China Pharma Holdings, Inc. Reports Full Year 2012 Financial Results

     China Pharma Holdings, Inc. Reports Full Year 2012 Financial Results

PR Newswire

HAIKOU CITY, China, May 15, 2013

HAIKOU CITY, China, May 15, 2013 /PRNewswire/ -- China Pharma Holdings, Inc.
(NYSE MKT: CPHI) ("China Pharma" or the "Company"), an NYSE MKT listed
corporation with its fully-integrated specialty pharmaceuticals subsidiary
based in China, today announced financial results for the year ended December
31, 2012.

Full Year Highlights

  oRevenue decreased 33% to $54.5 million in fiscal year 2012 from $81.2
    million in fiscal year 2011.
  oIncome from operations was $5.9 million in fiscal year 2012 compared to
    $22.0 million in 2011, a decrease of $16.1 million, or 73%.
  oNet income was $4.6 million in fiscal year 2012 compared to $19.3 million
    in 2011, a decrease of $14.7 million, or 76%. Earnings per common share
    was 11 cents per basic and diluted share in fiscal 2012 compared with 44
    cents per share in 2011, a decrease of 75%.
  oGross profit margin was 26% in fiscal year 2012, a decrease from 36% in
    fiscal 2011.

"The healthcare reform has produced encouraging results in improving the
standards of healthcare service for people in China. The changes produced by
the reform, however, have created pricing pressures on nearly all
pharmaceutical products across the industry, and we expect this environment to
continue for some time to come. The economic and pharmaceutical challenges and
uncertainties, raising cost and price cutting had negatively impacted our
business in 2012, which led to the overall decline in sales of our products."
Ms. Zhilin Li, China Pharma's Chairman and CEO continued, "Per the mandatory
requirements of new Good Manufacturing Practice (GMP) requirements, the
upgrading of our dried power injectable line and liquid injectable line must
be completed by the end of 2013. Therefore we have adjusted our general sales
and credit policies to a conservative stance since the beginning of 2012 in
order to ensure the capital requirements for new GMP upgrading requirements
are met, and control and improve the growing accounts receivable. We have
completed the planning, design and an environment contamination evaluation,
and commenced construction relative to certain required facilities and
equipment. We expect the launch of Candesartan in 2013 to bring positive
strength to our performance."

Full Year Results

Revenues for the year ended December 31, 2012 were $54.5 million, dropped 33%
from revenues of $81.2 million for the year ended December 31, 2011. This
decrease was primarily from our CNS Cerebral & Cardio Vascular product
category in terms of the decrease in dollar amount (approximately $10.6
million) and digestive disease product category in terms of percentage of
decrease in revenues (approximately 44%).

The most significant revenue decrease in terms of dollar amount was in our
"CNS Cerebral & Cardio Vascular" product category, which generated $15.2
million in sales revenue compared to $25.8 million a year ago, a decrease of
$10.6 million. Sales of the "Anti-Viro/Infection & Respiratory" category
decreased by $7.5 million to $24.5 million in 2012 compared to $32.0 million
in 2011. Our "Digestive Diseases" category generated $7.0 million of sales in
2012, compared to $12.4 million in the previous year, or a decrease of $5.4
million. Our "Other" product category sales fell to $7.8 million from $11.0
million, a decrease of $3.2 million.

Gross profit for the year ended December 31, 2012 was $14.0 million, compared
to gross profit of $29.0 million in 2011, a decrease of 51%. Gross margin was
26% in 2012, compared to 36% for 2011. The Healthcare Reform instituted by the
Chinese government since 2009 has resulted in margin compression in most
pharmaceutical products on the markets today, especially in the generic space
that many of our products are in. The decrease of sales and continued increase
of the purchase price of raw materials attributed to the decrease of gross
profit. Going forward we expect to see continued pricing pressure on most
products, but new products such as Candesartan and Rosuvastatin could help to
support overall gross margin once they are launched.

Selling, general and administrative expenses in 2012 were $6.8 million, or
12.6% of sales, compared to $7.2 million, or 8.8% of sales, in 2011. For the
year ended December 31, 2012, the Company's bad debt expense was $0.9 million,
compared to a bad debt expense of $0.1 million in 2011.

The carrying values of long-lived assets are reviewed for impairment annually
or whenever events or changes in circumstances indicate that the carrying
values may not be recoverable. Impairment losses of $593,095 relating to
intangible assets were recognized during the year ended December 31, 2012. No
impairment losses were recognized during the year ended December 31, 2011.

Operating income was $5.9 million in 2012 compared to $22.0 million in 2011, a
decrease of 73%. The lower operating income in 2012 reflects lower revenue,
lower gross profits and higher bad debt expenses in 2012.

In the years ended December 31, 2012 and 2011, we paid income tax at the rate
of 15%. Income tax expense was $0.98 million and $3.44 million for the years
ended December 31, 2012 and 2011 respectively. We obtained the "National
High-Tech Enterprise" status ("National HT Status") from the PRC government in
the fourth quarter of 2010. With this designation, we are entitled to a
preferential tax rate of 15% for the years ending December 31, 2011, 2012 and
2013, which is notably lower than the statutory income tax rate of 25%.

Net income for the year 2012 was $4.6 million, or $0.11 per basic and diluted
share, compared to $19.3 million, or $0.44 per basic and diluted share in
2011.

Financial Condition

As of December 31, 2012, the Company had cash and cash equivalents of $4.0
million compared to $4.1 million as of December 31, 2011. Year-over-year,
working capital increased to $98 million in 2012 from $97 million in 2011 and
the current ratio was 8.0 times in both 2012 and 2011.

Accounts receivable balance decreased to $66.2 million at December 31, 2012
from $69.7 million at December 31, 2011. Our receivable decreased due to
decreased sales and the improved performance of our collection in accounts
receivable.

For the year ended December 31, 2012, cash flow from operating activities was
$3.6 million, as compared to $5.2 million in 2011. As a common business
practice in China, Banker's Acceptances (BAs) are often used to settle payment
instead of checks. If cash equivalent treatment were to be applied to BAs with
more than 90 days maturity, $5.2 million would have been generated in
operating activities in the year ended December 31, 2012. This was mainly
because of the improved performance in collection of accounts receivable
partially offset the decrease in net income in 2012.

Pipeline Update

As of December 31, 2012, China Pharma had various pipeline drugs in different
stages of active development. Some of these are highlighted below:

  oCandesartan. The Company received production approval from the SFDA for
    Candesartan, a front-line drug therapy it developed for the treatment of
    hypertension in November 2012. It plans to launch this product during
    2013.
  oThe Company completed clinical trials of Rosuvastatin, a generic form of
    Crestor, and is in the process of production approval process.
  oAntibiotic Combination. The Company completed the Phase I clinical trials
    of its novel cephalosporin-based combination antibiotic in the third
    quarter of 2010. It is currently in Phase II of the clinical trial which
    is progressing well.
  oThe Company is developing a medicine for the treatment of coronary heart
    disease. This product comes with a patented TCM formula and It is
    currently conducting Phase III clinical trials for this drug.

Conference Call

The Company will hold a conference call at 8:30 am ET on March 15, 2013 to
discuss fiscal year 2012 results. Listeners may access the call by dialing
1-866-519-4004 or 65-672-393-81 for international callers, Conference ID #
15878326. A webcast will also be available through CPHI's website at
http://www.chinapharmaholdings.com. A replay of the call will be accessible
through March 22, 2013 by dialing 1-855-452-5696 or 61-281-990-299 for
international callers, Conference ID # 15878326.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a rapidly growing specialty pharmaceutical
company that develops, manufactures and markets a diversified portfolio of
products focused on conditions with a high incidence and high mortality rates
in China, including cardiovascular, CNS, infectious, and digestive diseases.
The Company's cost-effective, high-margin business model is driven by market
demand and supported by eight scalable GMP-certified product lines covering
the major dosage forms. In addition, the Company has a broad and expanding
nationwide distribution network across all major cities and provinces in
China. The Company's wholly-owned subsidiary, Hainan Helpson Medical &
Biotechnology Co., Ltd., is located in Haikou City, Hainan Province. For more
information about China Pharma Holdings, Inc., please visit
http://www.chinapharmaholdings.com. The Company routinely posts important
information on its website.

Safe Harbor Statement

Certain statements in this press release constitute forward-looking statements
for purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. Any statements set forth above that are not
historical facts are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements, which may include, but are not limited to,
such factors as the achievability of financial guidance, success of new
product development, unanticipated changes in product demand, increased
competition, downturns in the Chinese economy, uncompetitive levels of
research and development, and other information detailed from time to time in
the Company's filings and future filings with the United States Securities and
Exchange Commission. The forward-looking statements made herein speak only as
of the date of this press release and the Company undertakes no duty to update
any forward-looking statement to conform the statement to actual results or
changes in the Company's expectations except as required by applicable law or
regulation.

Contact:

China Pharma Holdings, Inc.
Phone:+86-898-6681-1730 (China)
Email: hps@chinapharmaholdings.com



CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
                                              December 31,     December 31,
                                              2012             2011
ASSETS
Current Assets:
 Cash and cash equivalents                   $   4,029,708  $   4,050,854
 Banker's acceptances                        101,570          83,512
 Trade accounts receivable, less allowance
for doubtful
 accounts of $4,429,945 and $3,536,405,   66,175,570       69,695,556
respectively
 Other receivables, less allowance for
doubtful
 accounts of $49,881 and $38,921,         80,799           55,039
respectively
Advances to suppliers                       4,816,354        5,778,841
Inventory                                   36,359,516       30,378,658
 Deferred tax assets                         967,671          566,226
Total Current Assets                          112,531,188      110,608,686
Advances for purchases of property and        -                170,323
equipment
Advances for purchases of intangible assets   39,263,977       36,194,494
Property and equipment, net of accumulated
depreciation of
 $4,273,373 and $3,391,124, respectively     9,031,894        6,334,817
Intangible assets, net of accumulated
amortization of
 $2,944,726 and $3,041,804, respectively     2,412,854        3,082,671
TOTAL ASSETS                                  $ 163,239,913    $ 156,390,991
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Trade accounts payable                      $   2,841,862  $   3,112,385
 Accrued expenses                            202,185          184,017
 Accrued taxes payable                       2,426,826        3,082,353
 Other payables                              1,094,886        822,448
 Advances from customers                     1,945,984        1,784,474
 Other payables - related parties            1,354,567        861,563
 Short-term notes payable                    4,761,073        3,931,745
Total Current Liabilities                     14,627,383       13,778,985
Long-term deferred tax liability              95,963           128,909
Total Liabilities                             14,723,346       13,907,894
Stockholders' Equity:
 Preferred stock, $0.001 par value;
5,000,000 shares authorized;
no shares issued or outstanding          -                -
 Common stock, $0.001 par value; 95,000,000
shares authorized;
 43,579,557 shares and 43,529,557 shares  43,580           43,530
outstanding, respectively
 Additional paid-in capital                  23,590,204       23,448,534
 Retained earnings                           108,904,325      104,286,666
 Accumulated other comprehensive income      15,978,458       14,704,367
Total Stockholders' Equity                    148,516,567      142,483,097
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 163,239,913    $ 156,390,991



CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
                                          For the Years Ended
                                          December 31,
                                          2012               2011
Revenue                                   $ 54,507,049       $ 81,166,739
Cost of revenue                           38,660,814         52,178,680
Inventory obsolescence                    1,769,984          -
Gross profit                              14,076,251         28,988,059
Operating expenses:
 Selling expenses                        3,535,214          3,439,522
 General and administrative expenses     3,313,306          3,716,397
 Bad debt expense                        871,612            108,085
 Impairment of intangible assets         593,095            -
Total operating expenses                  8,313,227          7,264,004
Government subsidy income                 141,987            301,672
Income from operations                    5,905,011          22,025,727
Other income (expense):
 Interest income                         4,944              7,208
 Interest expense                        (308,375)          (255,198)
 Derivative gain                         -                  934,260
Net other income (expense)                (303,431)          686,270
Income before income taxes                5,601,580          22,711,997
Income tax expense                        (983,921)          (3,442,355)
Net income                                4,617,659          19,269,642
Other comprehensive income - foreign
currency
 translation adjustment                  1,274,091          5,080,098
Comprehensive income                      $  5,891,750      $ 24,349,740
Earnings per Share:
 Basic                                   $      0.11  $      0.44
 Diluted                                 $      0.11  $      0.44



CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                 For the Years Ended
                                                                                                                 December 31,
                                                                                                                 2012         2011
Cash Flows from Operating Activities:
 Net income                                                                                                     $4,617,659   $19,269,642
 Depreciation and amortization                                                                                  1,462,771    1,174,822
 Stock based compensation                                                                                       141,720      196,183
 Derivative gain                                                                                                -            (934,260)
 Bad debt expense                                                                                               871,613      108,085
 Impairment of intangible assets                                                                                593,095      -
 Inventory obsolescence provision                                                                               1,769,984    -
 Deferred income taxes                                                                                          (430,250)    37,281
 Changes in assets and liabilities:
 Trade accounts and other receivables                                                                        (1,098,322)  (11,392,154)
 Advances to suppliers                                                                                       1,014,760    (251,171)
 Inventory                                                                                                   (4,702,575)  (2,925,143)
 Trade accounts payable                                                                                      (306,040)    (1,928,259)
 Accrued expenses and other liabilities                                                                      246,817      758,783
 Accrued taxes payable                                                                                       (683,357)    591,470
 Other payables                                                                                              744          13,327
 Advances from customers                                                                                     145,201      518,718
Net Cash Provided by Operating Activities                                                                        3,643,820    5,237,324
Cash Flows from Investing Activities:
 Net investment in banker's acceptances                                                                         -            (82,149)
 Advances for purchases of property and equipment                                                              (1,612,670)  -
 Advances for purchases of intangible assets                                                                    (3,218,035)  (5,191,385)
 Purchase of property and equipment                                                                             (156,878)    (352,362)
Net Cash Used in Investing Activities                                                                            (4,987,583)  (5,625,896)
Cash Flows from Financing Activity:
 Proceeds from issuance of notes payable                                                                        793,223      -
 Borrowings from related party                                                                                  493,004      595,670
Net Cash Provided by Financing Activity                                                                          1,286,227    595,670
Effect of Exchange Rate Changes on Cash                                                                          36,390       151,670
Net Increase (Decrease) in Cash                                                                                  (21,146)     358,768
Cash and Cash Equivalents at Beginning of Period                                                                 4,050,854    3,692,086
Cash and Cash Equivalents at End of Period                                                                       $4,029,708   $ 4,050,854
SupplementalCashFlowInformation:
 Cash paid for interest                                                                                        $  298,433  $  
                                                                                                                              248,018
 Cash paid for income taxes                                                                                    2,138,853    4,532,592
Supplemental Noncash Investing and Financing Activities:
Accounts payable for purchases of property and equipment                                                        $  151,731  $  
                                                                                                                              143,151
Accounts receivable collected with banker's acceptances                                                         4,354,825    6,102,570
Inventory purchased with banker's acceptances                                                                   2,768,805    6,102,570
Advances for purchases of property and equipment paid with banker'sacceptances                                 1,540,820    -
Advances for purchases of intangibles paid with banker's acceptances                                            27,909       -



SOURCE China Pharma Holdings, Inc.

Website: http://www.chinapharmaholdings.com
 
Press spacebar to pause and continue. Press esc to stop.