China Pharma Holdings, Inc. Reports First Quarter 2013 Financial Results

   China Pharma Holdings, Inc. Reports First Quarter 2013 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 pharmaceutical subsidiary
based in China, today announced financial results for the three months ended
March 31, 2013.

First Quarter 2013 Highlights

  oRevenue decreased 49% to $8.2 million in the first quarter of 2013 from
    $16.1 million in the first quarter of 2012.
  oGross loss was $1.6 million in the first quarter of 2013, a decrease of
    $6.9 million compared to $5.3 million gross profit in the first quarter of
    2012; management estimated that without the effect of inventory
    obsolescence, gross profit would have been $2.1 million in the first
    quarter of 2013.
  oNet loss was $2.8 million in the first quarter of 2013 compared to $2.8
    million net income in the first quarter of 2012, a decrease of $5.6
    million. Earnings (loss) per common share was ($0.06) per basic and
    diluted share in the first quarter of 2013 compared with $0.06 per share
    in the same period last year.

"The economic and pharmaceutical challenges and uncertainties had negatively
impacted our business in the first quarter of 2013. In addition, due to the
capital expenditure pressure from the GMP upgrade project, we have continued a
tighten marketing strategy to control credit expansion in the market." Ms.
Zhilin Li, China Pharma's Chairman and CEO continued, "Per the mandatory
requirements of new GMP requirements, the upgrading of our dried power
injectable line and liquid injectable line must be completed by the end of
2013. 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. The construction relative to certain required
facilities and equipment is in full swing."

First Quarter 2013 Results

Revenues for the three months ended March 31, 2013 were $8.2 million, a
decrease of 49% from revenues of $16.1 million for the three months ended
March 31, 2012. This decrease was primarily due to our continued tightened
marketing strategy as well as the cessation of our product Buflomedil. In
March 2013, the China Food and Drug Administration ("CFDA") issued a
nationwide notice (the "CFDA Notice") for the cessation of the production,
sale and use of Buflomedil effective immediately.

The most significant revenue decrease in terms of dollar amount was in our
"CNS Cerebral & Cardio Vascular" product category, which generated $2.1
million in sales revenue in the three months ended March 31, 2013 compared to
$4.8 million a year ago, a decrease of $2.7 million. This decrease was mainly
due to sales of Buflomedil, because the CFDA issued a nationwide notice for
the cessation of the production, sale and use of Buflomedil effective
immediately. The Company ceased the production and sale of this product and
voluntarily recalled limited quantities of our sold products from the market
as a customer service measure. No further recall is mandated by the CFDA
notice. Sales of the "Anti-Viro/Infection & Respiratory" category decreased by
$2.2 million to $4.6 million in the three months ended March 31, 2013 compared
to $6.8 million in the previous year period. Our "Digestive Diseases" category
generated $0.8 million of sales in the three months ended March 31, 2013,
compared to $2.5 million in the previous year period, or a decrease of $1.7
million. Our "Other" product category sales fell to $0.7 million from $2.0
million, a decrease of $1.3 million.

In March 2013, as a result of the CFDA Notice, the Company recognized an
inventory obsolescence expense in the amount of $3.7 million to write off all
of our Buflomedil-related raw materials and finished goods inventory. This was
recorded as inventory obsolescence on the accompanying statement of operations
for the three months ended March 31, 2013, which represented 11.1% of total
inventory as of March 31, 2013. There was no comparable expense for the three
months ended March 31, 2012.

Gross loss for the three months ended March 31, 2013 was $1.6 million, while
gross profit for the three months ended March 31, 2012 was $5.3 million. Our
gross profit margin in the first quarter of 2013 was (19%), compared to 33% in
the first quarter of 2012. Without the effect of inventory obsolescence in the
first quarter of 2013, management estimates that our gross profit would have
been approximately $2.1 million, and gross margin would have been 26% in the
first quarter of 2013. 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 revenue and sales price, and
continued increases 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 Rosuvastat
in could help to support overall gross margin once they are launched.

Selling, general and administrative expenses in the first quarter of 2013 were
$1.6 million, or 19% of sales, compared to $1.6 million, or 10% of sales, in
the first quarter of 2012. Due to many adjustments in our selling processes
from healthcare reform policies, despite the decrease in sales, we still
needed to maintain necessary personnel and expenses to support the sales and
collection of accounts receivable. For the three months ended March 31, 2013,
the Company recognized $0.1 million bad debt benefit, compared to a bad debt
expense of $0.3 million in the same period of 2012.

Our operating loss for the three months ended March 31, 2013 was $3.0 million,
compared to operating income of $3.4 million in the three months ended March
31, 2012, a decrease of $6.4 million. The main reasons for the decrease were
lower revenue, and the inventory obsolescence reserve recognized as a result
of the CFDA notice on Buflomedil in the first quarter of 2013.

In the three months ended March 31, 2013 and 2012, we paid income tax at the
rate of 15%. Income tax benefit was $0.3 million in the three months ended
March 31, 2013; and income tax expense was $0.5 million for the three months
ended March 31, 2012. As a result of the CFDA notice ceasing production of
Buflomedil, we have net operating loss carry forwards of $0.48 million which,
under Chinese tax law can be "carried forward" for 5 years.

Net loss for three months ended March 31, 2013 was $2.8 million, or earnings
per basic and diluted common share was ($0.06) per share, compared to net
income of $2.8 million in the three months ended March 31, 2012, or earnings
per basic and diluted common share was $0.06 per share. The decrease in net
income was mainly due to the decrease in revenue, and the inventory
obsolescence reserve recognized as a result of the CFDA notice on Buflomedil.

Financial Condition

As of March 31, 2013, the Company had cash and cash equivalents of $4.8
million compared to $4.0 million as of December 31, 2012. Working capital
decreased to $95.6 million as of March 31, 2013 from $97.9 million as of
December 31, 2012 and the current ratio was 8.6 times as of March 31, 2013
compared to 7.7 times as of December 31, 2012.

Accounts receivable balance decreased to $62.7 million at March 31, 2013 from
$66.2 million at December 31, 2012. Our receivable decreased due to decreased
sales and the improved performance of our collection of accounts receivable.

For the three months ended March 31, 2013, cash flow from operating activities
was $1.1 million, as compared to $0.4 million as of December 31, 2012.

Pipeline Update

As of March 31, 2013, 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 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 is currently
    undergoing Phase III clinical trials for this drug. Due to the improved
    regulatory requests for clinical works, the Company adjusted its
    anticipated completion time frame for the clinical trials work for this
    product to 2013.

Conference Call

The Company will hold a conference call at 8:30 am ET on May 15, 2013 to
discuss first quarter 2013 results. Listeners may access the call by dialing
1-866-519-4004 or 65-672-393-81 for international callers, Conference ID #
59804293. A webcast will also be available through CPHI's website at
http://www.chinapharmaholdings.com. A replay of the call will be accessible
through May 22, 2013 by dialing 1-855-452-5696 or 61-281-990-299 for
international callers, Conference ID # 59804293.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a 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



- FINANCIAL TABLES FOLLOW -



CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                                       March 31,     December31,
                                                                       2013          2012
ASSETS
Current Assets:
 Cash and cash equivalents                                         $ 4,750,468   $ 4,029,708
Banker's acceptances                                              1,180,864     101,570
 Trade accounts receivable, less allowance for doubtful
 accounts of $4,333,411 and $4,429,945, respectively               62,697,675    66,175,570
 Other receivables, less allowance for doubtful
 accounts of $50,592 and $49,881, respectively                     255,292       80,799
 Advances to suppliers                                             5,119,729     4,816,354
 Inventory, less allowance for obsolescence
 of $1,779,729 and $1,769,984, respectively                        33,260,226    36,359,516
 Deferred tax assets                                               954,980       967,671
Total Current Assets                                                   108,219,234   112,531,188
Advances for purchases of intangible assets                            39,462,268    39,263,977
Property and equipment, net of accumulated depreciation of
 $4,511,658 and $4,273,373, respectively                           9,288,259     9,031,894
Intangible assets, net of accumulated amortization of
 $3,097,224 and $2,944,726, respectively                           2,289,851     2,412,854
TOTAL ASSETS                                                           $159,259,612  $163,239,913
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Trade accounts payable                                            $ 2,978,636   $ 2,841,862
 Accrued expenses                                                  240,003       202,185
 Accrued taxes payable                                             514,245       2,426,826
 Other payables                                                    1,014,647     1,094,886
 Advances from customers                                           1,735,917     1,945,984
 Other payables - related parties                                  1,354,567     1,354,567
 Short-term notes payable                                          4,787,285     4,761,073
Total Current Liabilities                                              12,625,300    14,627,383
Long-term deferred tax liability                                       110,286       95,963
Total Liabilities                                                      12,735,586    14,723,346
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;
43,579,557sharesand43,579,557sharesoutstanding,respectively  43,580        43,580
 Additional paid-in capital                                        23,590,204    23,590,204
 Retained earnings                                                 106,092,017   108,904,325
 Accumulated other comprehensive income                            16,798,225    15,978,458
Total Stockholders' Equity                                             146,524,026   148,516,567
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $159,259,612  $163,239,913

CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
                                               For the Three Months
                                               Ended March 31,
                                               2013           2012
Revenue                                        $ 8,249,387    $ 16,086,731
Cost of revenue                                6,125,400      10,782,384
Inventory obsolescence                         3,692,895      -
Gross profit                                   (1,568,908)    5,304,347
Operating expenses:
 Selling expenses                          812,054        894,060
 General and administrative expenses       739,427        676,402
 Bad debt expense                          (119,930)      320,098
Total operating expenses                       1,431,551      1,890,560
(Loss) income from operations                  (3,000,459)    3,413,787
Other income (expense):
 Interest income                            1,586          690
Interest expense                           (82,445)       (77,537)
Net other expense                              (80,859)       (76,847)
(Loss) income before income taxes              (3,081,318)    3,336,940
Income tax benefit (expense)                   269,011        (530,581)
Net (loss) income                              (2,812,307)    2,806,359
Other comprehensive income - foreign currency
 translation adjustment                    819,767        (407,517)
Comprehensive (loss) income                    $ (1,992,540)  $ 2,398,842
(Loss) earnings per share:
 Basic                                     $ (0.06)       $ 0.06
 Diluted                                   $ (0.06)       $ 0.06



CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                    For the Three Months
                                                    Ended March 31,
                                                    2013           2012
Cash Flows from Operating Activities:
 Net (loss) income                              $ (2,812,307)  $ 2,806,359
 Depreciation and amortization                  350,468        365,223
 Stock based compensation                       -              56,489
 Bad debt expense                               (119,930)      320,098
 Deferred income taxes                          31,761         (34,312)
 Inventory obsolescence reserve                 3,692,895      -
 Changes in assets and liabilities:
 Trade accounts receivable                      589,186        (4,141,146)
 Other receivables                              (173,763)      (20,247)
 Advances to suppliers                          (276,405)      944,949
 Inventory                                      1,890,843      (3,351,458)
 Trade accounts payable                         122,430        2,725,945
 Accrued expenses                               (32,516)       11,517
 Accrued taxes payable                          (1,922,780)    443,684
 Other payables                                 (11,715)       54,337
 Advances from customers                        (220,418)      219,942
Net Cash Provided by Operating Activities           1,107,749      401,380
Cash Flows from Investing Activities:
 Net investment in banker's acceptances         -              (281,674)
 Advances for purchases of property and
equipment
 and intangible assets                          (399,992)      (790,092)
 Purchase of property and equipment             (4,373)        (7,926)
Net Cash Used in Investing Activities               (404,365)      (1,079,692)
Net Cash Provided by Financing Activity             -              -
Effect of Exchange Rate Changes on Cash             17,376         (52,736)
Net Increase in Cash and Cash Equivalents           720,760        (731,048)
Cash and Cash Equivalents at Beginning of Period    4,029,708      4,050,854
Cash and Cash Equivalents at End of Period          $ 4,750,468    $ 3,319,806
Supplemental Cash Flow Information:
 Cash paid for interest                         $ 111,346      $ 75,567
 Cash paid for income taxes                     1,593,510      274,587
Supplemental Noncash Investing and Financing
Activities:
Accounts payable for purchases of property and      $ 151,064      $144,057
equipment
Accounts receivable collected with banker's         3,366,655      406,604
acceptances
Inventory purchased with banker's acceptances       2,289,690      406,604

SOURCE China Pharma Holdings, Inc.

Website: http://www.chinapharmaholdings.com