China Baicaotang Reports Strong Fourth Quarter and Full Year 2009 ResultsMarch 31, 2010 4:22 PM ET advertisement
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All PR Newswire newsChina Baicaotang Reports Strong Fourth Quarter and Full Year 2009 ResultsFull Year 2009 Revenue Increases 25% to $136.1 MillionFull Year 2009 Net Income Rose 17% to $19.4 Million, or $0.61 Per Diluted SharePR Newswire
LIUZHOU CITY, China, March 31
Full Year 2009 Revenue Increases 25% to $136.1 Million<br />Full Year 2009 Net Income Rose 17% to $19.4 Million, or $0.61 Per Diluted Share
LIUZHOU CITY, China, March 31 /PRNewswire-Asia-FirstCall/ -- China Baicaotang Medicine Limited, (OTC Bulletin Board: CNBI), ("China Baicaotang" or the "Company"), the leading pharmaceutical distributor, retail pharmacy, and manufacturer of pharmaceuticals and medical-related products in Guangxi Province, China, today announced results for the fourth quarter and full-year ended December 31, 2009.
Fourth Quarter 2009 Highlights
-- Revenue increased 56.0% to $36.6 million
-- Gross profit grew 20.6% to $9.0 million
-- Operating income increased 21.9% to $5.9 million
-- Net income increased 31.3% to $4.0 million, or $0.13 per diluted share
Full Year 2009 Highlights
-- Revenue increased 24.9% to $136.1 million
-- Gross profit grew 19.8% to $35.5 million
-- Operating income increased 15.1% to $26.9 million
-- Net income increased 16.5% to $19.4 million, or $0.61 per diluted share
-- Became a public company through share exchange transaction
-- Won 6 counties and cities' tender for distribution business under New
Rural Co-operative Medicare Plan
"We closed 2009 with solid results, achieving double-digit growth in revenue and net income," commented Mr. Hui Tian Tang, Chairman and Chief Executive Officer of China Baicaotang Medicine Limited. "Our unique, vertically integrated business model combines manufacturing capabilities with the largest regional wholesale network in Guangxi and an extensive retail network position. We continue to focus on expanding our dominant position in second and third tier cities in Guangxi Province in order to take advantage of China's$124.3 billion universal healthcare bill, which targets rural areas."
Fourth Quarter 2009 Results
For the fourth quarter ended December 31, 2009, revenue increased 56.0% to $36.6 million, as compared to $23.5 million in the same quarter of 2008. The increase in revenue was primarily driven by strong sales volume in the Company's pharmaceutical distribution sales channel. Within this sales channel, the Company increased the number of products sold and grew its customer base. In terms of revenue by business segment, the wholesale distribution channel accounted for 72.0%, while retail and manufacturing contributed 24.2% and 3.8%, respectively, as compared to 62.4% from pharmaceutical distribution, 30.0% from retail and 7.6% from manufacturing for the fourth quarter of 2008.
Gross profit grew 20.6% to $9.0 million, as compared to $7.4 million for the same period of 2008. Gross margin was 24.5%, as compared to 31.7% in the same period last year. The decline was mainly attributable to the increase in the costs of purchasing merchandise in support of greater sales volume. Gross margin in the year ago period was elevated by sales of Yanguanglian injection, a high margin product which accounted for the majority of sales from the Company's Hefeng Pharmaceutical subsidiary. In 2009, demand for other products in Hefeng Pharmaceutical's product portfolio accounted for a larger proportion of the product mix. As a result, the Company's overall gross margin returned to a more sustainable rate of around 25%.
Operating expenses increased 18.3% to $3.1 million, as compared to $2.6 million in the same period last year. Administrative expenses increased 47.3% to $1.8 million, as compared to $1.2 million in the same period of 2008, primarily due to an increase in staff compensation. Selling expenses rose 94.2% to $1.3 million, compared to $0.7 million in the same period of 2008, due to increased marketing expenses. Research and development expenses declined 93.9% to $0.05 million as compared to $0.8 million in the same period of 2008, as the majority of the first phase of R&D expenses was recorded in 2008. Once the effectiveness of the first phase is complete, the Company will invest further in research and development.
Operating income increased 21.9% to $5.9 million, or 16.0% of revenue, from $4.8 million, or 20.5% of revenue, in the fourth quarter of 2008.
Net income increased 31.3% to $4.0 million, or $0.13 per diluted share, compared to $3.1 million, or $0.10 per diluted share, in the fourth quarter of 2008. Diluted earnings per share were calculated using weighted average shares of 32,055,319 and 32,000,000 for the quarters ended December 31, 2009 and 2008, respectively.
Full Year 2009 Results
Revenue increased 24.9% to $136.1 million, as compared to $109.0 million for the year ended December 31, 2008. The increase was mainly attributable to an increase of $24.3 million revenue from the Company's pharmaceutical distribution operations as a result of an increase in the quantity and range of products sold to existing hospital clients supported by the Chinese government's expansion in healthcare security schedule coverage and the implementation of the New Rural Cooperative Medicare Program. Revenue from the Company's pharmaceutical distribution segment accounted for approximately 71.4% of total revenue, while retail contributed 22.9% and manufacturing generated 5.7%. Gross profit increased 19.8% to $35.5 million, as compared to $29.6 million in 2008. Gross margin was 26.1%, as compared to 27.2% in 2008. The decrease in gross margin was primarily due to the increase in purchasing costs. Operating income increased 15.1% to $26.9 million, from $23.4 million in 2008. Net income increased 16.5% to $19.4 million, or $0.61 per diluted share, as compared to $16.7 million, or $0.52 per diluted share, for the year ended December 31, 2008. Diluted earnings per share were calculated using weighted average shares of 32,013,943 and 31,963,669 for the years ended December 31, 2009 and 2008, respectively.
Financial Condition
As of December 31, 2009, Baicaotang had $13.3 million in cash and cash equivalents and $29.6 million in working capital and a current ratio of 1.8x. Long-term debt was $3.6 million. At year end, shareholders' equity was $53.4 million, an increase from $28.6 million at the end of 2008.
The Company generated $5.9 million in cash from operating activities for the year ended December 31, 2009, compared to cash generated from operating activities of $11.7 million in 2008.
In October 2009, the Company raised $6.3 million in gross proceeds through the first closing of a private placement of its common stock and warrants. In February 2010, the Company completed a second closing of the private placement, raising an additional $2.6 million in gross proceeds. The Company intends to use the proceeds to expand its pharmaceutical retail sales network in Guangxi Province, especially focusing on rural retail pharmacy markets.
Business Outlook
China Baicaotang plans to implement a three-pronged growth strategy to support its business expansion. For its pharmaceutical distribution and retail pharmacy segments, the Company will continue to focus on second and third tier cities and rural markets supported by well-designed marketing initiatives. For 2010, the Company plans to open an additional 160 pharmacy stores and expand the product portfolio which it manufactures to gain market share. In addition, China Baicaotang plans to invest in advanced logistics and information management systems and maximize its utilization rate of Hefeng production capacity.
"China Baicaotang is well-positioned to benefit from Chinese healthcare reform programs and maintain its position as one of the largest manufacturers and distributors in Guangxi Province," concluded Mr. Tang. "As a highly integrated player, our growth is supported by a balanced product portfolio, healthy product margins and a strong brand name."
About China Baicaotang
China Baicaotang is engaged in pharmaceutical distribution, pharmacy retailing, and the manufacture of pharmaceuticals and medical-related products through its subsidiaries Guangxi Liuzhou Baicaotang Medicine Limited, Hefeng Pharmaceutical Co. Limited, and Guangxi Liuzhou Baicaotang Medicine Retail Limited in Guangxi province, China. It operates the largest regional retail network in Guangxi province, consisting of 66 directly owned retail stores in Guangxi province and currently over 8,000 products are distributed through the Company's wholesale distribution network.
