-- Revenue Rises 57.0% to $74.6 Million -- Adjusted Operating Income Climbs to $37.6 Million -- Adjusted* Net Income Hits $28.3 Million or $0.95 Per Share -- GAAP Net Income Up 56.5% to $24.4 Million or $0.87 Per Share
HARBIN, China, March 22, 2011 /PRNewswire-Asia-FirstCall/ -- Weikang Bio-Technology Group Co., Inc. (OTC QB: WKBT) ("Weikang" or the "Company"), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription and OTC pharmaceuticals and other health and nutritional products in the People's Republic of China, today announced its financial results for the fiscal year ended December 31, 2010.
Fiscal 2010 Financial Highlights Revenues generated in fiscal 2010 increased 57.0% to $74.6 million, up from $47.5 million in 2009. Gross profit was $45.0 million, an increase of 74.2% compared to $25.8 million in fiscal 2009. Gross margin was 60.4% and 54.4% in fiscal 2010 and 2009, respectively. Operating income in fiscal 2010 was $33.7 million, an increase of 68.5% compared to $20.0 million in 2009. Operating margin was 45.2% and 42.1% in fiscal 2010 and 2009, respectively. Adjusted* net income for fiscal 2010 was $28.3 million, an increase of 81.3% from GAAP net income of $15.6 million in 2009. GAAP net income for fiscal 2010 increased 56.5% to $24.4 million, compared to $15.6 million in 2009. Adjusted* fully diluted earnings per share ("EPS") for fiscal 2010 was $0.95, an increase of 53.2% from fully diluted EPS of $0.62 in 2009. GAAP diluted EPS was $0.87 for fiscal 2010, up 40.3% from diluted EPS of $0.62 in 2009.
Fiscal 2010 Financial Summary
Fiscal 2010 Results FY 2010 FY 2009 Change
Net Sales $74.6 million $47.5 million 57.0%
Gross Profit $45.0 million $25.8 million 74.2%
Adjusted* Net Income $28.3 million N/A 81.3%**
GAAP Net Income $24.4 million $15.6 million 56.5%
Adjusted* Diluted EPS $0.95 N/A 53.2%**
GAAP Diluted EPS $0.87 $0.62 40.3%
* 2010 net income adjusted for $3.88 million non-cash stock-based compensation expenses.
**Annual percentage changes calculated using 2010 non-GAAP net income and 2009 GAAP net income. No adjustment to net income was necessary in fiscal 2009.
"Our business strategy was very successful this year, as evidenced by strong double-digit annual growth in both our top and bottom lines and an especially strong fourth quarter," commented Mr. Yin Wang, Chairman and CEO of Weikang. "Our market share continues to improve with our successful new product launches and expanded sales channels. The five new products we launched during 2010 contributed roughly $11 million to our total sales, and we plan to launch four new products during 2011, three of which we expect to roll out during the first quarter."
Mr. Wang continued, "We are committed to implementing improved marketing and promotional strategies as well as aggressive R&D, both of which contributed to our strong performance this year. Furthermore, we have streamlined our cost structure in order to provide the highest quality product at the best value, and we look forward to continued growth of this nature as we continue to pursue additional US investor support and interaction in 2011."
Fiscal Year 2010 Results of Operations
Revenues
During the year ended December 31, 2010, the Company recorded record revenues of $74.6 million, compared to $47.5 million in 2009, an increase of 57.0%, or $27.1 million. The increase in sales was primarily attributable to sales of the Company's five new products launched in the second half of 2010, which accounted for approximately 15% of total revenues. An additional 8% of sales were attributable to new sales channels in Hunan and Guangxi provinces, with further growth due to increased client demand and market share. General price increases throughout China also contributed to higher product prices for the Company.
Gross Profit
Cost of sales increased to $29.5 million in 2010 from $21.6 million in 2009. The increase of $7.9 million, or 36.5%, was mainly due to a decrease in cost of goods sold as a percentage of sales from 45.6% in 2009 to 39.6% in 2010. Gross profit was $45.0 million for the year ended December 31, 2010, compared to $25.8 million for 2009, representing gross margins of 60.4% and 54.4%, respectively. The increase in gross margin was attributable to strict cost control procedures and improved economies of scale.
Operating Income
Total operating expenses were $11.3 million in 2010, compared to $5.9 million in 2009. The increase of 93.6%, or $5.5 million, was mainly attributable to increased promotional, marketing, and advertising expenses for new products; non-cash stock-based compensation expenses of $3.88 million; and R&D expenses of $2.54 million related to licorice flavonoid extraction technology. Income from operations totaled $33.7 million in 2010, an increase of 68.5% or $13.7 million, as compared to $20.0 million in 2009.
Net Income
Net income for fiscal 2010 was $24.4 million, compared to $15.6 million for 2009, an increase of 56.5% or $8.8 million. The increase was mainly attributable to the increase in revenues, improvement in gross margin due to cost control measures, and other reasons set forth above. The Company generated basic and diluted EPS of $0.87, an increase of 40.3% from basic and diluted EPS of $0.62 in 2009.
About Weikang Bio-Technology Group Co., Inc.
Weikang Bio-Technology Group Co., Inc. is principally engaged in developing, manufacturing and distributing Traditional Chinese Medicine (TCM), and health and nutritional supplements in China, in compliance with requisite Chinese licenses and approvals. The Company is also expanding its business scope to develop, manufacture and distribute Chinese herbal extract products and GMP-certified western prescription and OTC pharmaceuticals through its acquisition of Tianfang Pharmaceutical Co., Ltd. For more information, please visit http://www.weikangbio.com.
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