Professional Traders

[dDT]

NKBP - China Nuokang Bio-Pharmaceutical Inc. Reports Second Quarter 2012 Financial Results

GlobeNewswirePress Release: China Nuokang Bio-Pharmaceutical Inc. – 53 minutes ago

2Q12 Revenue was RMB72.9 Million ($11.5 Million)

2Q12 Net Income was RMB10.5 Million ($1.7 Million)

2Q12 Non-GAAP Adjusted Net Income was RMB11.3 Million ($1.8 Million)

Live conference call to be held Thursday, August 23, 2012 at 8:00 am ET

BEIJING, Aug. 22, 2012 (GLOBE NEWSWIRE) -- China Nuokang Bio-Pharmaceutical Inc. (NKBP) ("Nuokang" or the "Company"), a leading China-based biopharmaceutical company focused on the research, development, manufacture, marketing and sales of hospital-based medical products, today announced its unaudited financial results for the second quarter of 2012.

Mr. Baizhong Xue, the Company's Chairman and Chief Executive Officer, stated, "We are pleased to announce financial results for the second quarter of 2012 which demonstrate our continued progress with our corporate restructuring and profit making. Revenues from Baquting, our flagship product, rose sequentially by approximately 20% to RMB68.9 million from RMB57.5 million in the first quarter of 2012. Revenues through our sales agent channels remained strong while direct sales revenue, although less than the second quarter of 2011, improved from the first quarter of 2012. We are encouraged by these signs and continue to believe in the potential of our product portfolio."

Chairman Xue continued, "We remain focused on rebuilding and strengthening our business across various dimensions. For example, we continued regaining revenue levels with Baquting, whose quarter-over-quarter growth indicates that revenues generated by this product are approaching levels that were achieved prior to the restructuring. Moving beyond our core product offerings as part of a diversification strategy, we continued investing in clinical trials and market education for Kaitong and the Alpha Lipoic Acid Capsule ("ALA"). The Company is in the process of securing the required SFDA production permit for ALA. We likewise continued investing in R&D to support ongoing innovation. I am especially encouraged to see a sequential rise in net profit, which positively reflects on the progress the Company is making."

Second Quarter 2012 Financial Highlights

Revenue was RMB72.9 million ($11.5 million)1, compared to RMB79.5 million in the prior year period;
Baquting revenue was RMB68.9 million ($10.8 million), compared to RMB76.1 million in the prior year period;
Gross profit was RMB64.2 million ($10.1 million), compared to RMB70.9 million in the prior year period;
Gross margin was 88.1%, compared to 89.2% in the prior year period;
Operating income was RMB13.2 million ($2.1 million), compared to RMB21.0 million in the prior year period;
Net income was RMB10.5 million ($1.7 million), or RMB0.56 ($0.09) per diluted ADS2, compared to RMB14.1 million, or RMB0.72 per diluted ADS, in the prior year period; and
Non-GAAP adjusted net income was RMB11.3 million ($1.8 million), compared to RMB15.7 million in the prior year period.

Second Quarter 2012 Financial Performance

Revenue for the second quarter of 2012 was RMB72.9 million ($11.5 million), compared to RMB79.5 million in the second quarter of 2011. Revenue from Baquting decreased to RMB68.9 million ($10.8 million) from RMB76.1 million in the prior year period but increased sequentially from RMB57.5 million in the first quarter of 2012. This sequential growth reflects the gradual stabilization of the Company's sales team structure and the team's improving performance. Baquting revenue as a percentage of total revenue was 94.5% in the second quarter of 2012, compared to 94.2% in the second quarter of 2011. Revenue from other products was RMB4.0 million ($0.6 million), compared to RMB3.4 million in the prior year period.

Gross profit for the second quarter of 2012 was RMB64.2 million ($10.1 million), compared to RMB70.9 million in the second quarter of 2011. Gross margin for the second quarter of 2012 was 88.1%, in line with 89.2% in the second quarter of 2011.

Operating income for the second quarter of 2012 was RMB13.2 million ($2.1 million), compared to RMB21.0 million in the prior year period. Although representing a year-on-year decline, this marks the second consecutive quarter of a sequential increase in operating income, which continued to be driven by the Company's focus on strengthening its sales and marketing efforts for both Baquting and the Company's new products throughout the second quarter of 2012.

Research and development expenses for the second quarter of 2012 were RMB4.7 million ($0.7 million), compared to RMB3.3 million in the prior year period. Research and development expenses as a percentage of revenue was 6.5% for the second quarter of 2012, within the Company's expected range.

Selling, marketing and distribution expenses for the second quarter of 2012 were RMB31.8 million ($5.0 million), compared to RMB36.6 million in the prior year period. Selling, marketing and distribution expenses for the second quarter of 2012 primarily consisted of the Company's investment in sales and marketing for Baquting to preserve market share as well as the Company's continued investment in the commercialization of Kaitong and ALA. Selling, marketing and distribution expenses as a percentage of revenue for the second quarter of 2012 was 43.6%, compared to 46.1% in the second quarter of 2011.

General and administrative expenses were RMB14.5 million ($2.3 million) compared to RMB9.9 million in the prior year period. During the second quarter of 2012, expenses relating to the Company's going-private transaction were RMB3.4 million ($0.5 million).

Provision for income taxes was RMB3.8 million ($0.6 million), compared to RMB4.8 million in the prior year period, as a result of decreased income before tax.

Net income was RMB10.5 million ($1.7 million), or RMB0.56 ($0.09) per diluted ADS, compared to RMB14.1 million, or RMB0.72 per diluted ADS, in the prior year period.

Non-GAAP adjusted net income, excluding foreign exchange gains and losses, ESOP-related charges and the ASC 740 adjustment, were RMB11.3 million ($1.8 million), compared to RMB15.7 million in the prior year period.

For the second quarter of 2012, the Company had approximately 154.4 million weighted average diluted ordinary shares outstanding, or 19.3 million weighted average diluted ADSs.

As of June 30, 2012, the Company had cash and cash equivalents and other short-term investments of RMB236.1 million ($37.2 million), compared to RMB179.4 million as of December 31, 2011.

Six Months Ended June 30, 2012 Financial Performance

For the six months ended June 30, 2012, revenue decreased 7.5% to RMB133.2 million ($21.0 million) from RMB144.0 million for the six months ended June 30, 2011. During this same time period, gross profit decreased 8.5% to RMB116.4 million ($18.3 million) from RMB127.1 million and operating income decreased by 64.2% to RMB14.0 million ($2.2 million) from RMB39.0 million.

Net income decreased 55.3% to RMB11.2 million ($1.8 million), or RMB0.56 ($0.09) per diluted ADS from RMB25.0 million, or RMB1.27 per diluted ADS, for the six months ended June 30, 2011. Weighted average number of diluted ordinary shares outstanding was approximately 154.6 million for the six months of 2012, or 19.3 million ADSs.

Non-GAAP Measures

Adjusted net income is presented to better illustrate the Company's ongoing and core operational results. Adjusted net income is defined as net income excluding foreign exchange losses, ESOP related charges and ASC 740 adjustment. Adjusted net income may be calculated differently, and therefore Nuokang's adjusted net income may not be comparable to similarly titled measures of other companies. Adjusted net income is not a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from adjusted net income are significant and necessary components to the operations of the Company's business, and, therefore, adjusted net income should only be used as a supplemental measure of operating performance.

Read more ...