2014

Biostar Pharmaceuticals, Inc. Announces Second Quarter 2013 Financial Results

XIANYANG, China, Aug. 19, 2013 /PRNewswire/ -- Biostar Pharmaceuticals, Inc. (NASDAQ GM: BSPM) ("Biostar" or "the Company"), a PRC-based manufacturer and marketer of pharmaceutical and health supplement products in China for a variety of diseases and conditions, today announced financial results of the second quarter ended June 30, 2013.

SUMMARY FINANCIALS

Second Quarter 2013 Results (unaudited)


Q2 2013

Q2 2012

CHANGE

Net Sales

$14.7 million

$8.2 million

+79.6%

Gross Profit

$6.9 million

$4.6 million

+50.4%

Net Income

-$0.7 million

-$9.5 million

-

EPS (Diluted)

-$0.06

-$1.01

-

 

Six Months 2013 Results (unaudited)


6-Month 2013

6-Month 2012

CHANGE

Net Sales

$26.7 million

$24.1 million

+11.2%

Gross Profit

$13.6 million

$15.4 million

-11.9%

Net Income

-$0.2 million

-$7.3 million

-

EPS (Diluted)

-$0.02

-$0.78

-

Second Quarter 2013 Financial Results

Revenue for the second quarter of 2013 increased 79.6% to approximately $14.7 million compared to $8.2 million for the second quarter of 2012.  The increase was mainly attributed to the increase in sales volume and introduction of several new products, offset by decrease in average sales price and discontinuation of four products since the first quarter of 2013. Sales of products under the Aoxing Pharmaceutical brand increased by approximately $4.0 million, or 62.9%, to $10.4 million for the three months ended June 30, 2013, compared to the same period in 2012. Sales of Shaanxi Weinan's products increased by approximately $0.5 million or 30.2% to $2.3 million for the three months ended June, 2013 compared to the same period in 2012. The increase was attributable to an increase in sales volume and introduction of new products. The Company has also begun sales of three new products that were sold exclusively at a local hospital since the third quarter in 2012. These products accounted for approximately $1.9 million of total net sales for the three months ended June 30, 2013.

Cost of goods sold for the three months ended June 30, 2013 was approximately $7.8 million or 53.0% of revenue, as compared to $3.6 million or 44.0% of revenue for the three months ended June 30, 2012. This increase is mainly due to the increase in sales and the introduction of the new hospital products.

Gross profit for the second quarter of 2013 were $6.9 million with gross margins of 47.0%, compared to $4.6 million in gross profit and gross margins of 56.0% for the second quarter of 2012. The increase in gross profit was due to increased sales. The decrease in gross profit margin was mainly due to higher average cost of Xin Aoxing Capsule.

Operating expenses for the three months ended June 30, 2013 were approximately $7.7 million, a decrease of 54.3% compared to the same period in 2012. The decrease is attributable to decrease in advertising and selling expenses.  The Company incurred a one-time compensation expense of $7.9 million, paid to customers during the sales suspension as a result of the Capsule Incident during the three months ended June 30, 2012. Advertising expenses accounted for 17.4% and 53.8% of total net sales for the three months ended June 30, 2013 and 2012. The overall decrease of approximately $1.8 million or 41.9% is consistent with the temporary discontinuation of several products.  Selling expenses increased approximately $0.3 million or 11.9% to $2.6 million for the three months ended June 30, 2013 as compared to the same period in 2012. For the three months ended June 30, 2013 and 2012, general and administrative expenses were approximately $1.5 and 1.4 million.

Loss from operations for the second quarter of 2013 totaled approximately $0.8 million, a 93.5% decrease from $12.2 million reported for the second quarter of 2012. Net loss was approximately $0.7 million for the second quarter of 2013, compared to $9.5 million for the second quarter of 2012. Diluted earnings per share were ($0.06) for the second quarter of 2013 compared to ($1.01) for the second quarter of 2012, based upon 11.6 million and 9.4 million diluted common stocks outstanding, respectively.

Six Month Results

For the six months ended June 30, 2013, revenue increased approximately 11.2% to $26.7 million compared to the same period in 2012. Gross profit was approximately $13.6 million for the first six months of 2013, representing a decrease of 11.9% from the first six months of 2012. Gross margins decreased to 50.7% for the first six months of 2013 compared to the same period one year ago.

Loss from operations was $63,618 and $9.1 million for the first six months of 2013 and 2012, respectively. Net loss was $0.2 million for the six months ended June 30, 2013, compared to $7.3 million from the same period in 2012. Fully diluted earnings per share were ($0.02) compared to ($0.78) for the first six months of 2013 and 2012 respectively, based up on 10.8 million and 9.4 million shares.

Balance Sheet and Cash Flow

Cash and cash equivalents totaled $10.0 million on June 30, 2013, compared to $1.8 million on December 31, 2012. Accounts receivable balance was approximately $13.5 million on June 30, 2013, versus approximately $21.9 million on December 31, 2012. Days sales outstanding for the first six months of 2013 were at 91 days, compared to 176 days for the same period in 2012. The Company had a current ratio of 3.8:1 and stockholders' equity of $60.4 million, with total assets of $71.2 million versus total liabilities of $10.8 million on June 30, 2013.

For the first six months of 2013, the Company generated $10.5 million in cash from operations versus $2.7 million for the same period in 2012.

Business Developments

In April 2013, Aoxing Pharmaceutical executed a supplemental agreement to the Weinan Share Transfer Agreement (the "Weinan Supplemental Agreement") with all the former equity holders of Shaanxi Weinan to acquire 13 drug approval numbers which were excluded from the Weinan Share Transfer Agreement due to the ongoing re-registration. The Company acquired ownership of the 13 drug approval numbers for which re-registration has been completed in April 2013. The aggregate purchase price was approximately $10.2 million, consisting of approximately $8.8 million in cash and 1,602,564 shares of the Company's common stock, valued at approximately $1.4 million.

"We continued positive momentum in the second quarter of 2013 with 79.6% year-over-year growth in sales," commented Ronghua Wang, Chairman and Chief Executive Officer of Biostar. "Although our net profit was impacted by a temporary decrease in sale price of Xin Aoxing Capsule as we were still in recovery from the gel capsule production setback during the first half of 2013, we are optimistic about our long-term outlook as Chinese healthcare industry is still in rapid growth and we continue our expansion of product portfolio."

Conference Call

The Company will host a conference call to discuss the 2013 second quarter financial results on Tuesday, August 20, 2013 at 9:30 a.m. ET. Interested parties may access the call by dialing + 1-480-629-9664. The conference ID is 4636783. It is advisable to dial in approximately 5-10 minutes prior to the start of the call. A playback will be available through August 27, 2013. To listen, please call +1-858-384-5517 and utilize the pass code 4636783 for the replay. This call is being web cast by ViaVid Broadcasting and can be accessed at the following link: http://public.viavid.com/index.php?id=105864.

About Biostar Pharmaceuticals, Inc. 

Biostar Pharmaceuticals, Inc., through its wholly owned subsidiary and controlled affiliate in China, develops, manufactures and markets pharmaceutical and health supplement products for a variety of diseases and conditions. The Company's most popular product is its Xin Aoxing Oleanolic Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a disease affecting approximately 10% of the Chinese population. For more information please visit: http://www.biostarpharmaceuticals.com

Safe Harbor Relating to the Forward-Looking Statements

Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and similar expressions to identify forward-looking statements in this press release, including forward-looking statements. Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Biostar and described in the forward-looking information contained in this news release. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the Company's ability to achieve the projected sales through the efforts of the call center, to complete the contemplated clinical trials and capitalize on such opportunities, the Company's ability to recover its sales and revenue for the gel capsule segment of its business, the state of consumer confidence and market demand or the Company's products, success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our most recent Annual Report on Form 10-K for the year ended December 31, 2012, and other subsequent filings. These filings are available at www.sec.gov.  We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.

For more information contact:

Biostar Pharmaceuticals, Inc.
Ally Gong
Tel: +86-29-3368-6638
Email: office@aoxing-group.com

 

BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



June 30, 2013


December 31, 2012


(Unaudited)


(Audited)







ASSETS







Current Assets






Cash and cash equivalents

$

9,951,153


$

1,759,078

Accounts receivable, net of allowance for doubtful accounts
  of $3,721,261 (2012/12/31: $3,645,817)


13,478,205



21,851,412

Inventories


1,744,982



847,135

Deposits and other receivables


5,635,737



7,740,673

Income tax recoverable


161,247



265,007

Loan receivables


10,475,207



9,510,826

Total Current Assets


41,446,531



41,974,131







Non-current Assets






Deposits


-



8,718,258

Deferred tax assets


3,508,560



3,665,951

Property and equipment, net


7,876,513



6,980,521

Intangible assets, net


18,354,739



9,136,439







Total Assets

$

71,186,343


$

70,475,300







LIABILITIES AND STOCKHOLDERS' EQUITY







Current Liabilities






Accounts and other payables

$

5,542,855


$

5,732,329

Short-term bank loans


4,853,820



4,755,413

Due to a related party


-



1,585,138

Value-added tax payable


438,591



629,672

Total Current Liabilities


10,835,266



12,702,552







Commitment and contingencies












Stockholders' Equity






Common stock, $0.001 par value, 100,000,000 shares authorized,
  11,596,113 and 9,993,549 shares issued and outstanding as at
  June 30, 2013 and December 31


11,596



9,993

Additional paid-in capital


24,633,499



23,266,776

Statutory reserve


6,737,368



6,737,368

Retained earnings


23,059,737



23,229,743

Accumulated other comprehensive income


5,908,877



4,528,868

Total Stockholders' Equity


60,351,077



57,772,748







Total Liabilities and Stockholders' Equity

$

71,186,343


$

70,475,300

 

BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)



Three months ended June 30,


Six months ended June 30,


2013


2012


2013


2012













Sales, net

$

14,650,854


$

8,159,248


$

26,742,763


$

24,058,789

Cost of sales


7,771,404



3,586,243



13,174,423



8,649,393

Gross profit


6,879,450



4,573,005



13,568,340



15,409,396













Operating expenses:












Advertising expenses


2,550,271



4,389,657



4,436,952



7,244,982

Selling expenses


2,621,288



2,343,053



4,818,634



5,244,462

Compensation paid to customers


-



7,904,513



-



7,904,513

General and administrative expenses


1,458,818



1,383,843



2,536,566



2,484,549

Research and development expenses


805,613



789,776



1,601,614



1,580,903

Impairment of intangible assets


238,192



-



238,192



-

Total operating expenses


7,674,182



16,810,842



13,631,958



24,459,409













(Loss) from operations


(794,732)



(12,237,837)



(63,618)



(9,050,013)













Other income (expense)












Interest income


331,404



96,006



786,635



191,700

Interest expense


(99,521)



(17,099)



(195,209)



(32,134)

Other


635



198



(1,463)



446



232,518



79,105



589,963



160,012













(Loss) before income taxes


(562,214)



(12,158,732)



526,345



(8,890,001)













Provision for income tax (recovery)


168,766



(2,676,180)



696,351



(1,574,864)













Net (Loss) Income


(730,980)



(9,482,552)


$

(170,006)


$

(7,315,137)













Foreign currency translation adjustment


942,176



42,821



1,380,009



298,281













Comprehensive Income (Loss)

$

211,196


$

(9,439,731)


$

1,210,003


$

(7,016,856)













Net (loss) income per share












     Basic and diluted

$

(0.06)


$

(1.01)


$

(0.02)


$

(0.78)













Weighted average number of common shares outstanding












     Basic and diluted


11,560,501



9,400,216



10,777,025



9,400,216

 

BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Six months ended June 30,



2013


2012

CASH FLOWS FROM OPERATING ACTIVITIES






Net loss

$

(170,006)


$

(7,315,137)

Adjustments to reconcile net income to net cash provided by operating activities:






Accrued interest


(759,824)



-

Deferred tax assets


230,899



(1,815,094)

Depreciation and amortization


1,223,460



912,513

Recognition of deferred research and development expenses


1,601,614



1,580,903

Stock-based compensation


6,147



71,358

Credits to accounts receivable as compensation to customers


-



7,904,513

Impairment of intangible assets


238,192



-

Changes in operating assets and liabilities:







Accounts receivable


8,736,339



3,727,917


Inventories


(871,434)



535,421


Deposits and other receivables


640,646



43


Accounts payable and accrued expenses


(304,802)



(129,305)


Value-added tax payable


(202,051)



(752,786)


Income tax payable/recoverable


108,142



(1,997,695)


Exchange difference


-



898

Net cash provided by operating activities


10,477,322



2,723,549








CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property and equipment


(4,378)



(13,819)

Additions to construction in progress


(950,674)



-

Payment for acquisition of Shaanxi Weinan


-



(822,173)

Compensation received for disposed land use rights


-



553,876

Net cash (used in) investing activities


(955,052)



(282,116)








CASH FLOWS FROM FINANCING ACTIVITIES






Repayment of short term loan


-



(791,176)

Repayment to a related party


(1,601,614)



-

Net cash (used in) financing activities


(1,601,614)



(791,176)








Effective of exchange rate changes on cash and cash equivalents


271,419



87,548








Net increase in cash and cash equivalents


8,192,075



1,737,805








Cash and cash equivalents, beginning balance


1,759,078



16,971,789

Cash and cash equivalents, ending balance

$

9,951,153


$

18,709,594








SUPPLEMENTAL DISCLOSURES:






Interest received

$

26,811


$

-

Interest payments

$

(189,359)


$

-

Income tax payments

$

(559,441)


$

(2,243,098)

SOURCE Biostar Pharmaceuticals, Inc.



RELATED LINKS
http://www.biostarpharmaceuticals.com

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