China Pharma Holdings, Inc. Reports First Quarter 2019 Financial Results

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May 15, 2019, 06:00 ET

HAIKOU, China, May 15, 2019 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE American: CPHI) ("China Pharma," the "Company" or "We"), an NYSE American-listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the quarter ended March 31, 2019.

First Quarter Highlights

Revenue decreased 19.0% to $2.9 million in the first quarter 2019 from $3.6 million in the same period of 2018;
Gross margin was 22.4% in the first quarter 2019, compared to 29.1% in the same period of 2018;
Loss from operations was $0.3 million in the first quarter 2019 compared to $0.1 million in the same period of 2018, a deterioration of $0.2 million;
Net loss was $0.4 million in the first quarter 2019 compared to $0.3 million in the same period of 2018. Loss per common share was both $0.01 per basic and diluted share in the first quarter 2019 and 2018, respectively.

In a statement from Ms. Zhilin Li, China Pharma's Chairman and CEO, "We experienced certain market fluctuations in the first quarter of 2019, which has negatively impacted our revenue in this period. Management will continue to vigorously promote sales through active participation in recent provincial market openings to solicit new drug tender offers and allow China Pharma to expand its presence in these markets." Ms. Li continued, "In addition, we continued experiencing sustained pressure from the more stringent requirements of drug registration standards, consistency evaluations, and the challenging environment in our industry in this period. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market, in order to optimize our development strategy."

First Quarter Results

Revenue decreased by 19.0% to $2.9 million for the three months ended March 31, 2019, as compared to $3.6 million for the three months ended March 31, 2018. This decrease was mainly due to market fluctuations.

Gross profit for the three months ended March 31, 2019 was $0.7 million, as compared to $1.1 million during the same period in 2018. Our gross profit margin in the three months ended March 31, 2019 was 22.4% as compared to 29.1% during the same period in 2018. The decrease in our gross profit margin was mainly due to the decrease in revenue and the increased ratio of fixed cost to revenue.

Our selling expenses for the three months ended March 31, 2019 and 2018 were $0.5 million and $0.7 million, respectively. Selling expenses accounted for 16.3% of the total revenue in the three months ended March 31, 2019, as compared to 18.8% during the same period in 2018. Because of adjustments in our sales practices, due to healthcare reform policies, we had reduced number of personnel and expenses to efficiently support our sales and the collection of accounts receivable.

Our general and administrative expenses for the three months ended March 31, 2019 were $0.4 million, which represented a decrease of $0.1 million, as compared to $0.5 million for the same period in 2018. General and administrative expenses accounted for 14.6% and 13.6% of our total revenues in the three months ended March 31, 2019 and 2018, respectively.

Net loss for the three months ended March 31, 2019 was $0.4 million, as compared to $0.3 million for the same period a year ago. The increase in net loss was mainly the result of decreased revenue, whereas the expenditures did not decrease in proportion to revenue, which was due to fixed costs. For the three months ended March 31, 2019 and 2018, loss per basic and diluted common share was both $0.01.

Financial Condition

As of March 31, 2019, the Company had cash and cash equivalents of $1.0 million compared to $1.2 million as of December 31, 2018.

As of March 31, 2019, our net accounts receivable was $0.8 million, compared to $0.9 million as of December 31, 2018.

For the three months ended March 31, 2019, cash flow from operating activities was $0.1 million, as compared to $0.5 million for the same period in 2018.

Conference Call

The Company will hold a conference call at 8:30 am E.T. on May 15, 2019 to discuss the results of the first quarter 2019. Listeners may access the call by dialing 1-866-519-4004 or 65-671-350-90 for international callers, Conference ID # 2397008. A replay of the call will be accessible through May 23, 2019 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 2397008.

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 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 new 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 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. Such risks and uncertainties may include, but are not limited to: 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.

- FINANCIAL TABLES FOLLOW -

CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,	December 31,
	2019	2018
ASSETS
Current Assets:
Cash and cash equivalents	$ 961,277	$ 1,186,587
Restricted cash	976,622	1,273,940
Banker's acceptances	51,424	20,579
Trade accounts receivable, less allowance for doubtful
accounts of $18,295,892 and $17,815,075, respectively	845,401	916,931
Other receivables, less allowance for doubtful
accounts of $7,187 and $34,884, respectively	225,010	170,098
Advances to suppliers	108,454	47
Inventory	4,934,248	5,054,975
Prepaid expenses	118,701	123,759
Total Current Assets	8,221,137	8,746,916

Advances for purchases of intangible assets	17,490,101	17,069,587
Property and equipment, net	19,067,032	19,294,379
Operating lease right of use asset	212,587	-
Intangible assets, net	250,266	266,443
TOTAL ASSETS	$ 45,241,123	$ 45,377,325

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable	$ 1,093,182	$ 1,060,934
Accrued expenses	117,241	310,804
Other payables	2,838,847	3,065,508
Advances from customers	526,247	525,647
Other payables - related parties	1,518,756	1,633,263
Operating lease liability, current portion	91,597	-
Current portion of construction loan facility	2,086,092	2,181,360
Bankers' acceptance notes payable	976,622	1,273,940
Total Current Liabilities	9,248,584	10,051,456
Non-current Liabilities:
Construction loan facility	4,470,197	4,362,720
Operating lease liability, net of current portion	122,229	-
Deferred tax liability	783,204	764,374
Total Liabilities	14,624,214	15,178,550
Commitments and Contingencies (Note 13)
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;
43,579,557 shares and 43,579,557 shares outstanding, respectively	43,580	43,580
Additional paid-in capital	23,590,204	23,590,204
Accumulated deficit	(5,688,089)	(5,270,358)
Accumulated other comprehensive income	12,671,214	11,835,349
Total Stockholders' Equity	30,616,909	30,198,775
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 45,241,123	$ 45,377,325

CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)

	For the Three Months
	Ended March 31,
	2019	2018
Revenue	$ 2,929,273	$ 3,615,684
Cost of revenue	2,272,743	2,561,984

Gross profit	656,530	1,053,700

Operating expenses:
Selling expenses	478,691	678,330
General and administrative expenses	428,817	492,010
Research and development expenses	69,918	22,213
Bad debt expense	13,312	1,834
Total operating expenses	990,738	1,194,387

Loss from operations	(334,208)	(140,687)

Other income (expense):
Interest income	3,257	2,294
Interest expense	(86,780)	(129,102)
Net other expense	(83,523)	(126,808)

Loss before income taxes	(417,731)	(267,495)
Income tax expense	-	(25,985)
Net loss	(417,731)	(293,480)
Other comprehensive income - foreign currency
translation adjustment	835,865	1,674,076
Comprehensive income (loss)	$ 418,134	$ 1,380,596
Loss per share:
Basic and diluted	$ (0.01)	$ (0.01)
Weighted average shares outstanding	43,579,557	43,579,557

CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the Three Months
	Ended March 31,
	2019	2018
Cash Flows from Operating Activities:
Net loss	$ (417,731)	$ (293,480)
Depreciation and amortization	795,483	861,430
Bad debt expense	13,312	1,834
Deferred income taxes	-	25,985
Non cash lease expense	1,233	-
Changes in assets and liabilities:
Trade accounts and other receivables	(145,935)	(266,479)
Advances to suppliers	(107,839)	(237,165)
Inventory	389,589	427,741
Trade accounts payable	6,079	196,434
Accrued taxes payable	(51,879)	(163,335)
Other payables and accrued expenses	(387,569)	(52,823)
Advances from customers	(12,285)	20,709
Prepaid expenses	8,065	2,888
Net Cash Provided by Operating Activities	90,523	523,739

Cash Flows from Investing Activities:
Purchases of property and equipment	(73,866)	(3,627)
Net Cash Used in Investing Activities	(73,866)	(3,627)

Cash Flows from Financing Activities:
Payments of construction term loan	(148,227)	(157,316)
Payments of related party payables	(119,561)	-
Net Cash Used in Financing Activities	(267,788)	(157,316)

Effect of Exchange Rate Changes on Cash	25,821	75,025
Net (Decrease) Increase in Cash and Cash Equivalents	(225,310)	437,821
Cash and Cash Equivalents at Beginning of Period	1,186,587	2,030,214
Cash and Cash Equivalents at End of Period	$ 961,277	$ 2,468,035

Supplemental Cash Flow Information:
Cash paid for income taxes	$ -	$ -
Cash paid for interest	$ 80,693	$ 125,716

Supplemental Noncash Investing and Financing Activities:
Issuance of banker's acceptances	$ 55,603	$ 443,748
Accounts receivable collected with banker's acceptances	175,793	133,053
Inventory purchased with banker's acceptances	145,614	148,924
Right-of-use assets obtained in exchange for operating lease obligations	236,055	-