Weikang Bio-Technology Reports First Quarter 2010 Financial Results
HARBIN, China, May 18 /PRNewswire-Asia-FirstCall/ -- Weikang Bio-Technology Group Co., Inc. (OTC Bulletin Board: WKBT) ("Weikang" or the "Company"), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription pharmaceuticals and other health and nutritional products in the People's Republic of China, today announced its financial results for the first quarter of fiscal year 2010 ended on March 31, 2010.
First Quarter Highlights
-- Revenue increased 38.1% year-over-year to a record $14.0 million
-- Gross profit was a record $8.3 million with gross margin of 59.6%
-- Net income increased 18% year-over-year to a record $4.5 million
-- Fully diluted earnings per share were $0.17
-- Non-GAAP net income was $5.5 million for non-GAAP fully diluted
shares of $0.20
-- Raised $2.5 million in private placement
"We are pleased to have achieved a record quarter in terms of revenue and net income. Moreover, we believe the strong quarter demonstrates our solid competitive position with our portfolio of proprietary therapeutics and ability to consistently expand our market penetration," commented Mr. Yin Wang, Chairman & CEO of Weikang Bio-Technology Group Co., Inc. "Both Tianfang and Weikang had strong sales growth as a result of our increased distribution network and market coverage."
Revenue was a record $14.0 million for the first quarter of 2010, up 38.1% from revenue of $10.1 million in the first quarter of 2009. Revenue from Tianfang was $8.9 million, or 64% of total sales, up 42.6% from revenue of $6.3 million in the first quarter of 2009. Tianfang increased market coverage by 20% throughout forty second- and third-tier cities. Revenue from Weikang was $5.0 million, or 36% of total sales, up 30.6% from revenue of $3.9 million in the first quarter of 2009.
Gross profit for the quarter increased 47.2% to $8.3 million from $5.6 million in the same period of 2009. Gross profit for Tianfang and Weikang was $4.7 million and $3.6 million, respectively. Gross margin for first quarter of 2010 was 59.6% compared to 55.9% in the first quarter of 2009. The increase in gross margin is the result of increased sales of higher margin products for both Tianfang and Weikang. Gross margin for Tianfang and Weikang was 53.0% and 71.3%, respectively.
Operating expenses were $2.0 million, or 14.0% of sales, compared to $0.6 million, or 6.3% of sales, in the first quarter of 2009. The increase in operating expenses was attributable to an increase in investor relations and consulting expenses. Adjusting for non-cash, stock-based compensation of $912,000, operating expenses were $1.0 million, or 7.5% of sales. The non-cash, stock-based compensation relates to the private placement done on January 20, 2010 and associated investor relation expense. The Company recorded $1.8 million as deferred compensation and amortized $912,000 as non-cash stock based compensation.
Operating income for the first quarter was $6.4 million, up 27.1% from $5.0 million in the first quarter of 2009. Operating margin was 45.6% compared to 49.6% in the same period a year ago. Adjusting for the previously mentioned non-cash, stock-based compensation, non-GAAP operating income was $5.5 million in the first quarter of 2010.
Net income was $4.5 million in the first quarter of 2010, up 17.8% from $3.9 million in net income from the same period a year ago. Net income for Tianfang and Weikang was $3.0 million and $2.5 million, respectively. Fully diluted earnings per share were $0.17 compared to fully diluted earnings per share of $0.15 in the first quarter of 2009. Excluding the non-cash, stock-based compensation, non-GAAP net income and fully diluted earnings per share for the first quarter of 2010 was $5.4 million and $0.20, respectively.
Financial Condition
As of March 31, 2010, Weikang Bio-Technology Group Co., Inc. had $18.1 million in cash and cash equivalents, $8.7 million in working capital and $14.2 million in total liabilities. Net cash provided by operating activities for the first quarter of 2010 was $4.9 million. Shareholders' equity stood at $31.1 million, up from $23.4 million at year-end 2009.
Recent Events
Mr. Ren Hu was appointed as Vice President of Finance as of May 5, 2010. Mr. Hu reports directly to the Chairman and CEO of the Company and is responsible for the public company capital market operations, including investor relations, SEC compliance and financing. Mr. Hu has over eleven years of work experience in Wall Street, including over five years in working for China based US public companies.
Business Outlook
Weikang intends to continue developing new products and expanding its distribution network throughout 2010. The Company has 10 therapeutics in various stages of the SFDA approval process and expects to launch its 10-HDA in the third quarter of 2010 and ShuangBaoGu by the end of 2010.
"The market opportunity for Traditional Chinese Medicine and Western medicine continues to expand in China as consumers' medical expenditure is estimated to double annually over the next two decades. We remain focused on our long-term growth and expanding our distribution network by increasing our wholesale network and dedicated sales force," Mr. Wang continued. "We also welcome Mr. Hu to the Weikang Bio-Technology executive team who will assist us in increasing our visibility in the investment community and enhancing our shareholder value as we continue to expand our market penetration."
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 pharmaceuticals through its acquisition of Tianfang. For more information, please visit http://www.weikangbio.com .
Use of Non-GAAP Financial Measures
To supplement Weikang Bio-Technology Group Co condensed consolidated financial statements presented on a GAAP basis, Weikang is providing certain income statement information that is not calculated according to GAAP. Weikang believes that its non-GAAP disclosures are useful in evaluating its operating results as this information supplies the user with another view of the matching of costs and expenses. A reconciliation of the adjustments to GAAP results for the three-month periods ended March 31, 2010 is included below. The non-GAAP information presented is supplemental and is not purported to be a substitute for information prepared in accordance with GAAP.
Non-GAAP financial results for the three month periods ended March 31, 2010 discussed in this release reflect operating results excluding the impact of the non-cash, stock-based compensation recognized under general and administrative expenses in connection to deferred compensation and associated investor relation expense related to its private placement financing in January 2010.
Safe Harbor Statement
This press release contains certain statements that may include "forward looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
- FINANCIAL TABLES FOLLOW -
WEIKANG BIO-TECHNOLOGY GROUP CO., INC,
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS ENDED MARCH 31, 2010
Three months ended
Adjusted Net income March 31, 2010
Net Income (Loss) and Diluted EPS Net Income Diluted EPS
Adjusted Amount Non-GAAP 5,453,445 0.20
Adjustments
Non-cash compensation adjustment (1) 912,000 0.03
Amount per consolidated statement
of operations 4,541,445 0.17
(1) Non-cash compensation expense in connection with the private placement
done on January 20, 2010 and associated investor relation expense, the
Company recorded $1.8 million as deferred compensation and amortized
$912,000 as non-cash stock based compensation.
WEIKANG BIO-TECHNOLOGY GROUP CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2010 2009
ASSETS (Unaudited)
CURRENT ASSETS
Cash & cash equivalents $18,098,606 $11,380,019
Advances to suppliers and other
receivables 895,936 24,334
Inventory 470,754 285,395
Due from management 1,745 1,745
Total current assets 19,467,041 11,691,493
NONCURRENT ASSETS
Property and equipment, net 9,945,642 10,162,946
Construction in progress 445,238 --
Intangible assets 15,488,871 15,558,731
Total noncurrent assets 25,879,751 25,721,677
TOTAL ASSETS $45,346,792 $37,413,170
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $13,599 $12,668
Unearned revenue -- 11,716
Taxes payable 2,453,471 2,247,410
Other payables 7,634,863 7,620,321
Due to related party 24,903 --
Advance from officer 650,000 650,000
Total current liabilities 10,776,836 10,542,115
CONTINGENCIES
DEFERRED TAX LIABILITY 3,427,129 3,450,005
STOCKHOLDERS' EQUITY
Common stock, $.00001 par value;
authorized shares 100,000,000;
issued and outstanding shares
27,984,388 and 25,486,800 at
March 31, 2010 and December 31,
2009, respectively 280 255
Additional paid in capital 4,781,720 139,245
Deferred compensation (1,467,791) --
Statutory reserve 1,321,806 1,069,507
Accumulated other comprehensive
income 850,151 844,526
Retained earnings 25,656,661 21,367,517
Total stockholders' equity 31,142,827 23,421,050
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $45,346,792 $37,413,170
WEIKANG BIO-TECHNOLOGY GROUP CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
THREE MONTHS ENDED MARCH 31,
2010 Non-GAAP 2010 2009
Net sales $13,958,540 $13,958,540 $10,111,207
Cost of goods sold 5,640,302 5,640,302 4,461,585
Gross profit 8,318,238 8,318,238 5,649,622
Operating expenses
Selling expenses 691,259 691,259 432,843
General and
administrative expenses 348,179 1,260,179 206,469
Total operating expenses 1,039,438 1,951,438 639,312
Income from operations 5,454,800 6,366,800 5,010,310
Non-operating income
(expenses)
Interest income 16,244 16,244 245
Financial expense (522) (522) (110)
Other income 193 193 256,278
Other expenses (161) (161) (12,859)
Total non-operating
income, net 15,754 15,754 243,554
Income before income tax 5,470,554 6,382,554 5,253,864
Income tax 1,841,109 1,841,109 1,400,259
Net income 5,453,445 4,541,445 3,853,605
Other comprehensive income
Foreign currency
translation gain (loss) 9,307 9,307 (3,140)
Comprehensive Income 5,479,861 $4,550,752 $3,850,465
Basic and diluted weighted
average shares outstanding 27,360,062 27,360,062 25,229,800
Basic and diluted net earnings
per share $0.20 $0.17 $0.15
WEIKANG BIO-TECHNOLOGY GROUP CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,541,445 $3,853,605
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 301,286 293,452
Stock issued for consulting
expenses 65,200 --
Deferred compensation 912,009 --
Changes in deferred tax (23,834) (25,204)
(Increase) decrease in
current assets:
Advances to suppliers and
other receivables (871,532) (6,195)
Inventory (185,263) (296,952)
Increase (decrease) in
current liabilities:
Accounts payable 927 --
Unearned revenue (11,718) (36,573)
Accrued liabilities and
other payable 14,541 8,519
Taxes payable 205,418 727,431
Net cash provided by
operating activities 4,948,479 4,518,083
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction in progress (445,199) --
Acquisition of property &
equipment (6,989) --
Net cash used in investing
activities (452,188) --
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in due from management -- 245,785
Net proceeds from shares
Issued 2,197,500 --
Payment for purchase of
Tianfang -- (3,811,898)
Changes in due from related
party 24,901 --
Net cash provided by (used
in) financing activities 2,222,401 (3,566,113)
EFFECT OF EXCHANGE RATE CHANGE ON CASH &
CASH EQUIVALENTS (105) 5,893
INCREASE IN CASH & CASH EQUIVALENTS 6,718,587 957,863
CASH & CASH EQUIVALENTS, BEGINNING OF
PERIOD 11,380,019 16,927
CASH & CASH EQUIVALENTS, END OF PERIOD $18,098,606 $974,790
For more information, please contact:
Company contact:
Ren Hu, VP
WeiKang Bio-Technology Group Co., Inc.
US Tel: +1-201-887-0415
China cell: +86-137-1872-8163
Email: [email protected]
Investors Relation contact:
John Marco, Partner, Elite IR
Tel: +1-310-819-2948
Email: [email protected]
Leslie J. Richardson, Partner, Elite IR
Tel: +852-3183-0283
Email: [email protected]
SOURCE Weikang Bio-Technology Group Co., Inc.
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