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 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: [email protected]

SOURCE Biostar Pharmaceuticals, Inc.