BOHAI PHARMACEUTICALS GROUP, INC. 
By Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH), a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM) in China, today reported record financial results for its first quarter of fiscal 2011 ended September 30, 2010.
Summary of Fiscal First Quarter Ended September 30, 2010 Financial Results:
- Net Revenues of $17.0 million, an increase of 22% from $14.0 million in 2009
- Gross profit of $13.6 million, compared to $11.7 million in 2009
- Net income of $3.0 million, an increase of 57% from $1.9 million in 2009
- Fully diluted EPS of $0.15 for fiscal Q1 2011
- Basic EPS of $0.18 for fiscal Q1 2011, exceeding performance for Q1 2009
?Improving upon our past financial achievements, Bohai is excited to announce its record results for the first quarter of fiscal 2011,? said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group. ?During the quarter, we recognized double digit top line growth by focusing our strong marketing efforts on our lead products while at the same time continuing the roll out of our five new TCM products. We were also able to cut administrative costs, allowing us to boost net income by 57% compared to the same period last year. We look forward to making further progress with our sales initiatives as we continue to take advantage of the Chinese government's growing support of the TCM industry through the implementation of its new healthcare policies.?
As a key driver of Bohai's growth, the company's three lead TCM products (Tongbi Capsules and Tablets and Lung Nourishing Cream) are eligible for reimbursement under China's national medical insurance program enacted in 2009. Bohai believes that this provides a distinct advantage to the company's business strategy, which places a particular marketing focus on these lead products going forward. Among other features, this new government plan seeks to extend national medical insurance coverage to China's rural areas, with a target population in excess of 900 million potential healthcare consumers. The plan also seeks to promote the use of TCM products. Bohai currently produces 15 TCM products in China and is authorized to produce an additional 14 products.
Sales in the first quarter were generated mainly from Bohai's lead products, Lung Nourishing Cream, Tongbi Capsules and Tongbi Tablets, which together represented over 70% of Bohai's total net revenues. However, progress has been made on the five products that Bohai introduced in April and May of 2010. Although the new product sales only represented less than 5% of total net revenues in the first quarter, the net revenues for the five new products in the quarter ended September 30, 2010 increased by 160% compared to the quarter ended June 30, 2010.
Mr. Qu added, ?We anticipate our overall net revenues will continue to increase due to the national medical and health plan initiated by Chinese government in 2009, which is expected to eventually cover individual health insurance over 90% of China's population by 2011. As these policies continue to be implemented, we believe endorsements for Traditional Chinese Medicine, along with its coverage and reimbursement from hospitals and medical centers throughout China, will be a major driver of growth for Bohai as we seek to increase revenues, earnings and ultimately shareholder value.?
Highlights for the Fiscal 2011 First Quarter:
- Net revenue was $17.0 million along with net income of $3.0 million, resulting in basic EPS of $0.18 in the first quarter of fiscal 2011 ended September 30, 2010.
- Further implementation of a proactive marketing strategy in the quarter significantly increased revenue on all of the TCM products Bohai currently sells.
- In 2009, the PRC government began the implementation of a new national medical and health plan. Among other features, this new plan seeks to extend national medical insurance coverage to China's rural areas, with a target population in excess of 900 million, and to promote the use of TCM products.
- Sales in the fiscal first quarter were generated mainly from Bohai's lead products, Lung Nourishing Cream, Tongbi Capsules and Tongbi Tablets, which together represented over 70% of total net revenues.
- Bohai introduced five products in April and May of this year, increasing its total TCM offering from 10 to 15 products. Net revenues for these five new products constituted 5% of total period sales but increased 160% from the prior quarter ended June 30, 2010.
- Net income margin increased to 18% compared to 14% from the same quarter last year, while selling, general and administrative expenses decreased 8% to $8.6 million due to cost reduction in advertisement and other operating expenses.
- Cash flow from operating activities for the period ended September 30, 2010 was $2.8 million.
- A cash payment of $4.7 million was made towards the purchase of prepaid land use rights from the Shandong provincial government that Bohai anticipates utilizing for future factory expansion. An additional $2.3 million is due by March 31, 2011.
- Throughout the remainder of fiscal 2011, Bohai expects to increase marketing and advertising for its growing portfolio of TCM medicines.
In China, Traditional Chinese Medicine is not an alternative form of therapy but is used in the state-run hospitals alongside modern medicine. For its practitioners and advocates, TCM is a complete medical system that is used to treat disease in all its forms. TCM is also believed to promote long term wellness and vigor and many modern-day drugs have been developed from herbal sources.
Bohai's growth has been made possible through the company's focused strategy, which emphasizes quality products and aggressive sales and marketing efforts and also leverages the ?protected? manufacturing status and national insurance coverage for certain of its pharmaceutical products. Currently, Bohai has nearly 600 employees, including approximately 300 that are engaged in sales and distribution in 20 locations throughout China. Utilizing this distribution platform, and combined with mass media and other marketing methods to build awareness of its brand, Bohai will seek to grow its revenues and earnings in the remainder of 2011 and beyond.
Earnings Conference Call Details:
Bohai will host a conference call on Monday, November 15, 2010, at 11:00 a.m. Eastern to discuss its financial results for the first quarter of fiscal 2011 ended September 30, 2010. The teleconference can be accessed by dialing 877-407-8031 when calling within the United States or 201-689-8031 when calling internationally. Please dial in 10 minutes prior to the beginning of the call. There will be a playback available until December 16, 2010. To listen to the playback dial 877-660-6853 when calling within the United States, or 201-612-7415 when calling internationally and use account number: 286, in conjunction with replay ID number: 361002.
About Bohai Pharmaceuticals Group, Inc.
Based in the city of Yantai, Shandong Province, China, Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH) is engaged in the production, manufacturing and distribution of herbal pharmaceuticals based on Traditional Chinese Medicine in China. Bohai's medicines address common health problems such as rheumatoid arthritis, viral infections, gynecological diseases, cardio vascular issues and respiratory diseases. Bohai's products are sold either by prescription through hospitals or over-the-counter through local pharmacies and retail drug store chains. Bohai has approximately 600 employees, including approximately 300 sales representatives, operating from 20 offices throughout China. Bohai's three lead products, Tongbi Capsules, Tongbi Tablets and Lung Nourishing Cream, are eligible for reimbursement under China's National Medical Insurance Program.
For comprehensive investor relations material, including fact sheets, research reports, presentations and video, please follow the appropriate link: Investor Relations Portal, Investor Fact Sheet and Overview Video. For additional information, please visit Bohai's corporate website: www.bohaipharma.com.
Additional Information Relating to Bohai's Trading Data
Due to certain recent disruptions in the marketplace relating to quotations on the OTC Bulletin Board operated by FINRA (OTCBB), incomplete trading data may exist for certain companies like Bohai. Real-time trading data for Bohai on the OTCQB market is available through the below link. Readers are advised that OTCQB market is operated by the owner of otcmarkets.com, and Bohai Pharmaceuticals Group, Inc. makes no representation or warranty regarding the OTCQB market.
For real-time trading data for Bohai on the OTCQB market, including Level 2 quotes, please visit: www.otcmarkets.com/stock/boph/quote.
Cautionary Note Regarding Forward Looking Statements
This press release, the operational plans discussed herein and the statements of representatives of Bohai Pharmaceuticals Group, Inc. (the ?Company?) related thereto and in the conference call referenced herein contain, or may contain, among other things, ?forward-looking statements? within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are ?forward-looking statements,? including any other statements of non-historical information. These forward-looking statements are subject to significant known and unknown risks and uncertainties and are often identified by the use of forward-looking terminology such as ?guidance,? ?projects,? ?may,? ?could,? ?would,? ?should,? ?believes,? ?expects,? ?anticipates,? ?estimates,? ?intends,? ?plans,? ?ultimately? or similar expressions. All forward-looking statements involve material assumptions, risks and uncertainties, and the expectations contained in such statements may prove to be incorrect. Investors 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 factors and risks discussed in the periodic reports that the Company files with the Securities and Exchange Commission (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. The Company undertakes no duty to update these forward-looking statements except as required by law.
| Bohai Pharmaceuticals Group, Inc. and Subsidiaries | ||||||
Summary Selected Consolidated Statements of Operations | ||||||
| (in millions, except per share amounts) | ||||||
|
(unaudited)
Fiscal three months ended September 30, | ||||||
| 2010 | 2009 | |||||
| Net revenues | $ | 17.0 | $ | 14.0 | ||
| Cost of revenues | (3.4 | ) | (2.2 | ) | ||
| Selling, general and admin expenses | (8.6 | ) | (9.2 | ) | ||
| Income from operations | 5.0 | 2.6 | ||||
| Other income (expenses) | (0.8 | ) | (0.1 | ) | ||
| Provision for income taxes | (1.2 | ) | (0.6 | ) | ||
| Net income | $ | 3.0 | $ | 1.9 | ||
| Basic earnings per share | 0.18 | 0.15 | ||||
| Fully diluted earnings per share | $ | 0.15 | $ | 0.15 | ||
| Basic weighted average shares | 16.5 | 13.2 | ||||
| Diluted weighted average shares | 22.3 | 13.2 | ||||
NOTE: The above numbers may not total correctly due to rounding. | ||||||
| Bohai Pharmaceuticals Group, Inc. and Subsidiaries | ||||||
Summary Selected Consolidated Balance Sheet Items | ||||||
| (in millions) | ||||||
(unaudited) |
As of | |||||
| Cash and cash equivalents | $ | 15.5 | $ | 17.1 | ||
| Accounts receivable, net | 12.0 | 10.4 | ||||
| Inventories | 1.7 | 0.7 | ||||
| Property, plant & equipment, net | 7.9 | 7.9 | ||||
| Intangible assets, net | 17.6 | 17.3 | ||||
| Total Assets | 70.6 | 64.5 | ||||
| Total current liabilities | 10.8 | 8.8 | ||||
| Total liabilities | 16.4 | 14.4 | ||||
| Total stockholders' equity | $ | 54.2 | $ | 50.1 | ||
NOTE: The above numbers may not total correctly due to rounding. | ||||||
| Bohai Pharmaceuticals Group, Inc. and Subsidiaries | ||||||||
Summary Selected Consolidated Cash Flow Items | ||||||||
| (in millions) | ||||||||
(unaudited) Fiscal three months ended September 30, | ||||||||
| 2010 | 2009 | |||||||
| Net cash provided (used) by operating activities | $ | 2.8 | $ | 2.6 | ||||
| Net cash provided (used) by investing activities | (4.7 | ) | (0.0 | ) | ||||
| Net cash provided (used) by financing activities | 0.1 | (0.0 | ) | |||||
| Net change in cash and cash equivalents | $ | (1.6 | ) | $ | 2.6 | |||
NOTE: The above numbers may not total correctly due to rounding. | ||||||||
Company Contact:
Bohai Pharmaceuticals Group, Inc.
Gene
Hsiao, Chief Financial Officer
212-521-4470
or
Financial
Communications Contact:
Trilogy Capital Partners - Asia
Darren
Minton, President
Toll-free: 800-592-6067
info@trilogy-capital.com
