SOURCE: Bahai Pharmaceuticals Group, Inc

May 15, 2014 14:10 ET

Bohai Pharmaceuticals Third Quarter Income Up 24% to $3.9 Million

BEIJING, CHINA--(Marketwired - May 15, 2014) - Bohai Pharmaceuticals Group, Inc. (OTC Pink: BOPH) (PINKSHEETS: BOPH), a leading manufacturer and marketer of traditional Chinese medicine (TCM), today announced that for the third fiscal quarter of 2014 ended March 31, the company had net revenues of $39,722,126, a 14 percent improvement on net revenues of $34,786,624 in the third fiscal quarter of 2013. The company had net income in Q3 2014 of $3,928,011, or $.22 per basic common share and $.19 per diluted common share, a 24 percent improvement on net income of $3,159,206, or $.18 per basic common share and $.15 per diluted common share, in the comparable year-ago quarter.

For the first nine months of the current fiscal year, Bohai had net revenues of $129,284,445, a 16 percent gain on net revenues of $111,067,950 for the same period in fiscal 2013. Bohai's net income in the first nine months of fiscal 2014 was $18,024,773, or $1.01 per basic common share and $.85 per diluted common share, a 22 percent gain on net income of $14,813,455, or $.83 per basic common share and $.71 per diluted common share, in the same period last year.

The increase in Bohai's third fiscal quarter net revenues compared to the same period a year ago was primarily due to an 11 percent increase in revenues contributed by the company's three leading TCM products: Lung Nourishing Syrup, and Tongbi Capsules and Tongbi Tablets for treatment of arthritis, which together accounted for over 96 percent of the company's net revenues in both the current fiscal year quarter and first nine-month period. The increase in the company's net income was attributable mostly to an increase in total gross profit of $3,729,763, offset by an increase in operating expenses of $2,609,346 for this year compared to the same period a year ago.

Bohai's improvement in fiscal 2014 nine-month net revenues was due primarily to a net increase in revenues of 18 percent from the above three products. The increase in the company's net income during the first nine months of fiscal 2014 compared to the same period a year ago was attributable mostly to an increase in total gross profit of $14,435,545, offset by an increase in operating expenses of $8,495,777.

Bohai CEO, Mr. Hongwei Qu, said he believed the company's operating performance would continue to show improvement in future quarters. First, he said, the company has two products -- Lung Nourishing Syrup and Fangfeng Tongsheng Granule (for treatment of a wide range of dermatologic conditions) -- on China's Essential Drug List (EDL), giving Bohai exclusive or near-exclusive rights to manufacture and distribute these two medicines, both of which are eligible for up to 100 percent insurance reimbursement by the Chinese government. In addition, the company's Tongbi Capsules has been included on the EDL for Shangdong and Hubei provinces, providing the company with further marketing advantages. Plus, said the CEO, all rural hospitals and clinics as well as all level 2 hospitals in China have been mandated to limit their prescriptions to EDL-listed products.

Looking forward, said Mr. Qu, the company is positioned to expand its total revenue from Tongbi Capsules and Tongbi Tablets from $65 million in 2013 to $85 million within the next three to five years.

The company's Fangfeng Tongsheng Granule should also enjoy rapid growth, he added, supported by both its EDL status as well as the current 17 percent annual growth in China's overall dermatology drug market.

Lastly, he said, due to the worsening air pollution conditions afflicting much of China, the company's Lung Nourishing Syrup is expected to increase its annual revenue from $28 million in 2013 to $90 million within three to five years.

About Bohai Pharmaceuticals Group

A manufacturer and marketer of traditional Chinese medicine (TCM) in the People's Republic of China, Bohai offers seven varieties of approved herbal medicines comprising four prescription drugs and three over-the-counter products in six delivery systems. The company reported net income of $19.1 million on revenue of $151.8 million for the year ended June 30, 2013, and net income of $18.0 million on revenue of $129.3 million for the first nine months of fiscal 2014.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of United States securities laws. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations. You should review the factors described in the section entitled "Risk Factors" in our prospectus filed with the SEC and other documents we file from time to time with the SEC. We qualify all of our forward-looking statements by these cautionary statements.

   
   
BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF  
INCOME AND COMPREHENSIVE INCOME  
   
(UNAUDITED)  
   
    For the Three Months Ended March 31,   For the Nine Months Ended March 31,  
    2014   2013   2014   2013  
Net revenues   $ 39,722,126   $ 34,786,624   $ 129,284,445   $ 111,067,950  
Cost of revenues     10,125,405     8,919,666     30,879,154     27,098,204  
                           
Gross profit     29,596,721     25,866,958     98,405,291     83,969,746  
                           
Operating expenses:                          
Selling, general and administrative expenses     23,103,935     20,476,092     70,348,334     60,230,015  
Impairment Charge - drug formula     0     0     0     1,688,486  
Depreciation and amortization     722,006     740,503     2,154,368     2,088,424  
                           
Total Operating expenses     23,825,941     21,216,595     72,502,702     64,006,925  
                           
Income from operations     5,770,780     4,650,363     25,902,589     19,962,821  
                           
Other income (expenses):                          
Interest income     3,296     2,796     78,016     29,122  
Interest expenses     (336,645 )   (456,930 )   (1,555,573 )   (1,396,286 )
Other (expenses) income, net     (29 )   (142 )   (31,329 )   (16,733 )
Change in fair value of derivative liabilities     0     0     0     1,211,236  
Total other (expenses) income     (333,378 )   (454,276 )   (1,508,886 )   (172,661 )
Income before provision for income taxes     5,437,402     4,196,087     24,393,703     19,790,160  
Provision for income taxes     (1,509,391 )   (1,036,881 )   (6,368,930 )   (4,976,705 )
Net income   $ 3,928,011   $ 3,159,206   $ 18,024,773   $ 14,813,455  
                           
Comprehensive income:                          
Net income   $ 3,928,011   $ 3,159,206   $ 18,024,773   $ 14,813,455  
Unrealized foreign currency translation (loss) gain     (1,187,686 )   658,168     77,850     862,251  
Comprehensive income   $ 2,740,325   $ 3,817,374   $ 18,102,623   $ 15,675,706  
                           
Net income per common share                          
Basic   $ 0.22   $ 0.18   $ 1.01   $ 0.83  
Diluted   $ 0.19   $ 0.15   $ 0.85   $ 0.71  
Weighted average common shares outstanding                          
Basic     17,861,085     17,861,085     17,861,085     17,861,085  
Diluted     21,831,328     22,093,335     21,957,639     22,093,335  
                           
                           
 
 
BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  March 31,   June 30,
  2014   2013
  (UNAUDITED)    
ASSETS          
 Current assets:          
  Cash $ 11,265,031   $ 6,947,972
  Restricted cash   12,609,747     12,574,051
  Accounts receivable   46,496,963     38,716,023
  Inventories   4,504,744     2,781,734
  Prepaid expenses and other current assets   939,555     1,007,365
           
  Total current assets   75,816,040     62,027,145
           
Non-current assets:          
  Property, plant and equipment, net   17,327,863     17,678,453
  Prepayment for property, plant and equipment   996,286     604,739
  Intangible assets - pharmaceutical formulas   14,149,231     14,109,169
  Intangible assets - land use right, net   37,350,012     37,863,464
  Other intangible assets, net   24,851,359     28,139,219
  Goodwill   5,216,982     5,202,209
           
  Total non-current assets   99,891,733     103,597,253
           
TOTAL ASSETS $ 175,707,773   $ 165,624,398
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities:          
  Notes payable $ 9,735,203   $ 9,707,638
  Short-term loan   4,867,601     0
           
  Accounts payable   5,137,420     5,081,913
  Accrued expenses   11,805,864     12,185,615
  Land use right payable   0     6,471,759
   Income taxes payable   2,073,289     2,222,476
   Due to a related party   55,741     52,830
           
  Total current liabilities   33,675,118     35,722,231
           
Non-current liabilities:          
  Acquisition purchase price payable - non-current portion   0     5,000,000
  Deferred tax liability   7,922,428     8,048,113
  Convertible notes, net   7,618,050     8,464,500
           
  Total non-current liabilities   15,540,478     21,512,613
           
TOTAL LIABILITIES   49,215,596     57,234,844
           
COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS          
           
STOCKHOLDERS' EQUITY          
Common stock, $0.001 par value, 150,000,000 shares authorized, 17,861,085 shares issued and outstanding as of March 31, 2014 and June 30, 2013, respectively   17,861     17,861
Additional paid-in capital   24,615,353     24,615,353
Accumulated other comprehensive income   9,077,431     8,999,581
Retained earnings   92,781,532     74,756,759
           
           
Total stockholders' equity   126,492,177     108,389,554
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 175,707,773   $ 165,624,398
           
           

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