China Pharma Holdings, Inc. Reports First Quarter Financial Results

HAIKOU CITY, China, May 17, 2016 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma," the "Company" or "We"), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the quarter ended March 31, 2016.

First Quarter Highlights

• Revenue was $3.6 million in first quarter 2016, which represented a decrease of 36.1% compared to $5.7 million in the same period 2015;
• Gross margin was 17.6% in first quarter 2016, compared to 18.6% in the same period 2015;
• Net loss was $1.6 million in first quarter 2016 compared to $4.1 million in the same period 2015. Loss per common share was $(0.04) per basic and diluted share in first quarter 2016 compared with $(0.09) per basic and diluted share in the same period 2015.
• As of March 31, 2016, the Company had cash and cash equivalents of $7.3 million compared to $6.2 million as of December 31, 2015.

"In the first quarter 2016, there are a few important governement policies issued or implemented, such as the "Opinions on Carrying out Consistency Evaluation on Quality and Efficacy of Generic Drugs". 'Consistency Evaluation' requires currently marketed generic products to prove consistency in terms of quality, therapeutic effect, and substitutability during clinical trials with the original drug, which could enhance development of the pharmaceutical industry, ensure drug safety and effectiveness, promote the upgrading and restructuring of the pharmaceutical industry, and improve international competitiveness." said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms Li continued, "Nevertheless, we continued concentrating on enhancing our fundamentals. Although our sales in this quarter did not immediantly reflect our efforts to regain the market share due to certain background of our business as well as the pressure from  macro-environment of our industry, we continue to believe that our current operations and financial position will allow us to secure the foundation for steady business growth in the future."

First Quarter 2016 Results

Revenue decreased by 36.1% to $3.6 million for the three months ended March 31, 2016, as compared to $5.7 million for the same period 2015. This decrease was primarily caused by several missed provincial tenders back in 2014 due to the fact that our new GMP certificates were not received until November 2014, therefore we lost related market share and negatively impacted sales afterwards. In addition, the government's healthcare-cost-controls also maintained continuous pressure upon our sales.

Our cost of revenue was $3.1 million in the first quarter 2016, or 84.4% of total revenue, compared to $4.4 million, or 77.9% of total revenue, in the same period 2015. The decrease in cost of revenue during the first quarter 2016 was due to the revenue decrease.

Gross profit for the first quarter 2016 was $0.6 million, compared to $1.1 million in the same period 2015. Our gross profit margin was 17.6% and 18.6% for the first quarter 2016 and 2015 respectively. Without the effect of inventory obsolescence, management estimates that our gross profit would have been approximately 15.6% and 22.1% for the first quarter 2016 and 2015 respectively.

Our selling expenses for the three months ended March 31, 2016 and 2015 were both $1.0 million, which accounted for 26.6% and 17.4% of the total revenue in first quarter 2016 and 2015 respectively. Due to many adjustments in our selling processes under healthcare reform policies, despite the decrease in sales, we still need to maintain personnel and continue our sales activity to support the sales and collection of accounts receivable.

Our general and administrative expenses for the three months ended March 31, 2016 were $0.3 million, compared to $0.5 million in the three months ended March 31, 2015. General and administrative expenses accounted for 8.8% and 8.3% of our total revenues in first quarter 2016 and 2015, respectively.

The Company's bad debt expense was $0.6 million for the first quarter 2016, compared to a bad debt expense of $3.2 million in the first quarter 2015. The decrease was due to having majority of accounts receivable balance fully allowed in 2014 and 2015 under the Company's revised allowance policy as they were over 720 days old. 

Operating loss was $1.3 million in the first quarter 2016 compared to $3.8 million in the same period 2015. The main reason for the decrease in loss was lower bad debt expenses in the first quarter 2016.

Net loss for the first quarter 2016 was $1.6 million, or $(0.04) per basic and diluted share, compared to net loss of $4.1 million, or $(0.09) per basic and diluted share for the first quarter 2015. The reduction in net loss was mainly due to the decrease in bad debt expense, which was partially offset by the decreased revenue.

Financial Condition

As of March 31, 2016, the Company had cash and cash equivalents of $7.2 million compared to $6.5 million as of December 31, 2015. Year-over-year, working capital decreased to $11.1 million in March 31, 2016 from $12.2 million as of December 31, 2015; and the current ratio was 1.8 times as of March 31, 2016, decreased from 2.0 times as of December 31, 2015.

Our accounts receivable balance decreased to $4.8 million as of March 31, 2016 from $5.9 million as of December 31, 2015.

Net cash provided by operating activities was $1.3 million in the three months ended March 31, 2016 compared to ($2,239) for the three months ended March 31, 2015. This is mainly due to lower net loss and the outcome of the changes in our sales strategy: we enhanced the control of sales on credit, therefore improved the collection of accounts receivable and advances from customers. We also enhanced the control over accounts payable in this period.

Conference Call

The Company will hold a conference call at 8:30 am ET on May 17, 2016 to discuss the results of its first quarter 2016. Listeners may access the call by dialing 1-866-519-4004 or 65-671-350-90 for international callers, Conference ID # 5988683.  A replay of the call will be accessible through May 25, 2016 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 5988683.

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 a 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 http://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, which may include, but are not limited to, such factors as 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.

Contact:

China Pharma Holdings, Inc. Phone: +86-898-6681-1730 (China) Email: [email protected]

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SOURCE China Pharma Holdings, Inc.