China Nuokang Bio-Pharmaceutical Inc. Reports Third Quarter 2012 Financial Results
Nov 25, 2012 (Menafn - GlobeNewswire via COMTEX) --
3Q12 Revenue was RMB75.4 Million (12.0 Million)
3Q12 Net Income was RMB2.5 Million (0.4 Million)
3Q12 Non-GAAP Adjusted Net Income was RMB11.6 Million (1.8 Million)
Live conference call to be held Monday, November 26, 2012 at 8:00 am ET
BEIJING, Nov. 25, 2012 (GLOBE NEWSWIRE) -- China Nuokang Bio-Pharmaceutical Inc. NKBP ("Nuokang" or the "Company"), a leading China-based biopharmaceutical company focused on the research, development, manufacture, marketing and sales of hospital-based medical products, today announced its unaudited financial results for the third quarter of 2012.
Mr. Baizhong Xue, the Company's Chairman and Chief Executive Officer, stated, "We are pleased to report a solid third quarter that has demonstrated steady sales performance and continuing progress with non-GAAP profitability. Revenue of RMB69.9 million from Baquting, our flagship product, was largely in line with our target. Sales volume of Baquting has consistently increased during the first three quarters of this year. We are encouraged by overall longitudinal improvements that the Company has made so far for 2012."
Chairman Xue continued, "We recently celebrated the 15th anniversary of Nuokang. During the past decade and a half, our management and staff have striven to make Nuokang one of China's leading biopharmaceutical companies. We are extremely grateful for the support of our investors and very proud of the market-leading position we have achieved in the hemocoagulase sector. We also see tremendous potential with our increasingly diversified product portfolio. We remain committed to investing in R&D to support innovation of novel products as well as improvements to our proven product lines."
Third Quarter 2012 Financial Highlights
--Revenue was RMB75.4 million (12.0 million)1, compared to RMB87.2
million in the prior year period;
--Baquting revenue was RMB69.9 million (11.1 million), compared to
RMB83.9 million in the prior year period;
--Gross profit was RMB66.4 million (10.6 million), compared to RMB75.5
million in the prior year period;
--Gross margin was 88.0%, compared to 86.6% in the prior year period;
--Operating income was RMB5.1 million (0.8 million), compared to RMB16.5
million in the prior year period;
--Net income was RMB2.5 million (0.4 million), or RMB0.13 (0.02) per
diluted ADS2, compared to RMB7.6 million, or RMB0.39 per diluted ADS, in
the prior year period; and
--Non-GAAP adjusted net income was RMB11.6 million (1.8 million),
compared to RMB13.1 million in the prior year period.
Third Quarter 2012 Financial Performance
Revenue for the third quarter of 2012 was RMB75.4 million (12.0 million), compared to RMB87.2 million in the third quarter of 2011. Revenue from Baquting decreased to RMB69.9 million (11.1 million) in the third quarter of 2012 from RMB83.9 million in the third quarter of 2011 but was in line sequentially with RMB68.9 million in the second quarter of 2012. In terms of volume, Baquting sales saw both annual and sequential increases during the reporting period. The year-on-year decrease in Baquting revenue was primarily attributable to changes in the Company's sales channel mix during the period. Baquting revenue as a percentage of total revenue was 92.7% in the third quarter of 2012, compared to 96.1% in the third quarter of 2011. Revenue from other products was RMB5.5 million (0.9 million) in the third quarter of 2012, compared to RMB3.3 million in the third quarter of 2011, mainly attributable to increased Kaitong sales.
Gross profit for the third quarter of 2012 was RMB66.4 million (10.6 million), compared to RMB75.5 million for the third quarter of 2011. Gross margin for the third quarter of 2012 was 88.0%, an increase from 86.6% in the third quarter of 2011.
Operating income for the third quarter of 2012 was RMB5.1 million (0.8 million), compared to RMB16.5 million for the third quarter of 2011. The year-over-year decrease was primarily attributable to expenses relating to the Company's going-private transaction.
Research and development expenses for the third quarter of 2012 were RMB4.1 million (0.7 million), compared to RMB4.6 million for the third quarter of 2011. Research and development expenses as a percentage of revenue was 5.5% for the third quarter of 2012, which was largely in line with 5.3% for the third quarter of 2011 and within the Company's expected range.
Selling, marketing and distribution expenses for the third quarter of 2012 were RMB37.6 million (6.0 million), compared to RMB41.6 million for the third quarter of 2011. Selling, marketing and distribution expenses as a percentage of revenue for the third quarter of 2012 was 49.9%, which was largely in line with 47.7% in the third quarter of 2011. Selling, marketing and distribution expenses for the third quarter of 2012 primarily consisted of the Company's investment in sales and marketing for Baquting as well as the Company's continued investment in the commercialization of Kaitong and ALA.
General and administrative expenses for the third quarter of 2012 were RMB19.5 million (3.1 million), compared to RMB12.8 million for the third quarter of 2011. The increase in general and administrative expenses was primarily attributable to the Company's privatization expenses amounting to RMB7.6 million (1.2 million).
Provision for income taxes for the third quarter of 2012 was RMB3.6 million (0.6 million), compared to RMB7.1 million for the third quarter of 2011. The Company's effective tax rate was 58.9% during the third quarter of 2012, compared to 48.3% during the third quarter of 2011, primarily as a result of more non-deductible expenses such as privatization expenses incurred in this period.
Net income for the third quarter of 2012 was RMB2.5 million (0.4 million), or RMB0.13 (0.02) per diluted ADS, compared to RMB7.6 million, or RMB0.39 per diluted ADS, for the third quarter of 2011.
Non-GAAP adjusted net income for the third quarter of 2012, excluding foreign exchange losses, ESOP related charges, ASC 740 adjustment and privatization expenses, was RMB11.6 million (1.8 million), compared to RMB13.1 million for the third quarter of 2011.
For the third quarter of 2012, the Company had approximately 154.4 million weighted average diluted ordinary shares outstanding, or 19.3 million weighted average diluted ADSs.
As of September 30, 2012, the Company had cash and cash equivalents and other short-term investments of RMB185.9 million (29.8 million), compared to RMB179.4 million as of December 31, 2011.
Nine Months Ended September 30, 2012 Financial Performance
Revenue decreased 9.8% to RMB208.6 million (33.2 million) for the nine months ended September 30, 2012 from RMB231.3 million for the nine months ended September 30, 2011. During this same time period, gross profit decreased 9.8% to RMB182.7 million (29.1 million) from RMB202.7 million and operating income decreased by 65.7% to RMB19.1 million (3.0 million) from RMB55.5 million.
Net income decreased 58.0% to RMB13.7 million (2.2 million), or RMB0.09 (0.01) per diluted ADS from RMB32.7 million, or RMB0.21 per diluted ADS, for the nine months ended September 30, 2011. Weighted average number of diluted ordinary shares outstanding was approximately 154.2 million for the nine months of 2012, or 19.3 million ADSs.
Non-GAAP Measures
Adjusted net income is presented to better illustrate the Company's ongoing and core operational results. Adjusted net income is defined as net income excluding foreign exchange losses, ESOP related charges, ASC 740 adjustment and the Company's privatization expenses. Adjusted net income may be calculated differently, and therefore the Company's adjusted net income may not be comparable to similarly titled measures of other companies. Adjusted net income is not a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from adjusted net income are significant and necessary components to the operations of the Company's business, and, therefore, adjusted net income should only be used as a supplemental measure of operating performance.
Conference Call
The Company will hold a conference call at 8:00 a.m. ET on Monday, November 26, 2012 to discuss the third quarter 2012 financial results. Listeners may access the call by dialing:
United States toll free:1-855-500-8701
China toll free:400-1200654
Hong Kong toll free:800-903737
United Kingdom toll free:0800-0159724
International:65-6723-9385
Conference ID:64309501
A live webcast and replay of the earnings call will also be available through the Company's website www.nkbp.com.
About China Nuokang Bio-Pharmaceutical Inc.
China Nuokang Bio-Pharmaceutical Inc. NKBP is a leading biopharmaceutical company in China focused on the research, development, manufacture, marketing and sales of hospital-based medical products. The Company provides a diversified portfolio of products across more than 4,200 hospitals in China. Nuokang's principal products include Baquting(R), China's leading hemocoagulase product by market share, Kaitong(R), a lipid emulsion alprostadil product for the treatment of peripheral vascular diseases, cardiocerebral microcirculation disorders and post-surgery thrombosis; and alpha lipoic acid capsules, or ALA, an antioxidant product that addresses diabetic neuropathy. The Company's product pipeline includes product candidates under development in hematological, cardiovascular and cerebrovascular disease diagnosis, treatment and prevention. Please visit www.nkbp.com for more information.
Safe-Harbor Statement
This press release contains statements of a forward-looking nature. These statements, including the management quotations and the statements relating to the Company's new product development, are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. These forward-looking statements may include, but are not limited to, statements containing words such as "may," "could," "would," "plan," "anticipate," "believe," "estimate," "predict," "potential," "expects," "intends" and "future" or similar expressions. Among other things, the statements relating to the Company's expected progress on the product portfolio and future financial results may contain forward-looking statements. These forward-looking statements speak only as of the date of this press release and are subject to change at any time. These forward-looking statements are based upon management's current expectations and are subject to a number of risks, uncertainties and contingencies, many of which are beyond the Company's control that may cause actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F.
1This announcement contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars as of and for the quarter ended September 30, 2012, were made at the noon buying rate of RMB6.2848 to USD1.00 on September 28, 2012 in the City of New York for cable transfers in Renminbi per US dollar as certified for customs purposes by the Federal Reserve Bank of New York. China Nuokang Bio-Pharmaceutical Inc. makes no representation that the Renminbi or US dollar amounts referred to in this press release could have been or could be converted into US dollars or Renminbi, at any particular rate or at all.
2The Company's American Depositary Shares, which are traded on the NASDAQ, each of which represents eight ordinary shares of the Company.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED SEPTEMBER 30, 2011 AND 2012
Nine Months
3Q 20113Q 20122011Nine Months 2012
----------------------------------------------------------------------------
(RMB'000)(RMB'000)(US'000)(RMB'000)(RMB'000)(US'000)
Net revenue87,24775,39711,997231,253208,58733,189
Cost of revenue(11,716)(9,019)(1,435)(28,602)(25,857)(4,114)
------------------------------------------------------------------------
Gross profit75,53166,37810,562202,651182,73029,075
------------------------------------------------------------------------
Operating expenses
Research and
development costs(4,605)(4,136)(658)(12,102)(11,537)(1,836)
Selling, marketing and
distribution expenses(41,620)(37,628)(5,987)(99,407)(105,219)(16,742)
General and
administrative
expenses(12,787)(19,514)(3,105)(35,657)(46,918)(7,465)
------------------------------------------------------------------------
Total operating
expenses(59,012)(61,278)(9,750)(147,166)(163,674)(26,043)
------------------------------------------------------------------------
Operating profit16,5195,10081255,48519,0563,032
Interest income6061,1841881,2182,789444
Interest expense(831)(236)(38)(2,970)(710)(113)
Foreign exchange
(losses) gain(1,579)10016(4,475)36258
Other loss, net(78)(28)(4)(175)(64)(10)
------------------------------------------------------------------------
Income before income
tax expense14,6376,12097449,08321,4333,411
Income tax expense(7,069)(3,605)(574)(16,472)(7,727)(1,229)
------------------------------------------------------------------------
Net income7,5682,51540032,61113,7062,182
------------------------------------------------------------------------
Net (income) loss
attributable to
non-controlling
interest45(2)--105(3)--
Net income attributed
to ordinary shares7,6132,51340032,71613,7032,182
========================================================================
Net income per share
Basic0.050.02--0.210.090.01
Diluted0.050.02--0.210.090.01
Shares used in net income pershare
computation
Basic156,359,522153,681,734153,681,734156,350,951153,560,668153,560,668
Diluted157,631,522154,390,734154,390,734157,231,116154,246,544154,246,544
Net income per ADS
Basic0.390.130.021.670.710.11
Diluted0.390.130.021.660.710.11
Shares used in net income per ADS
computation
Basic19,544,94019,210,21719,210,21719,543,86919,195,08419,195,084
Diluted19,703,94019,298,84219,298,84219,653,89019,280,81819,280,818
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2011 and SEPTEMBER 30, 2012
DecemberSeptember
31,30,
-----------------------------
20112012
-----------------------------
(RMB'000)(RMB'000)(US'000)
ASSETS
Current assets:
Cash and cash equivalents179,385120,21219,240
Restricted cash5,410----
Short-term investments--65,69010,513
Accounts receivable (net
of allowance for doubtful
accounts of RMB393,860
and RMB393,860
(US63,034) as of
December 31, 2011 and
September 30, 2012,
respectively)60,76752,7768,446
Bills receivable109,25699,01315,846
Inventories15,84620,1573,226
Prepayments18,02022,0033,521
Other receivables7,2035,229837
Prepaid income tax8,17914,8382,375
Deferred tax assets1,04044671
---------------------------
Total current assets405,106400,36464,075
---------------------------
Non-current assets:
Property, plant and
equipment, net214,171230,47836,887
Land use rights, net35,12134,6115,539
Intangible assets, net21,21219,4293,109
Other Investments3,4143,414546
Prepayments15,88431,6405,064
Deferred tax assets7,4067,3261,172
---------------------------
Total non-current assets297,208326,89852,317
---------------------------
TOTAL ASSETS702,314727,262116,392
===========================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank loans7,0007,0001,120
Accounts payable1,5013,031485
Accrued expenses and other
payables34,86338,7996,209
Income tax payable3,3122,968475
Unrecognized tax benefits2,6565,763922
---------------------------
Total current liabilities49,33257,5619,211
---------------------------
Non-current liabilities:
Deferred tax liabilities2,0362,336374
Deferred government grants23,18526,6974,273
Long-term payable12,93413,4942,160
---------------------------
Total non-current
liabilities38,15542,5276,807
---------------------------
Commitments and
contingencies------
---------------------------
Shareholders' equity:
Ordinary shares (par value
US0.0005 per share,
474,200,000 shares
authorized and
157,906,470 shares issued
and outstanding as of
December 31, 2011;
474,200,000 shares
authorized and
157,330,734 shares issued
and outstanding as of
September 30, 2012)58158093
Additional paid-in capital469,107469,29775,107
Retained earnings143,180155,33524,860
---------------------------
Total shareholders'
equity612,868625,212100,060
---------------------------
Non-controlling interests1,9591,962314
---------------------------
TOTAL EQUITY614,827627,174100,374
---------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY702,314727,262116,392
===========================
NKBP
Non GAAP Net Income
Nine
Months
2011Nine Months 20123Q 20113Q 2012
------------------------------------------------------------
(RMB'000)(RMB'000)(USD'000)(RMB'000)(RMB'000)(USD'000)
GAAP Net Income32,71613,7032,1807,6132,513400
Adjusting
Foreign Exchang
Loss/(Gain)4,475(362)(58)1,579(100)(16)
ESOP5,972191303,86800
ASC 740 adjustment03,10749401,607256
Privatization expense010,9791,74707,5841,207
Non GAAP Net Income43,16327,6184,39413,06011,6041,846
--------------------------------------------------------
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: China Nuokang Bio-Pharmaceutical Inc.
CONTACT:China Nuokang Bio-Pharmaceutical Inc.
Mr. Steven Duan
Vice President of Investor Relations
Email: dsz@nkbp.com
ICR, Inc.
Mr. Rob Koepp
Tel: (86) 10-6583-7516 or (646) 405-5180
Email: robert.koepp@icrinc.com
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