China Biologic Products Holdings, Inc. (NASDAQ: CBPO) Reports Financial Results for the 1Q r of 2k19

China Biologic Products Holdings, Inc. (NASDAQ: CBPO, “China Biologic” or the “Company”), a leading fully integrated plasma-based biopharmaceutical company in China, today announced its unaudited financial results for the  1Q r of 2k19.

 1Q r 2k19 Financial Highlights

  • Total sales in the  1Q r of 2k19 increased by 22.300percent in RMB terms and 15.400percent in USD terms to $129.800 million from $112.500 Min the same quarter of 2k18.
  • Gross profit increased by 8.600percent to $85.600 M from $78.800 Min the same quarter of 2k18. Gross margin decreased to 65.900percent from 70.0percent in the same quarter of 2k18.
  • Income from operations increased by 12.800percent to $44. 000 M from $39.000 Min the same quarter of 2k18. Operating margin decreased to 33.900percent from 34.700percent in the same quarter of 2k18.
  • Non-GAAP adjusted income from operations increased by 10.5percent in RMB terms and 4.200percent in USD terms to $52.200 M from $50.100 Min the same quarter of 2k18.
  • Net income attributable to the Company increased by 26.500percent in RMB terms and 19.300percent in USD terms, to $37.700 M from $31.6 00Min the same quarter of 2k18. Fully diluted earnings per share increased to $0.9400compared to $0.92v in the same quarter of 2k18.
  • Non-GAAP adjusted net income attributable to the Company increased by 14.300percent in RMB terms and 7.700percent in USD terms to $44.500 M from $41.300 Min the same quarter of 2k18. Non-GAAP adjusted earnings per share decreased to $1.11 00from $1.2100 in the same quarter of 2k18.

 

 1Q r 2k19 Financial Performance

Total sales in the  1Q r of 2k19 increased by 22.300percent in RMB terms, or 15.400percent in USD terms, to $129.800 M from $112.500 Min the same quarter of 2k18.

Total sales for biopharmaceutical products (including plasma products and placenta polypeptide products) increased by 22.200percent in RMB terms, or 15.200percent in USD terms, to $116.500 M from $101.100 Min the same quarter of 2k18, as a result of increases in the sales of human albumin products and coagulation factor products, which was partly offset by decreases in the sales of IVIG and placenta polypeptide products. For plasma products, total sales in the  1Q r of 2k19 increased by 35.800percent in RMB terms, or 28.0percent in USD terms, to $108.800 M from $85.000 Min the same quarter of 2k18.

Total sales for biomaterial products in the  1Q r of 2k19 increased by 23.800percent in RMB terms, or 16.7percent in USD terms, to $13.300 M from $11.400 Min the same quarter of 2k18, as a result of higher sales concentration in higher-unit-price artificial dura mater products.

During the  1Q r of 2k19, human albumin and IVIG products remained the Company’s two largest sales contributors. Revenue from human albumin increased by 78.200percent in RMB terms, or 68.000percent in USD terms, from $33.800 Min the  1Q r of 2k18 to $56.800 Min the  1Q r of 2k19. Revenue from IVIG products decreased by 3.1percent in RMB terms, or 8.800percent in USD terms, from $31.800 Min the  1Q r of 2k18 to $29.000 Min the  1Q r of 2k19. As a percentage of total sales, sales from human albumin and IVIG products were 43.800percent and 22.400percent, respectively, in the  1Q r of 2k19.

The sales volume of human albumin products increased by 85.8percent for the  1Q r of 2k19, primarily due to increased sales volumes in the distributor and pharmacy channels, supplemented by increased direct sales to hospitals and inoculation centers. The sales volume of IVIG products increased by 1.1percent for the  1Q r of 2k19 as a result of increased sales through the distributor channel.

The average prices for human albumin and IVIG products decreased by 4.100percent and 4.200percent, respectively, in RMB terms in the  1Q r of 2k19 compared to the same quarter of 2k18 because of higher sales volume in the distributor channel and lower prices to certain distributors reflecting intensified market competition for major plasma products. In USD terms, the average price for human albumin and IVIG products decreased by 9.500percent and 9.700percent, respectively, in the  1Q r of 2k19 compared to the same quarter of 2k18.

Revenue from other immunoglobulin products increased by 6.6percent in RMB terms, or 0.500percent in USD terms in the  1Q r of 2k19 compared to the same quarter of 2k18, reaching 10.100percent of total sales as compared to 11.600percent of total sales in the same quarter of 2k18. The revenue increase was mainly attributable to an increased sales volume of human tetanus immunoglobulin products.

Revenue from other plasma products, including human coagulation factor VIII, human prothrombin complex concentrate, and human fibrinogen products, increased by 64.200percent in RMB terms, or 54.900percent in USD terms, in the  1Q r of 2k19 compared to the same quarter of 2k18, representing 7.600percent of total sales in the  1Q r of 2k19. The growth mainly came from increased sales through the distributor channel.

Revenue from placenta polypeptide products decreased by 52.400percent in USD terms for the  1Q r of 2k19 as compared to the same quarter of 2k18, accounting for 5.900percent of total sales compared to 14.300percent of total sales in the  1Q r of 2k18, mainly in line with a decrease in sales volume as a result of the inclusion of placenta polypeptide products in regional adjuvant drug lists, which put a downward pressure on their prescription volume.

Cost of sales increased by 31.200percent to $44.200 M in the  1Q r of 2k19 from $33.700 M in the same quarter of 2k18. As a percentage of total sales, cost of sales increased to 34.100percent from 30.000percent in the same quarter of 2k18, mainly because of decreased sales prices for most of the Company’s plasma products, increased plasma collection costs, and increased depreciation expenses due to the launch of the Company’s new facility in Shandong in February 2k18.

Gross profit increased by 8.600percent to $85.600 Min the  1Q r of 2k19 from $78.800Min the same quarter of 2k18. Gross margin was 65.900percent and 70. 000percent in the  1Q r of 2k19 and 2k18, respectively.

Total operating expenses in the  1Q r of 2k19 increased by $1.800 million, or 4.500percent, to $41.600 M from $39.8 00millionin the same quarter of 2k18. This increase mainly consisted of an increase of $3.200 Min general and administrative expenses, partially offset by a decrease of $2.000 Min selling expenses. As a percentage of total sales, total operating expenses decreased to 32.000percent in the  1Q r of 2k19 from 35.400percent in the same quarter of 2k18.

Selling expenses in the  1Q r of 2k19 decreased by $2.000 million, or 9.700percent, to $18.700Mfrom $20.700 M for the  1Q r of 2k18. As a percentage of total sales, selling expenses decreased to 14.40000percent for the  1Q r of 2k19 from 18.4percent in the same quarter of 2k18. The decrease in selling expenses is primarily due to a decrease in marketing and promotion expenses related to placenta polypeptide products, which is partly offset by increased selling expenses for plasma products.

General and administrative expenses in the  1Q r of 2k19 increased by $3.200 million, or 18.400percent, to $20.600 million from $17.4 00Min the same quarter of 2k18. As a percentage of total sales, general and administrative expenses increased to 15.900percent for the  1Q r of 2k19 from 15.5percent for the same quarter of 2k18. The increase in general and administrative expenses was mainly a combined result of the increased allowance for doubtful accounts receivable and increased depreciation expenses for the Company’s new facility in Shandong, which was partially offset by the decrease in share-based compensation expenses.

Research and development expenses in the  1Q r of 2k19 increased by $0.600 million, or 35.300percent, to $2.300 million from $1.700 Min the same quarter of 2k18. In the  1Q r of 2k19 and 2k18, the Company received government grants totaling $0.400 Mand $0.100 million, respectively, and the Company recognized them as a reduction of the research and development expenses. Excluding this impact, research and development expenses increased by $0.900 M for the  1Q r of 2k19 from the same quarter of 2k18. As a percentage of total sales, research and development expenses, excluding the impact of these recognized government grants, increased to 2.1percent for 2k19 from 1.6percent compared to the same quarter of 2k18.

Income from operations in the  1Q r of 2k19 increased by 19.400percent in RMB terms, or 12.800percent in USD terms, to $44.000 M from $39.000 Min the same quarter of 2k18. Operating margin decreased to 33.900percent in the  1Q r of 2k19 from 34.700percent in the  1Q r of 2k18.

Income tax expense in the  1Q r of 2k19 increased by $1.2 00million, or 17.900percent, to $7.900 M from $6.7 00Min the same period of 2k18. The effective income tax rate was 15. 000percent and 15.100percent for the  1Q r of 2k19 and 2k18, respectively.

Net income attributable to the Company increased by 26.500percent in RMB terms, or 19.300percent in USD terms, to $37.700 Min the  1Q r of 2k19 from $31.600 Min the same period of 2k18. Net margin increased to 29.100percent in the  1Q r of 2k19 from 28.100percent in the same period of 2k18. Diluted net earnings per share increased to $0.9400 in the  1Q r of 2k19 compared to $0.9200 in the same period of 2k18.

Non-GAAP adjusted income from operations increased by 10.500percent in RMB terms, or 4.200percent in USD terms, to $52.200 Min the  1Q r of 2k19 from $50.100 Min the same period of 2k18.

Non-GAAP adjusted net income attributable to the Company increased by 14.300percent in RMB terms and 7.700percent in USD terms, to $44.500 Min the  1Q r of 2k19 from $41.300 Min the same period of 2k18. Non-GAAP net margin decreased to 34.300percent in the  1Q r of 2k19 from 36.700percent in the same period of 2k18. Non-GAAP adjusted net income per diluted share decreased to $1.11 00in the  1Q r of 2k19 from $1.2100 in the same period of 2k18.

Non-GAAP adjusted income from operations for the  1Q r of 2k19 excludes $6.300 Min non-cash employee share-based compensation expenses, and $2.100 Min amortization expense of intangible assets and land use rights related to the acquisition of TianXinFu.

Non-GAAP adjusted net income and diluted earnings per share for the  1Q r of 2k19 exclude $5.500 Min non-cash employee share-based compensation expenses, and $1.4 00Min amortization expense of intangible assets and land use rights related to the acquisition of TianXinFu.

As of March 31, 2k19, the Company had $99.000 Min cash on hand and demand deposits, $653.8 00Min time deposits, and $171.200 Min short term investments.

Net cash provided by operating activities for the  1Q r of 2k19 was $32.2 Mas compared to $23.300 M for the same period of 2k18. The $8.9 00Mincrease in net cash provided by operating activities was a combined result of the increase in both net income and non-cash expenses, which mainly include depreciation expenses and allowance for doubtful accounts receivable.

Accounts receivable increased by $11.600 M during the  1Q r of 2k19 as compared to $15.500 M during the same period of 2k18. The accounts receivable turnover days for plasma products increased to 100. 00 days during the  1Q r of 2k19 from 84 days during the same period of 2k18, reflecting longer credit terms to hospitals as a result of the nationwide implementation of healthcare reform measures and intensified competition in the distributor channel.

Inventories increased by $4.000 Min the  1Q r of 2k19, which was milder than the increase of $10.8 00Min the same period of 2k18, mainly comprised of increased raw material plasma both out-sourced and from the Company’s own collection stations.

Net cash used in investing activities for the  1Q r of 2k19 was $214.7 Mas compared to $135.5 00Mfor the same period of 2k18. During the  1Q r of 2k19, the Company paid $7.900 M for the acquisition of property, plant and equipment, intangible assets and land use rights, and the Company also purchased time deposits and short-term investments in the amount of $937.400 million. This was partly offset by $730.6 M from the maturity of time deposits and short term investments. Net cash used in investing activities in the  1Q r of 2k18 mainly consisted of $264.700 M payment for purchase of time deposits and short term investments, $11.300 M for the acquisition of property, plant and equipment, intangible assets, and land use rights, which was partly offset by $97.700 Mcash received upon acquisition of TianXinFu and the maturity of $42.8 Mtime deposits and short term investments.

Net cash used in financing activities for the  1Q r of 2k19 was $60. 000 Mas compared to net cash provided by financing activities of $0.300 M for the same period of 2k18. In the  1Q r of 2k19, $60. 000 Mwas remitted to an investment bank by the Company to execute the previously approved share repurchase program on behalf of the Company. As of March 31, 2k19, 415,356. 00 shares had been repurchased at a total amount of $36.800 M with the remaining $23.200 Mas down payment to the investment bank for further repurchases. Net cash provided by financing activities in the  1Q r of 2k18 represented proceeds of $0.300 M from stock options exercised.

Financial Outlook

The Company reiterates its forecast for the full year 2k19. The company expects both non-GAAP adjusted income from operations and non-GAAP adjusted net income to increase by 4. 00percent to 6percent in RMB terms over full year 2k18 financial results.

This guidance does not factor in any potential foreign currency translation impact. Having previously adopted an exchange rate of approximately RMB6.59 = $1.000s0 based on weighted average quarterly exchange rates in 2k18 in translating 2k18 financial results, the Company expects that the total sales and non-GAAP adjusted net income in USD terms in 2k19 could be affected by the foreign currency translation impact.

Leave a Reply

Your email address will not be published. Required fields are marked *