China Sky One Medical,Inc.
China Sky One Medical, Inc. Announces Fourth Quarter and Fiscal Year 2009 Results
The Companys record revenues in 2009 were primarily driven by positive contribution from the strategic acquisitions that we completed in 2008, heightened consumer brand awareness and expansion of our sales network
China Sky One Medical, Inc. today announced financial results for the fourth quarter and fiscal year ended December 31, 2009. The Company also announced its earnings guidance for full year 2010.
\"The Company\'s record revenues in 2009 were primarily driven by positive contribution from the strategic acquisitions that we completed in 2008, heightened consumer brand awareness and expansion of our sales network. Our full year net income was slightly below our expectations due to increased operating costs from several acquisitions in 2008 and our new corporate headquarters and other non-cash expense items as previously discussed,\" said Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc. \"Looking ahead, the Company plans to make significant investment in the development of high margin branded drugs to support long-term sustainable growth. With a growing distribution network and a growing pipeline of SFDA License for drug batch lots, China Sky One is well positioned to be a leading pharmaceutical company in China.\"
Fourth Quarter 2009 results
In the fourth quarter of 2009, China Sky One\'s total revenues increased 15.0% to $29.9 million comparing to $26.0 million in the same quarter last year. This increase was primarily attributable to the strong performance of the Company\'s sales network and the addition of direct territory managers and sales agents, as well as increased marketing and advertising activities. As of December 31, 2009, China Sky One had 1,491 sales and marketing staff. The head count included approximately 1,100 sales representatives stationed in pharmacies to educate consumers about the benefits of the Company\'s products and to drive end users\' buying decisions.
Sales of patch products were essentially flat year-over-year at $9.9 million or 33.2% of revenue in the fourth quarter of 2009. Sales of ointments were down modestly in the 2009 fourth quarter to $5.3 million, accounting for 17.8% of revenues, compared to $5.8 million or 22.3% of revenues in the year ago quarter. Sales of spray products increased by 56% to $4.0 million and accounted for 13.4% of revenues, versus $2.5 million or 9.7% of revenues a year ago. The increase in spray products was primarily due to increased sales of mouth sprays resulting from the outbreak of the H1N1 virus. Sales of diagnostic testing kits decreased to $0.8 million or 2.8% of revenues from $2.4 million or 9.1% of revenues a year ago. Sales of the Company\'s Other Product Category totaled $9.8 million or 32.8% of revenues, representing a 133.5% increase from $4.2 million sales and 16.2% of revenues in 2008. The higher sales in this category were mainly due to an increase in diversified products from the acquisitions of Heilongjiang Tianlong Pharmaceutical, Inc. and Peng Lai Jin Chuang Pharmaceutical Company in 2008.
Gross profit rose 18.5% to $22.9 million in the fourth quarter of 2009. Gross margin increased to 76.6%, compared to 74.4% in the fourth quarter of 2008, primarily reflecting the Company\'s better production cost control.
Operating expenses increased 32.9% to $13.8 million in the fourth quarter of 2009 comparing to the same period of 2008. The increase was principally due to higher general and administrative expenses associated with the non-cash stock compensation expenses and registration rights liability. Depreciation and amortization expenses increased 170% year-over-year to $0.9 million due to the increased amortization resulting from the Company\'s newly acquired proprietary technologies in 2008 as well as the acquired proprietary technologies during the fourth quarter of 2009.
Operating income was $9.1 million, representing an operating margin of 30.4%, as compared to $8.9 million, or 34.4% margin, a year ago.
During the fourth quarter of 2009, the Company recorded a $1.3 million non-cash registration rights liability. The Company recorded no such expense in the year ago period.
Provision for income taxes was $2.5 million in the fourth quarter of 2009, as compared to $2.1 million in the same period of last year.
Net income for the fourth quarter of 2009 was $5.3 million, compared to $6.9 million in the fourth quarter of 2008. Excluding the effect of recording certain non-cash expense items: (i) share-based compensation and (ii) the registration rights liability expenses; the Company\'s pro forma non-GAAP adjusted net income was $7.9 million, or $0.47, as compared to $6.9 million or $0.45 per diluted share.
Full Year 2009 Results
For the full year 2009, total revenues were $130.1 million, up 41.7% from $91.8 million in 2008. Of the 91 products commercialized by China Sky One Medical in 2009, patches, ointments, sprays and diagnostic kits accounted for 31.3%, 22.2%, 14.2% and 7.9% of total revenues respectively.
The Company\'s top 10 products, including Sumei Slim Patch, Hemorrhoids Ointment, Compound Camphor Cream, Stomatitis Spray, AMI Diagnostic Kit and Naftopidil Dispersible Tablet, together accounted for approximately 68% of total revenues. Sales from export were $10.1 million, representing 7.8% of total revenues.
Gross profit was $98.4 million, an increase of 41.8% from $69.4 million in 2008. Gross margin was little changed at 75.7% and 75.6% in 2009 and 2008, respectively.
Operating income was $46.3 million, up 29.7% from $35.7 million in 2008. Operating margin was 35.6% in 2009 versus 38.8% in 2008.
Net income for 2009 rose 19.4% to $34.5 million, or a net profit margin of 26.5%, from $28.9 million or a 31.4% net margin. The decrease in net margin was primarily attributable to higher selling and R&D expenses incurred in 2009. Excluding the effect of recording certain expense items: (i) share-based compensation and (ii) the registration rights liability; the Company\'s pro forma non-GAAP basis adjusted net income was $37.0 million, or $2.22 per diluted share, as compared to $29.2 million or $1.89 per diluted share.
As of December 31, 2009, China Sky One had $52.8 million in cash and equivalents, with a quick ratio of 7.9. Average Days Sales Outstanding increase to 51.6 days from 45.5 days principally due to the increased average accounts receivable balances on September 30 and December 31 and less increase of average daily sales during the fourth quarter of 2009 comparing to the same period in 2008. Working capital was approximately $67.0 million. Stockholders\' equity at December 31, 2009, was $131.0 million, a 38.0% increase over the $94.9 million recorded at December 31, 2008.
The Company generated $33.4 million in net cash flow from operating activities in 2009, up from $27.5 million in 2008.