China Sky One
Medical, Inc. ("China Sky One Medical" or "the Company") (Nasdaq: CSKI), a
leading fully integrated pharmaceutical company producing over-the-counter
drugs in the People's Republic of China ("PRC"), 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.
Fourth Quarter 2009 Highlights
-- Total revenues increased 15.0% year-over-year to $29.9 million
-- Gross profit rose 18.5% to $22.9 million
-- Operating income increased 1.8% to $9.1 million
-- Net income decreased 23.6% year-over-year to $5.3 million, or $0.32 per
diluted share
-- Excluding the effect of recording certain non-cash expense items; (i)
share-based compensation of $1.2 million and (ii) a registration rights
liability of $1.3 million (" the registration rights liability") due to
the Company's failure to cause a registration statement covering the
warrant shares to be declared effective as set forth in the
Registration Rights Agreement of the Company's January 2008 private
placement, our pro forma non-GAAP basis adjusted net income amounted to
$7.9 million, or $0.47 per diluted share, as compared to $6.9 million
or $0.45 per diluted share a year ago
-- Engaged a new sales agent to distribute the Company's Sumei Slim Patch
in the U.S.
-- Signed Guangdong Mediacy Kind Medical Devices Industry Service Company
as exclusive sales agent for AMI Diagnostic Kit and Human Urinary
Albumin Elisa Kit in Southeast Asia
-- Had 30 medicines included in the 2009 Edition of the National Basic
Medical Insurance Directory
-- Completed first phase of construction for new headquarters in Harbin
Song Bei New Development District, Harbin, China.
Full Year 2009 Highlights
-- Total revenues increased 41.7% to $130.1 million, in-line with
management guidance
-- Gross profit grew 41.8% to $98.4 million
-- Operating income rose 29.7% to $46.3 million
-- Net income increased 19.4% to $34.5 million, or $2.07 per diluted share
-- Excluding the effect of recording certain non-cash expense items: (i)
shared-based compensation and (ii) the registration rights liability;
the Company's pro forma non-GAAP basis adjusted net income increased
28.3% to $37.0 million, or $2.22 per diluted share
-- Received SFDA final approval for nine new drugs
-- Signed agreement with Taiwan Golden Biotechnology Corporation for the
development of new anti-cancer drug Antroquinonol, which was approved
by the U.S. FDA to enter into first stage clinical trials
"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