China Yongxin Pharmaceuticals second-quarter 2010 revenue increases 21.8 % to $11.16 million

China Yongxin Pharmaceuticals Inc. (OTC Bulletin Board: CYXN), a wholesale distributor and retailer of pharmaceuticals and health-related products in Jilin province in the northeastern region of China, today announced its financial results for the second quarter ending June 30, 2010.

Revenues for the second quarter of 2010 were $11.16 million, a 21.8 % increase from $9.16 million for the same quarter in the prior year.

Revenues from its wholesale segment were $7.62 million, an increase of 27.4% over $5.98 million in the same quarter of the prior year. Revenues from the retail segment were $3.5 million, an increase of 11.3% over $3.18 million in the same quarter last year. The increase in revenue was attributable to both retail and wholesale operations. In the retail segment, the Company added 7 new drug stores in the second quarter. In the wholesale segment, the Company added new accounts through a national competitive bidding process, which increased wholesale revenue.

Cost of goods sold for the second quarter of 2010 was $8.34 million, an increase of 29.5%, compared to $6.44 million for the second quarter of 2009. Gross profit for the second quarter of 2010 was $2.82 million compared to $2.72 million for the same period in 2009.

GAAP net income, however, decreased by 50.1% to $0.52 million from $1.0 million in the same quarter of the prior year due largely to two items that were unrelated to the operations of the Company: first, in the second quarter of 2009, the Company earned "other income" of approximately $0.7 million from sponsorship and promotional activities from suppliers, of which this sum was not earned in the current quarter; secondly, the Company realized a one-time gain of approximately $0.3 million related to the sale of a subsidiary that occurred in the second quarter of 2009 (and no such gain was recorded in the second quarter of 2010). Income from operations, which is before the inclusion of "other income" and gain on the disposal of subsidiaries (in addition to other line items) increased to $1.0 million in the current quarter from $0.8 million in the same quarter of the prior year.

Selling expenses for the second quarter of 2010 were $0.96 million, compared to $0.76 million for the second quarter of 2009. The increase in selling expenses was mainly attributable to expenses related to the opening of new retail drugstores during the three month period ended June 30, 2010.

General and administrative expenses for the second quarter of 2010 decreased to $0.84 million, compared to $1.37 million in the same period of 2009. This decrease was largely due to a decrease in bad debt expense from $320,000 for the three month period ended June 30, 2009 to $0 for the same period ended June 30, 2010.

As of June 30, 2010, the Company had approximately $3 million in cash and cash equivalents, other current assets of $35.8 million, current liabilities of $16.5 million and total liabilities of $16.7 million. Cash and cash equivalents increased by 85% from $1.62 million of cash and equivalents for the second quarter of 2009.

Mr. Yongxin Liu, Chairman and Chief Executive Officer of China Yongxin commented, "We are very confident that our plans to build an extensive network of state of the art retail stores will provide a path to continued growth. We are also beginning to establish an outreach program to enhance our distribution capabilities throughout Northeastern China. We plan to expand our reach throughout three of China's northeast region provinces, including the Jilin, Liaoning, and Heilongjiang provinces. We are currently one of a limited number of government-approved qualified distributors in Jilin province. We are continuing to expand our retail store count, having established ten new retail stores and three franchises during 2010, bringing our total store presence to 110 throughout Northeastern China."

Mr. Liu also added, "We continue to be well positioned to take advantage of increased government support for expanded access to modern health care services and products in China. In 2010, the government accelerated implementation of its reforms, extending benefits to rural areas. We are very confident that the Chinese government's efforts toward health care reform will continue to boost domestic spending on health-related products."