Biostar Pharmaceuticals, Inc. (Nasdaq: BSPM) ("Biostar" or "the Company"), Xianyang-based manufacturer of a leading PRC over-the-counter Hepatitis B medicine, Xin Aoxing Oleanolic Acid Capsules ("Xin Aoxing Capsules"), and a variety of pharmaceutical products, today announced financial results for the fourth quarter and full year ended December 31, 2010.
- 2010 revenue increased 50.4% to $80.2 million
- Aoxing sales increased 45.5% to $53.4 million in 2010
- 2010 gross profit increased 54.1% to $60.1 million; gross margin up 170 basis points to 74.9%
- 2010 cash flow from operations increased 126.4% to $12.8 million
- Company's rural distribution network surpasses 10,000 locations; Company focused on increasing sales and market penetration from these locations in 2011
SUMMARY FINANCIALS
Fourth Quarter 2010 Financial Results
Revenue for the fourth quarter of 2010 increased 65.7% to approximately $28.2 million compared to $17.1 million for the fourth quarter of 2009. Sales of Xin Aoxing Capsules, Biostar's flagship product, increased by 56.5% from the fourth quarter of 2009 to $18.6 million, with a gross margin of 87.0%. Xin Aoxing represented approximately two thirds of total fourth quarter 2010 revenues. The order rate for Xin Aoxing started to rebound at the end of the third quarter and continued to accelerate through the fourth quarter. Sales of Gan Wang Compound Paracetamol Capsules ("Gan Wang"), used to fight colds, were also strong, growing by 37.3% to $2.2 million. Sales of other products launched since the second quarter of 2010, including Tangning Capsule, Shengjing Capsule and Aoxing ointment, totaled $1.1 million in the fourth quarter. The Company continued its expansion into rural communities in China with products now being sold at over 10,000 locations. $5 million in revenues were generated through this sales channel during the fourth quarter, up 400% from the year ago period.
"We are very pleased to report solid operating progress for both the fourth quarter and full year, which was supported by robust revenue growth across several products. We implemented a broader marketing strategy for our flagship Xin Aoxing Capsule, complemented by our expansion into more retail locations in rural areas. This enabled us to achieve record sales and earnings for the year," commented Ronghua Wang, Chairman and Chief Executive Officer of Biostar. "We expect to have 13,000 rural locations by the end of 2011, up from approximately 10,000 at the end of 2010, and believe this sales channel will further drive incremental growth for the year."
Cost of goods sold for the three months ended December 31, 2010 was approximately $6.8 million, as compared to $4.5 million for the three months ended December 31, 2009. Gross profit for the fourth quarter of 2010 increased 72% to $21.5 million from $12.5 million in the year ago period, while gross margin increased 310 basis points to 76.2%.
Operating expenses for the three months ended December 31, 2010 were approximately $13.6 million, an increase of 46% compared to $9.3 million in the same period of 2009.
Operating income for the fourth quarter of 2010 totaled approximately $7.9 million, a 146% increase from $3.2 million reported for the fourth quarter of 2009. Operating margins were 27.9% and 18.7% for the fourth quarter of 2010 and 2009, respectively. Excluding non-cash equity compensation charge of $0.2 million, adjusted operating income for the fourth quarter of 2010 was $8.1 million with operation margins of 28.7%.
Net income was approximately $6.1 million for the fourth quarter of 2010, a 259% increase from the fourth quarter of 2009. Diluted earnings per share were $0.22 and 0.07 for the fourth quarter of 2010 and 2009, based upon 27.4 million and 24.3 million diluted common stocks outstanding, respectively. Adjusted Non-GAAP net income for the fourth quarter was $6.3 million, or $0.24 per diluted common share.
For the twelve months ended December 31, 2010, revenue increased approximately 50.4% to $80.2 million. Drug sales were up 37.9% to $73.5 million, including a 45.5% increase in Aoxing sales. Gross profit was approximately $60.1 million for the twelve months of 2010, representing an increase of 54.1% from the twelve months of 2009. Gross margins improved by 170 basis points to 74.9%.
Selling, general and administrative expenses increased approximately 64% to $32.3 million, representing 40% of sales compared to 37% of sales in 2009. The increase was a result of higher advertising expenses to support the Company's growth plans. Operating income was $23.6 million, representing an increase of 56.3% over the twelve months of 2009. Operating margins were 29.4% for the twelve months of 2010, compared to 28.3% for 2009.
Net income was $17.4 million for the twelve months ended December 31, 2010, an increase of approximately 65.7% from the same period in 2009. Fully diluted earnings per share were $0.63 and $0.32 for the twelve months of 2010 and 2009 based up on 27.4 million and 24.3 million shares, respectively. Adjusted Non-GAAP net income for the twelve months of 2010 was $18.1 million, or $0.66 per diluted common share. (Please see "About Non-GAAP Financial Measures" below.)
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $13.2 million on December 31, 2010, compared to $8.6 million on December 31, 2009. Accounts receivable balance was approximately $28.5 million on December 31, 2010, versus approximately $19.8 million on December 31, 2009. Days sales outstanding (DSO) for the twelve months of 2010 were at 130 days, compared to 134 days for the same period in 2009, in line with management's target range of 130 to 150 days. The Company had a current ratio of 5.7 to 1 and stockholders' equity of $60.5 million, with total assets of $68.1 million versus total liabilities of $7.6 million on December 31, 2010. Working capital on December 31, 2010 was $35.8 million, compared to $23.9 million in the year ago period.
For the full year 2010, the Company generated $12.8 million in cash from operations and spent $1.5 million on capital expenditures.
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