LAIYANG, China, May 18 /PRNewswire-Asia-FirstCall/ -- Jiangbo Pharmaceuticals, Inc. (BULLETIN BOARD: JGBO) ('Jiangbo' or the 'Company'), a U.S. pharmaceutical company with its principal operations in the People's Republic of China, today announced its financial results for the third quarter ended March 31, 2009 of its fiscal year 2009.
Third Quarter of Fiscal Year 2009 Highlights -- Total revenue, which reflects newly associated expense restructuring, was $25.7 million, compared to $28.1 million in the corresponding quarter of 2008 -- Gross profit was $18.9 million, compared to $21.8 million in the corresponding quarter of 2008, and gross margin was 73.4% compared to 77.4% in the corresponding quarter of 2008 -- Operating income was $13.3 million, a 53.6% increase from $8.7 million for the three months ended March 31, 2008 -- Net income was $8.9 million, or $0.44 per fully diluted share, up from $4.5 million, or $0.46 per fully diluted share, for the three months ended March 31, 2008 -- Non-GAAP adjusted net income was $10.0 million, or $0.97 per weighted average share for the three months ended March 31, 2009, up 66.5% from non-GAAP adjusted net income of $6.0 million, or $0.61 per weighted average number of shares, for the quarter ended March 31, 2008 -- Acquired Shandong Hongrui Pharmaceutical Factory ("Hongrui") for approximately $11.2 million consisting of RMB58.6 million in cash (approximately $8.6 million) and 643,651 shares of Jiangbo's common stock amounting to approximately $2.6 million -- Obtained the legal rights to manufacture and distribute Hongrui's 22 Traditional Chinese Medicines -- Restructured its sales network to distribute products through 28 large regional distributors -- Changed the corporate name from Genesis Pharmaceuticals Enterprises, Inc. to 'Jiangbo Pharmaceuticals, Inc.' and its stock symbol from 'GNPH' to 'JGBO'. -- Launched a new website: http://www.jiangbopharma.com/
'Jiangbo had strong financial performance in the third quarter of our fiscal year 2009. Significant increases in sales of Radix Isatidis Dispersible Tablets and Baobaole Chewable Tablets, both of which are Traditional Chinese Medicines, contributed to revenue and operating income growth,' said Mr. Wubo Cao, Chairman and Chief Executive Officer of Jiangbo.
Third Quarter of Fiscal Year 2009 Results
Total revenue for the three months ended March 31, 2009 was $25.7 million, compared to $28.1 million for the three months ended March 31, 2008.
In January 2009, Jiangbo restructured its distribution and sales system to concentrate on using 28 large independent regional distributors. The independent distributors agreed to take on higher direct marketing and sales expenses if they received lower unit prices for the Company's products. The Company lowered its per unit prices for its three major products to the independent distributors. Jiangbo's new strategy is to use independent distributors for the distribution and sale of its three major products in order to gain access to their knowledge of and access to specific local markets.
The Company lowered its unit prices charged to independent distributors by an average of 26.0% for Clarithromycin Sustained-released tablets, Itopride Hydrochloride granules and Baobaole chewable tablets. The decrease in revenue from lower prices for these three major products was partially offset by an increase in sales revenue from Radix Isatidis Dispersible tablets, a new product launched in December 2008, and other Traditional Chinese Medicines acquired from Hongrui in January 2009.
Sales volume for Clarithromycin Sustained-released tablets and Baobaole chewable tables was higher in the three months ended March 31, 2009 than in the three months ended March 31, 2008. Clarithromycin Sustained-released tablets, Itopride hydrochloride granules and Baobaole chewable accounted for approximately 88.6 % of the total revenue in the three months ended March 31, 2009. Sales volume for Radix Isatidis Dispersible tablets grew throughout the three months ended March 31, 2009.
Gross profit in the third quarter of fiscal year 2009 was $18.9 million, compared to $21.8 million in the prior year's corresponding period. Gross margin was 73.4%, compared to 77.4% in the prior year's corresponding period because of the impact of lower unit sale prices for the Company's three major products.
Research and development costs were $1.1 million for the three months ended March 31, 2009, compared to $1.0 million for the three months ended March 31, 2008.
Selling, general and administrative expenses were $4.5 million for the three months ended March 31, 2009, a decrease of 63.1% from $12.1 million in the three months ended March 31, 2008. Salaries, wages and related benefits decreased by 73.1% from $7.5 million for the three months ended March 31, 2008 to $2.0 million for the three months ended March 31, 2009 primarily because of the significant decrease in commissions paid to the Company's sales representatives. Overall sales commissions declined as a result of cost savings associated with the increased use of 28 independent distributors.
Income from operations was $13.3 million for the three months ended March 31, 2009, a 53.6% increase from $8.7 million for the three months ended March 31, 2008.
Other expense, comprised primarily of interest earned, interest owed and amortized debt discount, was $1.1 million compared to $2.0 million for the three months ended March 31, 2008.
Net income for the three months ended March 31, 2009 was $8.9 million, $0.44 diluted earnings per share, compared to $4.5 million, and $0.46 diluted earnings per share, for the three months ended March 31, 2008.
Excluding a loss from discontinued operations of $103,008, a gain on trading securities of $204,134, and amortization of debt discount and issuance costs related to convertible debentures of $1.2 million, non-GAAP adjusted net income for the three months ended March 31, 2008 was $10.0 million, $0.97 per share, compared to adjusted net income of $6.0 million, $0.61 per share, for the three months ended March 31, 2008.
Nine Month Operating Highlights
Total revenue for the nine month period ended March 31, 2009 was $86.2 million, up 21.0% from $71.3 million for the nine month period ended March 31, 2008.
Gross profit for the nine month period ended March 31, 2009 totaled $66.5 million, up 24.2% from $53.5 million for the nine month period ended March 31, 2008. Gross profit margin was 77.1% for the nine month period ended March 31, 2009, compared to 75.1% for the corresponding period in 2008.
Operating income for the nine month period ended March 31, 2009 totaled $32.1 million, a 45.3% increase from $22.1 million in the corresponding period in 2008. The Company's operating margin increased to 37.2% from 31.0% compared to the same period in 2008, as result of the Company's continuing efforts to reduce its expenses and control its costs.
Net income for the nine month period ended March 31, 2009 was $17.4 million, $1.27 diluted earnings per share, compared to $12.9 million, $1.14 diluted earnings per share, for the corresponding period in 2008. Total shares outstanding as of May 14, 2009 were 10,351,448.
Excluding a loss from discontinued operations of $1.7 million, a loss on trading securities of $1.3 million, and amortization of debt discount and issuance costs related to convertible debentures of $3.2 million, non-GAAP adjusted net income for the nine month period ended March 31, 2008 was $23.5 million, $2.37 per share, compared to adjusted net income of $14.8 million, $2.28 per share, for the nine month period ended March 31, 2008.
Financial Condition
As of March 31, 2009, the Company had $86.1 million in cash and restricted cash. Working capital was $85.6 million, up from $72.5 million as of June 30, 2008. Current liabilities were $27.4 million and convertible debt, net of $29.8 million discount, was $5.0 million. Shareholders' equity was $113.9 million, compared to $95.5 million as of June 30, 2008.
The Company generated $41.1 million in cash flow from operating activities in the first nine months of its fiscal year 2009, compared to $17.7 million for the first nine months of its fiscal year 2008. The Company believes that its strong cash position will sustain its future working capital needs and successfully implement its growth strategies which include the expansion of manufacturing facilities.
Recent Events
On April 23, 2009, the Company announced that it changed its corporate name from 'Genesis Pharmaceuticals Enterprises, Inc.' to 'Jiangbo Pharmaceuticals, Inc.' to align the name of the public company with the name of its products. Management wants to associate the brand name 'Jiangbo' with the Company while it continues to develop its brand and corporate image, and expands its product line.
Jiangbo's stock started trading on the Over the Counter Bulletin Board under ticker symbol "JGBO" on May 12, 2009. The Company's shares ceased trading under the ticker symbol "GNPH" at the close of business on May 11, 2009. The Company's shares are identified under a new CUSIP Number: 47737 R 10 1. The Company still plans to apply to list its common stock on a senior U.S. stock exchange.
In April, the Company announced that it began marketing and selling three Traditional Chinese Medicines. They are Yi Mu Cao Gao (a motherwort herb electuary sticky syrup), Gan Mao Zhi Ke Ke Li (an antipyretic and antitussive granule), and Kang Gu Sui Yan Pian (an osteomyelitis treatment tablet). In April, Jiangbo started to produce Laiyang Pear Cough Syrup and New Compound Foliumisatidis Tablets. Laiyang Pear Cough Syrup helps relieve coughs arising from colds and other illnesses. Market feedback has shown that children like its fresh pear taste. New Compound Foliumisatidis Tablets address influenza symptoms and includes both western chemical ingredients and traditional Chinese herbs.
Sales of these five products are expected to be $2.0 million in the fourth quarter of the Company's fiscal year 2009, which ends on June 30, 2009, and an estimated $8.0 million in fiscal year 2010.
Business Outlook and Guidance
In April, the Company reaffirmed operating income guidance of $40 to $43 million for its fiscal year ending June 30, 2009, and adjusted its revenue guidance for its fiscal year ending June 30, 2009 from a range of $122 million to $130 million to a range of $111 million to $116 million. This adjustment to revenue guidance was mainly because of the Company's charging lower unit prices to the 28 independent distributors which sell and distribute the Company's three major products. The Company expects to meet or exceed its fiscal year 2009 guidance.
On April 6, 2009, China unveiled its 'Guideline of Deepening the Reform of Health Care System' ('Guideline'), a blueprint for health care over the next decade. By 2020, the world's most populous nation plans to have a basic health care system that can provide "safe, effective, convenient and affordable" health services to urban and rural residents. The State Council announced an investment of 850 billion Yuan (US $124 billion) to implement the health care reform plan in China.
'We believe that the Chinese government's planned reforms for China's healthcare system will increase demand for Jiangbo's products because a number of Jiangbo products are used to treat common and widespread illnesses. Several of our products should be good candidates for inclusion on provincial and the national drug lists, which are used to stock clinics and hospitals. We look forward to working with the government's planned programs to help meet the needs of an increasing number of China's consumers,' concluded Mr. Cao.
Conference Call
Jiangbo Pharmaceuticals, Inc. management will host a conference call at 9:30a.m. Eastern Time on Tuesday, May 19, 2009 to discuss financial results for the quarter ended March 31, 2009. Mr. Wubo Cao, Chairman and CEO, Mr. Haibo Xu, COO and Ms. Elsa Sung, CFO, of Jiangbo will be present for the conference call. To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time of 9:30 a.m. Eastern Time on Tuesday, May 19, 2009: (888) 481-7939. International callers should call (617) 847-8707. The Conference Passcode is 564 145 01. Replay of the conference call will be available from Tuesday, May 19, 2009 at 11:30 a.m. Eastern for 14 days. To access the replay, call (888) 286-8010. International callers should call (617) 801-6888. The Conference Passcode is: 547 268 69.
Use of Non-GAAP Financial Information
This press release includes certain financial information, adjusted net income and adjusted fully diluted earnings per share, which are not presented in accordance with GAAP. Adjusted net income was derived by taking net income and adjusting it with a loss from discontinued operations, unrealized losses on trading securities and non-cash amortization of debt discount and debt issuance costs related to convertible securities. The Company's management believes that these non-GAAP measures provide investors with a better understanding of the Company's historical results from its core business operations. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, which is adjusted net income and adjusted earnings per share, excluding the impact of these items in this release. The non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information provided by the Company may also differ from non-GAAP information provided by other companies. A table below provides a reconciliation of the non-GAAP financial information to the nearest GAAP measure.
About Jiangbo Pharmaceuticals, Inc.
Jiangbo Pharmaceuticals, Inc. is a U.S. public company engaged in the research, development, production, marketing and sales of pharmaceutical products in the People's Republic of China. Its operations are located in Eastern China in an Economic Development Zone in Laiyang City, Shandong province. Jiangbo is a major pharmaceutical company in China producing both western and Chinese herbal-based medical drugs in tablet, capsule, granule, syrup and electuary (sticky syrup) form. http://www.jiangbopharma.com/
Safe Harbor Statement
Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the Company's actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to introduce, manufacture and distribute new drugs. Actual results may differ materially from predicted results, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company's ability to obtain raw materials needed in manufacturing, the continuing employment of key employees, the failure risks inherent in testing any new drug, the possibility that regulatory approvals may be delayed or become unavailable, patent or licensing concerns that may include litigation, direct competition from other manufacturers and product obsolescence. More information about the potential factors that could affect the Company's business and financial results is included in the Company's filings, available via the United States Securities and Exchange Commission.
For more information, please contact: Jiangbo Pharmaceuticals, Inc. Ms. Elsa Sung, CFO Tel: +1-954-727-8435 Email: elsasung@jiangbo.com Web: http://www.jiangbopharma.com/ CCG Investor Relations, Inc. Mr. Crocker Coulson, President Tel: +1-646-213-1915 Email: crocker.coulson@ccgir.com Web: http://www.ccgirasia.com/ JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES (FORMERLY GENESIS PHARMACEUTICALS ENTERPRISES, INC.) CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (UNAUDITED) For the Three Months Ended For the Nine Months Ended March 31, March 31, 2009 2008 2009 2008 REVENUES: Sales $25,725,837 $26,231,191 $85,991,330 $66,648,051 Sales-related parties -- 1,869,092 243,943 4,611,849 TOTAL REVENUE 25,725,837 28,100,283 86,235,273 71,259,900 Cost of sales 6,853,810 5,896,113 19,705,020 16,626,461 Cost of sales - related parties -- 441,709 54,500 1,117,918 COST OF SALES 6,853,810 6,337,822 19,759,520 17,744,379 GROSS PROFIT 18,872,027 21,762,461 66,475,753 53,515,521 RESEARCH AND DEVELOPMENT EXPENSE 1,098,675 967,930 3,295,125 2,170,240 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 4,477,356 12,136,164 31,111,752 29,269,330 INCOME FROM OPERATIONS 13,295,996 8,658,367 32,068,876 22,075,951 OTHER (INCOME) EXPENSE: Other (income) expense, net (281,570) 1,244,892 1,062,959 1,217,385 Other (income)- related parties (76,552) (27,415) (313,276) (80,851) Non-operating (income) expense 150,466 (529) (471) (232) Interest expense, net 1,241,843 526,509 4,143,968 925,993 Loss from discontinued operations 103,008 228,812 1,693,830 341,743 OTHER EXPENSE, NET 1,137,195 1,972,269 6,587,010 2,404,038 INCOME BEFORE PROVISION FOR INCOME TAXES 12,158,801 6,686,098 25,481,866 19,671,913 PROVISION FOR INCOME TAXES 3,302,953 2,211,265 8,093,320 6,808,625 NET INCOME $8,855,848 $4,474,833 $17,388,546 $12,863,288 OTHER COMPREHENSIVE INCOME: Unrealized holding (loss) gain $(200,025) $(270,351) $(2,147,642) $1,347,852 Foreign currency translation adjustment (201,173) 1,960,948 378,284 3,428,779 COMPREHENSIVE INCOME $8,454,650 $6,165,430 $15,619,188 $17,639,919 BASIC WEIGHTED AVERAGE NUMBER OF SHARES 10,277,762 9,740,129 9,937,190 6,507,435 BASIC EARNINGS PER SHARE $0.86 $0.46 $1.75 $1.98 DILUTED WEIGHTED AVERAGE NUMBER OF SHARES 10,907,231 9,740,129 10,599,615 7,081,791 DILUTED EARNINGS PER SHARE $0.44 $0.46 $1.27 $1.14 JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES (FORMERLY GENESIS PHARMACEUTICALS ENTERPRISES, INC.) CONSOLIDATED BALANCE SHEETS A S S E T S March 31, June 30, 2009 2008 (Unaudited) CURRENT ASSETS: Cash $82,338,527 $48,195,798 Restricted cash 3,713,775 7,839,785 Investments 672,682 2,055,241 Accounts receivable, net of allowance for doubtful accounts of $525,268 and $155,662, respectively 21,688,723 24,312,077 Accounts receivable - related parties 187,766 673,808 Inventories 3,863,947 3,906,174 Other receivables 81,784 152,469 Other receivables-related parties 317,412 -- Advances to suppliers and other assets 130,088 1,718,504 Total current assets 112,994,704 88,853,856 PLANT AND EQUIPMENT, net 14,162,421 11,225,844 OTHER ASSETS: Restricted investments 400,050 2,481,413 Financing costs, net 1,406,717 1,916,944 Intangible assets, net 17,404,557 9,916,801 Total other assets 19,211,324 14,315,158 Total assets $146,368,449 $114,394,858 L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y CURRENT LIABILITIES: Accounts payable $5,523,666 $2,341,812 Short term bank loans 2,197,500 2,772,100 Notes payable 3,713,775 5,843,295 Other payables 4,074,203 3,671,703 Customer deposit 4,102,000 -- Other payables - related parties 176,666 324,972 Accrued liabilities 754,315 173,604 Liabilities assumed from reorganization 1,613,935 1,084,427 Taxes payable 5,276,690 166,433 Total current liabilities 27,432,750 16,378,346 CONVERTIBLE DEBT, net of discount $29,820,431 and $32,499,957 as of March 31, 2009 and June 30, 2008, respectively 5,019,569 2,500,043 Total liabilities 32,452,319 18,878,389 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock Series ($0.001 par value; 20,000,000 shares authorized; none issue, or outstanding) -- -- Common stock ($0.001 par value, 22,500,000 and 15,000,000 shares authorized, respectively; 10,435,099 and 9,767,844 shares issued and outstanding, respectively) 10,436 9,770 Paid-in-capital 76,168,319 45,554,513 Capital contribution receivable (27,845,000) (11,000) Retained earnings 56,390,950 39,008,403 Statutory reserves 3,253,878 3,253,878 Accumulated other comprehensive income 5,931,547 7,700,905 Total shareholders' equity 113,916,130 95,516,469 Total liabilities and shareholders' equity $146,368,449 $114,394,858 JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES (FORMERLY GENESIS PHARMACEUTICALS ENTERPRISES, INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended March 31, 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $17,388,546 $12,863,288 Loss from discontinued operations 1,693,830 341,743 Income from continuing operations 19,082,376 13,205,031 Adjustments to reconcile net income to cash, net of acquisition provided by (used in) operating activities: Depreciation 464,094 375,456 Amortization of intangible assets 371,925 113,578 Amortization of deferred debt issuance costs 510,227 47,583 Amortization of debt discount 2,679,526 671,296 Bad debt expense 368,840 (112,459) Gain on sale of marketable securities (106,865) 19,819 Unrealized loss (gain) on trading securities 1,255,522 1,150,516 Other non-cash settlement (20,000) -- Stock-based compensation 43,340 28,750 Changes in operating assets and liabilities Accounts receivable 2,353,566 (7,246,740) Accounts receivable - related parties 488,646 (1,403,383) Notes receivables -- 59,790 Inventories 205,471 27,542 Other receivables 63,170 (254,886) Other receivables- related parties (317,303) (81,384) Advances to suppliers and other assets 1,602,693 (391,526) Accounts payable 3,171,180 1,159,105 Accrued liabilities 682,145 301,290 Other payables 194,283 2,146,659 Other payables - related parties (58,580) (962,509) Customer deposit 4,100,600 -- Liabilities assumed from reorganization (1,164,323) (1,162,133) Taxes payable 5,107,831 10,006,057 Net cash provided by operating activities 41,078,364 17,697,452 CASH FLOWS FROM INVESTING ACTIVITIES: Cash used in acquisition (8,581,970) -- Proceeds from sale of marketable securities 167,623 605,882 Prepayment for land use right -- (8,246,830) Cash receipt from reverse acquisition -- 534,950 Purchase of equipment (130,814) (401,302) Net cash used in investing activities (8,545,161) (7,507,300) CASH FLOWS FINANCING ACTIVITIES: Restricted cash 4,149,305 (5,361,849) Proceeds from sale of common stock and options exercised -- 337,500 Proceeds from sale of treasury stock -- 1,977 Proceed from convertible debt -- 5,000,000 Payments on debt issuance costs -- (354,408) Payments for dividend -- (10,520,000) Proceeds from bank loans 2,196,750 3,255,360 Payments for bank loans (2,782,550) (5,425,600) Proceed from officers -- 27,128 Proceeds from notes payable 7,009,097 10,729,040 Principal payments on notes payable (9,161,912) (5,367,191) Net cash provided (used) in financing activities 1,410,690 (7,678,043) EFFECTS OF EXCHANGE RATE CHANGE IN CASH 198,836 1,324,727 INCREASE (DECREASE) IN CASH 34,142,729 3,836,836 CASH, beginning of the period 48,195,798 17,737,208 CASH, end of the period $82,338,527 $21,574,044 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $1,130,837 $331,431 Income taxes paid $4,883,039 $3,615,867 Non-cash investing and financing activities: Common stock issued to acquire Hongrui $2,597,132 -- GENESIS PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP NET INCOME For Three Months Ended For Nine Months Ended March 31 March 31, March 31 March 31 2009 2008 2009 2008 Net Income 8,855,848 4,474,833 17,388,546 12,863,288 Loss from discontinued operations 103,008 228,812 1,693,830 341,743 Unrealized loss (gain) on trading securities, net (204,134) 1,159,409 1,255,522 1,150,516 Amortization of debt discount and debt issuance costs related to convertible debentures 1,203,365 118,149 3,189,752 481,589 Adjusted Net Income 9,958,087 5,981,203 23,527,650 14,837,136 Basic Weight Average Number of Shares 10,277,762 9,740,129 9,937,189 6,507,435 Adjusted Earnings Per Weighted Average Number of Shares $0.97 $0.61 $2.37 $2.28
Jiangbo Pharmaceuticals, Inc
Web site: http://www.jiangbopharma.com/
