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Tianyin Pharmaceutical Co., Inc. News

Tianyin Pharmaceutical Co., Inc. Announces Third Quarter 2008 Financial Results

CHENGDU, China, May 15 Xinhua-PRNewswire-FirstCall — Tianyin Pharmaceutical Co., Inc., (OTC Bulletin Board: TYNP), a manufacturer and supplier of modernized traditional Chinese medicine ("TCM") based in Chengdu, China, today announced fiscal results for its third quarter ended March 31, 2008.

Revenue for the third quarter of 2008 increased 70.9% to approximately $9.2 million compared to approximately $5.4 million for the third quarter of 2007. The significant increase in revenues was due to strong demand of the Company's current product portfolio supported by enhanced marketing efforts and expansion of current sales channels.

Cost of goods sold for the third quarter was approximately $5.1 million, yielding a gross profit of $4.1 million and gross margins of 44.6%, compared to $2 million in gross profit and a gross margin of 37.5% during the third quarter of 2007. Thus, gross profits grew by 103.2% on a year-over-year basis. The increase in gross profit and improved margins were primarily attributable to the growth in revenue and our focus on high margin products in the Company's portfolio such as Ginkgo Mihuan Oral Liquid and Arpu Shuangxin Oral Liquid.

Operating expenses for the three months ended March 31, 2008 were $2.3 million, up 560.7% compared to the same period in 2007. Selling, general and administration expenses for the period increased to approximately $2.2 million from $0.33 million in the third quarter of 2007, which included a one-time expense of $0.4 million in public market listing expenses, in addition to increased investment in overall marketing including increased costs in advertisement, promotion and sales force related expenses. Research and development expenses were $89,372 in the three months ended March 31, 2008, versus $15,749.

Operating income for the third quarter of 2008 totaled approximately $1.9 million, a 10% increase from the $1.7 million reported for the third quarter of 2007. Operating margins were 20.1% and 31.2% for the third quarter of 2008 and 2007, respectively. The decrease in the operating margin was due to increased spending on R&D and marketing to expand Tianyin's market presence, and the one-time expense of going public. Without going public and investing in the growth initiatives undertaken during the third quarter, margins would have increased.

For the third quarter of 2008, net income was approximately $1.3 million, a 10.9% decrease, compared to approximately $1.4 million for the third quarter of 2007. Fully diluted earnings per share were $0.05 compared to $0.11 for the third quarter of 2008 and 2007 respectively, based up on 24.5 million and 12.8 million shares. The decrease in net income was primarily due to the Company's one-time listing and marketing expenses incurred in the quarter as discussed above. Additionally, the Company had increased interest expense of $245,174 during the quarter versus $31,465 a year ago due to a financing in the third quarter and the recently established bank loan. The Company also increased its provision for income taxes from $225,663 to $337,132 during the current quarter, yielding an effective tax rate of 20.9% vs. 13.6%. The Company incurred approximately $800,000 in expenses, not including the increased marketing expenditures, during the third quarter of 2008, which were not present during the same period of 2007. The items included are the increased expenditures for R&D, interest, taxes, and going public expenses.

"We are very pleased to report another quarter of strong revenue growth. The success of our overall marketing strategy and focusing on high margin products enabled us to achieve a 70% increase in revenues for the third quarter of 2008. While the overall net income was impacted by several non-operating expenses , our focus on expanding our distribution channels has brought new distribution partners, has enabled us to gain incremental market share and is contributing to our overall growth," commented Dr. Guoqing Jiang, Chief Executive Officer of Tianyin. "In addition, our reputation as a premier pharmaceutical organization has attracted a number of experienced sales and marketing executives. We recently appointed Mr. Shenxing Yuan, an industry veteran who previously worked for two well-known Chinese pharmaceutical manufacturers, as the head of our first marketing division. His addition has enabled us to expand our second marketing division to over 400 salespersons, We would like to publicly welcome Mr. Yuan and I am confident that his promotion will not only help create a stronger marketing division, but lead to future growth for the overall organization. "

Nine Month Results

For the nine months ended March 31, 2008, revenues increased approximately 77.4% to $24.2 million compared to the same period in 2007. Gross profit was $10.2 million for the first nine months of 2008, representing an increase of 97.8% from the first nine months of 2007. Gross margins were 42.1% for the first nine months of 2008 compared to 37.8% for the same period in 2007.

Income from operations was $5.7 million for the first nine months of 2008, representing an increase of 41.6% over the first nine months of 2007. Operating margins were 23.4% for the first nine months of 2008 compared to 29.3% for the first nine months of 2007. Net income was approximately $4.4 million for the nine months ended March 31, 2008, an increase of approximately 32.6% from the same period in 2007. Fully diluted earnings per share were $0.27 compared to $0.26 for the first nine months of 2008 and 2007 respectively, based up on 16.7 million and 12.8 million shares.

Balance Sheet and Cash Flow

The Company had a current ratio of 6.4 to 1 and $13.6 million in cash and cash equivalents on March 31, 2008. The Company had Stockholders' equity of $31 million, with total assets of $34.4 million versus total liabilities of $3.4 million. For the first nine months of 2008, the Company generated $1.76 million in cash from operations versus $0.78 million for the same period in 2007.

Business Development

Tianyin's key products continue to gain market shares in China. Ginkgo Mihuan Oral Liquid, Tianyin's leading product and core prescription drug, obtained product entry into the formularies of over 30 Tier I and Tier II hospitals in China during the third quarter of 2008. Additionally, plans call for the Company to enter 150 more hospitals before December 31, 2008 which will result in further increase of total sales of Ginkgo Mihuan Oral Liquid.

Tianyin has successfully installed newly purchased equipment including a high speed tablet press machine, a high speed capsule filling machine, and a one-step granulator. The installation has increased the overall production capacity of solid dosage form by 15%. Tianyin signed manufacturing agreements with two major pharmaceutical manufactures, Sichuan Kofule Pharmaceutical Group and Sichuan Medco Pharmaceutical Group, which will further alleviate the current capacity deficiency and meet the rapidly increasing market demand of their products. Additionally, Sichuan local government has approved Tianyin's application for a new solid dosage production plant. Construction of the plant started in the end of April 2008.

Although China's strongest earthquake in 58 years hit Sichuan Province on May 12, the Company's production was not affected and no one from Tianyin was injured by the disaster.

"Supported by the Chinese government and increases in personal income which is providing the means to improve consumers' overall level of healthcare, the growth of the TCM industry remains robust. Backed by our experienced management team, enhanced sales and marketing efforts, diversified product portfolio and extensive pipeline, we believe we are well positioned to capitalize on the significant growth opportunity in the TCM industry," concluded Dr. Jiang.

Conference Call

The Company will host a conference call to discuss the 2008 third quarter financial results on Thursday, May 15, 2008 at 9:00 a.m. EDT. Interested participants should call 800-762-9058 within the United States, or US +1-480-629-9039 if calling internationally. The conference ID is 3879213. It is advisable to dial in approximately 5-10 minutes prior to 9:00 a.m. EDT. If you are unable to participate in the call at the scheduled time, a playback will be available on Thursday, May 15, 2008 at 12:00 p.m. EDT through Thursday, May 29, 2008 at 11:59 p.m. EDT. To listen to the playback, please call 800-406-7325 from within the United States, or US +1 303-590-3030 internationally. Please use pass code 3879213 for the replay.

About Tianyin Pharmaceuticals

Tianyin is a manufacturer and supplier of modernized Traditional Chinese Medicine ("TCM") in China. It was established in 1994 and acquired by the current management team in August 2003. It has a comprehensive product portfolio of 34 modernized TCMs in the market, 22 of which are listed in the highly selective National Medicine Catalog of the National Medical Insurance Program. Tianyin owns and operates two GMP manufacturing facilities and an R&D platform supported by leading Chinese academic institutions. The Company has a pipeline of 51 pharmaceutical products pending approval. Tianyin has an extensive nationwide distribution network throughout China with a sales force of 523 salespeople. Tianyin is headquartered in Chengdu, Sichuan Province with two manufacturing facilities and a total of 1,187 employees. Tianyin achieved revenue of $20.4 million and net income of $3.95 million in FY2007 ending June 30, 2007.

Safe Harbor Statement

The Statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, government approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission.

For more information, please contact: For the Company: Allen Tang, Ph.D., MBA, Assistant to the CEO Tel: +86-158-212-25642 Email: Allen.y.tang@gmail.com Investors: HC International, Inc. Alan Sheinwald Tel: +1-914-669-0222 Email: Alan.Sheinwald@hcinternational.net — FINANCIAL TABLES FOLLOW — Tianyin Pharmaceutical Co. Inc. (FORMERLY VISCORP, INC.) CONSOLIDATED BALANCE SHEET (UNAUDITED) March 31, 2008 CURRENT ASSETS Cash and cash equivalents $13,624,058 Accounts receivable, net of allowance of $34,226 3,952,252 Inventory 2,607,587 Advance payments to vendors 1,812,132 Other receivables 52,690 Prepaid expenses and other current assets 284,529 Total Current Assets 22,333,248 PROPERTY AND EQUIPMENT, NET 4,990,756 INTANGIBLES, NET 7,108,671 Total Assets $34,432,675 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $1,254,956 Short term bank loans 1,363,740 VAT taxes payable 237,651 Income tax payable 345,936 Other taxes payable 29,484 Other payables 160,265 Total Current Liabilities 3,392,032 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 50,000,000 shares authorized 14,587 14,587,200 shares issued and outstanding Series A convertible preferred stock, $0.001 par value, 9,515,625 shares issued and outstanding 9,516 Additional paid-in capital 17,934,459 Statutory reserve 1,189,912 Retained earnings 10,090,588 Accumulated other comprehensive income 1,801,581 Total Stockholders' Equity 31,040,643 Total Liabilities and Stockholders' Equity $34,432,675 Tianyin Pharmaceutical Co. Inc. (FORMERLY VISCORP, INC.) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended Nine Months Ended March 31, March 31, 2008 2007 2008 2007 SALES $9,249,229 $5,412,969 $24,167,921 $13,622,991 COST OF GOODS SOLD 5,123,587 3,382,399 13,984,845 8,474,163 GROSS PROFIT 4,125,642 2,030,570 10,183,076 5,148,828 EXPENSES Selling, general and administrative 2,180,161 327,773 4,380,702 1,129,549 Research and development 89,372 15,749 150,930 29,129 Total Expenses 2,269,533 343,522 4,531,632 1,158,678 INCOME FROM 1,856,109 1,687,048 5,651,444 3,990,150 OPERATIONS OTHER INCOME (EXPENSES) Other income — 10 — 1,442 Interest expense (245,174) (31,465) (311,536) (103,210) Total Other (245,174) (31,455) (311,536) (101,768) Income (Expenses) INCOME BEFORE PROVISION FOR INCOME TAX 1,610,935 1,655,593 5,339,908 3,888,382 PROVISION FOR INCOME TAX 337,132 225,663 893,779 536,599 NET INCOME 1,273,803 1,429,930 4,446,129 3,351,783 OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment 780,932 63,644 1,355,898 170,267 COMPREHENSIVE INCOME $2,054,735 $1,493,574 $5,802,027 $3,522,050 BASIC EARNINGS PER SHARE $.09 $.11 $.33 $.26 DILUTED EARNINGS PER SHARE $.05 $.11 $.27 $.26 WEIGHTED AVERAGE SHARES OF COMMON STOCK BASIC 14,274,783 12,790,800 13,289,072 12,790,800 DILUTED 24,455,363 12,790,800 16,707,369 12,790,800 Tianyin Pharmaceutical Co. Inc. (FORMERLY VISCORP, INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, (UNAUDITED) 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $4,446,129 $3,351,783 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 273,060 293,572 Bad debt expense — 19,434 Changes in current assets and current liabilities: — Accounts receivable (535,631) (2,195,180) Inventory (550,711) (386,727) Advance payments to vendors - 351,303 Other receivables 89,183 (107,288) Prepaid expense and other current assets (2,005,616) — Accounts payable and accrued expenses (13,158) (401,089) VAT taxes payable 9,280 48,797 Income tax payable 13,565 67,390 Other taxes payable 4,254 5,368 Other payables 26,753 (264,438) Total Adjustments (2,689,021) (2,568,858) Net Cash Provided by Operating Activities 1,757,108 782,925 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (208,652) (54,939) Construction in progress (67,820) — Additions to intangibles (786,712) (865,844) Net Cash Used by Investing Activities (1,063,184) (920,783) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from capital contribution 9,089,700 — Proceeds from bank loans 2,674,873 — Repayment of shareholder loans (143,967) (13) Repayment of bank loans — (40,386) Net Cash Provided (Used) by Financing Activities 11,620,606 (40,399) EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH 685,138 16,759 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,999,668 (161,498) CASH AND CASH EQUIVALENTS - BEGINNING 624,390 740,780 CASH AND CASH EQUIVALENTS - ENDING $13,624,058 $579,282

SOURCE Tianyin Pharmaceutical Co., Inc.

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