BMP Sunstone Reports Third Quarter 2009 Financial Results
- Press Release
- Source: BMP Sunstone Corporation
- On 4:01 pm EST, Monday November 9, 2009
PLYMOUTH MEETING, Pa., Nov. 9 /PRNewswire-Asia-FirstCall/ -- BMP Sunstone Corporation (Nasdaq: BJGP - News; "BMP Sunstone" or the "Company"), today announced financial results for the third quarter ended September 30, 2009.
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Third Quarter 2009 Financial Highlights Include:
-- Revenue increased to $33.6 million from $30.5 million in the prior year
period, reflecting growth across all divisions, particularly in
licensed products;
-- Gross margin increased to 46.6% from 45.3% in the prior year period;
-- Non-GAAP net income was $1.3 million, or approximately $0.03 per share.
David Gao, Chief Executive Officer of BMP Sunstone, stated, "We are pleased with our financial performance in the third quarter of 2009. The inventory and distribution challenges from last quarter appear to be subsiding and we are encouraged with the ongoing demand we see for our portfolio of leading prescription and over the counter brands. Our licensed products revenue was particularly strong this quarter and, in conjunction with a revenue mix shift toward higher margin products at Sunstone and Beijing Med-Pharm, improved our gross margin performance year over year. On the cost side, we reinvested for growth primarily through research and development at Sunstone. We believe the healthcare market in China continues to grow by 15-20 percent annually and we continue to anticipate outperforming the industry growth rate over the long term."
Third Quarter 2009 Financial Results
Revenue in the third quarter of 2009 increased 10.2% to $33.6 million from $30.5 million in the third quarter of 2008, reflecting increased demand for the Company's licensed and branded OTC products. Revenue from Sunstone (Tangshan) Pharmaceutical Co., Ltd. ("Sunstone"), increased 10.2% $17.1 million of revenue, from $15.5 million in the prior year period. Revenue from licensed products increased 57.3% to $2.1 million from $1.3 million in the prior year period, reflecting sales and marketing efforts of Anpo, Propess and Ferriprox compared to the prior year. Revenue from distribution in the third quarter of 2009 was up slightly to $14.5 million from $13.7 million in the prior year period, as the Company deliberately focused less on driving low margin distribution revenue and more on increasing high margin product sales.
Gross profit in the third quarter of 2009 increased to $15.7 million from $13.8 million in the third quarter of 2008. Gross margin was 46.6%, compared to 45.3% in the prior year period. Gross margin performance primarily reflects revenue mix shift toward higher margin products during the quarter, versus prior periods.
Operating income was $1.0 million in the third quarter of 2009, compared to $1.8 million in the third quarter of 2008. Operating expenses increased 21.3% from the year ago period, primarily reflecting a $1.2 million increase in research and development expenditure, as the Company positions itself to drive future growth. Additionally, general and administrative expenses as a percentage of revenue increased to approximately 14.3%, up from 9.5% in the
prior year period, reflecting a $525,000 reversal for an over accrual of social taxes in prior years.
Non-GAAP net income was $1.3 million, or $0.03 per diluted share, compared to $1.9 million, or $0.05 per diluted share, in the third quarter of 2008. On a GAAP basis, the Company reported a net loss of $208,000 in the third quarter of 2009, or ($0.01) per share, compared to a net loss of $816,000, or ($0.02) per share, in the prior year period. Adjusted EBITDA was $2.6 million for the quarter, compared to $3.6 million in the third quarter of last year. The earnings per share calculation is based on 50.8 million diluted shares outstanding, compared to 40.8 million diluted shares outstanding in the prior year period.
Non-GAAP net income and earnings per share exclude stock based compensation expense, amortization related to the Sunstone and Wanwei acquisitions, amortization of debt discount and issuance cost, loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Adjusted EBITDA is a non-GAAP measure which provides earnings before interest, taxes, depreciation and amortization and excludes loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Please refer to the financial tables provided in this news release for a reconciliation of GAAP results to non-GAAP results for the three and nine month periods ended September 30, 2008 and 2009.
Balance Sheet
On September 30, 2009, the Company had $13.2 million of cash and $10.6 million of notes receivable, totaling approximately $23.8 million. All notes receivables are guaranteed by established banks in China and have maturities of six months or less. Additionally, $7.6 million of other receivables is due from Alliance Unichem in August of 2010.
Financial Results for the Nine Months Ended September 30, 2009 For the nine months ended September 30, 2009, revenue increased 34.7% to $105.4 million from $78.2 million in the first nine months of 2008. During this same time period, gross profit increased 33.1% to $50.7 million from $38.1 million. Income from operations increased 120.5% to $4.4 million, compared to $2.0 million in the first nine months of 2008. Non-GAAP net income was $4.6 million, or $0.10 per diluted share, compared to $3.1 million, or $0.08 per diluted share, in the prior year period. On a GAAP basis, the Company reported a net loss of $3.9 million, or ($0.10) per share, compared to $4.9 million, or ($0.13) per share, in the first nine months of 2008. Adjusted EBITDA was $9.0 million, compared to $7.4 million in the first nine months of 2008. The EPS calculation is based on 48.2 million diluted shares outstanding, compared to 39.4 million diluted shares outstanding in the prior year period.
Financial Guidance
Due to slower than expected growth rates in the second quarter of 2009, today BMP Sunstone is adjusting revenue, adjusted EBITDA and non-GAAP net income guidance for the fiscal year 2009. The Company now expects revenue to reach $140 million to $150 million, adjusted EBITDA to reach $12 million to $13 million, and non-GAAP net income to reach $6 million to $7 million.
Today's revisited guidance is down from previous full year expectations of $150 million to $160 million in revenue, $16 million to $18 million in adjusted EBITDA, and $9 million to $11 million in non-GAAP net income.
Gao continued, "We believe that declines in purchases from distributors hit a low point during the second quarter, improved during the third quarter, and should noticeably improve when the pending Chinese healthcare policies are finalized and disclosed. Our 2009 financial guidance reflects sales and marketing expansion in China resulting from continued performance at all of our business units, especially at Sunstone and Beijing Med-Pharm."
Conference Call
The Company will hold a conference call at 5:00 pm ET on November 9, 2009 to discuss third quarter 2009 results. Listeners may access the call by dialing 1-888-713-4211 or +1-617-213-4864 for international callers, access code: 20626681. Preregistration and a webcast will be available through the Company's website at http://www.bmpsunstone.com . A replay of the call will be
accessible through November 16, 2009 by dialing 1-888-286-8010 or +1-617-801-6888 for international callers, access code: 24243405.
About BMP Sunstone Corporation
BMP Sunstone Corporation ("BMP Sunstone" or the "Company") is a specialty pharmaceutical company that is building a proprietary portfolio of branded pharmaceutical and healthcare products in China. Through Sunstone Pharmaceutical Co. Ltd., the Company manufactures leading pediatric and women's health products, including two of China's most recognized brands, "Hao Wawa" and "Confort," sold throughout the country in approximately 120,000 pharmacies. The Company also markets a portfolio of products under exclusive multi-year licenses into China, primarily focused on women's health and pediatrics, as well as provides pharmaceutical distribution services through subsidiaries in Beijing and Shanghai. BMP Sunstone's main office is in Beijing, with a U.S. office in Plymouth Meeting, PA. For more information, please visit http://www.bmpsunstone.com .
Safe Harbor Statement
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts, including but not limited to statements regarding the impact of changes in China's healthcare industry on the Company's growth and financial performance, the Company's expected financial performance in 2009 and the Company's expectations for each of its business units in 2009. These statements are subject to uncertainties and risks including, but not limited to, operating performance, the timing of China's healthcare reform policy, general financial, economic, and political conditions affecting the biotechnology and pharmaceutical industries and the Chinese pharmaceutical market, the ability to timely manufacture and distribute the Company's products and other risks contained in reports filed by the Company with the Securities and Exchange Commission. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Statements of Operation
($ amounts, except per share amounts in thousands)
For the Three For the Nine
months ended months ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Third parties $33,358 $28,544 $101,001 $72,979
Related parties 268 1,959 4,370 5,251
Total Revenues 33,626 30,503 105,371 78,230
Cost of Goods Sold 17,950 16,676 54,643 40,120
Gross Profit 15,676 13,827 50,728 38,110
Sales and Marketing Expenses 9,811 9,152 33,622 26,251
General and Administration Expenses 4,825 2,910 12,755 9,886
Total Operating Expenses 14,636 12,062 46,377 36,137
Profit From Operations 1,040 1,765 4,351 1,973
Other Income (Expense):
Interest Income 52 6 159 68
Interest Expense (895) (1,590) (3,369) (4,770)
Debt Issuance Cost Amortization (101) (210) (326) (630)
Equity Method Investment Income 107 -- 189 675
Loss on Early Extinguishment of Debt -- -- (4,573) --
Gain(Loss) on Derivatives -- -- 1,204 --
Total Other Income (Expense) (837) (1,794) (6,716) (4,657)
(Profit) Loss Before Provision For
Income Taxes 203 (29) (2,365) (2,684)
Provision For Income Taxes 430 787 1,583 2,198
Net Loss $(227) $(816) $(3,948) $(4,882)
Less: Net Loss Attributable to the
Noncontrolling Interest 19 -- 35 --
Net Loss Attributable to BMP Sunstone
Corporation $(208) $(816) $(3,913) $(4,882)
Basic and Fully-Diluted Loss Per
Share $(0.01) $(0.02) $(0.10) $(0.13)
Basic Weighted-average Shares
Outstanding 41,559 39,650 41,291 38,070
Fully Diluted Weighted-average Shares
Outstanding 50,831 40,760 48,184 39,368
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Statements of Operation
($ amounts, except per share amounts in thousands)
Non GAAP
For the Three For the Nine
Months ended Months ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Third parties $33,358 $28,544 $101,002 $72,979
Related parties 268 1,959 4,370 5,251
Total Revenues 33,626 30,503 105,372 78,230
Cost of Goods Sold 17,835 16,567 54,299 39,235
Gross Profit 15,791 13,936 51,073 38,995
Sales and Marketing Expenses 9,058 8,237 31,390 24,075
General and Administration Expenses 4,206 2,196 10,890 7,852
Total Operating Expenses 13,264 10,433 42,280 31,927
Profit From Operations 2,527 3,503 8,793 7,068
Other Income (Expense):
Interest Income 9 6 79 68
Interest Expense (895) (823) (2,920) (2,469)
Debt Issuance Cost Amortization -- -- -- --
Equity Method Investment Income 107 -- 189 675
Loss on Early Extinguishment of Debt -- -- -- --
Gain on Derivatives -- -- -- --
Total Other Income (Expense) (779) (817) (2,652) (1,726)
Profit Before Provision For Income
Taxes 1,748 2,686 6,141 5,342
Provision For Income Taxes 430 787 1,583 2,198
Net Profit $1,318 $1,899 $4,558 $3,144
Less: Net Loss Attributable to the
Noncontrolling Interest 19 -- 35 --
Net Profit Attributable to BMP
Sunstone Corporation 1,337 1,899 4,593 3,144
Basic Profit Per Share $0.03 $0.05 $0.11 $0.08
Fully Diluted Profit Per Share $0.03 $0.05 $0.10 $0.08
Basic Weighted-average Shares
Outstanding 41,559 39,650 41,291 38,070
Fully Diluted Weighted-average Shares
Outstanding 50,831 40,760 48,184 39,368
BMP Sunstone Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
($ amounts in thousands)
September 30, December 31,
2009 2008
Assets
Current Assets:
Cash and Cash Equivalents $13,182 $15,740
Restricted Cash 1,563 1,150
Notes Receivable 10,595 15,797
Accounts Receivable, net of allowance
for doubtful accounts of $116 and
$127 42,493 30,897
Inventory, net of allowance for
obsolescence of $45 and $0 8,940 10,184
Receivable from Alliance Unichem 7,550 --
Due from Related Party 5 1,834
Other Receivables 2,545 2,168
VAT Receivable 1,060 921
Prepaid Expenses and Other Current
Assets 7,172 6,247
Total Current Assets 95,105 84,938
Property and Equipment, net 26,912 22,840
Investment in Alliance BMP Limited -- 15,093
Investment in Shengda 3,114 --
Investments, at Cost 146 146
Goodwill 70,029 69,866
Other Assets 519 875
Land Use Rights, net of accumulated
amortization 2,886 2,002
Intangible Assets, net of accumulated
amortization 39,377 41,891
Total Assets $238,088 $237,651
Liabilities and Equity
Current Liabilities:
Notes Payable and Bank Borrowings,
net of debt discounts $1,843 $33,591
Accounts Payable 24,941 27,482
Due to Related Parties 2,297 4,361
Deferred Revenues 128 128
Accrued Expenses 15,704 14,601
Total Current Liabilities 44,913 80,163
Long-Term Debt, including debt
premium 31,949 --
Deferred Taxes 9,510 9,856
Total Liabilities 86,372 90,019
Equity:
Common Stock, $.001 Par Value;
75,000,000 Shares Authorized as of
June 30, 2009 and December 31, 2008;
41,560,155 and 40,246,410 Shares
Issued and Outstanding as of
September 30, 2009 and December 31,
2008, respectively 42 40
Additional Paid in Capital 167,086 160,864
Common Stock Warrants 8,621 9,049
Accumulated Deficit (34,956) (31,042)
Accumulated Other Comprehensive
Income 9,422 8,721
Total Equity 150,215 147,632
Noncontrolling Interest 1,501 --
Total Liabilities and Equity $238,088 $237,651
BMP Sunstone Corporation and Subsidiaries
Non GAAP Reconciliations
($ amounts, except per share in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
GAAP Gross Profit $15,676 13,827 $50,728 $38,110
Amortization Related to Acquisitions 115 109 345 885
Non GAAP Gross Profit $15,791 $13,936 $51,073 $38,995
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
GAAP Operating Income $1,040 $1,765 $4,351 $1,973
Stock Based Compensation 600 636 1,784 1,816
Amortization Related to Acquisitions 887 1,102 2,658 3,279
Non GAAP Operating Income $2,527 $3,503 $8,793 $7,068
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
GAAP Net Loss $(208) $(816) $(3,913) $(4,882)
GAAP EPS $(0.01) $(0.02) $(0.10) $(0.13)
Stock Based Compensation 600 636 1,784 1,816
Debt Discount and Premium Amortization
and Issuance Cost 58 977 695 2,931
Amortization Related to Acquisitions 887 1,102 2,658 3,279
Loss on Early Extinguishment of Debt -- -- 4,573 --
Gain (Loss) on Derivatives -- -- (1,204) --
Non GAAP Net Income $1,337 $1,899 $4,593 $3,144
Non GAAP EPS $0.03 $0.05 $0.11 $0.08
BMP Sunstone Corporation and Subsidiaries
Adjusted EBITDA Reconciliation
($ amounts in thousands)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2009 2008 2009 2008
Net Loss $(208) $(816) $(3,913) $(4,882)
Net Loss Reconciliation to Adjusted
EBITDA:
Interest expense, net 879 817 2,841 2,401
Income taxes 430 787 1,583 2,198
Depreciation 592 615 1,745 1,424
Amortization of intangibles and fair
value of inventory increase 887 1,202 2,658 3,297
Loss on Early Extinguishment of Debt -- -- 4,573 --
Gain (Loss) on derivatives -- -- (1,204) --
Amortization of debt discount and
premium and debt issuance costs 59 977 695 2,931
ADJUSTED EBITDA $2,639 $3,582 $8,978 $7,369
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