China Pharma Holdings, Inc.("China Pharma," the "Company" or "We"), an NYSE American-listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, announced financial results for the quarter ended September 30, 2019.
Third Quarter Highlights
- Revenue increased by 3.4% to $2.4 million in the third quarter 2019 from $2.3 million in the same period of 2018;
- Gross margin was 15.7% in the third quarter 2019, compared to 22.3% in the same period of 2018;
- Loss from operations was $0.6 million in the third quarter 2019 compared to $1.9 million in the same period of 2018, an improvement of $1.3 million;
- Net loss was $0.7 million in the third quarter 2019 compared to $1.9 million in the same period of 2018. Loss per common share was $0.02 per basic and diluted share in the third quarter 2019, compared to $0.04 per basic and diluted share in the same period of 2018.
Ms. Zhilin Li, China Pharma's Chairman and CEO, commented, "We experienced negative effects on our sales from the strict implementation of the government policy of controlling the proportion of the spending on drugs to the patients' total expenditures in hospitals in recent quarters. Management endeavors to vigorously promote sales through active participation in recent provincial market openings to solicit new drug tender offers and allow China Pharma to expand its presence in these markets." Ms. Li continued, "In addition, we are experiencing sustained pressure from the more stringent requirements of drug registration standards, consistency evaluations, which has created a challenging environment in our industry during this period. We will continue actively adapting to the state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market, in order to optimize our development strategy. We will simultaneously actively implement the launch of our nutrition product."
Third Quarter Results
Revenue increased by 3.4% to $2.4 million for the three months ended September 30, 2019, as compared to $2.3 million for the three months ended September 30, 2018.
Gross profit for the three months ended September 30, 2019 was $0.4 million, as compared to $0.5 million during the same period in 2018. Our gross profit margin in the three months ended September 30, 2019 was 15.7% as compared to 22.3% during the same period in 2018. The decrease in our gross profit margin was mainly due to the increased ratio of fixed cost to revenue.
Our selling expenses for the three months ended September 30, 2019 and 2018 were $0.6 million and $0.9 million, respectively. Selling expenses accounted for 25.8% of the total revenue in the three months ended September 30, 2019, as compared to 40.3% during the same period in 2018.
Our general and administrative expenses were $0.3 million for each of the three months ended September 30, 2019 and 2018. General and administrative expenses accounted for 14.0% and 14.2% of our total revenues in the three months ended September 30, 2019 and 2018, respectively.
Our research and development expenses for the three months ended September 30, 2019 were $0.04 million, as compared to $0.06 million in the same period in 2018. Research and development expenses accounted for 1.7% and 2.7% of our total revenues in the three months ended September 30, 2019 and 2018, respectively. The consistency evaluations discussed under the "Business Overview & Recent Developments" section hereof is expected to have a significant impact on all generic products not only in our pipeline products, but also throughout the existing Chinese market for similar generic products. Because of the continuous introduction of detailed implementation rules under this policy, our pipeline products did not experience any further development in the third quarter of 2019.
Our bad debt expenses for the three months ended September 30, 2019 was $0.03 million, as compared to $1.13 million for the same period in 2018. The decrease of bad debt expenses in this period was mainly due to the decrease in the amount of accounts receivable that is turning to over 2 years old in this period. Our bad debt allowance estimate requires 70% of accounts re...
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