Biostar Pharmaceuticals, Inc. (NASDAQ GM: BSPM) ("Biostar" or "the Company"), a PRC-based manufacturer and marketer of pharmaceutical and health supplement products in China for a variety of diseases and conditions, today announced financial results of the first quarter ended March 31, 2013.
Summary Financials
First Quarter 2013 Financial Results
Revenue for the first quarter of 2013 decreased 23.9% to approximately $12.1 million compared to $15.9 million for the first quarter of 2012. The decrease was primarily due to decrease in sales of Biostar's capsule products as a result of the Capsule Incident, partially offset by the introduction of several new products. Sales of products under the Aoxing Pharmaceutical brand decreased by approximately $6.3 million, or 43.8%, for the three months ended March 31, 2013, compared to the same period in 2012. Sales of Shannxi Weinan's product increased by approximately $0.5 million or 33.2% for the three months ended March 31, 2013 compared to the same period in 2012. The Company introduced three new products to a local hospital in the 3rd quarter of 2012 and sales of these products contributed approximately $2.0 million to total net sales for the three months ended March 31, 2013.
Cost of goods sold for the three months ended March 31, 2013 was approximately $5.4 million or 44.7% of revenues, as compared to $5.1 million or 31.8% of revenues for the three months ended March 31, 2012. The increase in cost of goods sold was due to the introduction of new products and increase in the costs of raw material and labor, partially offset by the decrease in net sales and the temporarily discontinuation of several products. Gross profit for the first quarter of 2013 was approximately $6.7 million with gross margin of 55.3%, compared to gross profit of $10.8 million and gross margin of 68.2% for the first quarter of 2012. The decrease in gross margin was due to the increase in cost of goods sold and significant change in the sales of product mix.
Operating expenses for the three months ended March 31, 2013 were approximately $6.0 million, a decrease of 21.7% compared to the same period in 2012. The decrease was mainly attributable to approximately $1.0 million decrease in advertising expenses and approximately $0.7 million decrease in selling expenses.
Operating income for the first quarter of 2013 totaled approximately $0.7 million, a 77.1% decrease from $3.2 million reported for the first quarter of 2012. Operating margin were 6.0% and 20.0% for the first quarter of 2013 and 2012, respectively. The decrease was mainly attributed to the decrease of net sales in the first quarter of 2013.
Net income was approximately $0.6 million for the first quarter of 2013, a 74.1% decrease compared to $2.2 million for the first quarter of 2012. Diluted earnings per share were $0.06 for the first quarter of 2013 compared to $0.23 for the first quarter of 2012, based upon approximately 10.0 million and 9.4 million diluted common shares outstanding, respectively.
"We finished the first quarter of 2013 with positive momentum," commented Ronghua Wang, Chairman and Chief Executive Officer of Biostar. "Our net income was positive in the quarter and this reflects a gradual improvement in our sales. We expect the negative impact from the Capsule Incident is now behind us and we are optimistic that with our continued expansion of our product portfolio, supported by comprehensive marketing and distribution strategies, we are in position to leverage our product portfolio for optimal growth," Wang concluded.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled approximately $6.5 million on March 31, 2013, compared to $1.8 million on December 31, 2012. Accounts receivable balance was approximately $16.5 million on March 31, 2013, versus approximately $21.9 million on December 31, 2012. Days sales outstanding (DSO) were at 123 days. The Company had a current ratio of 3.7 to 1 and stockholders' equity of approximately $58.8 million, with total assets of approximately $70.3 million versus total liabilities of approximately $11.5 million on March 31, 2013.
For the first three months of 2013, the Company generated approximately $6.2 million in cash from operations versus $5.7 million in cash generated from operations reported for the same period in 2012.
Healthy lifestyle choices can offset genetic risk for brain diseases