Bohai Pharmaceuticals Group Inc (OTC:BOPH)

WEB NEWS

Friday, November 14, 2014

Comments & Business Outlook

BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

INCOME AND COMPREHENSIVE INCOME

 

(UNAUDITED) 


               

 

 

For the Three Months Ended September 30,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

 

 

Net revenues

 

 

$

54,742,745

 

 

$

50,889,060

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

15,533,884

 

 

11,707,654

 

 

 

 

 

 

 

 

 

Gross profit

 

 

39,208,861

 

 

39,181,406

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

 

25,454,348

 

 

27,240,489

 

Depreciation and amortization

 

 

742,657

 

 

713,560

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

26,197,005

 

 

27,954,049

 

 

 

 

 

 

 

 

 

Income from operations

 

 

13,011,856

 

 

11,227,357

 

 

 

 

 

 

 

 

 

Other expenses:

 

 

 

 

 

 

 

Interest income

 

 

28,373

 

 

2,790

 

Interest expenses

 

 

(437,267)

 

 

(362,286)

 

Other income (expenses), net

 

 

28,108

 

 

(26,117)

 

 

 

 

 

 

 

 

 

Total other expenses

 

 

(380,786)

 

 

(385,613)

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

12,631,070

 

 

10,841,744

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

(3,287,014)

 

 

(2,754,013)

 

 

 

 

 

 

 

 

 

Net income

 

 

$

9,344,056

 

 

$

8,087,731

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

Net income

 

 

9,344,056

 

 

8,087,731

 

Other comprehensive income:

 

 

 

 

 

 

 

Unrealized foreign currency translation gain (loss)

 

 

46,523

 

 

624,638

 

Comprehensive income

 

 

$

9,390,579

 

 

$

8,712,369

 

 

 

 

 

 

 

 

 

Net income per common share

 

 

 

 

 

 

 

Basic

 

 

$

0.50

 

 

$

0.45

 

Diluted

 

 

$

0.47

 

 

$

0.38

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

Basic

 

 

18,662,544

 

 

17,861,085

 

Diluted

 

 

20,450,764

 

 

22,093,335

Management Discussion and Analysis

Net Revenues

Net revenues are comprised of sales of 11 traditional Chinese medicines (corresponding to 7 drug formulas) in China during the three months ended September 30, 2014. We previously sold 20 medicines (corresponding to 16 drug formulas) following our acquisition of YantaiTianzheng on August 8, 2012, but have made the strategic choice to narrow our focus to our top 11 products (corresponding to 7 drug formulas). Net revenues for the three months ended September 30, 2014 increased by $3,853,685, or 7.6%, to $54,742,745 as compared to $50,889,060 for the three months ended September 30, 2013. Net revenues were $32,486,210 and $22,256,535 for Bohai and YantaiTianzheng, respectively, for the three months ended September 30, 2014. Net revenues were $31,793,560 and $19,095,500 for Bohai and YantaiTianzheng, respectively, for the three months ended September 30, 2013.

The increase in Bohai’s revenue was primarily due to a 5.5% net increase in revenues from three leading drug formulas in Bohai: Lung Nourishing Syrup, Tongbi Capsules, and Tongbi Tablets, which together accounted for over 98.9% of our total net revenues for Bohai for the three months ended September 30, 2014. Lung Nourishing Syrup, Tongbi Capsules, and Tongbi Tablets together accounted for 95.6% of our total net revenues for Bohai for the three months ended September 30, 2013. All of our lead products from Bohai are listed for coverage and reimbursement under national medical insurance program starting in December 2009.

The increase in Tianzheng’s revenue was primarily due to a net increase of 16.5% in revenue derived from two leading drug formulas in Tianzheng: Zhengxintai Capsule and Fangfengtongsheng Granule.

The increase in our revenue is primarily due to increase in market demand for our key products that are included in the government’s essential drug list. The government encourages hospital and doctors to prescribe essential drugs to patients.

The sale of our prescription drug products for the three months ended September 30, 2014 represented 67% of total net revenue compared to 83% for the same period in last year.


Net Income

We had a net income of $9,344,056 for the three months ended September 30, 2014, as compared to net income of $8,087,731 for the three months ended September 30, 2013, an increase in net income of $1,256,325, or 15.5%. This translates into basic earnings per common share of $0.50 and $0.45, and diluted earnings per common share of $0.48 and $0.38, for the three months ended September 30, 2014 and 2013, respectively. The increase in net income was primarily attributable to an increase in total gross profit of $27,454 and a decrease in operating expenses of $1,757,044 in the three months ended September 30, 2014 compared to the same period in 2013.

Net income margin was 17.1% for the three months ended September 30, 2014 as compared to net income margin 15.9% for the same period last year, an increase of 1.2%. The increase was mainly due to the decreased selling and general and administrative expenses decreased other expense and the increase of gross income.


Tuesday, October 14, 2014

Comments & Business Outlook

BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

         

 

 

For the Years Ended June 30,

 

 

2014

 

2013

Net revenues

 

$

175,086,238

 

$

151,792,917

 

 

 

 

 

Cost of revenues

 

42,376,170

 

37,196,569

 

 

 

 

 

Gross profit

 

132,710,068

 

114,596,348

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling, general and administrative

 

97,757,372

 

83,416,640

Impairment Charge - drug formula

 

0

 

1,688,486

Depreciation and amortization

 

2,541,351

 

2,613,040

 

 

 

 

 

Total operating expenses

 

100,298,723

 

87,718,166

 

 

 

 

 

Income from operations

 

32,411,345

 

26,878,182

 

 

 

 

 

Other income (expenses):

 

 

 

 

Interest income

 

183,974

 

38,712

Interest expense

 

(2,286,707)

 

(1,967,527)

Other (expenses)

 

1,246,732

 

(16,795)

Change in fair value of derivative liabilities

 

0

 

1,211,236

 

 

 

 

 

Total other (expenses)

 

(856,001)

 

(734,374)

 

 

 

 

 

Income before provision for income taxes

 

31,555,344

 

26,143,808

 

 

 

 

 

Provision for income taxes

 

(9,666,129)

 

(7,020,291)

 

 

 

 

 

Net income

 

21,889,215

 

$

19,123,517

 

 

 

 

 

Comprehensive income

 

 

 

 

Net income

 

21,889,215

 

19,123,517

Other comprehensive income

 

 

 

 

Unrealized foreign currency translation loss

 

(885,410)

 

2,763,505

Comprehensive income

 

$

21,003,805

 

$

21,887,022

 

 

 

 

 

Net income per common share

 

 

 

 

Basic

 

$

1.22

 

$

1.07

Diluted

 

$

1.02

 

$

0.91

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

Basic

 

17,964,714

 

17,861,085

Diluted

 

21,983,541

 

22,093,335

Management Discussion and Analysis

Net Revenues


Net revenues are comprised of sales of 11 traditional Chinese medicines (corresponding to 7 drug formulas) in China during the year ended June 30, 2014. We previously sold 20 medicines (corresponding to 16 drug formulas) following our acquisition of YantaiTianzheng on August 8, 2012, but have made the strategic choice to narrow our focus to our top 11 products (corresponding to 7 drug formulas). Net revenues for the year ended June 30, 2014 increased by $23,293,321, or 15.3%, to $175,086,238 as compared to $151,792,917 for the year ended June 30, 2013. Net revenues were $114,133,888 and $60,952,350 for Bohai and YantaiTianzheng, respectively, for the year ended June 30, 2014. Net revenues were $103,393,264 and $48,399,653 for Bohai and YantaiTianzheng, respectively, for the year ended June 30, 2013.

The increase in Bohai’s revenue was primarily due to a net increase in revenues of 15.2% from three leading drug formulas in Bohai: Lung Nourishing Syrup, Tongbi Capsules, and Tongbi Tablets, which together accounted for over 96.3% of our total net revenues for Bohai for the year ended June 30, 2014. Lung Nourishing Syrup, Tongbi Capsules, and Tongbi Tablets together accounted for 90.2% of our total net revenues for Bohai for the year ended June 30, 2013. All of our lead products from Bohai are listed for coverage and reimbursement under national medical insurance program starting in December 2009.

The increase in Tianzheng’s revenue was primarily due to a net increase of 26.6% in revenue derived from two leading drug formulas in Tianzheng: Zhengxintai Capsule and Fangfengtongsheng Granule.

The increase in our revenue is primarily due to increase in market demand for our key products that are included in the government’s essential drug list. The government encourages hospital and doctors to prescribe essential drugs to the patients.

The sale of our prescription drug products for the year ended June 30, 2014 represented 80% of total net revenue compared to 78% for the same period in last year.


Net Income


We had a net income of $21,889,215 for the year ended June 30, 2014, as compared to net income of $19,123,517 for the year ended June 30, 2013, an increase in net income of $2,765,698, or 14.5%. This translates into basic earnings per common share of $1.22 and $1.07, and diluted earnings per common share of $1.02 and $0.91, for the year ended June 30, 2014 and 2013, respectively. The increase in net income was primarily attributable to an increase in total gross profit of $18,113,720, offset by an increase in operating expenses of $12,580,557 in the year ended June 30, 2014 compared to the same period in 2013.

Net income margin was 12.5% for the year ended June 30, 2014 as compared to net income margin 12.6% for the same period last year, a decrease of 0.1%. The decrease was mainly due to the increased selling and general and administrative expenses and increased other expense offset by the increase of gross income.


Tuesday, October 7, 2014

Auditor trail

EXPLANATORY NOTE


On October 1, 2014, Bohai Pharmaceuticals Group, Inc. (the “Company”) filed an amendment (the “Amendment No. 1”) to its Current Report on Form 8-K (the “Original 8-K”), originally filed on September 19, 2014, with respect to the dismissal of the Company’s independent registered accounting firm and the retention of a new independent registered accounting firm.

The sole purpose of this Amendment No. 2 to the Original 8-K is to refile Exhibits 16.1 and 16.2 to Amendment No. 1 with the correct tagging for purposes of the Electronic Data Gathering, Analysis and Retrieval system. Except as set forth in the preceding sentence , Amendment No.1 and the Original 8-K have not been amended, updated or otherwise modified.

Item 4.01 Changes in Registrant’s Certifying Accountant


Effective September 15, 2014, Bohai Pharmaceuticals Group, Inc. (the “Company”) dismissed its independent registered public accounting firm, Marcum Bernstein & Pinchuk LLP (“Marcum”) effective immediately. The dismissal was approved by the Board of Directors (the “Board”) of the Company.

Marcum was engaged as the independent registered public accounting firm on June 24, 2011 (such period from June 24, 2011 through Marcum’s dismissal, the “Engagement Period”). During the Engagement Period, Marcum did not issue any reports on the Company’s financial statements that contained an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal years ended June 30, 2013 and June 30, 2014 and through the Engagement Period, there were (i) no disagreements with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Marcum would have caused them to make reference to the subject matter of the disagreement(s) in connection with their report; (2) no "reportable events" as such term is defined in Item 304(a)(1)(v) of Regulation S-K, except for the following:

During the examination of the Company’ accounts as of June 30, 2014, Marcum requested that the Company provide Marcum with access to its on line banking accounts for purpose of verifying the Company’s cash balances on the relevant dates., The Company refused to grant the access as requested because (i) such request was unprecedented during Marcum’s engagement with the Company and (ii) the Company did not hold any on line banking accounts at the time of such request (the “Disagreement”). Marcum’s view was that having such access was necessary to complete its current review procedures and that such requirement could not be waived. The Board has discussed the subject matter of the Disagreement described herein with Marcum. The Company has authorized Marcum to respond fully to the inquiries of Parker (as defined below) concerning the subject matter of the disagreement described herein.

The Company has provided Marcum with a copy of the above disclosures prior to its filing with the Securities and Exchange Commission (the “SEC”), and has requested that Marcum furnish a letter addressed to the SEC stating whether or not it agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of Marcum’s response letter dated September 19, 2014 is filed as Exhibit 16.1 to this Form 8-K.

 
1

Effective September 15, 2014, the Company engaged Parker Randall CF (H.K.) CPA Limited (“Parker”) as the Company’s independent registered public accounting firm. The engagement was approved by the Board. During the years ended June 30, 2013 and June 30, 2014 and through the date hereof, the Company did not consult with Parker regarding (1) the application of accounting principles to a specified transaction, (2) the type of audit opinion that might be rendered on the Company’s financial statements, (3) written or oral advice provided that would be an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue, or (4) any matter that was the subject of a disagreement between the Company and Marcum as described in Item 304(a)(1)(iv) or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K. The Company has provided Parker with an opportunity to review the Company’s disclosures contained in this Form 8-K and to furnish the Company with a letter addressed to the SEC containing any new information, clarification, or the respects in which it does not agree with the statements made in this Form 8-K. Parkers has reviewed the foregoing disclosures and has provided the Company with a letter indicating its agreement with the statements made herein.


 


Wednesday, October 1, 2014

CFO Trail

Explanatory Notes

On September 19, 2014, Bohai Pharmaceuticals Group, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original 8-K”) to report the dismissal of the Company’s independent registered accounting firm and the retention of a new independent registered accounting firm for the Company. The Company is now amending and restating the Original 8-K in response to comments received by the Company from the staff of the Securities and Exchange Commission regarding the Original 8-K. Therefore, Item 4.01 of the Original 8-K is hereby amended and restated in its entirety to read as follows:

Item 4.01 Changes in Registrant’s Certifying Accountant


Effective September 15, 2014, Bohai Pharmaceuticals Group, Inc. (the “Company”) dismissed its independent registered public accounting firm, Marcum Bernstein & Pinchuk LLP (“Marcum”) effective immediately. The dismissal was approved by the Board of Directors (the “Board”) of the Company.

Marcum was engaged as the independent registered public accounting firm on June 24, 2011 (such period from June 24, 2011 through Marcum’s dismissal, the “Engagement Period”). During the Engagement Period, Marcum did not issue any reports on the Company’s financial statements that contained an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal years ended June 30, 2013 and June 30, 2014 and through the Engagement Period, there were (i) no disagreements with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Marcum would have caused them to make reference to the subject matter of the disagreement(s) in connection with their report; (2) no "reportable events" as such term is defined in Item 304(a)(1)(v) of Regulation S-K, except for the following:

During the examination of the Company’ accounts as of June 30, 2014, Marcum requested that the Company provide Marcum with access to its on line banking accounts for purpose of verifying the Company’s cash balances on the relevant dates., The Company refused to grant the access as requested because (i) such request was unprecedented during Marcum’s engagement with the Company and (ii) the Company did not hold any on line banking accounts at the time of such request (the “Disagreement”). Marcum’s view was that having such access was necessary to complete its current review procedures and that such requirement could not be waived. The Board has discussed the subject matter of the Disagreement described herein with Marcum. The Company has authorized Marcum to respond fully to the inquiries of Parker (as defined below) concerning the subject matter of the disagreement described herein.

The Company has provided Marcum with a copy of the above disclosures prior to its filing with the Securities and Exchange Commission (the “SEC”), and has requested that Marcum furnish a letter addressed to the SEC stating whether or not it agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of Marcum’s response letter dated September 19, 2014 is filed as Exhibit 16.1 to this Form 8-K.

Effective September 15, 2014, the Company engaged Parker Randall CF (H.K.) CPA Limited (“Parker”) as the Company’s independent registered public accounting firm. The engagement was approved by the Board. During the years ended June 30, 2013 and June 30, 2014 and through the date hereof, the Company did not consult with Parker regarding (1) the application of accounting principles to a specified transaction, (2) the type of audit opinion that might be rendered on the Company’s financial statements, (3) written or oral advice provided that would be an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue, or (4) any matter that was the subject of a disagreement between the Company and Marcum as described in Item 304(a)(1)(iv) or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K. The Company has provided Parker with an opportunity to review the Company’s disclosures contained in this Form 8-K and to furnish the Company with a letter addressed to the SEC containing any new information, clarification, or the respects in which it does not agree with the statements made in this Form 8-K. Parkers has reviewed the foregoing disclosures and has provided the Company with a letter indicating its agreement with the statements made herein.


 


Friday, September 19, 2014

Auditor trail

Item 4.01 Changes in Registrant’s Certifying Accountant


Effective September 15, 2014, Bohai Pharmaceuticals Group, Inc. (the “Company”) dismissed its independent registered public accounting firm, Marcum Bernstein & Pinchuk LLP (“Marcum”) effective immediately. The dismissal was approved by the Board of Directors (the “Board”) of the Company.

Marcum was engaged as the independent registered public accounting firm on June 24, 2011 (such period from June 24, 2011 through Marcum’s dismissal, the “Engagement Period”). During the Engagement Period, Marcum did not issue any reports on the Company’s financial statements that contained an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.


Thursday, July 10, 2014

Comments & Business Outlook

YANTAI, CHINA--(Marketwired - Jul 10, 2014) - Bohai Pharmaceuticals Group, Inc.(OTCQB: BOPH), a leading manufacturer and marketer of traditional Chinese medicine (TCM), today said that, in the first six months of this year, its products increased their market penetration by an additional 3961 hospitals in China.

Of this total, 192 were level two hospitals -- medium-to-large size city facilities providing comprehensive health services. The remaining 3769 hospitals were level one -- smaller rural facilities and clinics tasked primarily with providing preventive care.

The Bohai product making the greatest gain was the company's Fangfeng Tongsheng Granule for treatment of upper respiratory tract infection, eczema and urticaria, which increased its penetration by 107 level two and 2373 level one hospitals. These included Suzhou Municipal Hospital, with more than 2,200 beds and 100,000 annual patients, and Shandong Dongping County People's Hospital, with over 500 beds and one of China's leading TCM departments.

Bohai's Lung Nourishing Syrup, which treats chronic tracheitis and bronchitis, increased its presence at 77 level two and 1685 level one hospitals including Fujian Sanming First Hospital, a 1000-bed teaching facility with 33 clinical specialties and 17 medical departments including one for TCM; and Zhejiang Zhenhai Hospital, a 128-bed facility with 17 clinical and medical departments.

Tongbi Capsule, Bohai's treatment for rheumatism and rheumatoid arthritis, was carried at 40 additional level two and 119 level one hospitals; the company's Tongbi Tablet was picked up at 21 level two and 42 level one hospitals.

Bohai added 43 distributors during the January 1 through June 30 period, and also opened a new marketing office in Beijing responsible for promoting the company's TCM products across China.

"We are thrilled to be making such rapid progress increasing the market presence of our leading TCM products," said Mr. Hongwei Qu, Bohai Chairman and CEO. "This progress should, we believe, result in significant revenue and earnings growth as we enter this new fiscal year."

For the first nine months of fiscal (June 30) 2014, Bohai earned about $18.0 million, or $1.01 per basic common share, a 22 percent improvement on its net income of $14.8 million, or $.83 per basic common share, in the first nine months of fiscal 2013.

The company said it expected market penetration for its TCM products to continue "at an accelerating pace."

Bohai's Fangfeng Tongsheng Granule and Lung Nourishing Syrup are included on China's Essential Drug List (EDL), a collection of drugs required by the government to be available to the public at all times in appropriate dosages at affordable prices. The company's Tongbi Capsule and Tongbi Tablet are on the EDL for Shandong and Hubei Provinces, two of the largest in China.


Friday, May 16, 2014

Comments & Business Outlook

BEIJING, CHINA--(Marketwired - May 15, 2014) - Bohai Pharmaceuticals Group, Inc. (OTC Pink: BOPH) (PINKSHEETS: BOPH), a leading manufacturer and marketer of traditional Chinese medicine (TCM), today announced that for the third fiscal quarter of 2014 ended March 31, the company had net revenues of $39,722,126, a 14 percent improvement on net revenues of $34,786,624 in the third fiscal quarter of 2013. The company had net income in Q3 2014 of $3,928,011, or $.22 per basic common share and $.19 per diluted common share, a 24 percent improvement on net income of $3,159,206, or $.18 per basic common share and $.15 per diluted common share, in the comparable year-ago quarter.

For the first nine months of the current fiscal year, Bohai had net revenues of $129,284,445, a 16 percent gain on net revenues of $111,067,950 for the same period in fiscal 2013. Bohai's net income in the first nine months of fiscal 2014 was $18,024,773, or $1.01 per basic common share and $.85 per diluted common share, a 22 percent gain on net income of $14,813,455, or $.83 per basic common share and $.71 per diluted common share, in the same period last year.

The increase in Bohai's third fiscal quarter net revenues compared to the same period a year ago was primarily due to an 11 percent increase in revenues contributed by the company's three leading TCM products: Lung Nourishing Syrup, and Tongbi Capsules and Tongbi Tablets for treatment of arthritis, which together accounted for over 96 percent of the company's net revenues in both the current fiscal year quarter and first nine-month period. The increase in the company's net income was attributable mostly to an increase in total gross profit of $3,729,763, offset by an increase in operating expenses of $2,609,346 for this year compared to the same period a year ago.

Bohai's improvement in fiscal 2014 nine-month net revenues was due primarily to a net increase in revenues of 18 percent from the above three products. The increase in the company's net income during the first nine months of fiscal 2014 compared to the same period a year ago was attributable mostly to an increase in total gross profit of $14,435,545, offset by an increase in operating expenses of $8,495,777.

Bohai CEO, Mr. Hongwei Qu, said he believed the company's operating performance would continue to show improvement in future quarters. First, he said, the company has two products -- Lung Nourishing Syrup and Fangfeng Tongsheng Granule (for treatment of a wide range of dermatologic conditions) -- on China's Essential Drug List (EDL), giving Bohai exclusive or near-exclusive rights to manufacture and distribute these two medicines, both of which are eligible for up to 100 percent insurance reimbursement by the Chinese government. In addition, the company's Tongbi Capsules has been included on the EDL for Shangdong and Hubei provinces, providing the company with further marketing advantages. Plus, said the CEO, all rural hospitals and clinics as well as all level 2 hospitals in China have been mandated to limit their prescriptions to EDL-listed products.

Looking forward, said Mr. Qu, the company is positioned to expand its total revenue from Tongbi Capsules and Tongbi Tablets from $65 million in 2013 to $85 million within the next three to five years.

The company's Fangfeng Tongsheng Granule should also enjoy rapid growth, he added, supported by both its EDL status as well as the current 17 percent annual growth in China's overall dermatology drug market.

Lastly, he said, due to the worsening air pollution conditions afflicting much of China, the company's Lung Nourishing Syrup is expected to increase its annual revenue from $28 million in 2013 to $90 million within three to five years.


Wednesday, April 23, 2014

Deal Flow

Entry Into a Material Definitive Agreement

On April 21, 2014, Bohai Pharmaceuticals Group, Inc. (the “Company”) and Euro Pacific Capital, Inc. (“Euro Pacific”), acting as representative of the holders of certain 8% convertible notes, as amended, (the “Notes”) issued by the Company on January 5, 2010, entered into a Fifth Amendment to the Notes (the “Fifth Amendment”) to extend the maturity date of the Notes to April 5, 2016.

The Fifth Amendment provides, among other things, that (i) the interest of the Notes will cease to accrue as of the date of the Fifth Amendment (the “Effective Date”), (ii) any accrued and unpaid interest as of the Effective Date in an aggregate amount of up to $1,000,000 (unless otherwise converted to the Company’s common stock pursuant to Section 5 of the Notes) shall be paid by cash as soon as practicable after the date of consummation of a financing by the Company conducted in the U.S. with net proceeds to the Company of at least $5 million, and (iii) in the event that the volume weighted average public trading price (as reported by Bloomberg Financial Markets) of the Company’s common stock exceeds $2.50 for 20 consecutive trading days (the “Trading Period”) with a daily average volume of 30,000 shares over such Trading Period, the Company will have the right, upon notice to the Investor Representative, to require mandatory conversion of the entire outstanding principal amount (including any accrued but unpaid interest) due thereunder into shares of common stock at a conversion price of $2.0 per share.


Tuesday, April 15, 2014

Comments & Business Outlook

Item 8.01 Other Events

Bohai Pharmaceuticals Group, Inc. (the “Company”) is hereby publishing its preliminary financial guidance for the third quarter of fiscal year 2014 ended March 31, 2014.

The Company is seeking to be a leading Traditional Chinese Medicine manufacturer in China. Since its debut in US capital markets in 2011, the Company’s revenues has grown from $59.2 million for fiscal year 2011 to $151.8 million for fiscal year 2013, with its net income grew from $9.1 million to $19.1million for the same periods. The Company’s estimated total revenue and net income for the third quarter of 2014 are proximately $35 million and $3.4 million as compared to $34.8 million and $3.2 million for the same period for the fiscal year 2013.

The Company currently produces seven traditional Chinese medicine products in China, among which two are on the State Essential Drugs List (the “EDL”), one is on the Provincial Essential Drugs list, five are on the National Drugs Reimbursement List, five have the Exclusive Drugs status, and two have the State Protected Chinese Medicine Status. The EDL allows for up to 100% insurance coverage by the Chinese federal or local governments, resulting in price advantage for EDL listed products. In addition, all rural hospitals/clinics and level 2 hospitals in China are mandated by law to limit their prescriptions to EDL listed products.


Tuesday, February 18, 2014

Comments & Business Outlook
BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME
 
(UNAUDITED)
 
 
 
For the Three Months Ended December 31,
 
For the Six Months Ended December 31,
 
 
 
2013
 
2012
 
2013
 
2012
 
Net revenues
 
$
38,673,259
 
$
40,932,506
 
$
89,562,319
 
$
76,281,326
 
Cost of revenues
 
 
9,046,095
 
 
9,283,649
 
 
20,753,749
 
 
18,178,538
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
29,627,164
 
 
31,648,857
 
 
68,808,570
 
 
58,102,788
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
 
20,003,910
 
 
22,546,807
 
 
47,244,399
 
 
39,753,923
 
Impairment Charge - drug formula
 
 
0
 
 
1,688,486
 
 
0
 
 
1,688,486
 
Depreciation and amortization
 
 
718,802
 
 
691,816
 
 
1,432,362
 
 
1,347,921
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Operating expenses
 
 
20,722,712
 
 
24,927,109
 
 
48,676,761
 
 
42,790,330
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
 
8,904,452
 
 
6,721,748
 
 
20,131,809
 
 
15,312,458
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expenses):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
 
71,930
 
 
8,541
 
 
74,720
 
 
26,326
 
Interest expenses
 
 
(856,642)
 
 
(426,323)
 
 
(1,218,928)
 
 
(939,356)
 
Other (expenses) income, net
 
 
(5,183)
 
 
115
 
 
(31,300)
 
 
(16,591)
 
Change in fair value of derivative liabilities
 
 
0
 
 
713,234
 
 
0
 
 
1,211,236
 
Total other income (expenses)
 
 
(789,895)
 
 
295,567
 
 
(1,175,508)
 
 
281,615
 
Income before provision for income taxes
 
 
8,114,557
 
 
7,017,315
 
 
18,956,301
 
 
15,594,073
 
Provision for income taxes
 
 
(2,105,526)
 
 
(1,758,578)
 
 
(4,859,539)
 
 
(3,939,824)
 
Net income
 
$
6,009,031
 
$
5,258,737
 
$
14,096,762
 
$
11,654,249
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
6,009,031
 
$
5,258,737
 
$
14,096,762
 
$
11,654,249
 
Unrealized foreign currency translation gain
 
 
640,898
 
 
453,030
 
 
1,265,536
 
 
204,083
 
Comprehensive income
 
$
6,649,929
 
$
5,711,767
 
$
15,362,298
 
$
11,858,332
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.34
 
$
0.29
 
$
0.79
 
$
0.65
 
Diluted
 
$
0.28
 
$
0.25
 
$
0.66
 
$
0.55
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
17,861,085
 
 
17,861,085
 
 
17,861,085
 
 
17,861,085
 
Diluted
 
 
21,945,509
 
 
22,093,335
 
 
22,019,422
 
 
22,093,335
 

Management Discussion and Analysis

Operating Results comparison of the three months ended December 31, 2013 and 2012
 
Net Revenues
 
Net revenues are comprised of sales of 11 traditional Chinese medicines (corresponding to 7 drug formulas) in China during the three months ended December 31, 2013. We previously sold 20 medicines (corresponding to 16 drug formulas) following our acquisition of Yantai Tianzheng on August 8, 2012, but have made the strategic choice to narrow our focus to our top 11 products (corresponding to 7 drug formulas). Net revenues for the three months ended December 31, 2013 decreased by $2,259,247, or 5.5%, to $38,673,259 as compared to $40,932,506 for the three months ended December 31, 2012. Net revenues were $27,441,076 and $11,232,183 for Bohai and Yantai Tianzheng, respectively, for the three months ended December 31, 2013. Net revenues were $29,979,509 and $10,952,997 for Bohai and Yantai Tianzheng, respectively, for the three months ended December 31, 2012.
 
The decrease in Bohai’s revenue was primarily due to a net decrease in revenues of 8.3% from three leading drug formulas in Bohai: Lung Nourishing Syrup, Tongbi Capsules, and Tongbi Tablets, which together accounted for over 96.4% of our total net revenues for Bohai for the three months ended December 31, 2013. Lung Nourishing Syrup, Tongbi Capsules, and Tongbi Tablets together accounted for 95.8% of our total net revenues for Bohai for the three months ended December 31, 2012. All of our lead products from Bohai are listed for coverage and reimbursement under national medical insurance program starting in December 2009. Tianzheng’s revenue was consistent for the three months ended December 31, 2013, compared to the same period last year.
 
The decrease in the Company’s revenue is primarily due to decrease in market demand caused by temporary negative industry news during the period relating to a government investigation into alleged acts of bribery committed in China by GlaxoSmithKline (“GSK”).  News of the investigation has not only affected GSK’s own sales in China, but has also had an adverse impact on the sales of other pharmaceutical companies, although such effect may not last long. In reaction to the news, many distributors exercised caution and temporarily decreased their purchase volume during the three months ended December 31, 2013.
 
The sale of our prescription drug products for the three months ended December 31, 2013 represented 81% of total net revenue compared to 80% for the same period in 2012.

Net Income
 
We had a net income of $6,009,031 for the three months ended December 31, 2013, as compared to net income of $5,258,737 for the three months ended December 31, 2012, an increase in net income of $750,294, or 14.3%. This translates into basic earnings per common share of $0.34 and $0.29, and diluted earnings per common share of $0.28 and $0.25, for the three months ended December 31, 2013 and 2012, respectively. The increase in net income was primarily attributable to a decrease in total gross profit of $2,202,693, offset by decrease in operating expenses of $4,204,397 for this year compared to the same period last year.
 
Net income margin was 15.5% for the three months ended December 31, 2013 as compared to net income margin 12.8% for the same period last year, an increase of 2.7%. The increase was mainly due to the decreased selling and general and administrative expenses, which was larger than the decrease of gross income.


Tuesday, October 9, 2012

Deal Flow

On January 5, 2010, Bohai Pharmaceuticals Group, Inc. (the “Company”) entered into a Securities Purchase Agreement with certain accredited investors (the “Investors”), for which Euro Pacific Capital, Inc. (“Euro Pacific”) is acting as representative, whereby the Company issued two-year convertible notes in the aggregate amount of $12 million (collectively, the “Notes”) and warrants to purchase shares of the Company’s common stock.  As of the date of this Report, there is currently $9.41 million due under the Notes and the maturity date of the Notes, as extended by the Second Amendment to the Notes, was October 5, 2012.

 We had previously established an RMB denominated escrow account in China and deposited into such escrow account the remaining outstanding amount of the Notes. As of the date of this Report, the escrow account remains in place and we continue to work on converting RMB to Dollars in order to make payments under the Notes.  However, we were not able to accomplish this by October 5, 2012, partially due to a one-week national holiday which ended on October 8, 2012. The Company is currently working with Euro Pacific as representative of the Investors on an amendment to the Notes which would extend the maturity date of the Notes further. As of the date of this Report, no written agreement has been entered into in this regard. We will continue to work with Euro Pacific on this matter and will continue our efforts in order to meet our obligations to the Note holders.

To demonstrate the Company’s efforts to repay the Notes, the Company expects to pay the quarterly interest of the Notes due October 5, 2012 during the week of October 8th and repay up to 10% of the $9.41 million principal currently due under the Notes as soon as practicable thereafter.


Monday, July 2, 2012

Liquidity Requirements
On June 27, 2012, Bohai Pharmaceuticals Group, Inc. (the “Company”) and Euro Pacific Capital, Inc. (“Euro Pacific”), acting as representative of the holders of certain 8% convertible notes, as amended, (the “Notes”) issued by the Company on January 5, 2010, entered into a Third Amendment to the Notes (the “Third Amendment”) to remove the limitations on Company’s ability to incur debt, to incur liens or to make capital expenditures. The purpose of the Third Amendment is to provide the Company with enhanced flexibility to seek potential sources of financing for the Company.

Thursday, June 28, 2012

Deal Flow

Item 1.01 Entry Into a Material Definitive Agreement

On June 27, 2012, Bohai Pharmaceuticals Group, Inc. (the “Company”) and Euro Pacific Capital, Inc. (“Euro Pacific”), acting as representative of the holders of certain 8% convertible notes, as amended, (the “Notes”) issued by the Company on January 5, 2010, entered into a Third Amendment to the Notes (the “Third Amendment”) to remove the limitations on Company’s ability to incur debt, to incur liens or to make capital expenditures. The purpose of the Third Amendment is to provide the Company with enhanced flexibility to seek potential sources of financing for the Company.


Tuesday, May 15, 2012

Comments & Business Outlook

BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

    For the Three Months Ended
March 31,
    For the Nine Months Ended
March 31,
 
    2012
(unaudited)
    2011     2012
(unaudited)
    2011  
                         
Net revenues   $ 36,237,847     $ 21,793,631     $ 101,002,589     $ 60,351,029  
                                 
Cost of revenues     8,180,762       4,853,768       23,106,879       12,402,897  
                                 
Gross profit     28,057,085       16,939,863       77,895,710       47,948,132  
                                 
Selling, general and administrative expenses     19,787,628       12,845,962       54,748,109       32,565,981  
                                 
Income from operations     8,269,457       4,093,901       23,147,601       15,382,151  
                                 
Other income (expenses):                                
Other income     -       1,783       -       99,901  
Interest income     13,039       11,176       51,205       40,673  
Interest expenses     (1,120,273 )     (554,428 )     (10,694,346 )     (2,203,775 )
Other (expenses) income, net of     (2,163 )     (546 )     (10,205 )     (2,468 )
Amortization of deferred financing fees     -       (232,200 )     -       (736,224 )
Change in fair value of derivative liabilities     317,986       263,118       458,724       3,181,603  
                                 
Total other income (expenses)     (791,411 )     (511,097 )     (10,194,622 )     379,710  
                                 
Income before provision for income taxes     7,478,046       3,582,804       12,952,979       15,761,861  
                                 
Provision for income taxes     (2,174,128 )     (897,458 )     (6,288,779 )     (3,523,145 )
                                 
Net income   $ 5,303,918     $ 2,685,346     $ 6,664,200     $ 12,238,716  
                                 
Comprehensive income :                                
Net income     5,303,918       2,685,346       6,664,200       12,238,716  
Other comprehensive income                                
Unrealized foreign currency translation gain     620,662       400,224       2,276,242       2,061,028  
Comprehensive income :   $ 5,924,580     $ 3,085,570     $ 8,940,442     $ 14,299,744  
                                 
Net income per common share                                
                                 
Basic   $ 0.30     $ 0.15     $ 0.37     $ 0.72  
Diluted   $ 0.28     $ 0.14     $ 0.37     $ 0.59  
                                 
Weighted average common shares outstanding                                
                                 
Basic     17,861,085       17,544,163       17,861,085       16,988,489  
Diluted     23,086,085       22,808,885       23,086,085       22,439,202  

Deal Flow
Item 1.01 Entry Into a Material Definitive Agreement
Item 8.01 Other Events

 

Pursuant to an agreement between Bohai Pharmaceuticals Group, Inc. (the “Company”) and Euro Pacific Capital, Inc. (“Euro Pacific”), on May 14, 2012, the Company repaid a portion of amounts due under its two-year 8% convertible notes, as amended (the “Notes”), in the amount of approximately $314,000, which is equivalent to the amount of the first quarter 2012 interest payment on the Notes (calculated based on an annual rate of 12% as currently provided for in the Notes). The Company will use its best efforts to repay an additional amount of approximately $731,000 due under the Notes as soon as possible, but no later than June 30, 2012. Such $314,000 and $731,000 payments are referred to herein as the “Repayment.”

 

The Notes were issued in a financing completed by the Company in January 2010 for which Euro Pacific acted as placement agent. Euro Pacific also acts as representative of the Note holders.

 

In addition, and as a result of the Company’s payment of the $314,000 portion of the Repayment as described above, on May 15, 2012, the Company and Euro Pacific entered into a Second Amendment to the Notes (the “Second Amendment”) to extend the maturity date thereof from April 5, 2012 to October 5, 2012 (such extra six month period, the “Second Extended Period”); and (ii) maintain the interest rate on the Notes at an annual rate of 12% (or 6% for the Second Extended Period). Pursuant to the terms of the Second Amendment, if the reminder of the Repayment ($731,000) is not received and distributed to Note holders by June 30, 2012, the Second Extended Period will thereafter automatically expire and the outstanding balance of the Notes will become immediately due and payable.


Tuesday, April 3, 2012

Deal Flow

Item 8.01 Other Information

 

(a) Proposed Extension of the Maturity Date of the Convertible Notes

 

On January 5, 2010, Bohai Pharmaceuticals Group, Inc. (the “Company”) entered into a Securities Purchase Agreement with certain accredited investors (the “Investors”), for which Euro Pacific Capital, Inc. (“Euro Pacific”) is acting as representative, whereby the Company issued two-year convertible notes in the aggregate amount of $12 million (collectively, the “Notes”) and warrants to purchase shares of the Company’s common stock.  As of the date of this Report, there is currently $10.45 million due under the Notes and the original maturity date of the Notes was January 5, 2012.

 

On December 31, 2011, the Company entered into an amendment to the Notes with Euro Pacific as representative of the Investors (the “Amendment”) which: (i) extended the maturity date of the Notes from January 5, 2012 to April 5, 2012 (such extra three month period, the “Extended Period”); and (ii) increased the interest rate on the Notes to an annual rate of 12% (or 3% for the Extended Period).  

 

Due to certain difficulties faced by the Company in China relating to the Company’s ability to convert its cash on hand from RMB (the Chinese currency) to US Dollars and in turn remit such amount outside China, the Company is currently in active discussions with Euro Pacific to (i) extend the maturity date of the Notes from April 5 to October 5, 2012 (such extra six month period, the “Second Extended Period”); and (ii) maintain the interest rate on the Notes as an annual rate of 12% (or 6% for the Second Extended Period). A second amendment to the Notes to memorialize the agreements of the Company and Euro Pacific with respect to the Second Extended Period is expected to be entered into by both parties in the near future.

 

To demonstrate the Company’s efforts to repay the Notes, the Company expects to repay up to 10% of the $10.45 million currently due under the Notes by April 13, 2012.  In addition to such proposed payment, and to further demonstrate the Company’s commitment to repay the Notes in full, the Company expects, as part of the contemplated Note amendment described above, to establish an RMB escrow account in China by April 13, 2012 with a reputable bank agreed upon by both Euro Pacific and the Company and to deposit into such escrow account the remaining outstanding amount of the Notes, which the Company will have no right to dispose of or use except for (i) conversion into US Dollars for the purpose of repayment of the Notes or (ii) releases from such escrow account from time to time in amounts equal to the decreases in the outstanding amount of the Notes, either by payments made by the Company or conversion of the Notes by Noteholders.

 

The Company expects to fulfill its obligations under the Notes on or before applicable due dates pursuant to the terms of the applicable agreements with Euro Pacific and the Investors (including the contemplated Note amendment described above).


Comments & Business Outlook
Fiscal 2012 Guidance and other information

 

The Company is hereby publishing its preliminary gross revenue guidance for the third quarter of fiscal year 2012 ended March 31, 2012 in the range of $35 million to $39 million which, if achieved, would represent year-over-year quarterly growth of approximately 62.8-69.3%. The Company expects that this revenue growth were driven by a combination of its Yantai Tianzheng acquisition undertaken in mid-2011 and increasing of essential drug sales. In addition, the Company expects that the revenue growth will continue into the fourth quarter of fiscal 2012 (ending June 30, 2012) and the second half of the calendar 2012


Saturday, January 7, 2012

CFO Trail
On December 31, 2011, Mr. Gene Hsiao submitted to the Board of Directors of the Company his resignation as a director of the Company and the Chief Financial Officer of the Company, which resignation became effective on December 31, 2011. Mr. Hsiao’s resignation was for personal reasons and not as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Hsiao noted in his resignation letter that his decision to resign was difficult as working at the Company has been a great experience for him for which he is extremely grateful. Mr. Hsiao wished the Company every success in the future and thanked the Company’s Chairman and Chief Executive Officer, Mr. Hongwei Qu, for the opportunities Mr. Hsiao was given during his tenure with the Company.

Sunday, December 11, 2011

Investor Alert

On January 5, 2010, Bohai Pharmaceuticals Group, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (the “Investors”), for which Euro Pacific Capital, Inc. (“Euro Pacific”) is acting as representative, whereby the Company issued two-year convertible notes in the aggregate amount of $12 million (collectively, the “Notes”) and warrants to purchase shares of the Company’s common stock. As of the date of this Report, there is currently $10.5 million due under the Notes and the current maturity date of the Notes is January 5, 2012.

The Company is currently working with Euro Pacific as representative of the Investors on an amendment to the Notes (the “Proposed Amendment”) which would: (i) extend the maturity date of the Notes from January 5, 2012 to April 5, 2012 (such extra three month period, the “Extended Period”); and (ii) increase the interest rate on the Notes to an annual rate of 12% (or 3% for the Extended Period). Under the terms of the SPA, Euro Pacific has the power and authority to enter into the Proposed Amendment on behalf of the Investors and will undertake a process during the month of December 2011 of informing the Investors of the Proposed Amendment, following which (and prior to the original maturity date of the Notes) it is expected that the Company and Euro Pacific will formally enter into the Proposed Amendment.


Friday, December 9, 2011

Deal Flow
On January 5, 2010, Bohai Pharmaceuticals Group, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (the “Investors”), for which Euro Pacific Capital, Inc. (“Euro Pacific”) is acting as representative, whereby the Company issued two-year convertible notes in the aggregate amount of $12 million (collectively, the “Notes”) and warrants to purchase shares of the Company’s common stock.  As of the date of this Report, there is currently $10.5 million due under the Notes and the current maturity date of the Notes is January 5, 2012.

Monday, November 14, 2011

Comments & Business Outlook

First Quarter 2012 Results

  • Revenue increased 78.3% to $29.9 million for the first quarter of fiscal 2012 from $16.8 million for the first quarter of fiscal 2011
  • Gross profit increased 69.2% to $23.0 million versus $13.6 million for the first quarter of fiscal 2011
  • Income from operations increased 35.9% to $6.7 million compared to $5.0 million for the same period of fiscal 2011
  • Net income was $2.7 million, or $0.15 per diluted share for the first quarter of fiscal 2012, versus $3.0 million, or $0.15 per diluted share for the same period of fiscal 2011
  • Non-GAAP net income increased 40.8% to $4.9 million, or $0.25 per diluted share, versus $3.5 million, or $0.17 per diluted share, for the first quarter of fiscal 2011

Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals, stated, "We are pleased to report another very strong quarter at Bohai. Our revenue growth is being driven by a number of factors, including increasing demand for our core products and brand, an expanding product line, aggressive marketing, China's expanding coverage of TCM under its national medical insurance program and, most recently, our acquisition of Yantai Tianzheng.

"We completed the acquisition of Yantai Tianzheng this past August and, by doing so, have expanded our existing product line while achieving economies of scale. The acquisition was immediately accretive to our business. We currently produce 19 varieties of approved traditional Chinese herbal medicines in seven delivery systems: tablets, granules, capsules, formulations, concentrated powder, tincture and medicinal wine. Of these 19 products, 12 are prescription drugs and 7 are over the counter (or OTC) products. Approximately 20% of the increase in our revenues during the third quarter was from Bohai and 58% was from Tianzheng.

"Our competitive advantage in the marketplace is the fact that all of our lead products are listed for coverage and reimbursement under China's national medical insurance program. The sale of our prescription drug products for the fiscal first quarter of 2012 represented 74.0% of total net revenue compared to 60.5% for the same period in last year. The increase in prescription sales was primary due to increases in sales volume from two of our core products, Tongbi Capsules and Tongbi Tablets, as well as prescription product sales from Yantai Tianzheng Pharmaceuticals. We are in a strong position in the Chinese market and seek to capture additional market share in the months ahead."

In concluding, Mr. Qu stated, "We anticipate our revenue and net profit will continue to increase as a result of the Chinese government's expansion of healthcare coverage and reimbursement for an increasing number of products produced by Bohai. By the end of 2011, China's healthcare system will provide individual health insurance for over 90% of the country's population. The health plan includes traditional Chinese medicines for coverage and reimbursement from hospitals and medical centers all over China."


Thursday, September 29, 2011

Comments & Business Outlook

Fiscal 2011 Financial Highlights:

  • Revenue increased 37.2% to $81.3 million in fiscal 2011 from $59.3 million in fiscal 2010
     
  • Gross profit increased 30.4% to $64.0 million versus $49.1 million for the fiscal 2010
     
  • Income from operations increased 42.1% to $18.3 million compared to $12.8 million in fiscal 2010
     
  • Net income was $14.0 million, or $0.75 per diluted share in fiscal 2011, versus $9.1 million, or $0.55 per diluted share in fiscal 2010
     
  • Non-GAAP net income increased 37.4% to $11.8 million, or $0.66 per diluted share, versus $8.6 million, or $0.52 per diluted share, in fiscal 2010

Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals, stated, "A combination of company-driven initiatives, quality products and favorable healthcare coverage trends in China are the driving forces behind Bohai's impressive growth. We are pleased to report a 37.2% increase in sales for 2011 and 37.4% growth in adjusted, non-GAAP net income. Our four lead products continue to gain traction in the markets we serve and now comprise 76% of our total revenue. These products include Lung Nourishing Syrup, Tongbi Capsules, Tongbi Tablets and Shantongning Tablets. We currently manufacture 19 varieties of approved traditional Chinese herbal medicines of which 12 are prescription drugs and seven are over-the-counter."

"We will continue to roll out new products already in our pipeline and we recently expanded our product lines through the acquisition of Yantai Tianzheng Pharmaceutical Co., Ltd., in August 2011. Yantai Tianzheng has a sales network that covers 14 major provinces in China and had revenue of $37.9 million in 2010, an increase of 60.5% over 2009. We plan to leverage our respective distribution channels and manufacturing capabilities, as well as streamline operations through the integration of our respective companies. The acquisition also expands Bohai's pipeline of SFDA approved, exclusive and/or protected TCM medicines. The government's plan to provide 90% of China's population with healthcare coverage by the end of 2011 will further enhance Bohai's penetration into its intended market."

In concluding, Mr. Qu stated, "With Bohai's strong and growing pipeline of both prescription and non-prescription products and the Chinese government's plan to provide reimbursement for an expanded universe of traditional Chinese medicines, we believe we are in an exceptionally strong position to increase sales as well as shareholder value."


Liquidity Requirements

We believe that we can meet our liquidity and capital requirements for our ongoing operations from our currently available working capital and maintain our operations at our current levels.

However, during the current fiscal year and thereafter, we will be required to fund two significant obligations (as well as others described under Obligations of Material Contracts below):

(i) the completion of the acquisition of Yantai Tianzheng (currently $12 million is due within 12 months, and a total of $29 million is due); and

(ii) the repayment our convertible promissory notes due January 5, 2012 (currently $10.45 million due).

As such, we will be required to raise substantial additional capital to fund these obligations, either through the issuance of debt or equity securities, bank loans or other methods. Readers are cautioned that additional funding, capital or loans may be unavailable to us on favorable terms, if at all. If adequate funds are not available, we would likely have to renegotiate the terms of these obligations, which we may be unable to do on favorable terms.


 


Wednesday, August 10, 2011

Acquisition Activity
On August 8, 2011, Yantai Nirui Pharmaceuticals, Ltd. (“Yantai Nirui”), a company formed under the laws of the People’s Republic of China (the “PRC”) and wholly owned by Bohai Pharmaceuticals Group, Inc. (the “Company”), entered into a Share Purchase Agreement (the “SPA”) pursuant to which Yantai Nirui acquired, from the three individual holders thereof, one hundred percent (100%) of the outstanding equity interests (the “Shares”) in Yantai Tianzheng Pharmaceuticals Co. Ltd., a company formed under the laws of the PRC (“Yantai Tianzheng”).

Monday, May 16, 2011

Comments & Business Outlook

Third Quarter Fiscal 2011 Financial Highlights:

  • Revenue increased 44.6% to $22.2 million from $15.3 million for the third quarter of fiscal 2010
  • Gross profit increased 35.7% to $16.9 million versus $12.5 million for the third quarter of fiscal 2010
  • Income from operations increased 24.8% to $4.1 million compared to $3.3 million for the third quarter of fiscal 2010
  • Net income was $2.7 million, or $0.14 per diluted share, versus $3.1 million, or $0.16 per diluted share for the third quarter of fiscal 2010
  • Non-GAAP net income increased 26.2% to $2.6 million, or $0.14 per diluted share, versus $2.1 million, or $0.11 per diluted share, in the fiscal third quarter of 2010, excluding $997,626 of net gains for non-cash related activities

Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals, stated, "The continued growth and acceptance of our traditional Chinese medicines in China is very gratifying and we are pleased to report another quarter of strong revenue growth. We continued the execution of our operational plan by investing heavily in sales and marketing this quarter, and we believe our 44.6% increase in revenue demonstrates that this effort is paying off. In addition, we added 200 level 2 hospitals and 10 new drug store chains to our national network of retail locations selling our lead product--Lung Nourishing Syrup. We now sell this product in approximately 1,600 level 2 hospitals and 36 drug store chains in China. We believe that our strong distribution network, combined with an internal sales force of more 300 direct sales representatives, provides an important competitive advantage and bodes extremely well for the future. Moreover, we have significant capacity within our existing manufacturing facilities, which should enable us to gain significant operating leverage as we continue to grow."


Tuesday, February 15, 2011

Liquidity Requirements
We believe that we can meet our liquidity and capital requirements for our ongoing operations from our currently available working capital and maintain our operations at our current levels.

Monday, February 14, 2011

Comments & Business Outlook

Summary of Fiscal Second Quarter Ended  December 31, 2010 Financial Results:

  • Net Revenues of $22.2 million, an increase of 32% from $16.8 million in 2009
  • Gross profit of $17.5 million, an increase of 24% from $14.2 million in 2009
  • Net income of $6.5 million, an increase of 100% from $3.3 million in 2009
  • Fully diluted EPS of $0.31 and basic EPS of $0.39 for fiscal Q2 2011, compared to $0.25 Q2 2010

"During the second quarter, we continued our track record of growth through sales of our three lead TCM products, and our growth was augmented by continued market acceptance of our five new TCM products introduced last year," said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group.  "During the quarter, we saw our net revenues increase by over 32% compared to the same quarter last year as we reaped the benefits of the strong marketing efforts on our lead products and the continuing the roll out of our newer products.  Our efforts to keep administrative costs down have also shown significant benefits to our net income."  

"Also during the quarter, in December we were very excited to announce our agreement to acquire 14 approved TCM medicines, which we believe represents a tremendous opportunity for our future sales growth," continued Mr. Qu.  "We believe our continued progress with our sales initiatives, along with the Chinese government's growing support of the TCM industry and our growing product portfolio, put us in a great position to continue driving shareholder value."

Mr. Qu added, "As we move into 2011, our balance sheet remains strong and we are well situated in the Chinese TCM market with a growing portfolio of government supported products.  Not only are Bohai's three lead products reimbursable through the National Drug Reimbursement List in China – and therefore not affected by the recent pricing caps – two of them are also partially sheltered from competition. Tongbi Capsules are a 'protected' medicine in China, meaning Bohai is one of the few manufacturers permitted to sell the product, and Lung Nourishing Syrup was recently awarded a patent in China that lasts 20 years, allowing Bohai to sell these medicines at a premium.  We believe these advantages, together with our strong marketing efforts, create the potential for continued growth for our company."


Tuesday, January 25, 2011

Deal Flow
YANTAI, China, January 24, 2011 — Bohai Pharmaceuticals Group, Inc. announced the closing of a financing transaction with investors located in China under which it sold an aggregate of 748,382 unregistered shares of common stock at $2.50 per share, for total gross proceeds of $1,870,955.  This share price represents greater than a 23% premium to the closing price on January 21st, 2011.  There were no warrants attached to the financing and no broker was utilized.

Wednesday, December 15, 2010

Comments & Business Outlook

From December 14, 2010:

Bohai Pharmaceuticals Group, Inc. has entered into a binding agreement with Shandong Daxin Microbiology Pharmaceutical Industry Co., Ltd. to acquire the rights to 14 approved TCM medicines that were previously issued to Daxin by the Shandong Branch of the State Food and Drug Administration of China ("SFDA").  The aggregate purchase price is approximately $7,200,000 (CNY 48 million), of which approximately $3,000,000 (CNY 20 million) will be paid within 15 days from the execution of the agreement.  The remaining balance will be paid on or before January 31, 2011. 
 
The product acquisitions expand Bohai's delivery platforms to include two new categories: powder and pellet formulations.  The Chinese government's Essential Drug List (EDL) for TCM, which was established in 2009 as part of China's healthcare reform, has the most product categories in these two areas.  Among the 14 medicines being acquired by Bohai, four are currently included on the EDL and an additional five medicines are included in the National Drug Reimbursement List (NRDL).  Additionally, 3 of the 14 are prescription medicines and 11 will be available for sale Over-the-Counter.  Inclusion on either the EDL or NRDL allows for up to 100% insurance coverage by the Chinese government. 
 
"Bohai is excited to significantly expand our potential product offerings with the acquisition of these 14 products, which we believe offer great value to our shareholders," said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group. "The ongoing national health insurance reform promises to drive tremendous growth in the Chinese markets, particularly with respect to TCM and in rural areas, where over 900 million people reside.  Patient purchased drugs from the EDL will receive 100% government coverage, so ensuring Bohai expands patient options for medicines on this list will be a key component of our growth strategy.  Importantly, these new products will leverage our existing 300 person sales-force and help us gain additional TCM market-share in China."
 
Bohai's 14 newly acquired medicines are in addition to the 29 traditional Chinese medicine products that the Company is authorized to produce, of which 15 are currently in production. 
 
For additional information on this transaction, please see the Form 8-K that the Company plans to file with the U.S. Securities and Exchange Commission. 


Thursday, November 18, 2010

Comments & Business Outlook
 
       
September 30,
 
   
Notes
 
2010
   
2009
 
                 
Net revenues
      $ 17,029,648     $ 13,954,604  
                     
Cost of revenues
        (3,447,266 )     (2,217,604 )
                     
Gross profit
        13,582,382       11,737,000  
                     
Selling, general and administrative expenses
 
15
    (8,614,758 )     (9,174,693 )
                     
Income from operations
        4,967,624       2,562,307  
                     
Other incomes (expenses)
                   
Other income
        14,208       69,072  
Amortization of deferred financing fees
        (259,965 )     -  
Interest expense
 
16
    (494,039 )     (148,395 )
Other expense
        (3,115 )     (5,269 )
Change in fair value of derivative liabilities
        (30,554 )     -  
                     
Total other income (expenses)
        (773,465 )     (84,592 )
                     
Income before provision for income taxes
        4,194,159       2,477,715  
                     
Provision for income taxes
 
17
    (1,181,684 )     (555,474 )
                     
Net income
      $ 3,012,475     $ 1,922,241  
                     
Comprehensive income:
                   
Net income
      $ 3,012,475     $ 1,922,241  
Other comprehensive income
                   
Unrealized foreign currency translation gain (loss)
        926,468       (47,583 )
Comprehensive income
      $ 3,938,943     $ 1,874,658  
                     
Earnings per common share
                   
Basic
 
11
  $ 0.18     $ 0.15  
Diluted
      $ 0.15     $ 0.15  
                     
Weighted average common shares outstanding
                   
Basic
 
11
    16,506,626       13,162,500  
Diluted
        22,250,104       13,162,500

“Improving upon our past financial achievements, Bohai is excited to announce its record results for the first quarter of fiscal 2011,” said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group. “During the quarter, we recognized double digit top line growth by focusing our strong marketing efforts on our lead products while at the same time continuing the roll out of our five new TCM products. We were also able to cut administrative costs, allowing us to boost net income by 57% compared to the same period last year. We look forward to making further progress with our sales initiatives as we continue to take advantage of the Chinese government’s growing support of the TCM industry through the implementation of its new healthcare policies.”

As a key driver of Bohai’s growth, the company’s three lead TCM products (Tongbi Capsules and Tablets and Lung Nourishing Cream) are eligible for reimbursement under China’s national medical insurance program enacted in 2009. Bohai believes that this provides a distinct advantage to the company’s business strategy, which places a particular marketing focus on these lead products going forward. Among other features, this new government plan seeks to extend national medical insurance coverage to China’s rural areas, with a target population in excess of 900 million potential healthcare consumers. The plan also seeks to promote the use of TCM products. Bohai currently produces 15 TCM products in China and is authorized to produce an additional 14 products.

Sales in the first quarter were generated mainly from Bohai’s lead products, Lung Nourishing Cream, Tongbi Capsules and Tongbi Tablets, which together represented over 70% of Bohai’s total net revenues. However, progress has been made on the five products that Bohai introduced in April and May of 2010. Although the new product sales only represented less than 5% of total net revenues in the first quarter, the net revenues for the five new products in the quarter ended September 30, 2010 increased by 160% compared to the quarter ended June 30, 2010.

Mr. Qu added, “We anticipate our overall net revenues will continue to increase due to the national medical and health plan initiated by Chinese government in 2009, which is expected to eventually cover individual health insurance over 90% of China’s population by 2011. As these policies continue to be implemented, we believe endorsements for Traditional Chinese Medicine, along with its coverage and reimbursement from hospitals and medical


Monday, October 4, 2010

Conference Call Notes

Transcript of the Bohai Pharmaceuticals Group, Inc: Fiscal Year 2010 Earnings Conference Call

Participants
Darren Minton, Trilogy Capital Partners, President
Gene Hsiao, Bohai Pharmaceuticals Group Inc., CFO

Darren Minton – Trilogy Partners – President


Thank you Diego and thank you to everyone who has joined us today for Bohai Pharmaceuticals Group’s Fiscal Year 2010 Earnings Conference Call.  I am joined here today by Gene Hsiao, Bohai’s Chief Financial Officer.  Bohai is lucky to have someone of Gene’s caliber on board, as he has over 15 years of experience working with public companies, and as an added benefit to Bohai’s investors he is based in the United States and is fluent in both English and Mandarin.

There are a number of items that we look forward to discussing with you this morning including Bohai’s record financial results for the fiscal year ended June 30th 2010, recent developments in the traditional Chinese medicine industry (also known as “TCM”), as well as Bohai’s plans for the future.  At the conclusion of this call we will be answering questions during a brief Q&A session.

Before we get started I will take a moment to read the safe harbor statement regarding today’s conference call.  This conference call will contain forward-looking statements within the meaning of the US Federal Securities Law concerning Bohai Pharmaceuticals Group, Inc.  Forward-looking statements can be identified by words such as “estimate,” “expect,” “project,” “guidance,” “intend,” “believe,” “anticipate,” “seek” and other words of similar meaning in connection with any discussion of future events.  Listeners are cautioned that Bohai’s actual results may differ materially or even substantially from what is stated in the forward looking statements depending on a number of risk factors, including, but not limited to risks associated with: general economic, political and business conditions in China; the Chinese government’s support of healthcare and TCM in China; Bohai’s manufacturing and shipment capabilities; market acceptance of both new and existing Bohai products; competition; Bohai’s sales and marketing initiatives; and Bohai’s corporate governance, accounting and disclosure procedures, as well as various other factors, many of which are beyond Bohai’s control.  All forward-looking statements are expressly qualified in their entirety by this cautionary statement and the full listing of risk factors detailed in Bohai’s filings with the SEC.  Except as required by applicable law, Bohai undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.


Now with that I would like to start the call with a few words from Bohai’s CFO, Gene Hsiao.  Gene?

Gene Hsiao – Bohai Pharmaceuticals Group, Inc. – CFO

Thank you, Darren.  Good morning everyone. It’s a pleasure to be here.
Our first order of business today will be providing a brief overview of Bohai’s business for those of you that are new to the company, and discussing the June 30 year-end financials in greater detail.  I’ll end our prepared remarks with Bohai’s recent developments, at which point we will enter the question and answer session.

Bohai Pharmaceuticals Group is involved in the production, manufacturing and distribution of herbal pharmaceuticals based on Traditional Chinese Medicine in China. Bohai’s medicines address common health problems ranging from arthritis to viral infections, and cardio vascular issues to respiratory diseases. Our products are sold either by prescription through hospitals, or over-the-counter through local pharmacies and retail drug store chains.

To understand our business model, it is important to have a general appreciation for the many macro-economic drivers that are currently influencing the healthcare system in China, as well as new PRC mandated policies that support the use of Traditional Chinese Medicine.  First and foremost, there is an ongoing and dramatic expansion of national health insurance in China through the implementation of new government programs established in early 2009 that are seeking to extend health insurance coverage to previously uncovered Chinese citizens.  With the government paying up to 90 percent of certain pharmaceutical products’ costs, these policies are opening up the pharmaceutical industry in China to a target demographic of approximately 900 million rural Chinese, who for the most part, have not purchased medicines on a large scale due to their limited income.

Going forward, it has been estimated that China plans to increase its healthcare spending from 96 billion in 2008 to approximately 125 billion by 2011, with the goal of covering 90% of its population with basic medical insurance at that time.  As these polices go into effect, and of further benefit to Bohai, the Chinese government is officially supporting the use of Traditional Chinese Medicine by including these drugs in its list of nationally reimbursable products.  Bohai’s three lead products, Tongbi Capsules, Tongbi Tablets and Lung Nourishing Cream, are eligible for reimbursement under China’s National Medical Insurance Program.

For this reason, in fiscal 2010 we placed (and we expect to continue to place) a significant emphasis on these products in our marketing budget through increased advertising, sales initiatives, and prescription drug promotion via conferences, seminars and directly to hospitals. With over 300 employees devoted to sales, operating from 20 offices throughout China, Bohai is committed to meeting the greater demand for Traditional Chinese Medicine.  As evidenced by our numbers this year, Bohai has positioned itself to take full advantage of the favorable market conditions in China.

Looking first at our consolidated year-end figures, our net revenues increased 20% to 59.3 million, up 10 million from 2009 net revenues of 49.3 million. We increased revenues primarily through sales of our main products: Lung Nourishing Cream (which is taken orally, similar to a cough syrup) and Tongbi Capsules and Tongbi Tablets (both of which treat arthritis).  As mentioned previously, each of these 3 products have been listed for national insurance coverage in China.  The increase in sales was also attributed to Bohai’s enhanced marketing strategy that was implemented in January 2010 when we raised 12 million dollars from US investors. As mentioned in the 10-K, due to temporary disruptions in the hospital bidding process, (as various PRC mandated healthcare policies have been implemented) fourth quarter net revenues decreased by approximately $173,000 compared to the same period of 2009.  Management believes that these changes to the local bidding process are temporary and they should NOT have a material impact on our overall sales going forward.

With Bohai’s increase in fiscal year 2010 net revenue, gross profit increased to 49.1 million as compared to 41.4 million last year.  Our overall gross profit margins as a percentage of revenue have now exceeded 80% for the last two fiscal years.  SG&A expenses increased to 36.3 million in fiscal 2010, compared to 31.3 million in 2009.  This increase was mainly attributable to an increase of advertising expense of approximately 2.3 million as part of Bohai’s increased marketing activities, as well as an increase on commission expense for our expanded sales team of approximately 2.7 million.

Bohai generated net income of 9.5 million in 2010, compared to 7.9 million last year, an approximate 19% increase.  Earnings per share increased to 57 cents per fully diluted share, or approximately 64 cents per basic share in 2010, compared to 60 cents per basic share in 2009.

Now, looking at the balance sheet. Cash and cash equivalents increased from 2.5 million as of June 30, 2009 to 17.1 million as of June 2010, mainly as a result of the 12 million dollar financing in January of this year and cash generated from operations.  As of June, current assets totaled 30.4 million, and current liabilities were 8.8 million. Working capital at the end of the year was a healthy 21.6 million, as compared to 8.5 million last year.  Derivative liabilities relating to investor and placement agent warrants for the year totaled 5.5 million.  Our shareholders' equity was 50.1 million compared to 33.4 million at June 30, 2009.
In addition to our record financial metrics, Bohai has experienced a number of significant events over the past year:

In January 2010, Bohai became a U.S. listed operating company and raised $12 million in a convertible note and warrant financing. Using these funds, Bohai has been implementing a proactive marketing strategy designed to significantly increased revenue on all the TCM products Bohai currently sells, with a particular focus on our 3 lead products.

In April and May of this year, Bohai introduced a total of five new products, increasing its total TCM offering from 10 to 15.  In addition, Bohai has the right to produce 14 additional products based on an aggregate portfolio of 29 TCM formulations that we are approved by the PRC government to manufacture.

Throughout the year, we have taken steps to enhance our corporate governance as we seek to be a model US listed Chinese company.  I was pleased to join the company earlier this year and in July we added three distinguished independent directors to join our CEO on the board.  Included in this group are a renowned expert in TCM, a well regarded public company accounting expert and the China Capital Markets group leader of an international law firm.

In September, as part of our increased investor awareness initiatives, Bohai conducted a non-deal US road show with our CEO Mr. Hongwei Qu, myself, and our PRC treasurer Lucy Jiang.  We visited numerous institutions, investment banks and prospective investors, in cities throughout the United States; however we want the investor community to know that this was only the first step in our enhanced awareness campaign and I will be conducting additional meetings and road shows due to my general availability as a CFO based in the United States.
 
As we move into fiscal 2011, we expect to further increase marketing and advertising for our growing portfolio of TCM medicines, with a particular focus on our lead products: Tongbi Capsules and Tongbi Tablets, formulated to treat various forms of arthritis, and Lung Nourishing Cream, a liquid product used in the treatment of asthma and other common respiratory ailments.  Not only are these products reimbursable through insurance in China, two of them are sheltered from competition in some way.  Tongbi Capsules are a “protected” medicine in China, meaning Bohai is the only manufacturer permitted to sell the product, and Lung Nourishing Cream was recently awarded a patent in June lasting 20 years.

As we wrap up the reporting for 2010 we would like to thank our shareholders for their continued support.  On a macro-level, we anticipate strong demand for Traditional Chinese Medicine as PRC policies, national insurance coverage, and various other economic drivers contribute to the benefit of our sales initiatives.

Now, that concludes our prepared remarks.  I’d like to thank you for joining us.  We will now be conducting our question and answer session.


Q&A

<Q>:  Hello Gene, this is Pat Murphy, thanks for taking my call.  You mentioned that the Q4 flat sales was temporary and I just wanted to see how sales look in the first quarter of the new fiscal year?


Gene Hsiao – Bohai Pharmaceuticals Group, Inc. – CFO

Yes even though this information has not been disclosed but based on the first two months of the first quarter information the sales revenue is on track.

<Q>:  Yes thank you for taking my question.  Could you talk a little bit about the competitive landscape and some of the competitors that you are running up against, just to provide some transparency there?


Gene Hsiao – Bohai Pharmaceuticals Group, Inc. – CFO

Right, yes.  I think the advantage we have over our competitors is that first of all this is a very fragmented market and a lot of smaller companies use different products and we believe we are on top of the competition, because a lot of our products are either protected by the government under protective status or exclusive status and one of our products even has a patent awarded. So these are the advantages we have.  Again, it is a very fragmented market out there and our company has focused products, for example like for the arthritis and the lung nourishing cream, those are the products that, so far, we believe we are the leader in those fields.
 
Gene Hsiao – Bohai Pharmaceuticals Group, Inc. – CFO

I would like to thank everyone for joining us this morning and attending Bohai’s first conference call.  We look forward to keeping investors apprised of our latest developments and holding regular earnings conference calls in the future.  Thank you so much.


Tuesday, September 28, 2010

Comments & Business Outlook

Summary of Fiscal Year Ended June 30, 2010 Financial Results:

  • Net revenues for the twelve months ended June 30, 2010 increased by approximately $9,916,110, or 20.1%, to $59,264,724 as compared to $49,348,614 for the twelve months ended June 30, 2009.  This increase was primarily due to increase in revenue from three of our main products, Lung Nourishing Cream, Tongbi Capsules and Tongbi Tablets, which together had over 50% of our total net revenue and all of which are listed for coverage and reimbursement under national medical insurance starting in December 2009.  The increase was also due to the marketing strategy we implemented beginning in January 2010.
  • Net income of $9,488,192 for the twelve months ended June 30, 2010, as compared to net income of $7,947,900 for the twelve months ended June 30, 2009, an increase in net income of $1,540,292, or 19.4%.
  • Fully diluted EPS of $0.57 for fiscal 2010 vs. $0.60.
  • Basic EPS of $0.64 for fiscal 2010, exceeding previously issued guidance of $0.61

GeoTeam® Note:

Net revenues for the fourth quarter ended June 30, 2010 decreased by approximately $173,000, or approximately 1%, compared to the fourth quarter ended June 30, 2009.  The decrease was due to the fact that some product orders were put on hold by hospitals as a result of changes in bidding processes for some state and local Chinese governments.  The national health insurance reform started in 2009 at national levels and, as a result, some state and local governments have tried to improve their overall new policies.  Changes in local bidding processes were temporary and should not have a material impact of our overall net revenues going forward.

"We anticipate our overall net revenue will continue to increase due to a national medical and health plan initiated by Chinese government in 2009, which plan will eventually cover individual health insurance over 90% of China’s population by 2011 and includes traditional Chinese medicines for coverage and reimbursement from hospitals and medical centers all over China."


Monday, September 13, 2010

Comments & Business Outlook
Based on a preliminary assessment of Bohai’s year-end financials, which will be finalized toward the end of September and announced through a 10-K filing with the SEC, Bohai expects to report record levels of net revenue and net income in comparison to its fiscal 2008 and 2009 results.

The company’s projected guidance for its June 30, 2010 fiscal year results are as follows:

  • FY 2010 projected net revenue of $58 million (vs. $49.3 million FY 2009), equating to an 18% year-over-year net revenue increase.
  • FY 2010 projected net income of $9.0 million (vs. $7.9 million FY 2009), equating to an approximate 14% year-over-year net income increase.
  • EPS of approximately $0.61 based on 14.7 million weighted average basic shares outstanding.

"We remain unequivocal in our commitment to driving revenue and earnings growth,” said Mr. Hongwei Qu, President and Chief Executive Officer of Bohai Pharmaceuticals. “We believe that our business model, which focuses on the government supported pharmaceutical and healthcare markets in China, is validated by our nine months ended March 31, 2010 top line results as well as current and forecasted top line and bottom line numbers for our June 30 fiscal year end. We believe our proactive sales initiatives and increased budget due to our capital raise in January will serve to drive our revenues, earnings and, ultimately, shareholder value.”


Tuesday, July 13, 2010

Research

Effective July 12, 2010, the board of directors (consisting of Hongwei Qu, the sole director) of Bohai Pharmaceuticals Group, Inc. (the “Company”), by written consent to action and pursuant to the Company’s Amended and Restated Bylaws (which provides for a classified board of directors of the Company), appointed the following persons to serve on the board of directors of the Company

  • Wang Chengde  and Hongwei Qu (for terms ending with the 2010 annual meeting of stockholders)
  •   Louis A. Bevilacqua, Esq. (for a term ending with the 2011 annual meeting of stockholders)
  •    Adam Wasserman (for a term ending with the 2012 annual meeting of stockholders)

Tuesday, January 12, 2010

Share Structure

Post Merger Share Calculation:

  • Pre reverse merger outstanding shares: 3,450,000
  • Shares of Common Stock issued in connection to the Bridge Investors: 200,000
  • Shares cancelled as part of the Share Exchange: 1,500,000
  • Newly issued shares of Common Stock: 13,162,500
  • Shares from convertible notes associated with private placement: 6 million
  • Shares from warrants associated with private placement: 6 million
  • Share issued to financial institutions (Agents): 600 thousand

GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions:  27,912,500

Source: SEC Form 8K (January 5, 2009)

 


Reverse Merger Activity

Yantai Bohai Pharmaceuticals Group Co., Ltd. went public via a share exchange on January 5, with Link Resources.

Highlights:

  • Bohai is a profitable company principally engaged in the production, manufacturing and distribution of herbal pharmaceuticals based on traditional Chinese medicine in China.
  • Bohai’s medicines address common health problems such as rheumatism, rheumatoid arthritis, respiratory diseases, viral infections, gynecological diseases and cardio vascular issues.
  • Bohai’s products are sold either by prescription through hospitals or Over the Counter through local pharmacies and retail drug store chains.
  • Bohai generated approximately $50.2 million in audited revenues and approximately $8.0 million in audited net earnings for the fiscal year ended June 30, 2009

Source: Business Wire (January 5, 2010)


Financials
Three Months Ended
September 30,
 
   
2009
   
2008
 
             
Sales
  $ 14,181,772     $ 11,412,018  
                 
Less: Sales Tax
    (227,168 )     (183,821 )
                 
Net sales
    13,954,604       11,228,197  
                 
Cost of sales
    (2,217,604 )     (1,854,478 )
                 
Gross profit
    11,737,000       9,373,719  
                 
Selling, general and administrative expenses
    (9,174,693 )     (6,651,539 )
                 
Interest expenses
    (148,395 )     (65,038 )
                 
Operating income
    2,413,912       2,657,142  
                 
Non-operating income
    69,072       -  
                 
Non-operating costs
    (5,269 )     (31 )
                 
Income before taxes
    2,477,715       2,657,111  
                 
Income taxes
    (555,474 )     (600,199 )
                 
Net income
  $ 1,922,241     $ 2,056,912  

________________________________________________________________________________________

Fiscal Year Ended
June 30,
 
   
2009
   
2008
 
             
Sales
  $ 50,170,014     $ 38,172,513  
                 
Less: Sales Tax
    (821,400 )     (629,489 )
Net sales
    49,348,614       37,543,024  
                 
Cost of sales
    (7,975,267 )     (5,950,680 )
                 
Gross profit
    41,373,347       31,592,344  
                 
Selling, general and administrative expenses
    (31,301,811 )     (22,601,932 )
                 
Interest expenses
    (184,404 )     (234,101 )
                 
Operating income
    9,887,132       8,756,311  
                 
Non-operating income
    49,447       8  
                 
Non-operating costs
    (36,366 )     (835 )
                 
Income before taxes
    9,900,213       8,755,484  
                 
Income taxes
    (1,906,985 )     (2,303,712 )
                 
Net income
  $ 7,993,228     $ 6,451,772

Using our post reverse merger share count of 27,912,500 yields a trailing EPS number of $0.29.