China Pharma Holdings, Inc., an NYSE American-listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the quarter ended September 30, 2020.

Third Quarter Highlights

• Revenue was $2.4 million in the third quarter of 2020, which stayed the same as the condition in the same period of 2019;

• Gross margin was 2.0% in the third quarter of 2020, compared to 15.7% in the same period of 2019;

• Loss from operations was $1.0 million in the third quarter of 2020 compared to $0.6 million in the same period of 2019;

• Net loss was $1.0 million in the third quarter of 2020 compared to $0.7 million in the same period of 2019. Loss per common stock was both $0.02 per basic and diluted share in the third quarter 2020 and 2019, respectively.

Ms. Zhilin Li, China Pharma's Chairwoman and CEO, commented, "Since the outbreak of COVID-19 early this year, it has continued to create a substantial negative impact on sales of pharmaceutical companies, including ours. Nevertheless, we achieved comparable drug sales revenue in the third quarter of 2020 compared to the same period last year, which showed certain improvements from the sales performance in the previous quarter (the second quarter of 2020), thanks to the efforts of the management and sales teams." Ms. Li continued, "We will continue to work on improving human health and we aim to leverage our expertise in the PRC for the development, manufacture and commercialization of pharmaceutical and comprehensive healthcare products for the benefit of human health."

Third Quarter Results

Revenue was both $2.4 million in the three months ended September 30, 2020 and 2019, respectively.

For the three months ended September 30, 2020, our cost of revenue was $2.4 million, or 98% of total revenue, comparing to $2.0 million, or 84% of total revenue, for the same period in 2019. The increase in cost of revenue was mainly due to declining production in the third quarter in addition to constant fixed costs leading to higher costs per unit of products and therefore higher sales costs of revenue in the third quarter of 2020.

Gross profit for the three months ended September 30, 2020 was $0.05 million, as compared to $0.37 million during the same period in 2019. Our gross profit margin in the three months ended September 30, 2020 was 2.0% as compared to 15.7% during the same period in 2019. The decrease in our gross profit margin was mainly due to the increased cost of revenue in the third quarter of 2020.

Our selling expenses for the three months ended September 30, 2020 and 2019 were $0.7 million and $0.6 million, respectively. Selling expenses accounted for 27.2% of the total revenue in the three months ended September 30, 2020, as compared to 25.8% during the same period in 2019. Because of the adjustments in our sales practices and the reformation of healthcare policies, we reduced the number of personnel and expenses to efficiently support our sales and the collection of accounts receivable.

Our general and administrative expenses were both $0.3 million for the three months ended September 30, 2020 and 2019, respectively. General and administrative expenses accounted for 12.1% and 14.0% of our total revenues in the three months ended September 30, 2020 and 2019, respectively.

Our operating loss for the three months ended September 30, 2020 was $1.0 million, compared to $0.6 million during the same period in 2019.

Net loss for the three months ended September 30, 2020 was $1.0 million, or $0.02 per basic and diluted common share, as compared to net loss of $0.7 million for the same period a year ago, or $0.02 per basic and diluted common share. The increase in net loss was mainly due to the increased cost of revenue in this period.

Nine Months Results

Revenue was both $7.9 million for the nine months ended September 30, 2020 and 2019, respectively.  

For the nine months ended September 30, 2020, our cost of revenue was $6.5 million, or 82.5% of total revenue, comparing to $6.7 million, or 84.9% of total revenue, in the same period in 2019. The decrease in cost of revenue was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020 partially offset the increase in cost of revenue.

Gross profit for the nine months ended September 30, 2020 was $1.4 million, compared to $1.2 million in the same period in 2019. Our gross profit margin in the nine months ended September 30, 2020 was 17.5% compared to 15.1% in the same period in 2019. The increase in our gross profit margin was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020 partially offset the increase in cost of revenue.

Net loss for the nine months ended September 30, 2020 was $1.7 million, or $0.04 per basic and diluted common share, as compared to net loss of $2.0 million, or $0.04 per basic and diluted common share for the nine months ended September 30, 2019. The decrease of net loss was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020. 

Financial Condition

As of September 30, 2020, the Company had cash and cash equivalents of $0.3 million compared to $1.1 million as of December 31, 2019.

Our net accounts receivable was $0.5 million and $0.6 million as of September 30, 2020 and December 31, 2019.

For the nine months ended September 30, 2020, cash flow used in operating activities was $0.4 million, as compared to cash flow provided by operating activities of $0.6 million for the same period in 2019.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products, focusing on conditions with high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective business model is driven by market demand and supported by new GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding nationwide distribution network across all major cities and provinces in China. The Company's wholly-owned subsidiary, Hainan Helpson Medical & Biotechnique Co., Ltd., is located in Haikou City, Hainan Province.