Sinovac Reports Unaudited Second Quarter Financial Results

-- -- Conference call scheduled for Friday, August 15, 2014 at 8:00 AM ET --

  • Date: 2014-08-15
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Sinovac Reports Unaudited Second Quarter Financial Results



-- Conference call scheduled for Friday, August 15, 2014 at 8:00 AM ET --


Sinovac Reports Unaudited Second Quarter Financial Results


-- Conference call scheduled for Friday, August 15, 2014 at 8:00 AM ET --
BEIJING, Aug.14, 2014 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited second quarter and half year financial results for the period ended June 30, 2014.
Second Quarter 2014 Financial Highlights
(compared to the second quarter 2013)
  • Quarterly sales were $12.1 million, a decrease of 30.7% from $17.5 million in the prior year period. Sales for the first six months were $25.6 million, a decrease of 6.8% YoY from $27.5 million.
  • Gross profit was $9.1 million, a decrease of 33.3% from $13.6 million in the prior year period.
  • Gross margin was 75.0%, compared to 77.9% in the prior year period.
  • Net loss attributable to common stockholders was $2.2 million, or $(0.04) per basic and diluted share, compared to net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the second quarter of 2013.
Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "While sales were impacted during the second quarter by short-term challenges from the external market environment, we are continuing to grow our sales channels and make strong progress in the development of our pipeline vaccines."
"In July, we received the first tranche of our RMB 60 million government grant to build a dedicated facility for the production of the EV71 vaccine, which is currently under review by the Center for Drug Evaluation. During the second quarter, we received our clinical trial license for the pneumococcal polysaccharide vaccine (PPV) from the CFDA and expect to begin trials later this year."
"Although we experienced decreased sales in the second quarter, we remain confident in our ability to execute our proven sales and marketing strategies, and continue to develop new vaccines that are both effective and safe. We expect these initiatives to meaningfully contribute to our performance as market conditions improve." Mr. Yin concluded.
Second Quarter 2014 Business Highlights
Sales Update
Public Tenders Sinovac has been selected by the Beijing Health Bureau as the sole supplier of inactivated hepatitis A vaccine in pre-filled syringe dosage to the Expanded Program of Immunization (EPI) for Beijing. The tender is valued at approximately RMB 16 million. The vaccines purchased by the Beijing Health Bureau will be used for the period from 2014 to 2016. The Company expects to begin delivery in the coming months.
Additionally, Sinovac has also been selected by the Beijing Centers for Disease Control and Prevention to be a supplier of the seasonal influenza vaccine to the citizens of Beijing for 2014. The Company expects to begin delivery in the third quarter of 2014.
International Sales to Mexico Sinovac obtained its commercialization license for Anflu in Mexico late last year. In early July, the Company delivered its first order of 150,000 doses of Anflu to Mexico, as it continues its efforts in international market expansions.
R&D Update
PPV The Company received clinical trial approval for its PPV in May. Sinovac has selected a site for the clinical trial and its draft proposal is currently under expert review. The Company expects clinical trials to begin by the end of 2014, following approval by an ethics committee.
Other Operation Updates
Government Grant In April, Sinovac received approval for a RMB 60 million government grant from China's Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology, and National Health and Family Planning Commission for construction of the Company's dedicated EV71 vaccine production facility. Sinovac received the first RMB 20 million of the grant in July. The remainder will be provided once construction and approval criteria are met.
VAT Rate Reduction The value added tax (VAT) rate applied to the sales of Sinovac's vaccine products has been reduced to 3% from 6%, as authorized by the Ministry of Finance and State Administration of Taxation of China. The reduced VAT rate was effective July 1, 2014, and therefore did not impact second quarter results. Going forward, the reduced VAT rate will contribute to an improvement in the profitability of the Company's vaccines in Chinese market.
Unaudited Financial Results for Second Quarter 2014

 

 
2014 Q2
% of Sales
2013 Q2
%of Sales
(In USD'000 except percentage data)
Hepatitis A – Healive

 
5,113
42.3%
7,021
40.2%
Hepatitis A&B – Bilive

 
6,439
53.3%
9,586
54.9%
Hepatitis vaccines

 
11,552
95.6%
16,607
95.1%
Influenza vaccine

 
-
-
48
0.3%
Animal vaccine

 
18
0.1%
65
0.4%
Mumps vaccine

 
520
4.3%
732
4.2%
Regular sales

 
12,090
100.0%
17,452
100.0%
H5N1

 
-
-
-
-
Total sales

 
12,090
100.0%
17,452
100.0%
Cost of goods sold

 
3,025
25.0%
3,861
22.1%
Gross profit

 
9,065
75.0%
13,591
77.9%
In the second quarter 2014, total sales were $12.1 million, a decrease of 30.7% from $17.5 million during the same period in 2013. This decrease was primarily due to softer demand in the private vaccine market. China's CDCs have been also more conservative in their vaccination programs. Nevertheless, the Company achieved record sales in the second quarter of 2013, which resulted in a higher basis for year-over-year comparison.
Gross profit was $9.1 million in the second quarter 2014, compared to $13.6 million in the prior year period. Gross margin decreased to 75.0% from 77.9% in the prior year period. The slight decrease in gross margin is attributable to idle capacity in the Company's influenza facility during the second quarter, which was charged to cost of goods sold.
Selling, general and administrative expenses for the second quarter 2014 were $8.6 million, compared to $8.8 million in the same period of 2013.
R&D expenses for the second quarter of 2014 were $3.3 million, a $1.2 million increase over the same period in 2013. These expenses are primarily related to the continued advancement of pipeline vaccine candidates, including sIPV, EV71, PPV, and varicella vaccine.
Net loss attributable to common stockholders for the second quarter of 2014 was $2.2 million, or $ (0.04) per basic and diluted share, compared to a net income attributable to common stockholders of $1.3 million, or $0.02 per basic and diluted share, in the same period last year.
Unaudited Financial Results for First Half of 2014

 

 
2014 H1
% of Sales
2013 H1
% of Sales
(In USD'000 except percentage data)
Hepatitis A – Healive

 
11,552
45.1%
13,199
48.0%
Hepatitis A&B – Bilive

 
12,437
48.5%
12,581
45.7%
Hepatitis vaccines

 
23,989
93.6%
25,780
93.7%
Influenza vaccine

 
61
0.2%
330
1.2%
Animal vaccine

 
44
0.2%
78
0.3%
Mumps vaccine

 
1,440
5.6%
1,316
4.8%
Regular sales

 
25,534
99.6%
27,504
100.0%
H5N1

 
102
0.4%
-
-
Total sales

 
25,636
100.0%
27,504
100.0%
Cost of goods sold

 
6,303
24.6%
6,853
24.9%
Gross profit

 
19,333
75.4%
20,651
75.1%
Total sales for the first half of 2014 were $25.6 million, a decrease of 6.8% from $27.5 million in the same period of 2013. Sales for the first half of 2014 were impacted by decreased sales of the Company's hepatitis A vaccine, Healive, as a result of the challenging environment in the private-pay market.
Gross profit for the first half of 2014 was $19.3 million, a decrease of 6.4% from $20.7 million in the same period of 2013. Gross margin was 75.4% in the first half of 2014, compared to 75.1% in the same period of 2013.
Selling, general and administrative expenses for the first half of 2014 were $16.4 million, compared to $15.9 million for the same period of 2013.
R&D expenses in the first half of 2014 were $5.0 million, compared to $3.9 million in the same period of 2013. These expenses are primarily related to the continued advancement of pipeline vaccine candidates.  
Net loss attributable to stockholders in the first half of 2014 was $2.2 million or $(0.04) per basic and diluted share, compared to a net loss of $0.7 million, or $(0.01) per basic and diluted share, in the same period of 2013.
As of June 30, 2014, cash and cash equivalents totaled $89.6 million, compared to $107.2 million as of December 31, 2013. Net cash used in operating activities was $11.4 million during the first half of 2014. Net cash used in investing activities was $5.7 million, which was primarily used for payment of property, plant and equipment for the Company's Changping facility. Net cash provided by financing activities was $0.9 million during the first half of 2014, including loan proceeds of $8.9 million and loan repayment of $8.5 million. As of June 30, 2014, the Company had $36.0 million of bank loans due within one year. Sinovac's cash and cash equivalents position of $89.6 million is sufficient to meet both these loan repayment obligations as well as the Company's operational requirements.
Conference Call Details
Sinovac will host a conference call on Friday, August 15, 2014 at 8:00 a.m. ET (August 15, 2014 at 8:00 p.m. China Standard Time) to review the Company's financial results and provide an update on recent corporate developments.  To access the conference call, please dial 1-877-407-9039 (USA) or 1-201-689-8470 (International).  A replay of the call will be available from 11:00 a.m. ET on August 15, 2014 through August 29, 2014. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 13587706.
A live audio webcast of the call will also be available on the Investor Relations section of the Company's website at www.sinovac.com. A webcast replay will be available on the Company's website for 30 days following the call, beginning August 15, 2014.
About Sinovac
Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing, and commercialization of vaccines that protect against human infectious diseases. Sinovac's product portfolio includes vaccines against hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), mumps and canine rabies. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, which it has supplied to the Chinese Government's vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government stockpiling program. Sinovac has filed a new drug application with the China Food & Drug Administration for its proprietary enterovirus 71 vaccine, having been proven effective in preventing hand, foot and mouth disease in infants and children during its Phase III clinical trial. The Company is currently developing a number of new products including a Sabin-strain inactivated polio vaccine, pneumococcal polysaccharides vaccine, pneumococcal conjugate vaccine and varicella vaccine. Sinovac primarily sells its vaccines in China, while also exploring growth opportunities in international markets. The Company has exported select vaccines to Mexico, Mongolia, Nepal, and the Philippines, and was recently granted a license to commercialize its hepatitis A vaccine in Chile. For more information, please visit the Company's website at www.Sinovac.com .
Contact
Sinovac Biotech Ltd. 
Helen Yang / Chris Lee 
Tel: +86-10-8279-9659 / 9696 
Fax: +86-10-6296-6910 
Email: ir@sinovac.com
ICR Inc. 
Bill Zima
U.S: 1-646-308-1707
Email: william.zima@icrinc.com
SINOVAC BIOTECH LTD.

 

 

 
Consolidated Balance sheets

 

 

 
As of June 30, 2014 and December 31, 2013

 

 
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)

 

 

 

 
Current assets 
December 31, 2013
June 30, 2014

 

 

 
(Unaudited)

 
Cash and cash equivalents
107,242
89,634

 
Accounts receivable 
31,927
34,733

 
Inventories
14,329
19,780

 
Prepaid expenses and deposits 
1,150
1,294

 
Deferred tax assets
2,602
1,981

 
Total current assets
157,250
147,422

 

 

 

 

 
Property, plant and equipment
67,963
64,646

 
Prepaid land lease payments
10,948
10,545

 
Long-term inventories
2,781
3,893

 
Long-term prepaid expenses
154
72

 
Prepayment for acquisition of equipment
708
3,169

 
Deferred tax assets
117
305

 
Licenses
772
553

 
Total   assets
240,693
230,605

 

 

 

 

 
Current liabilities

 

 

 
Bank loans and current portion of long-term 
debt
16,217
35,975

 
Loan from a non-controlling shareholder
3,324
3,243

 
Accounts payable and accrued liabilities 
28,037
24,384

 
Income tax payable
246
240

 
Deferred revenue
875
306

 
Deferred government grants
458
449

 
Total current liabilities
49,157
64,597

 

 

 

 

 
Deferred government grants
4,746
4,588

 
Long-term debt
32,146
11,651

 
Deferred revenue
11,005
10,639

 
Total long term liabilities
47,897
26,878

 

 

 

 

 
Total liabilities
97,054
91,475

 

 

 

 

 
Commitments and contingencies 

 

 

 
Equity

 

 

 
Preferred stock
-
-

 
Common stock
56
56

 
Additional paid-in capital
107,393
107,868

 
Accumulated other comprehensive income
14,141
12,039

 
Statutory surplus reserves
11,808
11,808

 
Accumulated deficit
(4,714)
(6,958)

 
Total stockholders' equity
128,684
124,813

 

 

 

 

 
Non-controlling interests
14,955
14,317

 
Total equity
143,639
139,130

 
Total liabilities and equity
240,693
230,605

 
 SINOVAC BIOTECH LTD. 

 

 

 

 
 Consolidated Statements of Comprehensive Income (loss) 

 

 

 

 
For the three and six months ended June 30, 2013 and 2014

 

 

 

 
 (Unaudited) 

 

 

 

 
(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)

 

 

 

 

 

 

 

 
 Three months ended June 30 

 
 Six months ended June 30 

 
2013
2014

 
2013
2014
 Sales 
17,452
12,090

 
27,504
25,636
 Cost of sales 
3,861
3,025

 
6,853
6,303
 Gross profit 
13,591
9,065

 
20,651
19,333

 

 

 

 

 

 
 Selling, general and administrative expenses 
8,786
8,589

 
15,891
16,381
 Provision for doubtful accounts 
604
132

 
886
294
 Research and development expenses 
2,042
3,265

 
3,889
4,967
 Loss (income) on disposal and Impairment of property, 
plant and equipment
-
29

 
(2)
29
 Total operating expenses 
11,432
12,015

 
20,664
21,671
 Operating income (loss) 
2,159
(2,950)

 
(13)
(2,338)

 

 

 

 

 

 
 Interest and financing expenses  
(770)
(832)

 
(1,433)
(1,582)
 Interest income
583
765

 
1,024
1,545
 Other income (expenses) - net
(54)
71

 
7
217
 Income (loss) before income taxes and non-
controlling interests  
1,918
(2,946)

 
(415)
(2,158)
 Income tax benefit (expense) 
(4)
(76)

 
(37)
(423)

 

 

 

 

 

 
 Net Income (loss) 
1,914
(3,022)

 
(452)
(2,581)
Less: (Income) loss attributable to the non-controlling interests
(595)
774

 
(237)
337
 Net Income (loss) attributable to stockholders of Sinovac 
1,319
(2,248)

 
(689)
(2,244)

 

 

 

 

 

 
 Other comprehensive income (loss), net of tax of nil         

 

 

 

 

 
Foreign currency translation adjustments
1,119
(319)

 
1,353
(2,403)
 Total comprehensive income (loss) 
3,033
(3,341)

 
901
(4,984)
  Less: comprehensive (income) loss attributable to non-controlling interests  
(707)
738

 
(378)
638
 Comprehensive income (loss) attributable to stockholders of Sinovac 
2,326
(2,603)

 
523
(4,346)

 

 

 

 

 

 
 Weighted average number of shares of 

 

 

 

 

 
   Basic 
55,056,191
55,663,566

 
54,995,674
55,625,509
  Diluted 
55,522,748
55,663,566

 
54,995,674
55,625,509

 

 

 

 

 

 
 Earning per share 

 

 

 

 

 
   Basic 
0.02
(0.04)

 
(0.01)
(0.04)
   Diluted 
0.02
(0.04)

 
(0.01)
(0.04)
 
SINOVAC BIOTECH LTD.

 

 

 

 

 

 
Consolidated Statements of Cash Flows

 

 

 

 

 

 
For the three and six months ended June 30, 2013 and 2014

 

 

 

 

 

 
(Unaudited)

 

 

 

 

 

 
(Expressed in thousands of U.S. Dollars)

 

 

 

 

 

 

 
Three months ended

 
Six months ended 

 
June 30

 
June 30

 

 
2013

 
2014

 

 
2013

 
2014
Cash flows provided by (used in) operating activities

 

 

 

 

 

 

 

 

 
Net income (loss)
$
1,914
$
(3,022)

 
$
(452)
$
(2,581)
  Adjustments to reconcile net income (loss) to net cash

 

 

 

 

 

 

 

 

 
  provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 
 - deferred income taxes

 
(17)

 
58

 

 
(15)

 
369
 - stock-based compensation

 
62

 
71

 

 
138

 
143
 - inventory provision

 
768

 
321

 

 
768

 
542
 - provision for doubtful accounts

 
604

 
132

 

 
886

 
294
 - impairment of equipment and loss on disposal

 
-

 
29

 

 
(3)

 
29
- depreciation of property, plant and equipment and amortization of licenses

 
1,718

 
1,903

 

 
3,348

 
4,534
- amortization of the prepaid land lease payments

 
69

 
65

 

 
138

 
132
- accretion expenses

 
34

 
28

 

 
52

 
55
Changes in:

 

 

 

 

 

 

 

 

 
 - accounts receivable

 
(4,511)

 
1,327

 

 
(8,288)

 
(3,654)
 - inventories

 
(3,582)

 
(4,905)

 

 
(6,657)

 
(7,784)
 - prepaid expenses and deposits

 
399

 
234

 

 
256

 
(348)
- deferred revenue 

 
(162)

 
33

 

 
(1,229)

 
(685)
 - accounts payable and accrued liabilities

 
(593)

 
(1,889)

 

 
1,754

 
(2,459)

 

 

 

 

 

 

 

 

 

 
Net cash used in operating activities

 
(3,297)

 
(5,615)

 

 
(9,304)

 
(11,413)

 

 

 

 

 

 

 

 

 

 
Cash flows provided by (used in) financing activities

 

 

 

 

 

 

 

 

 
- Loan proceeds

 
3,305

 
3,182

 

 
10,785

 
8,917
- Loan repayments

 
(162)

 
(6,084)

 

 
(162)

 
(8,542)
- Proceeds from issuance of common stock,

 

 

 

 

 

 

 

 

 
   net of share issuance costs

 
406

 
147

 

 
417

 
252
- Proceeds from shares subscribed 

 
8

 
31

 

 
8

 
80
- Government grants received 

 
220

 
185

 

 
524

 
185

 

 

 

 

 

 

 

 

 

 
Net cash provided (used in) by financing activities

 
3,777

 
(2,539)

 

 
11,572

 
892

 

 

 

 

 

 

 

 

 

 
Cash flows used in investing activities

 

 

 

 

 

 

 

 

 
 - Acquisition of property, plant and equipment

 
(508)

 
(3,479)

 

 
(2,232)

 
(5,683)

 

 

 

 

 

 

 

 

 

 
Net cash used in investing activities

 
(508)

 
(3,479)

 

 
(2,232)

 
(5,683)

 

 

 

 

 

 

 

 

 

 
Exchange gain (loss) on cash and cash equivalents

 
512

 
(385)

 

 
769

 
(1,404)

 

 

 

 

 

 

 

 

 

 
Increase (decrease) in cash and cash equivalents

 
484

 
(12,018)

 

 
805

 
(17,608)

 

 

 

 

 

 

 

 

 

 
Cash and cash equivalents, beginning of year

 
91,562

 
101,652

 

 
91,241

 
107,242

 

 

 

 

 

 

 

 

 

 
Cash and cash equivalents, end of year
$
92,046
$
89,634

 
$
92,046
$
89,634


 

 


 

 

 

       
     
   

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