Sinovac Reports Unaudited First Half of 2018 Financial Results

  • Date: 2018-11-08
  • Pageview: 1733

 BEIJING, Nov. 8, 2018 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA) ("Sinovac" or the "Company"), a leading provider of biopharmaceutical products in China, announced today its unaudited financial results for the six months ended June 30, 2018.

Financial highlights

  • Sales revenue for the first six months of 2018 was $122.5 million, compared to $66.9 million in the prior year period, an increase of 83.1%. Sales increased primarily due to revenue generated by the Company's EV71 vaccine.
  • Net income attributable to shareholders was $14.1 million, or $0.24 per basic and diluted share, compared to net income attributable to shareholders of $10.9 million, or $0.19 per basic and diluted share, in the prior year period.

Business Highlights

Sales and Marketing

In the first half of 2018, sales were mainly generated from the EV71 vaccine. The increase of EV71 vaccine sales was primarily attributable to government advocacy regarding the benefits of this vaccine to the public. In March 2018, the National Health Commission of the People's Republic of China ("NHFPC") issued a notice to encourage vaccination to prevent hand, foot and mouth disease due to the expected high prevalence of this disease in 2018. In addition, since late 2017, Sinovac has been collaborating with third party companies to improve market coverage and penetration in the private sector of the Chinese market. As a result, the number of customers increased over 30% in the first half of 2018 compared to the same period in 2017. Also in the first half of 2018, the marketing team of Sinovac expanded its activities, including academic promotion activities at the national, provincial, district, and county levels, which largely improved the awareness of Sinovac's EV71 vaccine among professionals and consumers.

The Company does not expect any sales of seasonal influenza vaccine during the 2018-2019 flu season. As was announced in April 2018, production at the Company's hepatitis A vaccine and flu vaccine bulk production site was suspended when a minority shareholder of Sinovac Beijing forcibly entered Sinovac Beijing's corporate offices along with dozens of unnamed individuals in an attempt to wrongfully take control of Sinovac Beijing's operations. As it was determined that the quality and safety of the vaccines could not be sufficiently verified to the Company's high standards following the disruption, the vaccines in production at the time of the attack were destroyed. Since the attacks, the Company has verified the safety and quality of the vaccine production process, and is ready to resume production in anticipation of next year's market demand. Sales of flu vaccine for the 2017-2018 flu season were $13.5 million.

Research and Development

Varicella Vaccine – Sinovac filed a production license application with the CFDA in November 2017; the CFDA's Center of Drug Evaluation completed its review  and provided comments to the Company. The Company is preparing supplementary documents as requested by the CFDA.

Sabin Inactivated Polio Vaccine (sIPV) –  In April 2018, the phase III trial of the sIPV candidate developed by Sinovac was unblinded. The preliminary results showed that it was not inferior to the control vaccine group. In June 2018, a sequential vaccination schedule consisting of sIPV and two doses of bOPV was conducted. Dosing and blood sampling have been completed recently, and the Company is awaiting the results.

Quandrivalent Flu vaccine (QIV) – Sinovac is conducting a phase III clinical study of its QIV and expects to complete this study by the end of 2018.

Unaudited Financial Results for the First Six Months of 2018

   

2018 1H

% of Sales

2017 1H

% of Sales

   

(In thousands except percentage data)

Hepatitis A – Healive

 

25,853

21.1%

12,879

19.2%

Hepatitis A&B – Bilive

 

10,344

8.4%

4,928

7.4%

Hepatitis vaccines 
subtotal

 

36,197

29.5%

17,807

26.6%

Influenza vaccine

 

2,063

1.7%

(6)

0.0%

Enterovirus 71 vaccine

 

84,113

68.7%

48,751

72.9%

Mumps vaccine

 

117

0.1%

356

0.5%

Total sales

 

122,490

100.0%

66,908

100.0%

Cost of sales

 

13,337

10.9%

7,735

11.6%

Gross profit

 

109,153

89.1%

59,173

88.4%

Sales in the first half of 2018 were $122.5 million, compared to $66.9 million in the prior year period. Sales increased primarily due to additional revenue generated by the Company's EV71 vaccine.

Gross profit was $109.2 million, compared to gross profit of $59.2 million in the prior year period. The increase was primarily due to the contribution of EV71 vaccine sales in the first half of 2018. Gross margin was 89.1%, compared to 88.4% in the prior year period.

Selling, general and administrative expenses in the first half of 2018 were $67.8 million, compared to $36.7 million in the same period of 2017. The Company's selling, general and administrative expenses increased with the higher level of sales activity. The Company incurred $3.4 million in legal expenses related to the facility disruption and litigation regarding the Company's annual meeting and related matters.

R&D expenses in the first half of 2018 were $10.1 million, compared to $8.8 million in the same period of 2017.

Net income was $22.6 million, compared to net income of $15.8 million in the prior year period.

Net income attributable to shareholders was $14.1 million, or $0.24 per basic and diluted share, compared to net income attributable to shareholders of $10.9 million, or $0.19 per basic and diluted share, in the prior year period.

Non-GAAP EBITDA was $34.2 million in the first half of 2018, compared to $15.9 million in the prior year period. Non-GAAP net income from continuing operations in the first half of 2018 was $24.0 million, compared to $16.2 million in the prior year period. Non-GAAP diluted earnings per share from continuing operations in the first half of 2018 were $0.26, compared to $0.20 per share in the prior year period. Reconciliations of non-GAAP measures to the nearest comparable GAAP measures are included at the end of this earnings announcement.

As of June 30, 2018, cash and cash equivalents totaled $88.1 million, compared to $114.4 million as of December 31, 2017. For the six months ended June 30, 2018, net cash used in operating activities was $11.3 million. Net cash used in investing activities was $2.9 million, which was for the purchase of equipment. Net cash used in financing activities was $8.0 million, including loan proceeds of $13.4 million and loan repayment of $23.8 million. As of June 30, 2018, the Company had $9.8 million of bank loans due within one year. The Company expects that its current cash position will be able to support its operations for at least the next 12 months.

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 enterovirus71, or EV71, hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), and mumps. The EV71 vaccine, an innovative vaccine developed by Sinovac against hand foot and mouth disease caused by EV71, was commercialized in China in 2016. 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. The Company is 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 over 10 countries in Asia and South America.  For more information, please visit the Company's website at www.sinovacbio.com.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the United States federal securities laws. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause such a difference include our inability to compete successfully in the competitive and rapidly changing marketplace in which we operate, failure to retain key employees, cancellation or delay of projects, disruptions to our operations, the results of any pending litigation, and adverse general economic conditions in Chinathe United States and elsewhere. These risks and other factors include those listed under "Risk Factors" and elsewhere in our Annual Report on Form 20-F as filed with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  The Company assumes no obligation to update the forward-looking information contained in this release.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), Sinovac uses the following non-GAAP financial measures: non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations.  For more information on these non-GAAP financial measures, please refer to the table captioned "Reconciliations of non-GAAP Measures to the Nearest Comparable GAAP Measures" in this release.

Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations help identify underlying trends in its business that could otherwise be distorted by the effect of certain income or expenses that Sinovac includes in income from operations from continuing operations, net income from continuing operations and diluted EPS from continuing operations. Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information about its core operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. Non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations should not be considered in isolation or construed as an alternative to income from operations from continuing operations, net income from continuing operations, diluted EPS from continuing operations, or any other measure of performance or as an indicator of Sinovac's operating performance. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies.  Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Non-GAAP EBITDA represents income (loss) from continuing operations, excludes interest and financing expenses, interest income, net other income (expenses) and income tax benefit (expenses), and certain non-cash expenses, consisting of share-based compensation expenses, amortization and depreciation that Sinovac does not believe are reflective of the core operating performance during the periods presented.

Non-GAAP net income from continuing operations represents net income from continuing operations before share-based compensation expenses, and foreign exchange gain or loss.

Non-GAAP diluted EPS from continuing operations represents non-GAAP net income attributable to ordinary shareholders from continuing operations divided by the weighted average number of shares outstanding during the periods on a diluted basis, including accounting for the effect of the assumed conversion of options.

Contact

Sinovac Biotech Ltd.

Helen Yang
Tel: +86-10-8279-9871
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, 2018 and December 31, 2017

(Expressed in thousands of U.S. Dollars)

 
   

June 30, 2018

 

December 31, 2017

Current assets 

 

(Unaudited)

   
         

Cash and cash equivalents

$

88,109

$

114,415

Restricted cash

 

1

 

1,549

Accounts receivable - net

 

100,412

 

66,205

Inventories

 

22,050

 

19,618

Prepaid expenses and deposits 

 

2,488

 

2,101

Total current assets

 

213,060

 

203,888

         

Property, plant and equipment

 

73,763

 

76,430

Prepaid land lease payments

 

8,753

 

9,028

Long-term inventories

 

71

 

-

Long-term prepaid expenses

 

24

 

25

Prepayment for acquisition of equipment

 

1,426

 

528

Deferred tax assets

 

10,570

 

9,320

Total assets

 

307,667

 

299,219

         

Current liabilities

       

Short-term bank loans and current portion of long-
term bank loans

 

9,810

 

18,152

Accounts payable and accrued liabilities 

 

68,434

 

59,418

Income tax payable

 

3,843

 

8,862

Deferred revenue

 

247

 

4,073

Deferred government grants

 

1,464

 

2,038

Total current liabilities

 

83,798

 

92,543

         

Deferred government grants

 

4,366

 

4,474

Long-term bank loans

 

12,644

 

14,849

Loan from a non-controlling shareholder

 

6,996

 

7,070

Other non-current liabilities

 

2,736

 

3,143

Total long-term liabilities

 

26,742

 

29,536

         

Total liabilities

 

110,540

 

122,079

         

Commitments and contingencies 

       

Equity

       

Preferred stock

 

-

 

-

Common stock

 

59

 

57

Additional paid in capital

 

118,182

 

115,339

Accumulated other comprehensive income

 

2,366

 

7,075

Statutory surplus reserves

 

19,549

 

19,549

Accumulated earnings

 

23,217

 

9,132

Total shareholders' equity

 

163,373

 

151,152

         

Non-controlling interests

 

33,754

 

25,988

Total equity

 

197,127

 

177,140

Total liabilities and equity

$

307,667

 

299,219

SINOVAC BIOTECH LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the six months ended June 30, 2018 and 2017

(Unaudited)

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

 
   

 Six months ended June 30 

   

2018

 

2017

 Sales 

$

122,490

$

66,908

 Cost of sales 

 

13,337

 

7,735

 Gross profit  

 

109,153

 

59,173

         

 Selling, general and administrative expenses 

 

67,826

 

36,719

 Provision for doubtful accounts 

 

2,576

 

527

 Research and development expenses 

 

10,074

 

8,779

 Loss on disposal of property, plant and equipment 

 

18

 

13

 Government grants recognized in income

 

(47)

 

(4)

 Total operating expenses 

 

80,447

 

46,034

 Operating income 

 

28,706

 

13,139

         

 Interest and financing expenses  

 

(650)

 

(822)

 Interest income

 

927

 

464

 Other income

 

146

 

104

 Income before income taxes 

 

29,129

 

12,885

 Income tax (expense) benefit 

 

(6,560)

 

2,960

 Net income 

 

22,569

 

15,845

 Less: Income attributable to non-controlling interests

 

(8,484)

 

(4,992)

 Net income attributable to shareholders of Sinovac 

 

14,085

 

10,853

         

 Net income 

 

22,569

 

15,845

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

       

Foreign currency translation adjustments

 

(5,427)

 

3,517

 Comprehensive income 

 

17,142

 

19,362

  Less: comprehensive income attributable to non-
controlling interests  

 

(7,766)

 

(5,337)

 Comprehensive income attributable to shareholders 
of Sinovac 

$

9,376

$

14,025

         

Earnings per share

       

Basic net income  per share:

 

0.24

 

0.19

Diluted net income per share

 

0.24

 

0.19

         
         

 Weighted average number of shares of common 
stock outstanding 

       

  Basic 

 

58,356,960

 

57,015,223

  Diluted 

 

58,719,789

 

57,036,805

SINOVAC BIOTECH LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2018 and 2017

(Unaudited)

(Expressed in thousands of U.S. Dollars)

 
   

Six months ended June 30

   

2018

 

2017

Cash flows provided by (used in) operating activities

       

Net income

$

22,569

$

15,845

Adjustments to reconcile net income to net cash (used in) provided by 
operating activities:

       

 - Deferred income taxes

 

(1,463)

 

(2,178)

 - Share-based compensation

 

2,831

 

484

 - Inventory provision

 

2,476

 

274

 - Provision for doubtful accounts

 

2,576

 

527

 - Loss on disposal and impairment of property, plant and equipment

 

18

 

13

 - Government grants recognized in income

 

(47)

 

(4)

 - Depreciation of property, plant and equipment and amortization of licenses

2,489

 

2,123

 - Amortization of prepaid land lease payments

 

129

 

117

Changes in:

       

 - Accounts receivable

 

(39,278)

 

(30,705)

 - Inventories

 

(5,420)

 

(3,598)

 - Income tax payable 

 

(5,434)

 

(4,289)

 - Prepaid expenses and deposits

 

(425)

 

440

 - Deferred revenue 

 

(3,906)

 

(2,473)

 - Accounts payable and accrued liabilities

 

9,982

 

25,482

 - Restricted cash

 

1,582

 

3,037

Net cash provided by (used in) operating activities 

 

(11,321)

 

5,095

         

Cash flows used in financing activities

       

 - Proceeds from bank loans

 

13,400

 

11,171

 - Repayments of bank loans

 

(23,791)

 

(17,948)

 - Proceeds from issuance of common stock, net of share issuance costs

 

1,631

 

35

 - Government grant received

 

805

 

92

Net cash used in financing activities

 

(7,955)

 

(6,650)

         

Cash flows used in investing activities

       

 - Acquisition of property, plant and equipment

 

(2,859)

 

(6,768)

Net cash used in investing activities

 

(2,859)

 

(6,768)

         

Effect of exchange rate changes on cash and cash equivalents

 

(4,171)

 

868

         

Decrease in cash and cash equivalents

 

(26,306)

 

(7,455)

         

Cash and cash equivalents, beginning of period

 

114,415

 

62,434

         

Cash and cash equivalents, end of period

$

88,109

$

54,979

SINOVAC BIOTECH LTD.

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

For the six months ended June 30, 2018 and 2017

(Unaudited)

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

 
   

 Six months ended June 30 

   

2018

 

2017

 Net income 

$

22,569

$

15,845

 Adjustments: 

       

   Share-based compensation 

 

2,831

 

484

   Depreciation and amortization 

 

2,618

 

2,240

   Interest and financing expenses, net of interest income 

 

(277)

 

358

   Net other income 

 

(146)

 

(104)

   Income tax expense (benefit) 

 

6,560

 

(2,960)

 Non-GAAP EBITDA 

 

34,155

 

15,863

         

 Net income 

$

22,569

 

15,845

   Add: Foreign exchange gain 

 

(1,412)

 

(135)

   Add: Share-based compensation 

 

2,831

 

484

 Non-GAAP net income 

 

23,988

 

16,194

         

 Net income attributable to shareholders of Sinovac 

 

14,085

 

10,853

 Add: Non-GAAP adjustments to net income 

 

1,419

 

349

 Non-GAAP net income attributable to shareholders of 
Sinovac for computing non-GAAP diluted earnings per 
share  

 

15,504

 

11,202

         

 Weighted average number of shares on a diluted 
basis 

 

58,719,789

 

57,036,805

 Diluted earnings per share 

 

0.24

 

0.19

 Add: Non-GAAP adjustments to net income per share 

 

0.02

 

0.01

 Non-GAAP Diluted earnings per share 

 

0.26

 

0.20

 

Bookmark and Share

Copyright © 2001-2018 Sinovac Biotech Ltd. All Rights Reserved.

Add: No. 39 Shangdi Xi Road, Haidian District, Beijing, P.R.C. 100085