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China Pharma Holdings (NYSEMKT:CPHI) reported its Q3 revenues climbed 52% to $12.61 million and net income was up 38% to $4.25 million, which equates to 10 cents per share fully diluted.

Growth in revenues was above the company’s forecast of 40%-45%, but net income was hurt by an increase in operating expenses, which jumped 89% over the year earlier quarter. The main problem was a $460,000 allowance for bad debt. However, it should be noted that operating expenses still totaled only $1.4 million.

Unfortunately, there is a more serious problem: China Pharma is having trouble with cash flow. Its Accounts Receivables have ballooned during the first nine months of the year, rising from $19 million to $32 million, a fact that has largely offset the beneficial effects of China Pharma’s profits. The company did end Q3 with $5.8 million in cash, a considerable increase from the $1.8 million in hand at the end of 2007. But, to accomplish that, the company was forced to float a $10 million private placement in May 2008.

The company said that its main revenue drivers were PuSenOK™, a newly approved generic form of Aleve-D®; Buflomedil, a treatment for peripheral blood vessel diseases; Roxithromycin dispersible tablet, a macrolide antibiotic; and Bumetanide, a newly approved diuretic that treats edema caused by heart disease and hypertension.

China Pharma said it would continue to bring new products to market, seeking high margin products that serve large markets. It also said that it has been tentatively approved to list its shares on the AMEX, though it must still meet one more provision: a minimum price of $3 per share.

The company has 42.3 million shares outstanding. At its current price of $1.70 per share, China Pharma has a market capitalization of $72 million.

Disclosure: None

Source: China Pharma Reports Improved Q3, Accounts Receivable Also Up