Tinayin Reports Higher Revenue and Costs

Tianyin Pharmaceutical Co. (TPI) reported higher results for the first quarter of 2009 fiscal year. Revenues rose 33 % to $9.6 million, while net income increased at a slower pace, rising 11% to $1.8 million. However, because the number of shares outstanding almost doubled to 24.6 million shares, earnings per share dropped to 7 cents in Q1 from 12 cents a year ago.

The company cited three factors in its growth: greater marketing efforts, expanded sales channels and a broader product portfolio.

Because the company concentrated on high-margin products, gross profits jumped 51% to $4.9 million in Q1, a big 70% jump from the year earlier. Tianyin said its Ginkgo Mihuan Oral Liquid and Arpu Shuangxin products, both of which have high gross margins, increased 340% and 31% respectively, driving the increase in revenues and gross profits.

Unhappily, operating expenses also increased. In fact, they grew faster than revenues, climbing 155% to $2.7 million. The culprit for the increase, according to Tianyin, was a $1.6 jump in SG&A costs to $2.6 million. Employee headcount in the Sales department increased by 40% to 720. This was beneficial for revenues, but the rise took a toll on margins.

Tianyin ended the quarter with $12.4 million in cash and cash equivalents. Stockholders' Equity was $35.1 million, with total assets of $38.5 million versus total liabilities of $3.4 million. The company generated just $500,000 in cash from operations during the first quarter. Tianyin has a $3 million stock buyback underway, and it will be introducing three new products into the marketplace during the current quarter. Tianyin’s stock price fell 10 cents to $1.70 following the announcement.

Disclosure: none.