China Medicine Corporation (OTCPK:CHME) announced that 2008 revenues increased 27% to $53.6 million, while net income actually outpaced the growth in revenues, rising 33% to $9.1 million. That is equivalent to 60 cents per share, fully diluted. The improved results build on a 75% increase in revenues in 2007.
These results beat the company’s guidance, even though China Medicine warned in October 2008 it would not meet its forecast. At the time, China Medicine did not issue a lower set of numbers.
Almost half of the company’s revenues were booked in Q4, which recorded sales of $24.4 million. China Medicine said that an early New Year’s holiday pushed some sales forward from early 2009 into late 2008.
The company is continuing to work on its recombinant Aflatoxin Detoxifizyme (rADTZ) product, which has the potential to detoxify aflatoxin (AFT), a cancer causing agent, in food and feed. All initial rADTZ experiments and testing have been completed successfully, and the Department of Agriculture in China is reviewing the product. China Medicine has applied for a production permit for rADTZ, which it expects to receive in Q2 of 2009.
China Medicine said its major products in Q4 of 2008 were Hongjin Xiaojie Capsules, a cough treatment (5.7% of revenue); Xueshuantong injection, which is used to improve blood circulation, remove vascular stasis and dilate blood vessels (5.4% of revenues); Cinepazide maleate injection, a treatment for vascular sclerosis (4.1% of revenue).
During Q4, prescription products accounted for 79% of total net revenues, and over-the-counter medicines generated another 18%. Dietary supplements, medical equipment and others were responsible for the rest. Sales of medical formula products have dwindled to almost nothing because of stricter SFDA regulations for these products.
The major negative in China Medicine’s report was a substantial increase in accounts receivable over the year. This item grew 41% in 2008 to $19.2 million.
Investors were pleasantly surprised by the news. They sent China Medicine higher by 21 cents to $.95, a 28% increase. In the past 12 months, the company’s shares have traded between $.57 and $3.05.