China Sky One Medical (NSDQ: CSKI) reported Q1 revenues hit $24.8 million this year, an exact 100% increase from the year earlier. Net income jumped 87% to $9.1 million, a big rise and a stunning 37% margin on sales.
The company attributed its success to its sales force as well as contributions from acquisitions made during 2008. The company has shifted its emphasis from contract sales of non-manufactured products to its own proprietary products, which carry higher margins.
China Sky One provided full-year 2009 guidance, saying it expects revenues to increase 40% to $128-$130 million and net income of $38-$39 million, a rise of 30%.
China Sky One provided the following breakdown of its sales:
• Patch products – including the Sumei Slim Patch, rose 141% to $9.1 million, accounting for 37% of revenue, up from 30% in 2008;
• Ointments – rose 242% year over year to $5.1 million, accounting for 20% of revenue, compared to 12% last year;
• Sprays – rose 55%, contributed 12% of revenue
• Bio-engineering products – including diagnostic testing kits, increased 70%, and also accounted for 12% of revenue.
Although prices for its products declined, China Sky One said it was able to negotiate lower prices from its suppliers, resulting in only a small decline in margins.
China Sky One said it finished Q1 with $48.8 million in cash and cash equivalents, approximately $65.9 million in working capital, and no debt. Operations produced $8.5 million in net cash flow during Q1.
After the end of Q1, China Sky One announced it received SFDA approval for Geranium ointment and Musk liniment for pain relief. It expects the two products to generate just $0.8 million in revenues in 2009, but much more in 2010. It also received a go-ahead to begin trials of its Sudden Cardiac Death (SCD) Early Examination Kit.
During Q1, the company achieved the following goals:
• SFDA approval to produce Calcium Folinate injection and Policresulen vaginal suppositories;
• SFDA approval to begin clinical trials for two new TCM products: Paeonol gel and Mei Lu gel;
• Began selling Sumei Slim Patch in South Korea and Sudan;
• Signed an agreement to distribute Naftopidil dispersible tablets with an expected sales target of $14.6 million over five years.