American Oriental Makes Another Plant-Based Healthcare Acquisition

American Oriental Bioengineering (AOB) will pay $40 million to buy Guangxi Boke Pharmaceutical Co. Ltd. Like American Oriental, Guangxi Boke is engaged in the business of plant-based healthcare. The privately held company produced $12 million in revenue during 2006, while American Oriental is expected to have sales of $158 million in 2007.

In June, American Oriental bought Changchun Xinan Pharmaceutical Group for $30 million (see story). That purchase followed a secondary stock offering that raised $74 million for American Oriental (see story). It has been avidly acquiring rivals as a way of expanding its business quickly.

The company had revenues of just $10 million in 2001, and now it is on track to produce $158 million this year, according to its own forecasts. Not only is that 16 times greater than 2001, it is a 43% increase over 2006.

At the same time, American Oriental released its second quarter financial report. The company said revenues climbed 49% to $34 million, while profits were 67% higher at $9.7 million. Revenues from plant-based products were $26 million, while its nutraceutical division brought in $8 million.

The two recently announced acquisitions caused American Oriental to raise its revenue and profit forecasts for 2007. The new target of $158 million of revenue includes contributions from Changchun Xinan Pharmaceutical, whose acquisition is expected to close in August, and Boke, which should close at the end of the third quarter. American Oriental expects earnings per share of 60 cents for 2007, or a total profit of $43 million.

Disclosure: none.