American Oriental Reports Greatly Improved Q1

American Oriental Bioengineering, Inc. (NYSE: AOB) reported greatly improved financial results in its first quarter. The company booked a 51% increase in revenue and a 46% jump in net income. Revenues were $38.8 million, and the company recorded net income of $9.4 million. Earnings per share moved up to 12 cps from 10 cps during Q1 of 2007. An increase in the outstanding number of shares kept the number from climbing higher.

The only negative note in the otherwise positive report was a large increase of $2.3 million in sales and distribution costs, representing an 85% increase. Unlike some of its China biopharma competitors, American Oriental is not reporting any difficulty with its Accounts Receivable. In fact, they dropped $2.1 million to $14.3 million, a 12% decline.

The 51% jump in revenues was helped by two acquisitions completed since the first quarter of 2007: CCXA and Boke. Breaking down the improvement in revenues by division, American Oriental said the majority came from its OTC pharmaceuticals. With a 138% increase, OTC products more than doubled ($21.2 million), while prescription drug rose 10% ($10.6 million) and nutraceuticals notched a small decline of 3% ($6.9 million).

Gross margin slipped slightly to 67.8% from 68.8% a year ago, primarily because CCXA’s products have a lower margin. Operating income climbed 51.4% to $12.0 million.

The company reiterated that it expects revenues of at least $245 million for all of 2008, a 50% improvement over 2007, and net income of $62 million, up 43% from 2007. Given that Q1’s revenues were less than $40 million, the projection for the full year seems almost unattainable. But American Oriental reminded investors that the first quarter of the year is the slowest quarter for the company. Organic growth will contribute 30% to the revenue increase, and the rest will come from acquisitions.

American Oriental says it has fully integrated the CCXA and Boke operations, and it will continue to seek other companies that add to its portfolio of products. American Oriental ended the quarter with an impressive $159 million in cash to make those acquisitions.

The financial report was, evidently, a positive surprise for investors. Shares of American Oriental moved $2.06 higher in Wednesday’s session to $11.44, a rise of 22%.

Disclosure: none.

Comments

[investorslive]

AOB nice breakout - heres the chart

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