On August 17, 2020 China Biologic Products Holdings, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), a leading fully integrated plasma-based biopharmaceutical company in China, reported its unaudited financial results for the second quarter of 2020 (Press release, China Biologic Products, AUG 17, 2020, View Source [SID1234563728]).

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Second Quarter 2020 Financial Highlights

Total sales in the second quarter of 2020 decreased by 14.9% in RMB terms and 18.1% in USD terms to $111.1 million from $135.7 million in the same quarter of 2019.
Gross profit decreased by 16.0% to $76.4 million from $90.9 million in the same quarter of 2019. Gross margin increased to 68.8% from 67.0% in the same quarter of 2019.
Income from operations decreased by 11.4% to $42.7 million from $48.2 million in the same quarter of 2019. Operating margin increased to 38.4% from 35.5% in the same quarter of 2019.
Non-GAAP adjusted income from operations decreased by 5.8% in RMB terms and 9.3% in USD terms to $51.4 million from $56.7 million in the same quarter of 2019.
Net income attributable to the Company decreased by 14.2% to $35.7 million from $41.6 million in the same quarter of 2019. Diluted earnings per share decreased to $0.91 compared to $1.06 in the same quarter of 2019.
Non-GAAP adjusted net income attributable to the Company decreased by 7.2% in RMB terms and 10.9% in USD terms to $43.4 million from $48.7 million in the same quarter of 2019. Non-GAAP adjusted earnings per diluted share decreased to $1.11 from $1.24 in the same quarter of 2019.
NOTE: Detailed financial statements and information are available through this link: View Source

"In line with our previous estimates, our revenue and net income declined during the second quarter reflecting the combined impact of the ongoing COVID-19 pandemic and our adjusted sales focus," said Joseph Chow, Chairman and CEO of China Biologic. "Although a decline in demand and an increase in supply have led to increased competition in our core markets, and while many hospitals are maintaining strict precautionary measures against the pandemic which limits our promotional activities, we have gained market share across most of our major products within direct sales channels. For certain major products in our distribution channels, we are taking a conservative approach in order to better align inventory with market demand for the second half of 2020. "

"We continue to focus on optimizing the efficiency of our distribution network and lowering our credit exposure by eliminating smaller non-performing distributors, evidenced by our continued improvement in accounts receivable turnover, which is quite important during this difficult time amid COVID-19. We are also implementing online enterprise management and logistics systems as we adjust our operational strategies to adapt to the challenging new environment. These measures together with our efforts to reduce operating costs have helped us to further improve our operating margin. We are also exploring more channels to improve overall plasma supply and fill the gap in both internal collection and outsourced plasma volumes. We will continue to make every effort to maintain our track record of providing high-quality products to our patients, investing in new product development, and bringing better healthcare to society."

Recent Updates

Obtained Approval to Build a New Collection Station

In April 2020, China Biologic received approval from the Health Commission of Shandong Province to build a new plasma collection station in Yangxin County, Binzhou City of Shandong Province.

Coagulation Factor IX Approved for Manufacturing

In July 2020, China Biologic received the certificate of approval for manufacturing coagulation factor IX. The Company began the clinical trial in 2017 for this first-to-market plasma-based product in China, which will further improve China Biologic’s plasma fractionation utilization and contribute to its long-term financial growth. China Biologic has begun manufacturing coagulation factor IX and expects to launch the product in the third quarter of 2020.

Huitian’s Manufacturing Permit Revoked

In July 2020, Xi’an Huitian Blood Products Co., Ltd. ("Huitian"), a PRC company in which China Biologic holds an indirect minority equity interest, received an administrative order from the Shaanxi Medical Products Administration revoking Huitian’s pharmaceutical manufacturing permit due to its failure to meet certain good manufacturing practice standards in its production of pharmaceutical products.

Huitian is a plasma products company based in Xi’an, Shaanxi Province, and China Biologic indirectly holds 35% of its equity interest. The Company records its equity investment in Huitian as equity in income of equity method investee in the Company’s consolidated statements of comprehensive income. In 2017, 2018 and 2019, such equity in income of equity method investee was $3.5 million, $2.4 million and $1.6 million, respectively, accounting for 5.2%, 1.8% and 1.1%, respectively, of the total net income attributable to China Biologic.

Conference Call

The Company will host a conference call at 7:30 am Eastern Time on Tuesday, August 18, which is 7:30 p.m. Beijing Time on August 18, 2020, to discuss its second quarter 2020 results and answer questions from investors. Listeners may access the call by dialing:

A telephone replay will be available one hour after the conclusion of the conference all through August 25, 2020. The dial-in details are:

A live and archived webcast of the conference call will be available through the Company’s investor relations website at View Source