China Pharma Holdings, Inc. Reports First Quarter 2017 Financial Results

China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma,"  the "Company" or "We"), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the quarter ended March 31, 2017.

First Quarter Highlights

• Revenue decreased 9.8% to $3.3 million in first quarter 2017 from $3.6 million in the same period of 2016;
• Gross profit margin was 21.9% in first quarter 2017, compared to 17.6% in the same period of 2016.
• Loss from operations was $0.8 million in first quarter 2017 compared to $1.3 million in the same period of 2016, a decrease of $0.5 million;
• Net loss was $1.0 million in first quarter 2017 compared to $1.6 million in the same period of 2016.  Loss per common share was $(0.02) per basic and diluted share in first quarter 2017 compared with $(0.04) per basic and diluted share in the same period of 2016.

"We experienced a slight revenue decrease in the first quarter of 2017 compared to the same period last year, which was mainly due to a more significant impact from an earlier Spring Festival holiday in 2017. However, we believed that our overall financial performance has improved, taking into consideration the increased gross profit margin and decreased net loss," said Ms. Zhilin Li, China Pharma's Chairman and CEO.  Ms. Li continued, "Nevertheless, increasing sales remains our top priority. Management will continue to vigorously promote sales by actively participating in the recent opening of the new provincial drug tender offer and further exploring basic medical market. We continue to believe that demand for pharmaceutical products is huge and steady in China. The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have a major impact on the future development of our industry and may change its business patterns. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."

First Quarter Results

Revenue decreased by 9.8% to $3.3 million for the three months ended March 31, 2017, as compared to $3.6 million for the three months ended March 31, 2016. This decrease was primarily due to the impact from Chinese Spring Festival on purchase and logistic activities.

Gross profit for the three months ended March 31, 2017 was $0.7 million, compared to $0.6 million in the same period last year. Our gross profit margin in the three months ended March 31, 2017 was 21.9% compared to 17.6% in the same period last year. This increase was primarily due to the increase in gross profit margins of our major products in this period.

Our selling expenses for the three months ended March 31, 2017 were $0.7 million, a decrease of $0.3 million, compared to $1.0 million for the three months ended March 31, 2016. Selling expenses accounted for 21.8% of the total revenue in the three months ended March 31, 2017 compared to 26.6% in the same period last year.  Because of adjustments in our sales practices resulting from health-care reform policies, despite the overall decrease in sales, we may require additional personnel and expenses to support our sales and the collection of accounts receivable.

Our general and administrative expenses for the three months ended March 31, 2017 were $0.4 million, which represented an increase of $0.1 million compared to $0.3 million in the same period last year. General and administrative expenses accounted for 12.7% and 8.7% of our total revenues in three months ended March 31, 2017 and 2016, respectively. This increase was primarily due to several major payments for listing maintenance happened in the three months ended March 31, 2017.

Our bad debt expenses for the three months ended March 31, 2017 was $0.4 million, which represented a decrease of $0.2 million compared to $0.6 million in the same period last year. The decline in our bad debt expenses was mainly the result of the decline in our revenues in recent years, which also led to the corresponding decline in the net amount of accounts receivable aging over one year (according to our current accounting policy, we are required to recognize a 70% bad debt allowance).

Our income tax expense was $0.03 million and $0.02 million for the three months ended March 31, 2017 and 2016, respectively. The expense arose as a result of certain deferred tax liabilities recognized in prior years. We renewed our "National High-Tech Enterprise" status with the Chinese government in the third quarter of 2013. With this designation, for the years ending December 31, 2015 and 2016, we enjoy a preferential tax rate of 15%, which is notably lower than the statutory income tax rate of 25%. However, our recent net loss results have put the Company in an unfavorable position for the potential renewal of "National High-Tech Enterprise" status in 2017, and after evaluating the feasibility of such a renewal, the Company has decided not to renew this status. As a result, our tax rate for 2017 and the foreseeable future will be 25%.

Net loss for the first quarter 2017 was $1.0 million, or $(0.02) per basic and diluted share, compared to net loss of $1.6 million, or $(0.04) per basic and diluted share for the same period of 2016. The decrease in net loss was mainly a result of the increase in gross profit margin and decrease in bad debt expenses.

Financial Condition

As of March 31, 2017, the Company had cash and cash equivalents of $2.5 million compared to $2.7 million as of December 31, 2016. Working capital decreased to $6.9 million as of March 31, 2017 from $7.1 million as of December 31, 2016; and the current ratio was 1.7 times in both March 31, 2017 and December 31, 2016, respectively.

Our accounts receivable balance decreased to $3.7 million as of March 31, 2017 from $4.0 million as of December 31, 2016.

Conference Call

The Company will hold a conference call at 8:30 am E.T. on May 12, 2017 to discuss the results of first quarter 2017. Listeners may access the call by dialing 1-866-519-4004 or 65-671-350-90 for international callers, Conference ID # 20452439.  A replay of the call will be accessible through May 20, 2017 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 20452439.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products focused on conditions with a high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective, high-margin business model is driven by market demand and supported by new GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding nationwide distribution network across all major cities and provinces in China. The Company's wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd., is located in Haikou City, Hainan Province.

Safe Harbor Statement 

Certain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as the achievability of financial guidance, success of new product development, unanticipated changes in product demand, increased competition, downturns in the Chinese economy, uncompetitive levels of research and development, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations except as required by applicable law or regulation.

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