Weikang Bio-Tech (PINK:WKBT)

WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(STATED IN US DOLLARS)

Full Year 2011 Results

• Net sales for the year ended December 31, 2011 were $101.68 million, compared to $74.55 million for the year ended December 31, 2010, an increase of $27.13 million or 36%.
• Net income for the year ended December 31, 2011 was $29.63 million compared to $24.44 million for the same period of 2010, an increase of $5.19 million or 21%
• Earnings per diluted share were $0.90 for the fiscal year 2011, as compared to $0.87 for the same period of 2010.

Mr. Yin Wang, Chairman and CEO of Weikang stated: "We are thrilled by the financial results of fiscal year of 2011. Our growth strategy continues to prove successful, as evidenced by our strong performance in the fiscal year of 2011. Although we are facing severe competition within TCM industry and slowdown of the Chinese economy, we still achieved the best performance in our company's history. In the next few years," Mr. Wang continued, "we will continue to execute our organic growth strategy while pursuing expansion through acquisition. As a matter of fact the slowdown of the Chinese economy gives us more opportunities in selecting acquisition targets, which we believe will put us on strong footing to continue our growth."

HARBIN, China, Feb. 27, 2012 /PRNewswire-Asia-FirstCall/ --  Weikang Bio-Technology Group Co., Inc. (WKBT.PK)("Weikang" or the "Company"), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription and OTC pharmaceuticals and other health and nutritional products in the People's Republic of China, today announced that the Company is expected to report its fiscal 2011 net profit of between $26 million to $28 million with EPS between $0.78 and $0.84 and revenue between $100 million and $102 millions.

"We are excited and confident about our results for 2011 and growth prospects beyond. The economy in China as we feel in general is slowing down, however we believe that the market for our high-quality therapeutics and health enhancement will continue to expand as China is expected to become the second largest pharmaceutical market by 2020," commented Mr. Yin Wang, Chairman and CEO of Weikang. "Moreover, our pipeline products on which our research team is focused address a large number of health problems and have a broad consumer appeal."

The increase in cost of goods sold for Tianfang and Heilongjiang Weikang between the corresponding periods was mainly due to the increase in price of raw materials and direct labor costs as a result of overall inflation in the PRC.

The decrease in our gross profit margin in the three months ended September 30, 2011 was mainly due to increased cost of goods sold.

HARBIN, China, Jun. 7, 2011 /PRNewswire-Asia/ -- The Audit Committee of the Board of Directors of Weikang Bio-Technology Group Co., Inc. (OTC Markets: WKBT.PK - News) (“WKBT,” "Weikang" or the "Company"), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription and OTC pharmaceuticals and other health and nutritional products in the People's Republic of China, today announced that Grant Thornton (“GT”), one of the world’s leading organizations of independently owned and managed accounting and consulting firms, has verified that the cash amounts listed on the Company’s SEC filings for 2010 and the first quarter of 2011 are consistent with account statements obtained from WKBT’s banks directly by GT.

“Given the recent change in auditors and my new chairmanship of the WKBT Audit Committee, we authorized the Grant Thornton review to take place last week, and are now releasing the results,” said Jeffery Chuang, independent director and Chairman of the Audit Committee of WKBT. “Weikang continues to advance as a US publicly-traded company and we are committed to high standards in the thoroughness of our financial information,” said Mr. Chuang, a U.S. CPA who is based in Southern California.

Fiscal 2010 Results:

• Revenues generated in fiscal 2010 increased 57.0% to $74.6 million, up from $47.5 million in 2009.
• Gross profit was $45.0 million, an increase of 74.2% compared to $25.8 million in fiscal 2009. Gross margin was 60.4% and 54.4% in fiscal 2010 and 2009, respectively.
• Operating income in fiscal 2010 was $33.7 million, an increase of 68.5% compared to $20.0 million in 2009. Operating margin was 45.2% and 42.1% in fiscal 2010 and 2009, respectively.
• Adjusted* net income for fiscal 2010 was $28.3 million, an increase of 81.3% from GAAP net income of $15.6 million in 2009.
• GAAP net income for fiscal 2010 increased 56.5% to $24.4 million, compared to $15.6 million in 2009.
• Adjusted* fully diluted earnings per share ("EPS") for fiscal 2010 was $0.95, an increase of 53.2% from fully diluted EPS of $0.62 in 2009.

"Our business strategy was very successful this year, as evidenced by strong double-digit annual growth in both our top and bottom lines and an especially strong fourth quarter," commented Mr. Yin Wang, Chairman and CEO of Weikang. "Our market share continues to improve with our successful new product launches and expanded sales channels. The five new products we launched during 2010 contributed roughly $11 million to our total sales, and we plan to launch four new products during 2011, three of which we expect to roll out during the first quarter."

Mr. Wang continued, "We are committed to implementing improved marketing and promotional strategies as well as aggressive R&D, both of which contributed to our strong performance this year. Furthermore, we have streamlined our cost structure in order to provide the highest quality product at the best value, and we look forward to continued growth of this nature as we continue to pursue additional US investor support and interaction in 2011."

HARBIN, China, Jan. 11, 2011 /PRNewswire-Asia/ -- Weikang Bio-Technology Group Co., Inc. today announced an update regarding sales of its Rongrun Good Health Package, a bundled product launched in the third quarter of 2010. The Good Health Package includes four SFDA-approved products produced by Heilongjiang Weikang: Perilla Seed Soft Capsule, Yangshen Dan, Forest Frog Oil, and Kidney Boost Tonic.

• Perilla Seed Soft Capsule, a functional food supplement containing pure natural perilla seed oil, contributed approximately $2.31 million to the Company's revenue from its launch through the end of 2010.
• The Company's Kidney Boost Tonic, which has new packaging and is intended to improve kidney function and boost the immune system, contributed approximately $2.73 million to total revenues over the same period.
• Yangshen Dan, which is designed to reduce the symptoms of prostatic hypertrophy and improve blood flow to the small capillaries and arteries, contributed roughly $2.12 million in revenue through the end of 2010.
• Forest Frog Oil, which is formulated to improve overall immune function and serve as a preventative therapeutic for a variety of ailments, contributed approximately $2.01 million in revenue from its launch through the end of 2010.

"We are pleased by the positive response our Rongrun Good Health Package has received thus far in the market," commented Dr. Yin Wang, Chairman and CEO of Weikang Bio-Technology Group. "Since we announced the launch of this bundled product at the end of the third quarter, it has contributed a total of $9.17 million to our fiscal 2010 revenues. We continue to market our proprietary products aggressively to gain brand recognition and market share, and we expect the Good Health Package and other new products to contribute significantly to our business in 2011."

Per the GeoTeam's request, WKBT has issued 2011 EPS guidance:

Third Quarter Highlights

• Revenue increased 55.2% year-over-year to a record $17.4 million

• Gross profit increased 74.7% year-over-year to a record $10.4 million

• Gross margin was 60.0%

• Net income increased 52.5% to a record $6.1 millionwith fully diluted earnings per share of $0.22 vs. $0.16

• Adjusting for non-cash, stock-based compensation of $0.4 million, non-GAAP net income was $6.5 million and non-GAAP fully diluted earnings per share was $0.23
  

"We are highly pleased with our record revenue and net income for the quarter," commented Mr. Yin Wang, Chairman and CEO of Weikang.  "Our increase in sales was due to an strong positive response from consumers for our new therapeutics launch this year, which represented 12.6% of our total sales for the quarter, combined with the delivery of products that were postponed during the first and second quarter due to weather problems.  We anticipate our revenue and net income will continue to increase as we regularly launch new and exciting therapeutics that have a broad market potential."

Business Outlook

Weikang Bio-Technology expects to complete the construction of its manufacturing line for producing licorice flavonoids by the end of 2010.  The total estimated cost for the production line is $0.75 million of which the Company has already spent $0.47 million and is committed to pay an additional $0.28 million by the end of 2010. The Company expects to start production of licorice flavonoid extraction in 2011.  Once full production is achieved in 2012, the project is expected to add over $13 million to annual revenue and approximately $5.7 million in annual net income.  In addition, Weikang Bio-Technology plans to launch two new therapeutics by the end of 2010 and three new therapeutics during the first quarter of 2011. Combined, the new therapeutics are expected to add approximately $8.8 million in revenue and up to approximately $3.3 million in net income in 2011.

Weikang maintains its fiscal 2010 revenue guidance of $55 million, net profit of $21 million and earnings per share of $0.75. The Company also expects stockholders' equity to be $48 million or $1.71 per share. For fiscal year 2011, Weikang Bio-Technology is targeting revenue growth to be in the range of 30% to 50% over 2010 revenue.

"We believe that our growth opportunities remain robust as we are actively expanding our product portfolio and distribution network," Mr. Wang continued.  "During the quarter we added a new distributor in Changsha, Hunan Province and Nanning, Guangxi Provinces.  In addition, this December, we are presenting at the 64th National Medicine Trade Conference where we will have the opportunity to introduce our new therapeutics to a large number of distributors and retailers."

Weikang Bio-Tech Group reiterating its fiscal 2010 guidance:

• Revenue of $55 million.
• Net profit of $21 million.
• Earnings per share of $0.75.
• The company also expects stockholders' equity to be $48 million or $1.71 per share.

For fiscal year 2011, Weikang Bio-Technology is targeting revenue growth to be in the range of 30% to 50% over 2010 revenue.

Weikang Bio-Technology plans to launch two new therapeutics in the fourth quarter of 2010 and an additional three new therapeutics in the first quarter of 2011.  Combined, the new therapeutics are expected to add approximately $8.8 million in revenue and up to approximately $3.3 million in net income in 2011.  

In addition, the recent launch of its new Rongrun Good Health Package has the potential to add approximately $8.5 million in revenue and $3.1 million in net income in 2011.

In total,  for 2011, the new therapeutics and Good Health Package are expected to add up to

• $17.3 million in revenue. 
• $6.4 million in net income.

"We are extremely excited about our growth prospects for 2011 and beyond.  We believe that the market for our high-quality therapeutics will continue to expand as China is expected to become the second largest pharmaceutical market by 2020," commented Mr. Yin Wang, Chairman and CEO of Weikang Bio-Technology Group. "Moreover, our research team is focused on developing new therapeutics that address a large number of health problems and have a broad consumer appeal."

GeoTeam® Note: We have taken away a few points from this mornings news:

• WKBT was willing to issue EPS guidance. We had drilled this into management during the 2010 Rodman Conference. This implies that an equity raise should be off the table for the remainder of the year. 
  
• Issuing EPS guidance also shows a commitment to enhance shareholder value.
  
• 2010 EPS guidance implies EPS of $0.25 for the 2010 third and fourth quarter or growth of about 50.0%.
  
• Since WKBT did not issue 2011 EPS guidance, we still believe an equity raise is possible in 2011.

Weikang Bio-Technology Group Co., Inc. today announced that the Company has recently launched its new Rongrun Good Health Package.  Total contribution to 2011 revenue and net income is expected to be $8.5 million and $3.1 million, respectively.  

"The Rongrun Good Health Package is our first bundled product which we believe offers consumers enhanced value and will accelerate the market acceptance of our new products," commented Dr. Ying Wang, Chairman & CEO of Weikang Bio-Technology Group Co., Inc.  "We intend to continue expanding our market share through regularly launching proprietary, high-quality, and high margin, new products that enhance consumers' health and overall wellbeing. We are also supporting our new products by continually building brand recognition through aggressive marketing campaigns and sales incentives."

Second Quarter Highlights

• Revenue for the second quarter of 2010 was $10.5 million, down 20.5% from revenue of $13.2 million.
  
• Gross profit was $6.1 million with gross margin of 58.3%.
  
• Net income was $1.9 million in the second quarter of 2010, down 42.5% from $3.3 million, with fully diluted earnings per share of $0.07 vs $0.13.
  
• Non- GAAP net income was $2.8 million and non-GAAP fully diluted earnings per share was $0.10.

"During the second quarter we experienced severely harsh weather which disrupted business operations and impacted our sales. In early May, 2010, the southern and central region of China experienced an unusual amount of heavy rainfall resulting in extreme flooding and high humidity. This extreme weather caused disruption to transportation in the region which in turn prompted a portion of our sales to be postponed," commented Dr. Ying Wang, Chairman & CEO of Weikang Bio-Technology Group Co., Inc. "However, we are pleased to note that the majority of the problems caused by the extreme weather have been resolved and with our strong product offering as well as new therapeutics to be launched this year, we are looking forward to return to healthy revenue and net income growth for the rest of 2010."

Business Outlook

Weikang Bio-Technology intends to increase its sales by expanding its product offering as well as offering consumers value packages by bundling its therapeutics. At the end of August, 2010, the Company intends to launch a new value-add bundled package of its Rongrun Kidney Boost Tonic combined with newly launched therapeutics: Perilla Seed Soft Capsule, Forest Frog Oil Soft Capsule and Yangshen Pill. In the fourth quarter of 2010, Weikang Bio-Technology plans to launch two additional therapeutics, Sha Bai Shuanghuai Soft Capsules and Gouqi Xi Pu Soft Capsules which have the potential to add up to approximately $5.7 million in revenue and up to approximately $2.2 million in net income combined on an annual basis when it reaches full production.

"While the second quarter of 2010 was off due to events outside of managements' control, we are very positive about our outlook for the rest of 2010 as we have several exciting new products that we plan to launch by the end of the year," Mr. Wang continued. "Moreover, we believe our long-term growth opportunities are strong as we remain committed to expanding our distribution network and developing new high quality therapeutics. For example, a project that we believe has an exciting commercial potential is the development of licorice flavonoids for use in therapeutics which we anticipate has the possibility to contribute to over $13 million in annual sales when it reaches full production."

"We are pleased to have achieved a record quarter in terms of revenue and net income. Moreover, we believe the strong quarter demonstrates our solid competitive position with our portfolio of proprietary therapeutics and ability to consistently expand our market penetration," commented Mr. Yin Wang, Chairman & CEO of Weikang Bio-Technology Group Co., Inc. "Both Tianfang and Weikang had strong sales growth as a result of our increased distribution network and market coverage."

Weikang intends to continue developing new products and expanding its distribution network throughout 2010. The Company has 10 therapeutics in various stages of the SFDA approval process and expects to launch its 10-HDA in the third quarter of 2010 and ShuangBaoGu by the end of 2010.

"The market opportunity for Traditional Chinese Medicine and Western medicine continues to expand in China as consumers' medical expenditure is estimated to double annually over the next two decades. We remain focused on our long-term growth and expanding our distribution network by increasing our wholesale network and dedicated sales force," Mr. Wang continued. "We also welcome Mr. Hu to the Weikang Bio-Technology executive team who will assist us in increasing our visibility in the investment community and enhancing our shareholder value as we continue to expand our market penetration."

Mr. Wang concludes, "Looking ahead, we will continue our growth strategy of developing newer and higher margin pharmaceutical and nutriceutical products, while expanding our sales and distribution network in China. In 2010, we will also deploy more time and resources towards the U.S. capital markets by increasing our investor relations efforts and potentially uplifting to a senior stock exchange. The management team is fully committed to build long term value for all of our stakeholders."

Source: MarketWire (April 5,  2009)