Universe Pharmaceuticals INC Reports Financial Results for The First Six Months of Fiscal Year 2022

JI'AN, China, Aug. 16, 2022 /PRNewswire/ -- Universe Pharmaceuticals INC (the "Company") (Nasdaq: UPC), a pharmaceutical producer and distributor in China, today announced its unaudited financial results for the first six months of fiscal year 2022 ended March 31, 2022.

Mr. Gang Lai, Chairman and CEO of Universe Pharmaceuticals INC, commented, "During the first six months of fiscal year 2022, we have navigated business uncertainties and adjusted our business strategy to offset the impact of reduced product sales volume due to the resurgence of COVID-19 cases and related lockdowns. As a result, we generated $24.2 million in revenue for the six months ended March 31, 2022, slightly lower than the same period of last year, demonstrating the considerable efforts we made during this challenging period. To complement our offline sales channels, we established a strategic priority in developing online business channels, which helps us to seize the opportunity and is expected to drive our business growth in the fast-evolving market. Through executing our growth strategy of emphasizing digital marketing and expanding our sales on e-commerce platforms, we expect to improve our brand recognition, deliver products to more customers, and expand our business scale. Looking forward, we intend to continue implementing our expansion strategy, which we believe will allow us to achieve greater market penetration and expand our customer base, with the goal creating long-term value for our shareholders."

Financial Highlights for the Six Months Ended March 31, 2022



For the Six Months Ended March 31,

($ millions, except per share data)


2022


2021


% Change

Revenues


24.2


24.3


-0.4 %

Income from operations


2.7


9.6


-71.8 %

Net income


1.7


7.1


-75.8 %

Earnings per share


0.08


0.44


-81.8 %

 

  • Revenues slightly decreased by 0.4% to $24.2 million for the six months ended March 31, 2022 from $24.3 million for the six months ended March 31, 2021, primarily attributable to decreased sales volume of the Company's traditional Chinese medicine derivatives ("TCMD") products and third-party products by 2,454,463 units, or 17.3%, and the decreased average selling price of third-party products by $0.32 per unit, or 14.7%, partially offset by the increased average selling price of the Company's TCMD products by $0.74 per unit, or 50.7%.
  • Income from operations was $2.7 million for the six months ended March 31, 2022, representing a decrease of 71.8% from an income from operations of $9.6 million for the six months ended March 31, 2021.
  • Net income was $1.7 million for the six months ended March 31, 2022, representing a decrease of 75.8% from a net income of $7.1 million for the six months ended March 31, 2021.
  • Earnings per share was $0.08 for the six months ended March 31, 2022, representing a decrease of 81.8% from earnings per share of $0.44 for the six months ended March 31, 2021.

Financial Results for the Six Months Ended March 31, 2022 Compared to the Six Months Ended March 31, 2021

Revenues

Total revenues decreased by $0.1 million, or 0.4%, to $24.2 million for the six months ended March 31, 2022, from $24.3 million for the six months ended March 31, 2021.



For the Six Months Ended March 31,



2022


2021

($ millions)


Revenue


Cost of
revenue


Gross
margin


Revenue


Cost of
revenue


Gross
margin

TCMD products sales


15.4


4.9


67.7 %


13.3


5.4


59.3 %

Third-party products
sales


8.8


5.5


37.9 %


11.0


6.9


37.2 %

Total


24.2


10.4


56.8 %


24.3


12.3


49.3 %

 

Sales of TCMD products increased by $2.1 million, or 15.3%, to $15.4 million for the six months ended March 31, 2022, from $13.3 million for the six months ended March 31, 2021. The increase in the sales of the TCMD products was due to an increase in the average selling price of the Company's TCMD products by $0.74 per unit, or 50.7%, to $2.20 per unit in the six months ended March 31, 2022, from $1.46 per unit in the six months ended March 31, 2021.

Sales of third-party products decreased by $2.2 million, or 19.4%, to $8.8 million for the six months ended March 31, 2022, from $11.0 million for the six months ended March 31, 2021. Sales volume of third-party products slightly decreased by 5.6%, to 4,763,265 units sold in the six months ended March 31, 2022, from 5,043,984 units sold in the six months ended March 31, 2021. In the six months ended March 31, 2022, due to a change in product mix, the Company's average selling price of third-party products decreased by $0.32 per unit, or 14.7%, to $1.86 per unit in the six months ended March 31, 2022, from $2.18 per unit in the six months ended March 31, 2021.

Cost of revenues and Gross profit

Cost of revenues decreased by $1.9 million, or 15.1%, to $10.4 million for the six months ended March 31, 2022, from $12.3 million for the six months ended March 31, 2021.

Gross profit increased by $1.8 million to $13.8 million for the six months ended March 31, 2022, from $12.0 million for the six months ended March 31, 2021. Gross margin increased by 7.5% to 56.8% for the six months ended March 31, 2022, from 49.3% for the six months ended March 31, 2021.

Operating expenses

Selling expenses increased by $7,970,484, or 718.5%, to $9,079,771 for the six months ended March 31, 2022, from $1,109,287 for the six months ended March 31, 2022, primarily attributable to (i) an increase in advertising expenses by $7,952,604, or 2,979.8%, from $266,884 in the six months ended March 31, 2021, to $ 8,219,488 in the six months ended March 31, 2022. In September 2021, the Company entered into an advertising service agreement with a third party, Guangdong Fengyang Legend Consulting Co., Ltd. ("Fengyang Legend"), pursuant to which, Fengyang Legend agreed to assist the Company in developing and producing a television advertisement for promoting the sales of the Company's major TCMD products, Bai Nian Dan and Guben Yanling Pill, and coordinating with a TV channel to broadcast the advertisement to targeted geographic market areas. Pursuant to the terms of this agreement, the Company made an advance payment in the amount of 30% of the total advertising service fee to Fengyang Legend, and the Company paid Fengyang Legend another 58% of the total advertising service fee when the TV channel on which the advertisement is broadcasted was determined. Since the Company's TV advertisement was first broadcasted in October 2021, the Company's prepayment to Fengyang Legend has been charged to advertising expenses during the six months ended March 31, 2022, which led to higher advertising expenses in the six months ended March 31, 2022; (ii) an increase in the Company's salary and benefit expenses paid to its sales employees by $35,852, or 8.7%, from $411,310 in the six months ended March 31, 2021 to $447,162 in the six months ended March 31, 2022, and an increase in business travel and meal expenses by $30,343, or 111.8%, from $27,145 in the six months ended March 31, 2021 to $57,488 in the six months ended March 31, 2022, primarily due to the Company's increased sales activities during the six months ended March 31, 2022; and (iii) a decrease in shipping and delivery expenses by $45,538, or 11.6%, from $393,446 in the six months ended March 31, 2021 to $347,908 in the six months ended March 31, 2022, due to the Company's decreased sales volume during the six months ended March 31, 2022.

General and administrative expenses increased by $845,425, or 85.8%, to $1,830,923 for the six months ended March 31, 2022 from $985,498 for the six months ended March 31, 2021, primarily attributable to (i) an increase in the Company's office supply and utility expenses by $104,770, or 69.4%, to support its administration activities; (ii) an increase in the Company's salaries, welfare expenses and insurance expenses paid to administration employees by $37,911, or 12.3%, because of a higher amount of annual bonus distributed to administrative staffs in the six months ended March 31, 2022 as compared to the six months ended March 31, 2021, and (iii) an increase in bad debt expense by $688,064, or 338.5%, because the Company accrued more bad debt expenses based on its assessment of the collectability of the accounts receivable and advance to suppliers, offset by a decrease in consulting fees by $46,700 because the Company incurred higher amount of consulting services fees in the six months ended March 31, 2021 before the Company completed its initial public offering (the "IPO").

Research and development expenses decreased by $166,207, or 53.5%, to $144,461 for the six months ended March 31, 2022, from $310,668 for the six months ended March 31, 2021, primarily attributable to a decrease in the materials used in the research and development activities.

Other income (expenses), net

Total other expenses, net, increased by $632,947, or 2,607.7%, to $608,675 for the six months ended March 31, 2022 from $24,272 for the six months ended March 31, 2021.

Provision for income taxes

Provision for income taxes was $1.6 million for the six months ended March 31, 2022, representing a decrease of $0.8 million, or 34.5%, from $2.4 million for the six months ended March 31, 2021 due to the Company's decreased taxable income.

Net income

Net income was $1.7 million for the six months ended March 31, 2022, representing a $5.4 million decrease from a net income of $7.1 million for the six months ended March 31, 2021.

Basic and diluted earnings per share were $0.08 for the six months ended March 31, 2022, representing a decrease of 81.8% from basic and diluted earnings per share of $0.44 for the six months ended March 31, 2021.

Balance Sheet

As of March 31, 2022, the Company had cash of $14.2 million, as compared to $8.1 million as of September 30, 2021.

Cash Flow

Net cash provided by operating activities was $6.1 million for the six months ended March 31, 2022, compared with $1.1 million for the six months ended March 31, 2021.

Net cash used in investing activities was $55,091 for the six months ended March 31, 2022, compared with $50,875 for the six months ended March 31, 2021.

Net cash used in financing activities was $19,991 for the six months ended March 31, 2022, compared with net cash provided by financing activities of $24,136,556 for the six months ended March 31, 2021.

About Universe Pharmaceuticals INC

Universe Pharmaceuticals INC, headquartered in Ji'an, Jiangxi, China, is a pharmaceutical producer and distributor in China. The Company specializes in the manufacturing, marketing, sales and distribution of traditional Chinese medicine derivatives products targeting the elderly with the goal of addressing their physical conditions in the aging process and to promote their general well-being. The Company also distributes and sells biomedical drugs, medical instruments, Traditional Chinese Medicine Pieces, and dietary supplements manufactured by third-party pharmaceutical companies. Currently, the Company's products are sold in 30 provinces of China. For more information, visit the company's website at http://www.universe-pharmacy.com/.  

Forward-Looking Statements

All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and in its other filings with the U.S. Securities and Exchange Commission.

For more information, please contact:

Ascent Investors Relations LLC
Tina Xiao
President
Phone: 917-609-0333
Email: tina.xiao@ascent-ir.com

 

 

 

UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)









As of



March 31,



September 30

ASSETS


2022



2021

CURRENT ASSETS:






    Cash

$

14,236,300


$

8,077,908

    Short-term investments


14,344,092



13,725,204

    Accounts receivable, net


18,816,406



15,573,742

    Inventories, net


3,385,872



2,462,542

    Due from related parties


356,290



236,982

    Advance to suppliers


103,653



2,738,313

    Prepayment for advertising


-



7,492,320

    Prepaid expenses and other current assets


418,170



174,053

TOTAL CURRENT ASSETS


51,660,783



50,481,064







    Property, plant and equipment, net


4,985,035



4,681,353

    Prepayments made to a related party for purchase of property


2,520,000



2,476,800

    Prepayments for construction in progress


10,448,944



10,712,160

    Intangible assets, net


178,764



178,483

    Investment in equity securities


586,674



744,924

    Deferred tax assets


985,961



869,997

TOTAL NONCURRENT ASSETS


19,705,378



19,663,717







TOTAL ASSETS

$

71,366,161


$

70,144,781







LIABILITIES AND STOCKHOLDERS' EQUITY












CURRENT LIABILITIES:






    Short-term bank loans

$

4,410,000


$

4,334,400

    Accounts payable


3,645,443



5,310,526

    Taxes payable


962,790



1,101,460

    Due to related parties


7,293



19,723

    Accrued expenses and other current liabilities


1,182,353



444,319

TOTAL CURRENT LIABILITIES


10,207,879



11,210,428







COMMITMENTS AND CONTINGENCIES












SHAREHOLDERS' EQUITY






Ordinary shares, $0.003125 par value, 100,000,000 shares
authorized, 21,750,000 shares and 21,750,000 shares issued
and outstanding as of March 31, 2022 and September 30,
2021, respectively


67,969



67,969

    Additional paid-in capital


29,279,159



29,279,159

    Statutory reserves


2,439,535



2,439,535

    Retained earnings


26,790,666



25,058,931

    Accumulated other comprehensive income


2,580,953



2,088,759

TOTAL SHAREHOLDERS' EQUITY


61,158,282



58,934,353







TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

71,366,161


$

70,144,781

 

 

 

UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES


 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 (UNAUDITED)








 For the Six Months Ended
March 31, 



2022



2021







 REVENUE

$

24,202,340


$

24,292,948

 COST OF REVENUE AND RELATED TAX


10,445,906



12,304,678

 GROSS PROFIT


13,756,434



11,988,270







 OPERATING EXPENSES






 Selling expenses


9,079,771



1,109,287

 General and administrative expenses


1,830,923



985,498

 Research and development expenses


144,461



310,668

 Total operating expenses


11,055,155



2,405,453







 INCOME FROM OPERATIONS


2,701,279



9,582,817







 OTHER INCOME (EXPENSES)






 Interest expense, net


(88,389)



(46,671)

 Other income (expense), net


634



(8,227)

 Short-term investment income


696,430



-

 Equity investment income


-



30,626

 Total other income (expense), net


608,675



(24,272)







 INCOME BEFORE INCOME TAX PROVISION


3,309,954



9,558,545







 PROVISION FOR INCOME TAXES


1,578,219



2,410,747







 NET INCOME


1,731,735



7,147,798







 OTHER COMPREHENSIVE INCOME






 Foreign currency translation adjustment


492,194



797,643

 COMPREHENSIVE INCOME 

$

2,223,929


$

7,945,441







 Earnings per common share - basic and diluted

$

0.08


$

0.44

 Weighted average shares - basic and diluted

$

21,750,000


$

16,168,956








 

 

 

UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)











For the Six Months Ended
March 31,




2022


2021


Cash flows from operating activities:






   Net income

$

1,731,735


$

7,147,798


   Adjustments to reconcile net income to net cash








provided by operating activities:








Depreciation and amortization


292,111



243,466



Loss from disposal of fixed assets


1,011



-



Changes in allowance for doubtful accounts


100,406



(203,253)



Changes in inventory reserve


(16,508)



(76,734)



Deferred income tax provision (benefit)


(100,406)



71,221



Short-term investment income


(696,430)



-


   Changes in operating assets and liabilities:








Accounts receivable


(3,060,116)



(6,322,074)



Inventories


(860,517)



(2,864,911)



Advance to suppliers, net


2,664,149



-



Prepayment for advertising


7,593,960



-



Advances to related parties


(110,241)



-



Prepaid expenses and other current assets


(240,164)



(3,098,993)



Accounts payable


(1,751,013)



5,801,410



Taxes payable


(157,280)



55,105



Accrued expenses and other current liabilities


727,506



305,094


Net cash provided by operating activities


6,118,203



1,058,129










Cash flows from investing activities:








Purchases of property and equipment


(55,629)



(50,875)



Proceeds from disposal of equipment


538



-


Net cash used in investing activities


(55,091)



(50,875)










Cash flows from financing activities:








Proceeds from short-term bank loans


1,255,200



1,220,800



Repayment of bank loans


(1,255,200)



(1,220,800)



Net proceeds from initial public offerings


-



21,941,916



Proceeds from (repayment of) related party borrowings


(19,991)



2,194,640


Net cash provided by (used in) financing activities


(19,991)



24,136,556










Effect of changes of foreign exchange rates on cash


115,271



797,117


Net increase in cash


6,158,392



25,940,927


Cash, beginning of period


8,077,908



10,058,202


Cash, end of period

$

14,236,300


$

35,999,129










Supplemental disclosure of cash flow information








Cash paid for interest

$

103,765


$

65,775



Cash paid for income tax

$

1,880,314


$

3,364,769










Supplemental non-cash financing activity:








Subscription receivable from issuance of ordinary shares under
initial public offerings

$

-


$

3,571,241



Cost of construction in progress paid in prior years

$

448,342


$

-











 

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Source: Universe Pharmaceuticals INC Related Stocks: NASDAQ:UPC
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