×

Sinovac Reports Unaudited First Half of 2017 Financial Results

BEIJING, Dec. 1, 2017 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA) ("Sinovac" or the "Company"), a leading provider of biopharmaceutical products in China, announced today that it reported its unaudited financial results for the six months ended June 30, 2017.

Financial Highlights

  • Sales revenue for the first six months of 2017 was $66.9 million compared to $12.3 million in the prior year period, an increase of 442.6%. Sales increased primarily due to revenue generated by the Company's EV71 vaccine and a low comparison base in the second quarter of 2016 due to the Shandong vaccine scandal that negatively impacted the whole industry.
  • Net income attributable to common shareholders was $10.9 million, or $0.19 per basic and diluted share, compared to net loss attributable to common shareholders of $8.3 million, or $(0.14) per basic and diluted share, in the prior year period.

Business Highlights

Research and Development

Varicella - Sinovac obtained clinical research approval for its proprietary varicella vaccine candidate from the CFDAin September2015 and completed clinical trials in 2017. The production license application was submitted to the CFDA in November 2017.

EV71 - In November 2017, Sinovac obtained clinical trial approval to conduct a trial on healthy children aged from three to five years old. This vaccine was initially approved in January 2016 to target healthy children aged from six months to three years old. The Company made an application to conduct clinical study in an expanded population in April 2017.

Mr. Weidong Yin, Chairman, President and CEO of the Sinovac, commented, "In the first half of 2017, we experienced a year-over-year revenue growth of 442.6%. The revenue increase was mainly driven by the sales of EV71 vaccine that we commercialized in 2016. After the Shandong incident, sales activities resumed after a new policy on vaccine distribution and logistics was implemented at the beginning of 2017.This resulted inhigher first half sales of our regular vaccines, including Healive, Bilive, Anflu and mumps, than those of first half of 2016.

From the beginning of this year, we also had a few developments of our R&D programs. We filed production license application of our PPV-23, completed phase II trial of our Sabin-IPV, and completed phase III clinical trial of our varicella vaccine. We also filed an application of production license with CFDA for our varicella vaccine recently. We believe the pipeline products developments bring future growth potential. Sinovac will keep executing our strategy to develop and provide vaccines to address the unmet medical needs."

Unaudited Financial Results for the First Six Months of 2017



2017 1H

% of Sales

2016 1H

% of Sales


(In $000 except percentage data)


Hepatitis A – Healive


12,879

19.2%

4,524

36.7%


Hepatitis A&B – Bilive


4,928

7.4%

(1,143)

(9.3)%


Hepatitis vaccines subtotal


17,807

26.6%

3,381

27.4%


Influenza vaccine


(6)

0.0%

710

5.8%


Enterovirus 71 vaccine


48,751

72.9%

1,562

12.7%


Mumps vaccine


356

0.5%

286

2.3%


Regular sales


66,908

100.0%

5,939

48.2%


H5N1


-

0%

6,392

51.8%



Total sales


66,908

100.0%

12,331

100.0%



Cost of sales


7,735

11.6%

8,363

67.8%



Gross profit


59,173

88.4%

3,968

32.2%



Sales from continuing operations in the first half of 2017 were $66.9 million compared to $12.3 million in the prior year period. Sales increased primarily due to revenue generated by the Company's EV71 vaccine and a low comparison base in the second quarter of 2016 due to the Shandong vaccine scandal.

Gross profit from continuing operations was $59.2 million compared to gross profit of $4.0 million in the prior year period. The increase was primarily due to the contribution of EV71 vaccine sales in the first half of 2017. Gross margin was 88.4% compared to 32.2% in the prior year period. The low growth margin in the first half of 2016 was due to higher inventory provision provided for the hepatitis A&B and mumps vaccines, higher idle capacity costs charged to cost of sales, and a negative gross profit for the hepatitis A&B vaccine due to higher sales returns provision provided in the first half of 2016 as a result of the Shandong incident.

Selling, general and administrative expenses in the first half of 2017 were $36.7 million compared to $14.5 million in the same period of 2016. The Company's selling, general and administrative expenses increased with the higher level of sales activity. The Company also incurred a cost of $0.8 million relating to the proposed privatization of Sinovac.

R&D expenses in the first half of 2017 were $8.8 million compared to $4.9 million in the same period of 2016. The increase was mainly due to higher R&D expenses on the varicella and sIPV vaccine projects in the first half of 2017.

Income from continuing operations was $15.8 million compared to loss from continuing operations of $14.2 million in the prior year period.

Net income attributable to common shareholders was $10.9 million, or $0.19 per basic and diluted share, compared to net loss attributable to common shareholders of $8.3 million, or $(0.14) per basic and diluted share, in the prior year period.

Non-GAAP EBITDA was $15.9 million in the first half of 2017 compared to a loss of $11.9 million in the prior year period. Non-GAAP net income from continuing operations in the first half of 2017 was $16.2 million compared to a loss of $13.1 million in the prior year period. Non-GAAP diluted earnings per share from continuing operations in the first half of 2017 were $0.20 compared to a loss of $(0.17) per share in the prior year period. Reconciliations of non-GAAP measures to the nearest comparable GAAP measures are included at the end of this earnings announcement.

As of June 30, 2017, cash and cash equivalents totaled $55.0 million compared to $62.4 million as of December 31, 2016. For the six months ended June 30, 2017 net cash provided by operating activities was $5.1 million. Net cash used in investing activities was $6.8 million, which was due to the purchase of equipment. Net cash used in financing activities was $6.7 million, including loan proceeds of $11.2 million and loan repayments of $17.9 million. As of June 30, 2017, the Company had $21.8 million of bank loans due within one year. The Company expects that its current cash position will be able to support its operations for at least the next 12 months. The Company will seek new commercial bank loans to finance the commercialization of its pipeline products and for other operational purposes when appropriate.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases. Sinovac's product portfolio includes vaccines against enterovirus71, or EV71, hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), and mumps. The EV71 vaccine, an innovative vaccine developed by Sinovac against hand foot and mouth disease caused by EV71, was commercialized in China in 2016. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, which it has supplied to the Chinese Government's vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government stockpiling program. The Company is developing a number of new products including a Sabin-strain inactivated polio vaccine, pneumococcal polysaccharides vaccine, pneumococcal conjugate vaccine and varicella vaccine. Sinovac primarily sells its vaccines in China, while also exploring growth opportunities in international markets. The Company has exported select vaccines to over 10 countries in Asia and South America. For more information, please visit the Company's website at www.sinovac.com.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause such a difference include our inability to compete successfully in the competitive and rapidly changing marketplace in which we operate, failure to retain key employees, cancellation or delay of projects and adverse general economic conditions in the United States and internationally. These risks and other factors include those listed under "Risk Factors" and elsewhere in our Annual Report on Form 20-F as filed with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The Company assumes no obligation to update the forward-looking information contained in this release.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Sinovac uses the following non-GAAP financial measures: non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations. For more information on these non-GAAP financial measures, please refer to the table captioned "Reconciliations of non-GAAP Measures to the Nearest Comparable GAAP Measures" in this results announcement.

Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations help identify underlying trends in its business that could otherwise be distorted by the effect of certain income or expenses that Sinovac includes in income from operations from continuing operations, net income from continuing operations and diluted EPS from continuing operations. Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information about its core operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. Non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations should not be considered in isolation or construed as an alternative to income from operations from continuing operations, net income from continuing operations, diluted EPS from continuing operations, or any other measure of performance or as an indicator of Sinovac's operating performance. The non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Non-GAAP EBITDA represents income (loss) from continuing operations, excludes interest and financing expenses, interest income, net other income (expenses) and income tax benefit (expenses), and certain non-cash expenses, consisting of share-based compensation expenses, amortization and depreciation that Sinovac does not believe are reflective of the core operating performance during the periods presented.

Non-GAAP net income from continuing operations represents net income from continuing operations before share-based compensation expenses, and foreign exchange gain or loss.

Non-GAAP diluted EPS from continuing operations represents non-GAAP net income attributable to ordinary shareholders from continuing operations divided by the weighted average number of shares outstanding during the periods on a diluted basis, including accounting for the effect of the assumed conversion of options.

Contact

Sinovac Biotech Ltd.
Helen Yang
Tel: +86-10-8279-9871
Fax: +86-10-6296-6910
Email: ir@sinovac.com

ICR Inc.
Bill Zima
U.S: 1-646-308-1707
Email: william.zima@icrinc.com

SINOVAC BIOTECH LTD.

CONSOLIDATED BALANCE SHEETS

As of June 30, 2017 and December 31, 2016

(Expressed in thousands of U.S. Dollars)








June 30, 2017


December 31, 2016

Current assets


(Unaudited)








Cash and cash equivalents

$

54,979

$

62,434

Restricted cash


-


3,007

Accounts receivable - net


81,616


49,832

Inventories


17,854


14,102

Prepaid expenses and deposits


958


1,372

Deferred tax assets


5,909


3,492

Income tax recoverable


1,092


-

Current assets held for sale


-


-

Total current assets


162,408


134,239






Property, plant and equipment


72,990


66,882

Prepaid land lease payments


8,788


8,697

Long-term inventories


57


98

Long-term prepaid expenses


24


23

Prepayment for acquisition of equipment


820


964

Deferred tax assets


338


452

Total assets


245,425


211,355






Current liabilities





Short-term bank loans and current portion of long-
term bank loans and other debt


21,841


31,279

Loan from a non-controlling shareholder


2,360


2,304

Accounts payable and accrued liabilities


51,543


24,960

Income tax payable


-


3,178

Deferred revenue


300


2,766

Deferred government grants


1,820


1,777

Current liabilities held for sale


-


-

Total current liabilities


77,864


66,264






Deferred government grants


2,578


2,953

Long-term bank loans


12,307


9,448

Deferred revenue


118


89

Other non-current liabilities


3,006


2,935

Total long-term liabilities


18,009


15,425






Total liabilities


95,873


81,689






Commitments and contingencies





Equity





Preferred stock


-


-

Common stock


57


57

Additional paid in capital


113,192


112,668

Accumulated other comprehensive income


3,340


168

Statutory surplus reserves


14,788


14,788

Accumulated deficit


(1,061)


(11,914)

Total shareholders' equity


130,316


115,767






Non-controlling interests


19,236


13,899

Total equity


149,552


129,666

Total liabilities and equity

$

245,425


211,355

SINOVAC BIOTECH LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the six months ended June 30, 2017 and 2016

(Unaudited)

(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)








Six months ended June 30



2017


2016

Sales

$

66,908

$

12,331

Cost of sales


7,735


8,363

Gross profit


59,173


3,968






Selling, general and administrative expenses


36,719


14,464

Provision for doubtful accounts


527


565

Research and development expenses


8,779


4,851

Loss on disposal of property, plant and equipment


13


121

Government grants recognized in income


(4)


(484)

Total operating expenses


46,034


19,517

Operating income


13,139


(15,549)






Interest and financing expenses


(822)


(784)

Interest income


464


453

Other income


104


236

Income (loss) from continuing operations before
income taxes


12,885


(15,644)

Income tax benefit


2,960


1,492

Income (loss) from continuing operations


15,845


(14,152)

Income from discontinued operations, net of tax
of nil


-


2,338

Net income (loss)


15,845


(11,814)

Less: (Income) loss attributable to non-controlling interests


(4,992)


3,564

Net income (loss) attributable to shareholders of
Sinovac


10,853


(8,250)






Income (loss) from continuing operations


15,845


(14,152)

Other comprehensive loss from continuing
operations, net of tax of nil





Foreign currency translation adjustments


3,517


(4,300)

Comprehensive income (loss) from continuing
operations


19,362


(18,452)






Income from discontinued operations


-


2,338

Other comprehensive income (loss) from
discontinued operations, net of tax of nil





Foreign currency translation adjustments


-


-

Comprehensive income from discontinued
operations


-


2,338






Comprehensive income (loss)


19,362


(16,114)

Less: comprehensive (income) loss attributable to non-
controlling interests


(5,337)


3,836

Comprehensive income (loss) attributable to
shareholders of Sinovac

$

14,025

$

(12,278)






Earnings (loss) per share





Basic net income (loss) per share:





Continuing operations


0.19


(0.19)

Discontinued operations


0.00


0.05

Basic net income (loss) per share


0.19


(0.14)






Diluted net income (loss) per share:





Continuing operations


0.19


(0.19)

Discontinued operations


0.00


0.05

Diluted net income (loss) per share


0.19


(0.14)











Weighted average number of shares of common stock
outstanding





Basic


57,015,223


56,922,175

Diluted


57,036,805


56,990,675

SINOVAC BIOTECH LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2017 and 2016

(Unaudited)

(Expressed in thousands of U.S. Dollars)








Six months ended June 30



2017


2016

Cash flows provided by (used in) operating activities





Income (loss) from continuing operations

$

15,845

$

(14,152)

Adjustments to reconcile net income to net cash provided by (used
in) operating activities:





- Deferred income taxes


(2,178)


68

- Share-based compensation


484


632

- Inventory provision


274


2,751

- Provision for doubtful accounts


527


565

- Loss on disposal and impairment of property, plant and equipment


13


121

- Government grants recognized in income


(4)


(484)

- Depreciation of property, plant and equipment and amortization of
licenses


2,123


2,874

- Amortization of prepaid land lease payments


117


126

Changes in:





- Accounts receivable


(30,705)


8,301

- Inventories


(3,598)


(6,313)

- Income tax payable


(4,289)


(2,840)

- Prepaid expenses and deposits


440


116

- Deferred revenue


(2,473)


(7,568)

- Accounts payable and accrued liabilities


25,482


303

- Deferred government grants


-


31

- Restricted cash


3,037


-

Net cash provided by (used in) operating activities from
continuing operations


5,095


(15,469)

Net cash used in operating activities from discontinued
operations


-


(95)

Net cash provided by (used in) operating activities


5,095


(15,564)






Cash flows provided by (used in) financing activities





- Proceeds from bank loans


11,171


22,654

- Repayments of bank loans


(17,948)


(17,751)

- Proceeds from issuance of common stock, net of share issuance
costs


35


760

- Proceeds from shares subscribed


-


36

- Government grant received


92


-

Net cash provided by (used in) financing activities


(6,650)


5,699






Cash flows used in investing activities





- Acquisition of property, plant and equipment


(6,768)


(4,611)

- Proceeds from disposal of subsidiary


-


875

Net cash used in investing activities from continuing
operations


(6,768)


(3,736)

Net cash used in investing activities from discontinued
operations


-


(9)

Net cash used in investing activities


(6,768)


(3,745)






Effect of exchange rate changes on cash and cash
equivalents, including cash classified within current assets
held for sale


868


(1,149)






Decrease in cash and cash equivalents, including cash
classified within current assets held for sale


(7,455)


(14,759)

Less: Net decrease in cash classified within current assets for sale


-


(143)

Decrease in cash and cash equivalents


(7,455)


(14,616)






Cash and cash equivalents, beginning of period


62,434


63,834






Cash and cash equivalents, end of period

$

54,979

$

49,218

SINOVAC BIOTECH LTD.

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

For the six months ended June 30, 2017 and 2016

(Unaudited)

(Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)








Six months ended June 30



2017


2016

Income (loss) from continuing operations

$

15,845

$

(14,152)

Adjustments:





Share-based compensation


484


632

Depreciation and amortization


2,240


3,000

Interest and financing expenses, net of interest income


358


331

Net other income


(104)


(236)

Income tax benefit


(2,960)


(1,492)

Non-GAAP EBITDA


15,863


(11,917)






Income (loss) from continuing operations

$

15,845


(14,152)

Add: Foreign exchange loss (gain)


(135)


403

Add: Share-based compensation


484


632

Non-GAAP net income (loss) from continuing
operations


16,194


(13,117)






Net income (loss) from continuing operations
attributable to shareholders of Sinovac


10,853


(10,588)

Add: Non-GAAP adjustments to net income from
continuing operaitons


349


1,035

Non-GAAP net income attributable to shareholders of
Sinovac from continuing operations for computing non-
GAAP diluted earnings (loss) per share


11,202


(9,553)






Weighted average number of shares on a diluted
basis


57,036,805


56,990,675

Diluted earnings (loss) per share from continuing
operations


0.19


(0.19)

Add: Non-GAAP adjustments to net income per share
from continuing operatons


0.01


0.02

Non-GAAP Diluted earnings (loss) per share from
continuing operations


0.20


(0.17)

View original content:http://www.prnewswire.com/news-releases/sinovac-reports-unaudited-first-half-of-2017-financial-results-300564918.html

SOURCE Sinovac Biotech Ltd.