NKBP. both annual and sequential increases during

NKBP. both annual and sequential increases during the reporting period
http://finance.yahoo.com/news/china-nuokang-b...00738.html

3Q12 Revenue was RMB75.4 Million ($12.0 Million)

3Q12 Net Income was RMB2.5 Million ($0.4 Million)

3Q12 Non-GAAP Adjusted Net Income was RMB11.6 Million ($1.8 Million)

Live conference call to be held Monday, November 26, 2012 at 8:00 am ET

BEIJING, Nov. 25, 2012 (GLOBE NEWSWIRE) -- China Nuokang Bio-Pharmaceutical Inc. (NKBP) ("Nuokang" or the "Company"), a leading China-based biopharmaceutical company focused on the research, development, manufacture, marketing and sales of hospital-based medical products, today announced its unaudited financial results for the third quarter of 2012.

Mr. Baizhong Xue, the Company's Chairman and Chief Executive Officer, stated, "We are pleased to report a solid third quarter that has demonstrated steady sales performance and continuing progress with non-GAAP profitability. Revenue of RMB69.9 million from Baquting, our flagship product, was largely in line with our target. Sales volume of Baquting has consistently increased during the first three quarters of this year. We are encouraged by overall longitudinal improvements that the Company has made so far for 2012."

Chairman Xue continued, "We recently celebrated the 15th anniversary of Nuokang. During the past decade and a half, our management and staff have striven to make Nuokang one of China's leading biopharmaceutical companies. We are extremely grateful for the support of our investors and very proud of the market-leading position we have achieved in the hemocoagulase sector. We also see tremendous potential with our increasingly diversified product portfolio. We remain committed to investing in R&D to support innovation of novel products as well as improvements to our proven product lines."

Third Quarter 2012 Financial Highlights

Revenue was RMB75.4 million ($12.0 million)1, compared to RMB87.2 million in the prior year period;
Baquting revenue was RMB69.9 million ($11.1 million), compared to RMB83.9 million in the prior year period;
Gross profit was RMB66.4 million ($10.6 million), compared to RMB75.5 million in the prior year period;
Gross margin was 88.0%, compared to 86.6% in the prior year period;
Operating income was RMB5.1 million ($0.8 million), compared to RMB16.5 million in the prior year period;
Net income was RMB2.5 million ($0.4 million), or RMB0.13 ($0.02) per diluted ADS2, compared to RMB7.6 million, or RMB0.39 per diluted ADS, in the prior year period; and
Non-GAAP adjusted net income was RMB11.6 million ($1.8 million), compared to RMB13.1 million in the prior year period.

Third Quarter 2012 Financial Performance

Revenue for the third quarter of 2012 was RMB75.4 million ($12.0 million), compared to RMB87.2 million in the third quarter of 2011. Revenue from Baquting decreased to RMB69.9 million ($11.1 million) in the third quarter of 2012 from RMB83.9 million in the third quarter of 2011 but was in line sequentially with RMB68.9 million in the second quarter of 2012. In terms of volume, Baquting sales saw both annual and sequential increases during the reporting period. The year-on-year decrease in Baquting revenue was primarily attributable to changes in the Company's sales channel mix during the period. Baquting revenue as a percentage of total revenue was 92.7% in the third quarter of 2012, compared to 96.1% in the third quarter of 2011. Revenue from other products was RMB5.5 million ($0.9 million) in the third quarter of 2012, compared to RMB3.3 million in the third quarter of 2011, mainly attributable to increased Kaitong sales.

Gross profit for the third quarter of 2012 was RMB66.4 million ($10.6 million), compared to RMB75.5 million for the third quarter of 2011. Gross margin for the third quarter of 2012 was 88.0%, an increase from 86.6% in the third quarter of 2011.

Operating income for the third quarter of 2012 was RMB5.1 million ($0.8 million), compared to RMB16.5 million for the third quarter of 2011. The year-over-year decrease was primarily attributable to expenses relating to the Company's going-private transaction.

Research and development expenses for the third quarter of 2012 were RMB4.1 million ($0.7 million), compared to RMB4.6 million for the third quarter of 2011. Research and development expenses as a percentage of revenue was 5.5% for the third quarter of 2012, which was largely in line with 5.3% for the third quarter of 2011 and within the Company's expected range.

Selling, marketing and distribution expenses for the third quarter of 2012 were RMB37.6 million ($6.0 million), compared to RMB41.6 million for the third quarter of 2011. Selling, marketing and distribution expenses as a percentage of revenue for the third quarter of 2012 was 49.9%, which was largely in line with 47.7% in the third quarter of 2011. Selling, marketing and distribution expenses for the third quarter of 2012 primarily consisted of the Company's investment in sales and marketing for Baquting as well as the Company's continued investment in the commercialization of Kaitong and ALA.

General and administrative expenses for the third quarter of 2012 were RMB19.5 million ($3.1 million), compared to RMB12.8 million for the third quarter of 2011. The increase in general and administrative expenses was primarily attributable to the Company's privatization expenses amounting to RMB7.6 million ($1.2 million).

Provision for income taxes for the third quarter of 2012 was RMB3.6 million ($0.6 million), compared to RMB7.1 million for the third quarter of 2011. The Company's effective tax rate was 58.9% during the third quarter of 2012, compared to 48.3% during the third quarter of 2011, primarily as a result of more non-deductible expenses such as privatization expenses incurred in this period.

Net income for the third quarter of 2012 was RMB2.5 million ($0.4 million), or RMB0.13 ($0.02) per diluted ADS, compared to RMB7.6 million, or RMB0.39 per diluted ADS, for the third quarter of 2011.

Non-GAAP adjusted net income for the third quarter of 2012, excluding foreign exchange losses, ESOP related charges, ASC 740 adjustment and privatization expenses, was RMB11.6 million ($1.8 million), compared to RMB13.1 million for the third quarter of 2011.

For the third quarter of 2012, the Company had approximately 154.4 million weighted average diluted ordinary shares outstanding, or 19.3 million weighted average diluted ADSs.

As of September 30, 2012, the Company had cash and cash equivalents and other short-term investments of RMB185.9 million ($29.8 million), compared to RMB179.4 million as of December 31, 2011.

Nine Months Ended September 30, 2012 Financial Performance

Revenue decreased 9.8% to RMB208.6 million ($33.2 million) for the nine months ended September 30, 2012 from RMB231.3 million for the nine months ended September 30, 2011. During this same time period, gross profit decreased 9.8% to RMB182.7 million ($29.1 million) from RMB202.7 million and operating income decreased by 65.7% to RMB19.1 million ($3.0 million) from RMB55.5 million.

Net income decreased 58.0% to RMB13.7 million ($2.2 million), or RMB0.09 ($0.01) per diluted ADS from RMB32.7 million, or RMB0.21 per diluted ADS, for the nine months ended September 30, 2011. Weighted average number of diluted ordinary shares outstanding was approximately 154.2 million for the nine months of 2012, or 19.3 million ADSs.

Non-GAAP Measures

Adjusted net income is presented to better illustrate the Company's ongoing and core operational results. Adjusted net income is defined as net income excluding foreign exchange losses, ESOP related charges, ASC 740 adjustment and the Company's privatization expenses. Adjusted net income may be calculated differently, and therefore the Company's adjusted net income may not be comparable to similarly titled measures of other companies. Adjusted net income is not a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from adjusted net income are significant and necessary components to the operations of the Company's business, and, therefore, adjusted net income should only be used as a supplemental measure of operating performance.

Conference Call

The Company will hold a conference call at 8:00 a.m. ET on Monday, November 26, 2012 to discuss the third quarter 2012 financial results. Listeners may access the call by dialing:
United States toll free:     1-855-500-8701

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