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: [email protected]

 

 

 

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

$

 

Generated by Feedzy
MEDICA 2022 banner

Where healthcare is going.
MEDICA 2022 – Top in all medical areas

We are at Hall 17 / A07

tradewinds booth location at MEDICA 2022

TradeWinds Consulting

Are you in?

Subscribe to receive exclusive content and notifications to your inbox