For the full year 2009, total revenues were $130.1 million, up 41.7% from $91.8 million in 2008. Of the 91 products commercialized by China Sky One Medical in 2009, patches, ointments, sprays and diagnostic kits accounted for 31.3%, 22.2%, 14.2% and 7.9% of total revenues respectively.
The Company's top 10 products, including Sumei Slim Patch, Hemorrhoids Ointment, Compound Camphor Cream, Stomatitis Spray, AMI Diagnostic Kit and Naftopidil Dispersible Tablet, together accounted for approximately 68% of total revenues. Sales from export were $10.1 million, representing 7.8% of total revenues.
Gross profit was $98.4 million, an increase of 41.8% from $69.4 million in 2008. Gross margin was little changed at 75.7% and 75.6% in 2009 and 2008, respectively.
Operating income was $46.3 million, up 29.7% from $35.7 million in 2008. Operating margin was 35.6% in 2009 versus 38.8% in 2008.
Net income for 2009 rose 19.4% to $34.5 million, or a net profit margin of 26.5%, from $28.9 million or a 31.4% net margin. The decrease in net margin was primarily attributable to higher selling and R&D expenses incurred in 2009. Excluding the effect of recording certain expense items: (i) share-based compensation and (ii) the registration rights liability; the Company's pro forma non-GAAP basis adjusted net income was $37.0 million, or $2.22 per diluted share, as compared to $29.2 million or $1.89 per diluted share.
Financial Condition
As of December 31, 2009, China Sky One had $52.8 million in cash and equivalents, with a quick ratio of 7.9. Average Days Sales Outstanding increase to 51.6 days from 45.5 days principally due to the increased average accounts receivable balances on September 30 and December 31 and less increase of average daily sales during the fourth quarter of 2009 comparing to the same period in 2008. Working capital was approximately $67.0 million. Stockholders' equity at December 31, 2009, was $131.0 million, a 38.0% increase over the $94.9 million recorded at December 31, 2008.
The Company generated $33.4 million in net cash flow from operating activities in 2009, up from $27.5 million in 2008.
Recent Events
As of January 4, 2010, China Sky One Medical's common shares were listed on the NASDAQ Global Select Market.
Also in January, the Company completed its two office buildings and relocated its headquarters to Harbin Song Bei New Development District and consolidated administration, research and development, accounting and sales functions to streamline operations and improve efficiency. Following the move of its headquarters, the Company also received local government-supported preferential policies, such as discounted land transfer fees and green channel to expedite project permits, which are expected to facilitate more cost effective expansion in the future.
In addition, the Company's AMI Diagnostic Kit was recently recognized by the National Development and Reform Commission as a "National Innovation Project," a designation given to innovative projects in key high technology industries.
2010 Outlook and Guidance
The Company's top priority in 2010 is to further optimize its distribution channels by locating and cooperating with more reputable distributors with extensive market coverage.
"We are confident in our 2010 outlook and plan to focus on enhancing and broadening our product portfolio to include proprietary new drugs so as to support sustainable long-term growth," said Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc. "Our financial guidance assumes only organic growth and does not reflect any potential acquisitions or other strategic deals in 2010. The Company is committed to delivering shareholder value and will pursue opportunities to acquire new proprietary drugs, advanced technologies or companies that can increase our growth potential."
For the full year 2010, the Company expects net revenue growth of approximately 20% or $156 million. Management developed the revenue guidance based upon a careful review of sales and marketing plans submitted by our sales team, as well as detailed analysis of each product's growth outlook and marketing plan. The sales forecast is calculated mainly based on the factors of sales plans submitted by the Company's sales agents, the estimate of increase and decrease of certain products managed on our internal sales and marketing force rather than through distributors or agents, and the estimate of promotion or discontinuance of sales of certain current products. The gross margin guidance is 68%, below historical levels due to our potential lower sales price to support our new sales model, as well as anticipated increases in raw materials costs and related overhead costs. Net income is anticipated to approximate $39 million, representing a net profit margin of 25%. The expected decline in net margin primarily reflects the increase in R&D spending which is expected to be 15% of total revenue for the year of 2010. We are dedicated to advancing our major research and development projects in the current R&D pipeline and also shifting our focus to Cardiovascular medicine and antibiotic drugs.
SOURCE China Sky One Medical, Inc.