China Health Industries Holdings, Inc. Reports Financial Results for the Second Quarter Ended December 31, 2018

February 14, 2019 8:30 AM EST | Source: China Health Industries Holdings, Inc.

Harbin, China--(Newsfile Corp. - February 14, 2019) - China Health Industries Holdings, Inc. (OCTQB: CHHE) (“China Health Industries”, the “Company” or “Us”) (www.chinahealthindustries.com) is a holding company vertically integrated with the operations in its subsidiaries in China, specializing in R&D, production, marketing and distribution of hemp derivative products, medicines and health supplement products, today announced the financial results for its second quarter ended December 31, 2018.

Mr. Xin Sun, Chief Executive Officer and Chairman of China Health Industries, commented, "We are pleased to report our financial results for the second quarter of our 2019 fiscal year. Our revenue increased by 50.03% compared to the same period of the previous year as we continue to develop, manufacture and distribute new hemp derivative products”.

Second Quarter of Fiscal 2019 Selected Financial Results

For the Three Months Ended December 31, 2018:

    December 31,     December 31,            
    2018     2017     Variance   %  
Revenues $  2,714,157   $  1,809,040   $  905,117   50.03%  
Humankind   2,684,885   $  1,809,040   $  875,845   48.41%  
HLJ Huimeijia   29,272     -     29,272   -  
Cost of Goods Sold $  688,076   $  1,153,077   $  (465,001)   (40.33%)  
Humankind   653,157   $  1,153,077   $  (499,920)   (43.36%)  
HLJ Huimeijia   34,919     -     34,919   -  
Gross Profit $  2,026,081   $  655,963   $  1,370,118   208.87%  
Humankind   2,031,728     655,963     1,375,765   209.7%  
HLJ Huimeijia   (5,647)     -     (5,647) -  

Revenue

Total revenues increased by $905,117, or 50.03%, for the three months ended December 31, 2018, as compared to the same period in 2017. The increase in revenues was primarily due to an increase of $875,845 or 48.41% in Humankind’s revenues for the three months ended December 31, 2018, as compared to the same period in 2017. The increase in Humankind’s sales revenues was primarily due to the increased demand of new products. The increase in HLJ Huimeijia’s sales revenue was primarily due to small-scale production after obtaining a new GMP certificate.

Cost of Goods Sold

Our total cost of sales decreased by $465,001, or 40.33% for the three months ended December 31, 2018, as compared to the same period in 2017. The decrease in the overall cost of sales was attributed to the decrease of $499,920 or 43.36% in Humankind’s cost of sales for the three months ended December 31, 2018 as compared to the same period in 2017. This decrease aligned with the decrease in sales volume of products sold by Humankind. The significant decline in the cost of the main business was mainly due to the lower unit cost of new products and the fact that the old products were no longer sold for the three months ended December 31, 2018, as compared with the same period in 2017. The increase in HLJ Huimeijia cost of sales was primarily due to the small-scale production.

Gross Profit

Our gross margin increased by $1,370,118, or 208.87%, for the three months ended December 31, 2018 as compared to the same period in 2017. This change was consistent with the change in the main products in Humankind. As HLJ Huimeijia resumed production for a short period of time, the output of the products is small, but the fixed cost of the apportionment has not decreased, resulting in high cost of the product. After the Company operates normally, the cost is expected to return to a reasonable level.

Net Income

Net Income was $1,117,265 for the three months ended December 31, 2018, as compared to a net loss of $110,573 for the three months ended December 31, 2017. This increase of $1,227,838 in net profit was primarily attributable to an increase of $939,049 in the net income from Humankind.

Net Income per share was $0.0170 for the three months ended December 31, 2018 and net loss per share was $0.0017 for the three months ended December 31, 2017. This increase was primarily a result of the aforementioned increase in net profit.

For the Six Months Ended December 31, 2018:

    December 31,     December 31,          
    2018     2017     Variance   %
Revenues $  4,855,982   $  3,325,007   $  1,530,975   46.04%
Humankind HLJ   4,810,393   $  3,325,007   $  1,485,386   44.67%
Huimeijia   45,589     -     45,589   -
Cost of Goods Sold $  1,161,817   $  2,132,710   $  (970,893)   (45.52%)
Humankind   1,106,433   $  2,132,710   $  (1,026,277)   (48.12%)
HLJ Huimeijia    55,384     -     55,384   -
Gross Profit $  3,694,165   $  1,192,297   $  2,501,868   209.84%
Humankind   3,703,960     1,192,297     2,511,663   210.66%
HLJ Huimeijia       (9,795 )   -     (9,795)   -

Revenue

Total revenues increased by $1,530,975, or 46.04% for the six months ended December 31, 2018, as compared to the same period in 2017. The increase in revenues was primarily due to an increase of $1,485,386 or 44.67% in Humankind’s revenues for the six months ended December 31, 2018, as compared to the same period in 2017. The increase in Humankind’s sales revenues was primarily due to the increased demand of the new products. The increase in HLJ Huimeijia’s sales revenue was primarily due to small-scale production after obtaining a new GMP certificate.

Cost of Goods Sold

Our total cost of sales decreased by $970,893, or 45.52%, for the six months ended December 31, 2018, as compared to the same period in 2017. The decrease in the overall cost of sales was attributed to the decrease of $1,026,277 or 48.12% in Humankind’s cost of sales for the six months ended December 31, 2018, as compared to the same period in 2017. The significant decline in the cost of the main business was mainly due to the lower unit cost of new products and the fact that the old products were no longer sold for the six months ended December 31, 2018, as compared to the same period in 2017.

Gross Profit

Our gross margin increased by $2,501,868, or 209.84%, for the six months ended December 31, 2018, as compared to the same period in 2017. This change was consistent with the change in the main products in Humankind. As HLJ Huimeijia resumed production for a short period of time, the output of the product is small, but the fixed cost of the apportionment has not decreased, resulting in high cost of the products. After the Company operates normally, the cost is expected to return to a reasonable level.

Net Income

Net Income was $1,749,481 for the six months ended December 31, 2018, as compared to the net loss $289,743 for the six months ended December 31, 2017. This increase of $2,039,224 in net profit was primarily attributable to an increase of $1,744,458 in Humankind.

Net Income per share was $0.0267 for the six months ended December 31, 2018 and net loss per share was $0.0044 for the six months ended December 31, 2017. This increase was primarily a result of the aforementioned increase in net profit.

About Us

China Health Industries Holdings, Inc. (www.chinahealthindustries.com) is a holding company vertically integrated with the operations in its subsidiaries in China, specializing in R&D, production, marketing and distribution of hemp derivative products, medicines and health supplement products.

China Health owns GMP certified plants and facilities, manufactures 21 CFDA approved medicines and 14 health supplement products covering five kinds of dosage forms, including soft capsule, hard capsule, tablet, granule and oral liquid. Our product series cover hemp derivative foods, hemp derivative medicines, externally used medicines and health foods.

Safe Harbor Statement

This press release contains certain statements that may include "forward-looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes", "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties; thus, these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission (“SEC”) and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Company Contact:
Melody Zhang
IR Contact
China Health Industries Holdings, Inc.
Tel: 86-451-88100688
Email: ir@chinahealthindustries.com

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

    December 31,     June 30,  
    2018     2018  
ASSETS            
             
Current assets            
Cash and cash equivalents $  32,748,905   $  32,614,910  
Accounts receivable, net   2,676,783     1,455,433  
Inventory   820,343     452,397  
Other receivables, net   27,390     30,611  
Advances to suppliers   18,791     94,749  
Prepayments   47,530     20,462  
Total current assets   36,339,742     34,668,562  
         
Property, plants and equipment, net   3,542,840     3,724,490  
Intangible assets, net   3,012,293     3,372,501  
Construction in progress   1,174,800     1,134,834  
Prepayments – Non-Current   19,387     30,212  
Deferred tax assets   2,232     1,970  
Total assets $  44,091,294   $  42,932,569  
           
LIABILITIES AND EQUITY        
           
Current liabilities        
Short-term loans $  -   $  -  
Accounts payable and accrued expenses   499,971     400,109  
Other payables   76,341     67,800  
Advances from customers   377,560     163,459  
Related party debts   6,419,954     6,393,730  
Wages payable   290,112     234,668  
   Total current liabilities   8,440,491     7,688,189  
           
   Equity        
   Common stock, ($0.0001 par value per share, 300,000,000 shares authorized, 65,539,737 and 65,539,737 shares issued and outstanding as of December 31, 2018 and June 30, 2018, respectively)   6,554     6,554  
Additional paid-in capital   521,987     521,987  
Accumulated other comprehensive income (loss)   (567,756)     775,302  
Statutory reserves   38,679     38,679  
Retained earnings   35,651,339     33,901,858  
   Total stockholders’ equity   35,650,803     35,244,380  
   Total equity   35,650,803     35,244,380  
         
   Total liabilities and equity $  44,091,294   $  42,932,569  
Taxes payable   776,553     428,423  

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

    For the three Months     For the Six Months  
    Ended     Ended  
    December     December     December     December  
    31,     31,     31,     31,  
    2018     2017     2018     2017  
                         
REVENUE $  2,714,157   $  1,809,040   $  4,855,982   $  3,325,007  
                         
COST OF GOODS SOLD   688,076     1,153,077     1,161,817     2,132,710  
                         
GROSS PROFIT   2,026,081     655,963     3,694,165     1,192,297  
                         
OPERATING EXPENSES                        
   Depreciation and amortization expenses   142,758     66,750     284,280     208,604  
       Total operating expenses   549,063     692,356     1,304,575     1,392,062  
                         
INCOME (LOSS) FROM OPERATIONS   1,477,018     (36,393 )   2,389,590     (199,765 )
                         
OTHER INCOME/(EXPENSES)                        
   Interest income   26,590     27,863     54,716     52,203  
   Interest expense   (1 )   (25,062 )   (3 )   (48,402 )
   Other income/(expenses), net   15,973     147     15,597     36,138  
   Bank charges   (274 )   (415 )   (709 )   (877 )
   Exchange Gain   -     12,675     -     -  
Total other income, net   42,288     15,208     69,601     39,062  
                         
INCOME/(LOSS) BEFORE INCOME TAXES   1,519,306     (21,185 )   2,459,191     (160,703 )
                         
Provision for income taxes   (402,041 )   (89,388 )   (709,710 )   (129,040 )
                         
NET INCOME (LOSS)   1,117,265     (110,573 )   1,749,481     (289,743 )
                         
Foreign currency translation loss   (44,937 )   789,814     (1,343,060 )   3,035,658  
                         
COMPREHENSIVE INCOME   1,072,328     679,241     406,421     2,745,915  
   Basic & diluted income (loss) per share $  0.0170   $  (0.0017)  $   0.0267   $  (0.0044 )
                         
Weighted average shares outstanding:                        
       Basic & diluted weighted average shares outstanding   65,539,737     65,539,737     65,539,737     65,539,737  
   Selling, general and administrative expenses   406,305     625,606     1,020,295     1,183,458  

 

CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


     For the Six Months Ended   
    December 31,     December31,  
    2018     2017  
Cash Flows from Operating Activities            
Net income (loss) available to China Health Industries Holdings $  1,749,481   $ (289,743)  
Net income (loss) from continuing operations   1,749,481     (289,743)  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:            
Depreciation and amortization expenses   388,576     289,596  
Provision for doubtful accounts   13     2,118  
Provision for inventories   (154,767)     (60,719)  
Deferred taxes loss/(gain)   (337)     (348)  
Changes in operating assets and liabilities            
Accounts receivable   (1,279,100)     157,408  
Other receivables   2,079     (1,307)  
Inventory   (231,096)     57,255  
Advance to suppliers and prepaid expenses   54,401     (27,320)  
Accounts payables and accrued expenses   115,066     (4,332)  
Advance from customers and other payables   231,888     (3,694  
Amounts due to related parties   248,961     1,882,464  
Wages payable   64,401     (17,560)  
Taxes payable   360,982     (200,581)  
   Net cash provided by operating activities   1,550,548     1,783,237  
             
Cash Flows from Investing Activities            
Expenditure in short term investment   -     9,034,534  
Purchases of property, plant and equipment   (112,055)     15,354  
Expenditure in construction in progress   (82,709)     (18,338)  
Disposal of property, plant and equipment   -     361  
Proceeds from disposal of subsidiaries   -     903,453  
Net cash used in investing activities   (194,764)     9,935,364  
             
Cash Flows from Financing Activities            
Payment of short term loans   -     (1,505,756)  
Net cash provided by financing activities   -     (1,420,671)  
             
Effect of exchange rate changes on cash and cash equivalents   (1,221,789)     1,099,331  
             
Net increase in cash and cash equivalents   133,995     11,397,261  
             
    32,614,910       21,197,448  
             
 Cash and cash equivalents, ending balance   32,748,905       32,594,709  
             
Supplemental cash flow information            
Cash paid for income taxes $  420,968   $  972,690  
Cash paid for interest expense $  -   $  48,400  
             
Non-cash activities:            
Loan from related party for the construction of a facility $  584,147   $  479,985  
Proceeds from related party debts   -     85,085  

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/42840

info