China Health Industries Holdings, Inc. Reports Financial Results for the Third Quarter Ended March 31, 2019

Harbin, China--(Newsfile Corp. - May 15, 2019) - China Health Industries Holdings, Inc. (OCTQB: CHHE) ("China Health Industries", the "Company" or "Us") 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, medical drugs and health supplements, today announced the financial results for its third quarter ended March 31, 2019.

Mr. Xin Sun, Chief Executive Officer and Chairman of China Health Industries, commented, "We are pleased to report our financial results for the third quarter of our 2019 fiscal year. Our revenue increased by 43.18% for the three months ended March 31, 2019 compared to the same period of the previous year as we continue to develop, manufacture and distribute new hemp derivative products. We have applied new Cannabidiol patents in 2019, and we will launch many more hemp derivative products into the market."

Third Quarter of Fiscal 2019 Selected Financial Results

For the Three Months Ended March 31, 2019:

March 31,

March 31,

2019

2018

Variance

%

Revenues

$

2,202,739

$

1,538,470

$

664,269

43.18

%

Humankind

2,192,680

$

1,538,470

$

654,210

42.52

%

HLJ Huimeijia

10,059

-

10,059

-

Cost of Goods Sold

$

506,623

$

979,456

$

(472,833

)

(48.28

)%

Humankind

492,569

$

979,456

$

(486,887

)

(49.71

)%

HLJ Huimeijia

14,054

-

(14,054

)

-

Gross Profit

$

1,696,116

$

559,014

$

1,137,102

203.41

%

Humankind

1,700,111

559,014

1,141,097

204.13

%

HLJ Huimeijia

(3,995

)

-

(3,995

)

-

Revenue

Total revenues increased by $664,269 or 43.18% for the three months ended March 31, 2019, as compared to the same period in 2018. The increase in revenues was primarily due to an increase of $654,210 or 42.52% in Humankind's revenues for the three months ended March 31, 2019, as compared to the same period in 2018. The increase in Humankind's sales revenues was primarily due to the increased demand for 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 $472,833 or 48.28% for the three months ended March 31, 2019 as compared to the same period in 2018. The decrease in the overall cost of sales was attributed to the decrease of $486,887 or 49.71% Humankind's cost of sales for the three months ended March 31, 2019 as compared to the same period in 2018. 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 March 31, 2019 as compared to the same period in 2018. The increase in HLJ Huimeijia cost of sales was primarily due to the small-scale production.

Gross Profit

Our gross margin increased by $1,137,102 or 203.41% for the three months ended March 31, 2019 as compared to the same period in 2018. 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 will return to a reasonable level.

Net Income and Net Income Per Share

Net income was $767,929 for the three months ended March 31, 2019, as compared to net income of $10,711 for the three months ended March 31, 2018. This increase of $757,218 in net income was primarily attributable to an increase of $564,862 from Humankind.

Net income per share was $0.0117 for the three months ended March 31, 2019, and net income per share was $0.0002 for the three months ended March 31, 2018, respectively. This increase was primarily a result of the aforementioned increase in net profit.

For the Nine Months Ended March 31, 2019:

March 31,

March 31,

2019

2018

Variance

%

Revenues

$

7,058,721

$

4,863,477

$

2,195,244

45.14

%

Humankind

7,003,073

$

4,863,477

$

2,139,596

43.99

%

HLJ Huimeijia

55,648

-

55,648

Cost of Goods Sold

$

1,668,440

$

3,112,166

$

(1,443,726

)

(46.39

)%

Humankind

1,599,002

$

3,112,166

$

(1,513,164

)

(48.62

)%

HLJ Huimeijia

69,438

-

69,438

Gross Profit

$

5,390,281

$

1,751,311

$

3,638,970

207.79

%

Humankind

5,404,071

1,751,311

3,652,760

208.57

%

HLJ Huimeijia

(13,790

)

-

(13,790

)

Revenue

Total revenues increased by $2,195,244 or 45.14% for the nine months ended March 31, 2019, as compared to the same period in 2018. The increase in revenues was primarily due to an increase of $2,139,596 or 43.99% in Humankind's revenues. The increase in Humankind's sales revenues was primarily due to the increased demand for the new products. The new products are hemp-based products, which include hemp oils, hemp protein powders, hemp polypeptides and collagen peptides. The market demand for medical appliances that combine with traditional Chinese medicine is increasing and these new products are important offerings to expand sales for Humankind.

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 $1,443,726 or 46.39% for the nine months ended March 31, 2019, as compared to the same period in 2018. The decrease in the overall cost of sales was attributed to the decrease of $1,513,164 or 48.62% in Humankind's cost of sales for the nine months ended March 31, 2019 as compared to the same period in 2018. 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 nine months ended March 31, 2019 as compared to the same period in 2018.

Gross Profit

Our gross margin increased by $3,638,970 from $1,751,311 for the nine months ended March 31, 2018 to $5,390,281 for the nine months ended March 31, 2019. 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 its products 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 will return to a reasonable level.

Net Income (Loss) and Net Income (Loss) Per Share

Net Income was $2,517,410 for the nine months ended March 31, 2019, as compared to net loss of $279,032 for the nine months ended March 31, 2018. This increase of $2,796,442 in net profit was primarily attributable to an increase of $2,576,385 in Humankind.

Net Income per share was $0.0384 for the nine months ended March 31, 2019 and net loss per share was $0.0043 for the nine months ended March 31, 2018. 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, medical drugs and health supplements.

China Health owns GMP certified plants and facilities, manufactures 21 CFDA approved medical drugs 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 medical drugs, externally used medical drugs and health supplements.

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.

Contact:
Company: 
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)

March 31,
2019

June 30,
2018

ASSETS

Current assets

Cash and cash equivalents

$

35,219,487

$

32,614,910

Accounts receivable, net

2,007,516

1,455,433

Inventory

954,019

452,397

Other receivables, net

28,189

30,611

Advances to suppliers

32,884

94,749

Prepayments

32,469

20,462

Total current assets

38,274,564

34,668,562

Property, plants and equipment, net

3,594,895

3,724,490

Intangible assets, net

2,966,893

3,372,501

Construction in progress

1,139,068

1,134,834

Prepayments - Non-Current

14,899

30,212

Deferred tax assets

2,287

1,970

Total assets

$

45,992,606

$

42,932,569

LIABILITIES AND EQUITY

Current liabilities

Accounts payable and accrued expenses

492,752

400,109

Other payables

77,163

67,800

Advances from customers

386,985

163,459

Related party debts

6,764,975

6,393,730

Wages payable

272,260

234,668

Taxes payable

684,488

428,423

Total current liabilities

8,678,623

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 March 31, 2019 and June 30, 2018, respectively)

6,554

6,554

Additional paid-in capital

521,987

521,987

Accumulated other comprehensive income

327,495

775,302

Statutory reserves

38,679

38,679

Retained earnings

36,419,268

33,901,858

Total stockholders' equity

37,313,983

35,244,380

Total equity

37,313,983

35,244,380

Total liabilities and equity

$

45,992,606

$

42,932,569


CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

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

For the Three Months Ended

For the Nine Months Ended

March 31,
2019

March 31,
2018

March 31,
2019

March 31,
2018

REVENUE

$

2,202,739

$

1,538,470

$

7,058,721

$

4,863,477

COST OF GOODS SOLD

506,623

979,456

1,668,440

3,112,166

GROSS PROFIT

1,696,116

559,014

5,390,281

1,751,311

OPERATING EXPENSES

Selling, general and administrative expenses

449,177

718,290

1,469,472

1,901,748

Depreciation and amortization expenses

180,166

127,079

464,446

335,683

Total operating expenses

629,243

845,369

1,933,918

2,237,431

INCOME (LOSS) FROM OPERATIONS

1,066,773

(286,355

)

3,456,343

(486,120

)

OTHER INCOME/(EXPENSES)

Interest income

28,815

28,824

83,531

81,027

Interest expense

(2

)

(710

)

(5

)

(49,112

)

Other income/(expenses), net

84

318,524

15,681

354,662

Bank charges

(205

)

(322

)

(914

)

(1,199

)

Total other income (expenses), net

28,692

346,316

98,293

385,378

INCOME/(LOSS) BEFORE INCOME TAXES

1,095,465

59,961

3,554,656

(100,742

)

Provision for income taxes

(327,536

)

(49,250

)

(1,037,246

)

(178,290

)

NET INCOME (LOSS)

767,929

10,711

2,517,410

(279,032

)

OTHER COMPREHENSIVE LOSS

Foreign currency translation loss

895,253

1,359,724

(447,807

)

2,829,645

COMPREHENSIVE INCOME (LOSS)

1,663,182

1,370,435

2,069,603

2,550,613

Basic & diluted income (loss) per share

$

0.0117

$

0.0002

$

0.0384

$

(0.0043

)

Weighted average shares outstanding:

Basic & diluted weighted average shares outstanding

65,539,737

65,539,737

65,539,737

65,539,737


CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)

Accumulated

Additional

Other

Total

Non-

Common Shares

Paid-in

Retained

Statutory

Comprehensive

Stockholders'

controlling

Total

Shares

Amount

Capital

Earnings

Reserve

Income (loss)

Equity

Interest

Equity

Balance, June 30, 2018

65,539,737

$

6,554

$

521,987

33,901,858

38,679

775,302

35,244,380

-

35,244,380

Net income

-

-

-

2,517,410

-

-

2,517,410

-

$

2,517,410

Other comprehensive loss - Translation adjustment

-

-

-

-

-

(447,807

)

(447,807

)

-

(447,807

)

Balance, March 31, 2019

65,539,737

$

6,554

$

521,987

36,419,268

38,679

327,495

37,313,983

-

37,313,983


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

For the Nine Months Ended

March 31,

March 31,

2019

2018

Cash Flows from Operating Activities

Net income (loss) from operations

$

2,517,410

$

(279,032

)

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

Depreciation and amortization expenses

619,788

466,755

Provision for doubtful accounts

82

2,118

Provision for inventories

(155,601

)

(61,608

)

Deferred taxes loss/(gain)

(339

)

(353

)

Changes in operating assets and liabilities,

Accounts receivable

(562,752

)

490,025

Other receivables

1,969

(221

)

Inventory

(343,902

)

15,495

Advance to suppliers and prepaid expenses

62,142

2,226

Accounts payables and accrued expenses

96,497

267

Advance from customers and other payables

232,195

80,007

Amounts due to related parties

445,204

2,253,404

Wages payable

40,142

(56,741

)

Taxes payable

253,604

(412,668

)

Net cash provided by operating activities

3,206,439

2,499,674

Cash Flows from Investing Activities

Withdraw of short term investment

-

9,166,881

Purchases of property, plant and equipment

(189,106

)

(74,033

)

Expenditure in construction in progress

(19,475

)

(77,196

)

Disposal of property, plant and equipment

-

13,450

Proceeds from disposal of subsidiaries

-

916,688

Net cash used in investing activities

(208,581

)

9,945,790

Cash Flows from Financing Activities

Proceeds from related party debts

-

85,085

Payment of short term loans

-

(1,527,813

)

Net cash provided by financing activities

-

(1,442,728

)

Effect of exchange rate changes on cash and cash equivalents

(393,281

)

2,208,204

Net increase/(decrease) in cash and cash equivalents from continuing operations

2,604,577

13,210,940

Cash and cash equivalents, beginning balance

32,614,910

21,197,448

Cash and cash equivalents, ending balance

$

35,219,487

$

34,408,388

Supplemental cash flow information

Cash paid for income taxes

$

829,119

$

461,176

Cash paid for interest expense

$

-

$

49,109

Non-cash activities:

Loan from related party for the construction of a facility

$

587,296

$

487,016

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