Biostar Pharmaceuticals, Inc. Announces Record Third Quarter 2009 Financial Results

Biostar Pharmaceuticals, Inc. Announces Record Third Quarter 2009 Financial
Results
-- Q3 2009 revenue increased 106.3% to $15.6 million; Q3 Gross Margins of
77.0%

XIANYANG, China, Nov. 12 /PRNewswire-Asia-FirstCall/ -- Biostar
Pharmaceuticals, Inc. (OTC Bulletin Board: BSPM) ("Biostar" or "the Company"),
a Xianyang-based developer, manufacturer and supplier of pharmaceutical
products and medical nutrients addressing a variety of diseases and
conditions,
today announced financial results the third quarter ended September 30, 2009.

SUMMARY FINANCIALS

Third Quarter 2009 Results
Q3 2009 Q3 2008 CHANGE
Net Sales $15.6 million $7.5 million +106.3%
Gross Profit $12.0 million $3.8 million +216.3%
Net Income $3.1 million $0.6 million +459.2%
EPS (Fully Diluted) $0.13 $0.02 +550.0%

Nine Month 2009 Results
First 9M 2009 First 9M 2008 CHANGE
Net Sales $36.2 million $23.8 million +52.5%
Gross Profit $26.5 million $13.3 million +98.5%
Net Income $8.8 million $4.1 million +112.9%
EPS (Fully Diluted) $0.37 $0.18 +105.6%

Third Quarter 2009 Financial Results
Revenue for the third quarter of 2009 increased 106.3% to approximately
$15.6 million compared to $7.5 million for the third quarter of 2008. The
increase in revenue was primarily due to Biostar's flagship product, Xin
Aoxing Oleanolic Acid Capsule ("Xin Aoxing") which accounted for 76.9% of the
Company's revenues during the quarter. For the third quarter of 2009, the
sales of Xin Aoxing increased 200.6% to $12.0 million with a gross margin of
84.1%, compared to $4.0 million in the third quarter of 2008. The increase
was driven by Xin Aoxing penetrating a new province through local wholesalers
in the third quarter of 2009 in addition to initiating sales in two provinces
in the second quarter of 2009. Biostar's focus on growing its rural
distribution network also contributed to revenue growth in the third quarter.
Up to September 2009, Biostar more than doubled its rural network retail
locations to 3,500 outlets from 1,300 reported in the second quarter of 2009.
Another Biostar's state approved drug, Tianqin Dysmenorrhea Capsule,
contributed $1.1 million in revenue in the third quarter, an increase of 17.3%
compared to $0.9 million in the third quarter of 2008.
Cost of goods sold for the three months ended September 30, 2009 was
approximately $3.6 million or 23.0% of revenues as compared to $3.8 million or
49.8% of revenues for the three months ended September 30, 2008, Gross profits
for the quarter were $12.0 million with gross margins of 77.0%, compared to
$3.8 million in gross profit and gross margins of 50.2% during the third
quarter of 2008. The decrease in cost of goods sold was a result of lower raw
material prices from the Sichuan province as production fully resumed after
the 2008 earthquake. Gross profits surged by 216.3% for the three months
ended September 30, 2009.
Operating expenses for the three months ended September 30, 2009 were
approximately $7.9 million, an increase of 151.3% compared to the same period
in 2008. The increase was primarily due to increase in promotional and
advertising expenditures of $2.4 million in support of the Biostar's product
and brand awareness marketing strategy. Biostar also expensed $0.5 million on
research and development in the quarter as part of new product development
strategy.
Operating income for the third quarter of 2009 totaled approximately $4.1
million, a 524.9% increase from the $0.7 million reported for the third
quarter of 2008. Operating margins were 26.4% and 8.7% for the third quarter
of 2009 and 2008, respectively.
Net income was approximately $3.1 million in the third quarter of 2009, a
459.1% increase compared to $0.6 million for the third quarter of 2008. The
company maintains an effective tax rate of 24.0% at September 30, 2009.
Diluted earnings per share were $0.13 for the third quarter of 2009 compared
to $0.02 for the third quarter of 2008, based upon 23.7 million and 23.2
million shares.
"We are very pleased to report another quarter of strong revenue growth
and improved profitability. The success of our marketing strategy, strong
sales of our Hepatitis B product, the Xin Aoxing Capsule, and expansion of
rural supply network enabled us to achieve record breaking sales and earnings
for the quarter," commented Ronghua Wang, Chairman and Chief Executive Officer
of Biostar. "The Chinese government's stimulus plan includes $126 billion in
health care reform and support of the New Rural Cooperative Medical System,
which is providing the means to improve health care services for all Chinese
citizens. This provides a solid foundation for sustained growth of the
Chinese pharmaceutical industry and will benefit our company. We are
confident that our strong product portfolio, proven sales team, experienced
and committed management team will enable us to continue to execute our growth
plan and capitalize on these long-term, secular growth opportunities."
Nine Month Results
For the nine months ended September 30, 2009, revenues increased
approximately 52.5% to $36.2 million compared to $23.8 million in the same
period of 2008. Gross profits were $26.5 million for the first nine months of
2009, representing an increase of 98.5% from the first nine months of 2008.
Gross margins increased 30% to 73.1% for the first nine months of 2009
compared to 56.2% for the same period in 2008.
Income from operations increased 147.9% year over year to $11.9 million
for the first nine months of 2009. Operating margins were 32.8% and 20.2% for
the first nine month of 2009 and 2008, respectively.
Net income was $8.8 million for the nine months ended September 30, 2009,
an increase of 112.9% from the same period in 2008. Diluted earnings per
share were $0.37 for the first nine months of 2009 compared to $0.18 for the
first nine months of 2008, based up on 23.7 million and 23.2 million shares
respectively.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $2.4 million on September 30, 2009
compared to $0.8 million on December 31, 2008. Accounts receivable balance
was approximately $17.9 million on September 30, 2009 versus approximately
$11.7 million on December 31, 2008. Days sales outstanding (DSO) were at 104
days. The Company had a current ratio of 5.9 to 1 and stockholders' equity of
$32.5 million, with total assets of $37.1 million versus total liabilities of
$4.5 million on September 30, 2009.
For the first nine months of 2009, the Company generated $2.9 million in
cash from operations versus reported $0.5 million used in operations for the
same period in 2008.
Business Developments
On November 6, 2009, Biostar announced the closing of a private placement
financing of approximately $3.6 million with certain accredited investors.
The "Make Good" target associated with this financing is measured by income
from operations of $15.9 million for 2009, and $21.1 million for 2010. The
Company will use the net proceeds for the completion of the Company's new raw
materials processing facility.
On November 3, the Company announced it has expanded its rural supply
network to 3,512 sales outlets in rural areas of 6 provinces. The Company
will continue working toward its goal of covering 5,000 sales outlets by the
end of 2009 and 10,000 sales outlets by 2011. The Company expects the rural
supply network to contribute more than $10.0 million in annual revenues in
2010 with average annual revenue generated from each sales outlet of
$2,000.00.
On October 7, Biostar announced the Chinese Military Drug Administration
granted clearance to begin clinical trials on Biostar's new drug, Zushima
Analgesic Aerosol Spray. The Company anticipates formal product approval by
the Chinese Military Drug Administration in the second quarter of 2010. The
product is expected to contribute at least $2.0 million to revenues in 2010.
On October 2, 2009 Biostar Pharmaceuticals reported it received a patent
from China's State Intellectual Property Bureau for its Aoxing Ganbao, which
is a complementary medicine for its flagship Xin Aoxing Capsule in treating
Hepatitis B. Aoxing Ganbao is a TCM product applied topically and effective
to nourish the liver and reduce inflammation without side effects. The patent
will prevent its competitors from producing similar products for 20 years.
"We are making progress on all aspects of our business including the rural
supply network, raw material processing facility, and new products. We will
continue to expand Xin Aoxing Capsule product's market and we expect further
penetration of the new markets we just entered. We will remain focused on
these initiatives which will contribute to our long-term growth profitability.
We are committed to creating value for our shareholders and will continue to
implement and execute a growth plan which will enable us to accomplish this
goal," concluded Mr. Wang.
Conference Call
The Company will host a conference call to discuss the 2009 third quarter
financial results on Thursday, November 12, 2009 at 9:30 a.m. ET. Interested
participants should call +1-888-549-7704 within the United States, or US
+1-480-629-9857 if calling internationally. The conference ID is 4182017. It
is advisable to dial in approximately 5-10 minutes prior to 9:30 a.m. ET.
This call is being web cast by ViaVid Broadcasting and can be accessed at
ViaVid's website at http://www.viavid.net or at the following link:
http://viavid.net/dce.aspx?sid=00006CE5 . To access the web cast, you will
need to have the Windows Media Player on your desktop. For the free download
of the Media Player please visit:
http://www.microsoft.com/windows/windowsmedia/en/download/default.asp .
About Biostar Pharmaceuticals, Inc.
Biostar Pharmaceuticals, Inc., through its wholly-owned subsidiary in
China, develops, manufactures and markets pharmaceutical and medical nutrient
products for a variety of diseases and conditions. The Company's most popular
product is its Xin Ao Xing Oleanolic Acid Capsule, an over-the-counter ("OTC")
medicine for chronic hepatitis B, a disease affecting approximately 10% of the
Chinese population. In addition to its hepatitis product, Biostar
manufactures two broad-based OTC products, two prescription-based
pharmaceuticals and thirteen nutrients. The Company has adopted international
standards and is in the process of applying for two patents.
Safe Harbor
Certain statements in this release concerning our future growth prospects
are forward-looking statements, within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended, and Section 21E of the U.S. Securities
Exchange Act of 1934, as amended, which involve a number of risks and
uncertainties that could cause actual results to differ materially from those
in such forward-looking statements. The risks and uncertainties relating to
these statements include, but are not limited to, risks and uncertainties
regarding the success of our investments, risks and uncertainties regarding
fluctuations in earnings, our ability to sustain our previous levels of
profitability including on account of our ability to manage growth, intense
competition, wage increases in China, our ability to attract and retain highly
skilled professionals, time and cost overruns on fixed-price, fixed-time frame
contracts, client concentration, our ability to successfully complete and
integrate potential acquisitions, withdrawal of governmental fiscal
incentives,
political instability and regional conflicts and legal restrictions on raising
capital or acquiring companies outside China. Additional risks that could
affect our future operating results are more fully described in our United
States Securities and Exchange Commission filings including our S-1 dated June
27, 2008, our Quarterly Report on Form 10-Q for the quarter ended September
30,
2009, our 10-K for the year ended December 31, 2008, and other recent filings.
These filings are available at http://www.sec.gov . We may, from time to
time,
make additional written and oral forward-looking statements, including
statements contained in our filings with the Securities and Exchange
Commission and our reports to shareholders. We do not undertake to update any
forward-looking statements that may be made from time to time by or on our
behalf.

BIOSTAR PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS

September 30, December 31,
2009 2008
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $2,448,667 $758,316
Accounts receivable 17,851,863 11,700,841
Inventories 706,624 315,745
Prepaid expenses and other receivables 5,617,468 2,926,505
Total Current Assets 26,624,622 15,701,407

Property and equipment, net 3,301,541 5,930,467

Intangible assets, net 7,147,701 7,365,765

Total Assets $37,073,864 $28,997,639

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued expenses $2,446,257 $2,191,976
Customer and other deposits 105,066 2,592,250
Value-added tax payable 1,000,837 527,103
Income tax payable 988,791 413,205
Total Current Liabilities 4,540,951 5,724,534

Commitment

Stockholders' Equity
Series A, convertible preferred stock,
$0.001 par value, 5,000,000 shares
authorized,
None issued and outstanding -- --
Undesignated preferred stock, $.001 par
value, 5,000,000 shares authorized,
None issued and outstanding -- --
Common stock, $.001 par value, 100,000,000
shares authorized, 23,240,899 shares
issued and outstanding at September 30,
2009 and December 31, 2008 23,241 23,241
Additional paid-in capital 10,430,168 10,430,168
Statutory reserves 2,487,480 1,585,383
Retained earnings 18,904,913 10,996,655
Accumulated other comprehensive income 687,111 237,658
Total Stockholders' Equity 32,532,913 23,273,105

Total Liabilities and Stockholders' Equity $37,073,864 $28,997,639

BIOSTAR PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

Sales, net $15,556,345 $7,541,534 $36,249,051 $23,772,567

Cost of sales 3,585,143 3,756,445 9,753,704 10,423,651

Gross profit 11,971,202 3,785,089 26,495,347 13,348,916

Selling, general
and administrative
expenses 7,857,258 3,126,704 14,608,550 8,553,999

Income from
operations 4,113,944 658,385 11,886,797 4,794,917

Other Income
(Expense)
Interest income 488 841 981 2,362
Interest expense -- (10,463) -- (39,945)
Loss on disposal
of building -- -- (248,730) --
Foreign exchange
loss -- -- (10) --
Total other Income
(Expense) 488 (9,622) (247,759) (37,583)

Income before
income taxes 4,114,432 648,763 11,639,038 4,757,334

Provision for
income taxes 988,286 89,580 2,828,683 619,055

Net income $3,126,146 $559,183 $8,810,355 $4,138,279

Net income per
common share
Basic $0.13 $0.03 $0.38 $0.19
Diluted $0.13 $0.02 $0.37 $0.18

Weighted average
common shares
outstanding
Basic 23,240,899 22,152,311 23,240,899 22,152,311
Diluted 23,720,233 23,240,899 23,720,233 23,240,899

BIOSTAR PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Nine Months Ended
September 30,
2009 2008
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $8,810,355 $4,138,279
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 470,833 485,051
Provision for doubtful accounts -- 186,085
Loss on disposal of building 248,730 --
Changes in operating assets and
liabilities:
Accounts receivable (6,118,030) (6,101,916)
Inventories (389,966) (111,725)
Deposit -- (285,676)
Prepaid expenses and other
receivables (1,505,755) 27,210
Accounts payable and accrued
expenses 241,181 1,132,285
Customer and other deposits 63,363 (18,942)
VAT tax payable 472,244 134,787
Income tax payable 574,387 (128,161)
Net cash provided by (used in)
operating activities 2,867,342 (542,723)

CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and equipment (9,897) (51,400)
Deposit for acquisition of land use
right (1,169,529) --
Net cash provided by (used in)
Investing activities (1,179,426) (51,400)

CASH FLOWS FROM FINANCING
ACTIVITIES
Repayment of short-term bank loan -- (554,508)
Net cash provided by (used in)
financing activities -- (554,508)

Effect of exchange rate changes on
cash and cash equivalents 2,435 105,262

Net Increase (Decrease) in cash and
cash equivalents 1,690,351 (1,043,369)

Cash and cash equivalents,
beginning balance 758,316 2,286,419

Cash and cash equivalents, ending
balance $2,448,667 $1,243,050

SUPPLEMENTAL DISCLOSURES:
Interest payments $-- $39,807
Income tax payments $1,360,011 $747,217

SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Consummation of disposal of
building $2,555,510 $--

For further information, contact:

Ms. Elaine Zhao, CFO
Tel: +1-626-456-2789
Email: elaine@biostarpharmaceuticals.com

John Mattio
HC International, Inc.
Tel: +1-914-669-5340
Email: john.mattio@hcinternational.net
Web: http://www.hcinternational.net

SOURCE Biostar Pharmaceuticals, Inc.

Elaine Zhao, CFO of Biostar Pharmaceuticals, Inc., +1-626-456-2789,
elaine@biostarpharmaceuticals.com; or John Mattio of HC International, Inc.,
+1-914-669-5340, john.mattio@hcinternational.net