Universe Pharmaceuticals INC Reports Fiscal Year 2023 Financial Results
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Insights
The financial results of Universe Pharmaceuticals INC highlight a 19.5% decrease in total revenues and a significant reduction in gross margins from 54.5% to 31.9%. These figures suggest a challenging fiscal year for the company, influenced by market conditions and economic slowdown.
From a market analysis perspective, the decrease in revenue and gross margin could reflect competitive pressures and operational inefficiencies within the industry. The company's strategic initiatives to enhance product offerings and marketing strategies are essential to regain market share and improve financial performance. However, the effectiveness of these strategies in a recovering market post-COVID-19 pandemic will be critical. Additionally, the company's focus on the growing elderly population in China presents a targeted approach to capitalizing on demographic trends.
Universe Pharmaceuticals INC's financials indicate a net loss reduction from $8.7 million to $6.2 million year-over-year, which could be perceived positively by investors as an improvement in cost management. However, the decline in revenue and the increase in cost of revenue due to rising raw material prices pose concerns about the company's ability to manage external economic factors.
Furthermore, the depreciation of the RMB against the US dollar has negatively impacted reported revenues, which is significant for investors considering currency risks. The basic and diluted loss per share improvement may not be sufficient to offset the concerns arising from a shrinking top line and contracting margins, which are critical indicators of a company's financial health.
The economic slowdown and the impact of the COVID-19 pandemic have had tangible effects on Universe Pharmaceuticals INC's financial performance. The depreciation of the RMB is a macroeconomic factor that has adversely affected the company's revenue when converted to US dollars, highlighting the importance of currency risk management in international business operations.
Moreover, the increase in the cost of traditional Chinese medicine raw materials reflects supply chain challenges and inflationary pressures that could persist in the short term. The company's response to these economic conditions, including pricing strategy changes and cost management, will be crucial for its financial stability and growth prospects in the long term.
JI'AN, China, Jan. 30, 2024 /PRNewswire/ -- Universe Pharmaceuticals INC ("Universe Pharmaceuticals" or the "Company") (Nasdaq: UPC), a pharmaceutical producer and distributor in
Mr. Gang Lai, Chairman and Chief Executive Officer of Universe Pharmaceuticals, commented, "Despite market fluctuations and the economic slowdown impacting our business in fiscal year 2023, we continued our efforts to deliver high quality products to our loyal customers. Our dedication to addressing the physical conditions of the elderly and promoting their longevity and general well-being remains unwavering. We maintain a positive outlook on the market development, particularly with
Fiscal Year 2023 Financial Highlights
- Revenues were
$32.3 million $40.1 million - Loss from operations was
$3.5 million $7.4 million - Net loss was
$6.2 million $8.7 million - Basic and diluted loss per share were
$1.70 $2.41
Fiscal Year 2023 Financial Results
Revenues
For the Fiscal Years Ended September 30, | ||||||||||||
2023 | 2022 | |||||||||||
($ millions) | Revenue | Cost of | Gross | Revenue | Cost of | Gross | ||||||
TCMD products sales | 18.6 | 13.4 | 27.8 % | 24.0 | 8.2 | 65.9 % | ||||||
Third-party products sales | 13.7 | 8.6 | 37.5 % | 16.2 | 10.1 | 37.7 % | ||||||
Total | 32.3 | 22.0 | 31.9 % | 40.1 | 18.3 | 54.5 % | ||||||
Total revenues decreased by
Sales of traditional Chinese medicine derivatives ("TCMD") products decreased by
a) A slowdown in the economy caused by the COVID-19 pandemic has led to a decline in customers' spending power, and the Company changed its pricing strategy by decreasing the per unit price of TCMD products in an effort to increase sales volume and market share during this challenging period. Average selling price of TCMD products decreased by
b) As a result of the Company's new pricing strategy, sales volume of TCMD products increased by
c) The average exchange rate between Renminbi ("RMB") and
Sales of third-party products decreased by
Cost of revenues and gross profit
Cost of revenues increased by
Gross profit decreased by
Operating expenses
Selling expenses decreased by
General and administrative expenses decreased by
Research and development ("R&D") expenses decreased by
Other income (expenses), net
Total other income, net, decreased by
Provision for income taxes
Provision for income taxes was
Net loss
Net loss was
Basic and diluted loss per share were
Balance Sheet
As of September 30, 2023, the Company had cash of
Cash Flow
Net cash provided by operating activities was
Net cash used in investing activities was
Net cash used in financing activities was
About Universe Pharmaceuticals INC
Universe Pharmaceuticals INC, headquartered in Ji'an,
Forward-Looking Statements
Certain statements 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
For more information, please contact:
Ascent Investor Relations LLC
Tina Xiao
President
Phone: +1-646-932-7242
Email: investors@ascent-ir.com
UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
As of September 30, | ||||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 5,285,247 | $ | 5,711,458 | ||||
Short-term investments | 13,219,005 | 13,148,594 | ||||||
Accounts receivable, net | 10,667,603 | 15,183,890 | ||||||
Due from related parties | 61,678 | - | ||||||
Inventories, net | 3,343,266 | 2,206,488 | ||||||
Advance to suppliers | 180,643 | 16,701 | ||||||
Prepayment for acquisition | 3,426,535 | 3,514,450 | ||||||
Prepaid expenses and other current assets | 626,241 | 1,724,099 | ||||||
TOTAL CURRENT ASSETS | 36,810,218 | 41,505,680 | ||||||
Property and equipment, net | 3,699,965 | 4,250,638 | ||||||
Prepayments made to a related party for purchase of property | 2,192,982 | 2,249,248 | ||||||
Prepayments for construction in progress | 9,092,996 | 9,326,296 | ||||||
Intangible assets, net | 148,584 | 157,451 | ||||||
Investment in equity securities | 685,307 | 702,890 | ||||||
Deferred tax assets | 656,980 | 1,347,672 | ||||||
TOTAL NONCURRENT ASSETS | 16,476,814 | 18,034,195 | ||||||
TOTAL ASSETS | $ | 53,287,032 | $ | 59,539,875 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Short-term bank loans | $ | 5,482,456 | $ | 3,936,184 | ||||
Accounts payable | 4,585,285 | 3,075,393 | ||||||
Taxes payable | 434,758 | 167,350 | ||||||
Due to related parties | 540,096 | 3,379,263 | ||||||
Accrued expenses and other current liabilities | 2,711,736 | 2,539,362 | ||||||
TOTAL CURRENT LIABILITIES | 13,754,331 | 13,097,552 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY | ||||||||
Ordinary shares, | 67,969 | 67,969 | ||||||
Additional paid in capital | 29,279,159 | 29,279,159 | ||||||
Statutory reserve | 2,439,535 | 2,439,535 | ||||||
Retained earnings | 10,159,304 | 16,322,365 | ||||||
Accumulated other comprehensive loss | (2,413,266) | (1,666,705) | ||||||
TOTAL SHAREHOLDERS' EQUITY | 39,532,701 | 46,442,323 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 53,287,032 | $ | 59,539,875 | ||||
* | Retrospectively restated for effect of 6-for-1 share consolidation. |
UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||||
For the Years Ended September 30, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Revenue | $ | 32,308,735 | $ | 40,143,151 | $ | 47,982,031 | ||||||
Cost of revenue | (21,993,601) | (18,251,815) | (22,655,854) | |||||||||
Gross profit | 10,315,134 | 21,891,336 | 25,326,177 | |||||||||
Operating expenses | ||||||||||||
Selling expenses | (6,783,703) | (19,083,135) | (2,973,531) | |||||||||
General and administrative expenses | (2,199,657) | (2,602,624) | (3,296,844) | |||||||||
Research and development expenses | (4,858,548) | (7,644,375) | (5,465,662) | |||||||||
Total operating expenses | (13,841,908) | (29,330,134) | (11,736,037) | |||||||||
Income from operations | (3,526,774) | (7,438,798) | 13,590,140 | |||||||||
Other income (expenses) | ||||||||||||
Interest expense, net | (156,788) | (162,400) | (101,604) | |||||||||
Other (expenses) income, net | (235,614) | 48,940 | (80,434) | |||||||||
Short-term investments income (loss) | 38,530 | (470,477) | 239,549 | |||||||||
Equity investment income | 31,072 | 38,588 | 30,827 | |||||||||
Total other (expense) income, net | (322,800) | (545,349) | 88,338 | |||||||||
(Loss) income before income tax provision | (3,849,574) | (7,984,147) | 13,678,478 | |||||||||
Income tax provision | (2,313,487) | (752,419) | (2,358,526) | |||||||||
Net (loss) income | (6,163,061) | (8,736,566) | 11,319,952 | |||||||||
Other comprehensive income (loss) | ||||||||||||
Foreign currency translation adjustment | (746,561) | (3,755,464) | 1,193,369 | |||||||||
Comprehensive (loss) income | $ | (6,909,622) | $ | (12,492,030) | $ | 12,513,321 | ||||||
Earnings per share | ||||||||||||
Basic and diluted | $ | (1.70) | $ | (2.41) | $ | 3.58 | ||||||
Weighted average number of shares outstanding | ||||||||||||
Basic and diluted * | 3,625,000 | 3,625,000 | 3,163,470 | |||||||||
* | Retrospectively restated for effect of 6-for-1 share consolidation. |
UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
For the Years Ended September 30, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net (loss) income | $ | (6,163,061) | $ | (8,736,566) | $ | 11,319,952 | ||||||
Adjustments to reconcile net income to net cash provided by | ||||||||||||
Depreciation and amortization | 508,785 | 533,949 | 446,878 | |||||||||
Loss from disposal of fixed assets | 114 | 983 | 1,559 | |||||||||
Allowance for doubtful accounts | (439,327) | 419,353 | (230,175) | |||||||||
Inventory reserve | (49,166) | 15,774 | - | |||||||||
Deferred income tax benefit | 679,586 | (605,278) | (668,341) | |||||||||
Short-term investments income | (38,530) | 470,477 | (239,549) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 4,718,118 | (1,549,312) | (3,867,457) | |||||||||
Inventory, net | (1,183,823) | 16,586 | (451,634) | |||||||||
Advance to suppliers, net | (170,016) | 2,681,214 | (2,717,085) | |||||||||
Prepayment for advertising | - | 7,385,695 | (7,434,240) | |||||||||
Advances to related parties | - | 236,982 | (237,720) | |||||||||
Prepaid expenses and other current assets | 1,091,022 | (1,699,929) | (168,188) | |||||||||
Accounts payable | 1,641,426 | (1,896,621) | 2,457,337 | |||||||||
Taxes payable | 280,939 | (904,127) | (298,620) | |||||||||
Accrued expenses and other current liabilities | 244,015 | 2,318,474 | 31,436 | |||||||||
Net cash provided by (used in) operating activities | 1,120,082 | (1,312,346) | (2,055,847) | |||||||||
Cash flows from investing activities | ||||||||||||
Purchases of property and equipment | (44,169) | (93,703) | (444,505) | |||||||||
Proceeds from disposal of fixed assets | - | 523 | - | |||||||||
Prepayments made to a related party for purchase of property | - | - | (2,457,600) | |||||||||
Prepayments for construction in progress | - | - | (10,629,120) | |||||||||
Prepayment for acquisition | - | (3,814,925) | - | |||||||||
Payments for short-term investments | - | - | (15,330,660) | |||||||||
Redemption of short-term investments | - | - | 1,801,927 | |||||||||
Net cash used in investing activities | (44,169) | (3,908,105) | (27,059,958) | |||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from short-term bank loans | 5,671,104 | 4,272,716 | 4,300,800 | |||||||||
Repayment of bank loans | (3,969,773) | (4,272,716) | (2,764,800) | |||||||||
Gross proceeds from initial public offerings | - | - | 28,750,000 | |||||||||
Payment for deferred initial public offering costs | - | - | (2,792,543) | |||||||||
Proceeds from (prepayments for) related parties borrowings | (3,091,977) | 3,317,943 | (911,648) | |||||||||
Net cash (used in) provided by financing activities | (1,390,646) | 3,317,943 | 26,581,809 | |||||||||
Effect of exchange rate changes on cash | (111,478) | (463,942) | 553,702 | |||||||||
Net (decrease) increase in cash | (426,211) | (2,366,450) | (1,980,294) | |||||||||
Cash, beginning of year | 5,711,458 | 8,077,908 | 10,058,202 | |||||||||
Cash, end of year | $ | 5,285,247 | $ | 5,711,458 | $ | 8,077,908 | ||||||
Supplemental disclosure information | ||||||||||||
Cash paid for interest expense | $ | 190,184 | $ | 199,852 | $ | 149,303 | ||||||
Cash paid for income tax | $ | 863,800 | $ | 2,748,629 | $ | 3,271,219 | ||||||
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SOURCE Universe Pharmaceuticals INC
FAQ
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