Bohai Pharmaceuticals Reports Record Financial Results for Fiscal Year Ended June 30, 2010

YANTAI, China--(BUSINESS WIRE)--Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH), a China-based pharmaceutical company engaged in the production, manufacturing and distribution of Traditional Chinese Medicine (TCM) in China, today reported record financial results for its fiscal year ended June 30, 2010.

“We are extremely proud of Bohai’s financial results as we continue to drive revenues while simultaneously maintaining attractive margins”

Summary of Fiscal Year Ended June 30, 2010 Financial Results:

Net Revenues of $59.3 million, an increase of 20% from $49.3 million in 2009
Gross profit of $49.1 million, compared to $41.4 million in 2009
Net income of $9.5 million, compared to $7.9 million in 2009
Fully diluted EPS of $0.57 for fiscal 2010
Basic EPS of $0.64 for fiscal 2010, exceeding previously issued guidance of $0.61

“We are extremely proud of Bohai’s financial results as we continue to drive revenues while simultaneously maintaining attractive margins,” said Mr. Hongwei Qu, Chairman, President and CEO of Bohai Pharmaceuticals Group. “This has been a remarkable year for the company and its shareholders. We became public in January 2010, raised $12 million in financing and continue to execute our strategic initiatives.”

In a significant development during the fiscal year, three of Bohai’s TCM products (Tongbi Capsules and Tablets and Lung Nourishing Cream) became eligible for reimbursement under China’s national medical insurance program. Bohai believes that this provides a distinct advantage to the company’s business strategy, which places a particular marketing focus on these lead products going forward. Among other features, this new plan seeks to extend national medical insurance coverage to China’s rural areas, with a target population in excess of 900 million potential healthcare consumers. The plan also seeks to promote the use of TCM products.

In addition, Bohai introduced five new products in April and May of this year, increasing its total TCM offering from 10 to 15 products. Bohai is approved by the Chinese government to produce a total of 29 TCM products.

Mr. Qu added, “Benefiting from our recent milestones, Bohai will seek to capitalize on the PRC’s recent insurance coverage of our lead products, China’s rising middle-class consumers and China’s growing elderly population to drive revenues, earnings and ultimately shareholder value.”

Highlights for the 2010 Fiscal Year:

Net revenue was $59.3 million along with net income of $9.5 million, resulting in basic EPS of $0.64 in the fiscal year ended June 30, 2010.
In January, Bohai became a U.S. listed operating company and raised $12 million in a concurrent private placement.
Effective implementation of a proactive marketing strategy in the calendar year significantly increased revenue on all the TCM products Bohai currently sells.
In 2009, the PRC government began the implementation of a new national medical and health plan. Among other features, this new plan seeks to extend national medical insurance coverage to China’s rural areas, with a target population in excess of 900 million, and to promote the use of TCM products.
Of the 11,000 Grade AA hospitals in China, management estimates that only 10% are currently using Bohai medicines, representing a significant market opportunity.
Bohai recently introduced five products in April and May of this year, increasing its total TCM offering from 10 to 15 products.
In fiscal 2011, Bohai expects to increase marketing and advertising for its growing portfolio of TCM medicines.
Particular focus will be on its three lead products: Tongbi Capsules and Tongbi Tablets, formulated to treat various forms of arthritis, and Lung Nourishing Cream, a liquid product used in the treatment of asthma and other common respiratory ailments.

In China, Traditional Chinese Medicine is not an alternative form of therapy but is used in the state-run hospitals alongside modern medicine. For its practitioners and advocates, TCM is a complete medical system that is used to treat disease in all its forms. TCM is also believed to promote long term wellness and vigor and many modern-day drugs have been developed from herbal sources.

Bohai’s growth has been made possible through the company’s focused strategy, which emphasizes quality products and aggressive sales and marketing efforts and also leverages the “protected” manufacturing status and national insurance coverage for certain of its pharmaceutical products. Currently, Bohai has nearly 600 employees, including approximately 300 that are engaged in sales and distribution in 20 locations throughout China. Utilizing this distribution platform, and combined with mass media and other marketing methods to build awareness of its brand, Bohai will seek to grow its revenues and earnings in fiscal 2011 and beyond.

Earnings Conference Call Details:

Bohai will host a conference call on Wednesday, September 29, 2010, at 11:00 a.m. Eastern to discuss its fiscal year-end June 30, 2010 financial results.

The teleconference can be accessed by dialing 877-407-8031 when calling within the United States or 201-689-8031 when calling internationally. Please dial in 10 minutes prior to the beginning of the call. There will be a playback available until December 22, 2010. To listen to the playback dial 877-660-6853 when calling within the United States, or 201-612-7415 when calling internationally and use account number: 286, in conjunction with replay ID number: 357715.

About Bohai Pharmaceuticals Group, Inc.

Based in the city of Yantai, Shandong Province, China, Bohai Pharmaceuticals Group, Inc. (OTCBB/OTCQB: BOPH) is engaged in the production, manufacturing and distribution of herbal pharmaceuticals based on Traditional Chinese Medicine in China. Bohai’s medicines address common health problems such as rheumatoid arthritis, viral infections, gynecological diseases, cardio vascular issues and respiratory diseases. Bohai’s products are sold either by prescription through hospitals or over-the-counter through local pharmacies and retail drug store chains. Bohai has approximately 600 employees, including approximately 300 sales representatives, operating from 20 offices throughout China. Bohai’s lead products, Tongbi Capsules and Tablets and Lung Nourishing Cream, are eligible for reimbursement under China’s National Medical Insurance Program.

For comprehensive investor relations material, including fact sheets, research reports, presentations and video, please follow the appropriate link: Investor Relations Portal, Investor Fact Sheet and Overview Video.

For additional information, please visit Bohai’s corporate website: www.bohaipharma.com.

Additional Information Relating to Bohai’s Trading Data

Due to certain recent disruptions in the marketplace relating to quotations on the OTC Bulletin Board operated by FINRA (OTCBB), incomplete trading data may exist for certain companies like Bohai. Real-time trading data for Bohai on the OTCQB market is available through the below link. Readers are advised that OTCQB market is operated by the owner of otcmarkets.com, and Bohai Pharmaceuticals Group, Inc. makes no representation or warranty regarding the OTCQB market.

For real-time trading data for Bohai on the OTCQB market, including Level 2 quotes, please visit: www.otcmarkets.com/stock/boph/quote.

Cautionary Note Regarding Forward Looking Statements

This press release, the operational plans discussed herein and the statements of representatives of Bohai Pharmaceuticals Group, Inc. (the “Company”) related thereto and in the conference call referenced herein contain, or may contain, among other things, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are “forward-looking statements,” including any other statements of non-historical information. These forward-looking statements are subject to significant known and unknown risks and uncertainties and are often identified by the use of forward-looking terminology such as “guidance,” “projects,” “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “ultimately” or similar expressions. All forward-looking statements involve material assumptions, risks and uncertainties, and the expectations contained in such statements may prove to be incorrect. Investors 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 (including, without limitation, those relating to the Company’s marketing and sales efforts, results of operations and the Chinese government’s support of TCM and healthcare in China generally) could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including factors and risks discussed in the periodic reports that the Company files with the Securities and Exchange Commission (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 factors. The Company undertakes no duty to update these forward-looking statements except as required by law.


Bohai Pharmaceuticals Group, Inc. and Subsidiaries
Selected Consolidated Statements of Operations
(in millions, except per share amounts)


		(unaudited) Fiscal year ended June 30,
		2010			2009

Net revenues	$	59.3		$	49.3
Cost of revenues		10.2			8.0
Selling, general and admin expenses		36.3			31.3
Income from operations		12.8			10.0

Other income (expenses)		(0.4	)		(0.2	)
Provision for income taxes		(3.0	)		(1.9	)

Net income	$	9.5		$	7.9

Basic earnings per share		0.64			0.60
Fully diluted earnings per share	$	0.57		$	0.60

Basic weighted average shares		14.7			13.2
Diluted weighted average shares		17.6			13.2

NOTE: The above numbers may not total correctly due to rounding.


Bohai Pharmaceuticals Group, Inc. and Subsidiaries
Selected Consolidated Balance Sheet Items
(in millions)


		(unaudited) Fiscal year ended June 30,
		2010		2009

Cash and cash equivalents	$	17.1	$	2.5
Accounts receivable, net		10.4		11.1
Inventories		0.7		0.3
Property, plant & equipment, net		7.9		8.1
Intangible assets, net		17.3		17.3
Total Assets		64.5		44.3
Total current liabilities		8.8		10.3
Total liabilities		14.4		10.3
Total stockholders’ equity	$	50.1	$	33.9

NOTE: The above numbers may not total correctly due to rounding.


Bohai Pharmaceuticals Group, Inc. and Subsidiaries
Selected Consolidated Cash Flow Items
(in millions)


	(unaudited) Fiscal year ended June 30,
	2010			2009

Net cash provided (used) by operating activities	$	13.2		$	(1.5	)
Net cash provided (used) by investing activities		(7.4	)		(0.8	)
Net cash provided (used) by financing activities		8.8			4.0
Net change in cash and cash equivalents	$	14.7		$	1.7