Name: China Health Industries Holdings, Inc. Q3 2015 Earnings Call
Start: 2015-05-15T00:00:00.000Z

Executive Summary

Q3 2015 revenue fell 24.34% year over year to $1.93M, driven by lower sales volume and average prices for the two flagship health supplement products; net loss was $0.18M with EPS of $(0.003) .
Sequentially, revenue declined versus Q2 and Q1 2015 ($3.12M and $3.16M respectively), reflecting demand normalization after strong first-half pricing/volume gains .
Nine-month fiscal 2015 performance improved materially: revenue up 26% to $8.21M and net income of $0.15M versus a loss in the prior year, supported by enhanced pricing and volume for Sailuozhi (Waterlilies Soft Capsule) and Propolis & Black Ant .
Management outlined new growth initiatives: accelerate CFDA registrations (4–6 products “in the near future”), expand distribution coverage, and pursue a national mobile health platform to drive product discovery and purchase intent .

What Went Well and What Went Wrong

What Went Well
- Nine-month results strengthened: revenue +26.30% YoY to $8.21M and gross profit +64.22% to $2.41M, turning to net income of $0.15M versus $(0.87)M in prior year .
- Solid liquidity and balance sheet: cash and cash equivalents at $29.03M, working capital $26.22M, no long-term debt, per press release and 10-Q .
- Strategic growth plan: “accelerating CFDA registration... release four to six new products,” “adding distributors” in under-covered regions, and “concrete steps” toward a nationwide mobile health platform .
What Went Wrong
- Q3 revenue declined 24.34% YoY to $1.93M due to lower average prices and volumes for Sailuozhi and Propolis & Black Ant; gross profit fell 31.47% to $0.53M .
- Operating expenses rose 18.05% YoY in Q3, mainly from higher depreciation and amortization tied to capital spending and land-use right adjustments, pressuring margins .
- Segment mix challenged: Humankind segment (higher-margin supplements) saw notable declines in Q3, while HLJ Huimeijia (pharmaceuticals) grew but at lower margins, compressing overall profitability .

Metric	Q1 2015 (Sep 30, 2014)	Q2 2015 (Dec 31, 2014)	Q3 2015 (Mar 31, 2015)
Revenue ($USD)	$3,160,217	$3,117,562	$1,933,377
Gross Profit ($USD)	$946,254	$938,149	$530,296
Income (Loss) from Operations ($USD)	$292,722	$192,327	$(157,872)
Net Income (Loss) ($USD)	$223,444	$106,811	$(180,800)
Diluted EPS ($USD)	$0.004	$0.002	$(0.003)
Gross Profit Margin %	29.9% (calc from )	30.1% (calc from )	27.43%

YoY comparison (Q3 2015 vs Q3 2014):

Metric	Q3 2014 (Mar 31, 2014)	Q3 2015 (Mar 31, 2015)	Change
Revenue ($USD)	$2,555,394	$1,933,377	-24.34%
Net Income (Loss) ($USD)	$135,448	$(180,800)	-$316,248
Diluted EPS ($USD)	$0.002	$(0.003)	-$0.005
Gross Profit Margin %	30.28%	27.43%	-2.85 pts

Segment breakdown (Revenue and Gross Profit):

Segment	Q1 2015 Revenue ($USD)	Q1 2015 Gross Profit ($USD)	Q2 2015 Revenue ($USD)	Q2 2015 Gross Profit ($USD)	Q3 2015 Revenue ($USD)	Q3 2015 Gross Profit ($USD)
Humankind (Supplements)	$2,752,343	$828,457	$2,562,746	$786,432	$1,609,169	$461,464
HLJ Huimeijia (Pharma)	$407,874	$117,797	$554,816	$151,717	$324,208	$68,832

Key balance sheet and liquidity KPIs:

KPI	Sep 30, 2014	Dec 31, 2014	Mar 31, 2015
Cash & Cash Equivalents ($USD)	$28,034,677	$28,320,894	$29,034,685
Working Capital ($USD)	$26,185,893	$26,168,453	$26,221,884
Accounts Receivable, net ($USD)	$2,240,248	$1,989,926	$1,350,831
Inventory ($USD)	$1,009,468	$908,152	$838,156
Short-term Loans ($USD)	$1,629,195	$1,611,707	$1,613,163
Related Party Debts ($USD)	$2,233,189	$1,674,078	$1,823,709

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q3 2015	Not provided	Not provided	Maintained (no formal guidance)
Margins/OpEx/Tax	FY/Q3 2015	Not provided	Not provided	Maintained (no formal guidance)
Product launches	Near-term	N/A	Plan to release 4–6 new CFDA-registered products (timing not specified)	New strategic initiative (not formal guidance)
Distribution	Ongoing	N/A	Considering adding distributors in under-covered regions	New strategic initiative (not formal guidance)
Dividends	FY/Q3 2015	Not provided	Not provided	Maintained (no formal guidance)

Topic	Previous Mentions (Q1 2015, Q2 2015)	Current Period (Q3 2015)	Trend
Mobile health initiatives	No disclosure in prior quarters filings	Concrete steps to build nationwide mobile health platform (data acquisition, information center, online platform)	Emerging focus
CFDA registrations/new products	Portfolio existed; pricing improvements drove volumes, but no explicit near-term launch timing	Accelerate CFDA registration and release 4–6 products “in the near future”	Accelerating
Distribution expansion	Standard agent coverage across key provinces	Add distributors to extend coverage in under-served geographies	Expansion
Product performance/pricing	Strong pricing and volume for Sailuozhi and Propolis drove H1 results	Q3 average prices and volumes down for both products; segment gross profit declined	Mixed; near-term pressure
Regulatory/legal	Sale/transfer of drug approval numbers in process with Xiuzheng (structural)	Continuing CFDA oversight; registration processes emphasized	Ongoing

“Despite the reduction in revenue and earnings in 2015 fiscal Q3 ’15 versus Q3 ’14, the nine-month period results were much improved and the Company’s balance sheet and financial position remain quite strong.” — Chairman & CEO Xin Sun .
Strategic priorities: “Accelerating the CFDA registration process... release four to six new products,” “considering adding distributors,” and taking “concrete steps” toward a nationwide mobile health platform to target likely consumers and drive purchase intent .

Results communication was via Item 2.02 8‑K press release; no analyst Q&A disclosures in filings for Q3 2015 .

Wall Street consensus (S&P Global) for CHHE’s Q1–Q3 FY2015 EPS and revenue was unavailable; as a result, no beat/miss assessment is provided for Q3 2015. The company communicated results via press release and 10‑Q filings .
Given the Q3 revenue and margin compression vs. H1 levels, sell-side estimates (if any) would likely need to reflect lower near-term volumes/pricing for Humankind products and higher depreciation/OpEx cadence .

Q3 2015 was weak on volume/price for flagship supplements; however, nine-month FY2015 showed strong YoY improvement and a return to profitability, highlighting seasonality and pricing dynamics in the portfolio .
Liquidity remains robust (cash ~$29M; working capital >$26M), providing flexibility to fund registrations, distribution expansion, and digital/mobile initiatives without leverage .
Product pipeline momentum: management plans to release 4–6 CFDA-registered products, which could diversify revenue beyond two flagship SKUs and stabilize margins .
Distribution strategy to broaden geographic coverage may support volume recovery; execution and timing will be catalysts to watch .
Near-term focus: monitor Humankind segment pricing/volume trends and depreciation/OpEx trajectory tied to capital projects; Q4 seasonality and product launch timing are key to sustaining profitability .
No formal financial guidance provided; narrative and operational milestones (registrations, distributor adds, mobile platform progress) will drive sentiment in absence of estimates .