Meihua International Medical(MHUA) - 2023 Q2 - Quarterly Report

Financial Performance - Total revenues for the six months ended June 30, 2023, were $48,190,076, a decrease of 12.5% compared to $54,832,847 for the same period in 2022[9] - Gross profit for the first half of 2023 was $17,170,729, down 17.0% from $20,891,732 in the prior year[9] - Net income attributable to shareholders increased to $7,062,007 for the six months ended June 30, 2023, compared to $6,554,887 in the same period of 2022, representing an increase of 7.7%[9] - The company reported a comprehensive income of $711,672 for the six months ended June 30, 2023, compared to $421,794 in the prior year, indicating an increase of 68.7%[9] - Net income for June 2023 was $7,031,529, an increase of 7.25% from $6,554,887 in June 2022[15] - Income before income tax provision for the six months ended June 30, 2023, was $9,097,681, compared to $8,988,658 for the same period in 2022, reflecting an increase of about 1.2%[112] Assets and Liabilities - Total current assets decreased to $132,264,679 as of June 30, 2023, from $135,319,155 as of December 31, 2022, a decline of 2.3%[6] - Total liabilities decreased to $23,221,700 as of June 30, 2023, from $24,898,499 as of December 31, 2022, a reduction of 6.7%[6] - Cash and cash equivalents decreased to $17,861,214 as of June 30, 2023, from $26,736,700 as of December 31, 2022, a decline of 33.3%[6] - Total bank borrowings as of June 30, 2023, were $7,171,128, an increase from $6,089,428 as of December 31, 2022[100][101] - Taxes payable increased to $1,452,318 as of June 30, 2023, from $1,131,276 as of December 31, 2022, with income tax payable rising significantly to $1,012,775[107] Revenue Breakdown - Revenue from self-manufactured products was $23,435,544 for the six months ended June 30, 2023, down from $27,046,663 in 2022, representing a decline of 13.5%[64] - Revenue from resales of sourced disposable medical devices was $24,754,532 for the six months ended June 30, 2023, compared to $27,786,184 in 2022, a decrease of 10.9%[64] - Direct sales revenue decreased to $4,305,506 from $4,582,321, while distributor sales revenue decreased to $43,884,570 from $50,250,526[65] - Class II medical devices generated $35,075,347 in revenue for the six months ended June 30, 2023, a decrease of 12.5% from $39,897,058 in 2022[79] - Class I medical devices revenue was $8,023,860, up from $7,657,297, indicating an increase of 4.8%[79] - Class III medical devices revenue decreased to $1,398,377 from $1,584,816, a decline of 11.7%[79] Operating Expenses - Operating expenses for the first half of 2023 were $8,074,056, significantly lower than $12,223,030 in the same period of 2022, a decrease of 33.5%[9] - Research and development expenses for the six months ended June 30, 2023, were $1,460,376, down 11.1% from $1,642,204 in 2022[69] - Advertising expenses increased to $8,275 for the six months ended June 30, 2023, compared to $7,603 in the same period of 2022, reflecting an increase of 8.8%[68] Cash Flow - Net cash used in operating activities decreased to $(5,424,569) in June 2023 from $(7,798,816) in June 2022, representing a 30.43% improvement[15] - Net cash used in investing activities increased significantly to $(3,866,151) in June 2023 compared to $(459,163) in June 2022[15] - Cash paid for income tax decreased to $2,313,417 in June 2023 from $2,956,643 in June 2022, a reduction of 21.67%[15] - Cash at the end of June 2023 was $17,861,214, down from $34,665,528 at the end of June 2022, reflecting a decrease of 48.54%[15] Customer Concentration - Two customers accounted for approximately 18.18% and 10.01% of total revenues for the six months ended June 30, 2023, compared to 32.53% and 11.25% in the same period of 2022[31] - As of June 30, 2023, two customers represented approximately 30.92% and 21.31% of accounts receivable, compared to 27.73% and 13.14% as of December 31, 2022[31] Taxation and Compliance - The company maintains a preferential tax rate of 15% under the High and New Technology Enterprise certificate, valid through December 31, 2025[113] - Total income tax expense for the six months ended June 30, 2023, was $2,064,697, a decrease from $2,433,772 in the same period of 2022, representing a reduction of approximately 15.1%[112] - The company has no significant unrecognized uncertain tax positions as of June 30, 2023[117] Other Financial Information - The company has not recorded any impairment charges for long-lived assets for the six months ended June 30, 2023, and 2022[50] - The allowance for doubtful accounts amounted to nil as of June 30, 2023, and December 31, 2022, indicating no bad debt expenses[41][44] - The company has pledged assets totaling $3,522,472 as of June 30, 2023, to secure short-term borrowings[103] - The company invested RMB 40 million into Zhongxiangxin, obtaining a 25% ownership interest, and recognized an investment loss of $1,632 for the six months ended June 30, 2023[96] - The company is currently involved in a lawsuit seeking damages of approximately $2.3 million, but has deemed the possibility of loss to be remote[122]