Zhengye Biotechnology Holding Limited Announces Fiscal Year 2024 Financial Results

, /PRNewswire/ -- Zhengye Biotechnology Holding Limited (Nasdaq: ZYBT) (the "Company" or "Zhengye"), a veterinary vaccine manufacturer that encompasses research, development, manufacturing, and sales of veterinary vaccines, with a focus on livestock vaccines in China, today announced its financial results for the fiscal year ended December 31, 2024. Mr. Songlin Song, co-chief executive officer of Zhengye, remarked, "Fiscal year 2024 was a transformational year for us, marked by strategic decisions and tough yet necessary shifts, as we navigated significant market adjustments and proactively diversified our customer base in pursuit of long-term growth. Amid global uncertainties and challenging domestic market conditions, we made the deliberate decision to reduce sales of swine vaccines, primarily to mitigate concentration risk from our largest customers. We believe this will lead to a healthier and more balanced customer portfolio to better support our strategic diversification. Meanwhile, we have maintained our research and development ("R&D") investments, recognizing that innovation is key to sustainable and long-term growth, even amid current headwinds. Over the past year, we made progress in expanding into China's fast-growing pet vaccine market, having completed clinical trials for two vaccines targeting cats and dogs. We see this as a high-potential segment and expect it to become a key focus moving forward. Additionally, we were honored to receive two Category I New Veterinary Drug Certificates from the Ministry of Agriculture and Rural Affairs for two vaccines jointly developed by us and other institutions, which is a strong testament to our R&D capabilities. Mr. Aiden Han, co-chief executive officer of Zhengye, added, "With our successful Nasdaq listing, global market expansion has become a central component of our long-term vision to become a world-leading, trusted manufacturer of veterinary vaccines. Exploring international sales opportunities and expanding our global distribution network will be a strategic priority in the years ahead. Though these transitional measures may bring noticeable short-term effects, we believe the long-term benefits will be enduring and substantial. We are building a more resilient and adaptable foundation to support our growth ambitions. Our unwavering commitment to developing safe and innovative products and consistently delivering high quality will continue to be the cornerstone of long-term value creation for our stakeholders." Fiscal Year 2024 Financial Summary Net revenues were RMB186.4 million (US$25.5 million) in fiscal year 2024, compared to RMB211.7 million in fiscal year 2023. Gross profit was RMB91.3 million (US$12.5 million) in fiscal year 2024, compared to RMB117.5 million in fiscal year 2023. Gross profit margin was 49.0% in fiscal year 2024, compared to 55.5% in fiscal year 2023. Total operating expenses were RMB74.9 million (US$10.3 million) in fiscal year 2024, increased from RMB72.5 million in fiscal year 2023. Net income was RMB13.5 million (US$1.8 million) in fiscal year 2024, compared to RMB37.5 million in fiscal year 2023. Basic and diluted earnings per share were RMB0.25 (US$0.03) in fiscal year 2024, compared to RMB0.69 in fiscal year 2023. Fiscal Year 2024 Financial Results Net Revenues Net revenues were RMB186.4 million (US$25.5 million) in fiscal year 2024, representing a decrease of 12.0% from RMB211.7 million in fiscal year 2023. The decrease was primarily due to the veterinary vaccine market adjustments and the reduced sales of swine vaccines following the Company's strategic realignment of sales practices aimed at diversifying the customer base and reducing concentration risk. For the years ended December 31, 2023 2024 RMB % RMB US$ % (in thousands, except for percentages) Revenues Swine vaccines 188,919 89.3 157,789 21,617 84.7 Poultry vaccines 15,430 7.3 15,506 2,124 8.3 Other vaccines 7,302 3.4 13,061 1,790 7.0 Total revenues 211,651 100 186,356 25,531 100 Revenue from sales of swine vaccines was RMB157.8 million (US$21.6 million) in fiscal year 2024, decreased from RMB188.9 million in fiscal year 2023. The decrease was a result of the control of sales to Zhengye's operating entity's largest customer. Revenue from sales of poultry vaccines was RMB15.5 million (US$2.1 million) in fiscal year 2024, increased from RMB15.4 million in fiscal year 2023. There was no significant change in revenue from sales of poultry vaccines and the difference was caused by normal demand fluctuation. Revenue from sales of other vaccines was RMB13.1 million (US$1.8 million) in fiscal year 2024, increased from RMB7.3 million in fiscal year 2023. The increase in sales of other vaccines was caused by the increased sales of the vaccines for sheep. Cost of Revenues Cost of revenues was RMB95.1 million (US$13.0 million) in fiscal year 2024, representing an increase of 1.0% from RMB94.1 million in fiscal year 2023. The increase was mainly due to the increase in the cost of poultry vaccines. Gross Profit Gross profit was RMB91.3 million (US$12.5 million) in fiscal year 2024, decreased from RMB117.5 million in fiscal year 2023. Gross profit margin was 49.0% in fiscal year 2024, decreased from 55.5% in fiscal year 2023. The decrease was mainly due to the lower sales price and unchanged fixed cost. Operating Expenses Total operating expenses were RMB74.9 million (US$10.3 million) in fiscal year 2024, increased from RMB72.5 million in fiscal year 2023. Sales and marketing expenses were RMB41.3 million (US$5.7 million) in fiscal year 2024, increased from RMB40.7 million in fiscal year 2023. The increase in sales and marketing expenses mainly resulted from an increase in payroll for sales staffs, marketing promotion expenses and entertainment, partially offset by a decrease in travel expenses and advertising expenses. General and administrative expenses were RMB22.6 million (US$3.1 million) in fiscal year 2024, decreased from RMB23.6 million in fiscal year 2023. The decrease in administrative expenses is attributed to the reduction in employee compensation and decrease in depreciation and amortization. Research and development expenses were RMB12.8 million (US$1.8 million) in fiscal year 2024, increased from RMB11.9 million in fiscal year 2023. The increase in research and development expenses mainly resulted from an increase in material expenses. Net Income Net income was RMB13.5 million (US$1.8 million) in fiscal year 2024, compared to RMB37.5 million in fiscal year 2023. Basic and Diluted Earnings per Share Basic and diluted earnings per share were RMB0.25 (US$0.03) in fiscal year 2024, compared to RMB0.69 in fiscal year 2023. Financial Condition As of December 31, 2024, the Company had cash of RMB18.6 million (US$2.5 million), compared to RMB15.1 million as of December 31, 2023. Net cash provided by operating activities was RMB41.0 million (US$5.6 million) in fiscal year 2024, compared to RMB48.2 million in fiscal year 2023. Net cash used in investing activities was RMB27.7 million (US$3.8 million) in fiscal year 2024, compared to RMB11.8 million in fiscal year 2023. Net cash used in financing activities was RMB22.1 million (US$3.0 million) in fiscal year 2024, compared to RMB19.0 million in fiscal year 2023. Exchange Rate Information This announcement contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi ("RMB") into U.S. dollars ("US$") were made at RMB7.2993 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2024. Recent Development On January 8, 2025, the Company closed its initial public offering (the "Offering"). We issued and sold an aggregate of 1,500,000 ordinary shares at a public offering price of $4.00 per ordinary share. On January 14, 2025, Kingswood Capital Partners, LLC, as the representative of the underwriters of the Offering, exercised their over-allotment option in full to purchase an additional 225,000 ordinary shares at the public offering price of $4.00 per share. The total gross proceeds received from the Offering, including proceeds from the exercise of the over-allotment option, were $6.9 million, before deducting underwriting discounts and other related expenses. The Company's ordinary shares commenced trading on the Nasdaq Capital Market on January 7, 2025, under the ticker symbol "ZYBT." On February 25, 2025, the Ministry of Agriculture and Rural Affairs ("the Ministry") approved the Live Vaccine for Mycoplasma bovis (Strain HB150) (2025 No.11) as a Category I New Veterinary Drug, which was jointly developed by the Company, Huazhong Agricultural University and other institutions. On March 21, 2025, the Ministry announced the approval (2025 No.18) of another Category I New Veterinary Drug — a Pentavalent Inactivated Vaccine for poultry diseases including Newcastle Disease, Infectious Bronchitis, Avian Influenza (H9), Infectious Bursal Disease, and Avian Adenovirus (Group I, Serotype 4), which was jointly developed by the Company, Pulike Biological Engineering, Inc. and other institutions. Both of these veterinary vaccines have obtained the national Category I Veterinary Drug Registration Certificate ("Category I Certificate"), marking a major breakthrough for the Company in the field of animal vaccine R&D. Category I Certificates are granted to biological products that demonstrate significant innovation and are being developed for the first time, either domestically or internationally, without prior market entry. Compared to Category II and III New Veterinary Drugs, Category I New Veterinary Drugs enjoy the longest monitoring period of up to five years. During this period, no other companies, except for the original applicants, are permitted to produce or import the drugs. This exclusivity creates a strong technological entry barrier and is expected to generate substantial economic returns while enhancing the Company's industry influence. About Zhengye Biotechnology Holding Limited Through Jilin Zhengye Biological Products Co., Ltd., the Company's operating entity based in Jilin, China, Zhengye Biotechnology Holding Limited focuses on the research, development, manufacturing and sales of veterinary vaccines, with an emphasis on vaccines for livestock. For over 20 years, the operating entity has been committed to enhancing the health of animals. The operating entity has 46 veterinary vaccines, including vaccines for swine, cattle, goats, sheep, poultry, and dogs. The operating entity's products are available in 28 provincial regions across China and are exported overseas to Vietnam, Pakistan, and Egypt. The operating entity has three GMP veterinary vaccine production floors, including 13 GMP vaccine production lines, one quality examination center, and one animal facility for vaccine development. The operating entity has 49 employees who have over a decade of experience in the veterinary vaccine industry. For more information, please visit the Company's website: http://ir.jlzybio.com. 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 the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as "approximates," "believes," "hopes," "expects," "anticipates," "estimates," "projects," "intends," "plans," "will," "would," "should," "could," "may" or other similar expressions in this announcement. The Company undertakes no obligation to update or revise publicly any 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 other filings with the SEC. For more information, please contact: Zhengye Biotechnology Holding Limited Investor Relations DepartmentEmail: [email protected] Ascent Investor Relations LLCTina XiaoPhone: +1-646-932-7242Email: [email protected] ZHENGYE BIOTECHNOLOGY HOLDING LIMITED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of RMB and US$, except for number of shares) As of December 31, 2023 2024 RMB RMB US$ ASSETS Current assets: Cash 15,073 18,604 2,549 Restricted Cash 12,113 2 — Short-term investments 1,224 1,433 197 Notes receivable, net 23,215 25,592 3,506 Accounts receivable, net 74,166 59,563 8,160 Advance to suppliers 3,110 10,788 1,478 Inventories, net 58,300 58,220 7,977 Other receivables, net 1,302 2,626 360 Other receivable-a related party 738 738 101 Total current assets 189,241 177,566 24,328 Non-current assets: Property, plant and equipment, net 263,248 255,164 34,957 Land use rights, net 8,187 7,930 1,087 Intangible assets, net 16,297 14,850 2,034 Long-term prepayments 6,504 18,698 2,562 Deferred IPO expenses 4,497 8,048 1,103 Net deferred tax assets 11,914 10,991 1,506 Total non-current assets 310,647 315,681 43,249 Total assets 499,888 493,247 67,577 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term loans 79,860 74,443 10,199 Current maturities of long term loans — 7,190 985 Accounts payable 45,659 42,960 5,885 Contract liabilities 3,885 3,485 477 Taxes payable 2,295 2,066 283 Dividends payable 15,652 — — Amount due to related parties — 146 20 Accrued expenses and other liabilities 2,882 5,617 769 Total current liabilities 150,233 135,907 18,618 Non-current liabilities: Long-term loans 9,990 4,800 658 Other payables – non-current 393 — — Total non-current liabilities 10,383 4,800 658 Total liabilities 160,616 140,707 19,276 Commitments and contingencies Shareholders' equity: Ordinary shares (US$0.000025 par value; 2,000,000,000 shares authorized; 45,666,376 shares issued and outstanding as of December 31, 2023 and 2024)* 8 8 1 Additional paid-in capital 203,150 203,150 27,832 Statutory reserves 31,311 32,647 4,473 Retained earnings 38,381 48,151 6,597 Accumulated other comprehensive income — 3 — Total Zhengye Biotechnology Holding Limited's shareholders' equity 272,850 283,959 38,903 Noncontrolling interests 66,422 68,581 9,398 Total equity 339,272 352,540 48,301 Total liabilities and equity 499,888 493,247 67,577 * Retroactively adjusted for effect of a 4-for-1 forward split on June 6, 2024. ZHENGYE BIOTECHNOLOGY HOLDING LIMITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Amounts in thousands of RMB and US$, except for number of shares and per share data) For the years ended December 31, 2022 2023 2024 RMB RMB RMB USD Net revenues 260,269 211,651 186,356 25,531 Cost of revenues (112,390) (94,143) (95,061) (13,023) Gross profit 147,879 117,508 91,295 12,508 Sales and marketing expenses (34,565) (40,743) (41,269) (5,654) General and administrative expenses (24,321) (23,592) (22,575) (3,093) Research and development expenses (13,424) (11,901) (12,794) (1,753) Reversal (allowance) for credit losses (9,735) 3,714 1,782 244 Total operating expenses (82,045) (72,522) (74,856) (10,256) Operating income 65,834 44,986 16,439 2,252 Other income (expenses): Other income 650 433 692 95 Other expenses (100) (199) (337) (45) Interest income 114 312 231 32 Interest expense (2,839) (4,423) (4,043) (554) Unrealized foreign exchange gain — — 679 93 Government subsidy 255 2,653 733 100 Total other expenses, net (1,920) (1,224) (2,045) (279) Income before income taxes 63,914 43,762 14,394 1,973 Income tax expenses (8,172) (6,253) (924) (127) Net income 55,742 37,509 13,470 1,846 Net income attributable to noncontrolling interests (9,007) (6,052) (2,159) (296) Net income attributable to the Zhengye Biotechnology Holding Limited's shareholders 46,735 31,457 11,311 1,550 Comprehensive income Net income 55,742 37,509 13,470 1,846 Other comprehensive income Foreign currency translation adjustment — — 3 — Total comprehensive income 55,742 37,509 13,473 1,846 Less: total comprehensive income attributable to non-controlling interest (9,007) (6,052) (2,159) (296) Total comprehensive income attributable to the Zhengye Biotechnology Holding Limited's shareholders 46,735 31,457 11,314 1,550 Earnings per share: Ordinary shares – basic and diluted 1.02 0.69 0.25 0.03 Weighted average shares outstanding used in calculating basic and diluted earnings per share: Ordinary shares – basic and diluted* 45,666,376 45,666,376 45,666,376 45,666,376 * Retroactively adjusted for effect of a 4-for-1 forward split on June 6, 2024. ZHENGYE BIOTECHNOLOGY HOLDING LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$, except for number of shares) For the years ended December 31, 2022 2023 2024 RMB RMB RMB US$ CASH FLOWS FROM OPERATING ACTIVITIES Net income 55,742 37,509 13,470 1,846 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,800 23,912 24,163 3,310 Allowance (reversal) for credit losses 9,735 (3,714) (1,782) (244) Impairment for inventory and intangible asset 968 10,026 5,962 817 Loss on disposal of property and equipment — 187 174 24 Deferred tax expenses (benefits) (1,311) 541 924 127 Unrealized gains on short-term investments — — (209) (29) Unrealized foreign exchange gain — — (679) (93) Changes in operating assets and liabilities: Notes receivable (22,650) 8,310 (3,752) (514) Accounts receivable (24,957) 31,044 16,345 2,240 Account receivable-a related party 233 — — — Inventories (12,325) (12,902) (5,882) (806) Other receivables (4) (563) (1,283) (176) Other receivable-a related party — (738) — — Advance to suppliers (713) (619) (7,677) (1,052) Accounts payable (9,673) (35,613) (404) (56) Taxes payable 3,191 (7,702) (229) (31) Accrued expense and other liabilities 207 (582) 2,698 370 Contract liabilities 317 (715) (400) (55) Other payables – non-current (225) (197) (393) (54) Net cash provided by operating activities 17,335 48,184 41,046 5,624 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of short-term investments — (1,224) — — Purchase of property, plant and equipment (27,328) (7,396) (13,587) (1,862) Prepayment for purchase of intangible assets — (4,204) (14,186) (1,943) Proceeds from disposal of property, plant and equipment — 1,059 108 15 Net cash used in investing activities (27,328) (11,765) (27,665) (3,790) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loans 99,852 79,860 90,122 12,347 Repayment of loans (64,972) (54,890) (92,860) (12,722) Proceeds from related parties — — 146 20 Dividend payment to shareholders (21,425) (39,452) (16,023) (2,195) Deferred IPO expenses — (4,497) (3,514) (481) Net cash provided by (used in) financing activities 13,455 (18,979) (22,129) (3,031) Net increase (decrease) in cash and restricted cash 3,462 17,440 (8,748) (1,197) Effect of exchange rate changes on cash — — 168 22 Cash and restricted cash at beginning of year 6,284 9,746 27,186 3,724 Cash and restricted cash at end of year 9,746 27,186 18,606 2,549 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest 2,839 4,423 3,985 546 Income taxes 8,481 10,486 116 16 NON-CASH INVESTING AND FINANCING ACTIVITIES: Liabilities assumed in connection with purchase of property, plant and equipment 11,379 2,345 8,633 1,183 SOURCE Zhengye Biotechnology Holding Limited WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Zhengye Biotechnology Holding Limited Announces Fiscal Year 2024 Financial Results

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