HARBIN, China, Aug. 12 /Xinhua-PRNewswire-FirstCall/ -- China Sky One Medical, Inc. ('China Sky One Medical' or 'the Company') (Amex: CSY), a China based developer, manufacturer, marketer and international distributor of pharmaceutical, medicinal and diagnostic products, today announced record financial results for the second quarter ended June 30, 2008.

    Second Quarter 2008 Highlights:
     -- Total revenues increased 62.1% to $23.7 million
     -- Gross profit increased 60.8% to $18.2 million; gross margin remained
        stable at 77%
     -- Operating income increased 96.1% to $10.1 million; operating margin
        improved to 42.6% from 35.2%
     -- Net income increased 91.9% to $8.1 million, or $0.50 per diluted share
     -- Completed acquisitions of Heilongjiang Tianlong Pharmaceutical Inc.
        and Heilongjiang Haina Pharmaceutical Inc.
     -- Entered into agreement to acquire pharmaceutical manufacturer Peng Lai
        Jin Chuang Company
     -- Received State Food and Drug Administration of China (SFDA) approval
        for six new drugs and five new patches
     -- Recognized by the Science and Technology Institute of Heilongjiang
     -- Began trading on American Stock Exchange

'We continued to see strong growth in product sales during the second quarter of 2008 and are very pleased with our record results,' said Mr. Yan- Qing Liu, Chairman, CEO and President of China Sky One Medical, Inc. 'By category, sales of ointments increased sharply during the second quarter, accounting for 28% of revenues. Top selling branded products included our Compound Camphor Cream and our Hemorrhoids Ointment. Sales of weight loss products, which include our top selling Slim Patch, also increased during the quarter, making up 25% of sales. That was followed by increases in sales of sprays, which made up 13% of revenues in the quarter, and sales of biochemical products, such as our diagnostic kits, which made up 10% of revenues.'

'In addition to our continued strong sales momentum during the quarter, we realized a number of significant accomplishments, including the listing of our common shares on the American Stock Exchange under the symbol 'CSY,' said Mr. Yan-Qing Liu. 'We completed the acquisitions of Heilongjiang Tianlong Pharmaceutical, Inc., which has a state-of-the-art manufacturing capabilities and a portfolio of 69 (SFDA) approved drugs with a strong pipeline, and Heilongjiang Haina Pharmaceutical, Inc., which has a Good Supply Practice (GSP) license that will allow us to expand our sales of medicinal products.' During the quarter, the Company also received approval from the (SFDA) for six new drugs, and five new patches.

On June 12, the Company entered into an agreement to acquire Peng Lai Jin Chuang Company ('Jin Chuang') for $4.6 million in China Sky One common stock and $2.5 million in cash. The Jin Chuang acquisition brings a portfolio of 20 approved drugs that are taken internally, an important addition to the Company's portfolio of products.

Second Quarter 2008 Results

Total revenues for the second quarter of 2008 grew 62.1% to $23.7 million from $14.6 million in the second quarter of 2007. This was primarily the result of strong performance associated with the Company's continued efforts to develop its sales distribution channels. Product sales increased 103% year- over-year to $21.9 million, accounting for 92.2% of total revenues. Contract sales decreased 52.3% to $1.8 million and accounted for 7.8% of revenues in the second quarter. In 2008, the Company began to discontinue contract sales as part of its strategic goals.

Gross profit in the second quarter of 2008 was $18.2 million, an increase of 60.8% over the same period a year ago. Gross margin was 76.7% of total revenues, in line with a gross margin of 77.4% for the second quarter of 2007.

Operating expenses in the second quarter of 2008 were $8.1 million, up 33% from $6.1 million in the second quarter of 2007. This increase was less than the increase in sales, and was primarily a result of higher selling, general and administrative expenses associated with the Company's sales growth. Research and development expenses were $1.3 million in the second quarter, compared to $0.3 million in the second quarter of 2007. Operating expenses were 34.1% of total revenues in the second quarter of 2008, down from 42.1% in the second quarter of 2007, due to efficiencies as the Company grows in scale.

Operating income was $10.1 million, compared with $5.2 million in the second quarter of 2007. Operating margin was 42.6%, compared to 35.2% in the second quarter of 2007. Provision for income taxes was $1.8 million in the second quarter of 2008, compared to $0.9 million in the same quarter of the previous year.

Net income for the second quarter of 2008 increased 91.9% to $8.1 million, or $0.50 per diluted share, compared to $4.2 million, or $0.34 per diluted share, in the second quarter of 2007. Fully diluted weighted average shares increased to 16,090,211 from 12,531,385 in the second quarter of 2007 due to common stock associated with the Company's private placement in February 2008 and the conversion of warrants.

Six Month Results

For the first half of 2008, revenues increased to $36.2 million, up 82.4% from $19.8 million in the corresponding period of 2007. Gross profit increased 80.5% to $27.8 million in the first six months of 2008, versus $15.4 million in the same period a year ago. Gross margin was 76.8% in the first half of 2008 compared to 77.6% during the first half of 2007. Operating income in the first half of 2008 grew 111.7% to $15 million compared to $7.1 million in the first half 2007.