China Sky One Medical (NSDQ: CSKI) reduced its guidance for 2010, blaming the shortfall on the loss of several major distributors. The company said the distributors ended their relationship with China Sky One after they discovered their business information was disclosed in SEC filings. This led to increased scrutiny in China, which was enough for them to stop doing business with China Sky One.
In actual numbers, China Sky One now expects revenues to drop from a forecasted $162 million to around $131 million, a decline of 19%. Net income is now predicted to come in 30% below the previous $40 million at about $28 million. Both sets of numbers exclude the impact of derivative warrant liabilities.
China Sky One says it will replace the distributors with new ones, but the process will take time and will increase the company’s Selling and Marketing costs in 2010.
The news sent the price of China Sky One shares lower by 29% to a 52-week low. It was trading at $6.90, down $2.79 in mid-session. The stock has traded in a range between $6.85 and $25.45 over the past 12 months. China Sky One’s market capitalization now stands at $116 million.
Disclosure: none.
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