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China Jo-Jo Drugstores Reports Third Quarter 2020 Financial Results

PR Newswire Asia Friday, 14 February 2020 ()
China Jo-Jo Drugstores Reports Third Quarter 2020 Financial ResultsHANGZHOU, China, Feb. 14, 2020 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: CJJD) ("Jo-Jo Drugstores" or the "Company"), a leading online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products and a provider of healthcare services in China, today announced its financial results for the third fiscal quarter ended December 31, 2019.

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, "We delivered outstanding financial results for the third quarter of 2020, with revenue recording $33.36 million, up 7.9% compared to the same period of last year. Benefiting from the growth in retail drugstores and online pharmacy businesses as well as our strong competitive position in the industry, all of our core businesses performed in line with our expectation. Looking forward, amidst the outbreak of 2019 Novel Coronavirus, we are striving to optimize our inventory and operational execution with effective distribution channels to meet the strong domestic demand of pharmaceutical and other healthcare products as well as healthcare services. We are confident that our professional team is able to deliver compelling value to our customers and the communities we serve. We will continue to focus on successful execution of our long-term growth strategies to unleash the full potential of our consumer-centric healthcare business model and create value for all shareholders." 

*Third Quarter of Fiscal 2020 Financial Highlights*
*For the Three Months Ended December 31,*

($ millions, except per share data)


*2019*


*2018*


*% Change*

Revenue


33.36


30.92


7.9%
     Retail drugstores


21.58


20.87


3.4%
     Online pharmacy


3.96


2.49


59.0%
     Wholesale


7.82


7.56


3.5%

Gross profit


7.28


7.14


2.1%

Gross margin


21.8%


23.1%


-1.3 pp*

Income (Loss) from operations


0.55


(2.13)


NM

Net income (loss)


0.46


(2.21)


NM

Earnings (loss) per share


0.02


(0.06)


NM

*Notes: pp represents percentage points

· Revenue increased by 7.9% to $33.36 million for the three months ended December 31, 2019 from $30.92 million for the same period of last year.
· Gross profit increased by 2.1% to $7.28 million for the three months ended December 31, 2019 from $7.14 million for the same period of last year.
· Gross margin decreased by 1.3 percentage points to 21.8% from 23.1% for the same period of last year.
· Net income was $0.46 million, or $0.02 per basic and diluted share, for the three months ended December 31, 2019, compared to net loss of $2.21 million, or $0.06 per basic and diluted share, for the same period of last year.

*Third Quarter of Fiscal 2020 Financial Results*

Revenue

Revenue for the three months ended December 31, 2019 increased by $2.45 million, or 7.9%, to $33.36 million from $30.92 million for the same period of last year. The increase in revenue was primarily due to the growth in retail drugstores and online pharmacy business.
*For the Three Months Ended December 31,*
*2019*


*2018*

($ millions)


*Revenue*


*Cost of
Goods*


*Gross
Margin*


*Revenue*


*Cost of
Goods*


*Gross
Margin*

Retail drugstores


21.58


15.39


28.7%


20.87


14.90


28.6%

Online pharmacy


3.96


3.64


8.2%


2.49


2.23


10.4%

Wholesale


7.82


7.05


9.9%


7.56


6.65


12.1%

*Total*


33.36


26.08


21.8%


30.92


23.78


23.1%

Revenue from the retail drugstores business increased by $0.71 million, or 3.4%, to $21.58 million for the three months ended December 31, 2019 from $20.87 million for the same period of last year. The increase was primarily attributable to the consumer-facing benefits we provided, such as on-site medical care, chronic disease management services, incremental "Direct-to-Patient" ("DTP") business caused by continuous hospital medical reform, and maturing of stores opened a year ago.

Revenue from the online pharmacy business increased by $1.47 million, or 59.0%, to $3.96 million for the three months ended December 31, 2019 from $2.49 million for the same period of last year. The increase was primarily caused by an increase in sales via e-commerce platforms such as Tmall, offset slightly by the decline in sales via the Company's official site. Popular products at reasonable prices are key to success in online business. In order to promote the Company's sales, the Company focused on the selection of medical equipment suitable to local customers. Additionally, as more and more customers switch to online OTC drug shopping, the Company's OTC drug sales grew too.

Revenue from the wholesale business increased by $0.26 million, or 3.5%, to $7.82 million for the three months ended December 31, 2019 from $7.56 million for the same period of last year. The increase was primarily a result of the Company's ability to resell certain products, which the Company sold in large quantities at its retail stores, to other vendors at competitive prices.

Gross profit and gross margin

Total cost of goods sold increased by $2.30 million, or 9.7%, to $26.08 million for the three months ended December 31, 2019 from $23.78 million for the same period of last year. Gross profit increased by $0.14 million, or 2.1%, to $7.28 million for three months ended December 31, 2019 from $7.14 million for the same period of last year. Overall gross margin decreased by 1.3 percentage points to 21.8% for the three months ended December 31, 2019, from 23.1% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 28.7%, 8.2%, and 9.9%, respectively, for the three months ended December 31, 2019, compared to the corresponding gross margins of 28.6%, 10.4%, and 12.1%  for the same period of last year.

Income (Loss) from operations

Selling and marketing expenses decreased by $1.01 million, or 15.1%, to $5.68 million for the three months ended December 31, 2019 from $6.69 million for the same period of last year. The decrease in selling and marketing expenses was primarily because the Company has outsourced logistic service to Astro Boy Cloud Pan (Hangzhou) Storage and Logistic Co. Ltd ("Astro Boy Logistic") since April 2019.

General and administrative expenses decreased by $1.52 million, or 59.0%, to $1.05 million for the three months ended December 31, 2019 from $2.57 million for the same period of last year. As the medical reform has been moving along in China, the central government of China promulgated a series of policies to significantly push down the prices of certain drugs covered by the National Health Insurance. Local government even deferred payments to certain clinics and drugstores on the drugs which the local government believes were sold above the government's designated price range. The price restriction and potential payment deferral may cut the profit and affect the Company's operating cash flow. To be safe, in the three months ended December 31, 2019, the Company actively negotiated with certain customers and made efforts to collect certain aged accounts receivable. As a result, the Company reversed bad debt allowance of $0.79 million. In comparison, the Company recorded additional bad debts allowance of $0.37 million in the three months ended December 31, 2018.

Income from operations was $0.55 million for the three months ended December 31, 2019, compared to loss from operations of $2.13 million for the same period of last year. Operating margin was 1.7% for the three months ended December 31, 2019, compared to operating loss of 6.9% for the same period of last year.

Net income (loss)

Net income was $0.46 million, or $0.02 per basic and diluted share for the three months ended December 31, 2019, compared to net loss of $2.21 million, or $0.06 per basic and diluted share for the same period of last year.

*Nine months ended December 31, 2019 Financial Highlights*
*For the Nine Months Ended December 31,*

($ millions, except per share data)


*2019*


*2018*


*% Change*

Revenue


87.00


81.10


7.3%
     Retail drugstores


56.31


54.97


2.4%
     Online pharmacy


8.76


6.64


32.0%
     Wholesale


21.93


19.49


12.5%

Gross profit


20.04


18.55


8.0%

Gross margin


23.0%


22.9%


0.1 pp*

Income (Loss) from operations


(3.82)


(4.33)


11.8%

Net income (loss)


(3.27)


(4.51)


27.5%

Earnings (loss) per share


(0.09)


(0.14)


35.7%

*Notes: pp represents percentage points

· Revenue increased by 7.3% to $87.00 million for the nine months ended December 31, 2019 from $81.10 million for the same period of last year.
· Gross profit increased by 8.0% to $20.04 million for the nine months ended December 31, 2019 from $18.55 million for the same period of last year.
· Gross margin increased by 0.1 percentage points to 23.0% from 22.9% for the same period of last year.
· Net loss was $3.27 million, or $0.09 per basic and diluted share, for the nine months ended December 31, 2019, compared to $4.51 million, or $0.14 per basic and diluted share, for the same period of last year.

*Nine months ended December 31, 2019 Financial Results*

Revenue

Revenue for the nine months ended December 31, 2019 increased by $5.90 million, or 7.3%, to $87.00 million from $81.10 million for the same period of last year. The increase in revenue was primarily due to the increase in wholesale and online pharmacy business.
*For the Nine Months Ended December 31,*
*2019*


*2018*

($ millions)


*Revenue*


*Cost of
Goods*


*Gross
Margin*


*Revenue*


*Cost of
Goods*


*Gross
Margin*

Retail drugstores


56.31


39.54


29.8%


54.97


39.35


28.4%

Online pharmacy


8.76


7.77


11.3%


6.64


5.88


11.4%

Wholesale


21.93


19.65


10.4%


19.49


17.32


11.1%

*Total*


87.00


66.96


23.0%


81.10


62.55


22.9%

Revenue from the retail drugstores business increased by $1.34 million, or 2.4%, to $56.31 million for the nine months ended December 31, 2019 from $54.97 million for the same period of last year. The increase was primarily attributable to the consumer-facing benefits we provided, such as onsite medical care, chronic disease management services, incremental DTP business caused by continuous hospital medical reform, and maturing of stores opened a year ago.

Revenue from the online pharmacy business increased by $2.12 million, or 32.0%, to $8.76 million for the nine months ended December 31, 2019 from $6.64 million for the same period of last year. The increase was primarily caused by an increase in sales via e-commerce platforms such as Tmall, offset slightly by the decline in sales via the Company's official site.

Revenue from the wholesale business increased by $2.44 million, or 12.5%, to $21.93 million for the nine months ended December 31, 2019 from $19.49 million for the same period of last year. The increase was primarily a result of the Company's ability to resell certain products, which the Company sold in large quantities at its retail stores, to other vendors at competitive prices.

Gross profit and gross margin

Total cost of goods sold increased by $4.41 million, or 7.1%, to $66.96 million for the nine months ended December 31, 2019 from $62.55 million for the same period of last year. Gross profit increased by $1.49 million, or 8.0%, to $20.04 million for the nine months ended December 31, 2019 from $18.55 million for the same period of last year. Overall gross margin increased by 0.1 percentage points to 23.0% for the nine months ended December 31, 2019, from 22.9% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 29.8%, 11.3%, and 10.4%, respectively, for the nine months ended December 31, 2019, compared to the corresponding gross margins of 28.4%, 11.4%, and 11.1% for the same period of last year.

Income (Loss) from operations

Selling and marketing expenses increased by $1.59 million, or 9.6%, to $18.13 million for the nine months ended December 31, 2019 from $16.54 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increases in labor related to the Company's store expansions and rising local cost of living.

General and administrative expenses decreased by $0.61 million, or 9.7%, to $5.73 million for the nine months ended December 31, 2019 from $6.34 million for the same period of last year. In the nine months ended December 31, 2019, the Company reversed bad debt allowance of $0.2 million. In comparison, the Company recorded additional bad debts allowance of $1.27 million for the nine months ended December 31, 2018. 

Loss from operations was $3.82 million for the nine months ended December 31, 2019, compared to $4.33 million for the same period of last year. Operating loss was 4.4% for the nine months ended December 31, 2019, compared to 5.3% for the same period of last year.

Net income (loss)

Net loss was $3.27 million, or $0.09 per basic and diluted share for the nine months ended December 31, 2019, compared to net loss of $4.51 million, or $0.14 per basic and diluted share for the same period of last year.

*Financial Condition*

As of December 31, 2019, the Company had cash of $11.86 million, compared to $9.32 million as of March 31, 2019. Net cash used in operating activities was $11.27 million for the nine months ended December 31, 2019, compared to $10.32 million for the same period of last year. Net cash used in investing activities was $1.71 million for the nine months ended December 31, 2019, compared to $6.85 million for the same period of last year. Net cash provided by financing activities was $12.70 million for the nine months ended December 31, 2019, compared to $7.98 million for the same period of last year.

*About China Jo-Jo Drugstores, Inc.*

China Jo-Jo Drugstores, Inc. ("Jo-Jo Drugstores" or the "Company"), is a leading online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products and a provider of healthcare services in China. Jo-Jo Drugstores currently operates an online pharmacy and retail drugstores with licensed doctors on site for consultation, examination and treatment of common ailments at scheduled hours. It is also a wholesale distributor of products similar to those carried in its pharmacies. In addition, Jo-Jo Drugstores cultivates herbs used for traditional Chinese medicine. For more information about the Company, please visit http://jiuzhou360.com. The Company routinely posts important information on its website.

*Forward-Looking Statements*

This press release contains information about the Company's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. The Company's encourages you to review other factors that may affect its future results in the Company's annual reports and in its other filings with the Securities and Exchange Commission.

*For more information, please contact:*

*Company Contact:  *

Frank Zhao
Chief Financial Officer
+86-571-88077108
[email protected]

Steve Liu
Investor Relations Director
[email protected]

*Investor Relations Contact: *

Tina Xiao
Ascent Investor Relations LLC
+1-917-609-0333
[email protected]    


CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(UNAUDITED)


December 31,



March 31,


2019



2019



ASSETS








CURRENT ASSETS








Cash


$

11,858,985



$

9,322,463



Restricted cash



12,035,385




15,422,739



Financial assets available for sale



159,946




180,928



Notes receivable



48,768




177,278



Trade accounts receivable



11,465,402




8,692,514



Inventories



10,962,677




13,955,202



Other receivables, net



5,862,408




4,438,230



Advances to suppliers



1,393,247




1,950,252



Other current assets



1,505,995




2,063,375



Total current assets



55,292,813




56,202,981










PROPERTY AND EQUIPMENT, net



8,097,428




8,727,358










OTHER ASSETS










Long-term investment



9,846




24,243



Farmland assets



747,782




825,259



Long term deposits



1,481,929




2,157,275



Other noncurrent assets



1,134,643




1,196,197



Operating lease right-of-use assets



15,318,428




-



Intangible assets, net



3,715,629




3,597,323



Total other assets



22,408,257




7,800,297



Total assets


$

85,798,498



$

72,730,636










LIABILITIES AND STOCKHOLDERS' EQUITY










CURRENT LIABILITIES










Accounts payable, trade



15,870,874




23,106,230



Notes payable



21,758,227




25,951,673



Other payables



2,590,186




3,197,221



Other payables - related parties



375,068




795,179



Customer deposits



1,201,464




771,942



Taxes payable



433,026




125,859



Accrued liabilities



793,942




1,264,182



Long-term loan - current portion



2,302,924




-



Current portion of operating lease liabilities



409,756




-



Total current liabilities



45,735,467




55,212,286



Long-term loan



4,773,114




-



Long term operating lease liabilities



12,670,694




-



Purchase option and warrants liability



120,000




465,248



Financial liability



71,757




81,935



Total liabilities



63,371,032




55,759,469










COMMITMENTS AND CONTINGENCIES

















STOCKHOLDERS' EQUITY










Common stock; $0.001 par value; 250,000,000 shares authorized; 32,936,786 and
28,936,778 shares issued and outstanding as of December 31, 2019 and March 31,
2019



32,937




28,937



Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and
outstanding as of December 31, 2019 and March 31, 2019



-




-



Additional paid-in capital



54,209,301




44,905,664



Statutory reserves



1,309,109




1,309,109



Accumulated deficit



(33,415,600)




(30,587,468)



Accumulated other comprehensive income



1,926,259




2,508,964



Total stockholders' equity



24,062,006




18,165,206



Noncontrolling interests



(1,634,540)




(1,194,039)



Total equity



22,427,466




16,971,167



Total liabilities and stockholders' equity


$

85,798,498



$

72,730,636

 


CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) 

(UNAUDITED)


For the three months ended
December 31,



For the nine months ended
December 31,


2019



2018



2019



2018














REVENUES, NET


$

33,363,282



$

30,916,549



$

86,997,845



$

81,098,161


















COST OF GOODS SOLD



26,079,910




23,780,763




66,959,671




62,548,471


















GROSS PROFIT



7,283,372




7,135,786




20,038,174




18,549,690


















SELLING EXPENSES



5,676,400




6,688,577




18,130,799




16,539,078



GENERAL AND ADMINISTRATIVE EXPENSES



1,054,060




2,572,862




5,729,607




6,342,874



TOTAL OPERATING EXPENSES



6,730,460




9,261,439




23,860,406




22,881,952


















INCOME (LOSS) FROM OPERATIONS



552,912




(2,125,653)




(3,822,232)




(4,332,262)


















INTEREST INCOME



272,773




18,964




661,160




92,196



OTHER INCOME (LOSS), NET



(302,408)




32,795




(437,118)




12,436


















CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITIES



(65,172)




(85,115)




345,248




(173,955)


















INCOME (LOSS) BEFORE INCOME TAXES



458,105




(2,159,009)




(3,252,942)




(4,401,585)


















PROVISION FOR INCOME TAXES



2,184




47,958




16,274




104,712


















NET INCOME (LOSS)



455,921




(2,206,967)




(3,269,216)




(4,506,297)


















ADD: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTEREST



75,861




528,736




441,084




594,796


















NET INCOME (LOSS) ATTRIBUTABLE TO CHINA JO-
JO DRUGSTORES, INC.



531,782




(1,678,231)




(2,828,132)




(3,911,501)


















Foreign currency translation adjustments



358,868




(130,619)




(582,705)




(957,646)


















COMPREHENSIVE INCOME (LOSS)


$

814,789



$

(2,337,586)



$

(3,851,921)



$

(5,463,943)


















WEIGHTED AVERAGE NUMBER OF SHARES:


















Basic



32,936,786




28,936,778




32,776,786




28,936,778



Diluted



32,936,786




28,936,778




32,776,786




28,936,778


















EARNINGS PER SHARES:


















Basic


$

0.02



$

(0.06)



$

(0.09)



$

(0.14)



Diluted


$

0.02



$

(0.06)



$

(0.09)



$

(0.14)

 


CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


For the
nine months ended
December 31,


2019



2018



CASH FLOWS FROM OPERATING ACTIVITIES:








Net loss


$

(3,269,216)



$

(4,506,297)



Adjustments to reconcile net income to net cash provided by operating activities:










Bad debt direct write-off and provision



(29,038)




1,266,994



Depreciation and amortization



1,572,925




937,268



Stock based compensation



34,560




121,547



Change in fair value of purchase option derivative liability



(345,248)




173,955



Accounts receivable, trade



(2,581,208)




(4,061,698)



Notes receivable



122,175




(43,024)



Inventories and biological assets



2,484,432




1,828,232



Other receivables



(1,353,544)




(681,667)



Advances to suppliers



(222,928)




(911,061)



Other current assets



(1,758,533)




476,909



Long term deposit



597,084




18,548



Other noncurrent assets



17,744




23,206



Accounts payable, trade



(6,397,104)




(3,945,980)



Other payables and accrued liabilities



(917,398)




815,725



Customer deposits



458,415




(2,258,202)



Taxes payable



312,192




422,665



Net cash used in operating activities



(11,274,690)




(10,322,880)










CASH FLOWS FROM INVESTING ACTIVITIES:










Disposal of financial assets available for sale



14,370




87,471



Purchase of financial assets available for sale



-




(104,577)



Acquisition of equipment



(561,677)




(5,368,240)



Increase in intangible assets



(461,013)




(29,879)



Investment in a joint venture



-




-



Additions to leasehold improvements



(705,856)




(1,432,060)



Net cash used in investing activities



(1,714,176)




(6,847,285)










CASH FLOWS FROM FINANCING ACTIVITIES:










Proceeds from third parties loan



7,085,406




-



Proceeds from notes payable



36,537,832




32,903,549



Repayment of notes payable



(39,784,592)




(24,930,903)



Increase in financial liability



(7,185)




82,167



Proceeds from equity financing



9,273,077




7,544



Repayment of other payables-related parties



(406,506)




(82,866)



Net cash provided by financing activities



12,698,032




7,979,491










EFFECT OF EXCHANGE RATE ON CASH



(559,998)




(1,653,988)










DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH



(850,832)




(10,844,662)










CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period



24,745,202




31,452,191










CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period


$

23,894,370



$

20,607,529










SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:










Cash paid for income taxes


$

17,215



$

56,539

 

View original content:http://www.prnewswire.com/news-releases/china-jo-jo-drugstores-reports-third-quarter-2020-financial-results-301005092.html

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