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China Jo-Jo Drugstores Reports Fiscal Year 2019 Financial Results

HANGZHOU, China, July 1, 2019 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (CJJD) ("Jo-Jo Drugstores" or the "Company"), a leading online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products and a healthcare provider in China, today announced its financial results for the fiscal year ended March 31, 2019.

Mr. Lei Liu, Chairman and Chief Executive Officer of China Jo-Jo Drugstores, Inc., commented, "We are pleased to present our financial results for our 2019 fiscal year. We increased our top line revenue to $107.55 million for the 2019 fiscal year as compared to $96.11 million for the previous fiscal year. Over the course of the 2019 fiscal year we made great strides in improving our operations and made a key senior appointment by appointing Mr. Wei Hu to serve as our new Chief Operating Officer, to accelerate the transition and digitalization of our company in the rapidly evolving retail drugstore industry. We look forward to further improving our operations and continuing to provide effective and efficient services to our loyal customer base for the coming years." 

Fiscal Year 2019 Financial Highlights



For the Year Ended March 31,

($ millions, except per share data)


2019


2018


% Change

Revenue


107.55


96.11


11.9%

      Retail drugstores


72.34


61.98


16.7%

      Online pharmacy


8.78


12.13


(27.6)%

      Wholesale


26.43


22.00


20.1%

Gross profit


25.11


20.13


24.8%

Gross margin


23.3%


20.9%


2.4 pp*

Loss from operations


(0.88)


(18.02)


95.1%

Net loss


(1.32)


(17.06)


92.3%

Loss per share


(0.03)


(0.68)


95.6%

*Notes: pp represents percentage points

  • Revenues increased by 11.9% to $107.55 million for the fiscal year ended March 31, 2019 from $96.11 million for the prior fiscal year.
  • Gross profit increased by 24.8% to $25.11 million for the fiscal year ended March 31, 2019 from $20.13 million for prior fiscal year.
  • Gross margin increased by 2.4 percentage points to 23.3% for the fiscal year ended March 31, 2019 from 20.9% for the prior fiscal year.
  • Net loss was $1.32 million, or $0.03 per basic and diluted share, for the fiscal year ended March 31, 2019, compared to $17.06 million, or $0.68 per basic and diluted share, for the same period of last year, which is a decrease in loss.

Fiscal Year 2019 Financial Results

Revenue

Revenue for the fiscal year ended March 31, 2019 increased by $11.44 million, or 11.9%, to $107.55 million from $96.11 million for the prior fiscal year. The increase in revenue was primarily due to the revenue increase in retail drugstores and wholesale business, partially offset by the decrease in online sales business.



For the Year Ended March 31,



2019


2018

($ millions)


Revenue


Cost of
Goods


Gross Margin


Revenue


Cost of
Goods


Gross Margin

Retail drugstores


72.34


51.25


29.2%


61.98


45.92


25.9%

Online pharmacy


8.78


7.75


11.8%


12.13


10.86


10.5%

Wholesale


26.43


23.45


11.3%


22.00


19.21


12.7%

Total


107.55


82.44


23.3%


96.11


75.99


20.9%

Revenue from the retail drugstores business increased by $10.36 million, or 16.7%, to $72.34 million for the fiscal year ended March 31, 2019 from $61.98 million for the prior fiscal year. The increase was primarily due to consumer-facing benefits such as emphasis on onsite medical care, chronic disease management, incremental DTP (Direct-to-Patient) business caused by continuous hospital medical reform, and the maturation of stores opened a year ago.

Revenue from the online pharmacy business decreased by $3.35 million, or 27.6%, to $8.78 million for the fiscal year ended March 31, 2019 from $12.13 million for the prior fiscal year. The decrease was mainly caused by a decline in sales via e-commerce platforms which suspended OTC drug sales on their sites directly, offset by the increase in business referred from Pharmacy Benefit Management ("PBM") providers. The Company is adding more non-medical health products such as nutritional supplements into its product offerings to counteract the decline in sale of OTC drugs.

Revenue from the wholesale business increased by $4.43 million, or 20.1%, to $26.43 million for the fiscal year ended March 31, 2019 from $22.00 million for the prior fiscal year. The increase was primarily a result of the Company's ability to resell certain products, which the Company sold in large quantity at its retail stores, to other vendors at competitive prices, as well as sales of certain nutritional supplements to sales agents.

Gross profit and gross margin

Total cost of goods sold increased by $6.45 million, or 8.5%, to $82.44 million for the fiscal year ended March 31, 2019 from $75.99 million for the prior fiscal year. Gross profit increased by $4.99 million, or 24.8%, to $25.11 million for the fiscal year ended March 31, 2019 from $20.13 million for the prior fiscal year. Overall gross margin increased by 2.4 percentage points to 23.3% for the fiscal year ended March 31, 2019, from 20.9% for the prior fiscal year, due to higher retail profit margins.

Gross margin for the Company's retail drugstores segment increased by 3.3 percentage points to 29.2% for the fiscal year ended March 31, 2019, from 25.9% for the prior fiscal year, primarily because of the introduction of new suppliers, and the continuing renegotiating of prices with the Company's suppliers.

Gross margin for the online pharmacy segment increased by 1.3 percentage points to 11.8% for the fiscal year ended March 31, 2019, from 10.5% for the prior fiscal year, primarily due to the increase in sales via the Company's own official website, offset by decrease in sale via third-party platforms, which are usually subject to low profit margin.

Gross margin for the Company's wholesale segment decreased by 1.4 percentage to 11.3% for the fiscal year ended March 31, 2019, from 12.7% for the prior fiscal year, primarily as a result of variation in the products the Company carries and sells to certain pharmaceutical vendors.

Loss from operations

Selling and marketing expenses increased by $5.53 million, or 29.5%, to $24.27 million for the fiscal year ended March 31, 2019 from $18.74 million for the prior fiscal year, primarily due to increases in labor and rent related to store expansions and increases in the cost of living.

General and administrative expenses decreased by $16.10 million, or 90.4%, to $1.72 million for the fiscal year ended March 31, 2019 from $17.82 million for the prior fiscal year. In fiscal 2019, in order to use cash more efficiently, the Company accelerated the collection of advances to suppliers and accounts receivables. Specifically, we focused on the collection of aged accounts of advances to suppliers and accounts receivable. As the Company has collected these amounts, its allowance on doubtful accounts decreased by approximately $7.7 million. Additionally, the Company's stock compensation expense decreased by approximately $6.8 million primarily as a result of issuing shares to its key employees in fiscal 2018. Excluding such expenses, general and administrative expenses decreased by approximately $1.6 million or 9%, which reflects control of expense such as overall management cash compensation in fiscal year 2019. 

Impairment of long-lived assets was nil for the fiscal year ended March 31, 2019, compared to $1.58 million for the prior fiscal year. On March 31, 2018, Jiuxin Medicine started outsourcing its logistic service to Astro Boy Cloud Pan (Hangzhou) Storage and Logistic Co. Ltd, Jiuxin Medicine's warehouse lease has been terminated. As a result, approximately $1.58 million in unamortized warehouse improvements were recognized as expenses in the year ended March 31, 2018. Such impairment was made after the Company estimated that the implied fair value of long-lived assets was lower than their carrying value.

Loss from operations was $0.88 million for the fiscal year ended March 31, 2019, compared to $18.02 million for the prior fiscal year. Operating margin was negative 0.8% for the fiscal year ended March 31, 2019, compared to negative 18.8% for the prior fiscal year.

Net loss

Net loss was $1.32 million, or $0.03 per basic and diluted share for the fiscal year ended March 31, 2019, compared to net loss of $17.06 million, or $0.68 per basic and diluted share for the prior fiscal year.

Financial Condition

As of March 31, 2019, the Company had cash of $24.75 million, compared to $31.45 million as of March 31, 2018. Net cash used in operating activities was $5.60 million for the fiscal year ended March 31, 2019, compared to $2.07 million for the prior fiscal year. Net cash used in investing activities was $7.33 million for the fiscal year ended March 31, 2019, compared to $2.98 million for the prior fiscal year. Net cash provided by financing activities was $8.08 million for the fiscal year ended March 31, 2018, compared to net cash used in financing activities of $4.89 million for the prior fiscal 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 in China. Jo-Jo Drugstores currently operates retail drugstores and an online pharmacy. It is also a wholesale distributor of products similar to those carried in its pharmacies and it cultivates and sells 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
+86-571-88219579
frank.zhao@jojodrugstores.com

Steve Liu
Investor Relations Director
steve.liu@jojodrugstores.com

Investor Relations Contact:

Tina Xiao
Ascent Investor Relations LLC
+1-917-609-0333
tina.xiao@ascent-ir.com

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS










March 31,



March 31,




2019



2018


ASSETS







CURRENT ASSETS







Cash


$

9,322,463



$

15,132,640


Restricted cash



15,422,739




16,319,551


Financial assets available for sale



180,928




175,140


Notes receivable



177,278




279,082


Trade accounts receivable



8,692,514




8,322,393


Inventories



13,955,202




13,429,568


Other receivables, net



4,438,230




3,098,079


Advances to suppliers



1,950,252




3,447,452


Other current assets



2,063,375




2,116,237


Total current assets



56,202,981




62,320,142











PROPERTY AND EQUIPMENT, net



8,727,358




2,843,640











OTHER ASSETS









Long-term investment



24,243




40,890


Farmland assets



825,259




796,286


Long term deposits



2,157,275




2,501,968


Other noncurrent assets



1,196,197




1,253,352


Intangible assets, net



3,597,323




4,056,414


Total other assets



7,800,297




8,648,910











Total assets


$

72,730,636



$

73,812,692











LIABILITIES AND STOCKHOLDERS' EQUITY









CURRENT LIABILITIES









Accounts payable, trade



23,106,230




25,259,526


Notes payable



25,951,673




19,180,200


Other payables



3,197,221




4,272,523


Other payables - related parties



795,179




850,342


Customer deposits



771,942




4,040,867


Taxes payable



125,859




366,040


Accrued liabilities



1,264,182




841,993


Total current liabilities



55,212,286




54,811,491











 Financial liability



465,248




-


Purchase option and warrants liability



81,935




138,796


Total liabilities



55,759,469




54,950,287











COMMITMENTS AND CONTINGENCIES


















STOCKHOLDERS' EQUITY









Common stock; $0.001 par value; 250,000,000 shares authorized; 28,936,778 and 28,936,778 shares issued and outstanding as of March 31, 2019 and March 31, 2018



28,937




28,937


Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of March 31, 2019 and March 31, 2018



-




-


Additional paid-in capital



44,905,664




43,599,089


Statutory reserves



1,309,109




1,309,109


Accumulated deficit



(30,587,468)




(29,661,190)


Accumulated other comprehensive income



2,508,964




3,586,460


Total stockholders' equity



18,165,206




18,862,405


Noncontrolling interests



(1,194,039)




-


Total equity



16,971,167




18,862,405


Total liabilities and stockholders' equity


$

72,730,636



$

73,812,692


 

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)






For the years ended
March 31,




2019



2018


REVENUES, NET


$

107,551,012



$

96,112,706











COST OF GOODS SOLD



82,442,969




75,987,537











GROSS PROFIT



25,108,043




20,125,169











SELLING EXPENSES



24,265,184




18,739,492


GENERAL AND ADMINISTRATIVE EXPENSES



1,718,989




17,823,661


IMPAIRMENT OF LONG-LIVED ASSETS



-




1,583,186


TOTAL OPERATING EXPENSES



25,984,173




38,146,339











LOSS FROM OPERATIONS



(876,130)




(18,021,170)











INTEREST INCOME



112,887




478,976


OTHER INCOME, NET



(93,311)




201,096


CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS LIABILITY



(326,452)




357,421











LOSS BEFORE INCOME TAXES



(1,183,006)




(16,983,677)











PROVISION FOR INCOME TAXES



134,763




76,256











NET LOSS



(1,317,769)




(17,059,933)











ADD: NET (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST



391,491




-











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



(926,278)




(17,059,933)











OTHER COMPREHENSIVE LOSS









Foreign currency translation adjustments



(1,077,496)




2,236,398











COMPREHENSIVE LOSS



(2,395,265)




(14,823,535)











WEIGHTED AVERAGE NUMBER OF SHARES:









Basic



28,936,778




25,241,748


Diluted



28,936,778




25,241,748











LOSS PER SHARES:









Basic


$

(0.03)



$

(0.68)


Diluted


$

(0.03)



$

(0.68)


 

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS





For the years ended
March 31,




2019



2018


CASH FLOWS FROM OPERATING ACTIVITIES:







Net income


$

(1,317,769)



$

(17,059,933)


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









Bad debt direct write-off and provision



(3,357,851)




4,009,636


Depreciation and amortization



1,676,413




1,383,810


Impairment of leasehold improvement







1,583,186


Stock based compensation



197,100




7,021,563


Change in fair value of purchase option derivative liability



326,452




(357,421)


Change in operating assets:









Accounts receivable, trade



(116,810)




(2,072,486)


Notes receivable



83,910




(1,005)


Inventories and biological assets



(1,390,823)




(2,411,209)


Other receivables



(1,308,437)




(489,334)


Advances to suppliers



3,612,453




1,121,006


Long term deposit



183,841




15,103


Other current assets



(83,372)




(377,391)


Other noncurrent assets



(23,511)




36,091


Change in operating liabilities:









Accounts payable, trade



(528,353)




3,726,625


Other payables and accrued liabilities



(328,473)




1,115,267


Customer deposits



(3,011,194)




1,048,939


Taxes payable



(216,792)




(362,513)


Net cash provided by operating activities



(5,603,216)




(2,070,066)











CASH FLOWS FROM INVESTING ACTIVITIES:









Disposal of financial assets available for sale



87,290




-


Purchase of financial assets available for sale



(104,360)




(75,513)


Acquisition of equipment and building



(5,450,934)




(414,398)


Increase intangible assets



(29,817)




(1,140,102




















Additions to leasehold improvements



(1,828,360)




(1,347,489)


Net cash provided by (used in) investing activities



(7,326,181)




(2,977,502)











CASH FLOWS FROM FINANCING ACTIVITIES:









Proceeds from notes payable



42,030,521




27,461,423


Repayment of notes payable



(34,018,811)




(22,476,740)


Increase in financial liability



81,997




-


Proceeds from sale of stock and warrants



7,529




-


Repayment of other payables-related parties



(22,655)




(91,395)


Net cash provided by (used in) financing activities



8,078,581




4,893,288











EFFECT OF EXCHANGE RATE ON CASH



(1,856,174)




3,810,661











(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH



(6,706,989)




3,656,381











CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year



31,452,191




27,795,810











CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year


$

24,745,202



$

31,452,191











SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


















Cash paid for income taxes


$

56,422



$

27,825


Cision

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