China Jo-Jo Drugstores Reports Fiscal Year 2020 Financial Results

    HANGZHOU, China, July 10, 2020 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: CJJD) ("Jo-Jo Drugstores" or the "Company"), a leading online and offline retailer, wholesale distributor of pharmaceutical and other healthcare products and healthcare provider in China, today announced its financial results for the fiscal year ended March 31, 2020.

    Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, "We are pleased to present our financial results for our 2020 fiscal year. Our revenue records $117.33 million for the fiscal year of 2020, up 9.1% compared to $107.55 million for the previous fiscal year. Revenue from retail drugstores, online pharmacy, and wholesale segments increased by 2.4%, 54.1% and 12.4% respectively, demonstrating our ability to realize the potential of our business model. When facing the pandemic of COVID-19, we are uniquely positioned to understand consumer and market needs and how to address them. We will continue monitoring the latest developments and taking appropriate measures to combat the COVID-19 pandemic and provide supports to our customers and the society. Looking forward, we are confident that we are on the right track to deliver significant value to all our investors and shareholders as we have a leading consumer brand in China with a diversified portfolio of essential health care businesses and we will continue to endeavor to provide the best experience to our customers."

    Fiscal Year 2020 Financial Highlights



    For the Year Ended March 31,

    ($ millions, except per share data)


    2020


    2019


    % Change

    Revenue


    117.33


    107.55


    9.1%

          Retail drugstores


    74.08


    72.33


    2.4%

          Online pharmacy


    13.54


    8.78


    54.1%

          Wholesale


    29.71


    26.43


    12.4%

    Gross profit


    25.53


    25.11


    1.7%

    Gross margin


    21.8%


    23.3%


    -1.5 pp*

    Loss from operations


    (7.00)


    (0.88)


    -699.4%

    Net loss


    (6.46)


    (1.32)


    -390.0%

    Loss per share


    (0.18)


    (0.03)


    -500.0%


    *Notes: pp represents percentage points

    • Revenue increased by 9.1% to $117.33 million for the fiscal year ended March 31, 2020 from $107.55 million for the prior fiscal year.
    • Gross profit increased by 1.7% to $25.53 million for the fiscal year ended March 31, 2020 from $25.11 million for the prior fiscal year.
    • Gross margin decreased by 1.5 percentage points to 21.8% for the fiscal year ended March 31, 2020 from 23.3% for the prior fiscal year.
    • Net loss was $6.46 million, or $0.18 per basic and diluted share, for the fiscal year ended March 31, 2020, compared to net loss of $1.32 million, or $0.03 per basic and diluted share, for the prior fiscal year.

    Fiscal Year 2020 Financial Results

    Revenue

    Revenue for the fiscal year ended March 31, 2020 increased by $9.78 million, or 9.1%, to $117.33 million from $107.55 million for the prior fiscal year. The increase in revenue was primarily due to the growth in retail drugstores, online pharmacy and wholesale business.



    For the Year Ended March 31,



    2020


    2019

    ($ millions)


    Revenue


    Cost of
    Goods


    Gross
    Margin


    Revenue


    Cost of
    Goods


    Gross
    Margin

    Retail drugstores


    74.08


    53.24


    28.1%


    72.34


    51.24


    29.2%

    Online pharmacy


    13.54


    12.11


    10.6%


    8.78


    7.75


    11.8%

    Wholesale


    29.71


    26.45


    11.0%


    26.43


    23.45


    11.3%

    Total


    117.33


    91.80


    21.8%


    107.55


    82.44


    23.3%

    Revenue from the retail drugstores business increased by $1.74 million, or 2.4%, to $74.08 million for the fiscal year ended March 31, 2020 from $72.34 million for the prior fiscal year. The increase was primarily attributable to the consumer-facing benefits, such as on-site medical care, chronic disease management services, incremental DTP (Direct-to-Patient) business caused by continuous hospital medical reform, and maturing of stores opened a year ago.

    Revenue from the online pharmacy business increased by $4.76 million, or 54.1%, to $13.54 million for the fiscal year ended March 31, 2020 from $8.78 million for the prior fiscal year. The increase was caused by an increase in sales via e-commerce platforms such as Tmall and an increase in sales via our 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, we maintained a membership care program targeted at chronic disease customers. We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine. By implementing a personalized customer care program, we were able to promote our sales. As a result, our sales via these e-commerce platforms increased by 58.3% period over period. The sales via our official website were primarily made by certain pharmacy benefit management providers and insurance companies. For example, we have signed a service contract with Yingda Taihe Life Insurance Co. Ltd. ("Yingda"), a national insurance company. State Grid Corporation of China has bought health insurance package for its employees from Yingda. In the year ended March 31, 2020, we served a local factory of State Grid and sold healthcare products to its employees who used their insurance cards to make payments. The sales from these customers contributed significantly to our official website sales. Additionally, in the first quarter of calendar 2020, during the outbreak of COVID-19, we sold a large quantity of health protective products such as masks. Our official website sales increased by $847,899 or 40.8% year over year.

    Revenue from the wholesale business increased by $3.28 million, or 12.4%, to $29.71 million for the fiscal year ended March 31, 2020 from $26.43 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 quantities at its retail stores, to other vendors at competitive prices.

    Gross profit and gross margin

    Total cost of goods sold increased by $9.36 million, or 11.4%, to $91.80 million for the fiscal year ended March 31, 2020 from $82.44 million for the prior fiscal year. Gross profit increased by $0.42 million, or 1.7%, to $25.53 million for fiscal year ended March 31, 2020 from $25.11 million for the prior fiscal year. Overall gross margin decreased by 1.5 percentage points to 21.8% for the fiscal year ended March 31, 2020, from 23.3% for the prior fiscal year.

    Gross margins for retail drugstores, online pharmacy and wholesale were 28.1%, 10.6%, and 11.0%, respectively, for the fiscal year ended March 31, 2020, compared to the corresponding gross margins of 29.2%, 11.8%, and 11.3% for the prior fiscal year.

    Loss from operations

    Selling and marketing expenses decreased by $0.48 million, or 1.9%, to $23.79 million for the fiscal year ended March 31, 2020 from $24.27 million for the prior fiscal year, primarily due to decrease in rent. As we closed several stores, rent expense went down. Additionally, we have closely monitored our marketing expense such as small gifts. As a result, our sale and marketing expense declined slightly.

    General and administrative expenses increased by $6.39 million, or 371.7%, to $8.11 million for the fiscal year ended March 31, 2020 from $1.72 million for the prior fiscal year. In the year ended March 31, 2020, we recorded bad debt expense of $455,159 as compared to a reduction in the allowance for bad debts of $3,346,886 in fiscal year 2019. Additionally, we incurred additional labor cost of approximately $1.5 million as we have expanded certain business. For example, we have been operating two Linjia Clinics and hired more doctors. In addition, in order to obtain business from commercial health insurance providers, we formed a marketing team. Although these businesses have not contributed significantly to our revenue, they incurred labor costs.

    Impairment of long-lived assets was $0.63 million for the fiscal year ended March 31, 2020, compared to nil for the prior fiscal year. In the year ended March 31, 2020, we evaluated the licenses of insurance applicable drugstores acquired in the past based on their discounted positive cash value. Due to the stricter government insurance policy in fiscal year 2021, the value of these licenses has declined.

    Loss from operations was $7.00 million for the fiscal year ended March 31, 2020, compared to loss from operations of $0.88 million for the prior fiscal year. Operating margin was (6.0)% and (0.8)% for the fiscal year ended March 31, 2020 and 2019 respectively.

    Net loss

    Net loss was $6.46 million, or $0.18 per basic and diluted share for the fiscal year ended March 31, 2020, compared to net loss of $1.32 million, or $0.03 per basic and diluted share for the prior fiscal year.

    Financial Condition

    As of March 31, 2020, the Company had cash of $16.18 million, compared to $9.32 million as of March 31, 2019. Net cash used in operating activities was $6.91 million for the fiscal year ended March 31, 2020, compared to $5.60 million for the prior fiscal year. Net cash used in investing activities was $4.84 million for the fiscal year ended March 31, 2020, compared to $7.33 million for the prior fiscal year. Net cash provided by financing activities was $19.01 million for the fiscal year ended March 31, 2020, compared to $8.08 million for the prior fiscal year. On April 15, 2019, we closed a registered direct offering of 4,000,008 shares of common stock at $2.50 per share with gross proceeds of $10,000,020 from our effective shelf registration statement on Form S-3. In addition, on June 3, 2020, we closed another registered direct offering of 5,000,0004 shares of common stock at $2.00 per share with gross proceeds of $10,000,008 from our effective shelf registration statement on Form S-3.

    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

    CONSOLIDATED BALANCE SHEETS




    March 31,



    March 31,




    2020



    2019


    ASSETS







    CURRENT ASSETS







    Cash and cash equivalents


    $

    16,176,318



    $

    9,322,463


    Restricted cash



    14,806,288




    15,422,739


    Financial assets available for sale



    157,159




    180,928


    Notes receivable



    57,005




    177,278


    Trade accounts receivable



    9,770,656




    8,692,514


    Inventories



    12,247,004




    13,955,202


    Other receivables, net



    5,069,442




    4,438,230


    Advances to suppliers



    1,174,800




    1,950,252


    Other current assets



    1,528,540




    2,063,375


    Total current assets



    60,987,212




    56,202,981











    PROPERTY AND EQUIPMENT, net



    7,633,740




    8,727,358











    OTHER ASSETS









    Long-term investment



    2,544,451




    24,243


    Farmland assets



    742,347




    825,259


    Long term deposits



    1,456,384




    2,157,275


    Other noncurrent assets



    1,046,763




    1,196,197


    Operating lease right-of-use assets



    21,711,376




    -


    Intangible assets, net



    3,393,960




    3,597,323


    Total other assets



    30,895,281




    7,800,297











    Total assets


    $

    99,516,233



    $

    72,730,636











    LIABILITIES AND STOCKHOLDERS' EQUITY









    CURRENT LIABILITIES









    Short-term bank loan



    1,410,130




    -


    Accounts payable, trade



    21,559,494




    23,106,230


    Notes payable



    26,605,971




    25,951,673


    Other payables



    2,522,330




    3,197,221


    Other payables - related parties



    490,218




    795,179


    Customer deposits



    708,140




    771,942


    Taxes payable



    119,247




    125,859


    Accrued liabilities



    753,612




    1,264,182


    Long-term loan payable-current portion



    2,287,742




    -


    Current portion of operating lease liabilities



    981,090




    -


    Total current liabilities



    57,437,974




    55,212,286











    Long-term loan payable



    4,115,958




    -


    Long term operating lease  liabilities



    19,049,575




    -


    Employee Deposits



    70,507




    81,935


    Purchase option and warrants liability



    64,090




    465,248


    Total liabilities



    80,738,104




    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 March 31, 2020 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 March 31, 2020 and March 31, 2019



    -




    -


    Additional paid-in capital



    54,209,301




    44,905,664


    Statutory reserves



    1,309,109




    1,309,109


    Accumulated deficit



    (36,400,837)




    (30,587,468)


    Accumulated other comprehensive income



    1,440,424




    2,508,964


    Total stockholders' equity



    20,590,934




    18,165,206


    Noncontrolling interests



    (1,812,805)




    (1,194,039)


    Total equity



    18,778,129




    16,971,167


    Total liabilities and stockholders' equity


    $

    99,516,233



    $

    72,730,636


     

     

    CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS




    For the years ended
    March 31,




    2020



    2019


    REVENUES, NET


    $

    117,327,689



    $

    107,551,012











    COST OF GOODS SOLD



    91,801,259




    82,442,969











    GROSS PROFIT



    25,526,430




    25,108,043











    SELLING EXPENSES



    23,793,603




    24,265,184


    GENERAL AND ADMINISTRATIVE EXPENSES



    8,108,377




    1,718,989


    IMPAIRMENT OF LONG-LIVED ASSETS



    628,192




    -


    TOTAL OPERATING EXPENSES



    32,530,172




    25,984,173











    LOSS FROM OPERATIONS



    (7,003,742)




    (876,130)











    OTHER INCOME (EXPENSE):









    INTEREST INCOME



    1,063,747




    112,887


    INTEREST EXPENSE



    (698,518)




    -


    OTHER



    (204,064)




    (93,311)


    CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS
    LIABILITY



    401,158




    (326,452)











    LOSS BEFORE INCOME TAXES



    (6,441,419)




    (1,183,006)











    PROVISION FOR INCOME TAXES



    16,258




    134,763











    NET LOSS



    (6,457,677)




    (1,317,769)











    ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST



    (644,308)




    (391,491)











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



    (5,813,369)




    (926,278)











    OTHER COMPREHENSIVE LOSS









    FOREIGN CURRENCY TRANSLATION ADJUSTMENTS



    (1,068,540)




    (1,077,496)











    COMPREHENSIVE LOSS



    (7,526,217)




    (2,395,265)











    WEIGHTED AVERAGE NUMBER OF SHARES:









    Basic



    32,816,567




    28,936,778


    Diluted



    32,816,567




    28,936,778











    LOSS PER SHARES:









    Basic


    $

    (0.18)



    $

    (0.03)


    Diluted


    $

    (0.18)



    $

    (0.03)


     

     

    CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF CASH FLOWS




    For the years ended
    March 31,




    2020



    2019


    CASH FLOWS FROM OPERATING ACTIVITIES:







    Net income


    $

    (6,457,677)



    $

    (1,317,769)


    Adjustments to reconcile net income to net cash used in operating activities:









    Bad debt direct write-off and provision



    446,354




    (3,357,851)


    Depreciation and amortization



    2,082,817




    1,676,413


    Impairment of long lived assets



    628,192




    -


    Stock based compensation



    34,560




    197,100


    Change in fair value of purchase option derivative liability



    (401,158)




    326,452


    Change in operating assets:









    Accounts receivable, trade



    (1,567,774)




    (116,810)


    Notes receivable



    112,803




    83,910


    Inventories and biological assets



    979,935




    (1,390,823)


    Other receivables



    (1,010,722)




    (1,308,437)


    Advances to suppliers



    148,638




    3,612,453


    Long term deposit



    596,209




    183,841


    Other current assets



    (1,278,833)




    (83,372)


    Other noncurrent assets



    87,065




    (23,511)


    Change in operating liabilities:









    Accounts payable, trade



    (317,755)




    (528,353)


    Other payables and accrued liabilities



    (967,751)




    (328,473)


    Customer deposits



    (22,963)




    (3,011,194)


    Taxes payable



    115




    (216,792)


    Net cash used in operating activities



    (6,907,945)




    (5,603,216)











    CASH FLOWS FROM INVESTING ACTIVITIES:









    Disposal of financial assets available for sale



    14,356




    87,290


    Purchase of financial assets available for sale



    -




    (104,360)


    Acquisition of equipment and building



    (656,297)




    (5,450,934)


    Investment in a joint venture



    (2,567,083)




    -


    Increase intangible assets



    (871,145)




    (29,817)


    Additions to leasehold improvements



    (756,444)




    (1,828,360)


    Net cash used in investing activities



    (4,836,613)




    (7,326,181)











    CASH FLOWS FROM FINANCING ACTIVITIES:









    Proceeds from short-term bank loan



    1,435,620




    -


    Proceeds from third parties loan



    7,178,100




    -


    Repayment of  third parties loan



    (658,645)




    -


    Proceeds from notes payable



    48,974,772




    42,030,521


    Repayment of notes payable



    (46,896,917)




    (34,018,811)


    Increase in financial liability



    (7,178)




    81,997


    Proceeds from sale of stock and warrants



    9,273,077




    7,529


    Repayment of other payables-related parties



    (285,123)




    (22,655)


    Net cash provided by financing activities



    19,013,706




    8,078,581











    EFFECT OF EXCHANGE RATE ON CASH



    (1,031,744)




    (1,856,174)











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



    6,237,404




    (6,706,989)











    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year



    24,745,202




    31,452,191











    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year


    $

    30,982,606



    $

    24,745,202











    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:









    Cash paid for income taxes


    $

    17,198



    $

    56,422


    Cash paid for interest



    108,098




    -


     

    Caishen.Co - Primary Data for China Secondary Investment and Stock Markets
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