China Jo-Jo Drugstores Reports First Half of Fiscal Year 2022 Financial Results


    HANGZHOU, China, Jan. 21, 2022 /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 first half of fiscal year 2022 ended September 30, 2021.

    Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, "We are pleased to have delivered a solid performance during the first half of fiscal year 2022 as we navigate through a challenging operating environment affected by multiple COVID-19 surges. We achieved record revenue of $78.48 million, up 26.8% from the same period of last year, and narrowed down 86% of net loss compared to the same period of last year. Revenue from online pharmacy and wholesale segments increased by 33.5% and 63.6%, respectively, which reflects the efforts of our team as we continue to expand our business. Our strong financial performance once again demonstrates the continuing momentum across the Company as the market recognizing the quality of our products and the brand awareness of Jo-Jo Drugstores. Our unrivaled quality management, reliable supply chains, extensive distribution network and industry-leading talent team are the reasons of the results."

    Mr. Liu continued, "ESG, standing for 'Environment, Society and Governance', is embedded in our core value and we are committed to improving the community we serve and protecting the lives of our employees and customers. We received 2021 China ESG Golden Awards, a Sustainability Award from Sina Finance, which recognizes our meaningful progress in delivering social and environmental benefits. The project "Healthy China 2030" will enhance the reformation and innovation in the healthcare industry. To seize this opportunity, we will continue focusing on providing excellent in-store services, accelerating digital transformation and upgrading our business model. We believe that our capability, operational performance and diversified distribution channels will enable us to generate additional revenue and create greater value for our shareholders in the long term."  

    First Six Months of Fiscal Year 2022 Financial Highlights



    For the Six Months Ended September 30,

    ($ millions, except per share data)


    2021


    2020


    % Change

    Revenue


    78.48


    61.90


    26.8%

          Retail drugstores


    40.42


    36.74


    10.0%

          Online pharmacy


    13.70


    10.26


    33.5%

          Wholesale


    24.36


    14.90


    63.6%

    Gross profit


    15.40


    14.99


    2.7%

    Gross margin


    19.6%


    24.2%


    -4.6 pp*

    Loss from operations


    (0.49)


    (1.94)


    74.6%

    Net loss


    (0.27)


    (1.92)


    86.0%

    Loss per share


    (0.01)


    (0.05)


    80.0%

    *Notes: pp represents percentage points

    • Revenue increased by 26.8% to $78.48 million for the six months ended September 30, 2021 from $61.90 million for the same period of last year.
    • Gross profit increased by 2.7% to $15.40 million for the six months ended September 30, 2021 from $14.99 million for the same period of last year.
    • Gross margin decreased by 4.6 percentage points to 19.6% for the six months ended September 30, 2021 from 24.2% for the same period of last year.
    • Net loss was $0.27 million, or $0.01 per basic and diluted share, for the six months ended September 30, 2021, compared to net loss of $1.92 million, or $0.05 per basic and diluted share, for the same period of last year.

    First Six Months of Fiscal Year 2022 Financial Results

    Revenue

    Revenue for the six months ended September 30, 2021 increased by $16.58 million, or 26.8%, to $78.48 million from $61.90 million for the same period of last year. The increase in revenue was primarily due to the growth in online pharmacy and wholesale business.



    For the Six Months Ended September 30,



    2021


    2020

    ($ millions)


    Revenue


    Cost of
    Goods


    Gross
    Margin


    Revenue


    Cost of
    Goods


    Gross
    Margin

    Retail drugstores


    40.42


    28.90


    28.5%


    36.74


    24.73


    32.7%

    Online pharmacy


    13.70


    12.29


    10.3%


    10.26


    8.97


    12.5%

    Wholesale


    24.36


    21.90


    10.1%


    14.90


    13.20


    11.4%

    Total


    78.48


    63.09


    19.6%


    61.90


    46.90


    24.2%

    Revenue from the retail drugstores business increased by $3.68 million, or 10.0%, to $40.42 million for the six months ended September 30, 2021 from $36.74 million for the same period of last year. After excluding the impact of exchange rate fluctuation, the actual retail drugstores sales increased by 2.0%. The actual increase in retail drugstore sales was primarily due to continuous adjustments of merchandises, better fitness to the market, improved store employee incentive plan, and contribution from the new store sales.

    Revenue from the online pharmacy business increased by $3.44 million, or 33.5%, to $13.70 million for the six months ended September 30, 2021 from $10.26 million for the same period of last year. The increase was primarily caused by an increase in sales to commercial insurance customers via the Company's official website and an increase in sales of prescription drugs via e-commerce platforms such as Tmall. The sales via the Company's official website were primarily made by certain pharmacy benefit management providers and insurance companies. For example, the Company has signed a service contract with Yingda Taihe Life Insurance Co. Ltd. ("Yingda"), a national insurance company. Certain companies bought private health insurances from Yingda for their employees. By linking the Company's online pharmacy platform with Yingda and training Yingda's employees, they are able to buy health products on the Company's online stores. The sales from these customers contributed significantly to the Company's official website sales. The Company's official website sales increased by 85.5% as compared to the same period of last year. Prescription drugs used to be prohibited from online sales due to safety concern. After the nation has lifted the ban order, online prescription drug sales become popular. As a result, the sale of prescription drugs was $4.93 million for the six months ended September 30, 2021. For the same period of last year, it was $3.63 million.

    Revenue from the wholesale business increased by $9.47 million, or 63.6%, to $24.37 million for the six months ended September 30, 2021, from $14.90 million for the same period of last year. In order to obtain rebates from its major suppliers, the Company is required to make more purchase from the suppliers. To quickly resell these products, the Company chose to lower its sales price to local vendors, which in turn helped increase the sales significantly. 

    Gross profit and gross margin

    Total cost of goods sold increased by $16.19 million, or 34.5%, to $63.09 million for the six months ended September 30, 2021, from $46.90 million for the same period of last year. Gross profit increased by $0.41 million, or 2.7%, to $15.40 million for six months ended September 30, 2021 from $14.99 million for the same period of last year. Overall gross margin decreased by 4.6 percentage points to 19.6% for the six months ended September 30, 2021, from 24.2% for the same period of last year.

    Gross margins for retail drugstores, online pharmacy and wholesale were 28.5%, 10.3%, and 10.1%, respectively, for the six months ended September 30, 2021, compared to gross margins for retail drugstores, online pharmacy and wholesale of 32.7%, 12.5%, and 11.4%, respectively, for the same period of last year.

    Loss from operations

    Selling and marketing expenses increased by $0.54 million, or 4.3%, to $13.29 million for the six months ended September 30, 2021 from $12.75 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increase in fees charged by various platforms as a result of sales increase in the Company's online pharmacy.

    General and administrative expenses decreased by $1.58 million, or 37.9%, to $2.60 million for the six months ended September 30, 2021 from $4.18 million for the same period of last year. The decrease in general and administrative expenses was primarily due to the decrease in labor cost. In response to the government insurance budget control, the Company cut off certain administration staff and combined several administrative duties. Additionally, in the six months ended September 30, 2021, the Company provided bonus to certain key staff. Such expenses, as a percentage of revenue, decreased to 3.3% from 6.8% for the same period of last year.

    Loss from operations was $0.49 million for the six months ended September 30, 2021, compared to $1.94 million for the same period of last year. Operating margin was (0.6) % and (3.1)% for the six months ended September 30, 2021 and 2020, respectively.

    Net loss

    Net loss was $0.27 million, or $0.01 per basic and diluted share for the six months ended September 30, 2021, compared to net loss of $1.92 million, or $0.05 per basic and diluted share for the same period of last year.

    Financial Condition

    As of September 30, 2021, the Company has cash of $24.61 million, compared to $22.05 million as of March 31, 2021. Net cash provided by operating activities is $0.50 million for the six months ended September 30, 2021, compared to net cash used in operating activities of $0.35 million for the same period of last year. Net cash used in investing activities is $0.19 million for the six months ended September 30, 2021, compared to $1.76 million for the same period of last year. Net cash provided by financing activities is $3.43 million for the six months ended September 30, 2021, compared to $4.55 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. 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
    frank.zhao@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


    CONDENSED CONSOLIDATED BALANCE SHEETS

    (UNAUDITED)










    September 30,



    March 31,




    2021



    2021


    ASSETS







    CURRENT ASSETS







    Cash and cash equivalents


    $

    24,611,175



    $

    22,045,628


    Restricted cash



    14,576,183




    12,627,016


    Financial assets available for sale



    92,940




    91,472


    Notes receivable



    97,195




    39,392


    Trade accounts receivable



    14,079,343




    13,423,728


    Inventories



    17,443,466




    16,972,965


    Other receivables, net



    5,768,743




    5,051,960


    Advances to suppliers



    2,919,052




    421,963


    Other current assets



    1,610,682




    1,560,119


    Total current assets



    81,198,779




    72,234,243











    PROPERTY AND EQUIPMENT, net



    6,212,655




    6,549,035











    OTHER ASSETS









    Long-term investment



    3,981,986




    3,981,986


    Farmland assets



    857,176




    835,427


    Long term deposits



    1,681,417




    1,546,764


    Other noncurrent assets



    834,298




    856,391


    Operating lease right-of-use assets



    18,580,840




    16,778,729


    Intangible assets, net



    3,538,707




    3,528,056


    Total other assets



    29,474,424




    27,527,353











    Total assets


    $

    116,885,858



    $

    106,310,631











    LIABILITIES AND STOCKHOLDERS' EQUITY









    CURRENT LIABILITIES









     Short-term bank loan



    -




    762,270


     Accounts payable, trade



    32,828,259




    29,895,830


     Notes payable



    31,299,086




    25,663,633


     Other payables



    3,842,964




    2,940,000


     Other payables - related parties



    1,133,803




    445,305


     Customer deposits



    1,642,586




    1,146,247


     Taxes payable



    519,531




    197,733


     Accrued liabilities



    396,787




    501,111


     Long-term loan payable-current portion



    2,643,513




    2,557,634


     Current portion of operating lease liabilities



    1,562,318




    788,171


       Total current liabilities



    75,868,847




    64,897,934











    Long-term loan payable



    590,640




    1,892,269


    Long-term operating lease liabilities



    16,063,306




    15,118,083


       Total liabilities



    92,522,793




    81,908,286











    COMMITMENTS AND CONTINGENCIES


















    STOCKHOLDERS' EQUITY









    Common stock; $0.001 par value; 250,000,000 shares authorized; 41,751,790 and
         41,751,790 shares issued and outstanding as of September 30, 2021 and March
         31, 2021



    41,752




    41,752


    Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and 
          outstanding as of September 30 and March 31, 2021



    -




    -


    Additional paid-in capital



    66,516,033




    66,516,033


    Statutory reserves



    1,309,109




    1,309,109


    Accumulated deficit



    (45,205,117)




    (44,942,374)


    Accumulated other comprehensive income



    3,046,753




    2,818,185


    Total stockholders' equity



    25,708,530




    25,742,705


    Noncontrolling interests



    (1,345,465)




    (1,340,360)


    Total equity



    24,363,065




    24,402,345


    Total liabilities and stockholders' equity


    $

    116,885,858



    $

    106,310,631


      

     

     

    CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES


    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

    (UNAUDITED)




    For the six months ended

    September 30,




    2021



    2020


    REVENUES, NET


    $

    78,484,478



    $

    61,896,857











    COST OF GOODS SOLD



    63,085,681




    46,903,886











    GROSS PROFIT



    15,398,797




    14,992,971











    SELLING EXPENSES



    13,292,931




    12,747,919


    GENERAL AND ADMINISTRATIVE EXPENSES



    2,598,175




    4,181,725


    TOTAL OPERATING EXPENSES



    15,891,106




    16,929,644











    LOSS FROM OPERATIONS



    (492,309)




    (1,936,673)











    OTHER INCOME (EXPENSE):









    INTEREST INCOME



    110,291




    351,255


    INTEREST EXPENSE



    (156,786)




    (245,079)


    OTHER



    274,883




    (74,475)


    CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS
    LIABILITY



    -




    27,784











    LOSS BEFORE INCOME TAXES



    (263,921)




    (1,877,188)











    PROVISION FOR INCOME TAXES



    3,927




    38,595











    NET LOSS



    (267,848)




    (1,915,783)











    LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST



    (5,105)




    (190,555)











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



    (262,743)




    (1,725,228)











    OTHER COMPREHENSIVE GAIN









    FOREIGN CURRENCY TRANSLATION ADJUSTMENTS



    228,568




    1,125,030











    COMPREHENSIVE LOSS



    (39,280)




    (790,753)











    WEIGHTED AVERAGE NUMBER OF SHARES:









    Basic



    41,751,790




    36,232,144


    Diluted



    41,751,790




    36,232,144











    LOSS PER SHARES:









    Basic


    $

    (0.01)



    $

    (0.05)


    Diluted


    $

    (0.01)



    $

    (0.05)


      

     

     

    CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES


    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (UNAUDITED)




    For the six months ended

    September 30,




    2021



    2020


    CASH FLOWS FROM OPERATING ACTIVITIES:







    Net loss


    $

    (267,848)



    $

    (1,915,783)


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









    Bad debt direct write-off and provision



    (159,978)




    (286,076)


    Depreciation and amortization



    672,825




    1,258,156


    Change in fair value of purchase option derivative liability



    -




    (27,784)


    Accounts receivable, trade



    (442,229)




    41,724


    Notes receivable



    (57,097)




    (13,675)


    Inventories and biological assets



    (197,928)




    (448,573)


    Other receivables



    (695,832)




    279,650


    Advances to suppliers



    (2,487,104)




    (531,255)


    Other current assets



    (94,153)




    (853,289)


    Long term deposit



    (109,694)




    (15,106)


    Other noncurrent assets



    35,787




    13,619


    Accounts payable, trade



    2,449,608




    2,362,338


    Other payables and accrued liabilities



    1,055,417




    (845,411)


    Customer deposits



    477,331




    509,549


    Taxes payable



    318,214




    123,082











    Net cash used in operating activities



    497,319




    (348,834)











    CASH FLOWS FROM INVESTING ACTIVITIES:









    Acquisition of equipment



    (73,471)




    (33,968)


    Purchases of intangible assets



    (6,962)




    (55,038)


    Investment in a joint venture



    -




    (1,422,193)


    Additions to leasehold improvements



    (105,638)




    (246,846)


    Net cash used in investing activities



    (186,071)




    (1,758,045)











    CASH FLOWS FROM FINANCING ACTIVITIES:









    Proceeds from short-term bank loan



    -




    714,160


    Repayment from short-term bank loan



    (773,500)




    -


    Repayment of third parties loan



    (1,285,484)




    (1,175,725)


    Proceeds from notes payable



    31,258,674




    22,668,388


    Repayment of notes payable



    (26,041,718)




    (26,949,176)


    Decrease in Employee Deposits



    -




    (57,133)


    Exercise of warrants



    -




    77,500


    Proceeds from equity financing



    -




    9,205,173


    Repayment of other payables-related parties



    269,994




    68,994


       Net cash provided by financing activities



    3,427,966




    4,552,181











    EFFECT OF EXCHANGE RATE ON CASH



    775,500




    1,941,058











    DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH



    4,514,714




    4,386,360











    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period



    34,672,644




    30,982,606











    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period


    $

    39,187,358



    $

    35,368,966











    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:









    Cash paid for interest



    156,786




    247,371


    Cash paid for income taxes


    $

    3,927



    $

    3,457


      

     

     

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