China Jo-Jo Drugstores Reports First Quarter 2020 Financial Results

 

HANGZHOU, China, Aug. 14, 2019 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: 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 first quarter of its fiscal year 2020.

Mr. Lei Liu, Chief Executive Officer and Chairman of Jo-Jo Drugstores, commented, "We are pleased to announce our financial results for the first quarter of fiscal year 2020. Our sales grew 11.0%, with sales growth in our retail drugstores, online pharmacy, and wholesale segments. We will continue adapting to the changing retail drugstore environment and making progress towards our long-term strategic goals. We remain confident of our ability to realize the potential of our business model as we endeavor to provide the best experience to our customers."  

First Quarter of Fiscal 2020 Financial Highlights

   

For the Three Months Ended June 30,

($ millions, except per share data)

 

2019

 

2018

 

% Change

Revenue

 

25.28

 

22.77

 

11.0%

      Retail drugstores

 

16.74

 

15.97

 

4.8%

      Online pharmacy

 

2.44

 

2.02

 

20.9%

      Wholesale

 

6.10

 

4.78

 

27.6%

Gross profit

 

6.06

 

5.62

 

7.9%

Gross margin

 

24.0%

 

24.7%

 

-0.7 pp*

Loss from operations

 

(2.76)

 

(0.56)

 

-388.5%

Net loss

 

(2.38)

 

(0.70)

 

-241.4%

Loss per share

 

(0.07)

 

(0.02)

 

-250.0%

 

*Notes: pp represents percentage points

  • Revenue increased by 11.0% to $25.28 million for the three months ended June 30, 2019 from $22.77 million for the same period of last year.
  • Gross profit increased by 7.9% to $6.06 million for the three months ended June 30, 2019 from $5.62 million for the same period of last year.
  • Gross margin decreased by 0.7 percentage points to 24.0% from 24.7% for the same period of last year.
  • Net loss was $2.38 million, or $0.07 per basic and diluted share, for the three months ended June 30, 2019, compared to $0.70 million, or $0.02 per basic and diluted share, for the same period of last year.

First Quarter of Fiscal 2020 Financial Results

Revenue

Revenue for the three months ended June 30, 2019 increased by $2.51 million, or 11.0%, to $25.28 million from $22.77 million for the same period of last year. The increase in revenue was primarily due to the growth in retail drugstores business, online pharmacy and wholesale business.

 

For the Three Months Ended June 30,

 

2019

 

2018

($ millions)

Revenue

 

Cost of Goods

 

Gross Margin

 

Revenue

 

Cost of Goods

 

Gross Margin

Retail drugstores

16.74

 

11.68

 

30.2%

 

15.97

 

11.17

 

30.1%

Online pharmacy

2.44

 

2.10

 

14.2%

 

2.02

 

1.74

 

13.9%

Wholesale

6.10

 

5.44

 

10.9%

 

4.78

 

4.25

 

11.1%

Total

25.28

 

19.22

 

24.0%

 

22.77

 

17.16

 

24.7%

Revenue from the retail drugstores business increased by $0.77 million, or 4.8%, to $16.74 million for the three months ended June 30, 2019 from $15.97 million for the same period of last year. The increase was primarily due to consumer-facing benefits such as emphasis on onsite 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 $0.42 million, or 20.9%, to $2.44 million for the three months ended June 30, 2019 from $2.02 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.  For example, sales of blood glucose meters and contact lens contributed significantly to our revenue in the three months ended June 30, 2019 as compared to the same period a year ago.

Revenue from the wholesale business increased by $1.32 million, or 27.6%, to $6.10 million for the three months ended June 30, 2019 from $4.78 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 quantity at its retail stores, to other vendors at competitive prices.

Gross profit and gross margin

Total cost of goods sold increased by $2.06 million, or 12.0%, to $19.22 million for the three months ended June 30, 2019 from $17.16 million for the same period of last year. Gross profit increased by $0.44 million, or 7.9%, to $6.06 million for three months ended June 30, 2019 from $5.62 million for the same period of last year. Overall gross margin decreased by 0.7 percentage points to 24.0% for the three months ended June 30, 2019, from 24.7% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 30.2%, 14.2%, and 10.9%, respectively, for the three months ended June 30, 2019. For the same period of last year, the gross margins for retail drugstores, online pharmacy and wholesale of were 30.1%, 13.9%, and 11.1%, respectively.

Loss from operations

Selling and marketing expenses increased by $1.34 million, or 29.0%, to $5.97 million for the three months ended June 30, 2019 from $4.63 million for the same period of last year. The increase in selling and marketing expenses was primarily due to the increase in labor and rent related to the Company's store expansions and rising local living costs.

General and administrative expenses increased by $1.30 million, or 83.4%, to $2.85 million for the three months ended June 30, 2019 from $1.55 million for the same period of last year. The Company's retail business incurred additional administrative expenses related to its store expansion. Additionally, Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd, the entity we have 51% that operates two new clinics in Hangzhou, incurred additional administrative labor costs. The bad debt expenses related to the Company's accounts receivable increased by approximately $0.5 million due to certain aged accounts. 

Loss from operations was $2.76 million for the three months ended June 30, 2019, compared to $0.56 million for the same period of last year. Operating margin was negative 10.9% for the three months ended June 30, 2019, compared to negative 2.5% for the same period of last year.

Net loss

Net loss was $2.38 million, or $0.07 per basic and diluted share for the three months ended June 30, 2019, compared to net loss of $0.70 million, or $0.02 per basic and diluted share for the same period of last year.

Financial Condition

As of June 30, 2019, the Company had cash of $8.34 million, compared to $9.32 million as of March 31, 2019. Net cash used in operating activities was $8.16 million for the three months ended June 30, 2019, compared to $2.58 million for the same period of last year. Net cash used in investing activities was $0.95 million for the three months ended June 30, 2019, compared to $0.26 million for the same period of last year. Net cash provided by financing activities was $8.02 million for the three months ended June 30, 2019, compared to net cash used in financing activities of $5.21 million for the same period of last year.

About China Jo-Jo Drugstores, Inc.

China Jo-Jo Drugstores, Inc. 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 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
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
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

 
               
               
 

June 30,

   

March 31,

 
 

2019

   

2019

 

ASSETS

             

CURRENT ASSETS

             
 

Cash

$

8,341,167

   

$

9,322,463

 
 

Restricted cash

 

14,808,986

     

15,422,739

 
 

Financial assets available for sale

 

162,273

     

180,928

 
 

Notes receivable

 

92,480

     

177,278

 
 

Trade accounts receivable

 

8,590,075

     

8,692,514

 
 

Inventories

 

10,806,698

     

13,955,202

 
 

Other receivables, net

 

4,253,802

     

4,438,230

 
 

Advances to suppliers

 

1,544,132

     

1,950,252

 
 

Other current assets

 

1,557,156

     

2,063,375

 
   

Total current assets

 

50,156,769

     

56,202,981

 
               

PROPERTY AND EQUIPMENT, net

 

8,620,758

     

8,727,358

 
               

OTHER ASSETS

             
 

Long-term investment

 

16,318

     

24,243

 
 

Farmland assets

 

742,974

     

825,259

 
 

Long term deposits

 

2,050,219

     

2,157,275

 
 

Other noncurrent assets

 

1,177,703

     

1,196,197

 
 

Operating lease right-of-use assets

 

13,564,115

     

-

 
 

Intangible assets, net

 

3,888,848

     

3,597,323

 
   

Total other assets

 

21,440,177

     

7,800,297

 
               
   

      Total assets

$

80,217,704

   

$

72,730,636

 
                   

LIABILITIES AND STOCKHOLDERS' EQUITY

             

CURRENT LIABILITIES

             
 

Accounts payable, trade

 

13,674,741

     

23,106,230

 
 

Notes payable

 

24,574,955

     

25,951,673

 
 

Other payables

 

3,267,074

     

3,197,221

 
 

Other payables - related parties

 

326,778

     

795,179

 
 

Customer deposits

 

870,100

     

771,942

 
 

Taxes payable

 

217,704

     

125,859

 
 

Accrued liabilities

 

990,032

     

1,264,182

 
 

Current portion of operating lease liabilities

 

4,738,632

     

-

 
   

Total current liabilities

 

48,660,016

     

55,212,286

 
               
 

Long term operating lease  liabilities

 

7,918,900

     

-

 
 

Purchase option and warrants liability

 

61,693

     

465,248

 
 

Financial liability

 

80,081

     

81,935

 
   

Total liabilities

 

56,720,690

     

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 June 30, 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 June 30, 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

 

(32,722,416)

     

(30,587,468)

 
 

Accumulated other comprehensive income

 

2,103,726

     

2,508,964

 
   

Total stockholders' equity

 

24,932,657

     

18,165,206

 
   

Noncontrolling interests

 

(1,435,643)

     

(1,194,039)

 
   

Total equity

 

23,497,014

     

16,971,167

 
   

      Total liabilities and stockholders' equity

$

80,217,704

   

$

72,730,636

 

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 
 

For the three months ended

June 30,

 

2019

 

2018

REVENUES, NET

$

25,280,784

 

$

22,772,566

           

COST OF GOODS SOLD

 

19,219,346

   

17,155,763

           

GROSS PROFIT

 

6,061,438

   

5,616,803

           

SELLING EXPENSES

 

5,968,551

   

4,626,978

GENERAL AND ADMINISTRATIVE EXPENSES

 

2,851,612

   

1,554,528

TOTAL OPERATING EXPENSES

 

8,820,163

   

6,181,506

           

LOSS FROM OPERATIONS

 

(2,758,725)

   

(564,703)

           

INTEREST INCOME

 

47,873

   

47,172

OTHER (EXPENSE), NET

 

(62,485)

   

(114,941)

CHANGE IN FAIR VALUE OF WARRANTS LIABILITY

 

403,555

   

(6,974)

           

LOSS BEFORE INCOME TAXES

 

(2,369,782)

   

(639,446)

           

PROVISION FOR INCOME TAXES

 

8,388

   

57,169

           

NET LOSS

 

(2,378,170)

   

(696,615)

           

ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

243,219

   

50,763

           

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

 

(2,134,951)

   

(645,852)

           

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS

 

(405,238)

   

621,634

           

COMPREHENSIVE LOSS

 

(2,783,408)

   

(74,981)

           

WEIGHTED AVERAGE NUMBER OF SHARES:

         

Basic

 

32,453,269

   

28,936,778

Diluted

 

32,453,269

   

28,936,778

           

LOSS PER SHARES:

         

Basic

$

(0.07)

 

$

(0.02)

Diluted

$

(0.07)

 

$

(0.02)

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

               
     

For the three months ended

     

June 30,

     

2019

 

2018

CASH FLOWS FROM OPERATING ACTIVITIES:

         

Net loss

 

$

(2,378,170)

 

$

(696,615)

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

   
 

Bad debt direct write-off and provision

 

758,231

   

259,279

 

Depreciation and amortization

 

499,175

   

293,095

 

Stock based compensation

 

34,560

   

49,140

 

Change in fair value of purchase option derivative liability

(403,555)

   

6,974

 

Accounts receivable, trade

 

(959,680)

   

1,077,419

 

Notes receivable

 

81,326

   

(114,944)

 

Inventories and biological assets

 

2,851,652

   

(458,803)

 

Other receivables

 

371,054

   

(401,204)

 

Advances to suppliers

 

242,652

   

(775,014)

 

Other current assets

 

(450,042)

   

554,048

 

Long term deposit

 

58,630

   

(5,415)

 

Other noncurrent assets

 

(8,631)

   

(97,341)

 

Accounts payable, trade

 

(8,968,168)

   

(2,369,206)

 

Other payables and accrued liabilities

 

(105,522)

   

357,335

 

Customer deposits

 

116,398

   

20,290

 

Taxes payable

 

95,326

   

(281,235)

               
   

Net cash (used in) operating activities

 

(8,164,764)

   

(2,582,197)

               

CASH FLOWS FROM INVESTING ACTIVITIES:

         
 

Disposal of financial assets available for sale

 

14,658

   

-

 

Acquisition of equipment

 

(210,356)

   

(32,753)

 

Increase in intangible assets

 

(433,111)

   

-

 

Investment in a joint venture

 

-

   

(109,142)

 

Additions to leasehold improvements

 

(542,734)

   

(116,002)

   

Net cash used in investing activities

 

(1,171,543)

   

(257,897)

               

CASH FLOWS FROM FINANCING ACTIVITIES:

         
 

Proceeds from notes payable

 

15,372,260

   

10,376,504

 

Repayment of notes payable

 

(16,167,012)

   

(15,512,104)

 

Proceeds from equity financing

 

9,273,077

   

7,629

 

Repayment of other payables-related parties

 

(460,000)

   

(84,014)

   

Net cash provided by (used in) financing activities

 

8,018,325

   

(5,211,985)

               

EFFECT OF EXCHANGE RATE ON CASH

 

(277,067)

   

(457,638)

               

DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

(1,595,049)

   

(8,509,717)

               

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

$

23,150,153

 

$

22,942,474

               

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

         
 

Cash paid for income taxes

$

29,176

 

$

27,832

 

 

Cision View original content:http://www.prnewswire.com/news-releases/china-jo-jo-drugstores-reports-first-quarter-2020-financial-results-300901024.html

SOURCE China Jo-Jo Drugstores, Inc.

 
 
Company Codes: NASDAQ-SMALL:CJJD
 

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