China Jo-Jo Drugstores Reports First Quarter 2021 Financial Results

HANGZHOU, China, Aug. 14, 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 first fiscal quarter ended June 30, 2020.

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, "We're proud of our strong first-quarter performance, despite unprecedented volatility and uncertainty in the market and across the globe. Our revenue and gross profit recorded $31.05 million and $7.98 million for the first fiscal quarter of 2021, up 22.8% and 31.7% compared to same period of fiscal year 2020. Revenue year-over-year from retail drugstores, online pharmacy, and wholesale segments increased by 12.4%, 101.1% and 20.1% respectively. We are rolling out our transformation strategy of 'Medical Linkage & Technology Empowerment' with the goal of providing quality medical services to commercial insurance customers from state-owned enterprises. We focus on stabilizing the medical supply in the market and protecting people's safety, allowing us to increase brand awareness, maintain revenues and expand margins."

First Quarter of Fiscal 2021 Financial Highlights

• Revenue increased by 22.8% to $31.05 million for the three months ended June 30, 2020 from $25.28 million for the same period of last year.
• Gross profit increased by 31.7% to $7.98 million for the three months ended June 30, 2020 from $6.06 million for the same period of last year.
• Gross margin increased by 1.7 percentage points to 25.7% for the three months ended June 30, 2020 from 24.0% for the same period of last year.
• Net loss was $0.39 million, or $0.01 per basic and diluted share, for the three months ended June 30, 2020, compared to net loss of $2.38 million, or $0.07 per basic and diluted share, for the same period of last year.

First Quarter of Fiscal 2021 Financial Results

Revenue

Revenue for the three months ended June 30, 2020 increased by $5.77 million, or 22.8%, to $31.05 million from $25.28 million for the same period of last year. The increase in revenue was primarily due to the growth in retail drugstores, online pharmacy and wholesale business.

Revenue from the retail drugstores business increased by $2.07 million, or 12.4%, to $18.81 million for the three months ended June 30, 2020 from $16.74 million for the same period of last year. The increase was primarily attributable to the consumer-facing benefits, such as emphasis on 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 $2.47 million, or 101.1%, to $4.91 million for the three months ended June 30, 2020 from $2.44 million for the same period of last year. The increase was primarily caused by an increase in sales of prescription drugs via e-commerce platforms such as Tmall. Prescription drugs used to be prohibited from sales online due to safety concern. However, because the nation has lifted the ban order, online prescription drug sales become popular. As a result, the sale of prescription drugs was $1.87 million in the three months ended June 30, 2020 as compared to none in the three month ended June 30, 2019. Additionally, the Company maintained a membership care program targeted at chronic disease customers. The Company has closely interacted with its members via WeChat by providing healthcare knowledge and reminding its customers to refill medicine. By implementing a personalized customer care program, the Company was able to promote its sales.

Revenue from the wholesale business increased by $1.23 million, or 20.1%, to $7.33 million for the three months ended June 30, 2020 from $6.10 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 $3.85 million, or 20.1%, to $23.07 million for the three months ended June 30, 2020 from $19.22 million for the same period of last year. Gross profit increased by $1.92 million, or 31.7%, to $7.98 million for three months ended June 30, 2020 from $6.06 million for the same period of last year. Overall gross margin increased by 1.7 percentage points to 25.7% for the three months ended June 30, 2020, from 24.0% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 34.1%, 13.9%, and 12.1%, respectively, for the three months ended June 30, 2020, compared to the corresponding gross margins of 30.2%, 14.2%, and 10.9% for the same period of last year.

Loss from operations

Selling and marketing expenses increased by $0.30 million, or 5.1%, to $6.27 million for the three months ended June 30, 2020 from $5.97 million for the same period of last year, primarily due to increase in fee charged by various platforms as a result of sale increase in our online pharmacy.

General and administrative expenses decreased by $0.73 million, or 25.7%, to $2.12 million for the three months ended June 30, 2020 from $2.85 million for the same period of last year. In the three months ended June 30, 2020, the Company recorded bad debt allowance expense of $18,320 as compared to $758,231 in the same period of last year. Excluding such an effect, the general and administrative expenses increased by $8,465 period over period.

Loss from operations was $0.41 million for the three months ended June 30, 2020, compared to loss from operations of $2.76 million for the same period of last year. Operating margin was (1.3)% and (10.9)% for the three months ended June 30, 2020 and 2019 respectively.

Net loss

Net loss was $0.39 million, or $0.01 per basic and diluted share for the three months ended June 30, 2020, compared to net loss of $2.38 million, or $0.07 per basic and diluted share for the same period of last year.

Financial Condition

As of June 30, 2020, the Company had cash of $18.48 million, compared to $16.18 million as of March 31, 2020. Net cash used in operating activities was $5.48 million for the three months ended June 30, 2020, compared to $8.16 million for the same period of last year. Net cash used in investing activities was $1.60 million for the three months ended June 30, 2020, compared to $1.17 million for the same period of last year. Net cash provided by financing activities was $9.47 million for the three months ended June 30, 2020, compared to $8.02 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

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

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SOURCE China Jo-Jo Drugstores, Inc.

Company Codes: NASDAQ-SMALL:CJJD