China Jo-Jo Drugstores Reports Fiscal Year 2018 Financial Results

China Jo-Jo Drugstores, Inc. announced its financial results for the fiscal year ended March 31, 2018.

HANGZHOU, China, June 29, 2018 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: 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, 2018.

Mr. Lei Liu, Chief Executive Officer and Chairman of Jo-Jo Drugstores, Inc., commented, "Fiscal year 2018 has been an important transition year for China Jo-Jo Drugstores with revenues increased by 17.9% year-over-year to $96.11 million. We expanded our retail business, opening 55 new retail drugstores in key locations, and continued to improve services in our existing stores. While our e-commerce business continued its transition following the suspension of OTC drug sales on e-commerce platforms in fiscal year 2017, in the third and fourth quarters of fiscal 2018, our online pharmacy results began to stabilize as we optimized our product range."

Mr. Liu continued, "We expect our efforts to focus on product selection and price negotiation with suppliers to increase our sales profit margin. Our e-commerce segment will continue its evolution following our initiatives to cooperate with commercial insurance companies, such as the People's Insurance Company of China, and other active strategies. We look forward to executing our business objectives and we believe that there is still plenty of room for us to continue to grow at a rapid rate in the foreseeable future."

Fiscal Year 2018 Financial Highlights

                                              For the Fiscal Year Ended March 31,
                                              -----------------------------------

    ($ millions, except per share data)            2018                     2017   Change
                                                   ----                     ----  ------

    Revenues                                      96.11                    81.50            17.9%

          Retail drugstores                       61.98                    51.79            19.7%

          Online pharmacy                         12.13                    15.39          (21.2%)

          Wholesale                               22.00                    14.32            53.6%

    Gross profit                                  20.13                    16.63            21.0%

    Gross margin                                  20.9%                   20.4%         0.5 pp*

    Loss from operations                        (18.02)                  (6.10)          195.5%

    Net loss attributable to Jo-Jo Drugstores   (17.06)                  (5.64)          202.3%

    Loss per share                               (0.68)                  (0.28)          141.4%
                                                  -----                    -----            -----


    *Notes: pp represents percentage points

 

  • Revenues increased by 17.9% to $96.11 million for the fiscal year ended March 31, 2018 from $81.50 million for the last fiscal year, mainly due to the increase in retail drugstores and wholesale business, partially offset by the decrease in online pharmacy business.
  • Gross profit increased by 21.0% to $20.13 million for the fiscal year ended March 31, 2018 from $16.63 million for the last fiscal year. Gross margin increased by 0.5 percentage points to 20.9% from 20.4% for the last fiscal year.

Fiscal Year ended March 31, 2018 Financial Results

Revenue

Revenue for the fiscal year ended March 31, 2018 increased by $14.61 million, or 17.9%, to $96.11 million from $81.50 million for the last fiscal year. The increase in revenue was primarily due to the increase in retail drugstores and wholesale business, partially offset by the decrease in online pharmacy business.

                               For the Fiscal Year Ended March 31,
                               -----------------------------------

                                 2018                                    2017
                                 ----                                    ----

    ($ millions)      Revenues                       Cost of                  Gross        Revenues        Cost of        Gross
                                                     Goods                    Margin                       Goods          Margin
                                                     -----                    ------                       -----          ------

    Retail drugstores           61.98                              45.92             25.9%          51.79          38.09         26.5%

    Online pharmacy             12.13                              10.86             10.5%          15.39          13.83         10.1%

    Wholesale                   22.00                              19.21             12.7%          14.32          12.95          9.6%

    Total                       96.11                              75.99             20.9%          81.50          15.39         20.4%
                                -----                              -----              ----           -----          -----          ----

Revenue from the retail drugstores segment increased by $10.19 million, or 19.7%, to $61.98 million for the fiscal year ended March 31, 2018 from $51.79 million for the last fiscal year. The increase was primarily due to the increased number of stores, close monitoring of health products suitable to communities, brand-name health product sales campaign in cooperation with brand name suppliers, and value-added customer services such as chronic disease monitoring.

Revenue from the online pharmacy segment decreased by $3.26 million, or 21.2%, to $12.13 million for the fiscal year ended March 31, 2018 from $15.39 million for the last fiscal year. The decrease was mainly caused by a decline in our sales via e-commerce platforms. The decline in sales was due to the suspension of OTC drug sales on e-commerce platforms in the second quarter of fiscal year 2017 by the CFDA. The Company is adding more non-medical health products such as nutritional supplements into our sales menu to counteract the decline in sales of OTC drug category via e-commerce platforms.

Revenue from the wholesale segment increased by $7.68 million, or 53.6%, to $22.00 million for the fiscal year ended March 31, 2018 from $14.32 million for the last fiscal year. The increase was primarily a result of the Company's ability to resell certain products, which our retail stores made large orders on, to other vendors at competitive prices.

Gross profit and gross margin

Total cost of goods sold increased by $11.12 million, or 17.1%, to $75.99 million for the fiscal year ended March 31, 2018 from $64.87 million for the last fiscal year. Gross profit increased by $3.50 million, or 21.0%, to $20.13 million for the fiscal year ended March 31, 2018 from $16.63 million for the last fiscal year. Overall gross margin increased by 0.5 percentage points to 20.9% for the fiscal year ended March 31, 2018, compared to 20.4% for the last fiscal year.

Gross margins for retail drugstores, online pharmacy and wholesale were 25.9%, 10.5%, and 12.7%, respectively, for the fiscal year ended March 31, 2018. This compared to gross margins for retail drugstores, online pharmacy and wholesale of 26.5%, 10.1%, and 9.6%, respectively, for the last fiscal year.

Loss from operations

Sales and marketing expenses increased by $5.82 million, or 45.0%, to $18.74 million for the fiscal year ended March 31, 2018 from $12.92 million for the last fiscal year, primarily due to increase in labor and rent related to our store expansions and rising local living cost.

General and administrative expenses increased by $10.14 million, or 131.9%, to $17.82 million for the fiscal year ended March 31, 2018 from $7.68 million for the last fiscal year. The increase in general and administrative expenses was primarily due to the increased number of administrative staff and their compensation, as well as additional accounts receivable and advances to vendors allowance of $4.7 million in the fiscal year ended March 31, 2018 as compared to an increase of $0.7 million in allowance in the year ended March 31, 2017.

Impairment of long-lived assets was $1.58 million for the fiscal year ended March 31, 2018, compared to $2.12 million for the last fiscal year. Jiuxin Medicine started outsourcing its logistics service to Astro Boy Cloud Pan (Hangzhou) Storage and Logistics Co. Ltd, Jiuxin Medicine's warehouse lease has been terminated. As a result, approximately unamortized $1,583,186 warehouse improvement is recognized as expense in the year ended March 31, 2018. Such impairment was made after we estimated that the implied fair value of long-lived assets was lower than the carrying value.

Loss from operations increased by $11.92 million, or 195.5%, to $18.02 million for the fiscal year ended March 31, 2018 from $6.10 million for the last fiscal year. Operating margin was negative 18.8% for the fiscal year ended March 31, 2018, compared to negative 7.5% for the last fiscal year.

Net loss

Net loss attributable to common shareholders for the fiscal year ended March 31, 2018 was $17.06 million, or $0.68 per basic and diluted share. This compared to net loss attributable to common shareholders of $5.64 million, $0.28 per basic and diluted share, for the last fiscal year.

Financial Condition

As of March 31, 2018, the Company had cash of $15.13 million, compared to $18.36 million as of March 31, 2017. Net cash used in operating activities was $2.07 million for the fiscal year ended March 31, 2018, compared to net cash provided by operating cash flow of $1.56 million for the last fiscal year. Net cash used in investing activities was $2.98 million for the fiscal year ended March 31, 2018, compared to $0.05 million for the last fiscal year. Net cash used in financing activities was $0.77 million for the fiscal year ended March 31, 2018, compared to net cash provided by financing activities of $10.64 million for the last 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://www.chinajojodrugstores.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

                                                                                                 CONSOLIDATED BALANCE SHEETS


                                                                                                                                                                         March 31,               March 31,

                                                                                                                                                                               2018                    2017
                                                                                                                                                                               ----                    ----

    ASSETS

    CURRENT ASSETS

    Cash                                                                                                                                                                             $15,132,640                $18,364,424

    Restricted cash                                                                                                                                                                   16,319,551                  9,431,386

    Financial assets available for sale                                                                                                                                                  175,140                     87,068

    Notes receivable                                                                                                                                                                     279,082                    253,394

    Trade accounts receivable, net of allowance for doubtful accounts of $4,561,314 and                                                                                                8,322,393                  8,561,596
                                                                                                                  $1,415,505, as of March 31, 2018 and 2017 respectively

    Inventories                                                                                                                                                                       13,429,568                  9,923,101

    Other receivables, net of allowance for doubtful accounts of $ 184,720 and $26,854,                                                                                                3,098,079                  2,269,193
        as of March 31, 2018 and 2017, respectively

    Advances to suppliers, net of allowance for doubtful accounts of $3,058,092 and                                                                                                    3,447,452                  5,504,141
                                                                                                                 $1,502,255, as of March 31, 2018 and 2017, respectively

    Other current assets                                                                                                                                                               2,116,237                  1,566,155
                                                                                                                                                                                       ---------                  ---------

    Total current assets                                                                                                                                                              62,320,142                 55,960,458
                                                                                                                                                                                      ----------                 ----------


    PROPERTY AND EQUIPMENT, net                                                                                                                                                        2,843,640                  4,263,157
                                                                                                                                                                                       ---------                  ---------


    OTHER ASSETS

    Long-term investment                                                                                                                                                                  40,890                     46,152

    Farmland assets                                                                                                                                                                      796,286                    718,787

    Long term deposits                                                                                                                                                                 2,501,968                  2,294,848

    Other noncurrent assets                                                                                                                                                            1,253,352                  1,177,005

    Intangible assets, net                                                                                                                                                             4,056,414                  2,712,611
                                                                                                                                                                                       ---------                  ---------

    Total other assets                                                                                                                                                                 8,648,910                  6,949,403
                                                                                                                                                                                       ---------                  ---------


    Total assets                                                                                                                                                                     $73,812,692                $67,173,018
                                                                                                                                                                                     ===========                ===========


    LIABILITIES AND STOCK HOLDERS' EQUITY
    -------------------------------------

    CURRENT LIABILITIES

    Short-term loan payable                                                                                                                                                       $            -            $            -

    Accounts payable, trade                                                                                                                                                           25,259,526                 19,441,195

    Notes payable                                                                                                                                                                     19,180,200                 12,691,575

    Other payables                                                                                                                                                                     4,272,523                  2,916,283

    Other payables - related parties                                                                                                                                                     850,342                    927,052

    Customer deposits                                                                                                                                                                  4,040,867                  2,675,030

    Taxes payable                                                                                                                                                                        366,040                    681,939

    Accrued liabilities                                                                                                                                                                  841,993                    679,350
                                                                                                                                                                                         -------                    -------

    Total current liabilities                                                                                                                                                         54,811,491                 40,012,424
                                                                                                                                                                                      ----------                 ----------


    Purchase option and warrants liability                                                                                                                                               138,796                    496,217
                                                                                                                                                                                         -------                    -------

    Total liabilities                                                                                                                                                                 54,950,287                 40,508,641
                                                                                                                                                                                      ----------                 ----------


    COMMITMENTS AND CONTINGENCIES


    STOCKHOLDERS' EQUITY

    Common stock; $0.001 par value; 250,000,000 shares authorized; 28,936,778 and                                                                                                         28,937                     25,215
        25,214,678 shares issued and outstanding as of March 31, 2018 and March 31,
        2017

    Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and                                                                                                            -                         -
        outstanding as of March 31, 2018 and March 31,2017

    Additional paid-in capital                                                                                                                                                        43,599,089                 36,581,248

    Statutory reserves                                                                                                                                                                 1,309,109                  1,309,109

    Accumulated deficit                                                                                                                                                             (29,661,190)              (12,601,257)

    Accumulated other comprehensive income                                                                                                                                             3,586,460                  1,350,062
                                                                                                                                                                                       ---------                  ---------

    Total stockholders' equity                                                                                                                                                        18,862,405                 26,664,377
                                                                                                                                                                                      ----------                 ----------


    Total liabilities and stockholders' equity                                                                                                                                       $73,812,692                $67,173,018
                                                                                                                                                                                     ===========                ===========

 

 

                                                                CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

                                                         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


                                                                                                                          For the years ended
                                                                                                                               March 31,
                                                                                                                               ---------

                                                                                                                      2018                    2017
                                                                                                                      ----                    ----

    REVENUES, NET                                                                                                              $96,112,706          $81,499,045


    COST OF GOODS SOLD                                                                                                          75,987,537           64,872,127
                                                                                                                                ----------           ----------


    GROSS PROFIT                                                                                                                20,125,169           16,626,918
                                                                                                                                ----------           ----------


    SELLING EXPENSES                                                                                                            18,739,492           12,923,192

    GENERAL AND ADMINISTRATIVE EXPENSES                                                                                         17,823,661            7,684,862

    IMPAIRMENT OF LONG-LIVED ASSETS                                                                                              1,583,186            2,117,042
                                                                                                                                 ---------            ---------

    TOTAL OPERATING EXPENSES                                                                                                    38,146,339           22,725,096
                                                                                                                                ----------           ----------


    LOSS FROM OPERATIONS                                                                                                      (18,021,170)         (6,098,178)


    INTEREST INCOME                                                                                                                478,976              379,790

    INTEREST EXPENSE                                                                                                                     -             (1,349)

    OTHER INCOME, NET                                                                                                              201,096               19,888

    CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS                                                                           357,421              140,032
    LIABILITY



    LOSS BEFORE INCOME TAXES                                                                                                  (16,983,677)         (5,559,817)


    PROVISION FOR INCOME TAXES                                                                                                      76,256               84,387
                                                                                                                                    ------               ------


    NET LOSS                                                                                                                  (17,059,933)         (5,644,204)


    OTHER COMPREHENSIVE LOSS

    Foreign currency translation adjustments                                                                                     2,236,398          (1,507,751)
                                                                                                                                 ---------           ----------


    COMPREHENSIVE LOSS                                                                                                        (14,823,535)         (7,151,955)


    WEIGHTED AVERAGE NUMBER OF SHARES:

    Basic                                                                                                                       25,241,748           20,396,217
                                                                                                                                ==========           ==========

    Diluted                                                                                                                     25,241,748           20,396,217
                                                                                                                                ==========           ==========


    LOSS PER SHARES:

    Basic                                                                                                                          $(0.68)             $(0.28)
                                                                                                                                    ======               ======

    Diluted                                                                                                                        $(0.68)             $(0.28)
                                                                                                                                    ======               ======

 

 

                                                                                     CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

                                                                                     CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


                                                                                                                                         Accumulated

                               Common Stock                        Retained Earnings                                        other                     Non-
                               ------------                        -----------------

                     Number of                             Paid-in     Statutory                                                        comprehensive                     controlling

                       shares               Amount         capital     reserves                           Unrestricted                  income/(loss)                      interest      Total
                       ------               ------         -------     --------                           ------------                  -------------                      --------      -----

    BALANCE,                     17,735,504        $17,736               22,088,267                                           1,309,109                         (6,957,053)                 2,857,813       -       $19,315,872
    March 31,
    2016.



    Stock based                   1,690,174          1,690                2,246,960                                                   -                                  -                         -      -         2,248,650
        compensation

    Net loss                              -             -                       -                                                  -                        (5,644,204)                         -      -       (5,644,204)

    Private direct                4,840,000          4,840               10,643,160                                                   -                                  -                         -      -        10,648,000
        offering
        financing


    Issuance of                     949,000            949                1,602,821                                                   -                                  -                                          1,603,810
        common
        stocks in
        exchange
        of debts



    Foreign                               -             -                       -                                                  -                                  -               (1,507,751)              (1,507,751)
        currency
        translation
        loss


    BALANCE,                     25,214,678        $25,215               36,581,248                                           1,309,109                        (12,601,257)                 1,350,062       -       $26,664,377
        March 31,
        2017.


    Stock based                   3,722,100          3,722                7,017,841                                                   -                                                            -      -         7,021,563
        compensation

    Net loss                              -                                                                                        -                       (17,059,933)                         -      -      (17,059,933)
                                        ---                                                                                      ---                        -----------                        ---    ---       -----------

    Foreign                               -             -                       -                                                  -                                                    2,236,398       -         2,236,398
        currency
        translation
        loss


    BALANCE,                     28,936,778         28,937               43,599,089                                           1,309,109                        (29,661,190)                 3,586,460       -        18,862,405
        March 31,
        2018.

 

 

                                                                                      CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

                                                                                          CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                                                        For the years ended
                                                                                                                                             March 31,
                                                                                                                                             ---------

                                                                                                                                    2018                    2017
                                                                                                                                    ----                    ----

    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income                                                                                                                             $(17,059,933)         $(5,644,204)

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

    Bad debt direct write-off and provision                                                                                                    4,009,636               679,271

    Depreciation and amortization                                                                                                              1,383,810             1,316,747

    Impairment of prepayment of lease use right                                                                                                        -            1,246,788

    Farmland assets impairment                                                                                                                         -              761,403

    Impairment of land and road improvement                                                                                                            -              108,851

    Impairment of leasehold improvement                                                                                                        1,583,186                     -

    Stock based compensation                                                                                                                   7,021,563             2,248,650

    Change in fair value of purchase option derivative liability                                                                               (357,421)            (140,084)

    Change in operating assets:

    Accounts receivable, trade                                                                                                               (2,072,486)            (717,386)

    Notes receivable                                                                                                                             (1,005)            (244,713)

    Inventories and biological assets                                                                                                        (2,411,209)              191,564

    Other receivables                                                                                                                          (489,334)            (773,359)

    Advances to suppliers                                                                                                                      1,121,006           (3,020,156)

    Long term deposit                                                                                                                             15,103                     -

    Other current assets                                                                                                                       (377,391)            (148,983)

    Other noncurrent assets                                                                                                                       36,091                35,509

    Change in operating liabilities:

    Accounts payable, trade                                                                                                                    3,726,625             3,936,178

    Other payables and accrued liabilities                                                                                                     1,115,267             1,250,755

    Customer deposits                                                                                                                          1,048,939               237,891

    Taxes payable                                                                                                                              (362,513)              234,780
                                                                                                                                                --------               -------

    Net cash provided by operating activities                                                                                                (2,070,066)            1,559,502
                                                                                                                                              ----------             ---------


    CASH FLOWS FROM INVESTING ACTIVITIES:

    Disposal of financial assets available for sale                                                                                                    -              445,968

    Purchase of financial assets available for sale                                                                                             (75,513)             (89,194)

    Acquisition of equipment                                                                                                                   (414,398)            (140,209)

    Increase intangible assets                                                                                                               (1,140,102)                    -

    Termination of a joint venture                                                                                                                     -              104,059

    Investment in a joint venture                                                                                                                      -             (96,180)

    Additions to leasehold improvements                                                                                                      (1,347,489)            (270,990)
                                                                                                                                              ----------              --------

    Net cash provided by (used in) investing activities                                                                                      (2,977,502)             (46,546)
                                                                                                                                              ----------               -------


    CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayment of short-term bank loan                                                                                                                  -             (29,731)

    Change in restricted cash                                                                                                                (5,664,224)            3,519,030

    Proceeds from notes payable                                                                                                               27,461,423            24,577,096

    Repayment of notes payable                                                                                                              (22,476,740)         (28,445,215)

    Changes in other payables-related parties                                                                                                          -              375,659

    Proceeds from sale of stock and warrants                                                                                                           -           10,648,000

    Repayment of other payables-related parties                                                                                                 (91,395)                    -
                                                                                                                                                 -------                   ---

    Net cash provided by (used in) financing activities                                                                                        (770,936)           10,644,839
                                                                                                                                                --------            ----------


    EFFECT OF EXCHANGE RATE ON CASH                                                                                                            2,586,720             (465,244)
                                                                                                                                               ---------              --------


    (DECREASE) INCREASE IN CASH                                                                                                              (3,231,784)           11,692,551


    CASH, beginning of year                                                                                                                   18,364,424             6,671,873
                                                                                                                                              ----------             ---------


    CASH, end of year                                                                                                                        $15,132,640           $18,364,424
                                                                                                                                             ===========           ===========


    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    Cash paid for interest                                                                                                             $               -               $1,349
                                                                                                                                     ===             ===               ======

    Cash paid for income taxes                                                                                                                   $27,825               $57,247
                                                                                                                                                 =======               =======

    Issuance of common stocks in exchange of debts                                                                                     $               -           $1,603,810
                                                                                                                                     ===             ===           ==========

 

 

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SOURCE China Jo-Jo Drugstores, Inc.

 

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