China Jo-Jo Drugstores Reports Second Quarter 2020 Financial Results

China Jo-Jo Drugstores, Inc. announced its financial results for the second fiscal quarter ended September 30, 2019.

HANGZHOU, China, Nov. 14, 2019 /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 provider of healthcare services in China, today announced its financial results for the second fiscal quarter ended September 30, 2019.

Mr. Lei Liu, Chief Executive Officer and Chairman of Jo-Jo Drugstores, commented, “We are pleased to announce our financial results for the second quarter of fiscal year 2020, with revenue increasing by 3.4% compared to the same period last year. We made great strides in boosting our business and optimizing our operation. As a result, our gross profit had a 15.5% increase and gross margin had a 2.4 percent points increase in the second quarter of 2019. We will continue executing our long-term growth strategy, improving our operations to deliver high quality services to our customers in a challenging and competitive environment.”

Second Quarter of Fiscal 2020 Financial Highlights

For the Three Months Ended September 30,

($ millions, except per share data)

2019

2018

% Change

Revenue

28.35

27.41

3.4%

Retail drugstores

18.00

18.14

-0.7%

Online pharmacy

2.35

2.12

10.8%

Wholesale

8.00

7.15

11.9%

Gross profit

6.69

5.80

15.5%

Gross margin

23.6%

21.2%

2.4 pp*

Loss from operations

(1.62)

(1.64)

1.6%

Net loss

(1.35)

(1.60)

16.0%

Loss per share

(0.04)

(0.06)

33.3%

*Notes: pp represents percentage points

  • Revenue increased by 3.4% to $28.35 million for the three months ended September 30, 2019 from $27.41 million for the same period of last year.
  • Gross profit increased by 15.5% to $6.69 million for the three months ended September 30, 2019 from $5.80 million for the same period of last year.
  • Gross margin increased by 2.4 percentage points to 23.6% from 21.2% for the same period of last year.
  • Net loss was $1.35 million, or $0.04 per basic and diluted share, for the three months ended September 30, 2019, compared to $1.60 million, or $0.06 per basic and diluted share, for the same period of last year.

Second Quarter of Fiscal 2020 Financial Results

Revenue

Revenue for the three months ended September 30, 2019 increased by $0.94 million, or 3.4%, to $28.35 million from $27.41 million for the same period of last year. The increase in revenue was primarily due to the growth in our wholesale business and online pharmacy.

For the Three Months Ended September 30,

2019

2018

($ millions)

Revenue

Cost of
Goods

Gross
Margin

Revenue

Cost of
Goods

Gross
Margin

Retail drugstores

18.00

12.47

30.7%

18.14

13.28

26.8%

Online pharmacy

2.35

2.03

13.6%

2.12

1.91

10.1%

Wholesale

8.00

7.16

10.6%

7.15

6.42

10.1%

Total

28.35

21.66

23.6%

27.41

21.61

21.2%

Revenue from the retail drugstores business decreased slightly by $0.14 million, or 0.7%, to $18.00 million for the three months ended September 30, 2019 from $18.14 million for the same period of last year, due to the RMB’s dramatic depreciation against the USD from the three months ended September 30, 2018.

Revenue from the online pharmacy business increased by $0.23 million, or 10.8%, to $2.35 million for the three months ended September 30, 2019 from $2.12 million for the same period of last year. The increase was primarily attributable to an increase in sales via e-commerce platforms such as Tmall, offset slightly by a decline in sales via the Company’s official site. Popular products at reasonable prices are key to success in our online business. In order to promote the Company’s sales, the Company focused on selecting medical equipment tailored to the demands of local customers.

Revenue from the wholesale business increased by $0.85 million, or 11.9%, to $8.00 million for the three months ended September 30, 2019 from $7.15 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 slightly by $0.05 million, or 0.2%, to $21.66 million for the three months ended September 30, 2019 from $21.61 million for the same period of last year. Gross profit increased by $0.89 million, or 15.5%, to $6.69 million for three months ended September 30, 2019 from $5.80 million for the same period of last year. Overall gross margin increased by 2.4 percentage points to 23.6% for the three months ended September 30, 2019, from 21.2% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 30.7%, 13.6%, and 10.6%, respectively, for the three months ended September 30, 2019. This compared to gross margins for retail drugstores, online pharmacy and wholesale of 26.8%, 10.1%, and 10.1%, respectively, for the same period of last year.

Loss from operations

Selling and marketing expenses increased by $1.27 million, or 24.2%, to $6.49 million for the three months ended September 30, 2019 from $5.22 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increases in labor costs related to the Company’s store expansions and rising local cost of living.

General and administrative expenses decreased by $0.40 million, or 17.7%, to $1.82 million for the three months ended September 30, 2019 from $2.22 million for the same period of last year. In the three months ended September 30, 2018, the Company recorded additional bad debt allowance of $0.63 million. In comparison, the Company recorded additional bad debts allowance of $0.01 million in the three months ended September 30, 2019.

Loss from operations was $1.62 million for the three months ended September 30, 2019, compared to $1.64 million for the same period of last year. Operating margin was negative 5.7% for the three months ended September 30, 2019, compared to negative 6.0% for the same period of last year.

Net loss

Net loss was $1.35 million, or $0.04 per basic and diluted share for the three months ended September 30, 2019, compared to net loss of $1.60 million, or $0.06 per basic and diluted share for the same period of last year.

Six Months Ended September 30, 2019 Financial Highlights

For the Six Months Ended September 30,

($ millions, except per share data)

2019

2018

% Change

Revenue

53.63

50.18

6.9%

Retail drugstores

34.74

34.10

1.9%

Online pharmacy

4.79

4.14

15.7%

Wholesale

14.10

11.93

18.2%

Gross profit

12.75

11.41

11.7%

Gross margin

23.8%

22.7%

1.1 pp*

Loss from operations

(4.38)

(2.21)

-98.3%

Net loss

(3.73)

(2.30)

-62.0%

Loss per share

(0.10)

(0.08)

-25.0%

*Notes: pp represents percentage points

  • Revenue increased by 6.9% to $53.63 million for the six months ended September 30, 2019 from $50.18 million for the same period of last year.
  • Gross profit increased by 11.7% to $12.75 million for the six months ended September 30, 2019 from $11.41 million for the same period of last year.
  • Gross margin increased by 1.1 percentage points to 23.8% from 22.7% for the same period of last year.
  • Net loss was $3.73 million, or $0.10 per basic and diluted share, for the six months ended September 30, 2019, compared to $2.30 million, or $0.08 per basic and diluted share, for the same period of last year.

Six Months Ended September 30, 2019 Financial Results

Revenue

Revenue for the six months ended September 30, 2019 increased by $3.45 million, or 6.9%, to $53.63 million from $50.18 million for the same period of last year. The increase in revenue was primarily due to the growth in wholesale business and online pharmacy.

For the Six Months Ended September 30,

2019

2018

($ millions)

Revenue

Cost of
Goods

Gross
Margin

Revenue

Cost of
Goods

Gross
Margin

Retail drugstores

34.74

24.15

30.5%

34.10

24.44

28.3%

Online pharmacy

4.79

4.13

13.9%

4.14

3.65

11.9%

Wholesale

14.10

12.60

10.7%

11.93

10.68

10.5%

Total

53.63

40.88

23.8%

50.18

38.77

22.7%

Revenue from the retail drugstores business increased by $0.64 million, or 1.9%, to $34.74 million for the six months ended September 30, 2019 from $34.10 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 $0.65 million, or 15.7%, to $4.79 million for the six months ended September 30, 2019 from $4.14 million for the same period of last year. The increase was primarily attributable to an increase in sales via e-commerce platforms such as Tmall, offset slightly by the decline in sales via the Company’s official site.

Revenue from the wholesale business increased by $2.17 million, or 18.2%, to $14.10 million for the six months ended September 30, 2019 from $11.93 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 $2.11 million, or 5.4%, to $40.88 million for the six months ended September 30, 2019 from $38.77 million for the same period of last year. Gross profit increased by $1.34 million, or 11.7%, to $12.75 million for the six months ended September 30, 2019 from $11.41 million for the same period of last year. Overall gross margin increased by 1.1 percentage points to 23.8% for the six months ended September 30, 2019, from 22.7% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 30.5%, 13.9%, and 10.7%, respectively, for the six months ended September 30, 2019. This compared to gross margins for retail drugstores, online pharmacy and wholesale of 28.3%, 11.9%, and 10.5%, respectively, for the same period of last year.

Loss from operations

Selling and marketing expenses increased by $2.60 million, or 26.4%, to $12.45 million for the six months ended September 30, 2019 from $9.85 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increases in labor costs related to the Company’s store expansions and rising local cost of living.

General and administrative expenses increased by $0.91 million, or 24.0%, to $4.68 million for the six months ended September 30, 2019 from $3.77 million for the same period of last year. The bad debt expense related to the Company’s accounts receivable decreased by approximately $0.1 million due to certain aged accounts. Additionally, in order to better reflect the attributes of expenses, certain clinic labor expenses, which were originally allocated to G&A expense are now allocated to selling expense in the six months ended September 20, 2019.

Loss from operations was $4.38 million for the six months ended September 30, 2019, compared to $2.21 million for the same period of last year. Operating margin was negative 8.2% for the six months ended September 30, 2019, compared to negative 4.4% for the same period of last year.

Net loss

Net loss was $3.73 million, or $0.10 per basic and diluted share for the six months ended September 30, 2019, compared to net loss of $2.30 million, or $0.08 per basic and diluted share for the same period of last year.

Financial Condition

As of September 30, 2019, the Company had cash of $17.40 million, compared to $9.32 million as of March 31, 2019. Net cash provided by operating activities was $0.97 million for the six months ended September 30, 2019, compared to net cash used in operating activities of $2.92 million for the same period of last year. Net cash used in investing activities was $1.45 million for the six months ended September 30, 2019, compared to $0.39 million for the same period of last year. Net cash provided by financing activities was $6.38 million for the six months ended September 30, 2019, compared to net cash used in financing activities of $2.19 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. In addition, Jo-Jo Drugstores cultivates herbs used for traditional Chinese medicine. For more information about the Company, please visit http://jiuzhou360.com. The Company routinely posts important information on its website.

Forward-Looking Statements

This press release contains information about the Company’s view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. The Company’s encourages you to review other factors that may affect its future results in the Company’s annual reports and in its other filings with the Securities and Exchange Commission.

For more information, please contact:

Company Contact:

Frank Zhao
Chief Financial Officer
+86-571-88077108
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

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