Exhibit 99.1

 

China Jo-Jo Drugstores Reports Fiscal Year 2020 Financial Results

 

HANGZHOU, China, July 10, 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 fiscal year ended March 31, 2020.

 

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, “We are pleased to present our financial results for our 2020 fiscal year. Our revenue records $117.33 million for the fiscal year of 2020, up 9.1% compared to $107.55 million for the previous fiscal year. Revenue from retail drugstores, online pharmacy, and wholesale segments increased by 2.4%, 54.1% and 12.4% respectively, demonstrating our ability to realize the potential of our business model. When facing the pandemic of COVID-19, we are uniquely positioned to understand consumer and market needs and how to address them. We will continue monitoring the latest developments and taking appropriate measures to combat the COVID-19 pandemic and provide supports to our customers and the society. Looking forward, we are confident that we are on the right track to deliver significant value to all our investors and shareholders as we have a leading consumer brand in China with a diversified portfolio of essential health care businesses and we will continue to endeavor to provide the best experience to our customers.”

 

Fiscal Year 2020 Financial Highlights

 

		For the Year Ended March 31,
($ millions, except per share data)		2020				2019				% Change
Revenue			117.33				107.55				9.1	%
Retail drugstores			74.08				72.33				2.4	%
Online pharmacy			13.54				8.78				54.1	%
Wholesale			29.71				26.43				12.4	%
Gross profit			25.53				25.11				1.7	%
Gross margin			21.8	%			23.3	%			-1.5 pp	*
Loss from operations			(7.00	)			(0.88	)			-699.4	%
Net loss			(6.46	)			(1.32	)			-390.0	%
Loss per share			(0.18	)			(0.03	)			-500.0	%

 

*Notes: pp represents percentage points

 

●

Revenue increased by 9.1% to $117.33 million for the fiscal year ended March 31, 2020 from $107.55 million for the prior fiscal year.

 

●

Gross profit increased by 1.7% to $25.53 million for the fiscal year ended March 31, 2020 from $25.11 million for the prior fiscal year.

 

●

Gross margin decreased by 1.5 percentage points to 21.8% for the fiscal year ended March 31, 2020 from 23.3% for the prior fiscal year.

 

●

Net loss was $6.46 million, or $0.18 per basic and diluted share, for the fiscal year ended March 31, 2020, compared to net loss of $1.32 million, or $0.03 per basic and diluted share, for the prior fiscal year.

 

 

Fiscal Year 2020 Financial Results

 

Revenue

 

Revenue for the fiscal year ended March 31, 2020 increased by $9.78 million, or 9.1%, to $117.33 million from $107.55 million for the prior fiscal year. The increase in revenue was primarily due to the growth in retail drugstores, online pharmacy and wholesale business.

 

		For the Year Ended March 31,
		2020												2019
($ millions)		Revenue				Cost of Goods				Gross Margin				Revenue				Cost of Goods				Gross Margin
Retail drugstores			74.08				53.24				28.1	%			72.34				51.24				29.2	%
Online pharmacy			13.54				12.11				10.6	%			8.78				7.75				11.8	%
Wholesale			29.71				26.45				11.0	%			26.43				23.45				11.3	%
Total			117.33				91.80				21.8	%			107.55				82.44				23.3	%

 

Revenue from the retail drugstores business increased by $1.74 million, or 2.4%, to $74.08 million for the fiscal year ended March 31, 2020 from $72.34 million for the prior fiscal year. The increase was primarily attributable to the consumer-facing benefits, such as 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 $4.76 million, or 54.1%, to $13.54 million for the fiscal year ended March 31, 2020 from $8.78 million for the prior fiscal year. The increase was caused by an increase in sales via e-commerce platforms such as Tmall and an increase in sales via our 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. Additionally, we maintained a membership care program targeted at chronic disease customers. We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine. By implementing a personalized customer care program, we were able to promote our sales. As a result, our sales via these e-commerce platforms increased by 58.3% period over period. The sales via our official website were primarily made by certain pharmacy benefit management providers and insurance companies. For example, we have signed a service contract with Yingda Taihe Life Insurance Co. Ltd. (“Yingda”), a national insurance company. State Grid Corporation of China has bought health insurance package for its employees from Yingda. In the year ended March 31, 2020, we served a local factory of State Grid and sold healthcare products to its employees who used their insurance cards to make payments. The sales from these customers contributed significantly to our official website sales. Additionally, in the first quarter of calendar 2020, during the outbreak of COVID-19, we sold a large quantity of health protective products such as masks. Our official website sales increased by $847,899 or 40.8% year over year.

 

Revenue from the wholesale business increased by $3.28 million, or 12.4%, to $29.71 million for the fiscal year ended March 31, 2020 from $26.43 million for the prior fiscal 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 $9.36 million, or 11.4%, to $91.80 million for the fiscal year ended March 31, 2020 from $82.44 million for the prior fiscal year. Gross profit increased by $0.42 million, or 1.7%, to $25.53 million for fiscal year ended March 31, 2020 from $25.11 million for the prior fiscal year. Overall gross margin decreased by 1.5 percentage points to 21.8% for the fiscal year ended March 31, 2020, from 23.3% for the prior fiscal year.

 

Gross margins for retail drugstores, online pharmacy and wholesale were 28.1%, 10.6%, and 11.0%, respectively, for the fiscal year ended March 31, 2020, compared to the corresponding gross margins of 29.2%, 11.8%, and 11.3% for the prior fiscal year.

 

 

Loss from operations

 

Selling and marketing expenses decreased by $0.48 million, or 1.9%, to $23.79 million for the fiscal year ended March 31, 2020 from $24.27 million for the prior fiscal year, primarily due to decrease in rent. As we closed several stores, rent expense went down. Additionally, we have closely monitored our marketing expense such as small gifts. As a result, our sale and marketing expense declined slightly.

 

General and administrative expenses increased by $6.39 million, or 371.7%, to $8.11 million for the fiscal year ended March 31, 2020 from $1.72 million for the prior fiscal year. In the year ended March 31, 2020, we recorded bad debt expense of $455,159 as compared to a reduction in the allowance for bad debts of $3,346,886 in fiscal year 2019. Additionally, we incurred additional labor cost of approximately $1.5 million as we have expanded certain business. For example, we have been operating two Linjia Clinics and hired more doctors. In addition, in order to obtain business from commercial health insurance providers, we formed a marketing team. Although these businesses have not contributed significantly to our revenue, they incurred labor costs.

 

Impairment of long-lived assets was $0.63 million for the fiscal year ended March 31, 2020, compared to nil for the prior fiscal year. In the year ended March 31, 2020, we evaluated the licenses of insurance applicable drugstores acquired in the past based on their discounted positive cash value. Due to the stricter government insurance policy in fiscal year 2021, the value of these licenses has declined.

 

Loss from operations was $7.00 million for the fiscal year ended March 31, 2020, compared to loss from operations of $0.88 million for the prior fiscal year. Operating margin was (6.0)% and (0.8)% for the fiscal year ended March 31, 2020 and 2019 respectively.

 

Net loss

 

Net loss was $6.46 million, or $0.18 per basic and diluted share for the fiscal year ended March 31, 2020, compared to net loss of $1.32 million, or $0.03 per basic and diluted share for the prior fiscal year.

 

 

Financial Condition

 

As of March 31, 2020, the Company had cash of $16.18 million, compared to $9.32 million as of March 31, 2019. Net cash used in operating activities was $6.91 million for the fiscal year ended March 31, 2020, compared to $5.60 million for the prior fiscal year. Net cash used in investing activities was $4.84 million for the fiscal year ended March 31, 2020, compared to $7.33 million for the prior fiscal year. Net cash provided by financing activities was $19.01 million for the fiscal year ended March 31, 2020, compared to $8.08 million for the prior fiscal year. On April 15, 2019, we closed a registered direct offering of 4,000,008 shares of common stock at $2.50 per share with gross proceeds of $10,000,020 from our effective shelf registration statement on Form S-3. In addition, on June 3, 2020, we closed another registered direct offering of 5,000,0004 shares of common stock at $2.00 per share with gross proceeds of $10,000,008 from our effective shelf registration statement on Form S-3.

 

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

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

		March 31,				March 31,
		2020				2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	16,176,318			$	9,322,463
Restricted cash			14,806,288				15,422,739
Financial assets available for sale			157,159				180,928
Notes receivable			57,005				177,278
Trade accounts receivable			9,770,656				8,692,514
Inventories			12,247,004				13,955,202
Other receivables, net			5,069,442				4,438,230
Advances to suppliers			1,174,800				1,950,252
Other current assets			1,528,540				2,063,375
Total current assets			60,987,212				56,202,981
PROPERTY AND EQUIPMENT, net			7,633,740				8,727,358
OTHER ASSETS
Long-term investment			2,544,451				24,243
Farmland assets			742,347				825,259
Long term deposits			1,456,384				2,157,275
Other noncurrent assets			1,046,763				1,196,197
Operating lease right-of-use assets			21,711,376				-
Intangible assets, net			3,393,960				3,597,323
Total other assets			30,895,281				7,800,297
Total assets		$	99,516,233			$	72,730,636
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term bank loan			1,410,130				-
Accounts payable, trade			21,559,494				23,106,230
Notes payable			26,605,971				25,951,673
Other payables			2,522,330				3,197,221
Other payables - related parties			490,218				795,179
Customer deposits			708,140				771,942
Taxes payable			119,247				125,859
Accrued liabilities			753,612				1,264,182
Long-term loan payable-current portion			2,287,742				-
Current portion of operating lease liabilities			981,090				-
Total current liabilities			57,437,974				55,212,286
Long-term loan payable			4,115,958				-
Long term operating lease  liabilities			19,049,575				-
Employee Deposits			70,507				81,935
Purchase option and warrants liability			64,090				465,248
Total liabilities			80,738,104				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 March 31, 2020 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 March 31, 2020 and March 31, 2019			-				-
Additional paid-in capital			54,209,301				44,905,664
Statutory reserves			1,309,109				1,309,109
Accumulated deficit			(36,400,837	)			(30,587,468	)
Accumulated other comprehensive income			1,440,424				2,508,964
Total stockholders’ equity			20,590,934				18,165,206
Noncontrolling interests			(1,812,805	)			(1,194,039	)
Total equity			18,778,129				16,971,167
Total liabilities and stockholders’ equity		$	99,516,233			$	72,730,636

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 

 

		For the years ended March 31,
		2020				2019
REVENUES, NET		$	117,327,689			$	107,551,012
COST OF GOODS SOLD			91,801,259				82,442,969
GROSS PROFIT			25,526,430				25,108,043
SELLING EXPENSES			23,793,603				24,265,184
GENERAL AND ADMINISTRATIVE EXPENSES			8,108,377				1,718,989
IMPAIRMENT OF LONG-LIVED ASSETS			628,192				-
TOTAL OPERATING EXPENSES			32,530,172				25,984,173
LOSS FROM OPERATIONS			(7,003,742	)			(876,130	)
OTHER INCOME (EXPENSE):
INTEREST INCOME			1,063,747				112,887
INTEREST EXPENSE			(698,518	)			-
OTHER			(204,064	)			(93,311	)
CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS LIABILITY			401,158				(326,452	)
LOSS BEFORE INCOME TAXES			(6,441,419	)			(1,183,006	)
PROVISION FOR INCOME TAXES			16,258				134,763
NET LOSS			(6,457,677	)			(1,317,769	)
ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST			(644,308	)			(391,491	)
NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.			(5,813,369	)			(926,278	)
OTHER COMPREHENSIVE LOSS
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS			(1,068,540	)			(1,077,496	)
COMPREHENSIVE LOSS			(7,526,217	)			(2,395,265	)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic			32,816,567				28,936,778
Diluted			32,816,567				28,936,778
LOSS PER SHARES:
Basic		$	(0.18	)		$	(0.03	)
Diluted		$	(0.18	)		$	(0.03	)

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		For the years ended March 31,
		2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	(6,457,677	)		$	(1,317,769	)
Adjustments to reconcile net income to net cash used in operating activities:
Bad debt direct write-off and provision			446,354				(3,357,851	)
Depreciation and amortization			2,082,817				1,676,413
Impairment of long lived assets			628,192				-
Stock based compensation			34,560				197,100
Change in fair value of purchase option derivative liability			(401,158	)			326,452
Change in operating assets:
Accounts receivable, trade			(1,567,774	)			(116,810	)
Notes receivable			112,803				83,910
Inventories and biological assets			979,935				(1,390,823	)
Other receivables			(1,010,722	)			(1,308,437	)
Advances to suppliers			148,638				3,612,453
Long term deposit			596,209				183,841
Other current assets			(1,278,833	)			(83,372	)
Other noncurrent assets			87,065				(23,511	)
Change in operating liabilities:
Accounts payable, trade			(317,755	)			(528,353	)
Other payables and accrued liabilities			(967,751	)			(328,473	)
Customer deposits			(22,963	)			(3,011,194	)
Taxes payable			115				(216,792	)
Net cash used in operating activities			(6,907,945	)			(5,603,216	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposal of financial assets available for sale			14,356				87,290
Purchase of financial assets available for sale			-				(104,360	)
Acquisition of equipment and building			(656,297	)			(5,450,934	)
Investment in a joint venture			(2,567,083	)			-
Increase intangible assets			(871,145	)			(29,817	)
Additions to leasehold improvements			(756,444	)			(1,828,360	)
Net cash used in investing activities			(4,836,613	)			(7,326,181	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loan			1,435,620				-
Proceeds from third parties loan			7,178,100				-
Repayment of  third parties loan			(658,645	)			-
Proceeds from notes payable			48,974,772				42,030,521
Repayment of notes payable			(46,896,917	)			(34,018,811	)
Increase in financial liability			(7,178	)			81,997
Proceeds from sale of stock and warrants			9,273,077				7,529
Repayment of other payables-related parties			(285,123	)			(22,655	)
Net cash provided by financing activities			19,013,706				8,078,581
EFFECT OF EXCHANGE RATE ON CASH			(1,031,744	)			(1,856,174	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH			6,237,404				(6,706,989	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year			24,745,202				31,452,191
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year		$	30,982,606			$	24,745,202
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes		$	17,198			$	56,422
Cash paid for interest			108,098				-

 

 

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