omniture

China Jo-Jo Drugstores Reports Fiscal 2017 First Quarter Results

2016-08-15 21:00 2063

HANGZHOU, China, August 15, 2016 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: CJJD) today announced financial results for its first fiscal quarter ended June 30, 2016.

FY 2017 First Quarter Highlights:

  • Revenue was $20.9 million compared to $21.3 million a year ago
  • Gross profit increased 2.4% year-over-year to $4.5 million
  • Gross margin increased 90bps year-over-year to 21.4%, retail pharmacy gross margin increased 280 bps to 28.5% from a year ago
  • GAAP net income was $131,153 or $0.01 per diluted share compared to net income of $110,611 or $0.01 per diluted share a year ago
  • Adjusted net income was $754,000 or $0.04 per diluted share compared to adjusted net income of $277,481 or $0.02 per diluted share a year ago

China Jo-Jo's Chairman and CEO, Mr. Liu Lei commented, "Our results in the first quarter were temporarily impacted by lower pharmacy traffic due to preparation for the G20 summit in Hangzhou, and the unexpected disruption in the Yikatong referral business. We are proactively seeking referral arrangement with alternative providers of Pharmacy Benefit Management. We remain focused on increasing our gross margin and expanding the online and offline integration of our wellness offerings."

Net revenues for the quarter were $20.9 million compared to $21.3 million in the same quarter a year ago, a decrease of $375, 377 or 1.8%. Retail drugstores sales were $12.7 million and increased 4.4% compared to the prior year period. The Company continues to launch in-pharmacy virtual doctor clinics, provide access to mobile payment and implement other operational strategies to promote same store growth. The pharmacy store count increased to 61 as of June 30, 2016, compared to 59 stores a year ago.

Online pharmacy sales for the quarter were $5.1 million compared to $6.0 million in the same quarter a year ago, a decrease of $894,689 or 15.0%. The decrease was mainly due to the decline in referral transactions from Yikatong on the Company's own online pharmacy website. Excluding the RMB depreciation, sales via e-commerce platforms increased by 6.0% year over year. The Company is proactively seeking referral arrangements with alternative providers of Pharmacy Benefit Management.

Net income was $131,153 or $0.01 per diluted share compared to last year's first quarter net income of $110,611 or $0.01 per diluted share.

Adjusted net income was $754,000 or $0.04 per diluted share compared to last year's first quarter adjusted net income of $277,481 million or $0.02 per diluted share.

About China Jo-Jo Drugstores, Inc.

China Jo-Jo Drugstores, Inc., is a leading China-based pharmacy with retail, wholesale and online distribution of pharmaceutical and health care products through its online and retail pharmacies. As of July 26, 2016, the Company had 62 retail pharmacies in Zhejiang Province. The Company's wholesale subsidiary supplies its retail stores, and distributes drug and healthcare products to other drugstores and drug vendors. For more information, please visit: www.jiuzhou-drugstore.com (Chinese) and www.chinajojodrugstores.com (English).

Forward Looking Statement

Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "estimate," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate," the negatives thereof, or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. It is routine for the Company's internal projections and expectations to change as the quarter and year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change. Although these expectations may change, the Company is under no obligation to inform you if they do. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of numerous factors, including the risks associated with the effect of changing economic conditions in the People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

CHINA JO-JO DRUGSTORES, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)










June 30,



March 31,




2016



2016


ASSETS









CURRENT ASSETS









Cash


$

5,058,091



$

6,671,873


Financial assets available for sale



451,512




465,165


Restricted cash



6,510,454




13,747,990


Notes receivable



54,622




15,506


Trade accounts receivable, net



8,861,884




8,054,597


Inventories



10,732,441




10,802,691


Other receivables, net



1,769,878




1,376,468


Advances to suppliers, net



4,691,995




4,230,665


Other current assets



1,881,243




1,518,048


Total current assets



40,012,120




46,883,003











PROPERTY AND EQUIPMENT, net



5,180,714




5,543,076











OTHER ASSETS









Long-term investment



105,353




108,539


Farmland assets



1,636,757




1,562,205


Long term deposits



2,380,086




2,452,056


Other noncurrent assets



2,871,139




2,595,129


Intangible assets, net



2,835,454




2,928,779


Total other assets



9,828,788




9,646,708











Total assets


$

55,021,622



$

62,072,787











LIABILITIES AND STOCKHOLDERS' EQUITY









CURRENT LIABILITIES









Short-term loan payable


$

30,101



$

31,011


Accounts payable, trade



15,509,963




16,667,396


Notes payable



11,573,880




17,595,634


Other payables



1,892,969




1,917,821


Other payables - related parties



2,216,223




2,199,775


Customer deposits



2,695,112




2,610,151


Taxes payable



430,162




483,770


Accrued liabilities



520,689




615,056


Warrant liability-current portion



106,970




-


Total current liabilities



34,976,069




42,120,614











Warrant liability



561,527




636,301


Total liabilities



35,537,596




42,756,915











STOCKHOLDERS' EQUITY









Common stock; $0.001 par value; 250,000,000 shares authorized; 19,373,504 and
17,735,504 shares issued and outstanding as of June 30, 2016 and March 31, 2016



19,374




17,736


Additional paid-in capital



22,677,280




22,088,267


Statutory reserves



1,309,109




1,309,109


Accumulated deficit



(7,494,419)




(6,957,053)


Accumulated other comprehensive income



2,972,682




2,857,813


Total stockholders' equity



19,484,026




19,315,872











Total liabilities and stockholders' equity


$

55,021,622



$

62,072,787


CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)



For the three months ended
June 30,



2016


2015

REVENUES, NET


$

20,935,915



$

21,311,292











COST OF GOODS SOLD



16,454,111




16,935,609











GROSS PROFIT



4,481,804




4,375,683











SELLING EXPENSES



2,682,721




3,096,369


GENERAL AND ADMINISTRATIVE EXPENSES



1,918,482




920,230


TOTAL OPERATING EXPENSES



4,601,203




4,016,599











INCOME (LOSS) FROM OPERATIONS



(119,399)




359,084











INTEREST INCOME



224,422




74,997


INTEREST EXPENSE



(439)




(159,931)


OTHER INCOME (EXPENSES), NET



87,199




(38,515)


CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITIES



(32,196)




(42,837)











INCOME BEFORE INCOME TAXES



159,587




192,798











PROVISION FOR INCOME TAXES



28,434




82,187











NET INCOME



131,153




110,611











OTHER COMPREHENSIVE INCOME









Foreign currency translation adjustments



114,869




86,300











COMPREHENSIVE INCOME


$

246,022



$

196,911











WEIGHTED AVERAGE NUMBER OF SHARES:









Basic



18,239,065




15,650,504


Diluted



18,276,565




15,975,583











EARNINGS PER SHARES:









Basic


$

0.01



$

0.01


Diluted


$

0.01



$

0.01


CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)



Three months ended
June 30,



2016


2015

CASH FLOWS FROM OPERATING ACTIVITIES:









Net income


$

131,153



$

110,611


Adjustments to reconcile net income to net cash (used in) operating activities:









Depreciation and amortization



246,499




419,806


Stock compensation



590,651




124,033


Bad debt direct write-off and provision



70,736




(676,858)


Change in fair value of purchase option derivative liability



32,196




42,837


Change in operating assets:









Accounts receivable, trade



(1,360,690)




1,867,046


Notes receivable



(40,252)




74,535


Inventories



(251,067)




(1,295,009)


Other receivables



(202,805)




(2,715)


Advances to suppliers



(605,769)




(1,040,870)


Other current assets



(414,770)




421,682


Other noncurrent assets



(358,242)




-


Change in operating liabilities:









Accounts payable, trade



(679,734)




(1,519,464)


Other payables and accrued liabilities



(47,600)




(352,973)


Customer deposits



164,352




499,141


Taxes payable



(40,087)




155,577


Net cash used in operating activities



(2,765,429)




(1,172,621)











CASH FLOWS FROM INVESTING ACTIVITIES:









Purchase of equipment



(9,372)




(99,393)


Investment to a joint venture



-




(114,660)


Additions to leasehold improvements



(26,532)




-


Net cash used in investing activities



(35,904)




(214,053)











CASH FLOWS FROM FINANCING ACTIVITIES:









Change in restricted cash



6,951,672




(4,853,800)


Proceeds from notes payable



7,768,165




13,793,434


Repayments of notes payable



(13,368,248)




(10,074,912)


Proceeds from other payables-related parties



36,662




131,872


Net cash provided by (used in) financing activities



1,388,251




(1,003,406)











EFFECT OF EXCHANGE RATE ON CASH



(200,700)




21,261











DECREASE IN CASH



(1,613,782)




(2,368,819)











CASH, beginning of period



6,671,873




4,023,581











CASH, end of period


$

5,058,091



$

1,654,762











SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:









Cash paid for interest


$

412



$

159,931


Cash paid for income taxes


$

17,973



$

25,969


Use of non-GAAP financial measures

To supplement China Jo-Jo's consolidated financial results presented in accordance with GAAP, China Jo-Jo uses the following measures defined as non-GAAP financial measures by the SEC: net income (loss) excluding share-based compensation expenses and change in fair value of derivative liabilities, and diluted net income (loss) per share excluding share-based compensation expenses and change in the fair value of derivatives liabilities. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

China Jo-Jo believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based compensation expenses and change in fair value of derivative liabilities that may not be indicative of its operating performance from a cash perspective. China Jo-Jo believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to China Jo-Jo's historical performance and liquidity. China Jo-Jo computes its non-GAAP financial measures using the same consistent method from quarter to quarter. China Jo-Jo believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP measures is that they exclude share-based compensation and change in fair value of derivative liabilities charge that has been and will continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The table under the heading Reconciliation to non-GAAP Financial Measures in the beginning of the release has more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Reconciliation to non-GAAP Financial Measures


Three Months Ended

June 30


2016

2015

Net income

$131,153

$110,611

Non-GAAP adjustments:



Share based compensation expense

590,651

124,033

Change in fair value of derivative liabilities

32,196

42,837

Adjusted net income

754,000

277,481

Adjusted net income per share - diluted

0.04

0.02

Investor Relations Contact:
Steve Liu
steve.liu@jojodrugstores.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-jo-jo-drugstores-reports-fiscal-2017-first-quarter-results-300313259.html

Source: China Jo-Jo Drugstores, Inc.
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