omniture

China Jo-Jo Drugstores Reports Third Quarter 2020 Financial Results

2020-02-14 22:00 10078

HANGZHOU, China, Feb. 14, 2020 /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 third fiscal quarter ended December 31, 2019.

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, "We delivered outstanding financial results for the third quarter of 2020, with revenue recording $33.36 million, up 7.9% compared to the same period of last year. Benefiting from the growth in retail drugstores and online pharmacy businesses as well as our strong competitive position in the industry, all of our core businesses performed in line with our expectation. Looking forward, amidst the outbreak of 2019 Novel Coronavirus, we are striving to optimize our inventory and operational execution with effective distribution channels to meet the strong domestic demand of pharmaceutical and other healthcare products as well as healthcare services. We are confident that our professional team is able to deliver compelling value to our customers and the communities we serve. We will continue to focus on successful execution of our long-term growth strategies to unleash the full potential of our consumer-centric healthcare business model and create value for all shareholders." 

Third Quarter of Fiscal 2020 Financial Highlights



For the Three Months Ended December 31,

($ millions, except per share data)


2019


2018


% Change

Revenue


33.36


30.92


7.9%

      Retail drugstores


21.58


20.87


3.4%

      Online pharmacy


3.96


2.49


59.0%

      Wholesale


7.82


7.56


3.5%

Gross profit


7.28


7.14


2.1%

Gross margin


21.8%


23.1%


-1.3 pp*

Income (Loss) from operations


0.55


(2.13)


NM

Net income (loss)


0.46


(2.21)


NM

Earnings (loss) per share


0.02


(0.06)


NM

*Notes: pp represents percentage points

  • Revenue increased by 7.9% to $33.36 million for the three months ended December 31, 2019 from $30.92 million for the same period of last year.
  • Gross profit increased by 2.1% to $7.28 million for the three months ended December 31, 2019 from $7.14 million for the same period of last year.
  • Gross margin decreased by 1.3 percentage points to 21.8% from 23.1% for the same period of last year.
  • Net income was $0.46 million, or $0.02 per basic and diluted share, for the three months ended December 31, 2019, compared to net loss of $2.21 million, or $0.06 per basic and diluted share, for the same period of last year.

Third Quarter of Fiscal 2020 Financial Results

Revenue

Revenue for the three months ended December 31, 2019 increased by $2.45 million, or 7.9%, to $33.36 million from $30.92 million for the same period of last year. The increase in revenue was primarily due to the growth in retail drugstores and online pharmacy business.



For the Three Months Ended December 31,



2019


2018

($ millions)


Revenue


Cost of
Goods


Gross
Margin


Revenue


Cost of
Goods


Gross
Margin

Retail drugstores


21.58


15.39


28.7%


20.87


14.90


28.6%

Online pharmacy


3.96


3.64


8.2%


2.49


2.23


10.4%

Wholesale


7.82


7.05


9.9%


7.56


6.65


12.1%

Total


33.36


26.08


21.8%


30.92


23.78


23.1%

Revenue from the retail drugstores business increased by $0.71 million, or 3.4%, to $21.58 million for the three months ended December 31, 2019 from $20.87 million for the same period of last year. The increase was primarily attributable to the consumer-facing benefits we provided, such as on-site 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 $1.47 million, or 59.0%, to $3.96 million for the three months ended December 31, 2019 from $2.49 million for the same period of last year. The increase was primarily caused by an increase in sales via e-commerce platforms such as Tmall, offset slightly by the decline in sales via the Company's 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, as more and more customers switch to online OTC drug shopping, the Company's OTC drug sales grew too.

Revenue from the wholesale business increased by $0.26 million, or 3.5%, to $7.82 million for the three months ended December 31, 2019 from $7.56 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 $2.30 million, or 9.7%, to $26.08 million for the three months ended December 31, 2019 from $23.78 million for the same period of last year. Gross profit increased by $0.14 million, or 2.1%, to $7.28 million for three months ended December 31, 2019 from $7.14 million for the same period of last year. Overall gross margin decreased by 1.3 percentage points to 21.8% for the three months ended December 31, 2019, from 23.1% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 28.7%, 8.2%, and 9.9%, respectively, for the three months ended December 31, 2019, compared to the corresponding gross margins of 28.6%, 10.4%, and 12.1%  for the same period of last year.

Income (Loss) from operations

Selling and marketing expenses decreased by $1.01 million, or 15.1%, to $5.68 million for the three months ended December 31, 2019 from $6.69 million for the same period of last year. The decrease in selling and marketing expenses was primarily because the Company has outsourced logistic service to Astro Boy Cloud Pan (Hangzhou) Storage and Logistic Co. Ltd ("Astro Boy Logistic") since April 2019.

General and administrative expenses decreased by $1.52 million, or 59.0%, to $1.05 million for the three months ended December 31, 2019 from $2.57 million for the same period of last year. As the medical reform has been moving along in China, the central government of China promulgated a series of policies to significantly push down the prices of certain drugs covered by the National Health Insurance. Local government even deferred payments to certain clinics and drugstores on the drugs which the local government believes were sold above the government's designated price range. The price restriction and potential payment deferral may cut the profit and affect the Company's operating cash flow. To be safe, in the three months ended December 31, 2019, the Company actively negotiated with certain customers and made efforts to collect certain aged accounts receivable. As a result, the Company reversed bad debt allowance of $0.79 million. In comparison, the Company recorded additional bad debts allowance of $0.37 million in the three months ended December 31, 2018.

Income from operations was $0.55 million for the three months ended December 31, 2019, compared to loss from operations of $2.13 million for the same period of last year. Operating margin was 1.7% for the three months ended December 31, 2019, compared to operating loss of 6.9% for the same period of last year.

Net income (loss)

Net income was $0.46 million, or $0.02 per basic and diluted share for the three months ended December 31, 2019, compared to net loss of $2.21 million, or $0.06 per basic and diluted share for the same period of last year.

Nine months ended December 31, 2019 Financial Highlights



For the Nine Months Ended December 31,

($ millions, except per share data)


2019


2018


% Change

Revenue


87.00


81.10


7.3%

      Retail drugstores


56.31


54.97


2.4%

      Online pharmacy


8.76


6.64


32.0%

      Wholesale


21.93


19.49


12.5%

Gross profit


20.04


18.55


8.0%

Gross margin


23.0%


22.9%


0.1 pp*

Income (Loss) from operations


(3.82)


(4.33)


11.8%

Net income (loss)


(3.27)


(4.51)


27.5%

Earnings (loss) per share


(0.09)


(0.14)


35.7%

*Notes: pp represents percentage points

  • Revenue increased by 7.3% to $87.00 million for the nine months ended December 31, 2019 from $81.10 million for the same period of last year.
  • Gross profit increased by 8.0% to $20.04 million for the nine months ended December 31, 2019 from $18.55 million for the same period of last year.
  • Gross margin increased by 0.1 percentage points to 23.0% from 22.9% for the same period of last year.
  • Net loss was $3.27 million, or $0.09 per basic and diluted share, for the nine months ended December 31, 2019, compared to $4.51 million, or $0.14 per basic and diluted share, for the same period of last year.

Nine months ended December 31, 2019 Financial Results

Revenue

Revenue for the nine months ended December 31, 2019 increased by $5.90 million, or 7.3%, to $87.00 million from $81.10 million for the same period of last year. The increase in revenue was primarily due to the increase in wholesale and online pharmacy business.



For the Nine Months Ended December 31,



2019


2018

($ millions)


Revenue


Cost of
Goods


Gross
Margin


Revenue


Cost of
Goods


Gross
Margin

Retail drugstores


56.31


39.54


29.8%


54.97


39.35


28.4%

Online pharmacy


8.76


7.77


11.3%


6.64


5.88


11.4%

Wholesale


21.93


19.65


10.4%


19.49


17.32


11.1%

Total


87.00


66.96


23.0%


81.10


62.55


22.9%

Revenue from the retail drugstores business increased by $1.34 million, or 2.4%, to $56.31 million for the nine months ended December 31, 2019 from $54.97 million for the same period of last year. The increase was primarily attributable to the consumer-facing benefits we provided, such as onsite medical care, chronic disease management services, incremental DTP business caused by continuous hospital medical reform, and maturing of stores opened a year ago.

Revenue from the online pharmacy business increased by $2.12 million, or 32.0%, to $8.76 million for the nine months ended December 31, 2019 from $6.64 million for the same period of last year. The increase was primarily caused by 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 $2.44 million, or 12.5%, to $21.93 million for the nine months ended December 31, 2019 from $19.49 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 $4.41 million, or 7.1%, to $66.96 million for the nine months ended December 31, 2019 from $62.55 million for the same period of last year. Gross profit increased by $1.49 million, or 8.0%, to $20.04 million for the nine months ended December 31, 2019 from $18.55 million for the same period of last year. Overall gross margin increased by 0.1 percentage points to 23.0% for the nine months ended December 31, 2019, from 22.9% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 29.8%, 11.3%, and 10.4%, respectively, for the nine months ended December 31, 2019, compared to the corresponding gross margins of 28.4%, 11.4%, and 11.1% for the same period of last year.

Income (Loss) from operations

Selling and marketing expenses increased by $1.59 million, or 9.6%, to $18.13 million for the nine months ended December 31, 2019 from $16.54 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increases in labor related to the Company's store expansions and rising local cost of living.

General and administrative expenses decreased by $0.61 million, or 9.7%, to $5.73 million for the nine months ended December 31, 2019 from $6.34 million for the same period of last year. In the nine months ended December 31, 2019, the Company reversed bad debt allowance of $0.2 million. In comparison, the Company recorded additional bad debts allowance of $1.27 million for the nine months ended December 31, 2018. 

Loss from operations was $3.82 million for the nine months ended December 31, 2019, compared to $4.33 million for the same period of last year. Operating loss was 4.4% for the nine months ended December 31, 2019, compared to 5.3% for the same period of last year.

Net income (loss)

Net loss was $3.27 million, or $0.09 per basic and diluted share for the nine months ended December 31, 2019, compared to net loss of $4.51 million, or $0.14 per basic and diluted share for the same period of last year.

Financial Condition

As of December 31, 2019, the Company had cash of $11.86 million, compared to $9.32 million as of March 31, 2019. Net cash used in operating activities was $11.27 million for the nine months ended December 31, 2019, compared to $10.32 million for the same period of last year. Net cash used in investing activities was $1.71 million for the nine months ended December 31, 2019, compared to $6.85 million for the same period of last year. Net cash provided by financing activities was $12.70 million for the nine months ended December 31, 2019, compared to $7.98 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    

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(UNAUDITED)




December 31,



March 31,




2019



2019


ASSETS







CURRENT ASSETS







Cash


$

11,858,985



$

9,322,463


Restricted cash



12,035,385




15,422,739


Financial assets available for sale



159,946




180,928


Notes receivable



48,768




177,278


Trade accounts receivable



11,465,402




8,692,514


Inventories



10,962,677




13,955,202


Other receivables, net



5,862,408




4,438,230


Advances to suppliers



1,393,247




1,950,252


Other current assets



1,505,995




2,063,375


Total current assets



55,292,813




56,202,981











PROPERTY AND EQUIPMENT, net



8,097,428




8,727,358











OTHER ASSETS









Long-term investment



9,846




24,243


Farmland assets



747,782




825,259


Long term deposits



1,481,929




2,157,275


Other noncurrent assets



1,134,643




1,196,197


Operating lease right-of-use assets



15,318,428




-


Intangible assets, net



3,715,629




3,597,323


Total other assets



22,408,257




7,800,297


Total assets


$

85,798,498



$

72,730,636











LIABILITIES AND STOCKHOLDERS' EQUITY









CURRENT LIABILITIES









Accounts payable, trade



15,870,874




23,106,230


Notes payable



21,758,227




25,951,673


Other payables



2,590,186




3,197,221


Other payables - related parties



375,068




795,179


Customer deposits



1,201,464




771,942


Taxes payable



433,026




125,859


Accrued liabilities



793,942




1,264,182


Long-term loan - current portion



2,302,924




-


Current portion of operating lease liabilities



409,756




-


Total current liabilities



45,735,467




55,212,286


Long-term loan



4,773,114




-


Long term operating lease liabilities



12,670,694




-


Purchase option and warrants liability



120,000




465,248


Financial liability



71,757




81,935


Total liabilities



63,371,032




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 December 31, 2019 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 December 31, 2019 and March 31, 2019



-




-


Additional paid-in capital



54,209,301




44,905,664


Statutory reserves



1,309,109




1,309,109


Accumulated deficit



(33,415,600)




(30,587,468)


Accumulated other comprehensive income



1,926,259




2,508,964


Total stockholders' equity



24,062,006




18,165,206


Noncontrolling interests



(1,634,540)




(1,194,039)


Total equity



22,427,466




16,971,167


Total liabilities and stockholders' equity


$

85,798,498



$

72,730,636


 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) 

(UNAUDITED)




For the three months ended
December 31,



For the nine months ended
December 31,




2019



2018



2019



2018















REVENUES, NET


$

33,363,282



$

30,916,549



$

86,997,845



$

81,098,161



















COST OF GOODS SOLD



26,079,910




23,780,763




66,959,671




62,548,471



















GROSS PROFIT



7,283,372




7,135,786




20,038,174




18,549,690



















SELLING EXPENSES



5,676,400




6,688,577




18,130,799




16,539,078


GENERAL AND ADMINISTRATIVE EXPENSES



1,054,060




2,572,862




5,729,607




6,342,874


TOTAL OPERATING EXPENSES



6,730,460




9,261,439




23,860,406




22,881,952



















INCOME (LOSS) FROM OPERATIONS



552,912




(2,125,653)




(3,822,232)




(4,332,262)



















INTEREST INCOME



272,773




18,964




661,160




92,196


OTHER INCOME (LOSS), NET



(302,408)




32,795




(437,118)




12,436



















CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITIES



(65,172)




(85,115)




345,248




(173,955)



















INCOME (LOSS) BEFORE INCOME TAXES



458,105




(2,159,009)




(3,252,942)




(4,401,585)



















PROVISION FOR INCOME TAXES



2,184




47,958




16,274




104,712



















NET INCOME (LOSS)



455,921




(2,206,967)




(3,269,216)




(4,506,297)



















ADD: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTEREST



75,861




528,736




441,084




594,796



















NET INCOME (LOSS) ATTRIBUTABLE TO CHINA JO-
JO DRUGSTORES, INC.



531,782




(1,678,231)




(2,828,132)




(3,911,501)



















Foreign currency translation adjustments



358,868




(130,619)




(582,705)




(957,646)



















COMPREHENSIVE INCOME (LOSS)


$

814,789



$

(2,337,586)



$

(3,851,921)



$

(5,463,943)



















WEIGHTED AVERAGE NUMBER OF SHARES:

















Basic



32,936,786




28,936,778




32,776,786




28,936,778


Diluted



32,936,786




28,936,778




32,776,786




28,936,778



















EARNINGS PER SHARES:

















Basic


$

0.02



$

(0.06)



$

(0.09)



$

(0.14)


Diluted


$

0.02



$

(0.06)



$

(0.09)



$

(0.14)


 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)




For the
nine months ended
December 31,




2019



2018


CASH FLOWS FROM OPERATING ACTIVITIES:







Net loss


$

(3,269,216)



$

(4,506,297)


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









Bad debt direct write-off and provision



(29,038)




1,266,994


Depreciation and amortization



1,572,925




937,268


Stock based compensation



34,560




121,547


Change in fair value of purchase option derivative liability



(345,248)




173,955


Accounts receivable, trade



(2,581,208)




(4,061,698)


Notes receivable



122,175




(43,024)


Inventories and biological assets



2,484,432




1,828,232


Other receivables



(1,353,544)




(681,667)


Advances to suppliers



(222,928)




(911,061)


Other current assets



(1,758,533)




476,909


Long term deposit



597,084




18,548


Other noncurrent assets



17,744




23,206


Accounts payable, trade



(6,397,104)




(3,945,980)


Other payables and accrued liabilities



(917,398)




815,725


Customer deposits



458,415




(2,258,202)


Taxes payable



312,192




422,665


Net cash used in operating activities



(11,274,690)




(10,322,880)











CASH FLOWS FROM INVESTING ACTIVITIES:









Disposal of financial assets available for sale



14,370




87,471


Purchase of financial assets available for sale



-




(104,577)


Acquisition of equipment



(561,677)




(5,368,240)


Increase in intangible assets



(461,013)




(29,879)


Investment in a joint venture



-




-


Additions to leasehold improvements



(705,856)




(1,432,060)


Net cash used in investing activities



(1,714,176)




(6,847,285)











CASH FLOWS FROM FINANCING ACTIVITIES:









Proceeds from third parties loan



7,085,406




-


Proceeds from notes payable



36,537,832




32,903,549


Repayment of notes payable



(39,784,592)




(24,930,903)


Increase in financial liability



(7,185)




82,167


Proceeds from equity financing



9,273,077




7,544


Repayment of other payables-related parties



(406,506)




(82,866)


Net cash provided by financing activities



12,698,032




7,979,491











EFFECT OF EXCHANGE RATE ON CASH



(559,998)




(1,653,988)











DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH



(850,832)




(10,844,662)











CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period



24,745,202




31,452,191











CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period


$

23,894,370



$

20,607,529











SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:









Cash paid for income taxes


$

17,215



$

56,539


 

Cision View original content:http://www.prnewswire.com/news-releases/china-jo-jo-drugstores-reports-third-quarter-2020-financial-results-301005092.html

Source: China Jo-Jo Drugstores, Inc.
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