China Jo-Jo Drugstores Reports Third Quarter 2020 Financial Results

HANGZHOU, China, Feb. 14, 2020 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. 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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