China Jo-Jo Drugstores Reports First Half of Fiscal Year 2022 Financial Results

Published: Jan. 21, 2022 at 8:00 AM CST

HANGZHOU, China, Jan. 21, 2022 /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 first half of fiscal year 2022 ended September 30, 2021.

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, "We are pleased to have delivered a solid performance during the first half of fiscal year 2022 as we navigate through a challenging operating environment affected by multiple COVID-19 surges. We achieved record revenue of $78.48 million, up 26.8% from the same period of last year, and narrowed down 86% of net loss compared to the same period of last year. Revenue from online pharmacy and wholesale segments increased by 33.5% and 63.6%, respectively, which reflects the efforts of our team as we continue to expand our business. Our strong financial performance once again demonstrates the continuing momentum across the Company as the market recognizing the quality of our products and the brand awareness of Jo-Jo Drugstores. Our unrivaled quality management, reliable supply chains, extensive distribution network and industry-leading talent team are the reasons of the results."

Mr. Liu continued, "ESG, standing for 'Environment, Society and Governance', is embedded in our core value and we are committed to improving the community we serve and protecting the lives of our employees and customers. We received 2021 China ESG Golden Awards, a Sustainability Award from Sina Finance, which recognizes our meaningful progress in delivering social and environmental benefits. The project "Healthy China 2030" will enhance the reformation and innovation in the healthcare industry. To seize this opportunity, we will continue focusing on providing excellent in-store services, accelerating digital transformation and upgrading our business model. We believe that our capability, operational performance and diversified distribution channels will enable us to generate additional revenue and create greater value for our shareholders in the long term."

First Six Months of Fiscal Year 2022 Financial Highlights



For the Six Months Ended September 30,

($ millions, except per share data)


2021


2020


% Change

Revenue


78.48


61.90


26.8%

      Retail drugstores


40.42


36.74


10.0%

      Online pharmacy


13.70


10.26


33.5%

      Wholesale


24.36


14.90


63.6%

Gross profit


15.40


14.99


2.7%

Gross margin


19.6%


24.2%


-4.6 pp*

Loss from operations


(0.49)


(1.94)


74.6%

Net loss


(0.27)


(1.92)


86.0%

Loss per share


(0.01)


(0.05)


80.0%

*Notes: pp represents percentage points

  • Revenue increased by 26.8% to $78.48 million for the six months ended September 30, 2021 from $61.90 million for the same period of last year.
  • Gross profit increased by 2.7% to $15.40 million for the six months ended September 30, 2021 from $14.99 million for the same period of last year.
  • Gross margin decreased by 4.6 percentage points to 19.6% for the six months ended September 30, 2021 from 24.2% for the same period of last year.
  • Net loss was $0.27 million, or $0.01 per basic and diluted share, for the six months ended September 30, 2021, compared to net loss of $1.92 million, or $0.05 per basic and diluted share, for the same period of last year.

First Six Months of Fiscal Year 2022 Financial Results

Revenue

Revenue for the six months ended September 30, 2021 increased by $16.58 million, or 26.8%, to $78.48 million from $61.90 million for the same period of last year. The increase in revenue was primarily due to the growth in online pharmacy and wholesale business.



For the Six Months Ended September 30,



2021


2020

($ millions)


Revenue


Cost of
Goods


Gross
Margin


Revenue


Cost of
Goods


Gross
Margin

Retail drugstores


40.42


28.90


28.5%


36.74


24.73


32.7%

Online pharmacy


13.70


12.29


10.3%


10.26


8.97


12.5%

Wholesale


24.36


21.90


10.1%


14.90


13.20


11.4%

Total


78.48


63.09


19.6%


61.90


46.90


24.2%

Revenue from the retail drugstores business increased by $3.68 million, or 10.0%, to $40.42 million for the six months ended September 30, 2021 from $36.74 million for the same period of last year. After excluding the impact of exchange rate fluctuation, the actual retail drugstores sales increased by 2.0%. The actual increase in retail drugstore sales was primarily due to continuous adjustments of merchandises, better fitness to the market, improved store employee incentive plan, and contribution from the new store sales.

Revenue from the online pharmacy business increased by $3.44 million, or 33.5%, to $13.70 million for the six months ended September 30, 2021 from $10.26 million for the same period of last year. The increase was primarily caused by an increase in sales to commercial insurance customers via the Company's official website and an increase in sales of prescription drugs via e-commerce platforms such as Tmall. The sales via the Company's official website were primarily made by certain pharmacy benefit management providers and insurance companies. For example, the Company has signed a service contract with Yingda Taihe Life Insurance Co. Ltd. ("Yingda"), a national insurance company. Certain companies bought private health insurances from Yingda for their employees. By linking the Company's online pharmacy platform with Yingda and training Yingda's employees, they are able to buy health products on the Company's online stores. The sales from these customers contributed significantly to the Company's official website sales. The Company's official website sales increased by 85.5% as compared to the same period of last year. Prescription drugs used to be prohibited from online sales due to safety concern. After the nation has lifted the ban order, online prescription drug sales become popular. As a result, the sale of prescription drugs was $4.93 million for the six months ended September 30, 2021. For the same period of last year, it was $3.63 million.

Revenue from the wholesale business increased by $9.47 million, or 63.6%, to $24.37 million for the six months ended September 30, 2021, from $14.90 million for the same period of last year. In order to obtain rebates from its major suppliers, the Company is required to make more purchase from the suppliers. To quickly resell these products, the Company chose to lower its sales price to local vendors, which in turn helped increase the sales significantly.

Gross profit and gross margin

Total cost of goods sold increased by $16.19 million, or 34.5%, to $63.09 million for the six months ended September 30, 2021, from $46.90 million for the same period of last year. Gross profit increased by $0.41 million, or 2.7%, to $15.40 million for six months ended September 30, 2021 from $14.99 million for the same period of last year. Overall gross margin decreased by 4.6 percentage points to 19.6% for the six months ended September 30, 2021, from 24.2% for the same period of last year.

Gross margins for retail drugstores, online pharmacy and wholesale were 28.5%, 10.3%, and 10.1%, respectively, for the six months ended September 30, 2021, compared to gross margins for retail drugstores, online pharmacy and wholesale of 32.7%, 12.5%, and 11.4%, respectively, for the same period of last year.

Loss from operations

Selling and marketing expenses increased by $0.54 million, or 4.3%, to $13.29 million for the six months ended September 30, 2021 from $12.75 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increase in fees charged by various platforms as a result of sales increase in the Company's online pharmacy.

General and administrative expenses decreased by $1.58 million, or 37.9%, to $2.60 million for the six months ended September 30, 2021 from $4.18 million for the same period of last year. The decrease in general and administrative expenses was primarily due to the decrease in labor cost. In response to the government insurance budget control, the Company cut off certain administration staff and combined several administrative duties. Additionally, in the six months ended September 30, 2021, the Company provided bonus to certain key staff. Such expenses, as a percentage of revenue, decreased to 3.3% from 6.8% for the same period of last year.

Loss from operations was $0.49 million for the six months ended September 30, 2021, compared to $1.94 million for the same period of last year. Operating margin was (0.6) % and (3.1)% for the six months ended September 30, 2021 and 2020, respectively.

Net loss

Net loss was $0.27 million, or $0.01 per basic and diluted share for the six months ended September 30, 2021, compared to net loss of $1.92 million, or $0.05 per basic and diluted share for the same period of last year.

Financial Condition

As of September 30, 2021, the Company has cash of $24.61 million, compared to $22.05 million as of March 31, 2021. Net cash provided by operating activities is $0.50 million for the six months ended September 30, 2021, compared to net cash used in operating activities of $0.35 million for the same period of last year. Net cash used in investing activities is $0.19 million for the six months ended September 30, 2021, compared to $1.76 million for the same period of last year. Net cash provided by financing activities is $3.43 million for the six months ended September 30, 2021, compared to $4.55 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. 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

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)










September 30,



March 31,




2021



2021


ASSETS







CURRENT ASSETS







Cash and cash equivalents


$

24,611,175



$

22,045,628


Restricted cash



14,576,183




12,627,016


Financial assets available for sale



92,940




91,472


Notes receivable



97,195




39,392


Trade accounts receivable



14,079,343




13,423,728


Inventories



17,443,466




16,972,965


Other receivables, net



5,768,743




5,051,960


Advances to suppliers



2,919,052




421,963


Other current assets



1,610,682




1,560,119


Total current assets



81,198,779




72,234,243











PROPERTY AND EQUIPMENT, net



6,212,655




6,549,035











OTHER ASSETS









Long-term investment



3,981,986




3,981,986


Farmland assets



857,176




835,427


Long term deposits



1,681,417




1,546,764


Other noncurrent assets



834,298




856,391


Operating lease right-of-use assets



18,580,840




16,778,729


Intangible assets, net



3,538,707




3,528,056


Total other assets



29,474,424




27,527,353











Total assets


$

116,885,858



$

106,310,631











LIABILITIES AND STOCKHOLDERS' EQUITY









CURRENT LIABILITIES









 Short-term bank loan



-




762,270


 Accounts payable, trade



32,828,259




29,895,830


 Notes payable



31,299,086




25,663,633


 Other payables



3,842,964




2,940,000


 Other payables - related parties



1,133,803




445,305


 Customer deposits



1,642,586




1,146,247


 Taxes payable



519,531




197,733


 Accrued liabilities



396,787




501,111


 Long-term loan payable-current portion



2,643,513




2,557,634


 Current portion of operating lease liabilities



1,562,318




788,171


   Total current liabilities



75,868,847




64,897,934











Long-term loan payable



590,640




1,892,269


Long-term operating lease liabilities



16,063,306




15,118,083


   Total liabilities



92,522,793




81,908,286











COMMITMENTS AND CONTINGENCIES


















STOCKHOLDERS' EQUITY









Common stock; $0.001 par value; 250,000,000 shares authorized; 41,751,790 and
     41,751,790 shares issued and outstanding as of September 30, 2021 and March
     31, 2021



41,752




41,752


Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and 
      outstanding as of September 30 and March 31, 2021



-




-


Additional paid-in capital



66,516,033




66,516,033


Statutory reserves



1,309,109




1,309,109


Accumulated deficit



(45,205,117)




(44,942,374)


Accumulated other comprehensive income



3,046,753




2,818,185


Total stockholders' equity



25,708,530




25,742,705


Noncontrolling interests



(1,345,465)




(1,340,360)


Total equity



24,363,065




24,402,345


Total liabilities and stockholders' equity


$

116,885,858



$

106,310,631


CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)




For the six months ended

September 30,




2021



2020


REVENUES, NET


$

78,484,478



$

61,896,857











COST OF GOODS SOLD



63,085,681




46,903,886











GROSS PROFIT



15,398,797




14,992,971











SELLING EXPENSES



13,292,931




12,747,919


GENERAL AND ADMINISTRATIVE EXPENSES



2,598,175




4,181,725


TOTAL OPERATING EXPENSES



15,891,106




16,929,644











LOSS FROM OPERATIONS



(492,309)




(1,936,673)











OTHER INCOME (EXPENSE):









INTEREST INCOME



110,291




351,255


INTEREST EXPENSE



(156,786)




(245,079)


OTHER



274,883




(74,475)


CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS
LIABILITY



-




27,784











LOSS BEFORE INCOME TAXES



(263,921)




(1,877,188)











PROVISION FOR INCOME TAXES



3,927




38,595











NET LOSS



(267,848)




(1,915,783)











LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST



(5,105)




(190,555)











NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.



(262,743)




(1,725,228)











OTHER COMPREHENSIVE GAIN









FOREIGN CURRENCY TRANSLATION ADJUSTMENTS



228,568




1,125,030











COMPREHENSIVE LOSS



(39,280)




(790,753)











WEIGHTED AVERAGE NUMBER OF SHARES:









Basic



41,751,790




36,232,144


Diluted



41,751,790




36,232,144











LOSS PER SHARES:









Basic


$

(0.01)



$

(0.05)


Diluted


$

(0.01)



$

(0.05)


CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)




For the six months ended

September 30,




2021



2020


CASH FLOWS FROM OPERATING ACTIVITIES:







Net loss


$

(267,848)



$

(1,915,783)


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









Bad debt direct write-off and provision



(159,978)




(286,076)


Depreciation and amortization



672,825




1,258,156


Change in fair value of purchase option derivative liability



-




(27,784)


Accounts receivable, trade



(442,229)




41,724


Notes receivable



(57,097)




(13,675)


Inventories and biological assets



(197,928)




(448,573)


Other receivables



(695,832)




279,650


Advances to suppliers



(2,487,104)




(531,255)


Other current assets



(94,153)




(853,289)


Long term deposit



(109,694)




(15,106)


Other noncurrent assets



35,787




13,619


Accounts payable, trade



2,449,608




2,362,338


Other payables and accrued liabilities



1,055,417




(845,411)


Customer deposits



477,331




509,549


Taxes payable



318,214




123,082











Net cash used in operating activities



497,319




(348,834)











CASH FLOWS FROM INVESTING ACTIVITIES:









Acquisition of equipment



(73,471)




(33,968)


Purchases of intangible assets



(6,962)




(55,038)


Investment in a joint venture



-




(1,422,193)


Additions to leasehold improvements



(105,638)




(246,846)


Net cash used in investing activities



(186,071)




(1,758,045)











CASH FLOWS FROM FINANCING ACTIVITIES:









Proceeds from short-term bank loan



-




714,160


Repayment from short-term bank loan



(773,500)




-


Repayment of third parties loan



(1,285,484)




(1,175,725)


Proceeds from notes payable



31,258,674




22,668,388


Repayment of notes payable



(26,041,718)




(26,949,176)


Decrease in Employee Deposits



-




(57,133)


Exercise of warrants



-




77,500


Proceeds from equity financing



-




9,205,173


Repayment of other payables-related parties



269,994




68,994


   Net cash provided by financing activities



3,427,966




4,552,181











EFFECT OF EXCHANGE RATE ON CASH



775,500




1,941,058











DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH



4,514,714




4,386,360











CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period



34,672,644




30,982,606











CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period


$

39,187,358



$

35,368,966











SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:









Cash paid for interest



156,786




247,371


Cash paid for income taxes


$

3,927



$

3,457


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SOURCE China Jo-Jo Drugstores, Inc.

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