China Jo-Jo Drugstores Reports First Quarter 2020 Financial Results
HANGZHOU, China, Aug. 14, 2019 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) ("Jo-Jo Drugstores" or the "Company"), a leading online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products and a healthcare provider in China, today announced its financial results for the first quarter of its fiscal year 2020.
Mr. Lei Liu, Chief Executive Officer and Chairman of Jo-Jo Drugstores, commented, "We are pleased to announce our financial results for the first quarter of fiscal year 2020. Our sales grew 11.0%, with sales growth in our retail drugstores, online pharmacy, and wholesale segments. We will continue adapting to the changing retail drugstore environment and making progress towards our long-term strategic goals. We remain confident of our ability to realize the potential of our business model as we endeavor to provide the best experience to our customers."
First Quarter of Fiscal 2020 Financial Highlights
For the Three Months Ended June 30, ($ millions, except per share data) 2019 2018 % Change Revenue 25.28 22.77 11.0% Retail drugstores 16.74 15.97 4.8% Online pharmacy 2.44 2.02 20.9% Wholesale 6.10 4.78 27.6% Gross profit 6.06 5.62 7.9% Gross margin 24.0% 24.7% -0.7 pp* Loss from operations (2.76) (0.56) -388.5% Net loss (2.38) (0.70) -241.4% Loss per share (0.07) (0.02) -250.0% *Notes: pp represents percentage points
-- Revenue increased by 11.0% to $25.28 million for the three months ended June 30, 2019 from $22.77 million for the same period of last year. -- Gross profit increased by 7.9% to $6.06 million for the three months ended June 30, 2019 from $5.62 million for the same period of last year. -- Gross margin decreased by 0.7 percentage points to 24.0% from 24.7% for the same period of last year. -- Net loss was $2.38 million, or $0.07 per basic and diluted share, for the three months ended June 30, 2019, compared to $0.70 million, or $0.02 per basic and diluted share, for the same period of last year.
First Quarter of Fiscal 2020 Financial Results
Revenue
Revenue for the three months ended June 30, 2019 increased by $2.51 million, or 11.0%, to $25.28 million from $22.77 million for the same period of last year. The increase in revenue was primarily due to the growth in retail drugstores business, online pharmacy and wholesale business.
For the Three Months Ended June 30, 2019 2018 ($ millions) Revenue Cost of Goods Gross Margin Revenue Cost of Goods Gross Margin Retail drugstores 16.74 11.68 30.2% 15.97 11.17 30.1% Online pharmacy 2.44 2.10 14.2% 2.02 1.74 13.9% Wholesale 6.10 5.44 10.9% 4.78 4.25 11.1% Total 25.28 19.22 24.0% 22.77 17.16 24.7%
Revenue from the retail drugstores business increased by $0.77 million, or 4.8%, to $16.74 million for the three months ended June 30, 2019 from $15.97 million for the same period of last year. The increase was primarily due to consumer-facing benefits such as emphasis on onsite 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 $0.42 million, or 20.9%, to $2.44 million for the three months ended June 30, 2019 from $2.02 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. For example, sales of blood glucose meters and contact lens contributed significantly to our revenue in the three months ended June 30, 2019 as compared to the same period a year ago.
Revenue from the wholesale business increased by $1.32 million, or 27.6%, to $6.10 million for the three months ended June 30, 2019 from $4.78 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 quantity at its retail stores, to other vendors at competitive prices.
Gross profit and gross margin
Total cost of goods sold increased by $2.06 million, or 12.0%, to $19.22 million for the three months ended June 30, 2019 from $17.16 million for the same period of last year. Gross profit increased by $0.44 million, or 7.9%, to $6.06 million for three months ended June 30, 2019 from $5.62 million for the same period of last year. Overall gross margin decreased by 0.7 percentage points to 24.0% for the three months ended June 30, 2019, from 24.7% for the same period of last year.
Gross margins for retail drugstores, online pharmacy and wholesale were 30.2%, 14.2%, and 10.9%, respectively, for the three months ended June 30, 2019. For the same period of last year, the gross margins for retail drugstores, online pharmacy and wholesale of were 30.1%, 13.9%, and 11.1%, respectively.
Loss from operations
Selling and marketing expenses increased by $1.34 million, or 29.0%, to $5.97 million for the three months ended June 30, 2019 from $4.63 million for the same period of last year. The increase in selling and marketing expenses was primarily due to the increase in labor and rent related to the Company's store expansions and rising local living costs.
General and administrative expenses increased by $1.30 million, or 83.4%, to $2.85 million for the three months ended June 30, 2019 from $1.55 million for the same period of last year. The Company's retail business incurred additional administrative expenses related to its store expansion. Additionally, Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd, the entity we have 51% that operates two new clinics in Hangzhou, incurred additional administrative labor costs. The bad debt expenses related to the Company's accounts receivable increased by approximately $0.5 million due to certain aged accounts.
Loss from operations was $2.76 million for the three months ended June 30, 2019, compared to $0.56 million for the same period of last year. Operating margin was negative 10.9% for the three months ended June 30, 2019, compared to negative 2.5% for the same period of last year.
Net loss
Net loss was $2.38 million, or $0.07 per basic and diluted share for the three months ended June 30, 2019, compared to net loss of $0.70 million, or $0.02 per basic and diluted share for the same period of last year.
Financial Condition
As of June 30, 2019, the Company had cash of $8.34 million, compared to $9.32 million as of March 31, 2019. Net cash used in operating activities was $8.16 million for the three months ended June 30, 2019, compared to $2.58 million for the same period of last year. Net cash used in investing activities was $0.95 million for the three months ended June 30, 2019, compared to $0.26 million for the same period of last year. Net cash provided by financing activities was $8.02 million for the three months ended June 30, 2019, compared to net cash used in financing activities of $5.21 million for the same period of last year.
About China Jo-Jo Drugstores, Inc.
China Jo-Jo Drugstores, Inc. is a leading online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products in China. Jo-Jo Drugstores currently operates retail drugstores and an online pharmacy. It is also a wholesale distributor of products similar to those carried in its pharmacies and it 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) June 30, March 31, 2019 2019 ASSETS --- CURRENT ASSETS Cash $ 8,341,167 $ 9,322,463 Restricted cash 14,808,986 15,422,739 Financial assets available for sale 162,273 180,928 Notes receivable 92,480 177,278 Trade accounts receivable 8,590,075 8,692,514 Inventories 10,806,698 13,955,202 Other receivables, net 4,253,802 4,438,230 Advances to suppliers 1,544,132 1,950,252 Other current assets 1,557,156 2,063,375 Total current assets 50,156,769 56,202,981 PROPERTY AND EQUIPMENT, net 8,620,758 8,727,358 OTHER ASSETS Long-term investment 16,318 24,243 Farmland assets 742,974 825,259 Long term deposits 2,050,219 2,157,275 Other noncurrent assets 1,177,703 1,196,197 Operating lease right-of-use assets 13,564,115 Intangible assets, net 3,888,848 3,597,323 Total other assets 21,440,177 7,800,297 Total assets $ 80,217,704 $ 72,730,636 LIABILITIES AND STOCKHOLDERS' EQUITY --- CURRENT LIABILITIES Accounts payable, trade 13,674,741 23,106,230 Notes payable 24,574,955 25,951,673 Other payables 3,267,074 3,197,221 Other payables - related parties 326,778 795,179 Customer deposits 870,100 771,942 Taxes payable 217,704 125,859 Accrued liabilities 990,032 1,264,182 Current portion of operating lease liabilities 4,738,632 Total current liabilities 48,660,016 55,212,286 Long term operating lease liabilities 7,918,900 Purchase option and warrants liability 61,693 465,248 Financial liability 80,081 81,935 Total liabilities 56,720,690 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 June 30, 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 June 30, 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 (32,722,416) (30,587,468) Accumulated other comprehensive income 2,103,726 2,508,964 Total stockholders' equity 24,932,657 18,165,206 Noncontrolling interests (1,435,643) (1,194,039) Total equity 23,497,014 16,971,167 Total liabilities and stockholders' equity $ 80,217,704 $ 72,730,636
CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) For the three months ended June 30, 2019 2018 --- REVENUES, NET $ 25,280,784 $ 22,772,566 COST OF GOODS SOLD 19,219,346 17,155,763 GROSS PROFIT 6,061,438 5,616,803 SELLING EXPENSES 5,968,551 4,626,978 GENERAL AND ADMINISTRATIVE EXPENSES 2,851,612 1,554,528 TOTAL OPERATING EXPENSES 8,820,163 6,181,506 LOSS FROM OPERATIONS (2,758,725) (564,703) INTEREST INCOME 47,873 47,172 OTHER (EXPENSE), NET (62,485) (114,941) CHANGE IN FAIR VALUE OF WARRANTS LIABILITY 403,555 (6,974) LOSS BEFORE INCOME TAXES (2,369,782) (639,446) PROVISION FOR INCOME TAXES 8,388 57,169 NET LOSS (2,378,170) (696,615) ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST 243,219 50,763 NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC. (2,134,951) (645,852) FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (405,238) 621,634 COMPREHENSIVE LOSS (2,783,408) (74,981) WEIGHTED AVERAGE NUMBER OF SHARES: Basic 32,453,269 28,936,778 Diluted 32,453,269 28,936,778 LOSS PER SHARES: Basic $ (0.07) $ (0.02) === Diluted $ (0.07) $ (0.02) ===
CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the three months ended June 30, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (2,378,170) $ (696,615) Adjustments to reconcile net income to net cash provided by operating activities: Bad debt direct write-off and provision 758,231 259,279 Depreciation and amortization 499,175 293,095 Stock based compensation 34,560 49,140 Change in fair value of purchase option derivative liability (403,555) 6,974 Accounts receivable, trade (959,680) 1,077,419 Notes receivable 81,326 (114,944) Inventories and biological assets 2,851,652 (458,803) Other receivables 371,054 (401,204) Advances to suppliers 242,652 (775,014) Other current assets (450,042) 554,048 Long term deposit 58,630 (5,415) Other noncurrent assets (8,631) (97,341) Accounts payable, trade (8,968,168) (2,369,206) Other payables and accrued liabilities (105,522) 357,335 Customer deposits 116,398 20,290 Taxes payable 95,326 (281,235) Net cash (used in) operating activities (8,164,764) (2,582,197) CASH FLOWS FROM INVESTING ACTIVITIES: Disposal of financial assets available for sale 14,658 - Acquisition of equipment (210,356) (32,753) Increase in intangible assets (433,111) - Investment in a joint venture (109,142) Additions to leasehold improvements (542,734) (116,002) Net cash used in investing activities (1,171,543) (257,897) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable 15,372,260 10,376,504 Repayment of notes payable (16,167,012) (15,512,104) Proceeds from equity financing 9,273,077 7,629 Repayment of other payables- related parties (460,000) (84,014) Net cash provided by (used in) financing activities 8,018,325 (5,211,985) EFFECT OF EXCHANGE RATE ON CASH (277,067) (457,638) DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH (1,595,049) (8,509,717) 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 $ 23,150,153 $ 22,942,474 === SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $ 29,176 $ 27,832
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SOURCE China Jo-Jo Drugstores, Inc.