Exhibit 99.1

 

China Jo-Jo Drugstores Reports Second Quarter 2021 Financial Results

 

HANGZHOU, China, November 13, 2020 /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 second fiscal quarter ended September 30, 2020.

 

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, “We are pleased with our second quarter performance as we delivered another quarter of strong results. Our revenue and gross profit recorded $30.84 million and $7.01 million for the second fiscal quarter of 2021, up 8.8% and 4.8% compared to same period of fiscal year 2020. Revenue year-over-year from online pharmacy increased by 127.4%. We have always been deeply committed to our communities, and we have taken necessary measures to protect the safety and health of our customers and employees during the global COVID-19 pandemic while making solid progress on our transformation strategy of ‘Medical Linkage & Technology Empowerment’. The environment surrounding COVID-19 is accelerating our transformation, giving us new opportunities to demonstrate our capabilities and gain retail market share in China. We are building a strong foundation for sustainable growth and setting the platform to engage with consumers, and we are remaining focused on creating value for all our stakeholders.”  

 

Second Quarter of Fiscal 2021 Financial Highlights

 

		For the Three Months Ended September 30,
($ millions, except per share data)		2020				2019				% Change
Revenue			30.84				28.35				8.8	%
Retail drugstores			17.93				18.00				-0.4	%
Online pharmacy			5.35				2.35				127.4	%
Wholesale			7.56				8.00				-5.5	%
Gross profit			7.01				6.69				4.8	%
Gross margin			22.7	%			23.6	%			-0.9 pp	*
Loss from operations			(1.52	)			(1.62	)			5.7	%
Net loss			(1.53	)			(1.35	)			-13.4	%
Loss per share			(0.04	)			(0.04	)			-	%

 

*	Notes: pp represents percentage points

 

●

Revenue increased by 8.8% to $30.84 million for the three months ended September 30, 2020 from $28.35 million for the same period of last year.

●

Gross profit increased by 4.8% to $7.01 million for the three months ended September 30, 2020 from $6.69 million for the same period of last year.

●

Gross margin decreased slightly by 0.9 percentage points to 22.7% for the three months ended September 20, 2020 from 23.6% for the same period of last year.

●

Net loss was $1.53 million, or $0.04 per basic and diluted share, for the three months ended September 30, 2020, compared to net loss of $1.35 million, or $0.04 per basic and diluted share, for the same period of last year.

 

 

Second Quarter of Fiscal 2021 Financial Results

 

Revenue

 

Revenue for the three months ended September 30, 2020 increased by $2.49 million, or 8.8%, to $30.84 million from $28.35 million for the same period of last year. The increase in revenue was primarily due to the growth in online pharmacy business.

 

		For the Three Months Ended September 30,
		2020												2019
($ millions)		Revenue				Cost of Goods				Gross Margin				Revenue				Cost of Goods				Gross Margin
Retail drugstores			17.93				12.33				31.3	%			18.00				12.47				30.7	%
Online pharmacy			5.35				4.74				11.3	%			2.35				2.03				13.6	%
Wholesale			7.56				6.76				10.7	%			8.00				7.16				10.6	%
Total			30.84				23.83				22.7	%			28.35				21.66				23.6	%

 

Revenue from the retail drugstores business decreased slightly by $0.07 million, or 0.4%, to $17.93 million for the three months ended September 30, 2020 from $18.00 million for the same period of last year. The slight decrease was primarily due to the Company’s strategical abandoning of the sales of certain low-profit margin products reimbursed by National Healthcare Security Administration (“NHSA” hereafter) due to its overall budget, elimination of a variety of drugs off the list of drugs reimbursed by the local NHSA since September 1, 2020, and the negative effect on the overall economy from COVID-19.

 

Revenue from the online pharmacy business increased by $3.00 million, or 127.4%, to $5.35 million for the three months ended September 30, 2020 from $2.35 million for the same period of last year. The increase was primarily caused by an increase in sales of prescription drugs via e-commerce platforms such as Tmall. Prescription drugs used to be prohibited from sales online due to safety concern. However, because the nation has lifted the ban order, online prescription drug sales become popular. As a result, the sale of prescription drugs was $1.76 million in the three months ended September 30, 2020 as compared to none in the three month ended September 30, 2019. Additionally, the Company maintained a membership care program targeted at customers with chronic disease. The Company has closely interacted with its members via WeChat by providing healthcare knowledge and reminding them to refill medicine. By implementing a personalized customer care program, the Company was able to promote its sales.

 

Revenue from the wholesale business decreased by $0.44 million, or 5.5%, to $7.56 million for the three months ended September 30, 2020 from $8.00 million for the same period of last year. The decrease was primarily due to the fact that a key salesperson was sick, which slowed certain business with customers.

 

Gross profit and gross margin

 

Total cost of goods sold increased by $2.17 million, or 10.0%, to $23.83 million for the three months ended September 30, 2020 from $21.66 million for the same period of last year. Gross profit increased by $0.32 million, or 4.8%, to $7.01 million for three months ended September 30, 2020 from $6.69 million for the same period of last year. Overall gross margin decreased slightly by 0.9 percentage points to 22.7% for the three months ended September 30, 2020, from 23.6% for the same period of last year.

 

Gross margins for retail drugstores, online pharmacy and wholesale were 31.3%, 11.3%, and 10.7%, respectively, for the three months ended September 30, 2020, compared to gross margins for retail drugstores, online pharmacy and wholesale of 30.7%, 13.6%, and 10.6%, respectively, for the same period of last year.

 

 

Loss from operations

 

Selling and marketing expenses decreased by $0.01 million, or 0.2%, to $6.48 million for the three months ended September 30, 2020 from $6.49 million for the same period of last year. The decrease in selling and marketing expenses was primarily due to the control of in-store advertising expense, offset by the increase in fee charged by various platforms as a result of sale increase in the Company’s online pharmacy.

 

General and administrative expenses increased by $0.24 million, or 13.0%, to $2.06 million for the three months ended September 30, 2020 from $1.82 million for the same period of last year. In the three months ended September 30, 2020, the Company reversed bad debt allowance of $304,397 as compared to an increase in bad debt allowance of $9,018 in the same period of last year. Excluding such effect, the general and administrative expenses increased by $551,039 period over period, which reflects the increase in staff and administration expense.

 

Loss from operations was $1.52 million for the three months ended September 30, 2020, compared to $1.62 million for the same period of last year. Operating margin was (4.9)% and (5.7)% for the three months ended September 30, 2020 and 2019 respectively.

Net loss

 

Net loss was $1.53 million, or $0.04 per basic and diluted share for the three months ended September 30, 2020, compared to net loss of $1.35 million, or $0.04 per basic and diluted share for the same period of last year.

 

Six Months Ended September 30, 2020 Financial Highlights

 

		For the Six Months Ended September 30,
($ millions, except per share data)		2020				2019				% Change
Revenue			61.90				53.63				15.4	%
Retail drugstores			36.74				34.74				5.8	%
Online pharmacy			10.26				4.79				114.0	%
Wholesale			14.90				14.10				5.6	%
Gross profit			14.99				12.75				17.5	%
Gross margin			24.2	%			23.8	%			0.4 pp	*
Loss from operations			(1.94	)			(4.38	)			55.7	%
Net loss			(1.92	)			(3.73	)			48.6	%
Loss per share			(0.05	)			(0.10	)			50.0	%

 

*	Notes: pp represents percentage points

 

●

Revenue increased by 15.4% to $61.90 million for the six months ended September 30, 2020 from $53.63 million for the same period of last year.

●

Gross profit increased by 17.5% to $14.99 million for the six months ended September 30, 2020 from $12.75 million for the same period of last year.

●

Gross margin increased by 0.4 percentage points to 24.2% for the six months ended September 20, 2020 from 23.8% for the same period of last year.

●

Net loss was $1.92 million, or $0.05 per basic and diluted share, for the six months ended September 30, 2020, compared to net loss of $3.73 million, or $0.10 per basic and diluted share, for the same period of last year.

 

Six Months Ended September 30, 2020 Financial Results

 

Revenue

 

Revenue for the six months ended September 30, 2020 increased by $8.26 million, or 15.4%, to $61.90 million from $53.63 million for the same period of last year. The increase in revenue was primarily due to the increase in retail drugstores, online pharmacy and wholesale business.

 

		For the Six Months Ended September 30,
		2020												2019
($ millions)		Revenue				Cost of Goods				Gross Margin				Revenue				Cost of Goods				Gross Margin
Retail drugstores			36.74				24.73				32.7	%			34.74				24.15				30.5	%
Online pharmacy			10.26				8.97				12.5	%			4.79				4.13				13.9	%
Wholesale			14.90				13.20				11.4	%			14.10				12.60				10.7	%
Total			61.90				46.90				24.2	%			53.63				40.88				23.8	%

 

Revenue from the retail drugstores business increased by $2.00 million, or 5.8%, to $36.74 million for the six months ended September 30, 2020 from $34.74 million for the same period of last year. The increase was primarily attributable 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, partially offset by the decline in sale reimbursed by NHSA in the second quarter of fiscal 2021, and maturing of stores opened a year ago.

 

 

Revenue from the online pharmacy business increased by $5.47 million, or 114.0%, to $10.26 million for the six months ended September 30, 2020 from $4.79 million for the same period of last year. The increase was primarily caused by an increase in sales of prescription drugs via e-commerce platforms such as Tmall. Due to the same reason discussed above, the sale of prescription drugs was $3.63 million in the six months ended September 30, 2020 as compared to none in the six month ended September 30, 2019. Additionally, the Company maintained a membership care program targeted at customers with chronic disease. The Company has closely interacted with its members via WeChat by providing healthcare knowledge and reminding them to refill medicine. By implementing a personalized customer care program, the Company was able to promote its sales.

 

Revenue from the wholesale business increased by $0.80 million, or 5.6%, to $14.90 million for the six months ended September 30, 2020 from $14.10 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 $6.02 million, or 14.7%, to $46.90 million for the six months ended September 30, 2020 from $40.88 million for the same period of last year. Gross profit increased by $2.24 million, or 17.5%, to $14.99 million for the six months ended September 30, 2020 from $12.75 million for the same period of last year. Overall gross margin increased by 0.4 percentage points to 24.2% for the six months ended September 30, 2020, from 23.8% for the same period of last year.

 

Gross margins for retail drugstores, online pharmacy and wholesale were 32.7%, 12.5%, and 11.4%, respectively, for the six months ended September 30, 2020. This compared to gross margins for retail drugstores, online pharmacy and wholesale of 30.5%, 13.9%, and 10.7%, respectively, for the same period of last year.

 

Loss from operations

 

Selling and marketing expenses increased by $0.30 million, or 2.4%, to $12.75 million for the six months ended September 30, 2020 from $12.45 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increase in fee charged by various platforms as a result of sale increase in the Company’s online pharmacy.

 

General and administrative expenses decreased by $0.50 million, or 10.6%, to $4.18 million for the six months ended September 30, 2020 from $4.68 million for the same period of last year. In the six months ended September 30, 2020, the Company reversed bad debt allowance of $286,076 as compared to an increase in bad debt allowance of $767,249 in the same period of last year. Excluding such an effect, the general and administrative expenses increased by $559,503 period over period, which reflects the increases in staff and administration expense as the Company’s online business grew. 

 

Loss from operations was $1.94 million for the six months ended September 30, 2020, compared to $4.38 million for the same period of last year. Operating margin was (3.1)% and (8.2)% for the six months ended September 30, 2020 and 2019 respectively .

 

Net loss

 

Net loss was $1.92 million, or $0.05 per basic and diluted share for the six months ended September 30, 2020, compared to net loss of $3.73 million, or $0.10 per basic and diluted share for the same period of last year.

 

 

Financial Condition

 

As of September 30, 2020, the Company had cash of $21.65 million, compared to $16.18 million as of March 31, 2020. Net cash used in operating activities was $0.35 million for the six months ended September 30, 2020, compared to net cash provided by operating activities of $0.97 million for the same period of last year. Net cash used in investing activities was $1.76 million for the six months ended September 30, 2020, compared to $1.45 million for the same period of last year. Net cash provided by financing activities was $4.55 million for the six months ended September 30, 2020, compared to $6.38 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

 

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)

 

		September 30,				March 31,
		2020				2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	21,646,487			$	16,176,318
Restricted cash			13,722,479				14,806,288
Financial assets available for sale			163,818				157,159
Notes receivable			73,494				57,005
Trade accounts receivable			9,992,142				9,770,656
Inventories			13,227,559				12,247,004
Other receivables, net			5,225,418				5,069,442
Advances to suppliers			1,929,273				1,174,800
Other current assets			1,833,208				1,528,540
Total current assets			67,813,878				60,987,212
PROPERTY AND EQUIPMENT, net			6,768,478				7,633,740
OTHER ASSETS
Long-term investment			4,115,839				2,544,451
Farmland assets			789,638				742,347
Long term deposits			1,533,640				1,456,384
Other noncurrent assets			1,077,100				1,046,763
Operating lease right-of-use assets			19,946,821				21,711,376
Intangible assets, net			3,440,046				3,393,960
Total other assets			30,903,084				30,895,281
Total assets		$	105,485,440			$	99,516,233
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term bank loan		$	2,204,820				1,410,130
Accounts payable, trade			24,904,087				21,559,494
Notes payable			23,327,972				26,605,971
Other payables			1,888,563				2,522,330
Other payables - related parties			574,103				490,218
Customer deposits			1,262,520				708,140
Taxes payable			245,203				119,247
Accrued liabilities			653,409				753,612
Long-term loan payable-current portion			2,375,729				2,287,742
Current portion of operating lease liabilities			1,056,181				981,090
Total current liabilities			58,492,587				57,437,974
Long-term loan payable			3,089,373				4,115,958
Long-term operating lease liabilities			16,500,499				19,049,575
Employee Deposits			14,699				70,507
Purchase option and warrants liability			36,306				64,090
Total liabilities			78,133,464				80,738,104
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock; $0.001 par value; 250,000,000 shares authorized; 37,961,790 and 32,936,786 shares issued and outstanding as of September 30, 2020 and March 31, 2020, respectively			37,962				32,937
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of September 30 and March 31, 2020, respectively			-				-
Additional paid-in capital			63,568,876				54,209,301
Statutory reserves			1,309,109				1,309,109
Accumulated deficit			(38,126,065	)			(36,400,837	)
Accumulated other comprehensive income			2,565,454				1,440,424
Total stockholders’ equity			29,355,336				20,590,934
Noncontrolling interests			(2,003,360	)			(1,812,805	)
Total equity			27,351,976				18,778,129
Total liabilities and stockholders’ equity		$	105,485,440			$	99,516,233

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 

		For the three months ended September 30,								For the six months ended September 30,
		2020				2019				2020				2019
REVENUES, NET		$	30,842,545			$	28,353,779			$	61,896,857			$	53,634,563
COST OF GOODS SOLD			23,829,793				21,660,415				46,903,886				40,879,761
GROSS PROFIT			7,012,752				6,693,364				14,992,971				12,754,802
SELLING EXPENSES			6,475,512				6,485,848				12,747,919				12,454,399
GENERAL AND ADMINISTRATIVE EXPENSES			2,061,559				1,823,935				4,181,725				4,675,547
TOTAL OPERATING EXPENSES			8,537,071				8,309,783				16,929,644				17,129,946
LOSS FROM OPERATIONS			(1,524,319	)			(1,616,419	)			(1,936,673	)			(4,375,144	)
OTHER INCOME (EXPENSE):
INTEREST INCOME			187,667				340,514				351,255				388,387
INTEREST EXPENSE			(117,692	)			-				(245,079	)			-
OTHER			(124,496	)			(72,225	)			(74,475	)			(134,710	)
CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITIES			32,674				6,865				27,784				410,420
LOSS BEFORE INCOME TAXES			(1,546,166	)			(1,341,265	)			(1,877,188	)			(3,711,047	)
PROVISION FOR INCOME TAXES			(18,975	)			5,702				38,595				14,090
NET LOSS			(1,527,191	)			(1,346,967	)			(1,915,783	)			(3,725,137	)
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST			(33,472	)			(122,004	)			(190,555	)			(365,223	)
NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.			(1,493,719	)			(1,224,963	)			(1,725,228	)			(3,359,914	)
Foreign currency translation adjustments			1,031,461				(536,335	)			1,125,030				(941,573	)
COMPREHENSIVE LOSS		$	(495,730	)		$	(1,883,302	)		$	(790,753	)		$	(4,666,710	)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic			37,961,790				32,936,786				36,232,144				32,696,348
Diluted			37,961,790				32,936,786				36,232,144				32,696,348
EARNINGS PER SHARES:
Basic		$	(0.04	)		$	(0.04	)		$	(0.05	)		$	(0.10	)
Diluted		$	(0.04	)		$	(0.04	)		$	(0.05	)		$	(0.10	)

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		For the six months ended September 30,
		2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,915,783	)		$	(3,725,137	)
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt direct write-off and provision			(286,076	)			767,250
Depreciation and amortization			1,258,156				1,051,907
Stock based compensation			-				34,560
Change in fair value of purchase option derivative liability			(27,784	)			(410,420	)
Changes in operating assets and liabilities：
Accounts receivable, trade			41,724				555,289
Notes receivable			(13,675	)			92,655
Inventories and biological assets			(448,573	)			975,170
Other receivables			279,650				(206,247	)
Advances to suppliers			(531,255	)			(106,790	)
Other current assets			(853,289	)			(1,031,185	)
Long term deposit			(15,106	)			682,504
Other noncurrent assets			13,619				13,791
Accounts payable, trade			2,362,338				1,938,015
Other payables and accrued liabilities			(845,411	)			(568,457	)
Customer deposits			509,549				744,912
Taxes payable			123,082				165,692
Net cash used in/provided by operating activities			(348,834	)			973,509
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposal of financial assets available for sale			-				14,457
Acquisition of equipment			(33,968	)			(374,992	)
Purchases of intangible assets			(55,038	)			(462,266	)
Investment in a joint venture			(1,422,193	)			-
Additions to leasehold improvements			(246,846	)			(622,464	)
Net cash used in investing activities			(1,758,045	)			(1,445,265	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loan			714,160				682,692
Repayment of  third parties’ loan			(1,175,725	)			-
Proceeds from notes payable			22,668,388				21,745,277
Repayment of notes payable			(26,949,176	)			(24,862,363	)
Decrease in Employee Deposits			(57,133	)			-
Exercise of warrants			77,500				-
Proceeds from equity financing			9,205,173				9,273,077
Repayment of other payables-related parties			68,994				(458,002	)
Net cash provided by financing activities			4,552,181				6,380,681
EFFECT OF EXCHANGE RATE ON CASH			1,941,058				(1,368,958	)
INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH			4,386,360				4,539,967
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period			30,982,606				24,745,202
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period		$	35,368,966			$	29,285,169
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest			247,371				-
Cash paid for income taxes		$	3,457			$	28,777

 

 

8