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China Jo-Jo Drugstores (CJJD)

Filed: 1 Jul 21, 2:27pm

Exhibit 99.1

 

China Jo-Jo Drugstores Reports Fiscal Year 2021 Financial Results

 

HANGZHOU, China, June 29, 2021 /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 fiscal year ended March 31, 2021.

 

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, “We are pleased to present our financial results for the fiscal year 2021. Our revenue and gross profit record $133.13 million and $29.24 million for the fiscal year 2021, up 13.5% and 14.6% compared to the fiscal year 2020. Revenue from retail drugstores, online pharmacy, and wholesale segments increased by 2.7%, 66.1% and 16.3%, respectively, demonstrating that we successfully executed our multifaceted growth strategy and strategic transformation.”

 

Mr. Liu continued, “The project of ‘Healthy China 2030’ brings us new opportunities since it will advance the healthcare sector reforms and greatly enhance overall medical service quality and efficiency in China. To realize the potential of our business model in this trend, we enhanced various information and data systems, continued to develop the management system for patients with chronic diseases, upgraded our ‘Medical + Medicine’ business model, introduced digital services, developed 24-hour service stores, launched a new Office Automation system, and accelerated comprehensive budget management. We aim to build a strong foundation for sustainable growth and engage with consumers from various platforms. As a leading consumer brand in China with a diversified portfolio of essential healthcare businesses, we are confident that we are on the right track to deliver significant value to all of our investors.”  

 

Fiscal Year 2021 Financial Highlights

  For the Year Ended March 31, 
($ millions, except per share data) 2021  2020  % Change 
Revenue  133.13   117.33   13.5%
Retail drugstores  76.10   74.08   2.7%
Online pharmacy  22.48   13.54   66.1%
Wholesale  34.55   29.71   16.3%
Gross profit  29.24   25.53   14.6%
Gross margin  22.0%  21.8%  0.2 pp*
Loss from operations  (8.84)  (7.00)  -26.2%
Net loss  (8.38)  (6.46)  -29.7%
Loss per share  (0.20)  (0.18)  -11.1%

 

*Notes: pp represents percentage points

 

Revenue increased by 13.5% to $133.13 million for the fiscal year ended March 31, 2021 from $117.33 million for the prior fiscal year.

 

Gross profit increased by 14.6% to $29.24 million for the fiscal year ended March 31, 2021 from $25.53 million for the prior fiscal year.

 

 

 

 

Gross margin increased slightly by 0.2 percentage points to 22.0% for the fiscal year ended March 31, 2021 from 21.8% for the prior fiscal year.

 

Net loss was $8.38 million, or $0.20 per basic and diluted share, for the fiscal year ended March 31, 2021, compared to net loss of $6.46 million, or $0.18 per basic and diluted share, for the prior fiscal year.

 

Fiscal Year 2021 Financial Results

 

Revenue

 

Revenue for the fiscal year ended March 31, 2021 increased by $15.80 million, or 13.5%, to $133.13 million from $117.33 million for the prior fiscal year. The increase in revenue was primarily due to the growth in retail drugstores business, online pharmacy and wholesale business.

 

  For the Year Ended March 31, 
  2021  2020 
($ millions) Revenue  Cost of
Goods
  Gross
Margin
  Revenue  Cost of
Goods
  Gross
Margin
 
Retail drugstores  76.10   53.09   30.2%  74.08   53.24   28.1%
Online pharmacy  22.48   20.15   10.4%  13.54   12.11   10.6%
Wholesale  34.55   30.65   11.3%  29.71   26.45   11.0%
Total  133.13   103.89   22.0%  117.33   91.80   21.8%

 

Revenue from the retail drugstores business increased by $2.02 million, or 2.7%, to $76.10 million for the fiscal year ended March 31, 2021 from $74.08 million for the prior fiscal year. However, after removing the impact of exchange rate fluctuation, the actual retail drugstores sales decreased by 1.5%. The actual decrease in retail drugstore sales was primarily due to the negative effect on the overall economy from COVID-19 and the Company’s strategic decision to cease selling certain low-profit margin products that are eligible for reimbursement by National Healthcare Security Administration since September 1, 2020.

 

Revenue from the online pharmacy business increased by $8.94 million, or 66.1%, to $22.48 million for the fiscal year ended March 31, 2021 from $13.54 million for the prior fiscal year. The increase was primarily caused by an increase in the sales of prescription drugs via e-commerce platforms such as Tmall. In the past, prescription drugs cannot be sold online due to safety concern. After the nation lifted the ban order, online prescription drug sales became popular. As a result, the sale of prescription drugs was $8.24 million in the year ended March 31, 2021 as compared to $1.45 million in the year ended March 31, 2020. Additionally, the Company maintained a membership care program targeted at customers with chronic disease. The Company has closely interacted with its members via WeChat to provide healthcare knowledge, and to remind 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 $4.84 million, or 16.3%, to $34.55 million for the fiscal year ended March 31, 2021 from $29.71 million for the prior fiscal year. The increase was primarily accomplished by Company’s ability to sell certain products, which were sold in large quantity at its retail stores, to other vendors at competitive prices.

 

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Gross profit and gross margin

 

Total cost of goods sold increased by $12.09 million, or 13.2%, to $103.89 million for the fiscal year ended March 31, 2021 from $91.80 million for the prior fiscal year. Gross profit increased by $3.71 million, or 14.6%, to $29.24 million for fiscal year ended March 31, 2021 from $25.53 million for the prior fiscal year. Overall gross margin increased slightly by 0.2 percentage points to 22.0% for the fiscal year ended March 31, 2021, from 21.8% for the prior fiscal year.

 

Gross margins for retail drugstores, online pharmacy and wholesale were 30.2%, 10.4%, and 11.3%, respectively, for the fiscal year ended March 31, 2021, compared to gross margins for retail drugstores, online pharmacy and wholesale of 28.1%, 10.6%, and 11.0%, respectively, for the prior fiscal year.

 

Loss from operations

 

Selling and marketing expenses increased by $3.16 million, or 13.3%, to $26.95 million for the fiscal year ended March 31, 2021 from $23.79 million for the prior fiscal year. The increase in selling and marketing expenses was primarily due to increase in employee’s salary and rent for office leases.

 

General and administrative expenses increased by 2.79 million, or 34.4%, to $10.90 million for the fiscal year ended March 31, 2021 from $8.11 million for the prior fiscal year. The increase in general and administrative expenses was primarily due to the increase in stock-based compensation, offset by the decrease in bad debt expense. In December 2020, the Company issued a total of 3,790,000 shares of common stock and recorded stock-based compensation of approximately $3.9 million. In the year ended March 31, 2021, the Company recorded the reduction in the allowance for bad debts of $1.0 million as compared to increase in bad debt expense in of $0.1 million in fiscal year 2020.

 

The Company recorded an impairment of long-lived assets of $0.23 million and $0.63 million for the year ended March 31, 2021 and 2020, respectively. In the year ended March 31, 2021, the Company evaluated the forest land use rights and recorded an impairment of $0.23 million. In the year ended March 31, 2020, the Company evaluated the licenses of insurance applicable drugstores acquired in the past based on their discounted positive cash value.

 

Loss from operations was $8.84 million for the fiscal year ended March 31, 2021, compared to loss from operations of $7.00 million for the prior fiscal year. Operating margin was (6.6) % and (6.0)% for the fiscal year ended March 31, 2021 and 2020, respectively.

 

Net loss

 

Net loss was $8.38 million, or $0.20 per basic and diluted share for the fiscal year ended March 31, 2021, compared to net loss of $6.46 million, or $0.18 per basic and diluted share for the prior fiscal year.

 

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Financial Condition

 

As of March 31, 2021, the Company had cash of $22.05 million, compared to $16.18 million as of March 31, 2020. Net cash used in operating activities was $0.06 million for the fiscal year ended March 31, 2021, compared to $6.91 million for the prior fiscal year. Net cash used in investing activities was $2.00 million for the fiscal year ended March 31, 2021, compared to $4.84 million for the prior fiscal year. Net cash provided by financing activities was $3.08 million for the fiscal year ended March 31, 2021, compared to $19.01 million for the prior fiscal 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

 

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CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

  March 31,  March 31, 
  2021  2020 
ASSETS      
CURRENT ASSETS      
Cash and cash equivalents $22,045,628  $16,176,318 
Restricted cash  12,627,016   14,806,288 
Financial assets available for sale  91,472   157,159 
Notes receivable  39,392   57,005 
Trade accounts receivable  13,423,728   9,770,656 
Inventories  16,972,965   12,247,004 
Other receivables, net  5,051,960   5,069,442 
Advances to suppliers  421,963   1,174,800 
Other current assets  1,560,119   1,528,540 
Total current assets  72,234,243   60,987,212 
         
PROPERTY AND EQUIPMENT, net  6,549,035   7,633,740 
         
OTHER ASSETS        
Long-term investment  3,981,986   2,544,451 
Farmland assets  835,427   742,347 
Long term deposits  1,546,764   1,456,384 
Other noncurrent assets  856,391   1,046,763 
Operating lease right-of-use assets  16,778,729   21,711,376 
Intangible assets, net  3,528,056   3,393,960 
Total other assets  27,527,353   30,895,281 
         
Total assets $106,310,631  $99,516,233 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Short-term bank loan  762,270   1,410,130 
Accounts payable, trade  29,895,830   21,559,494 
Notes payable  25,663,633   26,605,971 
Other payables  2,940,000   2,522,330 
Other payables - related parties  445,305   490,218 
Customer deposits  1,146,247   708,140 
Taxes payable  197,733   119,247 
Accrued liabilities  501,111   753,612 
Long-term loan payable-current portion  2,557,634   2,287,742 
Current portion of operating lease liabilities  788,171   981,090 
Total current liabilities  64,897,934   57,437,974 
         
Long-term loan payable  1,892,269   4,115,958 
Long term operating lease liabilities  15,118,083   19,049,575 
Employee Deposits  -   70,507 
Purchase option and warrants liability  -   64,090 
Total liabilities  81,908,286   80,738,104 
         
COMMITMENTS AND CONTINGENCIES        
         
STOCKHOLDERS’ EQUITY        
Common stock; $0.001 par value; 250,000,000 shares authorized; 41,751,790 and 32,936,786 shares issued and outstanding as of March 31, 2021 and March 31, 2020  41,752   32,937 
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of March 31, 2021 and March 31, 2020  -   - 
Additional paid-in capital  66,516,033   54,209,301 
Statutory reserves  1,309,109   1,309,109 
Accumulated deficit  (44,942,374)  (36,400,837)
Accumulated other comprehensive income  2,818,185   1,440,424 
Total stockholders’ equity  25,742,705   20,590,934 
Noncontrolling interests  (1,340,360)  (1,812,805)
Total equity  24,402,345   18,778,129 
Total liabilities and stockholders’ equity $106,310,631  $99,516,233 

 

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CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

  For the years ended
March 31,
 
  2021  2020 
REVENUES, NET $133,134,633  $117,327,689 
         
COST OF GOODS SOLD  103,890,824   91,801,259 
         
GROSS PROFIT  29,243,809   25,526,430 
         
SELLING EXPENSES  26,954,914   23,793,603 
GENERAL AND ADMINISTRATIVE EXPENSES  10,897,629   8,108,377 
IMPAIRMENT OF LONG-LIVED ASSETS  228,506   628,192 
TOTAL OPERATING EXPENSES  38,081,049   32,530,172 
         
LOSS FROM OPERATIONS  (8,837,240)  (7,003,742)
         
OTHER EXPENSE:        
INTEREST INCOME  707,878   1,063,747 
INTEREST EXPENSE  (455,187)  (698,518)
OTHER  176,519   (204,064)
CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS LIABILITY  64,090   401,158 
         
LOSS BEFORE INCOME TAXES  (8,343,940)  (6,441,419)
         
PROVISION FOR INCOME TAXES  31,638   16,258 
         
NET LOSS  (8,375,578)  (6,457,677)
         
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST  (255,716)  (644,308)
         
NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.  (8,119,862)  (5,813,369)
         
OTHER COMPREHENSIVE LOSS        
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS  1,377,761   (1,068,540)
         
COMPREHENSIVE LOSS  (6,997,817)  (7,526,217)
         
WEIGHTED AVERAGE NUMBER OF SHARES:        
Basic  40,780,762   32,816,567 
Diluted  40,780,762   32,816,567 
         
LOSS PER SHARES:        
Basic $(0.20) $(0.18)
Diluted $(0.20) $(0.18)

 

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CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  For the years ended
March 31,
 
  2021  2020 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $(8,375,578) $(6,457,677)
Adjustments to reconcile net income to net cash used in operating activities:        
Bad debt direct write-off and provision  (706,862)  446,354 
Depreciation and amortization  1,750,890   2,082,817 
Impairment of long lived assets  228,506   628,192 
Stock based compensation  3,941,600   34,560 
Change in fair value of purchase option derivative liability  (64,090)  (401,158)
Change in operating assets:        
Accounts receivable, trade  (3,307,946)  (1,567,774)
Notes receivable  21,539   112,803 
Inventories and biological assets  (3,615,017)  979,935 
Other receivables  468,967   (1,010,722)
Advances to suppliers  1,893,857   148,638 
Long term deposit  26,910   596,209 
Other current assets  1,004,448   (1,278,833)
Other noncurrent assets  38,142   87,065 
Change in operating liabilities:        
Accounts payable, trade  6,380,115   (317,755)
Other payables and accrued liabilities  (183,111)  (967,751)
Customer deposits  368,690   (22,963)
Taxes payable  66,648   115 
Net cash used in operating activities  (62,292)  (6,907,945)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Disposal of financial assets available for sale  75,973   14,356 
Acquisition of equipment and building  (126,766)  (656,297)
Investment in a joint venture  (1,470,119)  (2,567,083)
Purchases of intangible assets  (97,802)  (871,145)
Additions to leasehold improvements  (379,611)  (756,444)
Net cash used in investing activities  (1,998,325)  (4,836,613)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from short-term bank loan  738,315   1,435,620 
Repayment of short-term bank loan  (1,476,630)  - 
Proceeds from third parties loan  -   7,178,100 
Repayment of third parties loan  (2,395,629)  (658,645)
Proceeds from notes payable  48,292,231   48,974,772 
Repayment of notes payable  (51,295,776)  (46,896,917)
Increase in financial liability  (73,832)  (7,178)
Exercise of warrants  77,500   - 
Proceeds from sale of stock and warrants  9,287,100   9,273,077 
Repayment of other payables-related parties  (73,426)  (285,123)
Net cash provided by financing activities  3,079,853   19,013,706 
         
EFFECT OF EXCHANGE RATE ON CASH  2,670,802   (1,031,744)
         
INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH  3,690,038   6,237,404 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year  30,982,606   24,745,202 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year $34,672,644  $30,982,606 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash paid for income taxes $37,738  $17,198 
Cash paid for interest  455,187   108,098 

 

 

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