PR Newswire | Jan 21, 2022 09:00AM EST

01/21 08:00 CST

China Jo-Jo Drugstores Reports First Half of Fiscal Year 2022 Financial Results HANGZHOU, China, Jan. 21, 2022

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 Gross Revenue Cost of Gross Goods Margin Goods 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 ZhaoChief Financial Officer+86-571-88077108frank.zhao@jojodrugstores.com

Investor Relations Contact:Tina XiaoAscent Investor Relations LLC+1-917-609-0333tina.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 41,752 41,752March 31, 2021

Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issuedand - - 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 - 27,784LIABILITY

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 operatingactivities:

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.