China Jo-Jo Drugstores Reports Fiscal Year 2022 Financial Results

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HANGZHOU, China, July 28, 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 fiscal year ended March 31, 2022.

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, “We are pleased with our fiscal year 2022 financial results, which reflect our continued growth momentum that we have achieved overall improvement across all key financial metrics. Compared with fiscal year 2021, our total revenue and gross profit increased by 23.5% and 24.9%, respectively, while our net loss narrowed down by 61.8%. Our solid financial performance demonstrates the resilience of our business and the reliability of our current business strategies in the current challenging market amid COVID-19 pandemic. Through leveraging the advantage of our stable supplier network, extensive distribution channels, and deep customer connections, we have proven our capability to execute our multifaceted growth plan and scale our business. Our dedicated team continues to provide high-quality services to customers, which has improved our brand awareness, strengthened customer relationships and distinguished us from peers in the market.”

Mr. Liu continued, “The project of ‘Healthy China 2030’ advances the healthcare sector reforms and greatly enhances overall medical service quality and efficiency in China. We remain confident in the business we’ve built and our ability to capture the significant opportunity going forward brought by the project of ‘Healthy China 2030’. We will continue to focus on executing our growth strategy and drive initiatives to deliver sustainable development. To realize the potential of our business model, we have 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 look forward to bringing our excellent services and products to more customers and continuing to add value to our existing customers. We will keep our efforts in investing in our team and business, expanding our distribution network, growing our customer base and building continued momentum toward our growth objectives. We believe that we are well-positioned to deliver profitable growth over the long-term and generate long-term shareholder value.”

Fiscal Year 2022 Financial Highlights

For the Year Ended March 31,

($ millions, except per share data)

2022

2021

% Change

Revenue

164.39

133.13

23.5 %

      Retail drugstores

84.23

76.10

10.7 %

      Online pharmacy

30.22

22.48

34.4 %

      Wholesale

49.94

34.55

44.6 %

Gross profit

36.52

29.24

24.9 %

Gross margin

22.2 %

22.0 %

0.2 pp*

Loss from operations

(2.69)

(8.84)

69.5 %

Net loss

(3.20)

(8.38)

61.8 %

Loss per share

(0.92)

(2.39)

61.5 %

*Notes: pp represents percentage points

  • Revenue increased by 23.5% to $164.39 million for the fiscal year ended March 31, 2022 from $133.13 million for the same period of last year.
  • Gross profit increased by 24.9% to $36.52 million for the fiscal year ended March 31, 2022 from $29.24 million for the same period of last year.
  • Gross margin increased by 0.2 percentage points to 22.2% for the fiscal year ended March 31, 2022 from 22.0% for the same period of last year.
  • Net loss was $3.20 million, or $0.92 per basic and diluted share, for the fiscal year ended March 31, 2022, compared to net loss of $8.38 million, or $2.39 per basic and diluted share, for the same period of last year.

Fiscal Year 2022 Financial Results

Revenue

Revenue for the fiscal year ended March 31, 2022 increased by $31.25 million, or 23.5%, to $164.39 million from $133.13 million for the same period of last year. The increase in revenue was primarily due to the growth in retail drugstores, online pharmacy and wholesale business.

For the Year Ended March 31,

2022

2021

($ millions)

Revenue

Cost of

Goods

Gross

Margin

Revenue

Cost of

Goods

Gross

Margin

Retail drugstores

84.23

57.29

32.0 %

76.10

53.09

30.2 %

Online pharmacy

30.22

26.62

11.9 %

22.48

20.15

10.4 %

Wholesale

49.94

43.96

12.0 %

34.55

30.65

11.3 %

Total

164.39

127.87

22.2 %

133.13

103.89

22.0 %

Revenue from the retail drugstores business increased by $8.13 million, or 10.7%, to $84.23 million for the fiscal year ended March 31, 2022 from $76.10 million for the same period of last year. After excluding the impact of exchange rate fluctuation, the actual retail drugstores sales increased by 5.2%. The actual increase in retail drugstore sales was primarily due to continuous adjustments of merchandises, suitable to the market and improved store employee incentive plan, and contribution from the new store sales.

Revenue from the online pharmacy business increased by $7.74 million, or 34.4%, to $30.22 million for the fiscal year ended March 31, 2022 from $22.48 million for the same period of last year. The increase was primarily caused by 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.

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 $10.33 million for the fiscal year ended March 31, 2022 as compared to $8.24 million for the same period of last year.

Revenue from the wholesale business increased by $15.39 million, or 44.6%, to $49.94 million for the fiscal year ended March 31, 2022, from $34.55 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 $23.98 million, or 23.1%, to $127.87 million for the fiscal year ended March 31, 2022, from $103.89 million for the same period of last year. Gross profit increased by $7.28 million, or 24.9%, to $36.52 million for the fiscal year ended March 31, 2022 from $29.24 million for the same period of last year. Overall gross margin increased by 0.2 percentage points to 22.2% for the fiscal year ended March 31, 2022, from 22.0% for the same period of last year, due to higher retail drugstores profit margins.

Gross margins for retail drugstores, online pharmacy and wholesale were 32.0%, 11.9%, and 12.0%, respectively, for the fiscal year ended March 31, 2022, compared to gross margins for retail drugstores, online pharmacy and wholesale of 30.2%, 10.4%, and 11.3%, respectively, for the same period of last year.

Loss from operations

Selling and marketing expenses increased by $3.93 million, or 14.6%, to $30.88 million for the fiscal year ended March 31, 2022 from $26.95 million for the same period of last year. The increase in selling and marketing expenses was primarily due to increase in rent and the sales and marketing expenses.

General and administrative expenses decreased by $2.71 million, or 24.9%, to $8.19 million for the fiscal year ended March 31, 2022 from $10.90 million for the same period of last year. The decrease in general and administrative expenses was primarily due to the decrease in stock-based compensation, offset by the increase 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 $3.94 million. In the year ended March 31, 2021, the Company recorded the reduction in the allowance for bad debts of $0.17 million as compared to the increase in the allowance for bad debts of $1.0 million in fiscal year 2022.

Loss from operations was $2.69 million for the fiscal year ended March 31, 2022, compared to $8.84 million for the same period of last year. Operating margin was (1.6) % and (6.6)% for the fiscal year ended March 31, 2022 and 2021, respectively.

Net loss

Net loss was $3.20 million, or $0.92 per basic and diluted share for the fiscal year ended March 31, 2022, compared to net loss of $8.38 million, or $2.39 per basic and diluted share for the same period of last year.

Financial Condition

As of March 31, 2022, the Company had cash of $18.46 million, compared to $22.05 million as of March 31, 2021. Net cash used in operating activities was $5.39 million for the fiscal year ended March 31, 2022, compared to $0.06 million for the same period of last year. The change is primarily attributable to a decrease in cash provided by accounts payable of $9,938,165, a decrease in cash provided by stock compensation of $3,941,600, a decrease in cash provided by other receivables of $2,396,659 offset by an increase of $5,138,115 in inventories and biological assets, an increase in cash provided by net loss of $5,177,212. Net cash used in investing activities was $0.31 million for the fiscal year ended March 31, 2022, compared to $2.00 million for the same period of last year. The change is primarily attributable to an increase in cash provided by investment in a joint venture of $1,470,119 and an increase of $170,445 in additions to leasehold improvements. Net cash provided by financing activities was $4.84 million for the fiscal year ended March 31, 2022, compared to $3.08 million for the same period of last year. The change is primarily due to repayment of notes payable and proceeds from equity and debt financing.

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

CONSOLIDATED BALANCE SHEETS

March 31,

March 31,

2022

2021

 ASSETS

 CURRENT ASSETS

     Cash and cash equivalents

$

18,458,575

$

22,045,628

     Restricted cash

16,881,002

12,627,016

     Financial assets available for sale

94,648

91,472

     Notes receivable

39,392

     Trade accounts receivable

16,736,495

13,423,728

     Inventories

16,020,140

16,972,965

     Other receivables, net

5,764,660

5,051,960

     Advances to suppliers

571,577

421,963

     Other current assets

924,797

1,560,119

Total current assets

75,451,894

72,234,243

PROPERTY AND EQUIPMENT, net

5,922,179

6,549,035

OTHER ASSETS

     Long-term investment

4,416,891

3,981,986

     Farmland assets

722,283

835,427

     Long term deposits

1,761,945

1,546,764

     Other noncurrent assets

822,950

856,391

     Operating lease right-of-use assets

13,738,081

16,778,729

     Intangible assets, net

3,547,986

3,528,056

Total other assets

25,010,136

27,527,353

             Total assets

$

106,384,209

$

106,310,631

LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)

CURRENT LIABILITIES

     Short-term bank loan

762,270

     Accounts payable, trade

27,331,381

29,895,830

     Notes payable

34,189,022

25,663,633

     Other payables

2,268,967

2,940,000

     Other payables – related parties

1,561,244

445,305

     Customer deposits

1,873,062

1,146,247

     Taxes payable

1,381,108

197,733

     Accrued liabilities

556,037

501,111

     Long-term loan payable-current portion

1,957,956

2,557,634

     Current portion of operating lease liabilities

3,329,619

788,171

Total current liabilities

74,448,396

64,897,934

Long-term loan payable

1,892,269

Long term operating lease liabilities

9,197,027

15,118,083

Employee Deposits

      Purchase option and warrants liability

Total liabilities

83,645,423

81,908,286

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY(DEFICIT)

     Common stock; $0.001 par value; 250,000,000 shares authorized; 3,479,316 and

         3,479,316 shares issued and outstanding as of March 31, 2022 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 March 31, 2022 and March 31, 2021

     Additional paid-in capital

66,516,033

66,516,033

     Statutory reserves

1,309,109

1,309,109

     Accumulated deficit

(48,134,493)

(44,942,374)

     Accumulated other comprehensive income

4,352,992

2,818,185

Total stockholders’ equity

24,085,393

25,742,705

Noncontrolling interests

(1,346,607)

(1,340,360)

Total equity

22,738,786

24,402,345

              Total liabilities and stockholders’ equity

$

106,384,209

$

106,310,631

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the years ended

March 31,

2022

2021

2020

REVENUES, NET

$

164,392,555

$

133,134,633

$

117,327,689

COST OF GOODS SOLD

127,873,515

103,890,824

91,801,259

GROSS PROFIT

36,519,040

29,243,809

25,526,430

SELLING EXPENSES

30,876,959

26,954,914

23,793,603

GENERAL AND ADMINISTRATIVE EXPENSES

8,187,176

10,897,629

8,108,377

IMPAIRMENT OF LONG-LIVED ASSETS

148,795

228,506

628,192

TOTAL OPERATING EXPENSES

39,212,930

38,081,049

32,530,172

LOSS FROM OPERATIONS

(2,693,890)

(8,837,240)

(7,003,742)

OTHER EXPENSE:

INTEREST INCOME

401,921

707,878

1,063,747

INTEREST EXPENSE

(262,218)

(455,187)

(698,518)

OTHER

455,547

176,519

(204,064)

CHANGE IN FAIR VALUE OF PURCHASE OPTION AND

    WARRANTS LIABILITY

64,090

401,158

LOSS BEFORE INCOME TAXES

(2,098,640)

(8,343,940)

(6,441,419)

PROVISION FOR INCOME TAXES

1,099,726

31,638

16,258

NET LOSS

(3,198,366)

(8,375,578)

(6,457,677)

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING

    INTEREST

(6,247)

(255,716)

(644,308)

NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES,

    INC.

(3,192,119)

(8,119,862)

(5,813,369)

OTHER COMPREHENSIVE LOSS

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS

1,534,807

1,377,761

(1,068,540)

COMPREHENSIVE LOSS

(1,663,559)

(6,997,817)

(7,526,217)

WEIGHTED AVERAGE NUMBER OF SHARES:

        Basic

3,479,316

3,398,397

2,734,714

        Diluted

3,479,316

3,398,397

2,734,714

LOSS PER SHARES:

        Basic

$

(0.92)

$

(2.39)

$

(2.16)

        Diluted

$

(0.92)

$

(2.39)

$

(2.16)

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended 

March 31,

2022

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

(3,198,366)

$

(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

939,720

(706,862)

446,354

        Depreciation and amortization

1,256,491

1,750,890

2,082,817

        Impairment of long lived assets

148,795

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

(2,657,283)

(3,307,946)

(1,567,774)

        Notes receivable

40,260

21,539

112,803

        Inventories and biological assets

1,523,098

(3,615,017)

979,935

        Other receivables

(1,927,692)

468,967

(1,010,722)

        Advances to suppliers

(171,783)

1,893,857

148,638

        Long term deposit

(159,508)

26,910

596,209

        Other current assets

376,134

1,004,448

(1,278,833)

        Other noncurrent assets

62,394

38,142

87,065

        Change in operating liabilities:

        Accounts payable, trade

(3,558,050)

6,380,115

(317,755)

        Other payables and accrued liabilities

99,132

(183,111)

(967,751)

        Customer deposits

678,601

368,690

(22,963)

        Taxes payable

1,162,084

66,648

115

Net cash used in operating activities

(5,385,972)

(62,292)

(6,907,945)

CASH FLOWS FROM INVESTING ACTIVITIES:

        Disposal of financial assets available for sale

75,973

14,356

        Purchase of financial assets available for sale

        Acquisition of equipment and building

(89,960)

(126,766)

(656,297)

        Investment in a joint venture

(1,470,119)

(2,567,083)

        Purchases of intangible assets

(7,012)

(97,802)

(871,145)

        Additions to leasehold improvements

(209,166)

(379,611)

(756,444)

Net cash used in investing activities

(306,138)

(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

(779,059)

(1,476,630)

        Proceeds from third parties loan

7,178,100

        Repayment of third parties loan

(2,613,965)

(2,395,629)

(658,645)

        Proceeds from notes payable

65,370,181

48,292,231

48,974,772

        Repayment of notes payable

(57,829,269)

(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 payable-related parties

689,010

(73,426)

(285,123)

Net cash provided by financing activities

4,836,898

3,079,853

19,013,706

EFFECT OF EXCHANGE RATE ON CASH

1,522,146

2,670,802

(1,031,744)

INCREASE IN CASH AND CASH EQUIVALENTS AND

RESTRICTED CASH

666,933

3,690,038

6,237,404

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,

beginning of year

34,672,644

30,982,606

24,745,202

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,

end of year

$

35,339,577

$

34,672,644

$

30,982,606

SUPPLEMENTAL DISCLOSURE OF CASH FLOW

INFORMATION:

        Cash paid for income taxes

$

3,955

$

37,738

$

17,198

        Cash paid for interest

262,218

455,187

108,098

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Source: China Jo-Jo Drugstores, Inc.