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Last10K.com | 10-K Annual Report Mon Jul 01 2019
China Jo-Jo Drugstores Reports Fiscal Year 2019 Financial Results
HANGZHOU, China, July 1, 2019 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: 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 fiscal year ended March 31, 2019.
Mr. Lei Liu, Chairman and Chief Executive Officer of China Jo-Jo Drugstores, Inc., commented, “We are pleased to present our financial results for our 2019 fiscal year. We increased our top line revenue to $107.55 million for the 2019 fiscal year as compared to $96.11 million for the previous fiscal year. Over the course of the 2019 fiscal year we made great strides in improving our operations and made a key senior appointment by appointing Mr. Wei Hu to serve as our new Chief Operating Officer, to accelerate the transition and digitalization of our company in the rapidly evolving retail drugstore industry. We look forward to further improving our operations and continuing to provide effective and efficient services to our loyal customer base for the coming years.”
Fiscal Year 2019 Financial Highlights
|For the Year Ended March 31,|
|($ millions, except per share data)||2019||2018||% Change|
|Loss from operations||(0.88||)||(18.02||)||95.1||%|
|Loss per share||(0.03||)||(0.68||)||95.6||%|
*Notes: pp represents percentage points
|●||Revenues increased by 11.9% to $107.55 million for the fiscal year ended March 31, 2019 from $96.11 million for the prior fiscal year.|
|●||Gross profit increased by 24.8% to $25.11 million for the fiscal year ended March 31, 2019 from $20.13 million for prior fiscal year.|
|●||Gross margin increased by 2.4 percentage points to 23.3% for the fiscal year ended March 31, 2019 from 20.9% for the prior fiscal year.|
|●||Net loss was $1.32 million, or $0.03 per basic and diluted share, for the fiscal year ended March 31, 2019, compared to $17.06 million, or $0.68 per basic and diluted share, for the same period of last year, which is a decrease in loss.|
Fiscal Year 2019 Financial Results
Revenue for the fiscal year ended March 31, 2019 increased by $11.44 million, or 11.9%, to $107.55 million from $96.11 million for the prior fiscal year. The increase in revenue was primarily due to the revenue increase in retail drugstores and wholesale business, partially offset by the decrease in online sales business.
|For the Year Ended March 31,|
|($ millions)||Revenue||Cost of Goods||Gross Margin||Revenue||Cost of Goods||Gross Margin|
Revenue from the retail drugstores business increased by $10.36 million, or 16.7%, to $72.34 million for the fiscal year ended March 31, 2019 from $61.98 million for the prior fiscal year. The increase was primarily due to consumer-facing benefits such as emphasis on onsite medical care, chronic disease management, incremental DTP (Direct-to-Patient) business caused by continuous hospital medical reform, and the maturation of stores opened a year ago.
Revenue from the online pharmacy business decreased by $3.35 million, or 27.6%, to $8.78 million for the fiscal year ended March 31, 2019 from $12.13 million for the prior fiscal year. The decrease was mainly caused by a decline in sales via e-commerce platforms which suspended OTC drug sales on their sites directly, offset by the increase in business referred from Pharmacy Benefit Management (“PBM”) providers. The Company is adding more non-medical health products such as nutritional supplements into its product offerings to counteract the decline in sale of OTC drugs.
Revenue from the wholesale business increased by $4.43 million, or 20.1%, to $26.43 million for the fiscal year ended March 31, 2019 from $22.00 million for the prior fiscal 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, as well as sales of certain nutritional supplements to sales agents.
Gross profit and gross margin
Total cost of goods sold increased by $6.45 million, or 8.5%, to $82.44 million for the fiscal year ended March 31, 2019 from $75.99 million for the prior fiscal year. Gross profit increased by $4.99 million, or 24.8%, to $25.11 million for the fiscal year ended March 31, 2019 from $20.13 million for the prior fiscal year. Overall gross margin increased by 2.4 percentage points to 23.3% for the fiscal year ended March 31, 2019, from 20.9% for the prior fiscal year, due to higher retail profit margins.
Gross margin for the Company’s retail drugstores segment increased by 3.3 percentage points to 29.2% for the fiscal year ended March 31, 2019, from 25.9% for the prior fiscal year, primarily because of the introduction of new suppliers, and the continuing renegotiating of prices with the Company’s suppliers.
Gross margin for the online pharmacy segment increased by 1.3 percentage points to 11.8% for the fiscal year ended March 31, 2019, from 10.5% for the prior fiscal year, primarily due to the increase in sales via the Company’s own official website, offset by decrease in sale via third-party platforms, which are usually subject to low profit margin.
Gross margin for the Company’s wholesale segment decreased by 1.4 percentage to 11.3% for the fiscal year ended March 31, 2019, from 12.7% for the prior fiscal year, primarily as a result of variation in the products the Company carries and sells to certain pharmaceutical vendors.
Loss from operations
Selling and marketing expenses increased by $5.53 million, or 29.5%, to $24.27 million for the fiscal year ended March 31, 2019 from $18.74 million for the prior fiscal year, primarily due to increases in labor and rent related to store expansions and increases in the cost of living.
General and administrative expenses decreased by $16.10 million, or 90.4%, to $1.72 million for the fiscal year ended March 31, 2019 from $17.82 million for the prior fiscal year. In fiscal 2019, in order to use cash more efficiently, the Company accelerated the collection of advances to suppliers and accounts receivables. Specifically, we focused on the collection of aged accounts of advances to suppliers and accounts receivable. As the Company has collected these amounts, its allowance on doubtful accounts decreased by approximately $7.7 million. Additionally, the Company’s stock compensation expense decreased by approximately $6.8 million primarily as a result of issuing shares to its key employees in fiscal 2018. Excluding such expenses, general and administrative expenses decreased by approximately $1.6 million or 9%, which reflects control of expense such as overall management cash compensation in fiscal year 2019.
Impairment of long-lived assets was nil for the fiscal year ended March 31, 2019, compared to $1.58 million for the prior fiscal year. On March 31, 2018, Jiuxin Medicine started outsourcing its logistic service to Astro Boy Cloud Pan (Hangzhou) Storage and Logistic Co. Ltd, Jiuxin Medicine’s warehouse lease has been terminated. As a result, approximately $1.58 million in unamortized warehouse improvements were recognized as expenses in the year ended March 31, 2018. Such impairment was made after the Company estimated that the implied fair value of long-lived assets was lower than their carrying value.
Loss from operations was $0.88 million for the fiscal year ended March 31, 2019, compared to $18.02 million for the prior fiscal year. Operating margin was negative 0.8% for the fiscal year ended March 31, 2019, compared to negative 18.8% for the prior fiscal year.
Net loss was $1.32 million, or $0.03 per basic and diluted share for the fiscal year ended March 31, 2019, compared to net loss of $17.06 million, or $0.68 per basic and diluted share for the prior fiscal year.
As of March 31, 2019, the Company had cash of $24.75 million, compared to $31.45 million as of March 31, 2018. Net cash used in operating activities was $5.60 million for the fiscal year ended March 31, 2019, compared to $2.07 million for the prior fiscal year. Net cash used in investing activities was $7.33 million for the fiscal year ended March 31, 2019, compared to $2.98 million for the prior fiscal year. Net cash provided by financing activities was $8.08 million for the fiscal year ended March 31, 2018, compared to net cash used in financing activities of $4.89 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 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 and sells 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.
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:
Chief Financial Officer
Investor Relations Director
Investor Relations Contact:
Ascent Investor Relations LLC
CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|March 31,||March 31,|
|Financial assets available for sale||180,928||175,140|
|Trade accounts receivable||8,692,514||8,322,393|
|Other receivables, net||4,438,230||3,098,079|
|Advances to suppliers||1,950,252||3,447,452|
|Other current assets||2,063,375||2,116,237|
|Total current assets||56,202,981||62,320,142|
|PROPERTY AND EQUIPMENT, net||8,727,358||2,843,640|
|Long term deposits||2,157,275||2,501,968|
|Other noncurrent assets||1,196,197||1,253,352|
|Intangible assets, net||3,597,323||4,056,414|
|Total other assets||7,800,297||8,648,910|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accounts payable, trade||23,106,230||25,259,526|
|Other payables - related parties||795,179||850,342|
|Total current liabilities||55,212,286||54,811,491|
|Purchase option and warrants liability||81,935||138,796|
|COMMITMENTS AND CONTINGENCIES|
|Common stock; $0.001 par value; 250,000,000 shares authorized; 28,936,778 and 28,936,778 shares issued and outstanding as of March 31, 2019 and March 31, 2018||28,937||28,937|
|Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of March 31, 2019 and March 31, 2018||-||-|
|Additional paid-in capital||44,905,664||43,599,089|
|Accumulated other comprehensive income||2,508,964||3,586,460|
|Total stockholders’ equity||18,165,206||18,862,405|
|Total liabilities and stockholders’ equity||$||72,730,636||$||73,812,692|
CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
|For the years ended|
|COST OF GOODS SOLD||82,442,969||75,987,537|
|GENERAL AND ADMINISTRATIVE EXPENSES||1,718,989||17,823,661|
|IMPAIRMENT OF LONG-LIVED ASSETS||-||1,583,186|
|TOTAL OPERATING EXPENSES||25,984,173||38,146,339|
|LOSS FROM OPERATIONS||(876,130||)||(18,021,170||)|
|OTHER INCOME, NET||(93,311||)||201,096|
|CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS LIABILITY||(326,452||)||357,421|
|LOSS BEFORE INCOME TAXES||(1,183,006||)||(16,983,677||)|
|PROVISION FOR INCOME TAXES||134,763||76,256|
|ADD: NET (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST||391,491||-|
|NET (LOSS) ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.||(926,278||)||(17,059,933||)|
|OTHER COMPREHENSIVE LOSS|
|Foreign currency translation adjustments||(1,077,496||)||2,236,398|
|WEIGHTED AVERAGE NUMBER OF SHARES:|
|LOSS PER SHARES:|
CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|For the years ended|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Bad debt direct write-off and provision||(3,357,851||)||4,009,636|
|Depreciation and amortization||1,676,413||1,383,810|
|Impairment of leasehold improvement||1,583,186|
|Stock based compensation||197,100||7,021,563|
|Change in fair value of purchase option derivative liability||326,452||(357,421||)|
|Change in operating assets:|
|Accounts receivable, trade||(116,810||)||(2,072,486||)|
|Inventories and biological assets||(1,390,823||)||(2,411,209||)|
|Advances to suppliers||3,612,453||1,121,006|
|Long term deposit||183,841||15,103|
|Other current assets||(83,372||)||(377,391||)|
|Other noncurrent assets||(23,511||)||36,091|
|Change in operating liabilities:|
|Accounts payable, trade||(528,353||)||3,726,625|
|Other payables and accrued liabilities||(328,473||)||1,115,267|
|Net cash provided by operating activities||(5,603,216||)||(2,070,066||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Disposal of financial assets available for sale||87,290||-|
|Purchase of financial assets available for sale||(104,360||)||(75,513||)|
|Acquisition of equipment and building||(5,450,934||)||(414,398||)|
|Increase intangible assets||(29,817||)||(1,140,102|
|Additions to leasehold improvements||(1,828,360||)||(1,347,489||)|
|Net cash provided by (used in) investing activities||(7,326,181||)||(2,977,502||)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Proceeds from notes payable||42,030,521||27,461,423|
|Repayment of notes payable||(34,018,811||)||(22,476,740||)|
|Increase in financial liability||81,997||-|
|Proceeds from sale of stock and warrants||7,529||-|
|Repayment of other payables-related parties||(22,655||)||(91,395||)|
|Net cash provided by (used in) financing activities||8,078,581||4,893,288|
|EFFECT OF EXCHANGE RATE ON CASH||(1,856,174||)||3,810,661|
|(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH||(6,706,989||)||3,656,381|
|CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year||31,452,191||27,795,810|
|CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year||$||24,745,202||$||31,452,191|
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:|
|Cash paid for income taxes||$||56,422||$||27,825|
The following information was filed by China Jojo Drugstores, Inc. (CJJD) on Monday, July 1, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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China Jojo Drugstores, Inc.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2019 10-K Annual Report includes:
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