China Jo-Jo Drugstores Reports Fiscal Year 2024 Financial Results

HANGZHOU, China, July 30, 2024 /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, 2024.

Mr. Lei Liu, Chairman and CEO of Jo-Jo Drugstores, commented, "We are pleased to present our financial performance for fiscal year 2024, which reflects our commitment to maintaining a resilient business model in a dynamic market. We achieved a significant 42.1% revenue growth in our wholesale business, a result of our dedicated efforts in targeting wholesale buyers with competitively priced product offerings, and leveraging modern wholesale platforms to boost sales. We believe this strategy will benefit us for long-term and sustainable growth. Our dedication to high-quality services and products remains strong. By adopting agile product and pricing strategies, we have successfully navigated a competitive landscape in China's healthcare market. Looking ahead, we will keep strengthening our competitive advantages to differentiate our business and deliver outstanding results. We plan to actively seek as great growth potential opportunities as possible to strengthen our business, improve our customer experience, and expand our product portfolio to meet evolving customer needs. We will also continue to seize opportunities to facilitate market expansion and remain focused on gaining efficiencies and controlling costs to achieve the accelerated growth. We are deeply committed to contributing to China's healthcare market and communities we support, and we will continue to create greater value for our shareholders, ensuring that our contributions benefit all our shareholders."

Fiscal Year 2024 Financial Highlights

	For the Year Ended March 31,
($ millions, except per share data)	2024	2023	% Change
Revenue	154.54	148.81	3.8 %
Retail drugstores	75.68	83.35	(9.2) %
Online pharmacy	31.86	32.38	(1.6) %
Wholesale	47.00	33.08	42.1 %
Gross profit	31.11	34.28	(9.3) %
Gross margin	20.1 %	23.0 %	(2.9)pp
Loss from operations	(3.53)	(20.93)	83.1 %
Net loss	(4.23)	(21.14)	80.0 %
Loss per share	(2.93)	(41.46)	92.9 %

*Notes: pp represents percentage points

Revenue increased by 3.8% to $154.54 million for the fiscal year ended March 31, 2024, from $148.81 million for the same period of last year.
Gross profit was $31.11 million for the fiscal year ended March 31, 2024, compared to $34.28 million for the same period of last year.
Gross margin was 20.1% for the fiscal year ended March 31, 2024, compared to 23.0% for the same period of last year.
Net loss was $4.23 million, or $2.93 per basic and diluted share, for the fiscal year ended March 31, 2024, compared to net loss of $21.14 million, or $41.46 per basic and diluted share, for the same period of last year.

Fiscal Year 2024 Financial Results

Revenue

Revenue increased by $5.73 million, or 3.8%, to $154.54 million for the fiscal year ended March 31, 2024, from $148.81 million for the same period of last year.

	For the Year Ended March 31,
	2024			2023
($ millions)	Revenue	Cost of Goods	Average Gross Margin	Revenue	Cost of Goods	Average Gross Margin
Retail drugstores	75.68	53.06	29.9 %	83.35	56.55	32.2 %
Online pharmacy	31.86	28.24	11.3 %	32.38	28.51	12.0 %
Wholesale	47.00	42.13	10.4 %	33.08	29.47	10.9 %
Total	154.54	123.43	20.1 %	148.81	114.53	23.0 %

Revenue from the retail drugstores business decreased by $7.67 million, or 9.2%, to $75.68 million for the fiscal year ended March 31, 2024, from $83.35 million for the same period of last year. After excluding the impact of exchange rate fluctuation, the actual retail drugstores sales decreased by 5.0%. The decrease in its retail drugstore sales is primarily due to local consumption cutback, extremely competitive market and the temporary surge of sale in the second half of fiscal 2023, which is nonrecurring and is due to Chinese government's sanction lift on COVID-19.

Revenue from the online pharmacy business decreased by $0.53 million, or 1.6%, to $31.86 million for the fiscal year ended March 31, 2024, from $32.38 million for the same period of last year. The decrease was primarily caused by a decrease in sales via e-commerce platforms such as JD and Pinduoduo. Because the online prices are transparent, to be competitive in online sales, the Company has to keep low prices. More competitors came into the online retail sales market. As the Company does not have dominating power such as lowest prices or exclusive products, it may not be able to improve its sales significantly in the near future.

Revenue from the wholesale business increased by $13.93 million, or 42.1%, to $47.00 million for the fiscal year ended March 31, 2024, from $33.08 million for the same period of last year. In the year ended March 31, 2024, Online platforms such as Pharmacist Help, Yiyao Help and Yao Help have become popular ways to transact medical products by bulk. The platforms attract a plenty of buyers and sellers, so both parties have extended opportunities to expose themselves. The Company has spent significant efforts in exploring these buyers with certain products at reasonable prices as a result, the Company is able to attract more buyers and promote its sales. The Company believes that selling on the modern wholesale platform may be a new growth point. Therefore, the Company is actively looking for potential acquisition targets with trading platform to strengthen its wholesale business.

Gross profit and gross margin

Total cost of goods sold increased by $8.90 million, or 7.8%, to $123.43 million for the fiscal year ended March 31, 2024, from $114.53 million for the same period of last year. Gross profit decreased by $3.17 million, or 9.3%, to $31.11 million for the fiscal year ended March 31, 2024 from $34.28 million for the same period of last year. Overall gross margin decreased by 2.9 percentage points to 20.1% for the fiscal year ended March 31, 2024, from 23.0% for the same period of last year, due to lower retail drugstores profit margins.

Gross margins for retail drugstores, online pharmacy and wholesale were 29.9%, 11.3%, and 10.4%, respectively, for the fiscal year ended March 31, 2024, compared to gross margins for retail drugstores, online pharmacy and wholesale of 32.2%, 12.0%, and 10.9%, respectively, for the same period of last year.

Loss from operations

Sales and marketing expenses decreased by $1.79 million, or 6.1%, to $27.39 million for the fiscal year ended March 31, 2024 from $29.18 million for the same period of last year. The decrease in selling expenses was primarily due to a decrease in expense related to Normal Nucleic Acid Testing ("NNAT") as it is no longer requested by local government and a decrease in fee charged by distribution channels resulting from the decrease in retail drugstores and online pharmacy sales.

General and administrative expenses decreased by $8.41 million, or 53.7%, to $7.26 million for the fiscal year ended March 31, 2024 from $15.67 million for the same period of last year. The decrease in general and administrative expenses was primarily due to the decrease in bad debt expense. Such expenses as a percentage of revenue decreased to 4.7% from 10.5% for the same period a year ago. In the year ended March 31, 2024, the Company recorded a reduction of $0.22 million in the allowance account for bad debts as compared to the increase of $7.58 million in the allowance account for bad debts in FY2023.

Loss from operations was $3.53 million for the fiscal year ended March 31, 2024, compared to $20.93 million for the same period of last year. Operating margin was (2.3)% and (14.1)% for the fiscal year ended March 31, 2024 and 2023, respectively.

Net loss

Net loss was $4.23 million, or $2.93 per basic and diluted share for the fiscal year ended March 31, 2024, compared to net loss of $21.14 million, or $41.46 per basic and diluted share for the same period of last year.

Financial Condition

As of March 31, 2024, the Company had cash of $20.15 million, compared to $18.81 million as of March 31, 2023. Net cash used in operating activities was $3.16 million for the fiscal year ended March 31, 2024, compared to $3.28 million for the same period of last year. The change is primarily attributable to an increase in net income of $16.90 million, an increase in accounts receivable of $0.73 million, an increase in cash provided by accounts payable of $4.24 million and an increase in cash provided by other payables and accrued liabilities of $2.21 million, offset by a decrease in bad debt direct write-off and provision of $6.79 million, a decrease in inventories and biological assets of $1.18 million and a decrease in stock compensation of $10.36 million. Net cash used in investing activities was $2.04 million for the fiscal year ended March 31, 2024, compared to $0.32 million for the same period of last year. The change is primarily attributable to investment in a joint venture and purchases of long-term assets. Net cash provided by financing activities was $8.00 million for the fiscal year ended March 31, 2024, compared to $2.37 million for the same period of last year. The change is primarily due to notes payable and proceeds from short-term bank loan.

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
+1-646-932-7242
investors@ascent-ir.com

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

	March 31, 2024		March 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	20,149,806	$	18,807,936
Restricted cash		12,724,365		12,762,708
Trade accounts receivables		15,824,103		14,119,606
Inventories		16,248,373		15,309,100
Other receivables, net		2,938,049		2,725,015
Advances to suppliers		914,776		142,417
Due from related parties		313,346		-
Other current assets		569,544		616,008
Total current assets		69,682,362		64,482,790

OTHER ASSETS
Property and equipment, net		4,906,589		5,100,264
Long-term investment		1,195,261		1,772,072
Farmland assets		634,153		666,721
Long-term deposits		1,119,006		1,038,125
Other noncurrent assets		682,437		790,056
Operating lease right-of-use assets		13,827,360		13,924,826
Intangible assets, net		3,009,922		3,195,748
Total other assets		25,374,728		26,487,812
Total assets	$	95,057,090	$	90,970,602

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term loan payable	$	276,997	$	-
Accounts payable		31,630,131		26,990,250
Notes payable		31,676,335		29,255,776
Other payables		2,493,482		1,314,919
Due to related parties		1,833,509		683,560
Customer deposits		518,241		695,931
Taxes payable		682,239		1,706,909
Accrued liabilities		386,395		756,516
Current portion of operating lease liabilities		4,862,766		5,131,373
Total current liabilities		74,360,095		66,535,234
Long-term operating lease liabilities		6,403,858		7,768,216
Total liabilities		80,763,953		74,303,450

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Ordinary shares; $0.24 par value; 150,000,000 shares authorized; 1,743,362 and 1,184,861 shares issued and outstanding as of March 31, 2024 and 2023, respectively		418,407		284,367
Preferred shares; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of March 31, 2024 and 2023		-		-
Additional paid-in capital		86,413,978		83,958,418
Statutory reserves		1,309,109		1,309,109
Accumulated deficit		(73,507,246)		(69,273,018)
Accumulated other comprehensive income		1,005,762		1,735,135
Total shareholders' equity attributed to China Jo-Jo		15,640,010		18,014,011
Noncontrolling interests		(1,346,873)		(1,346,859)
Total shareholders' equity		14,293,137		16,667,152
Total liabilities and shareholders' equity	$	95,057,090	$	90,970,602

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	For the years ended March 31,
	2024		2023		2022
REVENUES, NET	$	154,541,077	$	148,811,976	$	164,392,555

COST OF GOODS SOLD		123,432,529		114,531,512		127,873,515

GROSS PROFIT		31,108,548		34,280,464		36,519,040

SELLING EXPENSES		27,385,587		29,177,163		30,876,959
GENERAL AND ADMINISTRATIVE EXPENSES		7,257,524		15,668,684		8,187,176
STOCK BASED COMPENSATION		-		10,360,000		-
IMPAIRMENT OF LONG-LIVED ASSETS		-		-		148,795
TOTAL OPERATING EXPENSES		34,643,111		55,205,847		39,212,930

LOSS FROM OPERATIONS		(3,534,563)		(20,925,383)		(2,693,890)

OTHER INCOME (EXPENSES):
INTEREST INCOME		516,637		883,908		401,921
INTEREST EXPENSE		(13,604)		(65,854)		(262,218)
INVESTMENT LOSS		(1,607,537)		(2,316,994)		-
OTHER INCOME (EXPENSES)		467,687		1,680,087		455,547

LOSS BEFORE INCOME TAXES		(4,171,380)		(20,744,236)		(2,098,640)

PROVISION FOR INCOME TAXES		62,862		394,541		1,099,726

NET LOSS		(4,234,242)		(21,138,777)		(3,198,366)

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(14)		(252)		(6,247)

NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.		(4,234,228)		(21,138,525)		(3,192,119)

OTHER COMPREHENSIVE LOSS
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS		(729,373)		(2,617,857)		1,534,807

COMPREHENSIVE LOSS		(4,963,615)		(23,756,634)		(1,663,559)

WEIGHTED AVERAGE NUMBER OF SHARES:
Basic		1,444,263		509,828		173,966
Diluted		1,444,263		509,828		173,966

LOSS PER SHARE:
Basic	$	(2.93)	$	(41.46)	$	(18.35)
Diluted	$	(2.93)	$	(41.46)	$	(18.35)

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended March 31,
	2024		2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,234,242)	$	(21,138,777)	$	(3,198,366)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		790,449		718,002		1,256,491
Bad debt direct write-off and provision and reversal		(249,257)		7,579,886		939,720
Amortization of right-of-use assets		4,594,172		-		-
Loss from disposal of property and equipment		107,251		-		-
Impairment of long lived assets		-		-		148,795
Share-based compensation		-		10,360,000		-
Investment loss		1,607,537		2,316,994		-
Change in operating assets and liabilities:
Accounts receivable		(1,804,440)		(2,531,755)		(2,657,283)
Notes receivable		19,943		(20,861)		40,260
Inventories and biological assets		(1,699,621)		(522,550)		1,523,098
Other receivables		(672,830)		(958,671)		(1,927,692)
Advances to suppliers		(839,221)		201,984		(171,783)
Long term deposit		(132,568)		589,653		(159,508)
Other current assets		19,076		331,426		376,134
Other noncurrent assets		69,539		(30,483)		62,394
Amount due from related parties		(317,828)		-		-
Accounts payable		6,002,186		1,765,488		(3,558,050)
Other payables and accrued liabilities		868,975		(1,341,447)		99,132
Customer deposits		(144,761)		(1,035,456)		678,601
Taxes payable		(948,277)		433,054		1,162,084
Operating lease liabilities		(6,191,522)		-		-
Net cash used in operating activities		(3,155,439)		(3,283,513)		(5,385,973)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment and building		(330,677)		(118,272)		(89,960)
Investment in a joint venture		(1,116,212)		(4,379)		-
Purchases of intangible assets		(66,973)		(12,774)		(7,012)
Additions to leasehold improvements		(525,988)		(180,672)		(209,166)
Net cash used in investing activities		(2,039,850)		(316,097)		(306,138)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loan		1,116,212		-		-
Repayment of short-term bank loan		(837,159)		-		(779,059)
Repayment of third parties loan		-		(1,811,558)		(2,613,965)
Proceeds from notes payable		56,875,403		57,965,013		65,370,181
Repayment of notes payable		(52,997,171)		(60,273,598)		(57,829,269)
Proceeds from issuance of shares and warrants in private placements		2,589,600		7,325,000		-
Proceeds from other payable-related parties		1,257,406		43,785		689,010
Repayment of other payable-related parties		-		(882,486)
Net cash provided by financing activities		8,004,291		2,366,156		4,836,898

EFFECT OF EXCHANGE RATE ON CASH		(1,505,475)		(2,535,479)		1,522,146

INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		1,303,527		(3,768,933)		666,933
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year		31,570,644		35,339,577		34,672,644
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year	$	32,874,171	$	31,570,644	$	35,339,577

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	149,023	$	63,668	$	3,955
Cash paid for interest		13,604		64,943		262,218

NON-CASH ACTIVITIES：
Cashless exercise of warrants	$	-	$	135,118	$	-