China Jo-Jo Drugstores Announces Fourth Quarter and Year End Financial Results for Fiscal Year 2017

HANGZHOU, China, June 29, 2017

HANGZHOU, China, June 29, 2017 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) (the "Company" or "China Jo-Jo"), a leading China-based pharmacy providing retail, wholesale and online distribution and sales of pharmaceutical and health care products through its own online and retail pharmacies, today announced financial results for the fourth quarter and fiscal year ended March 31, 2017.

FY 2017 Fourth Quarter Highlights:

• Revenue for the fourth quarter ended March 31, 2017 was $19,792,271, as compared to $20,468,616 for the same period of last year.
• Gross profit was $3,608,236, as compared to $4,311,559 for the same period of last year.
• Net income was ($5,038,420), as compared to $802,899 for the same period of last year.
• Earnings per share ("EPS") was approximately ($0.25), as compared to EPS of $0.05 for the same period of last year.

Fiscal Year 2017 Highlights:

• Total revenue for the year ended March 31, 2017 decreased by $7,566,535, or by 8.5% as compared to the previous fiscal year.
• Retail drugstores sales increased by $582,742, or by 1.1% as compared to the previous fiscal year.
• Online pharmacy sales decreased by $11,060,985, or by 41.8% as compared to the previous fiscal year.
• Wholesale revenue increased by $2,911,708, or by 25.5% as compared to the previous fiscal year.
• Gross profit decreased by $884,664, or by 5.1% year over year, while gross margin increased from 19.7% for FY 2016 to 20.4% for FY 2017.
• Net loss was $5,644,204 and loss per share was $0.28 per share, as compared to net income of $447,156 and EPS of $0.03 for the previous fiscal year.
• The Company ended the year with cash and restricted cash balances of $27,795,810, $67.2 million in total assets, and $40.5 million in total liabilities

Reconciliation to Non-GAAP Financial Measures

	For The Years Ended March 31
	2017 ARIVA.DE Börsen-Geflüster Kurse China Jo-Jo Drugstores -   0,00%	2016
Net income	(5,644,204)	447,156
Share-based compensation expenses	2,248,598	1,022,790
Change in fair value of derivative liabilities	(140,032)	(612,198)
Adjusted net income	(3,535,638)	857,748
Adjusted net income per share - diluted	(0.17)	0.05

Revenue decreased by $7,566,535 to $81,499,045 for the year ended March 31, 2017, or by 8.5% as compared to the year ended March 31, 2016, primarily due to a decline in our online pharmacy business, which was partially offset by increases in our retail drugstore and wholesale businesses. Retail drugstore sales, which accounted for approximately 63.5% of our total revenue for the year ended March 31, 2017, increased by $582,742 to $51,788,386, or by 1.1% as compared to the year ended March 31, 2016. Same-store sales decreased by approximately $2,648,725, or 5.5%, while new stores contributed approximately $2,200,622 in revenue during the year ended March 31, 2017. Excluding the RMB depreciation effect, the same store sales actually increased by approximately 0.6% period over period.

Online pharmacy sales decreased by approximately $11,060,985 for the year ended March 31, 2017, or by 41.8% as compared to the year ended March 31, 2016. This decrease was primarily the result of a decline in business referred from Yikatong and a decline in sales made via various e-commerce platforms during the year ended March 31, 2017.

Wholesale revenue increased by $2,911,708, or 25.5%, primarily through the resale of certain products for which our retail stores had prepared large orders to other vendors. Because our retail drugstores achieved large sales quantities for certain brand name merchandise, we were able to negotiate lower than market purchase prices for those items, and as a result, certain vendors who were unable to obtain a better price than ours will purchase those items from us, resulting in growth in our wholesale sales volumes.

Gross profit decreased by $884,664, or 5.1% period over period, primarily as a result of a decrease in gross profit from online sales, which decreased significantly in the year ended March 31, 2017. At the same time, gross margin increased from 19.7% to 20.4% due to higher retail and wholesale profit margins.

Net loss was $5,644,204, or $0.28 per diluted share, for the year ended March 31, 2017, as compared to net income of $447,156 ,or $0.03 per diluted share, for the year ended March 31, 2016.

The Chairman and CEO of China Jo-Jo Drugstores, Mr. Liu Lei, commented, "Despite a decline in our online pharmacy sales, we managed to not only have increased revenue in our other business segments - retail drugstore sales and wholesale sales - but also have increased our overall gross margin. Through increasing medical service prices at public hospitals and demanding a lower percentage of revenue from drug sales at hospital, China medical reform continues to push drug sales from public hospitals to other retail outlets such as retail pharmacies. As public hospitals in China dominate the retail sale of prescription drugs that was estimated to have annual gross sales volume over US $150 billion (one trillion RMB) in 2016, we anticipate that drugstores will continue to benefit from the reform. Additionally, we are implementing strategies to increase our online pharmacy sales, including increasing online drug and health products sales referred by large commercial health insurance providers."

"I am pleased to report that we now have a record number of retail pharmacies, which stood at 67 as of March 31, 2017. Our growth strategy includes opening and acquiring additional retail stores (chain) in fiscal year 2018 and employing tactics to grow our online pharmacy sales to help us continue to expand our market share and remain a leading player in the physical retail and e-commerce pharmacy businesses in China," Mr. Liu concluded.

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
		March 31,				March 31,
		2017				2016
ASSETS
CURRENT ASSETS
Cash		$	18,364,424			$	6,671,873
Restricted cash			9,431,386				13,747,990
Financial assets available for sale			87,068				465,165
Notes receivable			253,394				15,506
Trade accounts receivable, net of allowance for doubtful accounts of $1,415,505 and     $2,099,244, as of March 31, 2017 and 2016 respectively			8,561,596				8,054,597
Inventories			9,923,101				10,802,691
Other receivables, net of allowance for doubtful accounts of $26,854 and $28,405, as     of March  31, 2017 and 2016, respectively			2,269,193				1,376,468
Advances to suppliers, net of allowance for doubtful accounts of $1,502,255 and     $105,542, as of March 31, 2017 and 2016, respectively			5,504,141				4,230,665
Other current assets			1,566,155				1,518,048
Total current assets			55,960,458				46,883,003
PROPERTY AND EQUIPMENT, net			4,263,157				5,543,076
OTHER ASSETS
Long-term investment			46,152				108,539
Farmland assets			718,787				1,562,205
Long term deposits			2,294,848				2,452,056
Other noncurrent assets			1,177,005				2,595,129
Intangible assets, net			2,712,611				2,928,779
Total other assets			6,949,403				9,646,708
Total assets		$	67,173,018			$	62,072,787
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