China Jo-Jo Drugstores Inc (CJJD)

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China Jo-Jo Drugstores, Inc. Reports Record First Quarter 2012 Financial Results
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China Jo-JO Drugstores, Inc. (MM) (NASDAQ:CJJD)
Intraday Stock Chart
Today : Monday 15 August 2011
China Jo-Jo Drugstores, Inc. (NASDAQ:CJJD), which primarily operates retail pharmacies in the People’s Republic of China, today reported record financial results for the first quarter of fiscal 2012 ended June 30, 2011.

First Quarter Fiscal 2012 Highlights:

•Revenues increased 40.9% to $21.4 million; comparable stores sales up 31.9%
•Gross profit increased 48.9% to $6.9 million; gross margin improved 180 basis points to 32.0%
•Operating margins reached 20.6%
•Diluted and basic earnings per share rose 41.2% to $0.24
•Generated $9.9 million of cash flow from operations
•Opened 6 new store locations bringing total number of stores to 57 as of June 30, 2011
Dr. Lei Liu, Chairman and CEO, stated, “We are very pleased to deliver record operating results for the first quarter, which reflect strong sales and increased traffic at both new and existing stores. The substantial increase in sales primarily reflects our ability to accept medical insurance for an increased number of drugs, as well as a broader number of insured individuals under China’s government-sponsored insurance programs. All of our stores opened prior to April 1, 2010 are now able to accept government medical insurance. As we continue to apply to accept medical insurance as soon as our stores become eligible to do so, i.e. one year after opening, we anticipate that government-sponsored programs will continue to drive sales as our new stores mature.”

Dr. Liu further commented, “We are continuing to make progress towards our long-term goal to become vertically integrated. Specifically, we are in the process of acquiring a medical distributor and expect to close on the transaction in the second fiscal quarter; we plan to begin selling our own traditional Chinese medicines in Spring 2012; and we are selling through our online drugstore. We believe these initiatives will help us drive growth and build long-term shareholder value.”

First Quarter Fiscal 2012 Results

Revenue for the first quarter of fiscal 2012 increased 40.9% to $21.4 million compared to $15.2 million in the first quarter of fiscal 2011, while comparable store sales, which the Company defines as stores open for 15 months or more, increased 31.9%. The strength of sales during the period is primarily due to sales of pharmaceutical products covered under government-sponsored medical insurance programs. All of our store locations opened prior to April 1, 2010 are licensed to accept medical insurance, and sales at such locations have steadily increased as such insurance programs covered more drugs and participants. Revenue also increased from having more stores in operation. The Company operated 57 stores as of June 30, 2011 compared to 31 stores as of June 30, 2010. We opened 6 new locations during the three months ended June 30, 2011.

First quarter gross profit increased 48.9% to $6.9 million from $4.6 million for the same period of fiscal year 2011, primarily reflecting greater sales of higher margin traditional Chinese medicine products during the period. Gross margin for the first quarter improved 180 basis points to 32.1%, which compares to 30.3% for the same period of fiscal 2011.

Selling expense in the first quarter was $1.4 million versus $0.8 million in the same period of fiscal 2011. The year-over-year increase reflects an additional 26 stores in operation, as well as the Company’s ongoing efforts to build increased awareness of the China Jo-Jo Drugstores brand.

General and administrative expenses were $1.1 million in the first quarter compared to $0.8 million for the first quarter of fiscal 2011, reflecting the support of an additional 26 stores in operation. As we continue to open new stores, further develop our infrastructure, and incur expenses related to being a public company, we anticipate that our general and administrative expenses will increase in absolute dollars as well as a percentage of total revenues.

Income from operations in the first quarter totaled $4.4 million versus $3.0 million in the first quarter of fiscal 2011, while operating margin was 20.6% compared to 19.8%, respectively as a result of our increased gross profit.

Net income for the first quarter of fiscal 2012 rose 50.7% to $3.2 million compared to $2.2 million last year. Basic and diluted earnings per share increased 41.2% to $0.24 versus $0.17 for the same period of fiscal 2011.

Balance Sheet Highlights

As of June 30, 2011, the Company had $6.4 million of cash, $33.2 million in current assets and $10.1 million in total liabilities. During the first quarter of fiscal 2012, the Company generated $9.9 million of cash flow from operations. As of August 11, 2011, the Company had cash of approximately $5.5 million.

Dr. Liu concluded, “We recognize that the marketplace is extremely competitive and we are therefore, continuing to focus on strategic initiatives that will enable us drive operating efficiencies and increase market share.”

New and Planned Store Openings

During the first quarter of fiscal 2012, the Company opened 6 new stores, operating a total of 57 stores as of June 30, 2011. As of August 11, 2011, the Company operated 59 stores. During fiscal year 2012, the Company expects to open approximately 15 to 20 new locations.

Conference Call Information

The Company will host a conference call to discuss first quarter results on Tuesday, August 16, 2011 at 8:00 a.m. Eastern Time. To participate in the conference call, please dial 888-846-5003 from North America. International participants can access the call by dialing 480-629-9856. A live audio webcast of this conference call will be available under the Investors Relations section of the Company's website at http://www.chinajojodrugstores.com. A replay of the webcast will be available on the website approximately two hours after the conclusion of the call.