China Jo-Jo Drugstores Announces the Fourth Quarter and Year End

HANGZHOU, China, June 28, 2016 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) (the "Company" or "China Jo-Jo"), a leading China-based pharmacy with retail, wholesale and online distribution 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, 2016.

FY 2016 Fourth Quarter Highlights:

• Revenue was $20,468,616 for the fourth quarter ended March 31, 2016 as compared to $20,982,649 during the same period of last year
• Gross profit increased to $4,311,559 from $3,341,109 in the same quarter of last year
• Net income was $802,899 during the three months ended March 31, 2016, as compared to $519,423 in the fourth quarter of last year
• Earnings per share (EPS) was $0.05/share, as compared to EPS of $0.03/share for the same quarter of last year

Fiscal Year 2016 Highlights:

• Total revenue increased by $12,169,848 or 15.8% for the year ended March 31, 2016, as compared to the previous fiscal year
• Retail drugstores sales increased by $2,405,908 or 4.9%, for the year ended March 31, 2016, as compared to the previous fiscal year
• Online pharmacy sales increased 77.8% over FY 2015, to a record revenue of $26,449,981, which accounts for approximately 29.7% of the Company's overall sales
• Gross profit increased by $5,073,557, or 40.8% year over year, while gross margin increased from 16.2% of FY 2015 to 19.7% of FY 2016
• Net income was $447,156, and EPS was $0.03/share during FY 2016, as compared to net income of $855,628 and EPS of $0.06/share
• The Company ended the year with cash and restricted cash balance of $20,419,863, $62.1 million in total assets, and $42.8 million in total liabilities

Reconciliation to non-GAAP Financial Measures

Revenue increase during FY 2016 was mainly due to the expansion of the Company's retail drugstores and online pharmacy business. Retail drugstores sales, which accounted for approximately 57.5% of total revenue, increased by approximately $2.4 million, of which a 3.5% increase in same-store sales contributed approximately $1.7 million while new stores sales contributed approximately $0.7 million. Excluding RMB depreciation effect, the same store sales increased by approximately 6.4% year over year. The same store sales are expected to continue to grow due to the increasing demand for healthcare products in China.

Online pharmacy sales reached $26,449,981, an increase of 77.8% over the previous year, thanks to the increased sales on e-commerce platform partners, such as Tmall, JD.com and yhd.com, as well as the enhanced amount of transactions on the Company's own online pharmacy website. To further expand the online presence of its pharmacy products, the Company launched its own branded stores on WeChat, China's leading mobile messaging app and social network with over 500 million active users. Meanwhile, sales on the Company's official online pharmacy website for the year ended March 31, 2016 increased by 233.2% from a year ago, primarily as a result of partnership with large insurance companies in China such as the People's Insurance Company (Group) of China Limited that refer their insurance customers to purchase qualified products through China Jo-Jo's website.

Chairman and CEO of China Jo-Jo, Mr. Liu Lei commented, "We achieved solid results in fiscal year 2016. We consolidated the operations of our retail drugstores and implemented key initiatives such as increasing product adaptability, providing access to mobile payments, and launching in-pharmacy virtual doctor clinics to drive sales and provide value-added services to our customers. We maintained profitability while migrating our product mix to higher margined pharmaceutical and health and wellness products. At the same time, our expansion in the fast-growing online pharmacy markets in China continues to outpace the industry. Our online pharmacy sales continued to grow rapidly through both third-party e-commerce platforms and our own online pharmacy website."

"Moving forward, our efforts will continue to focus on opening or acquiring more stores, creating deeper relationships with our customers, holding regional dominant market share in retail pharmacy, while taking a data-driven approach in identifying popular products and enhancing our abilities to promote online sales. We believe we have the right strategy for succeeding as a leading online and physical retail chain pharmacy stores in China."

Use of non-GAAP financial measures

To supplement China Jo-Jo's consolidated financial results presented in accordance with GAAP, China Jo-Jo uses the following measures defined as non-GAAP financial measures by the SEC: net income (loss) excluding share-based compensation expenses and change in fair value of derivative liabilities, and diluted net income (loss) per share excluding share-based compensation expenses and change in the fair value of derivatives liabilities. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

China Jo-Jo believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based compensation expenses and change in fair value of derivative liabilities that may not be indicative of its operating performance from a cash perspective. China Jo-Jo believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to China Jo-Jo's historical performance and liquidity. China Jo-Jo computes its non-GAAP financial measures using the same consistent method from quarter to quarter. China Jo-Jo believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP measures is that they exclude share-based compensation and change in fair value of derivative liabilities charge that has been and will continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The table under the heading Reconciliation to non-GAAP Financial Measures in the beginning of the release has more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

About China Jo-Jo Drugstores, Inc.

China Jo-Jo Drugstores, Inc., through its own retail drugstores, wholesale distributor and online pharmacy, is a leading retailer and wholesale distributor of pharmaceutical and healthcare products in China. As of March 31, 2016, the Company had 58 retail pharmacies in Zhejiang Province, China. The Company's wholesale subsidiary not only supplies its retail stores, but also distributes drug and other healthcare products to other drugstores and drug vendors. The Company routinely posts important information on its corporate websites at www.jiuzhou-drugstore.com (Chinese) and www.chinajojodrugstores.com (English).

Forward Looking Statement

Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "estimate," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate," the negatives thereof, or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. It is routine for the Company's internal projections and expectations to change as the quarter and year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change. Although these expectations may change, the Company is under no obligation to inform you if they do. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of numerous factors, including the risks associated with the effect of changing economic conditions in the People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Investor Relations Contact:

Steve Liu [email protected]

Frank Zhao86-571-88077108 [email protected]

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SOURCE China Jo-Jo Drugstores, Inc.