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China Jo-Jo Drugstores Announces Fiscal Year March 31, 2010 And Fourth Quarter Financial Results

China Jo-Jo Drugstores, Inc. (NASDAQ: CJJD) ("Jo-Jo Drugstores" or the "Company"), which operates a retail pharmacy chain in the People’s Republic of China (the “PRC”), today reported full and fourth quarter financial results for the fiscal year ended March 31, 2010.

Fiscal Year Ended March 31, 2010 Highlights

  • Revenues increased by 23.2% YoY to $55.1 million
  • Operating income increased by 40.9% YoY $12.7 million
  • Net income increased by 44.2% YoY to $9.8 million
  • $1.09 earnings per basic share
  • 9 new stores opened

Fiscal Fourth Quarter ended March 31, 2010 Highlights

  • Revenues increased by 39.6% YoY to $16.3 million
  • Operating income increased by 141.8% YoY to $4.8 million
  • Net income increased by 158.1% YoY to $3.9 million

Dr. Lei Liu, China Jo-Jo Drugstores’ Chairman and Chief Executive Officer, commented, “We achieved our highest annual revenues, operating income, and net income to date. Growth was funded by operating cash flows and we controlled costs by outsourcing distribution to a third party and through marketing initiatives with our manufacturers. Our immediate goal is to utilize the proceeds from the $17.5 million fundraise we completed in late April to further expand our presence in Zhejiang Province. We plan to expand as quickly as possible while sticking to our fundamentals that have driven our growth to date.”

As of June 25, 2010 the company operated 31 stores and had a cash balance of $15,488,076.

For the Year Ended March 31, 2010 and 2009

Revenue.  Our revenue increased by $10,398,277 or 23.2% to $55,174,929 for the year ended March 31, 2010 from $44,776,652 for the year ended March 31, 2009 due to operating additional store locations. Of this increase $3,214,016 was attributable to new stores or 31% of the increase with the remainder primarily attributable to our maturing stores that we opened during the year ended March 31, 2010. We operated 25 stores as of March 31, 2010, as compared to 16 stores as of March 31, 2009. We anticipate that our overall revenue will continue to increase as we open additional stores.

Gross Profit.  Our gross profit increased by $4,729,129 or 38.9% to $16,898,040 for the year ended March 31, 2010 from $12,168,911 for the year ended March 31, 2009. Our gross margin slightly increased from 27.2% for the year ended March 31, 2009 to 30.6% for the year ended March 31, 2010 as a result of selling additional traditional Chinese medicines and sundry products, which typically have a higher margin contribution. We anticipate that our overall gross profit will continue to increase as our sales increase. Additionally, we anticipate that our gross margin will increase as we will be able to obtain better pricing terms from our suppliers and achieve further economies of scale as a result of purchasing larger quantities of products. We may lower our prices in order to increase sales volume which may have an adverse effect on our gross margins. We presently do not privately label any of our products and are constantly adjusting our product mix to meet customer demand and to maximize our gross margin.

Income from Operations.  As a result of our increased gross margin, our income from operations increased by $3,700,422 or 40.9% to $12,757,554 for the year ended March 31, 2010 from $9,057,132 for the year ended March 31, 2009. Our operating margin for the years ended March 31, 2010 and 2009 was 23.1% and 20.2%, respectively.

For the Three Months Ended March 31, 2010 and 2009

Revenue.  Our revenue increased by $4,630,855 or 39.6% to $16,311,186 for the three months ended March 31, 2010 from $11,680,331 for the three months ended March 31, 2009 due to operating additional store locations. We operated 25 stores as of March 31, 2010, as compared to 16 stores as of March 31, 2009. We anticipate that our overall revenue will continue to increase as we open additional stores.

Gross Profit.  Our gross profit increased by $2,396,258 or 74.6% to $5,608,433 for the three months ended March 31, 2010 from $3,212,175 for the three months ended March 31, 2009. Our gross margin increased from 27.5% for the three months ended March 31, 2009 to 34.4% for the three months ended March 31, 2010 as a result of selling additional traditional Chinese medicines and sundry products, which typically have a higher margin contribution. We anticipate that our overall gross profit will continue to increase as our sales increase. Additionally, we anticipate that our gross margin will increase as we will be able to obtain better pricing terms from our suppliers and achieve further economies of scale as a result of purchasing larger quantities of products. We may lower our prices in order to increase sales volume which may have an adverse effect on our gross margins. We presently do not privately label any of our products and are constantly adjusting our product mix to meet customer demand and to maximize our gross margin.

Income from Operations.  As a result of our increased gross margin, our income from operations increased by $2,830,402 or 141.8% to $4,826,623 for the three months ended March 31, 2010 from $1,996,221 for the three months ended March 31, 2009. Our operating margin for the three months ended March 31, 2010 and 2009 was 29.6% and 17.1%, respectively.

Conference Call Information

The Company will host a conference call to discuss these results on Thursday, July 1, 2010, at 8:00 a.m. Eastern time. To participate in the conference call, please dial 1-877-485-3104 from North America. International participants can access the call by dialing 1-201-689-8579. Investors may also access a live audio webcast of this conference call under the Investors Relations section of the Company's website at http://www.chinajojodrugstores.com.

A replay of the webcast will be available approximately two hours after the conclusion of the call. The webcast replay will remain available for three months. An audio replay will be made available until July 6, 2010. The audio replay can be accessed by dialing 1-877-660-6853 or 1-201-612-7415 and entering pass-code 337823.

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