Income from operations in the third quarter of fiscal 2011 totaled $2.8 million versus $3.4 million in the third quarter of fiscal 2010, while operating margin was 15.3% compared to 22.9%, respectively.

Net income for the period was $2.2 million, or basic and diluted earnings of $0.17 per share, compared to $2.6 million, or basic and diluted earnings of $0.26 per share, a year ago. The decline is primarily attributable to an additional 3.5 million basic and diluted shares outstanding, as well as higher operating expenses, on a year-over-year basis. The increase in the basic and diluted share count from 10.0 million in the fiscal 2010 period to 13.5 million in the fiscal 2011 period reflects the issuance of common shares in connection with the Company’s April 2010 public stock offering.

As of December 31, 2010, the Company had $6.8 million of cash, $37.7 million in current assets and $9.8 million in total liabilities.

Dr. Lei Liu, Chairman and CEO, stated, “Although the competitive environment is challenging, we are taking steps to innovate and differentiate our brand,” stated Dr. Lei Liu, Chairman and CEO. “Recent initiatives include the roll-out of our online drugstore and the addition of new clinics. We are also remaining focused on our core operating strategy to provide our customers with high quality products at an excellent value.”

Dr. Liu continued, “We are continuing to see a good pipeline of real estate opportunities and expect to have 60 stores in operation by March 31, 2011. Looking ahead, we expect to open between 20-30 new locations in fiscal 2012. We will continue to be highly disciplined and selective in choosing new locations, pursuing only those opportunities that meet our strict criteria for long-term profitability and returns.”

New Store Openings and Fiscal 2011 Financial Guidance

During the third quarter of fiscal 2011, the Company opened 3 new stores, bringing the fiscal year-to-date total to 24 new locations. As of December 31, 2010 the Company operated 49 stores.

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