111, Inc. Announces Second Quarter 2026 Unaudited Financial Results

• Transition from An Asset-Heavy Business Model to An Asset-Light Business Model
• Ongoing Investment and Adoption of AI Agents Making Workforce Streamlining Possible
• Net Revenue of Promotional Products ⁽¹⁾ Increased by 121% and Gross Profit Rose by 120% Year-over-Year
• Total Marketplace (MP) Service Revenue Increased by 18.2% Year-over-Year for the First Half of 2026
• Fulfillment Expenses as a Percentage of Revenue Improved by 5 Basis Points Year-over-Year

SHANGHAI, Sept. 17, 2026 /PRNewswire/ -- 111, Inc. ("111" or the "Company") (NASDAQ: YI), a leading tech-enabled healthcare platform company committed to reshaping the value chain of healthcare industry by digitally empowering the upstream and downstream in China, today announced its unaudited financial results for the second quarter ended June 30, 2026.

Second Quarter 2026 Highlights

• Net revenue amounted to RMB2.3 billion (US$339.0 million), representing a 28.3% decrease from RMB3.2 billion in the prior-year quarter. This decline was primarily attributable to the Company's ongoing strategic transition toward a more asset-light and operationally efficient business model. As part of this initiative, the Company divested several underperforming subsidiaries last year, under which the Company can generate more service-based commission income and reduce operational and capital risks to a certain extent. Total marketplace (MP) service revenue increased by 18.2% year-over-year for the first half of 2026, demonstrating growth of the Company's marketplace service business and enhanced revenue quality. Through such strategic optimization, the Company continues to pursue further improvements in its profitability and liquidity profile.

• Net revenue of promotional products amounted to RMB60.7 million (US$8.9 million), representing 121% year-over-year growth, accompanied by an increase of 120% in gross profit. To further diversify the portfolio of such products, the Company has partnered with a growing number of pharmaceutical manufacturers to secure distribution rights for products targeting small and medium-sized chain pharmacies. Among such products, Levofloxacin Tablets (Cravit^®) from JNOVA Pharmaceutical (Beijing) Co., Ltd., has already become the flagship offering, whose quarterly sales volume grew from 364,000 boxes to 1,041,000 boxes year-over-year, while the quarterly revenue posted a 157% increase, reaching RMB28.1 million. In addition, other priority products with secured distribution rights like Rivaroxaban Tablets (Pusitong^®) from Qilu Pharmaceutical Co., Ltd. and Xinkeshu Tablets from Shandong Wohua Pharmaceutical Co., Ltd. also delivered solid sales performance this quarter, with each reaching 60,000 boxes. These performances underscore the Company's marketing expertise and has created strong growth momentum for both upstream suppliers and downstream partners.

• Total operating expenses amounted to RMB155.5 million (US$22.9 million), representing a 16.1% decrease compared to RMB185.3 million in the prior-year quarter. Notably, ongoing investment in and adoption of AI agents have made workforce streamlining possible. As part of organizational initiatives to enhance cost-efficiency, the Company incurred substantial severance costs in the quarter in connection with workforce streamlining primarily within back-end support functions. Excluding the share-based compensation expenses and severance costs, total operating expenses accounted for 4.2% of total GMV this quarter as compared to 4.5% in the prior-year quarter.

• Fulfillment expenses amounted to RMB63.6 million (US$9.4 million), representing a decrease of 29.5% from RMB90.2 million in the prior-year quarter, outpacing the revenue decline. As a percentage of net revenue, fulfillment expenses improved to 2.76%, compared with 2.81% in the prior-year quarter, reflecting continued enhancement in operational efficiency and disciplined cost management.

Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111, commented, "During the second quarter of 2026, we continued to execute our strategic transition toward a more asset-light and platform-oriented operating model. The 18.2% year-over-year increase in total marketplace (MP) service revenue for the first half of 2026 demonstrates steady progress in the strategic initiative and underscores our pursuit of high-quality, scalable and cost-efficient growth. As our ongoing investment in and adoption of AI agents have enabled workforce streamlining, we incurred certain severance costs in the quarter, largely within back-end support functions, as part of efficiency-focused organizational initiatives."

"Our promotional products have rapidly penetrated pharmacies nationwide via the 111 digital marketing platform, with the product lineup continuously expanding. Net revenue and gross profit from those products delivered high year-over-year growth. A growing number of pharmaceutical companies have partnered with us to secure general distribution rights for products targeting small and medium-sized chain pharmacies. We remain committed to adding more pharmaceutical products such as "Cravit" to our distribution portfolio to consolidate our market standing and maintain steady performance."

"By optimizing our network and selectively exiting underperforming fulfillment centers, our fulfillment expenses declined by 29.5% year-over-year, outpacing the decrease in revenue. Meanwhile, fulfillment expenses as a percentage of net revenue improved by 5 basis points year-over-year, highlighting our capacity for sustained operational improvement and reflecting our commitment to prudent cost management."

"Looking ahead, we believe these initiatives are gradually reshaping 111 from a transaction-driven pharmaceutical distributor into a more technology-enabled and intelligent healthcare platform business. We will continue to integrate AI-enabled capabilities across multiple operational scenarios, including intelligent demand forecasting, inventory optimization, fulfillment routing and merchant operation management. More importantly, we are deploying AI agent-based solutions in pharmacies and healthcare service scenarios to help customers better manage day-to-day operations. Leveraging a lean, intelligent operating model, we aim to expand margins, lift profitability and deliver long-term value to stakeholders."

Second Quarter 2026 Financial Results

Net revenues were RMB2.3 billion (US$339.0 million), representing a decrease of 28.3% from RMB3.2 billion in the same quarter of last year mainly attributable to the strategic optimization.

Gross segment profit ⁽²⁾ was RMB132.3 million (US$19.5 million), representing a decrease of 28.6% from RMB185.4 million in the same quarter of last year.

 

Operating costs and expenses were RMB2.3 billion (US$342.4 million), representing a decrease of 27.5% from RMB3.2 billion in the same quarter of last year, broadly in line with the decline in net revenues.

• Cost of products sold was RMB2.2 billion (US$319.5 million), representing a decrease of 28.2% from RMB3.0 billion in the same quarter of last year.
   
• Fulfillment expenses were RMB63.6 million (US$9.4 million), representing a decrease of 29.5% from RMB90.2 million in the same quarter of last year. Fulfillment expenses as a percentage of net revenues accounted for 2.76% this quarter as compared to 2.81% in the same quarter of last year.
   
• Selling and marketing expenses were RMB58.1 million (US$8.6 million), representing a decrease of 12.2% from RMB66.2 million in the same quarter of last year. Excluding the share-based compensation expenses and severance costs, selling and marketing expenses as a percentage of net revenues accounted for 2.4% this quarter as compared to 2.0% in the same quarter of last year.
   
• General and administrative expenses were RMB17.6 million (US$2.6 million), representing a slight increase of 1.1% from RMB17.4 million in the same quarter of last year. Excluding the share-based compensation expenses and severance costs, general and administrative expenses as a percentage of net revenues accounted for 0.6% this quarter as compared to 0.5% in the same quarter of last year.
   
• Technology expenses were RMB19.0 million (US$2.8 million), representing an increase of 28.0% from RMB14.9 million in the same quarter of last year. Excluding the share-based compensation expenses and severance costs, technology expenses as a percentage of net revenues accounted for 0.6% this quarter as compared to 0.5% in the same quarter of last year.

Loss from operations was RMB23.2 million (US$3.4 million), compared to income from operations of RMB0.1 million in the same quarter of last year.

Non-GAAP loss from operations ⁽⁴⁾ was RMB20.5 million (US$3.0 million), compared to non-GAAP income from operations of RMB3.0 million in the same quarter of last year.

Net loss was RMB31.7 million (US$4.7 million), compared to RMB7.3 million in the same quarter of last year. As a percentage of net revenues, net loss accounted for 1.4% this quarter as compared to 0.2% in the same quarter of last year.

Non-GAAP net loss ⁽⁵⁾ was RMB28.9 million (US$4.3 million), compared to RMB4.4 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss accounted for 1.3% this quarter as compared to 0.1% in the same quarter of last year.

Net loss attributable to ordinary shareholders was RMB39.1 million (US$5.8 million), compared to RMB19.5 million in the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders accounted for 1.7% this quarter as compared to 0.6% in the same quarter of last year.

Non-GAAP net loss attributable to ordinary shareholders ⁽⁶⁾ was RMB36.4 million (US$5.4 million), compared to RMB16.7 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders accounted for 1.6% of net revenues this quarter as compared to 0.5% in the same quarter of last year.

As of June 30, 2026, the Company held cash and cash equivalents, restricted cash and short-term investments totaling RMB381.1 million (US$56.2 million), compared to RMB611.3 million as of December 31, 2025. Amount of RMB956.7 million has been included in the balances of redeemable non-controlling interests and accrued expenses and other current liabilities. This amount is owed to a group of investors of 1 Pharmacy Technology pursuant to equity investments made in 2020, as previously disclosed in the Company's annual report. To date, 111 had repaid approximately RMB282.2 million to all investors in 1 Pharmacy Technology as a result of the holders exercising their redemption rights. Following further discussions, investors representing 63.8% of the total outstanding principal amount have agreed to further restructure the redemption obligation at extended periods, if the holders exercise their redemption rights. For further details on the terms of 111's arrangements with these investors, please see "Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources" in the Company's annual report for the fiscal year ended December 31, 2025.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS ⁽⁷⁾, as supplemental measures to review and assess its operating performance. The Company defines non-GAAP income (loss) from operations as income from operations excluding share-based compensation expenses. The Company defines non-GAAP net income (loss) as net loss excluding share-based compensation expenses, net of tax. The Company defines non-GAAP net loss attributable to ordinary shareholders as net loss attributable to ordinary shareholders excluding share-based compensation expenses, net of tax. The Company defines non-GAAP loss per ADS as net loss attributable to ordinary shareholders per ADS excluding share-based compensation expenses, net of tax per ADS. 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 U.S. GAAP.

The Company believes that non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS help identify underlying trends in its business that could otherwise be distorted by the effect of certain expenses that it includes in income from operations and net loss. Share-based compensation expenses is a non-cash expense that varies from period to period. As a result, management excludes the items from its internal operating forecasts and models. Management believes that the adjustments for share-based compensation expenses provide investors with a reasonable basis to measure the company's core operating performance, in a more meaningful comparison with the performance of other companies. The Company believes that non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS provide useful information about its operating results, enhances the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by the management in their financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net loss attributable to ordinary shareholders, or non-GAAP loss per ADS is that it does not reflect all items of income and expense that affect the Company's operations. Further, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP measures, all of which should be considered when evaluating the Company's performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.

Reconciliation of the non-GAAP financial measures to the most comparable U.S. GAAP measures is included at the end of this press release.

Exchange Rate Information Statement

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.7851 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of June 30, 2026.

Forward-Looking Statements

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Among other things, the Business Outlook and quotations from management in this announcement, as well as 111's strategic and operational plans, contain forward-looking statements. 111 may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements involve inherent risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to the Company's ability comply with extensive and evolving regulatory requirements, its ability to compete effectively in the evolving PRC general health and wellness market, its ability to manage the growth of its business and expansion plans, its ability to achieve or maintain profitability in the future, its ability to control the risks associated with its pharmaceutical retail and wholesale businesses, and the Company's ability to meet the standards necessary to maintain listing of its ADSs on the Nasdaq Global Market, including its ability to cure any non-compliance with Nasdaq's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and 111 does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

About 111, Inc.

111, Inc. (NASDAQ: YI) ("111" or the "Company") is a leading tech-enabled healthcare platform company committed to reshaping the value chain of healthcare industry by digitally empowering the upstream and downstream in China. The Company provides consumers with better access to pharmaceutical products and healthcare services directly through its online retail pharmacy, 1 Pharmacy, and indirectly through its offline virtual pharmacy network. The Company also offers online healthcare services through its internet hospital, 1 Clinic, which provides consumers with cost-effective and convenient online consultation, electronic prescription service, and patient management service. In addition, the Company's online platform, 1 Medicine, serves as a one-stop shop for pharmacies to source a vast selection of pharmaceutical products. With the largest virtual pharmacy network in China, 111 enables offline pharmacies to better serve their customers with cloud-based services. 111 also provides an omni-channel drug commercialization platform to its strategic partners, which includes services such as digital marketing, patient education, data analytics, and pricing monitoring.

For more information on 111, please visit: http://ir.111.com.cn/.

For more information, please contact:

111, Inc.
Investor Relations
Email: ir@111.com.cn

111, Inc.
Media Relations
Email: press@111.com.cn
Phone: +86-021-2053 6666 (China)