Inc. Announces First Quarter 2020 Unaudited Financial Results SHANGHAI

Announces First Quarter 2020 Unaudited Financial Results

May 21, 2020 (PR Newswire) - 111, Inc. ("111" or the "Company") (NASDAQ: YI), a Company dedicated to

digitally connecting patients with drugs and healthcare services in China, today announced its unaudited financial results for

the first quarter ended March 31, 2020.

Quarter 2020 Highlights

comparison to the same period of last year)

was off to a very strong start as we sustained our tremendous momentum from last year and delivered net revenue of RMB1.58 billion

in the first quarter, or 140.3% growth year over year," said Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive

Officer of 111. He commented, "In spite of the challenges, uncertainties and disruptions caused by an unprecedented global

pandemic, we continued to deliver robust performance, driven by exceptional revenue growth across all of our business segments.

The year-over-year revenue growth of the B2B segment, which primarily represents pharmacy orders, was 178.4%. Revenue from our

B2C segment increased 17.5% year over year, while revenues from the E-Channel[2]

segment grew by 229.7% in the first quarter. In addition, the increasing operating leverage from our expanding business scale

and heightening cost management contributed to the substantial increase of 163.3% in gross profit [3],

and further improvement of gross margin."

we entered 2020, we have laid down a growth strategy with four facets to deliver long-term success: 1) Capitalize on the enormous

market opportunities from building the largest virtual pharmacy network in China; 2) build an omni-channel drug commercialization

capability to establish 111 as a partner of choice for pharmaceutical companies; 3) strengthen our healthcare ecosystem by enabling

key stakeholders via cloud-based solutions to increase stickiness, raise the barriers to entry, and generate diversified revenue

sources; 4) enhance our smart technology and integrated online-offline infrastructures to deliver best-in-class supply chain management

services to our customers."

have made significant progress in executing our growth strategies and strengthening our market position. As of March 31, 2020,

our virtual pharmacy network had expanded to cover more than 260,000 drugstores in China, equivalent to over 50% of the total

market. We have established direct purchasing relationships with over 200 pharmaceutical companies. With many consumers having

trouble finding popular items elsewhere, our ability to source a large variety of healthcare products contributed to an uptick

in registered users of and traffic to our B2C platform."

in leadership and top talent is pivotal to accelerating the advancement of our drug commercialization platform. I am pleased to

announce that Mr. Anfeng Guo joined 111 on May 1, 2020 as Chief Innovation Officer to oversee the operations and innovation of

our omni-channel drug commercialization platform. Anfeng is a veteran of China's pharmaceutical industry who brings us over

20 years of experience working in world-leading pharmaceutical companies such as Pfizer, Bayer, AstraZeneca and Bristol Myers

Squibb. We are confident that he will further strengthen our capabilities, particularly the development of an efficient and effective

omni-channel drug commercialization platform as we usher in a new era in healthcare."

"We are proud of our accomplishments, and the consecutive quarterly growth demonstrates our commitment and ability to build

a sustainable and profitable long-term business. We believe the large population base in the tier 3 to 6 cities as well as the

growing needs of the millions and millions of Chinese people living with chronic diseases offer tremendous market potential. And

we are capturing this opportunity by executing our mission to connect patients with drugs and healthcare services through a technology-empowered

and integrated online and offline healthcare platform. The Company remains laser-focused on maximizing value for our customers,

partners and shareholders through innovation, operational excellence, continued execution of our growth strategies."

the confidence in the Company's prospects, the Board approved a share repurchase program of up to US$10 million on August

14, 2019. As of March 31, 2020, the Company had repurchased 998,810 ADSs for a total consideration of US$4.9 million.

in COVID-19 Relief Efforts

Quarter 2020 Financial Results

revenues were RMB1.58 billion (US$222.5 million), representing an increase of 140.3% from RMB655.6 million in

the same quarter of last year. Our revenues breakdown was as follows:

costs and expenses were RMB1.69 billion (US$238.8 million), representing an increase of 121.7% from RMB762.1

million in the same quarter of last year.

Company will continue to make infrastructure investments to support its rapid revenue growth and expects operational efficiency

and effectiveness to continue to improve.

from operations was RMB113.7 million (US$16.1 million), compared to RMB106.5 million in the same

quarter of last year. As a percentage of net revenues, loss from operations further decreased to 7.2% in the quarter from 16.2%

in same quarter of last year.

Loss from operations[4] was RMB98.5 million (US$13.9 million), compared to RMB95.3 million in

the same quarter of last year. As a percentage of net revenues, Non-GAAP

loss from operations decreased to 6.3% in the quarter from 14.5% in same quarter of last year.

loss attributable to ordinary shareholders was RMB124.6 million (US$17.6 million), compared to RMB118.5

million in the same quarter of last year. As a percentage of net revenues, net loss

attributable to ordinary shareholders decreased to 7.9% in the quarter from 18.1% in same quarter of last year.

net loss attributable to ordinary shareholders[5] was RMB109.4 million (US$15.5 million), compared

to RMB96.3 million in the same quarter of last year. As a percentage of net revenues,

Non-GAAP net loss attributable to ordinary shareholders decreased to 6.9% in the quarter from

14.7% in same quarter of last year.

ADS was RMB1.52 (US$0.22), compared to RMB1.46 for the same period of last year.

Loss per ADS[6] was RMB1.34 (US$0.19), compared to RMB1.19 for the same period of last

of March 31, 2020, the Company had cash and cash equivalents, and restricted cash of RMB525.0 million (US$74.1

million), compared to RMB697.7 million as of December

the second quarter of 2020, the Company expects its total net revenues to be between RMB1.55 billion and RMB1.68 billion, representing

a year-over-year growth of approximately 85% to 100%.

above outlook is based on the current market conditions and reflects the Company's current and preliminary estimates of market

and operating conditions and customer demand, which are all subject to changes.

team will host an earnings conference call at 7:30 AM U.S. Eastern Time on Thursday, May 21, 2020 (7:30 PM Beijing Time on May

the conference call are as follows:

must use the link provided above to complete the online registration process in advance of the conference call. Upon registering,

each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique Registration ID, which

can be used to join the conference call.

in 15 minutes before the call is scheduled to begin and provide the Direct Event passcode and unique Registration ID you have

received upon registering to join the call.

A telephone replay of the call

will be available after the conclusion of the conference call until May 29, 2020, 09:59 P.M. ET on:

archived webcast of the conference call will be available on the Investor Relations section of 111's website at http://ir.111.com.cn/.

Non-GAAP Financial Measures

the business, the Company considers and uses non-GAAP loss from operations, non-GAAP net loss attributable to ordinary shareholders,

and non-GAAP loss per ADS, non-GAAP measures, as supplemental measures to review and assess its operating performance. The Company

defines non-GAAP loss from operations as loss from operations excluding share-based compensation expenses. The Company defines

non-GAAP net loss attributable to ordinary shareholders as net loss attributable to ordinary shareholders excluding share-based

compensation expenses and impairment loss of long-term investment. The Company defines non-GAAP loss per ADS as loss per ADS excluding

share-based compensation expenses and impairment loss of long-term investment 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.

believes that non-GAAP loss from operations, 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 loss from operations and net loss. Share-based compensation is a non-cash expense that varies from period to period. Impairment

loss of long-term investment is a non-cash, non-recurring expense that occurred in this period. As a result, management excludes

these two items from its internal operating forecasts and models. Management believes that this adjustment for share-based compensation

expenses and impairment loss of long-term investment provides investors with a basis to measure the company's core performance,

including compared with the performance of other companies, without the period-to-period variability created by share-based compensation

expenses and impairment loss of long-term investment. The Company believes that non-GAAP loss from operations, non-GAAP net loss