Inc. Announces First Quarter 2022 Unaudited Financial Results SHANGHAI

First Quarter 2022 Unaudited Financial Results

2022 /PRNewswire/ - 111, Inc. ("111" or the "Company") (NASDAQ: YI), a leading tech-enabled healthcare platform

company committed to digitally connecting patients with medicine and healthcare services in China, today announced its unaudited financial

results for the first quarter ended March 31, 2022.

Quarter 2022 Highlights

Mr. Junling Liu, Co-Founder, Chairman,

and Chief Executive Officer of 111, commented, "Despite all the challenges from pandemic lock-down in various parts of the country,

we continued to grow our top line and gross segment profit in the first quarter of 2022, which brought us another step closer to profitability.

Net revenue increased by 14.9% year-over-year to RMB 2.98 billion, marking the 15th consecutive quarter of year-over-year growth for

111 since our NASDAQ IPO. The B2B segment achieved year-over-year revenue and segment profit increases by 17.0% and 90.7%, respectively.

Our partnerships with pharmaceutical companies continued to grow and the direct purchase relationship totaled over 550 by the end of

March 2022. Our market coverage from both upstream and downstream is increasing and customer loyalty continues to grow."

Mr. Liu added, "In addition to

topline growth, our gross segment profit grew 4.4 times as fast as our revenue in the first quarter. Gross segment profit grew by 66.3%

year-over-year, and as a percentage of net revenues, our gross segment margins(3) improved

to 6.5% as compared to 4.5% in the same quarter of last year. We are especially pleased with the margin improvement for the B2B segment,

which as a percentage of net revenues, grew from 3.6% in the first quarter of 2021 to 5.9% in in the first quarter this year. Our operation

efficiency also improved and total operating expenses as a percentage of net revenues decreased to 9.9% in this quarter as compared to

11.1% in the same quarter of last year. We expect this momentum in improving operation efficiency to continue as we scale, putting us

on a clear path to profitability. As a result, non-GAAP loss from operation as a percentage of net revenues decreased from 5.2% in the

first quarter of 2021 to 2.4% in the first quarter this year."

"We will continue to flawlessly

execute our growth strategy and we are committed to steadily expand our revenue and gross segment profit. We remain resolute on our goal

to reach quarterly break-even at the non-GAAP operating income level in 2022."

Quarter 2022 Financial Results

revenues were RMB2.98 billion (US$470.5 million), representing an increase of 14.9% from RMB2.59 billion in

the same quarter of last year.

For segment reporting purposes, purchase rebates are allocated to the B2B segment and B2C segments primarily based on the amount of cost

of products sold for each segment. Cost of products sold does not include other direct costs related to cost of product sales such as

shipping and handling expense, payroll and benefits of logistic staff, logistic centers rental expenses and depreciation expenses, which

are recorded in the fulfillment expenses. Cost of service revenue is recorded in the operating expense.

costs and expenses were RMB3.1 billion (US$486.6 million), representing an increase of 11.5%

from RMB2.8 billion in the same quarter of last year.

increases in delivery costs.

from operations was RMB102.2million (US$16.1 million), compared to RMB173.3

million in the same quarter of last year. As a percentage of net revenues, loss from operations decreased to 3.4% in the quarter

from 6.7% in the same quarter of last year.

loss from operations was RMB72.4 million (US$11.4 million), compared to RMB135.9million in the same quarter of

last year. As a percentage of net revenues, non-GAAP loss from operations

decreased to 2.4% in the quarter from 5.2% in the same quarter of last year.

loss was RMB101.0 million (US$15.9 million), compared to RMB169.5 million in the same quarter of last year.

As a percentage of net revenues, net loss decreased to 3.4% in the quarter from 6.5% in same quarter

net loss (5) was RMB71.2 million (US$11.2 million), compared to RMB132.1 million in the same quarter

of last year. As a percentage of net revenues, non-GAAP net loss decreased

to 2.4% in the quarter from 5.1% in same quarter of last year.

loss attributable to ordinary shareholders was RMB110.3 million (US$17.4 million), compared to RMB146.6 million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary

shareholders decreased to 3.7% in the quarter from 5.7% in same quarter of last year.

net loss attributable to ordinary shareholders (6) was RMB80.6 million (US$12.7 million), compared to RMB109.3 million

in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased

to 2.7% in the quarter from 4.2% in same quarter of last year.

Non-GAAP net loss represents net loss excluding share-based compensation expenses, net of tax. Considering the impact of accretion of

redeemable non-controlling interest for the first quarter 2022 (which pertains to the Group's obligation to redeem equity interests

held by certain minority investors of a subsidiary of the Company), non-GAAP net loss is used as a meaningful measurement of the operation

performance of the Company.

Non-GAAP net loss attributable to ordinary shareholders represents net loss attributable to ordinary shareholders excluding share-based

compensation expenses, net of tax.

of March 31, 2022, the Company has cash and cash equivalents, restricted cash and short-term investments of RMB901.4 million (US$142.2million),

compared to RMB943.2 million as of December 31, 2021.

team will host an earnings conference call at 7:30 AM U.S. Eastern Time on Thursday, June 16, 2022 (7:30 PM Beijing Time on the same

conference call are as follows:

Inc. First Quarter 2022 Unaudited Financial Results

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.

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.

of the call will be available after the conclusion of the conference call until June 24, 2022, 9:59 ET on:

United States: +1-855-452-5696

International: +61-2-8199-0299

Conference ID: 5728866

webcast of the conference call will be available on the Investor Relations section of 111's website at http://edge.media-server.com/mmc/p/a246si8g

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

shareholders, and non-GAAP loss per ADS, 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

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 loss from operations, non-GAAP net 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 loss 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 loss from operations, non-GAAP

net 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 loss from operations, non-GAAP net 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