Inc. Announces First Quarter 2023 Unaudited Financial Results SHANGHAI

111, Inc. Announces First Quarter 2023 Unaudited

SHANGHAI, June 15, 2023 /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, 2023.

Quarter 2023 Highlights

(1) Gross segment profit represents net revenues less cost of goods sold.

Non-GAAP income from operations represents income from operations excluding share-based compensation expenses.

Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive

Officer of 111, commented, "We are pleased to report another solid quarter as well as a positive operating results at Non-GAAP level.

Net revenue increased by 23.9% year-over-year to RMB3.7 billion, marking the 19th consecutive quarter of year-over-year growth for 111

since the company's NASDAQ IPO. Our gross segment profit for the quarter increased by 22.7% year-over-year. As a result, loss from

operation decreased to RMB22 million compared to RMB102 million in the same quarter of last year. Non-GAAP operating profit for the quarter

turned positive as compared to a Non-GAAP loss from operations in the same quarter of last year, which partially benefited from the lifting

of COVID-related restrictions since December last year."

Mr. Liu added, "In addition,

we continued to enhance our operation efficiency and total operating expenses as a percentage of net revenues decreased to 7.0% in this

quarter from 9.9% in the same quarter of last year. We expect this momentum to continue as we scale, and meanwhile we will continue to

focus on delivering best services to our customers/patients."

"These results stem from our sustained,

strategic endeavors. We have enhanced partnerships with upstream pharmaceutical partners. By directly working with 500+ pharmaceutical

companies, we offer value-add services to numerous enterprises, debuted products like Sanofi's Allegra on our B2C platform, while our

B2B platform's digital marketing tool, "Telescope," offers invaluable market insights. Our digital empowerment to downstream

pharmacies provided them with cost-effective products and operational efficiency. By the end of Q1, we served more than 435,000 retail

pharmacies, with our 1 Health program engaging approximately 20,000 drugstores. Meanwhile, our operational

efficiency continues to improve with various cost saving initiatives, better corporate governance, and technology investments. We've notably

cut fulfillment costs through optimizing our own and joint-venture warehouses, while our new advisory department, focused on customer-centric

value creation, is refining product assortment and pricing strategies."

"We believe that our efforts to achieve margin

expansion, as well as to optimize our cost and improve our organizational alignment, have delivered positive results. We will keep optimizing

product assortment based on customer needs, reducing costs with direct sourcing, and improve our competitiveness through intelligent pricing.

We will keep improving efficiency through supply chain optimization and we will continually commit to digitization to enhance processes

and drive innovation. We are confident that our strong technology capabilities will continue to enable us to build scale, deliver profitability,

and maximize values for our shareholders."

Quarter 2023 Financial Results

revenues were RMB3.7 billion (US$538.3 million), representing an increase of 23.9% from RMB3.0 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 RMB3.7 billion (US$541.5 million), representing an increase of 20.5% from RMB3.1

billion in the same quarter of last year.

from operations was RMB21.7 million (US$3.2

million), compared to RMB102.2 million in the same quarter of last year. As a percentage of net revenues, loss from operations

decreased to 0.6% in the quarter from 3.4% in the same quarter of last year.

income from operations was RMB2.5 million (US$0.4 million), compared to Non-GAAP

loss from operations was RMB72.4 million in the same quarter of last year.

loss was RMB19.4 million (US$2.8 million), compared to RMB101.0 million in the same quarter of last year.

As a percentage of net revenues, net loss decreased to 0.5% in the quarter from 3.4% in same quarter of last year.

net income (4) was RMB4.9 million (US$0.7 million), compared to Non-GAAP net loss was RMB71.2 million in

the same quarter of last year.

loss attributable to ordinary shareholders was RMB31.8 million (US$4.6 million), compared to RMB110.3 million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 0.9%

in the quarter from 3.7% in same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB7.6 million (US$1.1 million), compared to RMB80.6 million in

the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased to 0.2%

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

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

of redeemable non-controlling interest for the first quarter 2023, non-GAAP net income is used as a more 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.

As of March 31, 2023,

the Company had cash and cash equivalents, restricted cash and short-term investments of RMB878.8 million (US$128.0 million), compared

to RMB922.7 million as of December 31, 2022.

111's management team will host an earnings conference

call at 7:30 AM U.S. Eastern Time on Thursday, June 15, 2023 (7:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Event Title: 111, Inc. First Quarter 2023 Unaudited

Registration Link: https://s1.c-conf.com/diamondpass/10030880-st6fye.html

All participants 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.

Please dial 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 June 22, 2023 on:

Hong Kong: 800 901 654

United States: +1 877 642 9125

International: +61 7 3145 4057

Conference ID: 10030880

A live and archived webcast of the conference call will be available

on the website at https://edge.media-server.com/mmc/p/uzvzjixt.

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, as supplemental measures to review and assess its operating performance. The Company defines non-GAAP income

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

income (loss) as net income (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 (loss)

from operations and net income (loss). Share-based compensation expenses is a non-cash expense that varies from period to period. As a