Inc. Announces First Quarter 2024 Unaudited Financial Results Turned to Quarterly Operational Profitability for the First Time Operating Expenses as a Percentage of Revenues Decreased 120 Basis Points YoY to 5.8% Achieve

111, Inc. Announces First Quarter 2024 Unaudited

SHANGHAI, May 23, 2024 /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 first quarter ended March 31, 2024.

Quarter 2024 Highlights

Mr. Junling Liu, Co-Founder, Chairman,

and Chief Executive Officer of 111, commented, "We are delighted to start the year with a major milestone in the first quarter

of 2024 as our continuous operational enhancements empowered us to turn to operational profitability for the first time. Notably, income

from operations reached RMB3.7 million during the period, a wonderfully positive shift from an operational loss of RMB21.7 million a year

ago. This was achieved despite a decrease in first-quarter revenue because of a higher baseline set in the corresponding period of 2023

during the peak of the pandemic. Non-GAAP income from operations even more than tripled year over year to a record high of RMB8.9 million.

Our performance in the quarter validates the effectiveness of our business model as a leading tech-enabled healthcare platform company

committed to digitally empower the entire healthcare value chain as well as our growth strategies.

Mr. Liu added, "We successfully

elevated our operational efficiency after disciplined expense optimization across the whole organization. Our operating expenses as a

percentage of net revenues decreased 120 basis points to 5.8%, while the ratio for non-GAAP operating expenses fell 60 basis points to

5.7%, reflecting our efforts for prudent resource management in the pursuit of sustainable growth. We anticipate the possibility of further

operating cost reductions and higher efficiency as we scale up our business and refine operations. Our ambition is to stand out as the

pinnacle of efficiency in the pharmaceutical e-commerce realm, and we strive to amplify our operational effectiveness to sharpen our competitive

"Furthermore, our investments in technology empowerment effectively

drove up operational efficiency and customer engagement. We also made novel supply chain advancement that will unlock new growth opportunities,

highlighted by our launch of a new delivery and transit model for streamlining logistics and saving fulfilment costs. Our pioneering role

in digital commerce transformation and commitment to innovative excellence has also been recognized as we obtained significant accolades

and a new patent from government agencies and professional institutions."

"Looking ahead, we will remain dedicated to delivering one-stop

shopping experiences supported by the most comprehensive and cost-effective product portfolio. With our internal 100% digital operating

system at our core, we've attained unmatched operational efficiency within the industry. We are well positioned to empower both upstream

and downstream customers to improve efficiency for the entire industry and reshape the traditional value chain. Our focus on strengthened

partnership with pharmaceutical companies, strategic investments in operational efficiency, as well as relentless commitment to digitalization

and AI innovation will enable us to capture greater market share and growth for higher revenue and profit levels. We are confident that

these initiatives will solidify our leadership in the market, and we look forward to continuously generating value to our shareholders,

customers, and stakeholders in the quarters ahead."

Quarter 2024 Financial Results

revenues were RMB3.5 billion (US$488.7 million), representing a decrease of 4.6% from RMB3.7 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 RMB3.5 billion (US$488.2 million), representing a decrease of 5.2% from RMB3.7

billion in the same quarter of last year.

from operations was RMB3.7 million (US$0.5

million), compared to loss from operations was RMB21.7 million in the same quarter of last year.

income from operations was RMB8.9 million (US$1.2 million), compared to RMB2.5

million in the same quarter of last year. As a percentage of net revenues, non-GAAP income from operations

accounted for 0.3% in the quarter as compared to 0.1% in the same quarter of last year.

loss was RMB2.7 million (US$0.4 million), compared to RMB19.4 million in the same quarter of last year. As a percentage

of net revenues, net loss decreased to 0.1% in the quarter from 0.5% in same quarter of last year.

net income (4) was RMB2.5 million (US$0.3 million), compared to RMB4.9 million in the same quarter

of last year. As a percentage of net revenues, non-GAAP net income accounted for 0.1% in the quarter, which was same as last year.

loss attributable to ordinary shareholders was RMB13.8 million (US$1.9 million), compared to RMB31.8 million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 0.4%

in the quarter from 0.9% in same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB8.6 million (US$1.2 million), compared to RMB7.6 million in the

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

in the quarter, which was same as 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 2024, 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, 2024,

the Company had cash and cash equivalents, restricted cash and short-term investments of RMB627.3 million (US$86.9 million), compared

to RMB673.7 million as of December 31, 2023. To this date, the Company has a total outstanding amount of RMB1.1 billion, which has been

included in the balances of redeemable non-controlling interests and accrued expenses and other current liabilities, owed to a group of

investors of 1 Pharmacy Technology pursuant to their equity investments made in 2020 as previously disclosed. 111 has received redemption

requests from certain of such investors for a total redemption amount of RMB0.2 billion in accordance with the terms of their initial

investments in 1 Pharmacy Technology. Furthermore, the Company has entered

into written agreements

and/or commitment letters with investors representing the majority of the total carrying amounts. For more information about the terms

of 111's arrangements with these investors, 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, 2023.

111's management team will host an earnings conference

call at 7:30 AM U.S. Eastern Time on Thursday, May 23, 2024 (7:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Event Title: 111, Inc. First Quarter 2024 Unaudited

Registration Link: https://s1.c-conf.com/diamondpass/10038645-oelc5s.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 May 30, 2024 on:

United States: +1 855 883 1031

International: +61 7 3107 6325

Conference ID: 10038645

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

on the website at https://edge.media-server.com/mmc/p/83ojreww.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers

and uses non-GAAP income from operations, non-GAAP net income, 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 from operations

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