Inc. Announces Fourth Quarter and Fiscal Year 2021 Financial Results SHANGHAI

111, Inc. Announces Fourth Quarter and Fiscal

Year 2021 Financial Results

17, 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 fourth quarter and fiscal year ended December 31, 2021.

Quarter 2021 Highlights

Year 2021 Highlights

Mr. Junling Liu, Co-Founder,

Chairman, and Chief Executive Officer of 111, commented, "We delivered another solid quarter and the results brought us another

step closer to profitability. Net revenue increased by 30.9% year-over-year to RMB 3.46 billion, marking the 14th consecutive quarter

of year-over-year growth for 111 since the company's NASDAQ IPO. The B2B segment saw year-over-year revenue and segment profit

increases by 34.6% and 132.7%, respectively. Our partnerships with pharmaceutical companies are growing steadily and the direct purchase

relationship totalled over 500 by the end of 2021. We are delighted to see that our market coverage from both upstream and downstream

is increasing and customer loyalty continues to grow and this is proven by our solid financial results.

addition to strong topline growth, our gross segment profit grew 3 times as fast as our revenue in the fourth quarter. Gross segment

profit grew by 98% year-over-year, and as a percentage of revenue, our gross segment margins improved to 5.9%. We are especially pleased

with the margin improvement for the B2B segment, which as a percentage of revenue, grew from 3.6% in the first quarter of 2021 to 3.8%

in the second quarter of 2021, and further to 4.4% in the third quarter of2021 and 5.2% in the fourth quarter of 2021. We expect this

momentum to continue as we scale,

putting us on a clear

path to profitability. Indeed, we were pleased to see continued progress toward achieving that milestone, as demonstrated by the sequential

quarter-over-quarter decrease in non-GAAP loss from operation as a percentage of net revenues from 4.1% in the third quarter of 2021

to 2.2% in the fourth quarter of 2021."

"On full year basis,

we have achieved net revenues of RMB12.4 billion with a 51.5% growth year over year, which put us into the 10 Billion Club for the first

time. We continued to broaden our revenue mix with service revenue growth by 103% year over year, while the overall gross segment profit

achieved 70% growth year over year. We believe that we have achieved our initial strategic target since IPO, which is to rapidly build

up suppliers and customers network with competitive pricing in order to achieve reasonable scale to compete in this market. As a matter

of fact, we are now directly working with 500+ pharmaceutical companies and serving more than 385,000 retail pharmacies. Our revenue

scale has been rapidly expanded 13 times in 4 years from RMB959 million in 2017 to RMB12.4 billion in 2021."

our shareholders to recognize that our company has conducted a series of initiatives to achieve margin expansion, as well as to optimize

our cost and improve our organizational alignment and the results have been very encouraging. We have significantly improved our operating

efficiency while maintaining our competitive edge. Our goal is to reach quarterly break-even at the non-GAAP operating income level in

2022. I am delighted to see that we are moving towards the right direction."

Quarter 2021 Financial Results

revenues were RMB3.46 billion (US$543.1 million), representing an increase of 30.9% from RMB2.64 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 RMB3.6 billion (US$559.5 million), representing an increase of 27.9% from RMB2.8

billion in the same quarter of last year.

from operations was RMB104.7 million (US$16.4

million), compared to RMB144.7 million in the same quarter of last year. As a percentage of net revenues, loss from operations

decreased to 3.0% in the quarter from 5.5% in the same quarter of last year.

loss from operations was RMB76.9 million (US$12.1 million), compared to RMB112.3million in

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

to 2.2% in the quarter from 4.2% in the same quarter of last year.

loss was RMB101.7 million (US$16.0 million), compared to RMB137.4 million in the same quarter of last year.

As a percentage of net revenues, net loss decreased to 2.9% in the quarter from 5.2% in same quarter of last year.

net loss (4) was RMB73.9 million (US$11.6 million), compared to RMB105.0 million in the same quarter

of last year. As a percentage of net revenues, non-GAAP net loss decreased to 2.1% in the quarter

from 4.0% in same quarter of last year.

loss attributable to ordinary shareholders was RMB111.3 million (US$17.5 million), compared to RMB130.6 million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 3.2%

in the quarter from 4.9% in same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB83.5 million (US$13.1 million), compared to RMB98.2 million

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

to 2.4% in the quarter from 3.7% 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 fourth quarter and fiscal year ended December 31, 2021, non-GAAP net loss 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.

Year 2021 Financial Results

revenues were RMB12.4 billion (US$1.95 billion), representing an increase of 51.5% from RMB8.2 billion last year.

of December 31, 2021, the Group had two reporting segments, Business to Business ("B2B") and Business to Consumer ("B2C").

Revenue contribution from the Company's E-Channel was previously disclosed as a separate segment, but has been incorporated in

the B2B segment since the third quarter of 2020.

costs and expenses were RMB13.1 billion (US$2.1 billion), representing an increase of 50.6%

from RMB8.7 billion last year.

from operations was RMB642.1 million (US$100.8 million), compared to RMB473.3

million last year. As a percentage of net revenues, loss from operations decreased to 5.2% this year from 5.8% last year.

loss from operations was RMB496.5 million (US$77.9 million), compared to RMB397.6 million last year. As

a percentage of net revenues, non-GAAP loss from operations decreased to 4.0% this year from 4.8%

loss was RMB621.0 million (US$97.5 million), compared to RMB467.1 million last year. As

a percentage of net revenues, net loss decreased to 5.0% this year from 5.7% last year.

net loss was RMB475.4 million (US$74.6 million), compared to RMB391.4 million last year. As

a percentage of net revenues, non-GAAP net loss decreased to 3.8% this year from 4.8% last year.

loss attributable to ordinary shareholders was RMB669.8 million (US$105.1 million), compared to RMB456.5 million

last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased

to 5.4% this year from 5.6% last year.

net loss attributable to ordinary shareholders was RMB524.2 million (US$82.3 million), compared to RMB380.8 million

last year. The increase was mainly caused by accretion for probable redemption of redeemable non-controlling

interest in the future. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders

decreased to 4.2% this year from 4.6% last year.

of December 31, 2021, the Company has cash and cash equivalents, restricted cash and short-term investments of RMB943.2 million (US$148.0

million), compared to RMB1.6 billion as of December 31, 2020.

team will host an earnings conference call at 7:30 AM U.S. Eastern Time on Thursday, March 17, 2022 (7:30 PM Beijing Time on the same

conference call are as follows:

Inc. Fourth Quarter and Fiscal Year 2021 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.