Inc. Announces Fourth Quarter and Fiscal Year 2023 Financial Results SHANGHAI

111, Inc. Announces Fourth Quarter and Fiscal

Year 2023 Financial Results

SHANGHAI, March 21, 2024 /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, 2023.

Quarter 2023 Highlights

Fiscal Year 2023 Highlights

Mr. Junling Liu, Co-Founder, Chairman,

and Chief Executive Officer of 111, commented, "Compared to fourth quarter of last year, which we had benefit from the opening up

of Covid related activities, our net revenues for the fourth quarter

this year saw a slight adjustment, with a modest decrease of 1.0% year-over-year to RMB 4.1 billion.

Our gross segment profit saw a 15.5% decrease year-over-year. Our operational loss, as a percentage of net revenues, accounted for 5.0%,

compared to 2.6% in the corresponding quarter of the prior year, while Non-GAAP operational loss accounted for 1.3% of net revenues this

quarter as compared to 1.0% in the same quarter of last year."

Mr. Liu added, "Nevertheless, we've made strides

in improving our operational efficiency, with excluding the share-based compensation, total operating expenses as a percentage of net

revenues falling to 6.6% this quarter, down from 7.1% in the corresponding quarter of the previous year. We anticipate maintaining this

positive trajectory as we expand. Concurrently, our dedication remains steadfast in providing top-tier services to our customers and patients."

Mr. Liu added, "in whole year 2023, we managed

to achieve net revenues growth at 10.6%. Our gross segment profit for the year increased by 1.1%. In addition, we continued to improve

our operation efficiency. Our total sales and marketing expenses, G&A expenses and technology expenses, excluding share-based compensation,

decreased by 11.6% year over year. As a result, on a full year basis, our Non-GAAP loss from operations as a percentage of net revenues

decreased to 0.8% from 1.6% last year."

"In 2023, we embarked on a transformative journey

focused on elevating operational efficiency and embracing digital innovation within the pharmaceutical sector. Our efforts to advance

digitization and enhance management processes have laid the foundation for significant improvements in operational efficiencies, pricing

strategies, and supply chain streamlining. Recognized for our pioneering approach, we were honored with prestigious awards such as the

"2023 Shanghai E-commerce Model Enterprise" and the "Key Productive Internet Service Platform in Shanghai's Pudong New

Area." These accolades reflect our leadership in leveraging technology to optimize supply chain processes, demand fulfillment, and

operational capabilities. We achieved milestones in operational excellence through the strategic integration of technology, including

the deployment of our Business Intelligence (BI) analysis, PIS Intelligent Pricing System, and Smart Supply Chain innovations. Our focus

on offering a comprehensive selection of goods, enhancing sales efficiency, and improving supply offerings through proprietary brands

has further solidified our market position. The listing of our Information Brain series on the Shanghai Data Exchange highlights our contribution

to digitalizing the pharmaceutical industry. Strategic partnerships with key pharmaceutical companies and Tencent Health underscore our

commitment to integrating health and technology for better healthcare outcomes. Our journey in 2023 was marked by a steadfast commitment

to operational efficiency, innovation, and customer-focused strategies, propelling us towards a future of enhanced healthcare delivery

and industry leadership.

" Moving forward, our company is poised for success

through strategic investments in operational efficiency, product diversification, enhanced partner ecosystems, organizational optimization,

self-owned brand development, and unwavering commitment to digitization. By focusing on these critical areas, we are not only setting

the stage for improved performance and competitiveness but also nurturing long-term customer loyalty, operational agility, and market

leadership. Our approach is designed to leverage the dynamic potential of technology, foster collaborative growth with partners, and capitalize

on the opportunities presented by an ever-evolving marketplace. With the support of our investors and the dedication of our team, we are

well-equipped to navigate future challenges, innovate within the healthcare industry, and realize our vision of leading the wave of innovation

for a healthier future."

Quarter 2023 Financial Results

revenues were RMB4.11 billion (US$578.69 million), representing a decrease of 1.0% from RMB4.15 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 RMB4.32 billion (US$607.78

million), representing an increase of 1.4% from RMB4.26

billion in the same quarter of last year. Excluding the share-based compensation, total operating costs

and expenses decreased by 0.6%.

from operations was RMB206.5 million (US$29.1

million), compared to RMB108.4 million in the same quarter of last year. As a percentage of net revenues, loss from operations

increased to 5.0% in the quarter from 2.6 % in the same quarter of last year.

operations was RMB55.2 million (US$7.8 million),

compared to RMB39.7 million in the same quarter of last year. As a percentage of net revenues,

non-GAAP loss from operations accounted for 1.3% in the quarter as compared to 1.0% in the same quarter of last year.

loss was RMB205.2 million (US$28.9 million), compared to RM104.1 million in

the same quarter of last year. As a percentage of net revenues, net loss increased to 5.0% in the quarter from 2.5% in same quarter

net loss (4) was RMB53.9 million (US$7.6 million), compared to RMB35.4

million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss accounted for

1.3% in the quarter as compared to 0.9% in the same quarter of last year.

loss attributable to ordinary shareholders was RMB210.4 million (US$29.6 million),

compared to RMB114.4 million in the same quarter of last year. As a percentage of

net revenues, net loss attributable to ordinary shareholders increased to 5.1% in the quarter from 2.8% in same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB59.0 million (US$8.3 million),

compared to RMB45.7 million in the same quarter of last year. As a percentage of net revenues, non-GAAP

net loss attributable to ordinary shareholders accounted for 1.4% in the quarter as compared to 1.1% in the 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, 2023, 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 2023 Financial Results

revenues were RMB14.9 billion (US$2.1 billion), representing an increase of 10.6% from RMB13.5 billion last year.

costs and expenses were RMB15.3 billion (US$2.2 billion), representing an increase of 10.2% from RMB13.9

from operations was RMB350.1 million (US$49.3

million), compared to RMB371.0 million last year. As a percentage of net revenues, loss from operations decreased to 2.3% this year

from 2.7% last year.

loss from operations was RMB123.9 million (US$17.5 million), compared to RMB213.6 million last year. As a percentage

of net revenues, non-GAAP loss from operations decreased to 0.8% this year from 1.6% last year.

loss was RMB353.4 million (US$49.8 million), compared to RMB376.1 million last year. As a percentage of

net revenues, net loss decreased to 2.4% this year from 2.8% last year.

net loss was RMB127.3 million (US$17.9 million), compared to RMB218.7 million last year. As a percentage of

net revenues, non-GAAP net loss decreased to 0.9% this year from 1.6% last year.

loss attributable to ordinary shareholders was RMB392.7 million (US$55.3 million), compared to RMB416.9 million

last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 2.6% this year from 3.1%

net loss attributable to ordinary shareholders was RMB166.5 million (US$23.5 million), compared to RMB259.5 million

last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders

decreased to 1.1% this year from 1.9% last year.