Inc. Announces Second Quarter 2021 Unaudited Financial Results SHANGHAI

Second Quarter 2021 Unaudited Financial Results

SHANGHAI, August 27, 2021 /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 second quarter

ended June 30, 2021.

Quarter 2021 Highlights

(1) Operating expenses consist of fulfillment expenses,

selling and marketing expenses, general and administrative expenses, technology expenses and other operating expenses.

(2) Non-GAAP net loss attributable to ordinary

shareholders represents net loss attributable to ordinary shareholders excluding share-based compensation expenses.

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

Officer of 111, commented, "The second quarter represents another period of strong growth, as net revenue increased 86.5% year-over-year

to RMB 3.0 billion, marking the 12th consecutive quarter of year-over-year growth for 111 since the company's IPO. Our top- and

bottom-line growth this quarter was driven by our B2B business, which saw year-over-year revenue and gross profit increases of 99% and

120%, respectively."

Mr. Liu added, "Also during the second quarter

and as a growing trend in 2021, we have seen significant increased demand for 111's service offerings, such as marketplace vendor

services, online medical consultations, cloud and e-prescription services, digital marketing, supply chain management, and others. We

are pleased to report that service revenue grew 125% year-over-year during the second quarter, contributing to a diversified revenue stream

for 111, and demonstrating successful execution of our strategy."

"Additionally, our supply chain continued to grow

substantially during Q2 2021. We greatly expanded our partnerships with both domestic and global pharmaceutical companies, now totaling

381 partners, up from 259 partners in the prior year. We are happy to report similar growth across other performance indicators for 111,

including the coverage of number of pharmacies in our network, which has grown to 355,000, a significant increase from 260,000 in the

second quarter of 2020. As our market coverage continues to increase, now encompassing approximately 65% of China's total retail

pharmacies, our customers are able to benefit from this scale. Purchases from existing customers made up 95% of our revenue this quarter,

demonstrating growing customer loyalty and satisfaction."

"In the second quarter we continued to invest

in our industry-leading technology. Technology expenses increased 186.0% year-over-year, accounting for 1.7% of net revenues this quarter

as compared to 1.1% in the same quarter of last year. We are proud to announce that these increased investments in technology are yielding

results, as we have obtained a total of 18 patents for our internally-developed proprietary technology in areas of digital health, big

data analytics, and SMART supply chain technology. Our cutting-edge technology solutions not only support our internal efficient supply

chain infrastructure, but also enable our customers, including the pharmacies in our network, to better serve their consumers using our

suite of SaaS enterprise solutions. In addition, we continue to offer more innovative solutions to

healthcare providers. For example,

our 1 Clinic, which offers e-hospital service, is seamlessly connecting doctors and patients through our digital solutions, making 1 Clinic

an attractive platform for pharmaceutical companies looking to launch and commercialize new drugs in China. Notably, we have already begun

to partner with numerous pharmaceutical companies looking to leverage our technology and network to commercialize their products. These

partnerships include Eli Lily's Trulicity, Taltz, and Verzenio, which treat diabetes, severe plaque psoriasis, and metastatic breast

cancer, respectively, as well as Novartis' Consentyx, which treats plaque psoriasis, and Sanofi's Dupixent, for the treatment

"Other notable highlights from the second quarter,"

continued Mr. Liu, "include the growth of our digital franchise initiative, which we branded as 1 Health Membership rewards program,

which reached a key milestone of eclipsing 10,000 participating stores in Q2 2021. This exclusive loyalty-driven program features an annual

fee and allows our members access to numerous privileged benefits and has shown to be popular with the retail pharmacies within our network.

Member stores are able to enjoy centralized and streamlined procurement, as well as access to tools such as our SMART CRM system, that

helps manage their businesses and customers, and assists in expanding their businesses."

"To conclude," stated Mr. Liu, "we

will continue to focus on growth, not only top-line growth, but also growing our margins. We will continue to strengthen our team, provide

innovative services, and capitalize on our technology-enabled infrastructure. We are committed to advancing China's healthcare system,

improving access to medicine and medical services, and ultimately delivering excellent value to our shareholders. We are well-positioned

to continue to transform the healthcare landscape in China, operating in an environment where regulatory and industry tailwinds fly in

Quarter 2021 Financial Results

revenues were RMB3.0 billion (US$468.4 million), representing an increase of 86.5% from RMB1.6 billion in

the same quarter of last year.

June 30, 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. The Company revised prior comparative periods to conform to the current period segment presentation

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.

costs and expenses were RMB3.2 billion (US$497.6 million), representing an increase of 87.4% from RMB1.7

billion in the same quarter of last year.

Loss from operations was RMB188.8

million (US29.2 million), compared to RMB92.7 million in the same quarter of last year. As a percentage of net revenues,

loss from operations increased to 6.2% in the quarter from 5.7% in same quarter of last year.

loss from operations(4) was RMB147.9 million (US$22.9 million), compared

to RMB78.8 million in the same quarter of last year. As a percentage of net revenues, non-GAAP

loss from operations was 4.9%, unchanged from Q2 2020.

loss attributable to ordinary shareholders was RMB159.0 million (US$24.6 million), compared to RMB92.7 million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 5.3%

in the quarter from 5.7% in same quarter of last year.

net loss attributable to ordinary shareholders was RMB118.0 million (US$18.3 million), compared to RMB78.8 million in

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

ordinary shareholders decreased to 3.9% in the quarter from 4.9% in same quarter of last year.

ADS was RMB1.92 (US$0.30), compared to RMB1.12 for

the same quarter of last year.

loss per ADS(5) was RMB1.43 (US$0.22),

compared to RMB0.95 for the same quarter of last year.

As of June 30, 2021, the Company had cash and cash equivalents, restricted cash and short- term investments

of RMB1.2 billion (US$186.7 million), compared to RMB1.6 billion as of December 31, 2020.

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

Non-GAAP loss per ADS represents loss per ADS excluding share-based compensation expenses per ADS.

third quarter of 2021, the Company expects its total net revenues to be between RMB3.31 billion and RMB3.55 billion, representing a year-over-year

growth of approximately 40% to 50%.

outlook is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating

conditions and customer demand, which are all subject to changes.

111's management team will host an earnings conference

call today, Friday, August 27, 2021, at 7:30 AM U.S. Eastern Time (7:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

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 September 4, 2021, 8:59 A.M. ET on: