Inc. Announces Second Quarter 2022 Unaudited Financial Results SHANGHAI

111, Inc. Announces Second Quarter 2022 Unaudited

SHANGHAI, August 25, 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 second quarter

ended June 30, 2022.

Quarter 2022 Key Results

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

of 111, commented, "The second quarter had been very tough for our business due to Covid lockdowns in Shanghai and many other cities.

Our head office in Shanghai had to be closed and our operation in 7 regional fulfillment centers had been significantly disrupted for

2 full months. Despite all the challenges, we have tried our best to work with local governments as well as logistics companies to fulfill

our customer/patient orders as these medicines are badly needed. Our net revenue for second quarter increased by 0.4% year-over-year to

RMB 3.04 billion, while our gross segment profit increased by 42.6% year-over-year. With Non-GAAP loss from operations being narrowed

to 1.7% of net revenues, we believe that we are heading in the right path to profitability. We continued to solidfy our network and relationship

with upstream and downstream partners."

Mr. Liu added, "our overall gross segment margin(3)

as a percentage of net revenues improved to 6.3% from 4.5% in the same quarter of last year. B2B segment profit grew by 55.1% year-over-year,

and as a percentage of net revenues, B2B segment margin improved to 5.8% from 3.8% in the same quarter of last year. We also improved

B2C segment margin to 22.5% from 20.2% in the same quarter of last year. The

gross segment profit improvement was the results of all the efforts

we have made to optimize our selection portfolio and competitive pricing. We contined to enhance our operation efficiency and total operating

expenses as a percentage of net revenues decreased to 8.9% in this quarter from 10.7% in the same quarter of last year. We expect this

momentum in improving operation efficiency to continue as we scale, putting us on a clear path to profitability. As a result, non-GAAP

loss from operation as a percentage of net revenues decreased to 1.7% in this quarter from 4.9% in the same quarter of last year."

"We have full confidence that we have the right strategy and

right team to steadily expand our revenue and gross segment profit."

Second Quarter 2022 Financial Results

revenues were RMB3.04 billion (US$453.43million), representing an increase of 0.4%

from RMB3.02 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 RMB3.1 billion (US$465.3 million), representing a decrease of 3.0% from RMB3.2

billion in the same quarter of last year.

from operations was RMB79.8 million (US$11.9

million), compared to RMB188.8 million in the same quarter of last year. As a percentage of net revenues, loss from operations

decreased to 2.6% in the quarter from 6.2% in the same quarter of last year.

loss from operations was RMB52.8 million (US$7.9 million), compared to RMB147.9

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

operations decreased to 1.7% in the quarter from 4.9% in same quarter of last year.

loss was RMB84.8 million (US$12.7 million), compared to RMB184.0 million in the same quarter of last year.

As a percentage of net revenues, net loss decreased to 2.8% in the quarter from 6.1% in same quarter of last year.

net loss (5) was RMB57.8 million (US$8.6 million), compared to RMB143.1 million in the same quarter

of last year. As a percentage of net revenues, non-GAAP net loss decreased to 1.9% in the quarter

from 4.7% in same quarter of last year.

loss attributable to ordinary shareholders was RMB95.3 million (US$14.2 million), compared to RMB159.0 million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 3.1%

in the quarter from 5.3% in same quarter of last year.

net loss attributable to ordinary shareholders (6) was RMB68.3 million (US$10.2 million), compared to RMB118.0 million

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

2.2% in the quarter from 3.9% 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 second quarter 2022 (which pertains to the Group's obligation to redeem equity interests

held by certain minority investors of a subsidiary of the Company), non-GAAP net loss is used as a 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 June 30, 2022,

the Company has cash and cash equivalents, restricted cash and short-term investments of RMB885.6 million (US$132.2million), compared

to RMB943.2 million as of December 31, 2021.

111's management team will host an earnings

conference call at 7:30 AM U.S. Eastern Time on Thursday, August 25, 2022 (7:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Conference Topic: 111, Inc. Second Quarter

2022 Earnings Conference Call Registration Link:https://register.vevent.com/register/BIe34d5c00196d4d91902c11871b843104

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

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

A live and archived webcast of the conference

call will be available on the website at https://edge.media-server.com/mmc/p/pivog2g2

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers

and uses non-GAAP loss from operations, non-GAAP net 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 loss from operations as

loss from operations excluding share-based compensation expenses. The Company defines non-GAAP net loss 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 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 loss from operations,

non-GAAP net 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 loss from operations and net loss.

Share-based compensation expenses is a non-cash expense that varies from period to period. As a result, management excludes the items

from its internal operating forecasts and models. Management believes that the adjustments for share-based compensation expenses provide

a reasonable basis to measure the company's core

operating performance, in a more meaningful comparison with the performance of other companies. The Company believes that non-GAAP loss

from operations, non-GAAP net loss, non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS provide useful

information about its operating results, enhances the overall understanding of its past performance and future prospects and allow for

greater visibility with respect to key metrics used by the management in their financial and operational decision-making.

The non-GAAP financial measures are not defined

under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools.

One of the key limitations of using non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss attributable to ordinary shareholders,

or non-GAAP loss per ADS is that it does not reflect all items of income and expense that affect the Company's operations. Further, the

non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore

their comparability may be limited.