Inc. Announces Second Quarter 2023 Unaudited Financial Results SHANGHAI

111, Inc. Announces Second Quarter 2023 Unaudited

SHANGHAI, August 24, 2023 /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, 2023.

Quarter 2023 Highlights

Mr. Junling Liu, Co-Founder, Chairman,

and Chief Executive Officer of 111, commented, "We're delighted to announce yet another robust quarter in terms of top-line expansion

with narrowed losses both on a GAAP and a Non-GAAP operational basis. Our net revenue saw a rise of 14.5% year-over-year, reaching RMB3.5

billion. This represents the 20th consecutive quarter of year-over-year progression for 111 since our NASDAQ IPO. Additionally, our gross

segment profit for this quarter rose by 8.3% compared to the same period last year. Consequently, our operational loss stood at RMB41.4

million (US$5.7 million), down from RMB79.8 million during the same quarter the previous year. When viewed as a percentage of net revenues,

the operational loss reduced to 1.2%, compared to 2.6% in the corresponding quarter of the prior year. Meanwhile, Non-GAAP

operational loss reduced to RMB17.2 million, dropping to 0.5% of net revenues from the previous 1.7% during the same quarter of the preceding

Mr. Liu added, "Furthermore,

we've made strides in improving our operational efficiency, with total operating expenses as a percentage of net revenues falling to 7.2%

this quarter, down from 8.9% 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."

"Our recent achievements are a direct result

of our unwavering strategic focus, particularly on digitization. In June, we forged a strategic alliance with Tencent to amplify the reach

of online pharmaceutical services. By July, 111 secured a spot on the Shanghai Data Exchange, propelling the digital transformation of

the pharmaceutical landscape. That same month, we unveiled a pivotal digital supply chain product, bolstering the momentum of supply-side

digitization. This quarter, in acknowledgment of 111's digital prowess, the Ministry of Commerce distinguished us as an E-commerce Demonstration

Enterprise, placing us among the top 132 nationwide. Capitalizing on our reinforced digital capabilities and robust relationships with

over 500 pharmaceutical allies, as well as optimizing operations for 435,000 retail pharmacies, we remain

committed to fine-tuning our strategies, and will

keep on capitalizing on innovative tools like "Telescope" and tapping into the latest tech advancements, ensuring sustained

growth and efficiency.

"We are confident that our initiatives aimed

at margin expansion, cost optimization, and organizational alignment have yielded tangible outcomes. Our focus remains on refining our

product selection in line with customer preferences, driving down costs through direct sourcing, and enhancing our market edge with smart

pricing strategies. Our commitment to supply chain efficiency and relentless digitization bolsters process enhancement and sparks innovation.

With our robust technological prowess, we're poised to scale further, ensure profitability, and consistently amplify value for our shareholders."

Quarter 2023 Financial Results

revenues were RMB3.5 billion (US$479.6 million), representing an increase of 14.5% from RMB3.0 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$485.3

million), representing an increase of 12.9% from RMB3.1

billion in the same quarter of last year.

from operations was RMB41.4 million (US$5.7

million), compared to RMB79.8 million in the same quarter of last year. As a percentage of net revenues, loss from operations

decreased to 1.2 % in the quarter from 2.6% in the same quarter of last year.

operations was RMB17.2 million (US$2.4

million), compared to RMB52.8 million in the same quarter of last year. As a percentage of

net revenues, non-GAAP loss from operations decreased to 0.5% in the quarter from 1.7% in the same quarter of last year.

loss was RMB45.4 million (US$6.3 million),

compared to RMB84.8 million in the same quarter of last year. As a percentage of

net revenues, net loss decreased to 1.3% in the quarter from 2.8% in same quarter of last year.

net loss (4) was RMB21.2 million (US$2.9 million),

compared to RMB57.8 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss decreased to 0.6% in

the quarter from 1.9% in same quarter of last year

loss attributable to ordinary shareholders was RMB57.2 million (US$7.9 million),

compared to RMB95.3 million in the same quarter of last year. As a percentage of

net revenues, net loss attributable to ordinary shareholders decreased to 1.6% in the quarter from 3.1% in same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB33.0 million (US$4.6

million), compared to RMB68.3 million in the same quarter of last year.

As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased to 0.9%

in the quarter from 2.2% 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 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.

As of June 30, 2023,

the Company had cash and cash equivalents, restricted cash and short-term investments of RMB735.8 million (US$101.5 million), compared

to RMB922.7 million as of December 31, 2022.

111's management team will host an earnings conference

call at 7:30 AM U.S. Eastern Time on Thursday, August 24, 2023 (7:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Event Title: 111, Inc. Second Quarter 2023 Unaudited

Registration Link: https://s1.c-conf.com/diamondpass/10032701-ygfhis.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 August 31, 2023 on:

Hong Kong: 800 930 639

United States: +1 855 883 1031

International: +61 7 3107 6325

Conference ID: 10032701

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

on the website at https://edge.media-server.com/mmc/p/iw7ck9oc.

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.