Inc. Announces Second Quarter 2024 Unaudited Financial Results Maintained Operational Profitability for the Second Consecutive Quarter Operating Expenses as a Percentage of Revenues Decreased 120 Basis Points YoY Held Po

111, Inc. Announces Second Quarter 2024 Unaudited

SHANGHAI, August 29, 2024 /PRNewswire/ -

111, Inc. ("111" or the "Company") (NASDAQ: YI), a leading tech-enabled healthcare platform company committed to reshaping

the value chain of healthcare industry by digitally empowering the upstream and downstream in China, today announced its unaudited financial

results for the second quarter ended June 30, 2024.

Quarter 2024 Highlights

Mr. Junling Liu, Co-Founder, Chairman,

and Chief Executive Officer of 111, commented, "Despite a challenging macroeconomic landscape, we successfully achieved operational

profitability for the second consecutive quarter, underscoring the resilience of our business model and the effectiveness of our strategic

initiatives as a top digital healthcare platform for empowering the whole industry chain. Our continued focus on operational efficiency

has driven a significant turnaround, with income from operations hitting RMB3.3 million during quarter-an impressive recovery from

an operational loss of RMB41.4 million a year earlier.

Mr. Liu added, "We've significantly improved operational

efficiency through prudent expense control, strategic investments in infrastructure, and optimal staffing efforts. Operating expenses

as a percentage of net revenues decreased by 120 basis points to 6%, while non-GAAP operating expenses fell by 70 basis points to 5.8%.

Our goal is to set the standard for efficiency in pharmaceutical e-commerce and strengthen our competitive edge through superior operational

effectiveness. As we expand and refine our operations, we expect further cost reductions and enhanced efficiency. These savings will be

reinvested into strategic areas such as innovation, market expansion, and customer engagement, all of which are crucial for driving revenue

and profitability growth."

"Our commitment to advancing digital capabilities and leveraging

cutting-edge technologies has significantly improved our operational performance across various facets, making our business more adaptable,

efficient, and customer-focused. This positions us for higher future returns in the evolving healthcare e-commerce

sector and reinforces our leading role to drive the pharmaceutical digital transformation. Our achievements in technology are highlighted

by the acquisition of four new patents. Additionally, we've strengthened supply chain with our effective transshipment model, the

expansion of fulfillment centers, and the deepening of our partnership."

"The drug sales and prescription shift towards retail pharmacies

is a robust growth avenue, along with continued digital reform of the healthcare value chain. In order to grasp these enormous opportunities,

we will focus on offering seamless, convenient shopping experiences for customers with the most comprehensive and cost-effective product

portfolio. Strengthening partnerships with pharmaceutical companies, lifting operational efficiency, driving digitalization and AI applications,

and accelerating new growth engines such as private label business and JBP platform are also key to our continued growth and success.

We believe these concerted efforts will enable us to garner a larger market share and achieve higher revenue and profit levels while generating

long-term value for our shareholders, customers, and stakeholders."

Quarter 2024 Financial Results

revenues were RMB3.4 billion (US$471.2 million), representing a decrease of 1.5% from RMB3.5 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 RMB3.4 billion (US$470.7 million), representing a decrease of 2.8% from RMB3.5

billion in the same quarter of last year.

from operations was RMB3.3 million (US$0.5

million), compared to loss from operations of RMB41.4 million in the same quarter of last year.

income from operations was RMB8.5 million (US$1.2 million), compared to Non-GAAP

loss from operations of RMB17.2 million in the same quarter of last year.

loss was RMB2.1 million (US$0.3 million), representing an improvement of 95% from RMB45.4 million in the same

quarter of last year. As a percentage of net revenues, net loss decreased to 0.1% in the quarter from 1.3% in same quarter of last year.

net income (4) was RMB3.1 million (US$0.4 million), compared to Non-GAAP net loss of RMB21.2 million in

the same quarter of last year.

loss attributable to ordinary shareholders was RMB14.0 million (US$1.9 million), representing an improvement of 76%

from RMB57.2 million in the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary

shareholders decreased to 0.4% in the quarter from 1.6% in same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB8.8 million (US$1.2 million), representing an improvement of

73% from RMB33.0 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary

shareholders decreased to 0.3% in the quarter from 0.9% in same quarter of last year.

Non-GAAP net income represents net income excluding share-based compensation expenses, net of tax. Considering the impact of accretion

of redeemable non-controlling interest for the second quarter 2024, non-GAAP net income 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, 2024,

the Company had cash and cash equivalents, restricted cash and short-term investments of RMB615.5 million (US$84.7 million), compared

to RMB673.7 million as of December 31, 2023. To this date, the Company has a total outstanding amount of RMB1.1 billion, which has been

included in the balances of redeemable non-controlling interests and accrued expenses and other current liabilities, owed to a group of

investors of 1 Pharmacy Technology pursuant to their equity investments made in 2020 as previously disclosed. 111 has received redemption

requests from certain of such investors for a total redemption amount of RMB0.2 billion in accordance with the terms of their initial

investments in 1 Pharmacy Technology. Furthermore, the Company has entered into written agreements and/or commitment letters with investors

representing the majority of the total carrying amounts. For more information about the terms of 111's arrangements with these investors,

see "Item 5. Operating and Financial Review and Prospects-B. Liquidity and Capital Resources" in the Company's

annual report for the fiscal year ended December 31, 2023.

111's management team will host an earnings conference

call at 7:30 AM U.S. Eastern Time on Thursday, August 29, 2024 (7:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Event Title: 111, Inc. Second Quarter 2024 Unaudited

Registration Link: https://s1.c-conf.com/diamondpass/10040837-g09iyj.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 September 5, 2024 on:

United States: +1 855 883 1031

International: +61 7 3107 6325

Conference ID: 10040837

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

on the website at https://edge.media-server.com/mmc/p/a2w3gscg.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers

and uses non-GAAP income (loss) from operations, non-GAAP net income (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 income

(loss) from operations as income (loss) from operations excluding share-based compensation expenses. The Company defines non-GAAP net

income (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 income (loss)