Inc. Announces Third Quarter 2020 Unaudited Financial Results SHANGHAI

111, Inc. Announces Third Quarter 2020

Unaudited Financial Results

November 19, 2020 /PRNewswire/ - 111, Inc. ("111" or the "Company") (NASDAQ: YI), a leading digital

healthcare platform committed to digitally connecting patients with medicine and healthcare services in China, today announced

its unaudited financial results for the third quarter ended September 30, 2020.

Quarter 2020 Highlights

Q3 2020, we exceeded the top end of our guidance and continued the strong momentum built since the IPO. In the 8th

consecutive quarter of revenue growth, we delivered net revenue of RMB2.36 billion, an increase of 113% year-over-year. Gross

profit rose 90% year-over-year to RMB90 million. Non-GAAP net loss attributable to ordinary share[3] as a percentage

of net revenue continued to narrow, from approximately 10% in Q3 2019 to 4% this quarter, showing a trajectory towards profitability,"

said Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111.

robust performance is a strong validation of the successful execution of our multifaceted growth strategy to deliver the mission

of digitally connecting patients with medicine and healthcare services. We have made solid progress in strengthening our digital

capabilities. Our cloud-based solutions in the areas of patient management, doctor-patient interaction, education for doctors,

patients and pharmacists, and other related services received excellent response from our customers. Our smart supply-chain management

is making our operation more and more efficient. The omni-channel drug commercialization platform is laying a strong foundation

for our future growth in one of China's fastest growing industries."

the last few quarters, we made significant progress in strengthening the infrastructure of our digital healthcare platform that

brings together key stakeholders in the healthcare ecosystem - retail pharmacies, online platform partners, doctors, insurance

companies and pharmaceutical companies to the benefit of all." He continued, "For our retail pharmacy customers, part

of our 300,000+ strong network representing 57% of China's total number of pharmacies and the largest in China, our smart

sourcing system, machine-learning and cloud-based solutions translate into effective sourcing, better inventory management, optimal

product assortment, and broader market reach, resulting in greater cost efficiency, higher earning potential and an enhanced ability

to serve our end consumers. For doctors, our smart technology puts the power of the latest medical innovations in their hands

to achieve better health outcomes for their patients. For patients, our holistic disease management platform gives them access

to the best doctors across the country, follow-up consultations, disease education materials, medication guides, and the benefits

of obtaining medications at home through our e-prescription service."

most significant progress is in establishing 111 as partner of choice for pharmaceutical companies with our omni-channel drug

commercialization capability." Commenting on the partnership with pharmaceutical companies, he said, "With our broad

consumer reach, vast virtual pharmacy network, and smart technology-enabled omni-channel commercialization platform, we have been

helping them to gain additional commercialization channels, expand reach, optimize their sales and marketing functions, enhance

patient services and support programs, resulting in greater commercial success for new and existing products. In the quarter,

we have expanded the number of partnerships to over 300 up 101% over the same period last year. New partners include major multinational

and domestic pharmaceutical companies, such as Bayer Healthcare, Huluwa Pharmaceutical, Xiangxue Pharmaceutical and Baiyunshan

also broadened our partnership with insurance companies to further enhance the digital healthcare value chain. In the quarter,

we added another insurance partner, Shanghai Uniondrug. This partnership will give us the power to offer to consumers better access

to healthcare and pharmaceutical products at lower prices. In addition, consumers will also gain tools and supporting services

that are personalized to their needs and that emphasize preventive, rather than curative care."

China successfully keeps the COVID-19 pandemic in check and its economy resumes growth, we are confident about the Company's

ability to take advantage of the immense opportunities that ensue. With our market-leading digital healthcare platform, we have

built a healthcare ecosystem where all key stakeholders - drug manufacturers, retailers, insurance companies and end consumers

are in a virtuous circle of value creation."

toward the last quarter, we'll continue to leverage this ecosystem and enhance its value as we work to increase sales from

our existing base of retail pharmacies while gaining new ones, enhance stickiness' of our customers, and expand and

deepen strategic partnerships. We'll focus on narrowing net loss, drive growth, and continue the ascent to delivering sustainable

and long-term profitability to our shareholders," he concluded.

August 14, 2019, the Company's Board of Directors approved a share repurchase program of up to US$10 million, as a vote

of confidence in the Company's prospects. As of September 30, 2020, the Company had repurchased 998,810

ADSs for a total consideration of US$4.9 million. No new repurchase happened in the

Quarter 2020 Financial Results

revenues were RMB2.36 billion (US$348.0 million), representing an increase of 112.8% from RMB1.11 billion in

the same quarter of last year.

of September 30, 2020, the Group has two reporting segments that includes B2B segment and B2C segment. Revenue contribution from

E-Channel was previously disclosed as a separate segment, but was incorporated in B2B segment in this quarter. The Company revised

prior comparative periods to conform to the current period segment presentation as follows:

costs and expenses were RMB2.48 billion (US$366.0 million), representing an increase of 102.3% from RMB1.23

billion in the same quarter of last year.

from operations was RMB122.2 million (US$18.0 million), compared to RMB118.1 million in the same

quarter of last year. As a percentage of net revenues, loss from operations further decreased to 5.2% in the quarter from 10.6%

in same quarter of last year.

loss from operations [5] was RMB108.0 million (US$15.9 million), compared to RMB104.5 million in

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

loss from operations decreased to 4.6% in the quarter from 9.4% in same quarter of last year.

loss attributable to ordinary shareholders was RMB108.6 million (US$16.0 million), compared to RMB123.3

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

attributable to ordinary shareholders decreased to 4.6% in the quarter from 11.1% in same quarter of last year.

net loss attributable to ordinary shareholders was RMB94.4

million (US$13.9 million), compared to RMB109.7 million in the same quarter of last year. As

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

to 4.0% in the quarter from 9.9% in same quarter of last year.

ADS was RMB1.32 (US$0.20), compared to RMB1.50 for the same quarter of last year.

loss per ADS [6] was RMB1.15 (US$0.17), compared to RMB1.34 for the same quarter of last

of September 30, 2020, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB

1,213.1 million (US$178.7 million), compared to RMB697.7 million as of December 31, 2019.

the fourth quarter of 2020, the Company expects its total net revenues to be between RMB2.44 billion and RMB2.56 billion, representing

a year-over-year growth of approximately 81% to 90%.

above 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.

team will host an earnings conference call at 7:30 AM U.S. Eastern Time on Thursday, November 19, 2020 (8:30 PM Beijing Time on

the conference call are as follows:

111, Inc. Third Quarter 2020 Earnings Conference Call

Link: http://apac.directeventreg.com/registration/event/1679252

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.

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 November 27, 2020, 7:59 P.M. ET on:

archived webcast of the conference call will be available on the Investor Relations section of 111's website at http://ir.111.com.cn/.

Non-GAAP Financial Measures

the business, the Company considers and uses non-GAAP loss from operations, non-GAAP net loss attributable to ordinary shareholders,

and non-GAAP loss per ADS, non-GAAP measures, 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 attributable to ordinary shareholders as net loss attributable to ordinary shareholders excluding share-based

compensation expenses and impairment loss of long-term investment. The Company defines non-GAAP loss per ADS as loss per ADS excluding

share-based compensation expenses and impairment loss of long-term investment per ADS. The presentation of these non-GAAP financial