Inc. Announces Third Quarter 2021 Unaudited Financial Results SHANGHAI

111, Inc. Announces Third Quarter 2021 Unaudited

SHANGHAI, November 19, 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 third quarter

ended September 30, 2021.

Quarter 2021 Highlights

(1) Gross profit represents net revenues less cost

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

Officer of 111, commented, "The third quarter of 2021 represents another period of strong growth, as net revenue increased 41.6%

year-over-year to RMB 3.3 billion, marking the 13th consecutive quarter of year-over-year growth for 111 since the company's NASDAQ

IPO. Our top- and bottom-line growth this quarter was driven by our B2B business, which saw year-over-year revenue and gross margin increases

of 46% and 145%, respectively. In addition, the market continued to show strong demand for our diverse portfolio of services offerings.

Overall, service revenue grew 106% year-over-year, and B2B service revenues totaled RMB16.2 million, representing a 336% year-over-year

Mr. Liu added, "In addition to strong

topline growth, our gross profit grew twice as fast as our revenue in the third quarter. Gross profit grew by 85% year-over-year, and

as a percentage of revenue, our gross margins improved to 5%. We are especially pleased with the margin improvement for the B2B segment,

which as a percentage of revenue, grew from 3.6% in Q1-2021 to 3.8% in Q2-2021, to 4.4% in Q3-2021. We expect this momentum to continue

as we scale, putting us on a clear path to profitability."

"We continue to improve upon our SMART supply

chain infrastructure. In the third quarter, we expanded the number of direct sourcing partnerships with domestic and global pharmaceutical

companies to 401, up 33% from the same period in 2020. 111 is an attractive partner for pharmaceutical companies because we can help them

establish and manage an "out-of-hospital" channel that connects them with over 350,000 retail pharmacies. We expect that our

value as a commercialization partner will continue to increase as we grow, enabling us to offer even more services to companies looking

to commercialize their products in China."

"Our recently launched '1 Health Membership' program continues

to gain strong momentum with our customers. This program allows members pay an annual fee to unlock exclusive benefits, and at the end

of the third quarter, we had over 11,000 participating stores, well exceeding our internal target of 10,000. Through 1 Health Membership,

we have also seen an increase in purchases amongst participating stores, which are not only attracted to our vast selection and competitive

prices, but also interested in gaining access to the valuable tools we offer to help them better manage their businesses. Currently, over

2,000 stores are using our proprietary systems to help them manage inventory, optimize their procurement and product selection, improve

their customer experience through our CRM system, and provide product education to their customers and employees."

"As a company committed to helping people live healthier lives,

ESG is very much embedded in our core values. Year-to-date, we have provided approximately 400,000 free online consultations, including

with patients in Henan Provence, many of whom have been faced with severe flooding conditions. In addition, we have partnered with local

hospitals to provide medical services to underserved populations. Finally, we have donated PPEs and other healthcare products to areas

experiencing recurrence of COVID outbreaks. We will continue to support our community and help realize our collective goal of a Healthy

Mr. Liu concluded, "We will continue to focus on revenue growth

and the margin improvement, and we are confident that we will become profitable in near future. Our leading position in the healthcare

services sector, along with industry tailwinds, position 111 well for continued growth as we transform medical services in China."

Quarter 2021 Financial Results

revenues were RMB3.35 billion (US$519.3 million), representing an increase of 41.6% from RMB2.36 billion in

the same quarter of last year.

September 30, 2021, the Company 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.

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$546.5 million), representing an increase of 41.7% from RMB2.5

billion in the same quarter of last year.

from operations was RMB175.4 million (US$27.2

million), compared to RMB122.2 million in the same quarter of last year. As a percentage of net revenues, loss from operations

accounted for 5.2% in the quarter unchanged from Q3 2020.

loss from operations (3) was RMB135.9 million (US$21.1 million), compared

to RMB108.0million in the same quarter of last year. As a percentage of net revenues, non-GAAP

loss from operations decreased to 4.1% in the quarter from 4.6% in the same quarter of last year.

loss was RMB165.8 million (US$25.7 million), compared to RMB111.2 million in the same quarter of last year.

As a percentage of net revenues, net loss increased to 5.0% in the quarter from 4.7% in same quarter of last year.

net loss (4) was RMB126.3 million (US$19.6 million), compared to RMB97.0 million in the same quarter

of last year. As a percentage of net revenues, non-GAAP net loss decreased to 3.8% in the quarter

from 4.1% in same quarter of last year.

loss attributable to ordinary shareholders was RMB252.9 million (US$39.2 million), compared to RMB108.6 million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders increased to 7.6%

in the quarter from 4.6% in same quarter of last year. The increase was mainly caused by accretion for probable redemption of redeemable

non-controlling interest in the future.

net loss attributable to ordinary shareholders was RMB213.4 million (US$33.1 million), compared to RMB94.4 million in

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

ordinary shareholders increased to 6.4% in the quarter from 4.0% in same quarter of last year. The increase was mainly caused by

accretion for probable redemption of redeemable non-controlling interest in the future.

2021, the Company has cash and cash equivalents, restricted cash and short-term investments of RMB1.1 billion (US$168.1 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, net of tax.

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 in the third quarter ended September 30, 2021, non-GAAP net loss is used as a more meaningful measurement

of the operation performance of the Company.

fourth quarter of 2021, the Company expects its total net revenues to be between RMB3.44 billion and RMB3.70 billion, representing a year-over-year

growth of approximately 30% to 40%.

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, November 19, 2021, at 7:30 AM U.S. Eastern Time (8:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Event Title: 111, Inc. Third Quarter 2021 Earnings

Registration Link: http://apac.directeventreg.com/registration/event/4517349

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 November 28, 2021, 7:59 A.M. ET on:

United States: +1-855-452-5696

International: +61-2-8199-0299

Conference ID: 9279916

A live and archived webcast of the conference call

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

Use of Non-GAAP Financial Measures