Inc. Announces Third Quarter 2022 Unaudited Financial Results SHANGHAI

111, Inc. Announces Third Quarter 2022 Unaudited

SHANGHAI, December 1, 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 third quarter

ended September 30, 2022.

Quarter 2022 Key Results

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

111, commented, "Our business was negatively impacted by lockdowns in various cities and provinces during the third quarter. We

have tried our very 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 third quarter increased by 0.1% year-over-year to RMB3.35 billion, while our gross segment

profit increased by 21.6% year-over-year. Non-GAAP loss from operations was narrowed to 1.5% of net revenues as compared to 4.1% in the

same quarter of last year. We are also pleased to see our positive operating cash flow and overall cash flow for the quarter."

Mr. Liu added, "Our efforts to improve our margin profile continued

to deliver positive results during the quarter. Our overall gross segment margin(3)

as a percentage of net revenues improved to 6.0% from 5.0% in the same quarter of last year. B2B segment profit grew by 26.9% year-over-year,

and as a percentage of net revenues, B2B segment margin improved to 5.5% from 4.4% in the same quarter of last year. We also improved

B2C segment margin to 22.4% from 19.7% in the same quarter of last year. In addition, we continued to enhance our operation efficiency

and total operating expenses as a percentage of net revenues decreased to 8.4% in this quarter from 10.2% in the same quarter of last

year. We expect this momentum to continue as we scale, and meanwhile we will continue to focus on delivering best services to our customers/patients."

Third Quarter 2022 Financial Results

revenues were RMB3,349 million (US$470.8 million),

representing an increase of 0.1% from RMB3,346 million 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$482.1 million), representing a decrease of 2.6% from RMB3.5

billion in the same quarter of last year.

from operations was RMB80.7 million (US$11.3

million), compared to RMB175.4 million in the same quarter of last year. As a percentage of net revenues, loss from operations

decreased to 2.4% in the quarter from 5.2% in the same quarter of last year.

loss from operations was RMB48.7 million (US$6.9

million), compared to RMB135.9 million in the same quarter

of last year. As a percentage of net revenues, non-GAAP loss from operations decreased

to 1.5% in the quarter from 4.1% in same quarter of last year.

loss was RMB86.2 million (US$12.1 million), compared to RMB165.8 million in the same quarter of last year.

As a percentage of net revenues, net loss decreased to 2.6% in the quarter from 5.0% in same quarter of last year.

net loss (5) was RMB54.3 million (US$7.6 million), compared to RMB126.3 million in the same quarter

of last year. As a percentage of net revenues, non-GAAP net loss decreased to 1.6% in the quarter

from 3.8% in same quarter of last year.

loss attributable to ordinary shareholders was RMB96.8 million (US$13.6 million), compared to RMB252.9million in

the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 2.9%

in the quarter from 7.6% in same quarter of last year.

net loss attributable to ordinary shareholders (6) was RMB64.9 million (US$9.1 million), compared to RMB213.4 million in

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

in the quarter from 6.4% 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 third 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.

2022, the Company has cash and cash equivalents, restricted cash and short-term investments of RMB865.9 million (US$121.7 million),

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, December 1, 2022 (8:30 PM Beijing Time on the same day).

Details for the conference call

Conference Topic: 111, Inc. Third

Quarter 2022 Earnings Conference Call

Registration Link: https://s1.c-conf.com/diamondpass/10026835-fg6ds.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 then be provided with the dial in number, the Passcode, and the unique access PIN. This information will also be

emailed to the participant as a calendar invite.

Please dial in 15 minutes before

the call is scheduled to begin. To join the conference, simply dial the number in the calendar invite and enter the passcode followed

by your PIN, and the participant will join the conference instantly.

A live and archived webcast of

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

A telephone replay of the call

will be available after the conclusion of the conference call until Dec 8, 2022, 7:59 AM U.S. Eastern Time:

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

investors with 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