Inc. Announces Third Quarter 2023 Unaudited Financial Results SHANGHAI

111, Inc. Announces Third Quarter 2023 Unaudited

SHANGHAI, November 30, 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 third quarter

ended September 30, 2023.

Quarter 2023 Highlights

Gross segment profit represents net revenues less cost of goods sold.

Non-GAAP loss from operations represents loss from operations excluding share-based compensation expenses.

Mr. Junling Liu, Co-Founder, Chairman,

and Chief Executive Officer of 111, commented, "Despite the challenges in the macro-economy as well as retail pharmacy business,

we have managed to deliver net revenue growth of 9.5% year-over-year, reaching RMB3.7 billion. This represents the 21st consecutive quarter

of year-over-year progression for 111 since our NASDAQ IPO. Our gross segment profit was negatively impacted as we made efforts to digest

the inventory of Anti-Covid related medicines, which decreased by 5.6% compared to the same period last year. Our operational loss, as

a percentage of net revenues, reduced to 2.2%, compared to 2.4% in the corresponding quarter of the prior year, while Non-GAAP

operational loss remained at 1.5% of net revenues which was same as third quarter of last year."

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 7.4%

this quarter, down from 8.4% 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 progresses are a direct outcome of

our unwavering strategic focus, particularly on digitalization. In this quarter, the 111 technology team achieved a significant milestone

by securing three patents, showcasing our dedication to innovation in the healthcare sector. On August 11th, we were honored to have our

case on "Leveraging Digitalization for Pharmaceutical Full-Channel Commercialization" selected for the 2023 "Supply Chain

Management Services and Manufacturing Integration" category within the "4th China (Shanghai) Industrial Product Online Trading

Festival.". Additionally, 111 was recognized as one of the "Top Ten Pharmaceutical Retail E-commerce Platforms in 2023"

and received the prestigious "CPEO Gold Award" at the 16th China Pharmaceutical Ecology Conference - CPEO Conference. In October,

we were privileged to receive the "2023 (16th) China Digital Breakthrough Practice Award" from the China Management Model 50+

Forum (C50+). With our strengthened digital capabilities and robust relationships with over 500 pharmaceutical partners, as well as operational

optimization for 450,000 retail pharmacies, we remain committed to our digitization strategy. We will continue to leverage innovative

tools like "Telescope" and harness the latest technological advancements to ensure ongoing growth and efficiency.

"We have a strong belief that our efforts directed towards improving

margins, optimizing costs, and aligning our organization have produced concrete results. Our primary objective continues to be refining

our product offerings to align with customer preferences, reducing costs through direct sourcing, and strengthening our competitive advantage

through intelligent pricing strategies. Our dedication to enhancing supply chain efficiency and continuous digitization drives process

improvement and fosters innovation. Leveraging our robust technological capabilities, especially with recent advancements in AI, positions

us to expand further, ensure profitability, and continually increase value for our shareholders."

Quarter 2023 Financial Results

revenues were RMB3.7 billion (US$502.4 million), representing an increase of 9.5% from RMB3.3 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 RMB3.7 billion (US$513.4

million), representing an increase of 9.2% from RMB3.4

billion in the same quarter of last year.

operations was RMB80.4 million (US$11.0 million),

compared to RMB80.7 million in the same quarter of last year. As a percentage of net revenues, loss from operations decreased

to 2.2% in the quarter from 2.4 % in the same quarter of last year.

operations was RMB54.0 million (US$7.4 million),

compared to RMB48.7 million in the same quarter of last year. As a percentage of net revenues,

non-GAAP loss from operations accounted for 1.5% in the quarter, which was same as last year.

loss was RMB83.5 million (US$11.4 million), compared to RMB86.2 million in

the same quarter of last year. As a percentage of net revenues, net loss decreased to 2.3% in the quarter from 2.6% in same quarter

net loss (4) was RMB57.1 million (US$7.8 million), compared to RMB54.3

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

1.56% in the quarter from 1.62% in same quarter of last year

loss attributable to ordinary shareholders was RMB93.3 million (US$12.8 million),

compared to RMB96.8 million in the same quarter of last year. As a percentage of

net revenues, net loss attributable to ordinary shareholders decreased to 2.5% in the quarter from 2.9% in same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB66.9 million (US$9.2 million),

compared to RMB64.9 million in the same quarter of last year. As a percentage of net revenues, non-GAAP

net loss attributable to ordinary shareholders decreased to 1.8% in the quarter from 1.9% 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 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.

2023, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB876.6 million (US$120.1 million),

compared to RMB922.7 million as of December 31, 2022. As of the date of this earning release, we had 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.

As of the date of this earning release, we have 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. We are currently in the process

of negotiating with these investors and other relevant stakeholders regarding the repayment and/or restructuring of such redemption obligations.

111's management team will host an earnings conference

call at 7:30 AM U.S. Eastern Time on Thursday, November 30, 2023 (8:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Event Title: 111, Inc. Third Quarter 2023 Unaudited

Registration Link: https://s1.c-conf.com/diamondpass/10034943-yewgs3.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 December 7, 2023 on:

United States: +1 855 883 1031

International: +61 7 3107 6325

Conference ID: 10034943

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

on the website at https://edge.media-server.com/mmc/p/jzjigam6.

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