Inc. Announces Third Quarter 2024 Unaudited Financial Results Maintained Operational Profitability for the Third Consecutive Quarter Operating Expenses as a Percentage of Revenues Decreased 160 Basis Points YoY Held Posi

111, Inc. Announces Third Quarter 2024 Unaudited

SHANGHAI, November 27, 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 third quarter ended September 30, 2024.

Quarter 2024 Highlights

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

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

Mr. Junling Liu, Co-Founder, Chairman,

and Chief Executive Officer of 111, commented, "While the macroeconomic environment in China continues to present challenges,

we are proud of our ability to maintain operational profitability for the third consecutive quarter. This achievement is a testament to

the strength of our business model as a one-stop shopping platform that offers the most comprehensive selection of pharmaceutical products

at competitive prices. It also highlights our commitment to operational efficiency across the organization. As a result, income from operations

in Q3 reached RMB2.4 million, a significant improvement from an operational loss of RMB80.4 million in the prior year."

Mr. Liu added, "We gained greater operational efficiency through

diligent cost management, ongoing infrastructure investments, and effective staffing arrangements, all of which has enabled us to navigate

an unfavorable consumer spending environment while delivering solid performance results. Operating expenses were 5.8% of revenues, a reduction

of 160 basis points compared to the previous year, while non-GAAP operating expenses as a percentage of revenues decreased by 100 basis

points to 5.7%. We aim to lead the pharmaceutical e-commerce sector in efficiency and sharpen our competitive advantages. As we scale

and optimize operations, we expect further cost savings, which will be reinvested into growth initiatives, including technological advancements,

market expansion, and client base growth, driving future profitability."

"We are strengthening our core competitiveness in digitalization

through advancements across multiple areas, laying a strong foundation for an agile, highly efficient, and customer-centric business that

can swiftly adapt to evolving industry needs. Additionally, we've bolstered our supply chain with an expanded transshipment network and

new fulfillment centers, further enhancing our service capabilities."

"Despite challenges, we are still confident in the long-term opportunities

ahead. Our investments in AI and digital technologies are not only providing industry-leading efficiency and reshaping the healthcare

value chain, but also positioning us to capture significant shifts in the pharmaceutical industry-particularly the unstoppable trend

of digital transformation, the growing demand for out-of-hospital drug distribution, and the expansion of the silver economy. By deepening

our partnerships with pharmaceutical companies, expanding our fulfillment network, refining our digital platforms, and prioritizing new

growth engines, we are well-positioned to engage more industry stakeholders, meet the needs of a broad customer base, and generate sustained

Quarter 2024 Financial Results

revenues were RMB3.6 billion (US$513.1 million), representing a decrease of 1.8% from RMB3.7 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 RMB3.6 billion (US$512.8 million), representing a decrease of 3.9% from RMB3.7

billion in the same quarter of last year.

from operations was RMB2.4 million (US$0.3

million), compared to loss from operations of RMB80.4 million in the same quarter of last year.

income from operations was RMB7.1 million (US$1.0 million), compared to non-GAAP

loss from operations of RMB54.0 million in the same quarter of last year.

loss was RMB3.5 million (US$0.5 million), representing an improvement of 96% from RMB83.5 million in the same

quarter of last year. As a percentage of net revenues, net loss amounted to 0.1% in the quarter, down from 2.3% in the same quarter of

net income (4) was RMB1.3 million (US$0.2 million), compared to non-GAAP net loss of RMB57.1 million in

the same quarter of last year.

loss attributable to ordinary shareholders was RMB17.1 million (US$2.4 million), representing an improvement of 82%

from RMB93.3 million in the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary

shareholders accounted for 0.5% in the quarter, down from 2.5% in the same quarter of last year.

net loss attributable to ordinary shareholders (5) was RMB12.4 million (US$1.8 million), representing an improvement of

82% from RMB66.9 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary

shareholders, accounted for 0.3% in the quarter, down from 1.8% in the 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 third quarter 2024, non-GAAP net income 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.

2024, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB614.4 million (US$87.6 million),

compared to RMB673.7 million as of December 31, 2023. To 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 received redemption

requests from certain of such investors in accordance with the terms of their initial investments in 1 Pharmacy Technology. Following

communication and negotiation, the Company has reached agreements and/or commitment letters with investors representing approximately

90% of the total amount to reschedule the repayments,

allowing for phased repayments

at extended periods, if the holders exercise their redemption right. The Company has paid

a portion of the repurchase funds upon signing of the agreements. Additionally, the Company is in ongoing discussions

with investors holding the remaining approximately 10% of the total amount. 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 Wednesday, November 27, 2024 (8:30 PM Beijing Time on the same day).

Details for the conference call are as follows:

Event Title: 111, Inc. Third Quarter 2024 Unaudited

Registration Link: https://s1.c-conf.com/diamondpass/10042738-te7sgd.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 4, 2024 via:

United States: +1 855 883 1031

International: +61 7 3107 6325

Conference ID: 10042738

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

on the website at https://edge.media-server.com/mmc/p/3nkscjv6.

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