111, Inc. Announces Second Quarter 2026 Unaudited Financial Results

- Transition from An Asset-Heavy Business Model to An Asset-Light Business Model

- Ongoing Investment and Adoption of AI Agents Making Workforce Streamlining Possible

- Net Revenue of Promotional Products (1) Increased by 121% and Gross Profit Rose by 120% Year-over-Year

- Total Marketplace (MP) Service Revenue Increased by 18.2% Year-over-Year for the First Half of 2026

- Fulfillment Expenses as a Percentage of Revenue Improved by 5 Basis Points Year-over-Year

SHANGHAI, Sept. 17, 2026 /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 second quarter ended June 30, 2026.

Second Quarter 2026 Highlights

- Net revenue amounted to RMB2.3 billion (US$339.0 million), representing a 28.3% decrease from RMB3.2 billion in the prior-year quarter. This decline was primarily attributable to the Company's ongoing strategic transition toward a more asset-light and operationally efficient business model. As part of this initiative, the Company divested several underperforming subsidiaries last year, under which the Company can generate more service-based commission income and reduce operational and capital risks to a certain extent. Total marketplace (MP) service revenue increased by 18.2% year-over-year for the first half of 2026, demonstrating growth of the Company's marketplace service business and enhanced revenue quality. Through such strategic optimization, the Company continues to pursue further improvements in its profitability and liquidity profile.

- Net revenue of promotional products amounted to RMB60.7 million (US$8.9 million), representing 121% year-over-year growth, accompanied by an increase of 120% in gross profit. To further diversify the portfolio of such products, the Company has partnered with a growing number of pharmaceutical manufacturers to secure distribution rights for products targeting small and medium-sized chain pharmacies. Among such products, Levofloxacin Tablets (Cravit®) from JNOVA Pharmaceutical (Beijing) Co., Ltd., has already become the flagship offering, whose quarterly sales volume grew from 364,000 boxes to 1,041,000 boxes year-over-year, while the quarterly revenue posted a 157% increase, reaching RMB28.1 million. In addition, other priority products with secured distribution rights like Rivaroxaban Tablets (Pusitong®) from Qilu Pharmaceutical Co., Ltd. and Xinkeshu Tablets from Shandong Wohua Pharmaceutical Co., Ltd. also delivered solid sales performance this quarter, with each reaching 60,000 boxes. These performances underscore the Company's marketing expertise and has created strong growth momentum for both upstream suppliers and downstream partners.

- Total operating expenses amounted to RMB155.5 million (US$22.9 million), representing a 16.1% decrease compared to RMB185.3 million in the prior-year quarter. Notably, ongoing investment in and adoption of AI agents have made workforce streamlining possible. As part of organizational initiatives to enhance cost-efficiency, the Company incurred substantial severance costs in the quarter in connection with workforce streamlining primarily within back-end support functions. Excluding the share-based compensation expenses and severance costs, total operating expenses accounted for 4.2% of total GMV this quarter as compared to 4.5% in the prior-year quarter.

- Fulfillment expenses amounted to RMB63.6 million (US$9.4 million), representing a decrease of 29.5% from RMB90.2 million in the prior-year quarter, outpacing the revenue decline. As a percentage of net revenue, fulfillment expenses improved to 2.76%, compared with 2.81% in the prior-year quarter, reflecting continued enhancement in operational efficiency and disciplined cost management.

Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111, commented, "During the second quarter of 2026, we continued to execute our strategic transition toward a more asset-light and platform-oriented operating model. The 18.2% year-over-year increase in total marketplace (MP) service revenue for the first half of 2026 demonstrates steady progress in the strategic initiative and underscores our pursuit of high-quality, scalable and cost-efficient growth. As our ongoing investment in and adoption of AI agents have enabled workforce streamlining, we incurred certain severance costs in the quarter, largely within back-end support functions, as part of efficiency-focused organizational initiatives."

"Our promotional products have rapidly penetrated pharmacies nationwide via the 111 digital marketing platform, with the product lineup continuously expanding. Net revenue and gross profit from those products delivered high year-over-year growth. A growing number of pharmaceutical companies have partnered with us to secure general distribution rights for products targeting small and medium-sized chain pharmacies. We remain committed to adding more pharmaceutical products such as "Cravit" to our distribution portfolio to consolidate our market standing and maintain steady performance."

"By optimizing our network and selectively exiting underperforming fulfillment centers, our fulfillment expenses declined by 29.5% year-over-year, outpacing the decrease in revenue. Meanwhile, fulfillment expenses as a percentage of net revenue improved by 5 basis points year-over-year, highlighting our capacity for sustained operational improvement and reflecting our commitment to prudent cost management."

"Looking ahead, we believe these initiatives are gradually reshaping 111 from a transaction-driven pharmaceutical distributor into a more technology-enabled and intelligent healthcare platform business. We will continue to integrate AI-enabled capabilities across multiple operational scenarios, including intelligent demand forecasting, inventory optimization, fulfillment routing and merchant operation management. More importantly, we are deploying AI agent-based solutions in pharmacies and healthcare service scenarios to help customers better manage day-to-day operations. Leveraging a lean, intelligent operating model, we aim to expand margins, lift profitability and deliver long-term value to stakeholders."

Second Quarter 2026 Financial Results

Net revenues were RMB2.3 billion (US$339.0 million), representing a decrease of 28.3% from RMB3.2 billion in the same quarter of last year mainly attributable to the strategic optimization.

Gross segment profit (2) was RMB132.3 million (US$19.5 million), representing a decrease of 28.6% from RMB185.4 million in the same quarter of last year.

Operating costs and expenses were RMB2.3 billion (US$342.4 million), representing a decrease of 27.5% from RMB3.2 billion in the same quarter of last year, broadly in line with the decline in net revenues.

- Cost of products sold was RMB2.2 billion (US$319.5 million), representing a decrease of 28.2% from RMB3.0 billion in the same quarter of last year.

- Fulfillment expenses were RMB63.6 million (US$9.4 million), representing a decrease of 29.5% from RMB90.2 million in the same quarter of last year. Fulfillment expenses as a percentage of net revenues accounted for 2.76% this quarter as compared to 2.81% in the same quarter of last year.

- Selling and marketing expenses were RMB58.1 million (US$8.6 million), representing a decrease of 12.2% from RMB66.2 million in the same quarter of last year. Excluding the share-based compensation expenses and severance costs, selling and marketing expenses as a percentage of net revenues accounted for 2.4% this quarter as compared to 2.0% in the same quarter of last year.

- General and administrative expenses were RMB17.6 million (US$2.6 million), representing a slight increase of 1.1% from RMB17.4 million in the same quarter of last year. Excluding the share-based compensation expenses and severance costs, general and administrative expenses as a percentage of net revenues accounted for 0.6% this quarter as compared to 0.5% in the same quarter of last year.

- Technology expenses were RMB19.0 million (US$2.8 million), representing an increase of 28.0% from RMB14.9 million in the same quarter of last year. Excluding the share-based compensation expenses and severance costs, technology expenses as a percentage of net revenues accounted for 0.6% this quarter as compared to 0.5% in the same quarter of last year.

Loss from operations was RMB23.2 million (US$3.4 million), compared to income from operations of RMB0.1 million in the same quarter of last year.

Non-GAAP loss from operations (4) was RMB20.5 million (US$3.0 million), compared to non-GAAP income from operations of RMB3.0 million in the same quarter of last year.

Net loss was RMB31.7 million (US$4.7 million), compared to RMB7.3 million in the same quarter of last year. As a percentage of net revenues, net loss accounted for 1.4% this quarter as compared to 0.2% in the same quarter of last year.

Non-GAAP net loss (5) was RMB28.9 million (US$4.3 million), compared to RMB4.4 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss accounted for 1.3% this quarter as compared to 0.1% in the same quarter of last year.

Net loss attributable to ordinary shareholders was RMB39.1 million (US$5.8 million), compared to RMB19.5 million in the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders accounted for 1.7% this quarter as compared to 0.6% in the same quarter of last year.

Non-GAAP net loss attributable to ordinary shareholders (6) was RMB36.4 million (US$5.4 million), compared to RMB16.7 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders accounted for 1.