Business

111, Inc. Reports Q4 and Fiscal Year 2023 Unaudited Financials, Revealing Challenges and Strategizing for Future Growth

SHANGHAI, March 21, 2024 /PRNewswire/ – 111, Inc.'s Financial Performance

111, Inc. (NASDAQ: YI), a prominent healthcare platform dedicated to merging patients with medical and healthcare services in China, today disclosed its unaudited financial figures for the fourth quarter and the fiscal year ending December 31, 2023. The company, renowned for its technology-driven solutions, confronted various challenges this fiscal year but remains optimistic about harnessing digital innovation for future progress.

Fourth Quarter 2023 Financial Highlights

Despite a marginal year-over-year dip of 1.0% in net revenues, amounting to RMB4.1 billion (US$578.7 million), the company's financial performance reflected resilience in a complex market environment. The gross segment profit experienced a more considerable decline of 15.5% year-over-year to RMB 214.3 million (US$ 30.2 million). Furthermore, the escalation in total operating expenses, which climbed to RMB420.8 million (US$59.3 million), was tempered by aggressive cost control measures that excluded considerable share-based compensation expenses. The loss from operations was RMB206.5 million (US$29.1 million), marking an increase from the previous fiscal year. However, the non-GAAP loss from operations stood at RMB55.2 million (US$7.8 million), which, although an increase from the last year, was controlled to represent only a slight jump as a percent of net revenues.

Fiscal Year 2023 Financial Highlights

On an annual scale, net revenues saw a boost of 10.6%, reaching RMB14.9 billion (US$2.1 billion). Amidst the unpredictable market, the gross segment profit edged up by 1.1%, testifying to the company's capacity to maintain profitability in stringent conditions. A tight rein on operating expenses was apparent, with a year-over-year decrease to 6.5% from 7.8% previously, excluding share-based compensation. The fiscal prudence effectively mitigated the loss from operations to RMB350.1 million (US$49.3 million), a marked improvement from the year prior. Cash and cash equivalents, restricted cash, and short-term investments were reported at a solid RMB673.7 million (US$94.9 million) at year's end, fortifying the company's financial position.

Management Commentary

Junling Liu, Co-Founder, Chairman, and CEO of 111, reflected on the fiscal year with a balanced view. Acknowledging the slight downturn in Q4 net revenues influenced by a post-COVID normalization, Liu remained confident about the company's cost-efficiency gains. Excluding share-based compensation, the operating expenses reduction speaks volumes about the operational efficiency improvements. The year's revenue growth and profit increases, as Liu pointed out, were the fruits of strategic organizational optimization and robust operational frameworks. As the year unfolded, 111 embarked on a transformative digital innovation journey within the pharmaceutical sector. The company's pioneering endeavors were recognized with prestigious awards, cementing its leadership in technology-integrated supply chain optimization. With strategic partnerships including Tencent Health, 111's trajectory in 2023 exemplified a steadfast commitment to technological integration yielding improved healthcare outcomes and industry leadership for the future.

Forward-Looking Strategies

Looking ahead, 111 is equipped for future successes through strategic investments in critical domains such as operational efficiency, product diversification, and digital innovation. The holistic approach intertwines technological advancements with strong partnerships, paving the way for improved performance, customer loyalty, and market dominance. Liu highlighted that the strategic alignments are geared towards capitalizing on evolving market opportunities, reinforcing the company's position at the forefront of the healthcare industry revolution for a healthier future.

Detailed Financial Performance Overview

For the fourth quarter, the detailed financials reveal a nuanced picture. B2B segment net revenues remained robust while B2C net revenues experienced significant contractions. Notably, the cost of products sold showed a fractional downtick, while service revenues saw a notable jump, reflecting agility in the company's service offerings. Segment profit and profit percentages depicted mixed variations, illustrating the complex financial landscape the company navigated. Operating costs and expenses indicated a moderate increase, yet careful management of fulfillment and marketing expenses exemplified operational efficiency. The company's non-GAAP measures, excluding share-based compensation expenses, offer a clearer view of ongoing operations.

Conference Call and Investor Communication

The management team will elaborate on the financial results and forecast during a conference call scheduled for 7:30 AM U.S. Eastern Time on Thursday, March 21, 2024. Interested parties can join the call through the link provided on the PRNewswire: https://s1.c-conf.com/diamondpass/10037482-7ehh8s.html. Further details, such as the replay availability and webcast archive, are offered, ensuring comprehensive investor communication.

Non-GAAP Financial Measures

The non-GAAP financial measures adopted by 111 serve as useful indicators of the underlying business trends that could be obscured by non-cash share-based compensation expenses. These adjustments enable a more meaningful comparison with the core operating performances of other entities and reflect the metrics utilized by the management in decision-making. The reconciliation of GAAP to non-GAAP measures is provided in detail at the end of the press release.

Cautious Outlook with Forward-Looking Statements

111's forward-looking statements reflect the company's expectations and predictions subject to potential risks and uncertainties. The forward-looking statements cover various areas, including regulatory compliance, market competitiveness, growth management, profit sustainability, and continued listing on the Nasdaq Global Market. These reflect events that involve inherent risks and uncertainties, which could cause actual outcomes to differ significantly.

About 111, Inc.

111, Inc. is a leading tech-enabled healthcare platform that has pioneered the digital transformation in healthcare delivery and pharmaceutical supply chain management. As an integrative healthcare service provider, 111 is unwaveringly dedicated to connecting patients to medicine and healthcare services via digital and offline channels, leveraging partnerships with key industry players, and innovating for a healthier future.

For more information about 111, please visit their website: http://ir.111.com.cn/.