[Company Overview and Performance Highlights](index=1&type=section&id=Company%20Overview%20%26%20Highlights) 111, Inc. reported strong Q4 and FY2020 financial results, highlighting significant revenue growth, improved operating efficiency, reduced non-GAAP net loss, and successful subsidiary financing [Fourth Quarter 2020 Key Highlights](index=1&type=section&id=Fourth%20Quarter%202020%20Key%20Highlights) In Q4 2020, net revenues grew 96.1% to RMB 2.64 billion, gross profit increased 143.7%, operating expenses as a percentage of net revenues decreased from 15.6% to 9.4%, and non-GAAP net loss narrowed to RMB 98.2 million Key Financial Data for Q4 2020 | Metric | Q4 2020 (RMB) | YoY Growth | % of Net Revenues (Q4 2020) | % of Net Revenues (Q4 2019) | | :------------------------------------------ | :------------ | :--------- | :-------------------------- | :-------------------------- | | Net revenues | 2,640,000,000 | 96.1% | | | | Gross Profit | 103,600,000 | 143.7% | | | | Operating expenses | 248,300,000 | 17.9% | 9.4% | 15.6% | | Non-GAAP net loss attributable to ordinary shareholders | (98,200,000) | (vs RMB143.7M loss) | 3.7% | 10.7% | [Fiscal Year 2020 Key Highlights](index=1&type=section&id=Fiscal%20Year%202020%20Key%20Highlights) For FY2020, net revenues increased 107.6% to RMB 8.2 billion, gross profit grew 121.5%, operating expenses as a percentage of net revenues decreased from 16.7% to 10.2%, non-GAAP net loss narrowed to RMB 380.8 million, and cash and equivalents significantly increased to RMB 1.62 billion Key Financial Data for Fiscal Year 2020 | Metric | FY 2020 (RMB) | YoY Growth | % of Net Revenues (FY 2020) | % of Net Revenues (FY 2019) | | :------------------------------------------ | :------------ | :--------- | :-------------------------- | :-------------------------- | | Net revenues | 8,200,000,000 | 107.6% | | | | Gross Profit | 365,800,000 | 121.5% | | | | Operating expenses | 839,100,000 | 27.4% | 10.2% | 16.7% | | Non-GAAP net loss attributable to ordinary shareholders | (380,800,000) | (vs RMB434.3M loss) | 4.6% | 11.0% | | Cash and cash equivalents, restricted cash and short-term investments | 1,620,000,000 | 132.2% | | | [Management Commentary and Strategic Outlook](index=2&type=section&id=Management%20Commentary%20%26%20Strategic%20Outlook) The CEO highlighted 2020 as a year of strong growth with continuous net revenue increase, significant reduction in non-GAAP net loss as a percentage of net revenues, and S2B2C model-driven expansion, with plans to strengthen this model, increase AI and technology investments, and expand services in 2021, following successful subsidiary financing - Net revenues increased by **96.1%** to **RMB 2.64 billion** in Q4 2020, with full-year net revenues reaching **RMB 8.2 billion**, more than double that of FY2019[5](index=5&type=chunk) - Non-GAAP net loss as a percentage of net revenues decreased from **22.3%** in the first quarter post-IPO to **3.7%** in the current quarter[5](index=5&type=chunk) - The S2B2C model drove growth, with over **330** direct global and domestic pharmaceutical company partners and the retail pharmacy network becoming China's largest virtual network by Q4 2020[5](index=5&type=chunk) - Fulfillment expenses as a percentage of net revenues decreased from **3.6%** in Q4 2019 to **2.6%** in Q4 2020, and from **3.3%** to **2.8%** for the full year[5](index=5&type=chunk) - Future focus includes strengthening the S2B2C model, enhancing AI and data processing capabilities, increasing technology investments, expanding services for retail pharmacies, and deploying more digital medical representatives[5](index=5&type=chunk) - Subsidiary Yao Fang Shanghai completed two rounds of financing totaling approximately **$142.8 million**, with the second round's pre-money valuation reaching **RMB 10 billion ($1.5 billion)**, and plans for a STAR Market listing in Shanghai[5](index=5&type=chunk) [Fourth Quarter 2020 Financial Performance](index=3&type=section&id=Fourth%20Quarter%202020%20Financial%20Performance) [Net Revenues](index=3&type=section&id=Q4%20Net%20Revenues) Q4 2020 net revenues increased by **96.1%** to **RMB 2.64 billion**, primarily driven by strong growth in the B2B business Q4 2020 Net Revenues | Metric | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | YoY Growth | | :----- | :------------ | :------------ | :--------- | | Net Revenues | 1,347,840 | 2,642,950 | 96.1% | [Segment Performance (B2B and B2C)](index=3&type=section&id=Q4%20Segment%20Performance) The B2B segment achieved strong growth of **108.7%** in Q4, with significant increases in both product and service revenues, while the B2C segment also grew, albeit at a slower pace Q4 2020 B2B Segment Revenues | Metric | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | YoY Growth | | :----- | :------------ | :------------ | :--------- | | **B2B Revenue** | | | | | Product | 1,184,424 | 2,462,875 | 107.9% | | Service | 1,543 | 11,966 | 675.5% | | Sub-Total | 1,185,967 | 2,474,841 | 108.7% | | Segment Profit | 17,036 | 74,169 | 335.4% | | Segment Profit % | 1.4% | 3.0% | | Q4 2020 B2C Segment Revenues | Metric | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | YoY Growth | | :----- | :------------ | :------------ | :--------- | | **B2C Revenue** | | | | | Product | 156,746 | 161,394 | 3.0% | | Service | 5,127 | 6,715 | 31.0% | | Sub-Total | 161,873 | 168,109 | 3.9% | | Segment Profit | 25,456 | 29,385 | 15.4% | | Segment Profit % | 15.7% | 17.5% | | [Operating Costs and Expenses](index=3&type=section&id=Q4%20Operating%20Costs%20and%20Expenses) Total operating costs and expenses increased by **83.8%** in Q4, yet fulfillment, selling and marketing, general and administrative, and technology expenses all decreased as a percentage of net revenues, indicating improved operating efficiency Q4 2020 Operating Costs and Expenses | Expense Category | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | YoY Change | % of Net Revenues (Q4 2019) | % of Net Revenues (Q4 2020) | | :--------------- | :------------ | :------------ | :--------- | :-------------------------- | :-------------------------- | | Cost of products sold | 1,305,348 | 2,539,396 | 94.5% | | | | Fulfillment expenses | 48,683 | 69,550 | 42.9% | 3.6% | 2.6% | | Selling and marketing expenses | 102,931 | 118,408 | 15.0% | 7.6% | 4.5% | | General and administrative expenses | 35,501 | 31,776 | -10.5% | 2.6% | 1.2% | | Technology expenses | 19,878 | 30,686 | 54.4% | 1.5% | 1.2% | [Profitability Metrics (GAAP and Non-GAAP)](index=4&type=section&id=Q4%20Profitability%20Metrics) Q4 operating and net losses (GAAP and non-GAAP) both narrowed year-over-year, with their percentages of net revenues significantly decreasing, demonstrating continuous improvement in the company's profitability Q4 2020 Profitability Metrics | Metric | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | YoY Change | % of Net Revenues (Q4 2019) | % of Net Revenues (Q4 2020) | | :------------------------------------------ | :------------ | :------------ | :--------- | :-------------------------- | :-------------------------- | | Loss from operations | (168,072) | (144,723) | -13.9% | 12.5% | 5.5% | | Non-GAAP loss from operations | (154,163) | (112,306) | -27.2% | 11.4% | 4.2% | | Net loss attributable to ordinary shareholders | (157,591) | (130,624) | -17.1% | 11.7% | 4.9% | | Non-GAAP net loss attributable to ordinary shareholders | (143,682) | (98,207) | -31.6% | 10.7% | 3.7% | | Loss per ADS | (1.92) | (1.58) | -17.6% | | | | Non-GAAP Loss per ADS | (1.75) | (1.19) | -32.0% | | | [Fiscal Year 2020 Financial Performance](index=5&type=section&id=Fiscal%20Year%202020%20Financial%20Performance) [Net Revenues](index=5&type=section&id=FY2020%20Net%20Revenues) FY2020 net revenues increased by **107.6%** to **RMB 8.2 billion**, primarily driven by significant expansion in the B2B business FY 2020 Net Revenues | Metric | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | YoY Growth | | :----- | :------------ | :------------ | :--------- | | Net Revenues | 3,952,053 | 8,203,157 | 107.6% | [Segment Performance (B2B and B2C)](index=5&type=section&id=FY2020%20Segment%20Performance) FY2020 B2B segment achieved strong growth of **127.8%**, with significant increases in both product and service revenues, while the B2C segment maintained stable growth FY 2020 B2B Segment Revenues | Metric | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | YoY Growth | | :----- | :------------ | :------------ | :--------- | | **B2B Revenue** | | | | | Product | 3,293,268 | 7,490,449 | 127.4% | | Service | 4,537 | 21,442 | 372.6% | | Sub-Total | 3,297,805 | 7,511,891 | 127.8% | | Segment Profit | 46,512 | 226,564 | 387.1% | | Segment Profit % | 1.4% | 3.0% | | FY 2020 B2C Segment Revenues | Metric | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | YoY Growth | | :----- | :------------ | :------------ | :--------- | | **B2C Revenue** | | | | | Product | 636,430 | 666,223 | 4.7% | | Service | 17,818 | 25,043 | 40.5% | | Sub-Total | 654,248 | 691,266 | 5.7% | | Segment Profit | 118,671 | 139,268 | 17.4% | | Segment Profit % | 18.1% | 20.1% | | [Operating Costs and Expenses](index=5&type=section&id=FY2020%20Operating%20Costs%20and%20Expenses) FY2020 total operating costs and expenses increased by **95.1%**, yet fulfillment, selling and marketing, general and administrative, and technology expenses all decreased as a percentage of net revenues, reflecting economies of scale and improved operating efficiency FY 2020 Operating Costs and Expenses | Expense Category | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | YoY Change | % of Net Revenues (FY 2019) | % of Net Revenues (FY 2020) | | :--------------- | :------------ | :------------ | :--------- | :-------------------------- | :-------------------------- | | Cost of products sold | 3,786,870 | 7,837,325 | 107.0% | | | | Fulfillment expenses | 128,996 | 226,930 | 75.9% | 3.3% | 2.8% | | Selling and marketing expenses | 340,562 | 399,610 | 17.3% | 8.6% | 4.9% | | General and administrative expenses | 123,501 | 128,226 | 3.8% | 3.1% | 1.6% | | Technology expenses | 61,902 | 92,080 | 48.8% | 1.6% | 1.1% | [Profitability Metrics (GAAP and Non-GAAP)](index=6&type=section&id=FY2020%20Profitability%20Metrics) FY2020 operating and net losses (GAAP and non-GAAP) both narrowed year-over-year, with their percentages of net revenues significantly decreasing, indicating continuous profitability improvement alongside high growth FY 2020 Profitability Metrics | Metric | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | YoY Change | % of Net Revenues (FY 2019) | % of Net Revenues (FY 2020) | | :------------------------------------------ | :------------ | :------------ | :--------- | :-------------------------- | :-------------------------- | | Loss from operations | (493,513) | (473,311) | -4.1% | 12.5% | 5.8% | | Non-GAAP loss from operations | (439,232) | (397,616) | -9.5% | 11.1% | 4.8% | | Net loss attributable to ordinary shareholders | (499,606) | (456,533) | -8.6% | 12.6% | 5.6% | | Non-GAAP net loss attributable to ordinary shareholders | (434,325) | (380,838) | -12.3% | 11.0% | 4.6% | | Loss per ADS | (6.10) | (5.54) | -9.2% | | | | Non-GAAP Loss per ADS | (5.30) | (4.62) | -12.8% | | | [Financial Position](index=6&type=section&id=FY2020%20Financial%20Position) As of December 31, 2020, the company's cash and cash equivalents, restricted cash, and short-term investments significantly increased, demonstrating substantially enhanced liquidity Cash and Equivalents at FY2020 End | Metric | As of Dec 31, 2019 (RMB) | As of Dec 31, 2020 (RMB) | YoY Change | | :----- | :----------------------- | :----------------------- | :--------- | | Cash and cash equivalents, restricted cash and short-term investments | 697,700,000 | 1,620,000,000 | 132.2% | [Business Outlook](index=6&type=section&id=Business%20Outlook) The company forecasts Q1 2021 net revenues between **RMB 2.53 billion** and **RMB 2.6 billion**, representing **61% to 65%** year-over-year growth, or **87% to 93%** excluding one-time COVID-19 related sales in Q1 2020 - Total net revenues for Q1 2021 are projected to be between **RMB 2.53 billion** and **RMB 2.6 billion**, representing year-over-year growth of approximately **61% to 65%**[21](index=21&type=chunk) - Excluding the impact of one-time COVID-19 related sales in Q1 2020, year-over-year growth is expected to be **87% to 93%**[21](index=21&type=chunk) [Conference Call Information](index=6&type=section&id=Conference%20Call%20Information) The company will host its Q4 2020 earnings conference call on March 18, 2021, providing registration links and replay information - The conference call will be held on March 18, 2021, at **7:30 AM U.S. Eastern Time** (**7:30 PM Beijing Time** on the same day)[21](index=21&type=chunk) - An online registration link is provided, requiring participants to pre-register to obtain dial-in numbers, a passcode, and a unique registrant ID[21](index=21&type=chunk) - A replay of the conference call will be available until **March 26, 2021**, with a webcast and archive accessible on the company's investor relations website[25](index=25&type=chunk) [Use of Non-GAAP Financial Measures](index=7&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP operating loss, non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS as supplementary metrics to better assess operating performance, excluding the impact of non-cash or non-recurring items like share-based compensation and impairment losses on long-term investments, to provide a more comparable measure of core performance - Non-GAAP operating loss is defined as loss from operations excluding share-based compensation expenses[26](index=26&type=chunk) - Non-GAAP net loss attributable to ordinary shareholders is defined as net loss attributable to ordinary shareholders excluding share-based compensation expenses and impairment loss of long-term investment[26](index=26&type=chunk) - The use of non-GAAP measures aims to identify underlying business trends, exclude the distorting impact of certain expenses (such as share-based compensation and impairment loss of long-term investment), and provide a more comparable measure of core operating performance with peer companies[27](index=27&type=chunk) - Non-GAAP financial measures are not defined by U.S. GAAP, should not be considered in isolation or as a substitute for GAAP financial information, and may differ from non-GAAP information used by other companies[28](index=28&type=chunk) [Exchange Rate Information Statement](index=8&type=section&id=Exchange%20Rate%20Information%20Statement) RMB amounts in this announcement converted to USD use the exchange rate of **RMB 6.5250 to $1.00**, as published in the H.10 statistical release of the U.S. Federal Reserve System on December 31, 2020 - All RMB to USD conversions use the exchange rate of **RMB 6.5250 to $1.00**, as listed in the H.10 statistical release of the U.S. Federal Reserve System on December 31, 2020[31](index=31&type=chunk) [Safe Harbor Statement](index=8&type=section&id=Safe%20Harbor%20Statement) This press release contains forward-looking statements involving known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially, with no obligation for the company to update them unless required by applicable law - This press release contains forward-looking statements, involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied[32](index=32&type=chunk) - Forward-looking statements are based on management's current expectations and market operating conditions, including business outlook and management quotations[32](index=32&type=chunk) - The company undertakes no obligation to update any forward-looking statements, except as required by applicable law[32](index=32&type=chunk) [About 111, Inc.](index=8&type=section&id=About%20111%2C%20Inc.) 111, Inc. is a leading technology-enabled healthcare platform in China, digitally connecting patients with medicines and healthcare services through online retail pharmacies, offline virtual pharmacy networks, internet hospitals, and online wholesale pharmacies, also offering an omnichannel drug commercialization platform for strategic partners - 111, Inc. is a leading technology-enabled healthcare platform company dedicated to digitally connecting patients with medicines and healthcare services in China[33](index=33&type=chunk) - Key services include: online retail pharmacy (1 Pharmacy), an offline virtual pharmacy network, internet hospital (1 Clinic) offering online consultations, e-prescriptions, and patient management, and online wholesale pharmacy (1 Medicine Marketplace) providing one-stop drug procurement for pharmacies[33](index=33&type=chunk) - The company also provides an omnichannel drug commercialization platform for strategic partners, including digital marketing, patient education, data analytics, and price monitoring services[33](index=33&type=chunk) [Financial Statements](index=10&type=section&id=Financial%20Statements) [Unaudited Condensed Consolidated Balance Sheets](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2020, total assets increased to **RMB 3.026 billion**, with cash and cash equivalents, restricted cash, and short-term investments totaling **RMB 1.62 billion**, and current liabilities also increasing proportionally Summary of Unaudited Condensed Consolidated Balance Sheets | Metric | As of Dec 31, 2019 (in thousands of RMB) | As of Dec 31, 2020 (in thousands of RMB) | | :------------------------------------------ | :----------------------- | :----------------------- | | Total Assets | 1,610,293 | 3,026,489 | | Cash and cash equivalents | 581,281 | 1,189,620 | | Restricted cash | 116,441 | 128,914 | | Short-term investments | — | 300,167 | | Total Current liabilities | 773,423 | 1,629,720 | | Total Liabilities | 836,370 | 1,695,844 | | Total equity | 773,923 | 406,400 | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) FY2020 net revenues doubled, operating costs and expenses significantly increased, yet operating and net losses narrowed year-over-year, leading to a reduction in comprehensive loss Summary of Unaudited Condensed Consolidated Statements of Comprehensive Loss | Metric | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | | :------------------------------------------ | :------------ | :------------ | :------------ | :------------ | | Net revenues | 1,347,840 | 2,642,950 | 3,952,053 | 8,203,157 | | Total operating costs and expenses | (1,515,912) | (2,786,660) | (4,445,566) | (8,675,455) | | Loss from operations | (168,072) | (144,723) | (493,513) | (473,311) | | Net loss attributable to ordinary shareholders | (157,591) | (130,624) | (499,606) | (456,533) | | Comprehensive loss | (169,572) | (120,759) | (490,238) | (441,990) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) FY2020 saw a significant reduction in cash outflow from operating activities and a substantial increase in cash inflow from financing activities, resulting in a net increase in cash and cash equivalents and restricted cash, and a significant boost in period-end cash reserves Summary of Unaudited Condensed Consolidated Statements of Cash Flows | Metric | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | | :---------------------------------------------------------------- | :------------ | :------------ | :------------ | :------------ | | Net cash used in operating activities | (71,544) | (156,083) | (512,382) | (116,777) | | Net cash provided by/(used in) investing activities | 109,817 | (216,323) | 237,675 | (324,669) | | Net cash provided by financing activities | 9,052 | 573,663 | 108,987 | 1,070,408 | | Net increase/(decrease) in cash and cash equivalents, and restricted cash | 40,989 | 205,593 | (156,018) | 620,812 | | Cash and cash equivalents, and restricted cash at the end of the period | 697,722 | 1,318,534 | 697,722 | 1,318,534 | [Reconciliation of GAAP and Non-GAAP Results](index=14&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Results) The reconciliation table details the adjustments from GAAP operating loss, net loss, and loss per ADS to their non-GAAP counterparts, primarily by adding back share-based compensation expenses and impairment losses on long-term investments Reconciliation of GAAP and Non-GAAP Results | Metric | Q4 2019 (in thousands of RMB) | Q4 2020 (in thousands of RMB) | FY 2019 (in thousands of RMB) | FY 2020 (in thousands of RMB) | | :------------------------------------------------------------------------------------------------ | :------------ | :------------ | :------------ | :------------ | | Loss from operations (GAAP) | (168,072) | (144,723) | (493,513) | (473,311) | | Add: Share-based compensation expenses | 13,909 | 32,417 | 54,281 | 75,695 | | Non-GAAP loss from operations | (154,163) | (112,306) | (439,232) | (397,616) | | Net Loss attributable to ordinary shareholders (GAAP) | (157,591) | (130,624) | (499,606) | (456,533) | | Add: Share-based compensation expenses, net of tax | 13,909 | 32,417 | 54,281 | 75,695 | | Add: Impairment loss of long-term investment | — | — | 11,000 | — | | Non-GAAP net Loss attributable to ordinary shareholders | (143,682) | (98,207) | (434,325) | (380,838) | | Loss per ADS (GAAP) | (1.92) | (1.58) | (6.10) | (5.54) | | Add: Share-based compensation expenses and impairment loss of long-term investment per ADS, net of tax | 0.17 | 0.39 | 0.80 | 0.92 | | Non-GAAP Loss per ADS | (1.75) | (1.19) | (5.30) | (4.62) |

111, Inc. (NASDAQ:YI) Q3 2020 Results Conference Call November 19, 2020 7:30 AM ET Company Participants Monica Mu - Director, Investor Relations Dr. Gang Yu - Co-Founder and Executive Chairman Junling Liu - Co-Founder, Chairman and CEO Luke Chen - CFO Harvey Wang - Co-COO Barry Zhu - Co-COO Monica Mu - Investor Relations Director Alex Liu - Finance Director Conference Call Participants Sherry Yin - JP Morgan Bingyu Chen - Citigroup Xipeng Feng - China International Capital Corporation Limited Horace Cheng - ...

111, Inc. (NASDAQ:YI) Q2 2020 Earnings Conference Call August 20, 2020 7:30 AM ET Company Participants Monica Mu - Director, Investor Relations Junling Liu - Co-Founder, Chairman and Chief Executive Officer Luke Chen - Chief Financial Officer Haihui Wang - Co-Chief Operating Officer Conference Call Participants Bingyu Chen - Citi Sherry Yin - JPMorgan Xipeng Feng - CICC Rachel Yang - HSBC Operator Hello, ladies and gentlemen and thank you for standing by for 111 Incorporated Second Quarter 2020 Conference C ...

111, Inc. (NASDAQ:YI) Q1 2020 Results Earnings Conference Call May 21, 2020 7:30 AM ET Company Participants Monica Mu - Investor Relations Director Junling Liu - Co-Founder, Chairman, Chief Executive Officer Luke Chen - Chief Financial Officer Gang Yu - Co-Founder and Executive Chairman Haihui Wang - Co-Chief Operating Officer Conference Call Participants Bingyu Chen - Citi Sherry Yin - JPMorgan Rachel Yang - HSBC Chris Lui - Jefferies Jonas Xu - CFT Capital Peter Halesworth - Heng Ren Operator Hello, ladie ...

PART I [Item 3. Key Information](index=6&type=section&id=Item%203.%20Key%20Information) This section presents the company's selected financial data, highlights key risks, and addresses other mandatory disclosures [Selected Financial Data](index=6&type=section&id=A.%20Selected%20Financial%20Data) The company's net revenues grew significantly from RMB 1.79 billion in 2018 to RMB 3.95 billion in 2019, a 121% increase, while net losses widened to RMB 501.8 million (US$72.1 million) in 2019 Selected Consolidated Statements of Comprehensive Loss Data (in thousands RMB, except for US$) | Indicator | 2017 | 2018 | 2019 | 2019 (US$) | | :--- | :--- | :--- | :--- | :--- | | **Net revenues** | 959,486 | 1,785,970 | 3,952,053 | 567,677 | | **Loss from operations** | (254,022) | (400,375) | (493,513) | (70,889) | | **Net loss** | (249,327) | (382,041) | (501,827) | (72,083) | | **Net loss attributable to ordinary shareholders** | (248,580) | (380,091) | (499,606) | (71,764) | Selected Consolidated Balance Sheet Data (in thousands RMB, except for US$) | Indicator | As of Dec 31, 2018 | As of Dec 31, 2019 | As of Dec 31, 2019 (US$) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 853,740 | 581,281 | 83,496 | | Inventories | 210,836 | 486,271 | 69,848 | | **Total assets** | 1,546,418 | 1,610,293 | 231,305 | | **Total liabilities** | 322,654 | 836,370 | 120,138 | | **Total equity** | 1,223,764 | 773,923 | 111,167 | - The financial statements are prepared in accordance with U.S. GAAP, with the 2019 fiscal year conversion to U.S. dollars based on an exchange rate of RMB 6.9618 to US$1.00 as of December 31, 2019[16](index=16&type=chunk)[22](index=22&type=chunk) [Risk Factors](index=8&type=section&id=D.%20Risk%20Factors) The company identifies significant risks across four main categories: business and industry, corporate structure, doing business in China, and its ADSs - **Business & Industry Risks:** The company is subject to extensive and evolving regulations in the PRC's internet, healthcare, and pharmaceutical industries, facing intense competition and a history of operating losses, with a net loss of **RMB 501.8 million in 2019**[24](index=24&type=chunk)[30](index=30&type=chunk)[37](index=37&type=chunk) - **Corporate Structure Risks:** Operating through a Variable Interest Entity (VIE) structure to comply with foreign investment restrictions, the company relies on contractual arrangements that face substantial uncertainties under PRC law, risking severe penalties if deemed non-compliant[155](index=155&type=chunk)[159](index=159&type=chunk)[162](index=162&type=chunk) - **China-Specific Risks:** The business is subject to PRC government controls on currency conversion, and the PCAOB's inability to inspect the company's PRC-based auditor poses a significant risk of delisting[187](index=187&type=chunk)[201](index=201&type=chunk)[235](index=235&type=chunk) - **ADS Risks:** The company's dual-class share structure grants founders approximately **92.1% of total voting power** through Class B shares (15 votes per share), limiting the influence of public shareholders[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) [Item 4. Information on the Company](index=47&type=section&id=Item%204.%20Information%20on%20the%20Company) This section provides a comprehensive overview of the company's history, business model, organizational structure, and properties [History and Development of the Company](index=47&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company commenced operations in 2012, established its offshore holding company in the Cayman Islands in 2013, and subsequently created its VIE structure to operate in China - The company was listed on Nasdaq on September 12, 2018, raising net proceeds of approximately **US$101.2 million** from its initial public offering[290](index=290&type=chunk) - The company's operations began in 2012 through Guangdong Yihao Pharmaceutical Chain Co., Ltd., with the current holding company, 111, Inc., incorporated in the Cayman Islands in May 2013, and the VIE structure established in September 2013[289](index=289&type=chunk) [Business Overview](index=47&type=section&id=B.%20Business%20Overview) The company operates an integrated 'New Retail' platform connecting various participants in China's healthcare ecosystem, with its B2B segment serving over 235,000 pharmacies as a key growth driver - The company's 'New Retail' platform integrates its online retail pharmacy (1 Drugstore) and offline pharmacy network, leveraging a smart supply chain and cloud-based solutions[294](index=294&type=chunk) - The business model serves multiple participants: consumers, pharmacies, pharmaceutical companies, medical professionals, and insurance companies[295](index=295&type=chunk) - As of December 31, 2019, the company's B2B platform, 1 Drug Mall, served over **235,000 offline pharmacies** across 31 provinces in China[316](index=316&type=chunk) - The company is subject to complex PRC regulations, including restrictions on foreign investment in value-added telecommunications and medical institutions, requiring the use of a VIE structure[392](index=392&type=chunk) [Organizational Structure](index=76&type=section&id=C.%20Organizational%20Structure) 111, Inc. is a Cayman Islands holding company that controls its PRC operations through a series of contractual arrangements with its Variable Interest Entities (VIEs) - The company uses a VIE structure to comply with PRC laws restricting foreign ownership in internet and telecommunications businesses[478](index=478&type=chunk) - Key contractual agreements that provide control and economic benefits include: Exclusive Support Services Agreements, Proxy Agreements, Equity Pledge Agreements, and Exclusive Option Agreements[481](index=481&type=chunk)[482](index=482&type=chunk)[483](index=483&type=chunk)[486](index=486&type=chunk) - PRC legal counsel opines that the VIE structure is currently valid and enforceable, but acknowledges substantial uncertainties regarding the interpretation of future PRC laws, such as the Foreign Investment Law[487](index=487&type=chunk)[488](index=488&type=chunk) [Operating and Financial Review and Prospects](index=79&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes the company's financial performance and condition, highlighting significant revenue growth driven by the B2B segment despite persistent net losses [Operating Results](index=79&type=section&id=A.%20Operating%20Results) The company's net revenues increased by 121.3% to RMB 3.95 billion in 2019, primarily driven by a 243.2% surge in the B2B segment, though net loss widened to RMB 501.8 million Net Revenues by Segment (in thousands RMB) | Segment | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | | Product revenues (B2C) | 862,327 | 847,476 | 763,254 | | Product revenues (B2B) | 86,890 | 922,751 | 3,166,444 | | Service revenues | 10,269 | 15,743 | 22,355 | | **Total net revenues** | **959,486** | **1,785,970** | **3,952,053** | - Product revenue from the B2B segment increased by **243.2% in 2019**, reaching **RMB 3.17 billion** and accounting for **80.1% of total product revenues**[504](index=504&type=chunk)[525](index=525&type=chunk) - Operating expenses as a percentage of net revenue decreased across key categories in 2019 compared to 2018: Fulfillment expenses: **3.3%** (down from 4.1%), Selling and marketing expenses: **8.6%** (down from 14.6%), General and administrative expenses: **3.1%** (down from 5.5%), Technology expenses: **1.6%** (down from 4.0%)[531](index=531&type=chunk)[532](index=532&type=chunk)[533](index=533&type=chunk)[534](index=534&type=chunk) Consolidated Results of Operations Summary (in thousands RMB) | Item | 2018 | 2019 | | :--- | :--- | :--- | | Total net revenues | 1,785,970 | 3,952,053 | | Total operating costs and expenses | (2,186,345) | (4,445,566) | | Loss from operations | (400,375) | (493,513) | | Net loss | (382,041) | (501,827) | [Liquidity and Capital Resources](index=91&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's operations have been financed through private placements and its 2018 IPO, with RMB 581.3 million in cash and cash equivalents as of December 31, 2019, and access to credit facilities Summary of Cash Flows (in thousands RMB) | Activity | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (204,372) | (343,018) | (512,382) | | Net cash provided by (used in) investing activities | (36,125) | 44,454 | 237,675 | | Net cash provided by financing activities | 49,500 | 972,697 | 108,987 | - As of December 31, 2019, the company had **RMB 581.3 million (US$83.5 million)** in cash and cash equivalents[578](index=578&type=chunk) - The company has a revolving credit facility of up to **RMB 500 million** expiring in December 2020 and another for **RMB 100 million** expiring in September 2020, with **RMB 95.1 million** outstanding as of December 31, 2019[579](index=579&type=chunk)[961](index=961&type=chunk)[962](index=962&type=chunk)[963](index=963&type=chunk) [Item 6. Directors, Senior Management and Employees](index=94&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) This section details the company's leadership, compensation, board structure, and employee base, highlighting the founders' significant voting control [Directors and Executive Officers](index=94&type=section&id=A.%20Directors%20and%20Executive%20Officers) The company is led by co-founders Dr. Gang Yu and Mr. Junling Liu, who serve as Co-Chairmen, bringing extensive e-commerce experience from their previous venture, YHD.com - Dr. Gang Yu (Co-founder, Co-Chairman) previously served as VP at Dell and Amazon and co-founded e-commerce company YHD.com[602](index=602&type=chunk) - Mr. Junling Liu (Co-founder, Co-Chairman, CEO) also co-founded YHD.com and previously served as a global VP at Dell[603](index=603&type=chunk) [Compensation](index=96&type=section&id=B.%20Compensation) For the fiscal year 2019, the aggregate cash compensation and benefits paid to directors and executive officers was approximately RMB 8.8 million, with the 2018 Share Incentive Plan being the current active plan for new grants - Total cash compensation for directors and executive officers in 2019 was approximately **RMB 8.8 million (US$1.3 million)**[610](index=610&type=chunk) - The 2018 Share Incentive Plan is the primary vehicle for equity awards, allowing for the issuance of options, restricted shares, and restricted share units, and includes an annual increase in the share pool[620](index=620&type=chunk) [Employees](index=102&type=section&id=D.%20Employees) As of December 31, 2019, the company had a total of 1,932 employees, with the largest functional group being the wholesale pharmacy business, accounting for 60.8% of the total workforce Employees by Function as of December 31, 2019 | Function | Number of Employees | % of Total | | :--- | :--- | :--- | | Wholesale pharmacy business | 1,174 | 60.8% | | Retail pharmacy business | 245 | 12.7% | | Supply chain | 73 | 3.8% | | Procurement | 142 | 7.3% | | Research and development and IT | 200 | 10.4% | | General and administrative | 98 | 5.0% | | **Total** | **1,932** | **100.0%** | [Share Ownership](index=102&type=section&id=E.%20Share%20Ownership) As of March 31, 2020, the company's founders, Dr. Gang Yu and Mr. Junling Liu, collectively control approximately 92.2% of the aggregate voting power due to the dual-class share structure - Co-founders Dr. Gang Yu and Mr. Junling Liu collectively control approximately **92.2%** of the company's aggregate voting power as of March 31, 2020[250](index=250&type=chunk)[654](index=654&type=chunk) - The dual-class structure grants holders of Class B ordinary shares fifteen votes per share, while Class A ordinary shares receive one vote per share[656](index=656&type=chunk)[665](index=665&type=chunk) [Item 7. Major Shareholders and Related Party Transactions](index=105&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section refers to Item 6.E for details on major shareholders and highlights that key related party transactions are centered around contractual arrangements with the company's VIEs - The most significant related party transactions are the contractual arrangements with the company's VIEs and their shareholders, which are necessary to operate in restricted industries in the PRC[669](index=669&type=chunk) - Pursuant to a shareholders' agreement, certain shareholders retain registration rights, including demand, piggyback, and Form F-3 registration rights, allowing them to sell their shares in public offerings[671](index=671&type=chunk)[672](index=672&type=chunk)[673](index=673&type=chunk) [Item 10. Additional Information](index=107&type=section&id=Item%2010.%20Additional%20Information) This section covers the company's corporate governance framework under Cayman Islands law, material contracts, exchange controls, and tax considerations, including the dual-class share structure and potential PFIC status - The company's ordinary shares are divided into Class A (1 vote per share) and Class B (15 votes per share), with Class B shares convertible to Class A shares at the holder's option and automatically upon transfer to a non-founder affiliate[689](index=689&type=chunk)[690](index=690&type=chunk)[691](index=691&type=chunk) - The company is an exempted company under Cayman Islands law, which has significant differences from U.S. corporate law regarding mergers, shareholder suits, and director's fiduciary duties[720](index=720&type=chunk)[723](index=723&type=chunk) - The company does not believe it was a Passive Foreign Investment Company (PFIC) for the 2019 taxable year but acknowledges that its PFIC status is a factual determination made annually and is subject to change based on income, asset composition, and market price of its ADSs[765](index=765&type=chunk)[767](index=767&type=chunk) [Item 11. Quantitative and Qualitative Disclosures about Market Risk](index=124&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate risk and foreign exchange risk, with the latter being more significant due to all revenues being in Renminbi (RMB) while ADSs are traded in U.S. dollars - The company's primary market risk exposure is foreign exchange risk, as revenues are in RMB and ADSs are traded in USD[787](index=787&type=chunk) - As of December 31, 2019, a **10% depreciation of the RMB** against the USD would result in a decrease of **US$4.4 million** in the value of the company's RMB-denominated cash and cash equivalents[791](index=791&type=chunk) PART II [Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds](index=126&type=section&id=Item%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Security%20Holders%20and%20Use%20of%20Proceeds) This section confirms no material modifications to security holder rights and details the use of proceeds from the company's 2018 initial public offering - The company raised approximately **US$101.2 million** in net proceeds from its September 2018 IPO[798](index=798&type=chunk) - As of the report date, **US$75.9 million** of the IPO proceeds have been used for general corporate purposes[798](index=798&type=chunk) [Item 15. Controls and Procedures](index=127&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2019, with a previously identified material weakness remediated - Management concluded that disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2019[801](index=801&type=chunk)[802](index=802&type=chunk) - A material weakness identified in 2018 concerning a lack of U.S. GAAP accounting expertise was remediated by hiring a member of the AICPA and establishing a more sophisticated accounting team[805](index=805&type=chunk)[806](index=806&type=chunk) [Item 16. Other Information](index=128&type=section&id=Item%2016.%20Other%20Information) This section covers various governance and compliance topics, including the audit committee financial expert, code of ethics, principal accountant fees, a share repurchase program, and the company's use of home country practices for Nasdaq exemptions Principal Accountant Fees (in thousands US$) | Fee Type | 2018 | 2019 | | :--- | :--- | :--- | | Audit fees and audit-related fees | 1,671 | 935 | - On August 15, 2019, the board authorized a share repurchase program of up to **US$10 million**, with approximately **US$3.3 million** remaining available as of April 16, 2020[814](index=814&type=chunk) - As a foreign private issuer, the company follows Cayman Islands home country practices in lieu of certain Nasdaq rules, including the requirements for a majority-independent board and a nominations committee comprised solely of independent directors[816](index=816&type=chunk) PART III [Item 18. Financial Statements](index=129&type=section&id=Item%2018.%20Financial%20Statements) This section contains the company's audited consolidated financial statements for the fiscal years ended December 31, 2017, 2018, and 2019, prepared in accordance with U.S. GAAP - The financial statements were audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, which issued an unqualified opinion[824](index=824&type=chunk)[829](index=829&type=chunk) - The company adopted the new lease accounting standard (ASC 842) on January 1, 2019, resulting in the recognition of right-of-use assets of **RMB 87.9 million** and lease liabilities of **RMB 88.1 million** on the balance sheet as of December 31, 2019[939](index=939&type=chunk)[943](index=943&type=chunk)[957](index=957&type=chunk) - The company's operations are organized into two reportable segments: B2C and B2B, with the B2C segment generating a profit of **RMB 108.5 million** and the B2B segment generating a profit of **RMB 34.4 million** in 2019, while unallocated corporate expenses led to the overall net loss[929](index=929&type=chunk)[930](index=930&type=chunk) - As of December 31, 2019, the company had tax loss carryforwards of **RMB 1,462 million**, expiring between 2020 and 2024 if not utilized, against which a full valuation allowance has been provided[995](index=995&type=chunk)[997](index=997&type=chunk)[998](index=998&type=chunk)

111, Inc. (NASDAQ:YI) Q4 2019 Earnings Conference Call March 12, 2020 7:30 AM ET Company Participants Monica Mu - Director of Investor Relations Junling Liu - Co-Founder, Chairman, and Chief Executive Officer Luke Chen - Chief Financial Officer Barry Zhu - Co-Chief Operating Officer Conference Call Participants Sherry Yin - J.P. Morgan Xipeng Feng - CICC Bingyu Chen - Citigroup Inc. Dexter Xu - Ambrosia Capital Partners Operator Ladies and gentlemen, thank you for standing by, and welcome to the 111, Inc. F ...

About: 111, Inc. (NASDAQ:YI) Q3 2019 Results Earnings Conference Call November 14, 2019 7:30 AM ET Company Participants Dr. Gang Yu - Co-Founder and Executive Chairman Junling Liu - Co-Founder, Chairman, and CEO Luke Chen - Chief Financial Officer Harvey Wang - Co-COO Barry Zhu - Co-COO Monica Mu - Investor Relations Alex Liu - Finance Director Conference Call Participants Sherry Yin - JP Morgan Zhiqiang Xing - CICC Tom Hamilton - Park Hill Capital Operator Ladies and gentlemen, thank you for standing by an ...