Financial Data and Key Metrics Changes - In 2024, the company achieved its first-ever operational profit with income from operations reaching RMB2.1 million, a significant turnaround from an operational loss of RMB350.1 million in 2023 [25][67] - Total net revenues for 2024 were RMB14.4 billion, reflecting a 3.7% decrease year-over-year, while gross segment profit was RMB829.2 million, down 2.3% [66] - Operating expenses decreased by 31% year-over-year to RMB827.1 million, representing 5.7% of net revenues, down from 8% in 2023 [66][27] - The company generated positive operating cash flow of RMB263 million for the first time [26][68] Business Line Data and Key Metrics Changes - Fulfillment expenses accounted for 2.6% of net revenues in 2024, slightly down from 2.7% in the previous year [66] - Sales and marketing expenses as a percentage of net revenues reduced to 2.2% from 3% in 2023 [66] - General and administrative expenses accounted for 0.5% of net revenues, down from 1.5% a year earlier [66] Market Data and Key Metrics Changes - China's per capita healthcare expenditure grew by only 3.6% in 2024, a sharp decline from 16% growth in the prior year [11] - Total retail pharmacy sales in China dropped by 2.2% in 2024, indicating increased competition in a stagnant market [13] - The company noted that economic uncertainties in China have led to cautious consumer behavior, impacting retail sales growth in the healthcare sector [10] Company Strategy and Development Direction - The company is focused on enhancing operational efficiency and leveraging technology, particularly AI, to drive growth and maintain competitiveness [7][56] - The ongoing anti-corruption campaign in the healthcare sector is expected to shift drug sales and prescriptions to retail pharmacies, presenting a significant growth opportunity [18] - The company plans to expand its fulfillment center network and enhance supply chain capabilities to improve service delivery and reduce costs [44][52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic pressures and healthcare reforms but emphasized the company's resilience and operational profitability [7][10] - The company remains optimistic about long-term healthcare demand in China, driven by an aging population and ongoing reforms [22] - Management highlighted the importance of digital transformation and AI in navigating the current market challenges and enhancing operational efficiency [17][56] Other Important Information - The company has made significant advancements in technology, including the integration of AI and digital solutions to optimize operations and enhance customer engagement [31][58] - The company received several industry recognitions, including being named the most valuable healthcare and pharmaceutical company for investment [46] Q&A Session Summary Question: How has the unfavorable macroeconomic environment affected the company's performance? - Management highlighted that despite the tough environment, the company achieved its first-ever operating profits and positive cash flow, significantly reducing operating expenditures [74][75] Question: What are the main factors driving gross margin improvement? - Management explained that gross margin improvement was achieved by offering both low and high-margin products, outsourcing low-margin products, and optimizing inventory management [79][81] Question: How were operating expenses reduced significantly? - Management attributed the reduction in operating expenses to staffing optimization, detailed expense management, and significant investments in digital capabilities [84][88] Question: What are the key drivers behind the company's first annual operating profit and positive cash flow? - Management noted that improved operational efficiency, reduced operating expenses, and effective working capital management were key drivers of profitability [90][92] Question: Are there plans for further expense control in 2025? - Management confirmed that continuous optimization using AI and internet technologies will be a focus for future expense control [101][102] Question: Can you elaborate on technology advancements, especially in AI applications? - Management discussed various AI initiatives aimed at improving efficiency, customer engagement, and operational performance, emphasizing AI's role in future growth [108][120] Question: What are the expectations for the market in 2025? - Management indicated that ongoing reforms in the pharmaceutical sector will enhance efficiency and reduce costs, and the company plans to leverage its technological advantages to create greater value [134][135]

111, Inc. (NASDAQ: YI) Reshaping the Value Chain of Healthcare Industry with Digital Technology Fourth Quarter and Fiscal Year 2024 Earnings Call March 20, 2025 1 DISCLAIMER 2 Forward-looking statements involve inherent risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to the Company's ability comply with extensive and evolving regulatory ...

Financial Data and Key Metrics Changes - In Q4 2024, total net revenues were RMB 3.8 billion, a decrease of 6.3% year over year, while gross segment profit was RMB 202.5 million, down 5.5% [40] - Total operating expenses for Q4 decreased by 50.1% to RMB 0.9 billion, representing 5.5% of net revenues, down from 10.2% in the previous year [40] - For the full year 2024, net revenues were RMB 14.4 billion, a decrease of 3.7%, and gross segment profit was RMB 829.2 million, down 2.3% [43] Business Line Data and Key Metrics Changes - Selling expenses as a percentage of net revenues decreased to 2% in Q4 from 4.2% a year ago, while general and administrative expenses accounted for 0.5%, down from 2.4% [41] - For the full year, sales and marketing expenses reduced to 2.2% of net revenues from 3% in 2023, and technology expenses accounted for 0.5%, down from 0.8% [44] Market Data and Key Metrics Changes - China's per capita healthcare expenditure grew by only 3.6% in 2024, a significant decline from 16% growth in the previous year, indicating a slowdown in the healthcare sector [8] - Total retail pharmacy sales in China dropped by 2.2% in 2024, reflecting the challenges faced by the industry [9] Company Strategy and Development Direction - The company aims to leverage digital transformation and AI-driven solutions to enhance operational efficiency and meet future demand [12][14] - The ongoing anti-corruption campaign in the healthcare sector is expected to drive drug sales and prescriptions to retail pharmacies, presenting a significant growth opportunity [12][13] - The company plans to expand its fulfillment center network and enhance supply chain infrastructure to improve logistics efficiency and reduce costs [28][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant challenges posed by macroeconomic pressures and healthcare reforms but highlighted the achievement of operational profitability and positive cash flow for the first time [6][49] - The company remains optimistic about the long-term growth potential of China's healthcare market, driven by an aging population and ongoing reforms [14][32] Other Important Information - The company achieved its first-ever annual positive operating cash flow of RMB 263 million in 2024 [17] - The company has expanded its patent portfolio to 33, reflecting its commitment to technological advancements [30] Q&A Session Summary Question: How did the unfavorable macroeconomic environment affect the company's performance? - Management noted that despite the tough environment, the company achieved its first-ever operating profits and positive cash flow, significantly reduced operating expenditures, and improved the bottom line [49][50] Question: What are the main factors driving gross margin improvement? - Management explained that gross margin improved while offering competitive prices by outsourcing low-margin products and focusing on higher-margin products through strategic goals and decentralized inventory management [52][53] Question: How was the significant decrease in operating expenses achieved? - Management attributed the decrease to staffing optimization, detailed expense management, and significant investments in digital capabilities that allow for real-time adjustments [55][56] Question: What are the key drivers behind the company's first annual operating profit and positive cash flow? - Management highlighted improved operational efficiency, reduced operating expenses, and effective working capital management as key drivers of profitability [59][60] Question: Are there plans for further expense control in 2025? - Management confirmed that cost optimization will continue, leveraging AI and technology to enhance efficiency [65][66] Question: What are the expectations for the market in 2025? - Management anticipates continued regulatory reforms aimed at enhancing efficiency and reducing costs, which will benefit the company [90][91]

Core Viewpoint - 111, Inc. achieved its first-ever annual operational profitability and positive operating cash flow in 2024, despite facing challenges from the macroeconomic environment and healthcare reforms [4][7][20]. Fourth Quarter 2024 Highlights - Net revenues for Q4 2024 were RMB3.8 billion (US$527.1 million), a decrease of 6.3% from RMB4.1 billion in Q4 2023 [5][7]. - Total operating expenses in Q4 2024 were RMB209.8 million (US$28.7 million), a significant improvement of 50.1% compared to RMB420.8 million in Q4 2023 [7][9]. - Loss from operations improved to RMB7.3 million (US$1.0 million) in Q4 2024, a 96.5% improvement from RMB206.5 million in the same quarter of 2023 [10][12]. - Non-GAAP loss from operations was RMB2.3 million (US$0.3 million), improving by 95.8% from RMB55.2 million in Q4 2023 [11][13]. Fiscal Year 2024 Highlights - Total net revenues for the fiscal year 2024 were RMB14.4 billion (US$2.0 billion), down 3.7% from RMB14.9 billion in 2023 [17][21]. - Income from operations for the full year was RMB2.1 million (US$0.3 million), a turnaround from an operating loss of RMB350.1 million in 2023 [20][21]. - Non-GAAP income from operations for 2024 was RMB22.3 million (US$3.0 million), compared to a non-GAAP loss of RMB123.9 million in 2023 [21][22]. - Net cash from operating activities reached RMB263.0 million (US$36.0 million), marking the first-ever positive operating cash flow for the year [7][21]. Operational Efficiency - The company focused on operational efficiency, with total operating expenses as a percentage of revenues decreasing by 230 basis points to 5.7% for the full year 2024 [4][7]. - In Q4 2024, operating expenses accounted for 5.5% of revenues, down 470 basis points year over year [4][7]. - The company streamlined logistics and reduced delivery times through its Kunpeng Network, which operates 28 transportation routes across five major geographic hubs [4][7]. Future Outlook - The company remains optimistic about long-term growth opportunities driven by the digitalization of healthcare and the rising healthcare needs of China's aging population [4][7]. - Continued investments in AI and digital technologies are planned to enhance operational efficiency and customer engagement [4][7].

Core Viewpoint - 111, Inc. is set to participate in a fireside chat to discuss its Q4 2024 earnings, priorities for 2025, and macroenvironment overview [1][2]. Company Overview - 111, Inc. is a leading tech-enabled healthcare platform in China, focused on reshaping the healthcare value chain by digitally empowering both upstream and downstream sectors [4]. - The company provides consumers with access to pharmaceutical products and healthcare services through its online retail pharmacy, 1 Pharmacy, and an offline virtual pharmacy network [4]. - Online healthcare services are offered through its internet hospital, 1 Clinic, which includes online consultations, electronic prescriptions, and patient management [4]. - 111 operates the largest virtual pharmacy network in China, enhancing service delivery for offline pharmacies with cloud-based solutions [4]. - The company also provides an omni-channel drug commercialization platform, offering services like digital marketing, patient education, data analytics, and pricing monitoring to strategic partners [4]. Upcoming Events - The fireside chat will take place on March 26, 2025, at 11:00 a.m. ET, featuring Mr. Junling Liu, the Co-Founder, Chairman, and CEO of 111 [2]. - The Q4 2024 earnings report is scheduled for March 20, 2024 [2]. - Registration for the event is available through a provided link, and a replay will be accessible on the company's investor relations website [2].

Core Viewpoint - 111, Inc. is set to report its unaudited financial results for the fourth quarter and fiscal year 2024 on March 20, 2025, indicating a focus on transparency and communication with investors [1]. Company Overview - 111, Inc. is a leading tech-enabled healthcare platform in China, aiming to reshape the healthcare value chain by digitally empowering both upstream and downstream sectors [4]. - The company provides consumers with improved access to pharmaceutical products and healthcare services through its online retail pharmacy, 1 Pharmacy, and its offline virtual pharmacy network [4]. - 111, Inc. also offers online healthcare services via its internet hospital, 1 Clinic, which includes online consultations, electronic prescriptions, and patient management services [4]. - The company operates 1 Medicine, an online platform that serves as a one-stop shop for pharmacies to source a wide range of pharmaceutical products [4]. - With the largest virtual pharmacy network in China, 111, Inc. enhances the ability of offline pharmacies to serve customers through cloud-based services [4]. - The company provides an omni-channel drug commercialization platform to strategic partners, offering services such as digital marketing, patient education, data analytics, and pricing monitoring [4]. Earnings Conference Call - The management team will host an earnings conference call on March 20, 2025, at 7:30 AM U.S. Eastern Time, allowing stakeholders to engage directly with the company's financial performance [2]. - Participants must register in advance to receive dial-in information, ensuring organized communication during the call [2][3]. - A live and archived webcast of the conference call will be available on the company's website, providing additional access to the information shared [3].

Core Viewpoint - 111, Inc. plans to change the ratio of its American Depositary Shares (ADSs) from one ADS representing two Class A ordinary shares to one ADS representing twenty Class A ordinary shares, effectively a one-for-ten reverse ADS split [1][2]. Company Overview - 111, Inc. is a leading tech-enabled healthcare platform in China, focused on reshaping the healthcare value chain by digitally empowering both upstream and downstream sectors [1][4]. - The company provides consumers with improved access to pharmaceutical products and healthcare services through its online retail pharmacy, 1 Pharmacy, and its offline virtual pharmacy network [4]. - 111 also offers online healthcare services via its internet hospital, 1 Clinic, which includes online consultations, electronic prescriptions, and patient management services [4]. - The company operates the largest virtual pharmacy network in China, enabling offline pharmacies to enhance customer service through cloud-based solutions [4]. - Additionally, 111 provides an omni-channel drug commercialization platform that includes digital marketing, patient education, data analytics, and pricing monitoring for its strategic partners [4]. ADS Ratio Change Impact - The ratio change will not affect the underlying Class A ordinary shares, and no shares will be issued or cancelled as a result [2]. - The change is expected to take effect on January 24, 2025, and the ADS price is anticipated to increase proportionally, although no assurance can be given regarding the exact price post-change [2].

Financial Data and Key Metrics Changes - Total net revenues for Q3 2024 were RMB3.6 billion, remaining relatively flat compared to the same quarter of last year [51] - Gross segment profit grew 10.5% to RMB210.6 million, while total operating expenses decreased 23.2% to RMB28.2 million [51][52] - Income from operations was RMB2.4 million compared to a loss of RMB80.4 million in the same quarter last year, indicating a significant turnaround [20][53] - Non-GAAP income from operations was RMB7.1 million compared to a non-GAAP loss of RMB54 million in Q3 of the prior year [54] Business Line Data and Key Metrics Changes - Total operating expenses as a percentage of net revenues decreased to 5.8% from 7.4% year-over-year, reflecting enhanced operational efficiency [52] - Fulfillment expenses remained steady at 2.8% of net revenues, while selling expenses decreased to 2.1% from 2.6% in the prior year [52][21] - General and administrative expenses accounted for 0.4% of net revenues, down from 1.3% a year ago, showcasing effective cost management [52] Market Data and Key Metrics Changes - Retail pharmacy sales in China decreased by 2.2% in the first nine months of 2024, indicating a challenging market environment [11] - The per capita healthcare expenditures growth rate declined by 11.5 percentage points from a year earlier for the first nine months [9] Company Strategy and Development Direction - The company is focusing on digital transformation and operational efficiency to navigate the challenging macroeconomic environment [7][14] - There is a commitment to leveraging technology to reshape the value chain and enhance operational efficiency [61] - The company aims to capture growth opportunities in the out-of-hospital pharmaceutical distribution market, projected to reach RMB1.1 trillion in three years [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth of China's healthcare market, driven by an aging population and increased healthcare consumption [19][82] - The company anticipates achieving operational profitability for the entire year, reflecting confidence in its operational strategies [72] Other Important Information - The company reported positive operating cash flow for three consecutive quarters, indicating improved cash management [55][78] - The company has reached agreements with investors to reschedule repayments, allowing for phased repayment periods [56] Q&A Session Summary Question: Is there room for OpEx to further decrease and what measures will be taken? - Management confirmed that there is room for further reduction in OpEx, emphasizing the role of technology and smart staffing in achieving this [61][63] Question: What factors are driving the improvement in gross margin despite flat revenue? - Management highlighted assortment management and category management as key drivers for margin improvement, focusing on minimizing money-losing categories [66][68] Question: Will the company achieve operating profit for the entire year? - Management expressed optimism about achieving operational profitability for the entire year [72] Question: What improvements were made in supply chain management in Q3? - Management reported a decrease in order fulfillment costs and improvements in logistics and warehousing efficiency [73][75] Question: How has the company achieved positive operating cash flow for three consecutive quarters? - Management attributed positive cash flow to effective working capital control and improved turnover rates for inventory and accounts receivable [78]

Financial Performance - Net revenues for Q3 2024 were RMB3.6 billion (US$513.1 million), a decrease of 1.8% from RMB3.7 billion in the same quarter last year[5]. - Income from operations was RMB2.4 million (US$0.3 million), compared to a loss of RMB80.4 million in the same quarter last year, marking operational profitability for the third consecutive quarter[3][7]. - Gross segment profit increased by 10.5% year-over-year to RMB210.6 million (US$30.0 million)[3]. - Non-GAAP income from operations was RMB7.1 million (US$1.0 million), compared to a non-GAAP loss of RMB54.0 million in the same quarter last year[7]. - Net loss attributable to ordinary shareholders improved by 82% to RMB17.1 million (US$2.4 million), accounting for 0.5% of net revenues, down from 2.5% in the same quarter last year[9]. - The company reported a net loss of RMB 3,462 for the three months ended September 30, 2024, significantly improved from a net loss of RMB 83,478 in the same period of 2023[27]. - Non-GAAP net loss attributable to ordinary shareholders for the nine months ended September 30, 2024, was RMB 29,780 million, compared to RMB 107,509 million for the same period in 2023, indicating a reduction of approximately 72.3%[31]. - The loss per ADS for the three months ended September 30, 2024, improved to RMB 0.20 from RMB 1.10 in the same period of 2023[31]. - Non-GAAP loss per ADS for the nine months ended September 30, 2024, was RMB 0.34, down from RMB 1.28 in the same period of 2023, reflecting a 73.4% improvement[31]. - The total loss from operations for the three months ended September 30, 2024, was RMB 2,371 million, compared to a loss of RMB 80,422 million in the same period of 2023[31]. Operating Expenses and Cash Flow - Total operating expenses decreased by 23.2% year-over-year to RMB208.2 million (US$29.7 million), representing 5.8% of net revenues, down from 7.4% in the same quarter last year[3][5]. - The company achieved positive operating cash flow for three consecutive quarters, with net cash from operating activities at RMB109.9 million (US$15.7 million)[3]. - Fulfillment expenses were RMB100.0 million (US$14.2 million), a decrease of 1.6% from the same quarter last year, maintaining 2.8% of net revenues[11]. - Operating costs and expenses for the three months ended September 30, 2024, were RMB 3,598,304, a decrease from RMB 3,745,667 in the same period of 2023[27]. - The company generated RMB 109,865 in net cash from operating activities for the three months ended September 30, 2024, compared to RMB 35,208 in the same period of 2023[29]. - Share-based compensation expenses for the three months ended September 30, 2024, were RMB 4,756 million, down from RMB 26,402 million in the same period of 2023[31]. Assets and Liabilities - As of September 30, 2024, cash and cash equivalents totaled RMB614.4 million (US$87.6 million), down from RMB673.7 million at the end of 2023[11]. - Cash and cash equivalents, and restricted cash at the end of the period were RMB 564,411, down from RMB 766,218 at the beginning of the period[29]. - Total current assets increased slightly to RMB 2,886,888 as of September 30, 2024, compared to RMB 2,933,331 as of December 31, 2023[26]. - The company’s total liabilities were RMB 2,722,172 as of September 30, 2024, compared to RMB 2,812,932 as of December 31, 2023, indicating a reduction in liabilities[26]. - The company’s inventories decreased to RMB 1,532,170 as of September 30, 2024, from RMB 1,419,396 as of December 31, 2023[26]. Strategic Initiatives - The company is investing in AI and digital technologies to enhance operational efficiency and adapt to industry changes, focusing on digital transformation and out-of-hospital drug distribution[4]. - The company plans to continue expanding its online healthcare services and enhance its digital marketing capabilities to improve market competitiveness[22]. - 111, Inc. aims to maintain compliance with Nasdaq listing criteria and manage growth effectively amid evolving regulatory requirements[21]. - The company aims to continue improving its financial performance and reducing losses in the upcoming quarters[31].

Core Viewpoint - 111, Inc. has maintained operational profitability for the third consecutive quarter, demonstrating improved operational efficiency despite a challenging macroeconomic environment in China [1][4]. Financial Performance - Net revenues for Q3 2024 were RMB 3.6 billion (US$ 513.1 million), showing a slight decrease of 1.8% from RMB 3.7 billion in the same quarter last year [2][5]. - Gross segment profit increased by 10.5% year-over-year to RMB 210.6 million (US$ 30.0 million) [2]. - Total operating expenses decreased by 23.2% to RMB 208.2 million (US$ 29.7 million) from RMB 271.0 million in the same quarter last year, with operating expenses as a percentage of net revenues dropping by 160 basis points to 5.8% [2][4]. - Income from operations was RMB 2.4 million (US$ 0.3 million), a significant improvement from a loss of RMB 80.4 million in the same quarter last year [2][9]. - Non-GAAP income from operations was RMB 7.1 million (US$ 1.0 million), compared to a non-GAAP loss of RMB 54.0 million in the same quarter last year [2][10]. Cash Flow and Expenses - The company achieved positive operating cash flow for three consecutive quarters, with net cash from operating activities amounting to RMB 109.9 million (US$ 15.7 million) [2][30]. - Fulfillment expenses were RMB 100.0 million (US$ 14.2 million), a decrease of 1.6% from RMB 101.6 million in the same quarter last year [8]. - Selling and marketing expenses decreased by 19.4% to RMB 77.0 million (US$ 11.0 million) [8]. Strategic Initiatives - The company is focused on enhancing operational efficiency through cost management, infrastructure investments, and effective staffing arrangements [4]. - Investments in AI and digital technologies are aimed at reshaping the healthcare value chain and capturing shifts in the pharmaceutical industry [4]. - The company is expanding its fulfillment network and refining digital platforms to strengthen core competitiveness in digitalization [4]. Balance Sheet and Liabilities - As of September 30, 2024, the company had cash and cash equivalents of RMB 614.4 million (US$ 87.6 million), down from RMB 673.7 million at the end of 2023 [14]. - The total outstanding amount owed to investors was RMB 1.1 billion, with agreements reached to reschedule repayments for approximately 90% of this amount [14].