SHANGHAI, June 15, 2023 /PRNewswire/ -- 111, Inc. ("111" or the "Company") (NASDAQ: YI), a leading tech-enabled healthcare platform company committed to digitally connecting patients with medicine and healthcare services in China, today announced its unaudited financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Highlights
(1) Gross segment profit represents net revenues less cost of goods sold.
(2) 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, "We are pleased to report another solid quarter as well as a positive operating results at Non-GAAP level. Net revenue increased by 23.9% year-over-year to RMB3.7 billion, marking the 19th consecutive quarter of year-over-year growth for 111 since the company's NASDAQ IPO. Our gross segment profit for the quarter increased by 22.7% year-over-year. As a result, loss from operation decreased to RMB22 million compared to RMB102 million in the same quarter of last year. Non-GAAP operating profit for the quarter turned positive as compared to a Non-GAAP loss from operations in the same quarter of last year, which partially benefited from the lifting of COVID-related restrictions since December last year."
Mr. Liu added, "In addition, we continued to enhance our operation efficiency and total operating expenses as a percentage of net revenues decreased to 7.0% in this quarter from 9.9% in the same quarter of last year. We expect this momentum to continue as we scale, and meanwhile we will continue to focus on delivering best services to our customers/patients."
"These results stem from our sustained, strategic endeavors. We have enhanced partnerships with upstream pharmaceutical partners. By directly working with 500+ pharmaceutical companies, we offer value-add services to numerous enterprises, debuted products like Sanofi's Allegra on our B2C platform, while our B2B platform's digital marketing tool, "Telescope," offers invaluable market insights. Our digital empowerment to downstream pharmacies provided them with cost-effective products and operational efficiency. By the end of Q1, we served more than 435,000 retail pharmacies, with our 1 Health program engaging approximately 20,000 drugstores. Meanwhile, our operational efficiency continues to improve with various cost saving initiatives, better corporate governance, and technology investments. We've notably cut fulfillment costs through optimizing our own and joint-venture warehouses, while our new advisory department, focused on customer-centric value creation, is refining product assortment and pricing strategies."
"We believe that our efforts to achieve margin expansion, as well as to optimize our cost and improve our organizational alignment, have delivered positive results. We will keep optimizing product assortment based on customer needs, reducing costs with direct sourcing, and improve our competitiveness through intelligent pricing. We will keep improving efficiency through supply chain optimization and we will continually commit to digitization to enhance processes and drive innovation. We are confident that our strong technology capabilities will continue to enable us to build scale, deliver profitability, and maximize values for our shareholders."
First Quarter 2023 Financial Results
Net revenues were RMB3.7 billion (US$538.3 million), representing an increase of 23.9% from RMB3.0 billion in the same quarter of last year.
(In thousands RMB) | For the three months ended March 31, | ||||
2022 | 2023 | YoY | |||
B2B Net Revenue | |||||
Product | 2,851,396 | 3,562,682 | 24.9 % | ||
Service | 18,360 | 21,141 | 15.1 % | ||
Sub-Total | 2,869,756 | 3,583,823 | 24.9 % | ||
Cost of Products Sold(3) | 2,701,643 | 3,372,828 | 24.8 % | ||
Segment Profit | 168,113 | 210,995 | 25.5 % | ||
Segment Profit % | 5.9 % | 5.9 % | |||
(In thousands RMB) | For the three months ended March 31, | ||||
2022 | 2023 | YoY | |||
B2C Net Revenue | |||||
Product | 102,131 | 106,608 | 4.4 % | ||
Service | 10,704 | 6,330 | -40.9 % | ||
Sub-Total | 112,835 | 112,938 | 0.1 % | ||
Cost of Products Sold | 88,413 | 87,720 | -0.8 % | ||
Segment Profit | 24,422 | 25,218 | 3.3 % | ||
Segment Profit % | 21.6 % | 22.3 % | |||
(3) 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.
Operating costs and expenses were RMB3.7 billion (US$541.5 million), representing an increase of 20.5% from RMB3.1 billion in the same quarter of last year.
Loss from operations was RMB21.7 million (US$3.2 million), compared to RMB102.2 million in the same quarter of last year. As a percentage of net revenues, loss from operations decreased to 0.6% in the quarter from 3.4% in the same quarter of last year.
Non-GAAP income from operations was RMB2.5 million (US$0.4 million), compared to Non-GAAP loss from operations was RMB72.4 million in the same quarter of last year.
Net loss was RMB19.4 million (US$2.8 million), compared to RMB101.0 million in the same quarter of last year. As a percentage of net revenues, net loss decreased to 0.5% in the quarter from 3.4% in same quarter of last year.
Non-GAAP net income (4) was RMB4.9 million (US$0.7 million), compared to Non-GAAP net loss was RMB71.2 million in the same quarter of last year.
Net loss attributable to ordinary shareholders was RMB31.8 million (US$4.6 million), compared to RMB110.3 million in the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 0.9% in the quarter from 3.7% in same quarter of last year.
Non-GAAP net loss attributable to ordinary shareholders (5) was RMB7.6 million (US$1.1 million), compared to RMB80.6 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased to 0.2% in the quarter from 2.7% in same quarter of last year.
(4) 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 first quarter 2023, non-GAAP net income is used as a more meaningful measurement of the operation performance of the Company.
(5) Non-GAAP net loss attributable to ordinary shareholders represents net loss attributable to ordinary shareholders excluding share-based compensation expenses, net of tax.
As of March 31, 2023, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB878.8 million (US$128.0 million), compared to RMB922.7 million as of December 31, 2022.
Conference Call
111's management team will host an earnings conference call at 7:30 AM U.S. Eastern Time on Thursday, June 15, 2023 (7:30 PM Beijing Time on the same day).
Details for the conference call are as follows:
Event Title: 111, Inc. First Quarter 2023 Unaudited Financial Results
Registration Link: https://s1.c-conf.com/diamondpass/10030880-st6fye.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 June 22, 2023 on:
Mainland China: 4001 209 217
Hong Kong: 800 901 654
United States: +1 877 642 9125
International: +61 7 3145 4057
Conference ID: 10030880
A live and archived webcast of the conference call will be available on the website at https://edge.media-server.com/mmc/p/uzvzjixt.
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 income (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 for the financial information prepared and presented in accordance with U.S. GAAP.
The Company believes that 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 help identify underlying trends in its business that could otherwise be distorted by the effect of certain expenses that it includes in income (loss) from operations and net income (loss). Share-based compensation expenses is a non-cash expense that varies from period to period. As a result, management excludes the items from its internal operating forecasts and models. Management believes that the adjustments for share-based compensation expenses provide investors with a reasonable basis to measure the company's core operating performance, in a more meaningful comparison with the performance of other companies. The Company believes that 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 provide useful information about its operating results, enhances the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by the management in their financial and operational decision-making.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net loss attributable to ordinary shareholders, or non-GAAP loss per ADS is that it does not reflect all items of income and expense that affect the Company's operations. Further, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.
The Company compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP measures, all of which should be considered when evaluating the Company's performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.
Reconciliation of the non-GAAP financial measures to the most comparable U.S. GAAP measures is included at the end of this press release.
Exchange Rate Information Statement
This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.8676 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of March 31, 2023.
Forward-Looking Statements
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Among other things, the Business Outlook and quotations from management in this announcement, as well as 111's strategic and operational plans, contain forward-looking statements. 111 may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control. 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 requirements, its ability to compete effectively in the evolving PRC general health and wellness market, its ability to manage the growth of its business and expansion plans, its ability to achieve or maintain profitability in the future, its ability to control the risks associated with its pharmaceutical retail and wholesale businesses, and the Company's ability to meet the standards necessary to maintain listing of its ADSs on the Nasdaq Global Market, including its ability to cure any non-compliance with Nasdaq's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and 111 does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
About 111, Inc.
111, Inc. (NASDAQ: YI) ("111" or the "Company") is a leading tech-enabled healthcare platform company committed to digitally connecting patients with medicine and healthcare services in China. The Company provides consumers with better access to pharmaceutical products and healthcare services directly through its online retail pharmacy, 1 Pharmacy, and indirectly through its offline virtual pharmacy network. The Company also offers online healthcare services through its internet hospital, 1 Clinic, which provides consumers with cost-effective and convenient online consultation, electronic prescription service, and patient management service. In addition, the Company's online platform, 1 Medicine, serves as a one-stop shop for pharmacies to source a vast selection of pharmaceutical products. With the largest virtual pharmacy network in China, 111 enables offline pharmacies to better serve their customers with cloud-based services. 111 also provides an omni-channel drug commercialization platform to its strategic partners, which includes services such as digital marketing, patient education, data analytics, and pricing monitoring.
For more information on 111, please visit: http://ir.111.com.cn/.
111, Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share data)
| ||||||
As of | As of | |||||
December 31, 2022 | March 31, 2023 | |||||
RMB | RMB | US$ | ||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | 673,669 | 584,544 | 85,116 | |||
Restricted cash | 43,122 | 34,737 | 5,058 | |||
Short-term investments | 205,861 | 259,498 | 37,786 | |||
Accounts receivable, net | 488,875 | 437,288 | 63,674 | |||
Notes Receivable | 43,332 | 43,704 | 6,364 | |||
Inventories | 1,498,900 | 1,468,172 | 213,782 | |||
Prepayments and other current assets | 282,066 | 191,720 | 27,916 | |||
Total current assets | 3,235,825 | 3,019,663 | 439,696 | |||
Property and equipment, net | 48,497 | 44,809 | 6,525 | |||
Intangible assets, net | 3,267 | 2,871 | 418 | |||
Long-term investments | 2,000 | 2,000 | 291 | |||
Other non-current assets | 20,348 | 20,195 | 2,941 | |||
Operating lease right-of-use asset | 163,877 | 149,275 | 21,736 | |||
Total Assets | 3,473,814 | 3,238,813 | 471,607 | |||
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' DEFICIT | ||||||
Current Liabilities: | ||||||
Short-term borrowings | 178,990 | 269,852 | 39,293 | |||
Accounts payable | 1,764,849 | 1,681,293 | 244,815 | |||
Accrued expense and other current liabilities | 781,271 | 550,227 | 80,119 | |||
Total Current liabilities | 2,725,110 | 2,501,372 | 364,227 | |||
Long-term operating lease liabilities | 100,469 | 85,917 | 12,510 | |||
Total Liabilities | 2,825,579 | 2,587,289 | 376,737 | |||
MEZZANINE EQUITY | ||||||
Redeemable non-controlling interests | 1,056,939 | 1,070,769 | 155,916 | |||
SHAREHOLDERS' DEFICIT | ||||||
Ordinary shares Class A | 31 | 31 | 5 | |||
Ordinary shares Class B | 25 | 25 | 3 | |||
Treasury shares | (40,859) | (40,859) | (5,949) | |||
Additional paid-in capital | 2,977,174 | 3,003,037 | 437,276 | |||
Accumulated deficit | (3,426,556) | (3,458,343) | (503,574) | |||
Accumulated other comprehensive income | 75,586 | 72,706 | 10,587 | |||
Total shareholders' deficit | (414,599) | (423,403) | (61,652) | |||
Non-controlling interest | 5,895 | 4,158 | 606 | |||
Total Deficit | (408,704) | (419,245) | (61,046) | |||
Total liabilities, mezzanine equity and deficit | 3,473,814 | 3,238,813 | 471,607 | |||
111, Inc. | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
(In thousands, except for share and per share data) | |||
For the three months ended March 31, | |||
2022 | 2023 | ||
RMB | RMB | US$ | |
Net Revenues | 2,982,591 | 3,696,761 | 538,290 |
Operating Costs and expenses: | |||
Cost of products sold | (2,790,056) | (3,460,548) | (503,895) |
Fulfillment expenses | (94,533) | (102,650) | (14,947) |
Selling and marketing expenses | (114,854) | (89,240) | (12,994) |
General and administrative expenses | (47,994) | (41,317) | (6,016) |
Technology expenses | (39,021) | (25,316) | (3,686) |
Other operating income, net | 1,716 | 578 | 84 |
Total Operating costs and expenses | (3,084,742) | (3,718,493) | (541,454) |
Loss from operations | (102,151) | (21,732) | (3,164) |
Interest income | 2,043 | 1,949 | 284 |
Interest expense | (3,184) | (4,272) | (622) |
Foreign exchange gain | 391 | 1,634 | 238 |
Other Income, net | 1,913 | 3,064 | 446 |
Loss before income taxes | (100,988) | (19,357) | (2,818) |
Income tax expense | - | - | - |
Net Loss | (100,988) | (19,357) | (2,818) |
Net Loss attributable to non-controlling interest | 4,477 | 1,400 | 204 |
Net Loss attributable to redeemable non-controlling interest | 9,135 | 1,548 | 225 |
Adjustment attributable to redeemable non-controlling interest | (22,966) | (15,378) | (2,239) |
Net Loss attributable to ordinary shareholders | (110,342) | (31,787) | (4,628) |
Other comprehensive loss | |||
Unrealized gains of available-for-sale securities, | 1,298 | 2,135 | 311 |
Realized gains of available-for-sale debt securities | (1,335) | (1,902) | (277) |
Foreign currency translation adjustments | (956) | (3,113) | (453) |
Comprehensive loss | (111,335) | (34,667) | (5,047) |
Loss per ADS: | |||
Basic and diluted | (1.32) | (0.38) | (0.06) |
Weighted average number of shares used in computation of loss per share | |||
Basic and diluted | 166,331,126 | 167,329,609 | 167,329,609 |
111, Inc. | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(In thousands) | |||
For the three months ended March 31, | |||
2022 | 2023 | ||
RMB | RMB | US$ | |
Net cash used in operating activities | (68,241) | (121,328) | (17,668) |
Net cash provided by (used in) investing activities | 22,859 | (53,188) | (7,744) |
Net cash provided by financing activities | 35,278 | 78,497 | 11,430 |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | (731) | (1,491) | (217) |
Net decrease in cash and cash equivalents, and restricted cash | (10,835) | (97,510) | (14,199) |
Cash and cash equivalents, and restricted cash at the beginning of the period | 760,672 | 716,791 | 104,373 |
Cash and cash equivalents, and restricted cash at the end of the period | 749,837 | 619,281 | 90,174 |
111, Inc. | |||
Unaudited Reconciliation of GAAP and Non-GAAP Results | |||
(In thousands, except for share and per share data) | |||
For the three months ended March 31, | |||
2022 | 2023 | ||
RMB | RMB | US$ | |
Loss from operations | (102,151) | (21,732) | (3,164) |
Add: Share-based compensation expenses | 29,757 | 24,208 | 3,525 |
Non-GAAP income (loss) from operations | (72,394) | 2,476 | 361 |
Net Loss | (100,988) | (19,357) | (2,818) |
Add: Share-based compensation expenses, net of tax | 29,757 | 24,208 | 3,525 |
Non-GAAP net Income (Loss) | (71,231) | 4,851 | 707 |
Net Loss attributable to ordinary shareholders | (110,342) | (31,787) | (4,628) |
Add: Share-based compensation expenses, net of tax | 29,757 | 24,208 | 3,525 |
Non-GAAP net Loss attributable to ordinary shareholders | (80,585) | (7,579) | (1,103) |
Loss per ADS(6): Basic and diluted | (1.32) | (0.38) | (0.06) |
Add: Share-based compensation expenses per ADS(6), net of tax | 0.36 | 0.28 | 0.04 |
Non-GAAP Loss per ADS(6) | (0.96) | (0.1) | (0.02) |
(6) Every one ADSs represent two Class A ordinary shares.
SOURCE 111, Inc.