Net Revenue of Promotional Products (1) Increased by 70.2% and Gross Profit Rose by 75.0% Year-over-Year
Total Marketplace (MP) Service Revenue Increased by 24.7% Year-over-Year
Fulfillment Expenses as a Percentage of Revenue Improved by 10 Basis Points Year-over-Year
SHANGHAI, June 4, 2026 /PRNewswire/ -- 111, Inc. ("111" or the "Company") (NASDAQ:YI), a leading tech-enabled healthcare platform company committed to reshaping the value chain of healthcare industry by digitally empowering the upstream and downstream in China, today announced its unaudited financial results for the first quarter ended March 31, 2026.
First Quarter 2026 Highlights
Net revenue amounted to RMB2.4 billion (US$342.4 million), representing a 33.1% decrease from RMB3.5 billion in the prior-year quarter. This decline was primarily attributable to the Company's ongoing strategic transition toward a more asset-light and operationally efficient business model. As part of this initiative, the Company divested several underperforming subsidiaries last year and further optimized the fulfillment network through expanded warehouse partnership arrangements, enabling the transition to a warehouse partnership model—where recurring commission income will be generated rather than bearing operational and capital burdens. Meanwhile, total marketplace (MP) service revenue increased by 24.7% year-over-year, demonstrating growth of the Company's marketplace service business and enhanced revenue quality.
Net revenue from promotional products amounted to RMB28.9 million, representing 70.2% year-over-year growth, accompanied by a 75.0% increase in gross profit. Furthermore, as of the current quarter, an increasing number of pharmaceutical companies have partnered with 111 to secure general distribution rights for products targeting small and medium-sized chain pharmacies, further strengthening the Company's capabilities in brand building and market penetration. Among such products, "Cravit" has become the flagship offering, with sales growing from 84,000 boxes to 710,000 boxes year-over-year. This performance underscores the Company's distinctive marketing expertise and has generated strong momentum for both upstream suppliers and downstream partners.
Fulfillment expenses were RMB61.2 million (US$8.9 million), representing a decrease of 34.6% from RMB93.6 million in the prior-year quarter. As a percentage of net revenue, fulfillment expenses improved to 2.6%, compared with 2.7% in the prior-year quarter, reflecting continued enhancement in operational efficiency and disciplined cost management.
(1) Promotional products are the Company's core promoted pharmaceuticals featuring mainstream positioning and high gross margin.
Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111, commented, "During the first quarter of 2026, we continued to execute our strategic transition toward a more asset-light and platform-oriented operating model. The 24.7% year-over-year increase in total marketplace (MP) service revenue demonstrates steady progress of the strategic initiative and underscores our pursuit of high-quality, scalable and operationally efficient growth. Through ongoing SKU expansion, deeper collaboration with major third-party online platforms, and enhanced brand partnership strategies, our revenue of B2C business also achieved positive growth in this quarter."
"Our promotional products have rapidly penetrated pharmacies nationwide via the 111 digital marketing platform, with the product lineup continuously expanding. Net revenue and gross profit from these products posted explosive year-over-year growth. Meanwhile, we are committed to securing general distribution rights for more pharmaceutical products like "Cravit" to consolidate market standing and maintain steady performance. This has proven to be a highly profitable and scalable business model, positioning us for sustained growth, and I look forward to sharing further progress and achievements in the coming quarters."
"By optimizing our network and selectively exiting underperforming fulfillment centers, our fulfillment expenses declined by 34.6% year-over-year, outpacing the decrease in revenue. Meanwhile, fulfillment expenses as a percentage of net revenue improved by 10 basis points year-over-year, highlighting our capacity for sustained operational improvement and reflecting our commitment to prudent cost management."
"Looking ahead, we believe these initiatives are gradually reshaping 111 from a transaction-driven pharmaceutical distributor into a more technology-enabled and intelligent healthcare platform business. We will continue to integrate AI-enabled capabilities across multiple operational scenarios, including intelligent demand forecasting, inventory optimization, fulfillment routing and merchant operation management. More importantly, we are deploying AI agent-based solutions in pharmacies and healthcare service scenarios to help customers better manage day-to-day operations. Leveraging a lean, intelligent operating model, we aim to expand margins, lift profitability and deliver long-term value to stakeholders."
First Quarter 2026 Financial Results
Net revenue amounted to RMB2.4 billion (US$342.4 million), representing a decrease of 33.1% from RMB3.5 billion in the same quarter of last year, mainly attributable to the strategic optimization.
Gross segment profit (2) was RMB126.0 million (US$18.3 million), representing a year-over-year decrease of 35.4%.
(In thousands RMB)
For the three months ended March 31,
2025
2026
YoY
B2B Net Revenue
Product
3,457,267
2,282,803
-34.0 %
Service
16,971
21,868
28.9 %
Sub-Total
3,474,238
2,304,671
-33.7 %
Cost of Products Sold (3)
3,288,747
2,186,865
-33.5 %
Segment Profit
185,491
117,806
-36.5 %
Segment Profit %
5.3 %
5.1 %
(In thousands RMB)
For the three months ended March 31,
2025
2026
YoY
B2C Net Revenue
Product
52,312
54,544
4.3 %
Service
2,729
2,369
-13.2 %
Sub-Total
55,041
56,913
3.4 %
Cost of Products Sold
45,437
48,761
7.3 %
Segment Profit
9,604
8,152
-15.1 %
Segment Profit %
17.4 %
14.3 %
(2) Gross segment profit represents net revenue less cost of goods sold.(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 RMB2.4 billion (US$345.3 million), representing a decrease of 32.5% from RMB3.5 billion in the same quarter of last year.
Cost of products sold was RMB2.2 billion (US$324.1 million), representing a decrease of 32.9% from RMB3.3 billion in the same quarter of last year.
Fulfillment expenses were RMB61.2 million (US$8.9 million), representing a decrease of 34.6% from RMB93.6 million in the same quarter of last year. As a percentage of net revenue, fulfillment expenses accounted for 2.6% this quarter, down from 2.7% in the same quarter of last year.
Selling and marketing expenses were RMB58.0 million (US$8.4 million), representing a decrease of 14.6% from RMB67.9 million in the same quarter of last year. Excluding the share-based compensation expenses, selling and marketing expenses as a percentage of net revenue accounted for 2.4% in the quarter as compared to 1.9% in the same quarter of last year.
General and administrative expenses amounted to RMB12.6 million (US$1.8 million), representing a decrease of 31.1% from RMB18.3 million in the same quarter of last year. Excluding the share-based compensation expenses, general and administrative expenses as a percentage of net revenue accounted for 0.5% this quarter, maintaining the same as last year.
Technology expenses were RMB14.4 million (US$2.1 million), representing a decrease of 6.9% from RMB15.5 million in the same quarter of last year. Excluding the share-based compensation expenses, technology expenses as a percentage of net revenue accounted for 0.6% in the quarter as compared to 0.4% in the same quarter of last year.
Loss from operations was RMB20.0 million (US$2.9 million), compared with income from operations of RMB0.1 million in the same quarter of last year.
Non-GAAP loss from operations (4) was RMB18.8 million (US$2.7 million), compared with non-GAAP income from operations of RMB4.3 million in the same quarter of last year.
Net loss was RMB26.8 million (US$3.9 million), compared with RMB7.3 million in the same quarter of last year. As a percentage of net revenue, net loss accounted for 1.1% this quarter as compared to 0.2% in the same quarter of last year.
Non-GAAP net loss (5) was RMB25.7 million (US$3.7 million), compared with RMB3.2 million in the same quarter of last year. As a percentage of net revenue, non-GAAP net loss accounted for 1.1% this quarter as compared to 0.1% in the same quarter of last year.
Net loss attributable to ordinary shareholders was RMB37.0 million (US$5.4 million), compared with RMB17.6 million in the same quarter of last year. As a percentage of net revenue, net loss attributable to ordinary shareholders accounted for 1.6% this quarter as compared to 0.5% in the same quarter of last year.
Non-GAAP net loss attributable to ordinary shareholders (6) was RMB35.9 million (US$5.2 million), compared with RMB13.5 million in the same quarter of last year. As a percentage of net revenue, non-GAAP net loss attributable to ordinary shareholders accounted for 1.5% this quarter as compared to 0.4% in the same quarter of last year.
(4) Non-GAAP income (loss) from operations represents income (loss) from operations excluding share-based compensation expenses.
(5) Non-GAAP net loss represents net loss excluding share-based compensation expenses, net of tax. Considering the impact of accretion of redeemable non-controlling interest for the first quarter 2026, non-GAAP net loss is used as a meaningful measurement of the operation performance of the Company.
(6) 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, 2026, the Company held cash and cash equivalents, restricted cash and short-term investments totaling RMB396.6 million (US$57.5 million), compared to RMB611.3 million as of December 31, 2025. Amount of RMB0.95 billion has been included in the balances of redeemable non-controlling interests and accrued expenses and other current liabilities. This amount is owed to a group of investors of 1 Pharmacy Technology pursuant to equity investments made in 2020, as previously disclosed in the Company's annual report. To date, 111 had repaid approximately RMB282.2 million to all investors in 1 Pharmacy Technology as a result of the holders exercising their redemption rights. Following further discussions, investors representing 60.3% of the total outstanding principal amount have agreed to further restructure the redemption obligation at extended periods, if the holders exercise their redemption rights. For further details on the terms of 111's arrangements with these investors, please see "Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources" in the Company's annual report for the fiscal year ended December 31, 2025.
Use of Non-GAAP Financial Measures
In evaluating the business, the Company considers and uses non-GAAP income 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 from operations as income from operations excluding share-based compensation expenses. The Company defines non-GAAP net income (loss) as net 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.
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