On June 4th, 111 Inc. (YI.US) released its financial results for the first quarter of 2026. The report indicates the company achieved revenue of 2.4 billion Chinese yuan during the quarter. The company is advancing its transition towards a lighter-asset, high-operational-efficiency business model. As part of this transformation, last year the company converted several underperforming self-operated warehouses to a franchise cooperation model, integrating them into its ecosystem to provide fulfillment service support for platform clients. Under this model, franchise partners contribute stable commission income to the company, with related operational revenues and expenses no longer consolidated into the company's financial statements, thereby enhancing overall profitability and capital turnover efficiency. This quarter, the company's Marketplace Platform (MP) service revenue grew by 24.7% year-over-year, reflecting growth in platform service business and improved revenue quality. Concurrently, the company optimized its fulfillment fee rate, with overall logistics expenses decreasing by 34.6% year-over-year; the proportion of total quarterly expenses to Gross Merchandise Volume (GMV) declined year-over-year, with the total expense amount decreasing by 25.1%.
Operational Efficiency as a Foundation, Accelerating Off-Hospital Sales and Industry Collaboration
In the first quarter of 2026, 111 Inc. increased investment in product agency marketing to undertake pharmaceutical companies' off-hospital sales. During the period, net revenue from key promoted marketing products grew by 70.2% year-over-year, with gross profit increasing by 75.0%. Among these, sales of one flagship original research product surged from 84,000 boxes to 710,000 boxes. By the end of the quarter, the number of pharmaceutical companies collaborating with 111 Inc. had increased, and the portfolio of product agencies within the cooperative pipeline expanded, strengthening the company's brand building and market penetration capabilities. In the B2C sector, online third-party platform business maintained growth, with first-quarter revenue and gross profit from online third-party platforms increasing by 119.2% and 157.9% year-over-year, respectively. By optimizing product category structure, leveraging supply chain advantages, and strengthening third-party operations and industrial platform cooperation, the foundation for business growth was consolidated, and operational quality improved.
To deepen industry collaboration across the upstream and downstream supply chain, 111 Inc. held its 2026 "No.1 Summit." The summit gathered professionals from the national pharmaceutical retail industry, chain pharmacy representatives, experts, and partners from across the industrial chain, with over 500 small and medium-sized chain clients attending, covering more than 60,000 terminal stores. Numerous leading pharmaceutical enterprises, including Qilu Pharmaceutical, Chongqing Yaoyou, Shanghai Modern Pharmaceutical, Huahai Pharmaceutical, Jiuzhitang, Abbott, and Huasen Pharmaceutical, participated. The event drove sales growth of over 50 key product varieties by 124% year-over-year, promoted product movement and industrial-commercial cooperation, and solidified 111 Inc.'s ecosystem influence within the pharmaceutical industry.
Supply Chain Network Upgrade, AI Accelerates Digital-Intelligent Operations
In the first quarter, 111 Inc. upgraded its supply chain network infrastructure, increasing the total number of national fulfillment centers to 20, with new centers added in Sichuan and Anhui. The network can now cover over 890 counties and cities nationwide within 24 hours, enhancing service radius, delivery timeliness, and national coverage capability. The company promoted intelligent operational transformation, upgrading the goods receiving process at warehouses from "mobile cart verification" to an intelligent "scan traceability code" mode. The system automatically retrieves comprehensive product information, improving verification and processing efficiency by 30%.
Regarding AI tool application, the capabilities of the OpenClaw intelligent agent were implemented. Drug code matching was automated, reducing operational costs and response cycles to near real-time levels. The Boguan Intelligent Product Selection tool supports generating product selection lists from a single sentence, compressing update time from several days to hours. The Merchant Intelligent Replenishment System has completed a multi-dimensional algorithm design based on a 100-point scale and is expected to launch its first pilot in late June. The progress of the COS Non-Stock Automatic Review Agent project reached 40%, with the target automation rate increasing from 50% to 90%.
In fund settlement, the company's unified bank payment platform achieved 100% collection across business lines, with a 100% standardization rate for fund payments, requiring no manual intervention throughout the entire process. Small-amount claims achieved fully automated closed-loop approval, covering scenarios for thousands of clients monthly, compressing processing time from 3 days to within 1 hour with 100% accuracy.
AI is transforming the core business operational logic of 111 Inc. Benefiting from the company's application of AI and digital operational capabilities, operational efficiency has improved, and operational costs have decreased. During the reporting period, the proportion of total first-quarter expenses to GMV declined year-over-year, with the total expense amount decreasing by 25.1%.
Dr. Yu Gang, Co-Founder and Executive Chairman of 111 Inc., stated: "In the first quarter of 2026, we continued to advance our strategic transition towards a lighter-asset, platform-based operational model. The 24.7% year-over-year growth in Marketplace Platform (MP) service revenue reflects steady progress in this strategy and embodies our pragmatic pursuit of quality, scalability, and operational efficiency. Simultaneously, we accelerated the implementation of our artificial intelligence strategy, driving the upgrade of our business model from traditional manual-driven to AI-intelligence-driven. The core objective is to create long-term value for our customers, upstream and downstream industrial chain partners, and shareholders through an exceptional customer experience."
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