111 Inc. (YI.US) Reports Q3 2025 Results: Achieves Third Consecutive Quarter of Non-GAAP Operating Profit and Positive Operating Cash Flow

On December 17, 111 Inc. (YI.US) released its financial results for the third quarter of 2025. Despite a complex macroeconomic environment, the company demonstrated strong operational resilience, marking its third consecutive quarter of Non-GAAP operating profitability and achieving positive quarterly operating cash flow. This progress underscores the company's steady advancement toward a healthier, more sustainable business model.

**Strategic Shift from Heavy to Light Assets Strengthens Profitability** This quarter, the company reported total revenue of RMB 3 billion. Through refined operations and cost control, total operating expenses decreased by 13.4% year-over-year, significantly improving operational efficiency. Notably, 111 Inc. has maintained Non-GAAP operating profitability for three consecutive quarters and achieved Non-GAAP net profit this quarter. Additionally, the company recorded positive quarterly operating cash flow, further validating the effectiveness of its business model and ongoing financial optimization.

During the reporting period, 111 Inc. advanced its strategic structural optimization by converting three self-operated warehouses into franchise partnerships, integrating them into its ecosystem while continuing to provide professional fulfillment services to platform customers. This transition marks a key step in the company's shift from a traditional heavy-asset model to a lighter, more scalable strategy. Under the new model, franchise partners contribute stable commission income, with their operational expenses excluded from consolidated financials, enhancing overall profitability and capital efficiency.

**AI and Digital Innovation Drive Efficiency Gains** Bolstered by financial stability, 111 Inc. has deepened investments in technology. This quarter, its AI and digital innovation initiatives yielded significant results, systematically advancing intelligent transformation across its business chain.

The company has embedded AI across operations, leveraging a seven-pillar AI matrix—including a Drug Assistant, Dedicated Pharmacist, Customer & Merchant Management Assistant, analytics tool "Orca AI," Category Analysis, and Financial Reconciliation Assistant—to shift from manual processes to data-driven intelligence. Key breakthroughs include: - **Post-Sale Efficiency**: AI-powered image recognition for shipping labels improved accuracy to 98%-99%, reducing labor costs and errors while enhancing user experience. - **Merchant Services**: The proprietary SaaS analytics tool "Orca AI" now supports thousands of partners, enabling natural-language-driven sales and inventory analysis for agile decision-making. - **Data Accuracy**: AI-enhanced coding maintains a 98% drug-matching rate, ensuring reliable data for operational precision.

These AI-driven efficiencies, combined with its intelligent supply chain network, fortify 111 Inc.'s competitive edge.

**Upgraded Smart Supply Chain Reinforces Market Leadership** The company's nationwide smart supply chain infrastructure expanded this quarter, with 18 digital fulfillment centers enabling 24-hour delivery to over 890 counties and cities. Its proprietary "Kunpeng" logistics system ensures end-to-end control, reliability, and efficiency through digital coordination and last-mile networks.

Industry recognition highlights its operational excellence: - Guangdong Yihao Pharmacy was named among "Top 100 Private Enterprises in Guangdong" and "Top 50 Service Industry Private Enterprises in Guangdong" for two consecutive years. - Chongqing Yihao Pharmacy ranked in "Top 100 Service Enterprises in Chongqing" for three straight years. - Hubei Yihao Pharmacy secured spots in "Top 100 Private Service Enterprises in Hubei" (second year) and "Top 100 Private Enterprises in Wuhan" (third year).

These accolades reflect the company's regional market leadership and operational prowess.

**Leadership Insight** Dr. Gang Yu, Co-Founder and Executive Chairman of 111 Inc., stated: "Our Q3 results demonstrate the effectiveness of our strategic execution. Despite external challenges, sustained Non-GAAP profitability and healthy cash flow stem from our commitment to a leaner, more efficient model. Moving forward, AI will remain our core strategic driver, accelerating intelligent transformation to elevate customer experience and operational efficiency, delivering lasting value for all stakeholders."