On April 9, 2026, 111 Inc. (YI.US) announced its financial results for the full year and the fourth quarter of 2025. The report indicates the company continued to advance its strategic optimization and transition towards a light-asset model, steadily improving operational quality. For both the fourth quarter and the full year of 2025, the company achieved Non-GAAP operating profitability and positive operating cash flow, while the gross margin of its B2B business continued to increase.
According to the financial report, 111 Inc. generated full-year 2025 revenue of RMB 12.6 billion. Total operating expenses decreased by 12.3% year-over-year, leading to annual Non-GAAP operating profitability. The company reported net positive operating cash flow of RMB 119 million for the full year. In the fourth quarter, revenue reached RMB 2.8 billion, with total operating expenses declining by 21.3% year-over-year. The quarter also achieved Non-GAAP operating profitability and positive net operating cash flow of RMB 29.87 million.
Strategic optimization has yielded results, with the light-asset transformation enhancing quality and efficiency. In 2025, responding to new industry dynamics, 111 Inc. proactively implemented structural strategic optimizations. It formally upgraded several underperforming self-operated warehouses to a franchise partnership model, fully integrating them into the company's ecosystem to continue providing professional fulfillment service support for platform clients. This transition marks a key step in the company's strategic upgrade from a traditional heavy-asset operational model to a light-asset approach.
Under the new partnership model, franchise partners will contribute stable commission income to the company. Their related operating revenues and expenses are no longer consolidated into the company's financial statements, effectively enhancing overall profitability and capital turnover efficiency. Although this move had a temporary, short-term impact on revenue scale, these franchised warehouses have successfully joined the company's ecosystem as fulfillment partners, focusing on providing exclusive services for 111 Inc.'s clients and enabling efficient resource integration and value maximization.
Specifically, by transitioning the warehouse cooperation model, the company successfully shifted from bearing heavy operational and capital expenditure burdens to earning sustained commission income. This not only optimized the asset structure but also drove a steady increase in the B2B business gross margin, further strengthening corporate profitability and liquidity. Overall, the light-asset transformation has shown significant results, demonstrating the foresight of the company's strategic decisions and providing lasting momentum for future business scaling.
Deep empowerment through digital intelligence technology, with AI applications driving efficiency across the entire chain. While advancing its light-asset transition, 111 Inc. consistently leveraged technology as its core driver in 2025, deeply integrating artificial intelligence into full-chain business operations. The company actively promoted an upgrade from a digital to an intelligent ecosystem, achieving multiple breakthroughs and comprehensive implementation of AI applications.
In pharmaceutical compliance, the entire initial qualification process was fully automated using AI. Utilizing advanced technologies like OCR recognition and knowledge graphs, the company achieved fully automated, highly compliant supplier qualification reviews, effectively addressing industry pain points of lengthy review times and high risks, thereby strengthening the technical safeguards for drug distribution security.
In the intelligent supply chain domain, AI technology was applied across inventory sharing and smart picking processes. Inventory management was upgraded from a single-channel approach to bidirectional resource integration, with core metrics improving by over 50%. The accuracy rate for post-sale waybill recognition reached 98%-99%, significantly enhancing circulation efficiency. Furthermore, AI product coding capabilities were upgraded, with model optimizations increasing the drug coding match rate to 98%, effectively ensuring data standardization.
In data intelligence and marketing empowerment, the self-developed ChatBI "Orca AI" successfully achieved scaled SaaS deployment. Using simple natural language interaction, it empowered thousands of merchants to make efficient data-driven decisions. Additionally, a real-time intelligent bidding system operated efficiently, enabling millisecond-level dynamic price adjustments, which reinforced the "lowest price across the platform" label and further optimized supply-demand matching efficiency.
In capital flow management, a fully automated acceptance bill system was implemented, achieving unmanned processing for the entire cycle of bill entry, review, and payment. Direct connections to bank and bill exchange systems realized the triple objectives of improving efficiency, reducing costs, and controlling risks.
Continuous upgrade of the intelligent supply chain, with digital intelligence marketing empowering partners for mutual success. Beyond digital intelligence technology empowerment, 111 Inc. continued to upgrade its national intelligent supply chain network in 2025 while deepening its digital marketing布局, creating a dual-drive effect from both supply chain and marketing to effectively empower and enhance efficiency for upstream and downstream partners.
In the fourth quarter of 2025, the company's fulfillment center network continued to expand, reaching a total of 20 centers. New centers were added in Sichuan and Anhui, further improving national coverage and significantly enhancing regional fulfillment capabilities. Simultaneously, self-operated warehouses continued their transition to the franchise partnership model, optimizing the operational structure while ensuring professional and efficient fulfillment services, thereby supporting the light-asset strategy.
Leveraging the upgraded supply chain network, the company's logistics system achieved 24-hour coverage across more than 890 cities and counties nationwide, efficiently serving tens of millions of patients. Concurrently, comprehensive refinement of the supply chain was implemented. Through process optimization and operational improvements, the Kunpeng network's service capability was significantly enhanced. Continuous optimizations were made across various areas, including warehouse capacity modifications at fulfillment centers and picking models, achieving comprehensive supply chain cost reduction and efficiency gains.
In digital marketing and the general agent model, results were equally outstanding: revenue and gross profit for fully promoted product categories increased year-over-year by 76.2% and 81.7%, respectively. The sales volume of a core promoted product, a first-line original research drug, climbed from 20,000 boxes in March 2025 at launch to a peak of 290,000 boxes in November. The full-year transaction value for this product increased by 368.2% year-over-year, solidifying the company's role as a key strategic partner for pharmaceutical companies in non-hospital sales.
Dr. Yu Gang, Co-Founder and Executive Chairman of 111 Inc., stated, "In 2025, the company deepened its light-asset transformation and strategic optimization, achieving full-year Non-GAAP operating profitability and positive cash flow for the first time, laying a solid foundation for sustainable, high-quality development. In 2026, we will continue to be driven by technology, deeply integrating cutting-edge technologies like artificial intelligence to comprehensively upgrade from a digital to an intelligent ecosystem, enabling high-quality pharmaceutical and health products and services to benefit more families and the broader public."
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