111, Inc. Announces First Quarter 2024 Unaudited Financial Results
PR Newswire
SHANGHAI, May 23, 2024
-- Turned to Quarterly Operational Profitability for the First Time
-- Operating Expenses as a Percentage of Revenues Decreased 120 Basis Points
YoY to 5.8%
-- Achieved Positive Operating Cash Flow
SHANGHAI, May 23, 2024 /PRNewswire/ -- 111, Inc. ("111" or the "Company") $(YI)$, 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, 2024.
First Quarter 2024 Highlights
-- Net revenues were RMB3.5 billion (US$488.7 million) and Gross segment
profit (1) was RMB 208.5 million (US$ 28.9 million). Due to the sudden
surge in medicine demand during the peak of the Covid-19 pandemic in Q1
2023, net revenue and gross segment profit had a 4.6% and 11.7% decrease
respectively.
-- Total operating expenses were RMB204.8 million (US$28.4 million), an
improvement of 20.6% compared to RMB257.9 million in the same quarter of
last year. As a percentage of net revenues, total operating expenses
decreased by 120 basis points to 5.8% from 7.0% in the same quarter of
last year, which reflected continuous improvement in our operation
efficiency.
-- Income from operations was RMB3.7 million (US$0.5 million), compared to
loss from operations was RMB21.7 million in the same quarter of last
year. This marks 111's inaugural operational income on a quarterly basis.
-- Non-GAAP income from operations (2) was RMB8.9 million (US$1.2 million),
representing an increase of 259.2% compared to RMB2.5 million in the same
quarter of last year. As a percentage of net revenues, non-GAAP income
from operations accounted for 0.3% in the quarter, an increase of 20
basis points from 0.1% in the same quarter of last year.
(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 delighted to start the year with a major milestone in the first quarter of 2024 as our continuous operational enhancements empowered us to turn to operational profitability for the first time. Notably, income from operations reached RMB3.7 million during the period, a wonderfully positive shift from an operational loss of RMB21.7 million a year ago. This was achieved despite a decrease in first-quarter revenue because of a higher baseline set in the corresponding period of 2023 during the peak of the pandemic. Non-GAAP income from operations even more than tripled year over year to a record high of RMB8.9 million. Our performance in the quarter validates the effectiveness of our business model as a leading tech-enabled healthcare platform company committed to digitally empower the entire healthcare value chain as well as our growth strategies.
Mr. Liu added, "We successfully elevated our operational efficiency after disciplined expense optimization across the whole organization. Our operating expenses as a percentage of net revenues decreased 120 basis points to 5.8%, while the ratio for non-GAAP operating expenses fell 60 basis points to 5.7%, reflecting our efforts for prudent resource management in the pursuit of sustainable growth. We anticipate the possibility of further operating cost reductions and higher efficiency as we scale up our business and refine operations. Our ambition is to stand out as the pinnacle of efficiency in the pharmaceutical e-commerce realm, and we strive to amplify our operational effectiveness to sharpen our competitive edge."
"Furthermore, our investments in technology empowerment effectively drove up operational efficiency and customer engagement. We also made novel supply chain advancement that will unlock new growth opportunities, highlighted by our launch of a new delivery and transit model for streamlining logistics and saving fulfilment costs. Our pioneering role in digital commerce transformation and commitment to innovative excellence has also been recognized as we obtained significant accolades and a new patent from government agencies and professional institutions."
"Looking ahead, we will remain dedicated to delivering one-stop shopping experiences supported by the most comprehensive and cost-effective product portfolio. With our internal 100% digital operating system at our core, we've attained unmatched operational efficiency within the industry. We are well positioned to empower both upstream and downstream customers to improve efficiency for the entire industry and reshape the traditional value chain. Our focus on strengthened partnership with pharmaceutical companies, strategic investments in operational efficiency, as well as relentless commitment to digitalization and AI innovation will enable us to capture greater market share and growth for higher revenue and profit levels. We are confident that these initiatives will solidify our leadership in the market, and we look forward to continuously generating value to our shareholders, customers, and stakeholders in the quarters ahead."
First Quarter 2024 Financial Results
Net revenues were RMB3.5 billion (US$488.7 million), representing a decrease of 4.6% from RMB3.7 billion in the same quarter of last year.
(In thousands RMB) For the three months ended March 31,
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2023 2024 YoY
------------- ------------- ----------
B2B Net Revenue
Product 3,562,682 3,431,172 -3.7 %
Service 21,141 20,837 -1.4 %
------------- ------------- ----------
Sub-Total 3,583,823 3,452,009 -3.7 %
============= ============= ==========
Cost of Products Sold(3) 3,372,828 3,261,103 -3.3 %
------------- ------------- ----------
Segment Profit 210,995 190,906 -9.5 %
============= ============= ==========
Segment Profit % 5.9 % 5.5 %
------------- ------------- ----------
(In thousands RMB) For the three months ended March 31
----------------------------------------
2023 2024 YoY
------------- ------------- ----------
B2C Net Revenue
Product 106,608 72,206 -32.3 %
Service 6,330 4,214 -33.4 %
------------- ------------- ----------
Sub-Total 112,938 76,420 -32.3 %
============= ============= ==========
Cost of Products Sold 87,720 58,793 -33.0 %
------------- ------------- ----------
Segment Profit 25,218 17,627 -30.1 %
============= ============= ==========
Segment Profit % 22.3 % 23.1 %
------------- ------------- ----------
(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 RMB3.5 billion (US$488.2 million), representing a decrease of 5.2% from RMB3.7 billion in the same quarter of last year.
-- Cost of products sold was RMB3.3 billion (US$459.8 million), representing
a decrease of 4.1% from RMB3.5 billion in the same quarter of last year.
-- Fulfillment expenses were RMB88.5 million (US$12.3 million), representing
a decrease of 13.8% from RMB102.7 million in the same quarter of last
year. Fulfillment expenses accounted for 2.5% of net revenues this
quarter as compared to 2.8% in the same quarter of last year.
-- Selling and marketing expenses were RMB80.4 million (US$11.1 million),
representing a decrease of 10.0% from RMB89.2 million in the same quarter
of last year. Excluding the share-based compensation expenses of RMB1.9
million for the quarter and RMB1.1 million for the same quarter last year,
respectively, selling and marketing expenses as a percentage of net
revenues, accounted for 2.2% in the quarter as compared to 2.4% in the
same quarter of last year.
-- General and administrative expenses were RMB19.1 million (US$2.6 million),
representing a decrease of 53.8% from RMB41.3 million in the same quarter
of last year. Excluding the share-based compensation expenses of RMB2.1
million for the quarter and RMB19.0 million for the same quarter last
year, respectively, general and administrative expenses as a percentage
of net revenues, accounted for 0.5% in the quarter as compared to 0.6% in
the same quarter of last year.
-- Technology expenses were RMB18.3 million (US$2.5 million), representing a
decrease of 27.7% from RMB25.3 million in the same quarter of last year.
Excluding the share-based compensation expenses of RMB1.2 million for the
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