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111 , Inc. InvestorRoom 111 , Inc. Announces Third Quarter 2021 Unaudited Financial Results SHANGHAI , Nov. 19 , 2021 / PRNewswire / -- 111 , Inc. ( " 111 " or the " Company " ) ( NASDAQ : YI ) , a leading tech - enabled healthcare platform company committed to digitally connecting patients with medicine and healthcare services in China , today announced its unaudited financial results for the third quarter ended September 30 , 2021 . Third Quarter 2021 Highlights • Net revenues were RMB3.35 billion ( US $ 519.3 million ) , representing an increase of 41.6 % year - over - year . • Service revenue increased 106 % year - over - year , among which B2B service revenue increased 336 % year - over - year . ⚫ Gross profit ( 1 ) increased 85 % year - over - year and gross margin improved from 3.8 % to 5.0 % , among which gross profit for the B2B segment increased 145 % year - over - year . • Technology expenses were RMB56.1 million ( US $ 8.7 million ) , representing an increase of 155.4 % year - over - year . • Fulfillment center capacity expanded 148 % year - over - year . • Cash and cash equivalents , restricted cash and short - term investments amounted to RMB 1.1 billion ( US $ 168.1 million ) as of September 30 , 2021 . ( 1 ) Gross profit represents net revenues less cost of goods sold . Mr. Junling Liu , Co - Founder , Chairman , and Chief Executive Officer of 111 , commented , " The third quarter of 2021 represents another period of strong growth , as net revenue increased 41.6 % year - over - year to RMB 3.3 billion , marking the 13th consecutive quarter of year - over - year growth for 111 since the company's NASDAQ IPO . Our top- and bottom- line growth this quarter was driven by our B2B business , which saw year - over - year revenue and gross margin increases of 46 % and 145 % , respectively . In addition , the market continued to show strong demand for our diverse portfolio of services offerings . Overall , service revenue grew 106 % year - over - year , and B2B service revenues totaled RMB16.2 million , representing a 336 % year - over - year increase . " Mr. Liu added , " In addition to strong topline growth , our gross profit grew twice as fast as our revenue in the third quarter . Gross profit grew by 85 % year - over - year , and as a percentage of revenue , our gross margins improved to 5 % . We are especially pleased with the margin improvement for the B2B segment , which as a percentage of revenue , grew from 3.6 % in Q1-2021 to 3.8 % in Q2-2021 , to 4.4 % in Q3-2021 . We expect this momentum to continue as we scale , putting us on a clear path to profitability . " " We continue to improve upon our SMART supply chain infrastructure . In the third quarter , we expanded the number of direct sourcing partnerships with domestic and global pharmaceutical companies to 401 , up 33 % from the same period in 2020. 111 is an attractive partner for pharmaceutical companies because we can help them establish and manage an ' out - of - hospital ' channel that connects them with over 350,000 retail pharmacies . We expect that our value as a commercialization partner will continue to increase as we grow , enabling us to offer even more services to companies looking to commercialize their products in China . " " Our recently launched ' 1 Health Membership ' program continues to gain strong momentum with our customers . This program allows members pay an annual fee to unlock exclusive benefits , and at the end of the third quarter , we had over 11,000 participating stores , well exceeding our internal target of 10,000 . Through 1 Health Membership , we have also seen an increase in purchases amongst participating stores , which are not only attracted to our vast selection and competitive prices , but also interested in gaining access to the valuable tools we offer to help them better manage their businesses . Currently , over 2,000 stores are using our proprietary systems to help them manage inventory , optimize their procurement and product selection , improve their customer experience through our CRM system , and provide product education to their customers and employees . " " As a company committed to helping people live healthier lives , ESG is very much embedded in our core values . Year - to - date , we have provided approximately 400,000 free online consultations , including with patients in Henan Provence , many of whom have been faced with severe flooding conditions . In addition , we have partnered with local hospitals to provide medical services to underserved populations . Finally , we have donated PPEs and other healthcare products to areas experiencing recurrence of COVID outbreaks . We will continue to support our community and help realize our collective goal of a ' Healthy China ' . " Mr. Liu concluded , " We will continue to focus on revenue growth and the margin improvement , and we are confident that we will become profitable in near future . Our leading position in the healthcare services sector , along with industry tailwinds , position 111 well for continued growth as we transform medical services in China . " Third Quarter 2021 Financial Results Net revenues were RMB3.35 billion ( US $ 519.3 million ) , representing an increase of 41.6 % from RMB2.36 billion in the same quarter of last year . As of September 30 , 2021 , the Company had two reporting segments , Business to Business ( " B2B " ) and Business to Consumer ( " B2C " ) . Revenue contribution from the Company's E- Channel was previously disclosed as a separate segment , but has been incorporated in the B2B segment since the third quarter of 2020 . ( In thousands RMB ) For the three months ended September 30 , 2020 2021 ΥΟΥ B2B Net Revenue Product Service 2,197,915 3,710 3,205,763 16,188 45.9 % 336.3 % Sub - Total 2,201,625 3,221,951 46.3 % Cost of Products Sold ( 2 ) 2,143,845 3,080,411 43.7 % Segment Profit Segment Profit % 57,780 2.6 % 141,540 4.4 % 145.0 % ( In thousands RMB ) For the three months ended September 30 , 2020 2021 ΥΟΥ B2C Net Revenue Product Service 152,939 8,159 116,069 8,207 ( 24.1 % ) 0.6 % Sub - Total 161,098 124,276 ( 22.9 % ) Cost of Products Sold ( 2 ) 128,943 99,751 Segment Profit Segment Profit % 32,155 20.0 % 24,525 19.7 % ( 22.6 % ) ( 23.7 % ) ( 2 ) 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 $ 546.5 million ) , representing an increase of 41.7 % from RMB2.5 billion in the same quarter of last year . • Cost of products sold was RMB3.2 billion ( US $ 493.6 million ) , representing an increase of 39.9 % from RMB2.3 billion in the same quarter of last year . The increase was primarily due to our rapid revenue growth in B2B business , which increased by 46.3 % as compared to the same quarter last year . • Fulfillment expenses were RMB100.6 million ( US $ 15.6 million ) , representing an increase of 72.9 % from RMB58.2 million in the same quarter of last year . Fulfillment expenses accounted for 3.0 % of net revenues this quarter as compared to 2.5 % in the same quarter of last year . We continued to expand the capacity of our eight fulfillment centers to support future business growth . • Selling and marketing expenses were RMB131.8 million ( US $ 20.5 million ) , representing an increase of 26.5 % from RMB104.3 million in the same quarter of last year , mainly due to increase in the number of sales staffs and expenses associated with the expansion of the B2B business . As a percentage of net revenues , selling and marketing expense further reduced to 3.9 % in the quarter from 4.4 % in the same quarter of last year . • General and administrative expenses were RMB53.1 million ( US $ 8.2 million ) , representing an increase of 86.2 % from RMB28.5 million in the same quarter of last year . Excluding share - based compensation expenses of RMB18.2 million and RMB7.1 million for the third quarter in 2021 and 2020 , respectively , non - GAAP general and administrative expenses totaled 1 % of net revenue , in the third quarter 2021 as compared to 0.9 % in the same quarter of last year . • Technology expenses were RMB56.1 million ( US $ 8.7 million ) , representing an increase of 155.4 % from RMB22.0 million in the same quarter of last year , mainly due to our increased investments in tech solutions and infrastructure . Technology expenses accounted for 1.7 % of net revenues this quarter as compared to 0.9 % in the same quarter of