111, Inc. Announces Fourth Quarter and Fiscal Year 2021 Financial Results


SHANGHAI, March 17, 2022 /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 fourth quarter and fiscal year ended December 31, 2021.

Fourth Quarter 2021 Highlights

  • Net revenues were RMB3.46 billion (US$543.1 million), representing an increase of 30.9% year-over-year.
  • Gross segment profit (1) increased by 98% year-over-year, with B2B segment profit increasing by 133% year-over-year.
  • Non-GAAP loss from operations (2) was RMB76.9 million (US$12.1 million), compared to RMB112.3million in the same quarter of last year. As a percentage of net revenues, non-GAAP loss from operations decreased to 2.2% from 4.2% in the same quarter of last year
  • Number of partnerships with pharmaceutical companies increased to 515.

Fiscal Year 2021 Highlights

  • Net revenues were RMB12.4 billion (US$1.95 billion), representing an increase of 51.5% year-over-year.
  • Service revenue increased by 103% year-over-year, with B2B service revenue increasing by 195% year-over-year.
  • Gross segment profit increased by 70% year-over-year and gross segment margin improved from 4.5% to 5.0%, with B2B segment profit increasing by 126% year-over-year.
  • Technology expenses were RMB189.3 million (US$29.7 million), representing an increase of 106% year-over-year.  We have made significant investment in technology to build next generation digital platform and obtained a total of 19 patents in China.
  • Cash and cash equivalents, restricted cash and short-term investments at the end of 2021 amounted to RMB 943.2 million (US$148.0 million) as of December 31, 2021.

(1) Gross segment profit represents net revenues less cost of goods sold.
(2) Non-GAAP loss from operations represents loss from operations excluding share-based compensation expenses.

Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111, commented, “We delivered another solid quarter and the results brought us another step closer to profitability. Net revenue increased by 30.9% year-over-year to RMB 3.46 billion, marking the 14th consecutive quarter of year-over-year growth for 111 since the company’s NASDAQ IPO.  The B2B segment saw year-over-year revenue and segment profit increases by 34.6% and 132.7%, respectively. Our partnerships with pharmaceutical companies are growing steadily and the direct purchase relationship totalled over 500 by the end of 2021. We are delighted to see that our market coverage from both upstream and downstream is increasing and customer loyalty continues to grow and this is proven by our solid financial results.

Mr. Liu added, “In addition to strong topline growth, our gross segment profit grew 3 times as fast as our revenue in the fourth quarter. Gross segment profit grew by 98% year-over-year, and as a percentage of revenue, our gross segment margins improved to 5.9%. We are especially pleased with the margin improvement for the B2B segment, which as a percentage of revenue, grew from 3.6% in the first quarter of 2021 to 3.8% in the second quarter of 2021, and further to 4.4% in the third quarter of2021 and 5.2% in the fourth quarter of 2021. We expect this momentum to continue as we scale, putting us on a clear path to profitability. Indeed, we were pleased to see continued progress toward achieving that milestone, as demonstrated by the sequential quarter-over-quarter decrease in non-GAAP loss from operation as a percentage of net revenues from 4.1% in the third quarter of 2021 to 2.2% in the fourth quarter of 2021.

“On full year basis, we have achieved net revenues of RMB12.4 billion with a 51.5% growth year over year, which put us into the 10 Billion Club for the first time.  We continued to broaden our revenue mix with service revenue growth by 103% year over year, while the overall gross segment profit achieved 70% growth year over year. We believe that we have achieved our initial strategic target since IPO, which is to rapidly build up suppliers and customers network with competitive pricing in order to achieve reasonable scale to compete in this market.  As a matter of fact, we are now directly working with 500+ pharmaceutical companies and serving more than 385,000 retail pharmacies.  Our revenue scale has been rapidly expanded 13 times in 4 years from RMB959 million in 2017 to RMB12.4 billion in 2021.”

“We would like our shareholders to recognize that our company has conducted a series of initiatives to achieve margin expansion, as well as to optimize our cost and improve our organizational alignment and the results have been very encouraging.  We have significantly improved our operating efficiency while maintaining our competitive edge.  Our goal is to reach quarterly break-even at the non-GAAP operating income level in 2022.  I am delighted to see that we are moving towards the right direction.”

Fourth Quarter 2021 Financial Results

Net revenues were RMB3.46 billion (US$543.1 million), representing an increase of 30.9% from RMB2.64 billion in the same quarter of last year.

(In thousands RMB)


For the three months ended December 31,



2020


2021


YoY








B2B Net Revenue







Product


2,462,875


3,312,969


34.5%

Service


11,966


18,424


54.0%








Sub-Total


2,474,841


3,331,393


34.6%








Cost of Products Sold(3)


2,400,672


3,158,837


31.6%








Segment Profit


74,169


172,556


132.7%

Segment Profit %


3.0%


5.2%



(In thousands RMB)


For the three months ended December 31,



2020


2021


YoY








B2C Net Revenue







Product


161,394


116,285


(27.9%)

Service


6,715


13,173


96.2%








Sub-Total


168,109


129,458


(23.0%)








Cost of Products Sold


138,724


97,330


(29.8%)








Segment Profit


29,385


32,128


9.3%

Segment Profit %


17.5%


24.8%



(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 RMB3.6 billion (US$559.5 million), representing an increase of 27.9% from RMB2.8 billion in the same quarter of last year.

  • Cost of products sold was RMB3.3 billion (US$511.0 million), representing an increase of 28.2% from RMB2.5 billion in the same quarter of last year. The increase was primarily due to our rapid revenue growth in B2B business, which increased by 34.5% from the same quarter last year.
  • Fulfillment expenses were RMB104.9 million (US$16.5 million), representing an increase of 50.8% from RMB69.6 million in the same quarter of last year. Fulfillment expenses accounted for 3.0% of net revenues this quarter as compared to 2.6% in the same quarter of last year.  We continued to expand the capacity of our fulfillment centers to support future business growth.
  • Selling and marketing expenses were RMB125.3 million (US$19.7 million), representing an increase of 5.8% from RMB118.4 million in the same quarter of last year. As a percentage of net revenues, selling and marketing expense further reduced to 3.6% in the quarter from 4.5% in the same quarter of last year.
  • General and administrative expenses were RMB50.4 million (US$7.9 million), representing an increase of 58.5% from RMB31.8 million in the same quarter of last year. Excluding the share-based compensation expenses of RMB15.9 million for the quarter and RMB1.1 million for the same quarter last year, respectively, general and administrative expenses as a percentage of net revenues, accounted for 1.0% in the quarter as compared to 1.2% in the same quarter of last year.
  • Technology expenses were RMB30.9 million (US$4.8 million), compared with RMB30.7 million in the same quarter of last year. As a percentage of net revenues, technology expenses reduced to 0.9% this quarter from 1.2% in the same quarter of last year.

Loss from operations was RMB104.7 million (US$16.4 million), compared to RMB144.7 million in the same quarter of last year. As a percentage of net revenues, loss from operations decreased to 3.0% in the quarter from 5.5% in the same quarter of last year.

Non-GAAP loss from operations was RMB76.9 million (US$12.1 million), compared to RMB112.3million in the same quarter of last year. As a percentage of net revenues, non-GAAP loss from operations decreased to 2.2% in the quarter from 4.2% in the same quarter of last year. 

Net loss was RMB101.7 million (US$16.0 million), compared to RMB137.4 million in the same quarter of last year. As a percentage of net revenues, net loss decreased to 2.9% in the quarter from 5.2% in same quarter of last year.

Non-GAAP net loss (4) was RMB73.9 million (US$11.6 million), compared to RMB105.0 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss decreased to 2.1% in the quarter from 4.0% in same quarter of last year. 

Net loss attributable to ordinary shareholders was RMB111.3 million (US$17.5 million), compared to RMB130.6 million in the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 3.2% in the quarter from 4.9% in same quarter of last year.

Non-GAAP net loss attributable to ordinary shareholders (5) was RMB83.5 million (US$13.1 million), compared to RMB98.2 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased to 2.4% in the quarter from 3.7% in same quarter of last year.

(4) Non-GAAP net loss represents net loss excluding share-based compensation expenses, net of tax. Considering the impact of accretion of redeemable non-controlling interest for the fourth quarter and fiscal year ended December 31, 2021, non-GAAP net loss is used as a more meaningful measurement of the operation performance of the Company.
(5) Non-GAAP net loss attributable to ordinary shareholders represents net loss attributable to ordinary shareholders excluding share-based compensation expenses, net of tax.

Fiscal Year 2021 Financial Results

Net revenues were RMB12.4 billion (US$1.95 billion), representing an increase of 51.5% from RMB8.2 billion last year.

As of December 31, 2021, the Group 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…



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