As reported by the Smart Finance APP, on August 29th, 111 inc (YI.US) released its Q2 2024 performance report. The report shows that 111 inc achieved revenue of 3.424 billion RMB in this quarter; Non-GAAP operating profit was 8.5 million RMB, and GAAP operating profit reached 3.3 million RMB. It has achieved operating profit for two consecutive quarters and continuous positive operating cash flow, marking a further solidification of 111 inc's profitability trend.

111 inc has always been committed to expanding market share to drive revenue growth while persistently pursuing improved operational efficiency. During the reporting period, 111 inc continued to reduce costs and improve efficiency in corporate governance, operational management, and supply chain fulfillment, relying on its core technological advantages. Efficiency has significantly improved in all aspects.

Widespread application of digital intelligence drives a significant increase in operational efficiency.

As a high-tech enterprise recognized by the Ministry of Science and Technology, 111 inc has continuously solidified its core competitiveness and promoted the digital transformation of the pharmaceutical and healthcare industry chain through digital technology innovation in the field of medical and health. In this quarter, 111 inc has added four new invention patents, bringing the total to 28 invention patents held, demonstrating the continuous investment and achievements in technological innovation, and providing strong support for the long-term development of the company.

Benefiting from the company's expanding business areas and continuously enhancing technological capabilities, 111 inc's operational efficiency has significantly improved, and cost expenses have continued to decrease. In the second quarter, the company's operating expenses as a percentage of net income decreased from 7.2% in the same period last year to 6.0% this quarter. Among them, 111 inc's supply chain fulfillment costs have continued to decrease based on big data and algorithm optimization. Through algorithm optimization, the overall efficiency of national fulfillment centers has increased by 11%; picking paths have been reduced by 15%, further improving the outbound efficiency.

In addition, 111 inc continues to invest in AI innovation applications. By using AI to construct a large database of medical instruments and health products, the accuracy of coding has doubled, and the matching rate of codes has increased by 50%.

Optimizing and upgrading the supply chain network, deepening the cooperation between the upstream and downstream industries.

Through a firm implementation of the industrial internet strategy, 111 Inc has created a nationwide network of virtual pharmacies, which has served approximately 0.47 million pharmacies nationwide, and has established partnerships with over 500 well-known domestic and foreign pharmaceutical companies and over 4,500 distributors.

In the second quarter, the nationwide supply chain network infrastructure of 111 Inc continued to be upgraded. So far, 13 order fulfillment centers have been established. The company has newly registered a second joint-venture order fulfillment center in Urumqi and Wuhan, and plans to start operation in the third quarter of 2024. In addition, 111 Inc's nationwide logistics network 'Kunpeng' continues to make progress, using digital trunk lines and on-site distribution models to connect the direct network deployment between order fulfillment centers nationwide, reducing delivery costs by 15% and reducing delivery damage rate by 55%. This helps solve the pain points of the industry, such as slow delivery, high damage rate, and inefficient acceptance, and provides professional pharmaceutical logistics and distribution services for partners in the pharmaceutical supply chain.

During the reporting period, 111 Inc persisted in using digital technology to empower partners in the pharmaceutical industry chain. Currently, 111 Inc has empowered hundreds of well-known pharmaceutical companies and thousands of distributors in all-round drug commercialization, digital marketing, and market insights. The company also actively creates one-stop services for merchants, and has created merchant bidding tools and automated operation systems, using big data for intelligent pricing for merchants. At the same time, with the operation focus on digital investment platform and billions of subsidies, the conversion rate of traffic has been significantly increased to 32%.

111 Inc continues to innovate its business operations. Through the successful holding of the 'No.1 Summit', it has gathered representatives from well-known industrial brands, leading regional chain pharmacies, and growing chain pharmacies, effectively increasing customer stickiness and achieving a year-on-year sales growth of 111.8% for core marketing varieties.

In order to enhance the competitiveness of its products, 111 Inc continuously strengthens its strategic partnership for direct procurement with well-known domestic and foreign pharmaceutical companies. During the reporting period, 111 Inc announced a strategic upgrade of its partnership with Xi'an Janssen Pharmaceutical Ltd. The two parties will deepen their cooperation on a national level for multiple series of products including 'Xi'an Janssen Folic Acid Tablets'.

Dr. Yu Gang, co-founder and executive director of 111 Inc, said: 'In the second quarter, we continued to leverage our advantages in digital technology and intelligent supply chain, greatly improving operational efficiency, and achieved two consecutive quarters of operational profitability. In the future, we will continue to focus on digitally empowering the pharmaceutical and health industry chain, actively promote the application of new technologies such as digitalization and artificial intelligence, and create long-term value for our customers, partners, and shareholders.'