As reported by Techfin Financial, on November 27, 111 inc (YI.US) released the performance report for the third quarter of 2024. The report shows that 111 inc achieved a revenue of 3.6 billion yuan in this quarter, with a gross profit of 0.21 billion yuan, a gross profit year-on-year growth of 10.5%; Non-GAAP operating profit was 7.1 million yuan, achieving operating profit for three consecutive quarters, as well as positive operating cash flow for three consecutive quarters. Despite challenges from a sluggish consumer market and pressure from downstream pharmacies, 111 inc's performance in the third quarter remained robust, demonstrating the resilience of the company in operational management.

Building core digital competitiveness to enhance operational efficiency

During the reporting period, 111 inc continuously strengthened its technological advantages by investing in system development, models, algorithms, and data applications, further enhancing its core digital competitiveness. Leveraging its core technological strengths, 111 inc managed to significantly reduce costs in operational and supply chain management, leading to a substantial improvement in operational efficiency. In the third quarter, the company's operating expenses as a percentage of net revenue decreased from 7.4% in the same period last year to 5.8% this quarter.

In this quarter, 111 inc also obtained a new invention patent, bringing the total number of patents held to 29. The continuous investment and achievements in technological innovation have provided strong support for the company's long-term development. Through an open platform and inventory sharing technology, 111 inc organically connected with upstream merchants' inventory to form a self-operated integrated inventory, adding 0.023 million SKUs, enriching the product selection, and further enhancing the company's supply capabilities.

Furthermore, the company has made significant progress in applying AI-driven solutions, particularly in the field of traditional chinese medicine decoction pieces. Based on the specifications of traditional chinese medicine decoction pieces, an AI algorithm model was developed to identify the specifications of the decoction pieces, with the model's accuracy improving from 77% to 98.18% through multiple iterations. The accuracy of code assignment for the traditional chinese medicine decoction pieces also increased from 43% to 96%.

Continuous enhancement of supply chain management capabilities; multiple branch operational centers selected for the top 100 ranking

In the third quarter, 111 inc expanded its delivery centers nationwide, with four new delivery centers located in Guangzhou, Guangdong Province, Wuhan, Hubei Province, Jinan, Shandong Province, and Shijiazhuang, Hebei Province, starting operation. As of now, the number of delivery centers has increased to 15. With the upgrade of the national supply chain network, the company's supply and delivery capabilities continue to strengthen. The new delivery centers have significantly shortened the local customer delivery time by two days, further enhancing the company's ability to cover 890 counties and cities nationwide within 24 hours.

In addition, 111 inc's national logistics network "Kunpeng" continues to exert efforts. By utilizing digital trunk lines and on-site delivery models, it has established a direct network deployment among nationwide delivery centers, actively expanding the scale of trunk lines and the coverage of on-site delivery services. As of now, 28 transportation routes have been opened. On one hand, the "Kunpeng" logistics network helps internally reduce costs and improve efficiency, achieving a 15% reduction in distribution costs; at the same time, it enables external empowerment of the supply chain, reducing the distribution damage rate by 55%. It helps address the pain points of the industry, such as "mixed goods, high damage rate, and inefficient acceptance", and provides professional logistics services internally and externally.

During the reporting period, 111 inc's operating centers in various parts of the country have won multiple honors, demonstrating the strong business performance and influence of the company in these regional markets. Among them, the Wuhan operation center was awarded the Top 100 Private Enterprises in the Service Industry in Hubei Province and Top 100 Private Enterprises in Wuhan City; the Guangzhou operation center was listed in the Top 100 Private Enterprises in Guangdong Province and the Top 50 Service-Oriented Private Enterprises in Guangdong Province; and the Chongqing operation center was selected as one of the Top 100 Private Enterprises in the Service Industry in Chongqing.

Dr. Yu Gang, Co-founder and Executive Chairman of 111 inc, stated: "This quarter, despite the challenges brought by the macro environment, our performance remains robust. Through digitalized and refined management, we continue to enhance organizational and operational efficiency, reduce costs, and have achieved three consecutive quarters of operational profitability. We will continue to drive the application and innovation of digitalization in the medical and health field, continuously empower upstream and downstream partners in the medical and health industry, and accelerate the digitalization process of the pharmaceutical industry."