111, Inc. Reports Strong Growth in Promotional Products and Marketplace Services
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111, Inc., a leading tech-enabled healthcare platform company, has reported its unaudited financial results for the second quarter of 2026. The company has transitioned from an asset-heavy business model to an asset-light one, focusing on operational efficiency and platform-oriented services.
Revenue from promotional products saw a significant increase, with net revenue rising by 121% year-over-year to RMB60.7 million (US$8.9 million). The gross profit from these products also saw a 120% increase. Key products like Levofloxacin Tablets (Cravit®) from JNOVA Pharmaceutical (Beijing) Co., Ltd., have shown strong growth, with sales volume increasing from 364,000 boxes to 1,041,000 boxes, and revenue jumping 157% to RMB28.1 million. Other products, such as Rivaroxaban Tablets (Pusitong®) from Qilu Pharmaceutical Co., Ltd., and Xinkeshu Tablets from Shandong Wohua Pharmaceutical Co., Ltd., also performed well, each reaching 60,000 boxes.
The company's total marketplace (MP) service revenue increased by 18.2% year-over-year for the first half of 2026, indicating growth in its marketplace service business and enhancing the quality of its revenue. This strategic move is part of 111, Inc.'s ongoing efforts to optimize its business model and improve profitability and liquidity.
Operating expenses decreased by 16.1% year-over-year to RMB155.5 million (US$22.9 million). The reduction is attributed to the company's investment in and adoption of AI agents, which have enabled workforce streamlining. The company incurred substantial severance costs, primarily within back-end support functions, as part of its efficiency-focused organizational initiatives.
Fulfillment expenses, which amounted to RMB63.6 million (US$9.4 million), decreased by 29.5% from the prior-year quarter. Fulfillment expenses as a percentage of net revenue improved to 2.76%, compared to 2.81% in the prior-year quarter, reflecting enhanced operational efficiency and disciplined cost management.
Mr. Junling Liu, Co-Founder, Chairman, and CEO of 111, Inc., commented, "During the second quarter of 2026, we continued to execute our strategic transition toward a more asset-light and platform-oriented operating model. The 18.2% year-over-year increase in total marketplace (MP) service revenue for the first half of 2026 demonstrates steady progress in the strategic initiative and underscores our pursuit of high-quality, scalable, and cost-efficient growth."
The company's net revenues for the second quarter of 2026 were RMB2.3 billion (US$339.0 million), a 28.3% decrease from the RMB3.2 billion in the prior-year quarter. Gross segment profit was RMB132.3 million (US$19.5 million), a 28.6% decrease from RMB185.4 million in the same quarter of last year. Operating costs and expenses were RMB2.3 billion (US$342.4 million), a 27.5% decrease from RMB3.2 billion in the same quarter of last year.
The company's loss from operations was RMB23.2 million (US$3.4 million), compared to an income from operations of RMB0.1 million in the same quarter of last year. Non-GAAP loss from operations was RMB20.5 million (US$3.0 million), compared to non-GAAP income from operations of RMB3.0 million in the same quarter of last year. Net loss was RMB31.7 million (US$4.7 million), compared to RMB7.3 million in the same quarter of last year.
As of June 30, 2026, the company held cash and cash equivalents, restricted cash, and short-term investments totaling RMB381.1 million (US$56.2 million). The company continues to focus on integrating AI-enabled capabilities across multiple operational scenarios, including intelligent demand forecasting, inventory optimization, fulfillment routing, and merchant operation management. The company also plans to deploy AI agent-based solutions in pharmacies and healthcare service scenarios to help customers better manage day-to-day operations.
By optimizing its network and selectively exiting underperforming fulfillment centers, the company has reduced fulfillment expenses by 29.5% year-over-year, outpacing the decrease in revenue. This has led to a 5 basis point improvement in fulfillment expenses as a percentage of net revenue, highlighting the company's capacity for sustained operational improvement and its commitment to prudent cost management.
Looking ahead, 111, Inc. aims to expand margins, lift profitability, and deliver long-term value to stakeholders. The company will continue to integrate AI-enabled capabilities and deploy AI agent-based solutions to further streamline operations and enhance its platform-oriented business model.