111, Inc. Sponsored ADR Class A (YI.US) Q2 Revenue of RMB 2.3 Billion, AI Drives Cost Reduction and Efficiency Improvement

On September 17, 111, Inc. Sponsored ADR Class A (YI.US) released its second quarter 2026 earnings report. The report shows that 111, Inc. Sponsored ADR Class A achieved revenue of RMB 2.3 billion in the quarter. The company continued to deepen its asset-light, platform-based operations, steadily improved operational efficiency, accelerated AI penetration across the entire business chain, and continuously unleashed the momentum of digital-intelligent operations. In the first half of the year, platform (MP) service revenue grew 18.2% year over year, further demonstrating the results of strategic transformation and cost reduction and efficiency improvement. Accelerating AI business penetration, activating new momentum for digital-intelligent operations In the second quarter, the company comprehensively accelerated AI business penetration and continued to promote AI implementation across the entire chain, including sales, middle office, and supply chain: 12 AI applications on the sales side were fully launched, 6 intelligent agents in the business middle office were put into production, efficiency in 4 core scenarios improved by more than 80%, and more than 20 reusable AI capabilities were accumulated, driving AI from "pilot exploration" to daily business operations. In customer operations and channel collaboration, the AI business assistant has moved from customized development to large-scale application, focusing on chain customers, with a WeChat message reach rate of 93%; the rebate incentive center launched during the same period covered 158 enterprises and 108 product specifications in its first pilot batch, initially forming a closed-loop data collaboration connecting manufacturers, the platform, and pharmacies. Supply chain digitalization also accelerated in tandem. The company continued to improve supply chain digitalization, upgrading inventory operations data from T+1 queries to real-time monitoring, enabling full-chain tracking of anomaly alerts and execution records; after the Wuhan sub-warehouse went online, SKUs remained stable at more than 16,000, further improving the transparency and responsiveness of multi-warehouse collaboration. As AI and digital capabilities penetrate more business links, the operating logic of the company's core business is shifting from traditional manual-driven operations to AI intelligence-driven operations, further consolidating the trend of efficiency improvement and cost reduction. In the second quarter, the company's fulfillment expense ratio improved, total logistics expenses fell significantly by 29.5% year over year; overall quarterly operating expenses decreased by 16.1% year over year. Out-of-hospital market expansion accelerated, upstream and downstream cooperation continued to deepen Supported by both operational efficiency and AI capabilities, out-of-hospital market expansion became more robust. Key marketing products and drug agency business grew strongly, among which net revenue and gross profit of key marketing products increased by 90.2% and 86.4%, respectively. To further enrich the product portfolio, the company continued to expand cooperation with pharmaceutical companies to secure product distribution rights for small and medium-sized chain pharmacies. Among them, an original flagship product launched in the first quarter of 2025 saw sales climb from 85,000 boxes per quarter in the same period last year to 1.04 million boxes per quarter this year. In addition, other key products that have obtained distribution rights also maintained steady sales this quarter, with single-product sales reaching new highs. These results highlight the company's unique marketing expertise and create strong growth momentum for upstream suppliers and downstream partners. Industrial ecosystem cooperation also advanced in depth. The Southwest Regional Manufacturers Conference was successfully held, bringing together more than 300 manufacturers and over 500 participants from the Southwest region, with 36 enterprises reaching strategic cooperation on site, marking a new step forward in regional industrial collaboration and policy consensus. In addition, the company's national fulfillment network continued to expand, providing more solid support for out-of-hospital market expansion. In the second quarter, fulfillment centers increased to 21, with a new fulfillment center in Yunnan, covering more than 890 counties and cities nationwide within 24 hours, simultaneously improving service radius and delivery timeliness. Dr. Gang Yu, co-founder and executive chairman of 111, Inc. Sponsored ADR Class A, said: "In the second quarter of 2026, we continued to deepen the strategic deployment of asset-light, platform-based operations. In the first half of the year, platform (MP) service revenue achieved 18.2% year-over-year growth, confirming the effectiveness of our strategic progress and fully reflecting our commitment to a high-quality, scalable, and efficient operating development path. At the same time, we are making every effort to advance the full implementation of our artificial intelligence strategy, accelerating the fundamental transformation of our business model from traditional labor-driven to AI intelligence-driven, striving to continuously create long-term returns for customers, ecosystem partners, and shareholders with a superior service experience."