UPDATE: 111, Inc. (YI) Reports Q3 Loss of $0.19, Revenues Miss

111, Inc. (NASDAQ: YI) reported Q3 EPS of ($0.19). Revenue for the quarter came in at $155.4 million versus the consensus estimate of $176.39 million.

Third Quarter 2019 Highlights

• Net revenues were RMB1.11 billion (US$155.4 million), representing 123.2% growth year-over-year and 32.5% growth quarter-over-quarter, beating high-end of previous guidance of RMB1.05 billion.
• Operating expenses[1] were RMB165.4 million (US$23.1 million), representing an increase of 13.7% year-over-year. Operating expenses accounted for 14.9% of net revenue this quarter as compared to 29.2% in the same quarter of last year.
• Number of pharmacies served increased to more than 210,000 as of September 30, 2019, compared to more than 130,000 pharmacies as of September 30, 2018.
• Quarterly pharmacy order numbers reached 280,000, representing an increase of 45.1% quarter-over-quarter. Same store sales were up 24.6% quarter-over-quarter and newly added pharmacies contributed 15.2% growth quarter-over-quarter.

Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111, commented, "We are pleased to report another quarter of solid business growth. Our third quarter net revenues increased 123.2% year-over-year and 32.5% quarter-over-quarter to RMB1.11billion, exceeding the high end of our guidance for the 4th consecutive quarter. Gross profit reached RMB47.3 million, up 204.3% year-over-year. Our operating efficiency continued to improve during the quarter, due to solid execution of our growth strategy. All operating expenses as a percentage of revenue were lower year-over-year. In particular, fulfillment cost as a percentage of revenue decreased further to 2.8% during the quarter, as compared to 3.2% in the previous quarter, and 4.2% in the same quarter of last year. This clearly demonstrates the growing effectiveness of our smart supply chain technology.

As a result of relentlessly executing our T2B2C strategy, by September 30, 2019, we had a fast-growing virtual pharmacy network of more than 210,000 pharmacies as compared to 130,000 as of September 30, 2018. We have also made solid progress in establishing strategic partnerships with pharmaceutical and insurance companies. By the end of the quarter we were directly sourcing from 150 leading pharmaceutical manufacturers, as compared to 80 in the same quarter last year. During the quarter, we signed a strategic partnership with TK.CN, the online arm of Taikang Insurance Company.

The Internet+ model in the healthcare sector is gaining more popularity and we believe 111, Inc. is ideally positioned to benefit from more favorable regulatory environment. As a leading integrated online and offline healthcare platform in China, our mission is to build efficiency and transparency in this highly fragmented and multi-tiered pharmaceutical distribution and retail industry, and to deliver unique value to both consumers and businesses."

Business Outlook

For the fourth quarter of 2019, the Company expects total net revenues to be between RMB1.18 billion and RMB1.24 billion, representing year-over-year growth of approximately 112% to 123%.

For earnings history and earnings-related data on 111, Inc. (YI) click here.

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