111, Inc. (YI) Reports Q4 Loss of $0.26, Revenues Miss

111, Inc. (NASDAQ: YI) reported Q4 EPS of ($0.26), versus $0.00 reported last year. Revenue for the quarter came in at $193.6 million versus the consensus estimate of $216.5 million.

• Non-GAAP Loss per ADS[4] was RMB1.75 (US$0.26), compared to RMB1.34 for the same period of last year.
• Net revenues were RMB1.35 billion (US$193.6 million), representing an increase of 141.8% year-over-year and an increase of 21.4% quarter-over-quarter, beating high-end of previous guidance of RMB1.24 billion.
• Operating expenses[1] were RMB210.6 million (US$30.2 million), representing an increase of 35.6% year-over-year. Operating expenses accounted for 15.6% of net revenue this quarter as compared to 27.9% in the same quarter of last year.
• Number of pharmacies served increased to more than 235,000 as of December 31, 2019, successfully accomplished the company's strategic goal of reaching 230,000 by end of 2019.
• Quarterly pharmacy order numbers reached 366,000, representing an increase of 201% year-over-year.

Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111, commented, "Our fourth quarter capped off a strong year for the company as we achieved record high growth rate of 141.8%. On a full year basis, we achieved net revenue of RMB3.95 billion, representing an increase of 121.3% year-over-year. In addition to the accelerated revenue growth and the rapid scaling of our business, we have made substantial progress in improving gross profit and further narrowing operating losses as a percentage of net revenue.

2019 was a year of considerable strategic progress where we continue to break down barriers to accessible healthcare by offering transformative novel model to serve the vast demand in China\'s multi-trillion healthcare industry. Firstly, 1 Drugstore, the pioneer in online drugstore model in China has become a well-recognized and trusted brand. Instead of tediously adjusting their schedules around an antiquated healthcare system, customers can now obtain drugs and other medical services in the privacy of their homes.

Secondly, in an ongoing effort to offer healthcare services to as many people as possible and to provide the largest selection to our consumers, we substantially expanded our network, ending the year covering more than 235,000 pharmacies (approximately 50% of the pharmacy market), which makes 111 the largest virtual pharmacy network in China. In addition, we established direct purchasing relationships with 188 drug manufacturers, expanded our technology-enabled infrastructure that includes a nationwide network of five fulfillment centers, and reinforced our commitment for a best-in-class supply chain infrastructure. Finally, we continued to strengthen our ecosystem through strategic partnerships with insurance companies and other healthcare providers.

2019 was also a year of major regulatory changes in our sector with sweeping reforms enacted to improve efficiency and affordability of healthcare delivery to China's large and geographically dispersed aging population. Many of these reforms are providing a strong tailwind for our business and we believe we are uniquely positioned as we strive to build a comprehensive healthcare services platform to meet the growing demand in every city.

In 2020, we will continue to scale our operations, further growing our network of pharmacies, drug manufacturers and doctors. In addition, we plan to expand into public hospitals across China, with a particular focus on tier three to six cities where we believe the need for our services is the most acute. We will also continue to develop novel services and tools that will educate and empower our customers and partners to make better informed decisions.

We are the only company in our industry with the capacity to provide nationwide, omni-channel coverage in China in the drug commercialization space. Every year, new life saving or life improving drugs are being approved and we can ensure that these drugs reach the people in need. The "111 omni-channel model\" will offer multiple channels for pharmaceutical companies to simultaneously reach healthcare providers nationwide and educate them about new drugs and therapies. This will significantly reduce time, resources, and cost, which will allow drugs to be distributed efficiently, and quickly. Imagine a platform that can deliver innovative drugs to a vast pool of patients in every city across China simultaneously! That is the power of the 111 omni-channel model."

Business Outlook

For the first quarter of 2020, the Company expects total net revenues to be between RMB1.40 billion and RMB1.48 billion, representing year-over-year growth of approximately 113.5% to 125.7%.

The above outlook is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

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

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