FAST NEWS: 111 Inc’s Revenue Flattens on Covid Disruptions

The Latest: Online drug seller 111 Inc. (YI.US) on Thursday reported third-quarter revenue of 3.35 billion yuan ($470.8 million), roughly the same as a year earlier. Its net loss for the period narrowed sharply to 96.8 million yuan, from 252.9 million yuan a year earlier.

Looking Up: The company’s gross profit for the quarter grew 22% to 202 million yuan, and its gross margin improved to 6% from 5% a year earlier. Gross profit for its B2B segment, which contributed the vast majority of its revenue, increased 27% year-over-year.

Take Note: China’s “Zero Covid” policy, including frequent lockdowns and other disruptions related to pandemic control, posted significant challenges for the company. Those included supply chain disruptions and difficulties with online medicine fulfilment.

Digging Deeper: Founded in 2010, 111 operates an integrated platform selling drugs to online and offline pharmacies across China. Its virtual pharmacy network covers approximately 413,000 pharmacies, or more than 70% of the total in China. The company recorded several quarters of strong revenue growth last year as it aimed to become profitable in the low-margin business. But the company said its priorities now will be delivering revenue and margin growth, downplaying the potential for near-term profitability.

Market Reaction: 111’s stock fell 3.68% to $2.88 on Thursday in New York after its results came out. The stock is now down nearly 90% from its all-time high of $23 last year.

Reporting by Chan Ka Po

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