Reshaping the Value Chain of Healthcare and Pharmaceutical
Industry with Digital Technology
NASDAQ: YI
F ourt h Q uart er and F is c al Year 2023 Earn in gs Call
Mar 21, 2024
1
DISCLAIMER
- The following presentation has been prepared by 111,. Inc. ("111" or the "Company") solely for informational purposes and should not be construed to be, directly or indirectly, in whole or in part, an offer to buy or sell and/or an invitation and/or a recommendation and/or a solicitation of an offer to buy or sell any security or instrument or to participate in any investment or trading strategy, nor shall any part of it form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities or otherwise.
- This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations involved with an investment in the securities of the Company. Nothing contained in this document shall be relied upon as a promise or representation as to the past or future performance of the Company. Past performance does not guarantee or predict future performance.
- You acknowledge that any assessment of the Company that may be made by you will be independent of this document and that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company.
- This document contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Among other things, the Business Outlook and quotations from management in this announcement, as well as 111's strategic and operational plans, contain forward-looking statements. 111 may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control.
- Forward-lookingstatements involve inherent risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to the Company's ability comply with extensive and evolving regulatory requirements, its ability to compete effectively in the evolving PRC general health and wellness market, its ability to manage the growth of its business and expansion plans, its ability to achieve or maintain profitability in the future, its ability to control the risks associated with its pharmaceutical retail and wholesale businesses, and the Company's ability to meet the standards necessary to maintain listing of its ADSs on the Nasdaq Global Market, including its ability to cure any non-compliance with Nasdaq's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and 111 does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
- This document also contains non-GAAP financial measures, the presentation of which is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America. In addition, the Company's calculation of these non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited. The reconciliation of those measures to the most comparable GAAP measures is contained within this document or the earnings press release.
- This document speaks as of December, 2023. Neither the delivery of this document nor any further discussions of the Company with any of the recipients shall, under and circumstances, create any implication that there has been no change in the affairs of the Company since that date.
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- BUSINESS & OPERATIONAL PERFORMANCE HIGHLIGHTS
- FINANCIAL REVIEW
- APPENDIX
CONTENT
3
- BUSINESS & OPERATIONAL PERFORMANCE HIGHLIGHTS
- FINANCIAL REVIEW
- APPENDIX
CONTENT
4
Navigating Changes: the Pharmaceutical Retail Market in 2023
- 2023 is a significant turning point for China's economy and the healthcare industry, adapting to normalization while accelerating digitalization.
- The anti-corruption campaign in 2023 led to a significant crackdown on bribery within the hospital system, urging a shift towards greater transparency and integrity in healthcare transactions.
- Healthcare industry shifts towards technological innovation due to aging population, rising healthcare costs, and increasing consumer demand.
- We strategically positioning as a leader in the digital health revolution, aim to enhance the capabilities of pharmacies, enabling them to thrive in this new environment and look forward to contributing to a healthier, more transparent healthcare system for all.
National Retail Pharmacy Market Full Category GMV Trend |
|||||||||
600 |
10.40% |
12% |
|||||||
500 |
10% |
||||||||
6.90% |
8% |
||||||||
400 |
5.60% |
||||||||
6% |
|||||||||
300 |
|||||||||
3.60% |
4% |
||||||||
2.10% |
|||||||||
200 |
|||||||||
2% |
|||||||||
100 |
-0.70% |
0% |
|||||||
441.2 |
465.7 |
482.3 |
492.2 |
543.3 |
539.4 |
||||
0 |
-2% |
||||||||
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
||||
GMV (Billion) |
YoY Growth Rate |
||||||||
Source: Sinohealth CMH |
5 |
Maintaining Steady Revenue Amidst a Sudden Sales Surge During the 2022 Q4 Pandemic
Revenue - Total |
B2B Revenue |
|||
(Million) |
YoY -0.96% |
(Million) |
YoY -0.03% |
|
RMB 4,148 |
RMB 4,109 |
RMB 4,022 |
RMB 4,021 |
|
USD 601 |
USD 579 |
USD 583 |
USD 566 |
2022 Q4 |
2023 Q4 |
2022 Q4 |
2023 Q4 |
6
Driving Operational Excellence
(Excluding Share-Based Compensation Expenses)
Selling and Marketing Expense
as % of Net Revenue
YoY -10bpsYoY -50bps
Fulfillment Expense as % of Net Revenue
YoY -40bpsYoY -30bps
Workforce
Optimization
2.7% 2.6%
3.0%
2.5%
2.9% |
3.0% |
|
2.5% |
2.7% |
|
Streamlined
Management
Improved
2022 Q4 |
2023 Q4 |
2022 |
2023 |
Technology Expense as % of Net Revenue
YoY -30bps
0.9%
2022 Q4 |
2023 Q4 |
2022 |
2023 |
G&A Expense as % of Net Revenue
YoY -20bps
0.9%
Corporate
Governance
Technology
Investment
Fulfillment
0.6% 0.6%
0.6%
0.9% |
0.9% |
0.7% |
Upgrade
In-House
Advisory
Department
2022 Q4 |
2023 Q4 |
2022 |
2023 |
2022 Q4 |
2023 Q4 |
2022 |
2023 |
7
Fiscal Year 2023 Net Revenue Increased 10.6% with Gross Segment Profit Up 1.1% YoY
Revenue/Gross Segment Profit/Margin - Total Company |
Revenue/Gross Segment Profit/Margin - B2B |
|||||
(Million) |
(Million) |
|||||
YoY +10.6% |
YoY +11.4% |
|||||
RMB 14,948 |
RMB 14,571 |
|||||
USD 2,105 |
USD 2,052 |
|||||
RMB 13,517 |
YoY +3.5% |
|||||
USD 1,960 |
YoY +1.1% |
|||||
RMB 13,075 |
||||||
USD 1,896 |
RMB 770 |
|||||
RMB 849 |
||||||
USD 108 |
||||||
RMB 840 |
USD 120 |
RMB 744 |
||||
USD 122 |
USD 108 |
|||||
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
6.2% |
5.7% |
5.7% |
5.3% |
||||
Revenue |
Gross Profit |
Revenue |
Gross Profit |
8
Total Operating Expenses Narrowed as a Percentage of Net Revenue
Operating Expense as % of Net Revenue (Excluding Share-Based Compensation Expenses)
Excluding Share-Based |
Excluding Share-Based |
7.8% |
Compensation Expenses |
Compensation Expenses |
||||||||
7.1% |
6.5% |
2022 Q4 |
2023 Q4 |
2022 |
2023 |
|||||
6.6% |
Total |
7.1% |
6.6% |
7.8% |
6.5% |
|||||
Selling and Marketing |
2.7% |
2.6% |
3.0% |
2.5% |
||||||
G&A |
0.9% |
0.9% |
0.9% |
0.7% |
||||||
2022 Q4 |
2023 Q4 |
2022 |
2023 |
|||||||
Technology |
0.6% |
0.6% |
0.9% |
0.6% |
||||||
Fulfillment |
2.9% |
2.5% |
3.0% |
2.7% |
||||||
Non-GAAP Loss from Operations1 as % of Net Revenue
1.6% |
||||||||||
1.3% |
0.8% |
|||||||||
2023 Q4 |
2023 |
|||||||||
1.0% |
||||||||||
Increased |
Decreased |
|||||||||
30bps YoY |
80bps YoY |
|||||||||
2022 |
2023 |
|||||||||
2022 Q4 |
2023 Q4 |
|||||||||
Notes: |
||||||||||
1. |
Non-GAAP loss from operations represents loss from operations excluding share-based compensation expenses. |
9 |
||||||||
2. |
Cost of severance of organization optimization impacted Q4 Non-GAAP loss. |
|||||||||
Navigating the Delicate Balance Between Pioneering Technological Advancements and Adhering to Proven Traditional Survival Tactics
Traditional Model
Pharmas
Primary Distributor
Secondary Distributor
Tertiary Distributor
Retail End
Consumer
Digital Model
Pharmas
111, Inc.
Fully Digitalized |
Digital Marketing |
Operational System |
|
Technology Empowerment |
30 + Proprietary Systems |
for Pharmacies |
|
Intelligent Supply |
22 Patents |
Chain |
|
Retail End
Consumers
Data Direct Linkage & Digital Enablement
Industry Upgrade
- De-Intermediationof Industrial Supply Chain
- Transaction Automation
- Intelligent Service
Enabling
Technological
Innovation
- Industrial Informatization
- Industrial Digitalization
- Industrial AI
10
Attachments
Disclaimer
111 Inc. published this content on 21 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2024 09:25:25 UTC.