Pharmacy Supplier 111 Inc. Sees Stock Drop 5% on Losses Despite Growth

The Chinese platform has been expanding its network of pharmacies, supplying more than 210,000 stores as of September - a significant growth from 130,000 pharmacies it served at the same time a year ago.

Author: Yaning Ying   

A mobile healthcare platform in China, 111 Inc. (Nasdaq: YI), reported strong revenue for the third quarter on Thursday, but its losses sent the company's shares down more than 5% in New York, to $5 apiece.

111 stated in a report today that its net revenue in the three months through September was $155.4 million, representing 123% growth year-over-year and 33% growth quarter-over-quarter, beating the high-end of its previous guidance. Gross profit, the company said, also reached a new high, which was $6.7 million, up 204% year-over-year.

However, the drug retailer said losses attributable to ordinary shareholders were $17.2 million, or 22 cents per share, compared with $17.6 million in the same quarter last year.

111 has been expanding its network of pharmacies, supplying more than 210,000 stores as of September - a significant growth from 130,000 pharmacies it served at the same time a year ago.

The company said its B2C (business to consumer) business revenue in the third quarter decreased by 11% to $27.1 million from $30.5 million. The strong performance of the B2B (business to business) segment and the increase in sales offset the decline.

The company's B2B revenue has been growing at approximately 40% for the last three consecutive quarters. In the third quarter alone, it was up 230% year-over-year and 40% quarter-over-quarter, at $128.4 million. Quarterly pharmacy order numbers reached 280,000, representing an increase of 45% from the second quarter, according to the statement.

Operating expenses were $23.1 million, representing an increase of 14% year-over-year, which accounted for 14.9% of net revenue this quarter as compared to 29.2% in the same quarter of last year, 111 reported.

Moving forward, the company said it will continue to deploy its T2B2C (technology companies stimulating major upheaval in business-oriented and consumer-oriented) strategy and to further develop its Smart Sourcing System to strengthen the smart supply chain. 

The chairman and chief executive officer of 111, Junling Liu, said in the statement, "We will continue to invest in our capabilities in chronic patients' life-cycle wellness management and improve the experience of service modules of patient education and drive adherence management and online refill." 

For the fourth quarter, 111 said it expects to generate revenue in the range of 1.18 billion yuan to 1.24 billion yuan, representing year-over-year growth of approximately 112% to 123%.

111 also noted it has so far repurchased $2.6 million of its ADSs under the $10 million share repurchase plan kicked off in August.