111 (YI) Fireside Chat with Water Tower Research summary

Financial performance and market environment

• Achieved profitability and positive cash flow for the second consecutive quarter, with improved operational expenditure by 120 basis points.

• Operating metrics are trending positively despite macroeconomic pressures and lower consumer confidence post-pandemic.

• Consumption in the pharmaceutical sector remains conservative, but expectations are for a rebound as confidence returns.

• The industry benefits from an aging population and increased healthcare awareness.

Policy and market outlook

• Central government policies, including anti-corruption, separation of medical services from drug sales, and zero markup, are favorable.

• Pharmacy retail market is expanding rapidly, with the number of pharmacies expected to exceed 700,000 by year-end.

• Both B2B and B2C segments are expected to benefit from these reforms, supporting a bullish outlook for the second half.

Expansion and operational strategy

• Expanding coverage in Q3 and Q4 with 6-7 new joint venture and franchised fulfillment centers.

• Direct sourcing relationships with pharmaceutical companies and partnerships with thousands of distributors to broaden product selection.

• Focus on providing a one-stop shopping experience to drive customer loyalty.