On September 17, 111 Inc. (YI.US) released its second quarter 2025 earnings report. The report shows that 111 Inc. achieved revenue of RMB 3.2 billion for the quarter, with Non-GAAP operating profit of RMB 3 million, maintaining consecutive operating profitability and sustaining positive operating cash flow throughout the first half of the year.

**AI-Powered Supply Chain Enhances Operational Efficiency**

During the reporting period, 111 Inc. continued to invest heavily in AI innovation and digitalization, leveraging AI capabilities to continuously improve operational efficiency. In the second quarter, the company's operating expenses as a percentage of net revenue decreased from 6% in the same period last year to 5.8% this quarter.

In AI-powered supply chain operations, the company utilized an AI order entry system to optimize warehouse efficiency. Through image recognition and text parsing technologies, the system supports automatic entry of various document formats including images and files, completing purchase/sales document generation in 3 seconds with efficiency improvements exceeding 60%, significantly enhancing product listing efficiency.

The company also leveraged AI-powered product selection to enable precise introduction of new products. By analyzing customer profiles and market trends, it real-time identifies new product opportunities, providing accurate decision support for new product introduction with 83% efficiency improvement, enhancing upstream and downstream supply-demand matching capabilities.

Additionally, the company built an AI agent matrix, developing and launching specialized agents for medication guidance, merchant business analysis, and procurement category analysis based on key platform business scenarios, helping to improve overall operational efficiency.

**Accelerating Digital Fulfillment Center Construction to Support Pharmaceutical Companies' Out-of-Hospital Sales**

In the second quarter, 111 Inc.'s nationwide digital supply chain network infrastructure continued to upgrade. Currently, the company has deployed 19 digital fulfillment centers, enabling 24-hour coverage of over 890 counties and cities nationwide.

111 Inc.'s national logistics network "Kunpeng" continues to strengthen, utilizing digital trunk line and last-mile delivery models to establish direct network deployment between fulfillment centers nationwide, providing professional pharmaceutical logistics and delivery services for upstream and downstream partners in the pharmaceutical supply chain.

During the reporting period, 111 Inc. persisted in using digital technology to empower upstream and downstream partners in the pharmaceutical industry chain. Through 111 Inc.'s digital marketing platform, marketing and promotional products rapidly reach pharmacies across the country. Revenue related to marketing and promotional products increased 53.6% year-over-year, with customer numbers growing 19.0% year-over-year.

111 Inc. has empowered hundreds of renowned pharmaceutical companies and thousands of distributors in omnichannel pharmaceutical commercialization, digital marketing, and market insights. Furthermore, 111 Inc.'s brand general agency model is experiencing strong momentum, helping the company become a core strategic partnership platform for pharmaceutical companies' out-of-hospital sales.

As a general agent for small and medium-sized chains of first-line original anti-infection drugs, customer numbers and sales volume continue to grow monthly, with monthly sales volume increasing more than 7-fold compared to project initiation.

Dr. Yu Gang, Co-founder and Executive Chairman of 111 Inc., stated: "In a challenging macroeconomic environment during the second quarter, we achieved operating profitability and positive operating cash flow again in the first half through efficient operational capabilities. We made significant progress in artificial intelligence applications, particularly in developing and implementing multiple cost-reduction and efficiency-enhancement AI agents, effectively improving overall operational efficiency. Looking ahead, we will continue to increase investment in artificial intelligence and digital solutions, committed to creating sustainable long-term value for customers, upstream and downstream partners, and shareholders."