111, Inc., a China-based technology-enabled healthcare platform, reported strong growth in promotional products and marketplace services during the second quarter as the company continues shifting from an asset-heavy pharmaceutical distribution model toward a more asset-light, technology-driven platform.
Net revenue totaled RMB2.3 billion, or approximately $339 million, down 28.3% from RMB3.2 billion a year earlier. The decline primarily reflected the divestiture of underperforming subsidiaries and the company’s broader effort to reduce capital intensity and generate more commission-based service revenue.
Within that transition, several higher-priority businesses expanded.
Revenue from promotional products increased 121% year over year to RMB60.7 million, or $8.9 million, while gross profit from those products rose 120%.
The company’s flagship Cravit levofloxacin product saw quarterly unit sales increase from 364,000 boxes to more than 1 million boxes, while quarterly revenue increased 157% to RMB28.1 million.
Marketplace service revenue rose 18.2% year over year during the first half of 2026, supporting 111’s effort to build a business with a larger mix of service-based revenue.
The company is simultaneously using AI to reduce operating costs and automate internal workflows.
Operating expenses declined 16.1% to RMB155.5 million, or $22.9 million. 111 said investment in and adoption of AI agents enabled workforce streamlining, particularly across back-office support functions.
Fulfillment expenses fell 29.5% to RMB63.6 million, declining faster than revenue, while fulfillment expense as a percentage of revenue improved by five basis points to 2.76%.
The company plans to deploy AI capabilities across demand forecasting, inventory optimization, fulfillment routing and merchant operations. It is also developing AI agent-based tools for pharmacies and healthcare-service settings.
Gross segment profit was RMB132.3 million, or $19.5 million, compared with RMB185.4 million a year earlier.
The company’s strategy is increasingly centered on using its digital distribution network, data and AI capabilities to move beyond conventional pharmaceutical distribution and toward a more scalable healthcare technology platform.
KEY QUOTES:
“During the second quarter of 2026, we continued to execute our strategic transition toward a more asset-light and platform-oriented operating model.”
“Looking ahead, we believe these initiatives are gradually reshaping 111 from a transaction-driven pharmaceutical distributor into a more technology-enabled and intelligent healthcare platform business.”
Junling Liu, Co-Founder, Chairman and CEO of 111
