111 Inc (YI) 2022 Q4 法說會逐字稿

Hello, everyone, and thank you for joining 111's conference call today. On the call today from the company are Dr. Gang Yu, Co-Founder and Executive Chairman; Mr. Junling Liu, Co-Founder, Chairman and CEO; Mr. Luke Chen, CFO of 111's major subsidiary; and Mr. Harvey Wang, COO.

大家好，感謝大家今天參加111的電話會議。今天接到公司電話的是聯合創始人兼執行董事長 Gang Yu 博士；聯合創始人、董事長兼首席執行官劉俊嶺先生； 111主要子公司CFO陳路克先生；以及首席運營官 Harvey Wang 先生。

As a reminder, today's conference call is being broadcast live via webcast. The company's earnings press release was distributed earlier today and together with the earnings press release are available on the company's IR website.

提醒一下，今天的電話會議將通過網絡直播進行現場直播。公司的收益新聞稿於今天早些時候發布，連同收益新聞稿可在公司的 IR 網站上查閱。

Before the conference call gets started, let me remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known and unknown risks, uncertainties and other factors, all of which could cause actual results to differ materially. For more information about these risks, please refer to the company's filings with the SEC. 111 does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.

在電話會議開始之前，讓我提醒您，本次電話會議可能包含根據 1995 年《私人證券訴訟改革法案》的安全港條款作出的前瞻性陳述。此類陳述基於管理層當前的預期以及當前的市場和經營狀況與涉及已知和未知風險、不確定性和其他因素的事件有關，所有這些都可能導致實際結果存在重大差異。有關這些風險的更多信息，請參閱公司向美國證券交易委員會提交的文件。 111 不承擔因新信息、未來事件或其他原因而更新任何前瞻性陳述的任何義務，適用法律要求的除外。

Please note that all numbers are in RMB, and all comparisons refer to year-over-year comparisons, unless otherwise stated. Please also refer to the earnings press release for detailed information of the comparative financial performance on a year-over-year basis.

請注意，所有數字均以人民幣為單位，所有比較均指同比比較，除非另有說明。另請參閱收益新聞稿，了解同比財務業績比較的詳細信息。

With that, I will turn the call over to 111's CEO, Mr. Junling Liu. Please go ahead.

有了這個，我將把電話轉給 111 的首席執行官劉俊嶺先生。請繼續。

Good morning, and good evening, everyone. Thank you for joining our fourth quarter and fiscal year 2022 earnings call. The information that we'll be discussing here are also provided in the slides that have been posted earlier today on the company's website. And I would like to encourage you to download the presentation along with the earnings report at ir.111.com.cn.

大家早上好，晚上好。感謝您加入我們的第四季度和 2022 財年財報電話會議。今天早些時候在公司網站上發布的幻燈片中也提供了我們將在此處討論的信息。我想鼓勵您在 ir.111.com.cn 下載該演示文稿和收益報告。

In today's call, I will talk about some of the latest regulatory development in the healthcare industry and what it means to the company. I'll also cover our strategies for building growth momentum, improving operational efficiency and strengthening supply base. Then I'll spend some time to speak about the performance of Q4 and full year of 2022 before handing the call to Mr. Luke Chen, who will walk you through our financial results.

在今天的電話會議中，我將討論醫療保健行業的一些最新監管發展及其對公司的意義。我還將介紹我們建立增長動力、提高運營效率和加強供應基礎的戰略。然後我會花一些時間談談第四季度和 2022 年全年的表現，然後將電話轉給陳路克先生，他將向您介紹我們的財務業績。

2022 proved to be a very challenging year for many businesses, including 111. Everybody in China is thankful that COVID is behind us and anxious to get on with life as per normal.

事實證明，對於包括 111 在內的許多企業來說，2022 年是充滿挑戰的一年。中國的每個人都感謝 COVID 已經過去，並渴望像往常一樣繼續生活。

One of the most important trends post pandemic will be the digitization of the healthcare industry. COVID-19 pandemic has shown how important healthcare services are in society, but it has also highlighted the limitations of the traditional healthcare services. With the introduction of digital technology, healthcare services have become more accessible for both consumers and businesses. With digital tools and platforms, healthcare providers can increase access to care, improve patient outcomes and better manage the challenges posted by public health emergencies.

大流行後最重要的趨勢之一將是醫療保健行業的數字化。 COVID-19 大流行表明了醫療服務在社會中的重要性，但也凸顯了傳統醫療服務的局限性。隨著數字技術的引入，消費者和企業都更容易獲得醫療保健服務。借助數字工具和平台，醫療保健提供者可以增加獲得護理的機會，改善患者的治療效果並更好地應對突發公共衛生事件帶來的挑戰。

Digital technology has emerged as one of the key capabilities in solving the uncertain disturbance factors of the COVID-19 pandemic. The importance of digital technology in healthcare is likely to increase in the future. And thus, its usage will continue as a critical trend in the healthcare industry.

數字技術已成為解決COVID-19大流行不確定乾擾因素的關鍵能力之一。未來，數字技術在醫療保健中的重要性可能會增加。因此，它的使用將繼續成為醫療保健行業的一個重要趨勢。

In May 2022, the State Council of China issued the 14th 5-year plan for national health which clearly proposed to accelerate the construction of national health (inaudible), promote information interconnection and the construction of Internet hospitals, Internet class chronic disease management and other projects. This is expected to help improve access to healthcare for people in remote areas as well as streamline healthcare services.

2022年5月，中國國務院印發《全民健康“十四五”規劃》，明確提出加快全民健康建設（聽不清），推進信息互聯互通和互聯網醫院建設、互聯網類慢病管理等項目。預計這將有助於改善偏遠地區人們獲得醫療保健的機會，並簡化醫療保健服務。

In June 2022, the National Health Commission of China issued the rules of the supervision of Internet diagnosis and treatment which further provided new guideline for the development of Internet diagnosis and treatment norms.

2022年6月，國家衛健委發布《互聯網診療監管辦法》，進一步為互聯網診療規範的製定提供了新的指引。

In September 2022, the state administration of market supervision and administration issued the measures for the supervision and administration of drug network sales which provided clearer requirements for the high-quality development of the pharmaceutical e-commerce industry.

2022年9月，國家市場監督管理總局發布《藥品網絡銷售監督管理辦法》，對醫藥電子商務行業高質量發展提出了更加明確的要求。

In October 2022, the report of the 20th National Congress of the Communist Party of China clearly pointed out that high-quality development is the primary task of building a social-based modern country and all around the way. As one of the 4 key directions of people's well-being, healthcare industry is regarded as a strategic priority for development.

2022年10月，中共二十大報告明確指出，高質量發展是全面建設社會化現代化國家的首要任務。健康產業作為民生四大重點方向之一，被列為戰略發展重點。

With the increasing adoption of digital technology, the healthcare industry has been undergoing significant advancements towards digital transformation. As the nation is quickly approaching an aging society, one can bet that healthcare expenditure from both the government and personal wallet will grow at a fast pace. All those policies will become tremendous tailwind in our business.

隨著數字技術的日益普及，醫療保健行業在數字化轉型方面取得了重大進展。隨著國家迅速進入老齡化社會，可以肯定的是，政府和個人錢包的醫療保健支出都將快速增長。所有這些政策都將成為我們業務的巨大推動力。

111 aims to create a leading digital healthcare platform in China with a mission to connect patients with medicine and healthcare services physically. The platform offers a wide range of healthcare services, including consultations, diagnosis, delivery of medicine, tools to enable both upstream pharmaceutical manufacturers and downstream pharmacies. Consumers can access these services through the digital platform, enabling them to receive medical advice and consultation services from the safety of their homes. Businesses can leapfrog the traditional way of conducting business and can access a range of services digitally with much greater efficiency. This digital platform has made healthcare services more accessible, convenient and affordable for individuals and businesses with great user experience.

111旨在打造中國領先的數字醫療平台，其使命是將患者與醫療和醫療服務物理連接起來。該平台提供廣泛的醫療保健服務，包括諮詢、診斷、藥物交付、工具，以支持上游製藥商和下游藥店。消費者可以通過數字平台訪問這些服務，使他們能夠安全地在家中獲得醫療建議和諮詢服務。企業可以超越傳統的開展業務的方式，並可以更高效地訪問一系列數字服務。這個數字平台讓個人和企業更容易獲得、方便和負擔得起醫療保健服務，並擁有出色的用戶體驗。

Based on the rapid development in the past few years, the company's development strategy has begun to shift from expanding scale and acquiring customers to pursuing businesses with higher value, focusing on value creation, better customer experience and a stronger supply base.

基於過去幾年的快速發展，公司的發展戰略開始從擴大規模和獲取客戶轉向追求更高價值的業務，專注於價值創造、更好的客戶體驗和更強大的供應基礎。

In order to achieve the above, the company realigned operations with the goals set in 3 areas. When it comes to new projects, the decision-making process starts from the value it can create for upstream and downstream customers. Proof of concept also comes from feedback from real customers instead of management imagining in the isolation of office.

為實現上述目標，公司根據在 3 個方面設定的目標重新調整了運營。當涉及到新項目時，決策過程從它能為上下游客戶創造的價值出發。概念驗證也來自真實客戶的反饋，而不是管理層想像的辦公室隔離。

Ideas and projects always fight for attention. In order to ensure that they are always creating maximum value for their customers, management emphasizes competition on the basis of value creation. This could be measured in a number of ways, including increased efficiency, improved outcomes or a better overall experience. Projects that have the greatest potential to create significant value for customers are prioritized over those that are likely to provide fewer benefits. And once the project has been approved, management ensures that the team working on it is fully focused on delivering maximum value at every stage of development.

想法和項目總是爭奪注意力。為了確保他們始終為客戶創造最大價值，管理層強調在價值創造的基礎上進行競爭。這可以通過多種方式來衡量，包括提高效率、改善結果或改善整體體驗。最有可能為客戶創造重大價值的項目優先於那些可能提供較少收益的項目。一旦項目獲得批准，管理層就會確保從事該項目的團隊在開發的每個階段都完全專注於提供最大價值。

Throughout the project life cycle, value creation is a key consideration. Teams are given specific metrics to track their progress and ensure that the project is meeting its goals. And perhaps most importantly, feedback from the customers is constantly solicited and incorporated into the project's development process. This helps to ensure that the final product is fully aligned with the needs of 111's customers and provides them with the best possible experience.

在整個項目生命週期中，價值創造是一個關鍵的考慮因素。團隊會獲得特定的指標來跟踪他們的進度並確保項目實現其目標。也許最重要的是，不斷徵求客戶的反饋並將其納入項目的開發過程。這有助於確保最終產品完全符合 111 客戶的需求，並為他們提供最佳體驗。

Being customer-centric is the half of the renewed operational structure. In the past, there have been numerous times when weekly business review metrics are more centered around internal metrics such as revenue and margin. That would change to metrics related to things like, do we have what customers want? Is the pricing competitive enough? Do they always come back to us? Do they recommend our service to others? All teams will have to go through their own operational metrics to align with customer needs.

以客戶為中心是更新後的運營結構的一半。過去，每周業務回顧指標更多地集中在收入和利潤率等內部指標上。這將改變與諸如我們是否有客戶想要的東西相關的指標？定價是否足夠有競爭力？他們總是回到我們身邊嗎？他們向其他人推薦我們的服務嗎？所有團隊都必須通過自己的運營指標來滿足客戶需求。

For instance, a fulfillment center manager will need to reform his or her metrics around how fast do we receive goods, how fast can we deliver to customers, how many items got damaged during transportation, how many complaints are received on a day-to-day basis. The company believes that long-term value is much more important than short-term revenue and margin gains. To achieve long-term value, everyone in the company has to have the mentality that customers come first.

例如，履行中心經理需要改革他或她的指標，包括我們接收貨物的速度、我們可以多快向客戶交付、運輸過程中損壞的物品數量、每天收到的投訴數量等等。日基礎。該公司認為，長期價值比短期收入和利潤率收益重要得多。為了實現長期價值，公司的每個人都必須有客戶至上的心態。

With great efforts over the last few years, a decent supply base has been built. But the company believes, moving forward, this supply base needs to be further strengthened. Although great relationships with major suppliers have been established, through strategic relationships need meet further development. This comes back to the point of value creation. The company has the state-of-the-art technology with many modules scattered in different silos of operations. Once we can integrate all those modules, much greater value can be created. Suppliers can leverage our digital tools to have real-time data on their products coverage, sales and pricing. Traditionally, they could only get sales in figures from Tier 1 distributors. Now they have a complete view of business through the lenses of our digital tools.

經過幾年的努力，已經建立了良好的供應基地。但該公司認為，展望未來，這一供應基礎需要進一步加強。雖然與主要供應商建立了良好的關係，但通過戰略關係需要滿足進一步的發展。這又回到了價值創造的角度。該公司擁有最先進的技術，許多模塊分散在不同的運營孤島中。一旦我們能夠整合所有這些模塊，就可以創造更大的價值。供應商可以利用我們的數字工具獲取有關其產品覆蓋範圍、銷售和定價的實時數據。傳統上，他們只能從一級分銷商那裡獲得銷售額。現在，他們可以通過我們的數字工具來全面了解業務。

Clearly, those kinds of digital benefits were never available to the pharmaceutical manufacturers in the past. At best, they have some limited data on a few key customers with direct coverage if they are big enough with a ground sales team.

顯然，過去製藥商從未享受過這些數字化優勢。如果他們有足夠大的地面銷售團隊，他們充其量只能掌握一些直接覆蓋的幾個關鍵客戶的有限數據。

Without surprise, almost all of the suppliers who have seen our digital solutions are delighted by its capabilities. If we continue to deliver such solutions to our upstream suppliers, they'll be more and more interested in allocating more resources to 111 as a digital channel. Over time, our supply base will be strong enough to compete against those well-established traditional players. Then the partnership will be based on who can deliver more value to suppliers other than previously established long-term relationships.

毫不奇怪，幾乎所有看過我們數字解決方案的供應商都對其功能感到滿意。如果我們繼續向我們的上游供應商提供此類解決方案，他們將越來越有興趣將更多資源分配給 111 作為數字渠道。隨著時間的推移，我們的供應基礎將強大到足以與那些成熟的傳統參與者競爭。那麼夥伴關係將基於誰能為供應商提供更多價值，而不是之前建立的長期關係。

As digital catalyst in the healthcare industry, 111 has rapidly developed its core competence by digitally connecting key players in this ecosystem. This makes it possible for digital technology to become an enabler for those players to improve their respective efficiency. With more and more players adopting digital technology, the industry is being transformed.

作為醫療保健行業的數字化催化劑，111通過數字化連接該生態系統中的關鍵參與者，迅速發展了其核心競爭力。這使得數字技術有可能成為這些參與者提高各自效率的推動力。隨著越來越多的參與者採用數字技術，該行業正在發生變革。

There is a popular terminology in China called the Industrial Internet which should be translated as an industry that's being transformed by Internet technology. We have laid a very solid foundation and a position for 111 as one of the most important players in the field. So Internet ties this very traditional industry.

在中國有一個流行的術語叫做Industrial Internet，應該翻譯成一個正在被互聯網技術改造的行業。我們為 111 作為該領域最重要的參與者之一奠定了非常堅實的基礎和地位。所以互聯網把這個非常傳統的行業聯繫在一起了。

Now let me spend a moment to talk about the key business progress in 111 in both Q4 and the whole year of 2022. Over the past 12 months, the deepening the partnership with upstream and downstream companies continued to expand. Upstream, we have reached direct supply relationship with more than 500 global and domestic pharmaceutical companies which provides abundant supply of drugs, more competitive costs and more stable supply and support us to help drug store partners give them more competitive assortment portfolio and improve the gross profit products.

下面我花點時間談談111在Q4和2022年全年的重點業務進展。過去12個月，與上下游企業的深化合作不斷擴大。上游，我們與全球及國內500多家藥企達成直供關係，提供充足的藥品供應、更具競爭力的成本和更穩定的供應，支持我們幫助藥店合作夥伴提供更具競爭力的品種組合，提高毛利產品。

Downstream, we provided services to more than 435,000 retail pharmacies. This is around 75% market penetration, providing our pharmaceutical partners in-depth market reach of drug commercialization in the broad market, reducing distribution costs and achieving coverage of more than 890 cities and counties in China within 24 hours and directly or indirectly providing medical services to hundreds of millions of consumers.

在下游，我們為超過 435,000 家零售藥店提供服務。 75%左右的市場滲透率，為我們的醫藥合作夥伴提供廣闊市場的藥品商業化深度市場覆蓋，降低分銷成本，實現24小時內覆蓋中國890多個城市縣，直接或間接提供醫療服務給億萬消費者。

We always adhere to the principle that digital technology can effectively improve the efficiency of the industry. In 2022, our technology R&D expenditure reached RMB 140 million, with a total R&D expenditure of CNY 421 million in the past 3 years.

我們始終堅持數字技術可以有效提高行業效率的原則。 2022年科技研發支出1.4億元，近3年研發總支出4.21億元。

At the end of 2022, 111 owns 9 core intelligent systems, independently developed more than 30 proprietary systems. We were awarded 19 inventory patents and made breakthrough innovations in intelligent supply chain and big data analysis.

截至2022年底，111擁有9大核心智能係統，自主研發專有系統30餘項。獲得庫存專利19項，在智能供應鏈、大數據分析等方面取得突破性創新。

In 2022, 111 was once again awarded the honorary titles and qualifications of high-tech enterprise certified by the Ministry of Science and Technology, National E-Commerce Demonstration Enterprise by the Ministry of Commerce, Special and New Enterprise by Shanghai City Government and Fudan Area New R&D Institution by Fudan Government.

2022年，111再次獲得科技部認定的高新技術企業、商務部認定的國家電子商務示範企業、上海市政府和復旦地區的特新企業等榮譽稱號和資質復旦政府新研發機構。

We don't live in the delusion that the fame and recognition can translate into business results. The reason why we invest in technology is because we truly believe that technology can bring operational efficiency. We want this to be a core strength of 111. Therefore, we are confident that we will be able to compete in such a crowded industry. Even with current scale, which is relatively small compared to the few big establishments, we can already compete on operational efficiency. OpEx will be a very key metric to tell how efficient a company can be.

我們不會幻想名聲和認可可以轉化為商業成果。我們之所以投資於技術，是因為我們堅信技術可以帶來運營效率。我們希望這是111的核心優勢。因此，我們有信心能夠在如此擁擠的行業中競爭。即使以目前的規模，與少數幾家大型機構相比相對較小，我們已經可以在運營效率上競爭。 OpEx 將是衡量一家公司效率的一個非常關鍵的指標。

As we continue to grow in scale, we believe we can run this operation at a much lower rate. The significance of this is that we will be the most efficient operator in the whole industry, which will enable us to compete effectively with the big boys.

隨著我們規模的不斷擴大，我們相信我們可以以更低的速度開展這項業務。這樣做的意義在於，我們將成為整個行業中最高效的運營商，這將使我們能夠有效地與大公司競爭。

One of our strategies moving forward is to continue to build an operation with the lowest-cost structure as we want to be the most efficient operator in our space.

我們前進的戰略之一是繼續建立成本最低的運營結構，因為我們希望成為我們所在領域最高效的運營商。

Innovation is one of the core tenets of our corporate culture and it continues to be the driver for future growth. In the B2B sector, we pioneered the 1 Health project to more than 12,000 drug stores through digital franchise. The franchise drug stores can use digital SaaS services, including intelligent procurement, O2O, CRM, et cetera, to better manage drug selection, procurement, inventory management and customer relationship.

創新是我們企業文化的核心宗旨之一，它將繼續成為未來增長的驅動力。在 B2B 領域，我們率先通過數字特許經營將 1 Health 項目推廣到 12,000 多家藥店。加盟藥店可以通過數字化SaaS服務，包括智能採購、O2O、CRM等，更好地管理選藥、採購、庫存管理和客戶關係。

Under 1 Health project, 111 can deliver value to upstream pharmaceutical companies and downstream pharmacies. This model makes it the most efficient way for drugs to reach the hands of consumers from manufacturers as the whole process is digital and transparent. Our mission has always been to digitally connect drugs and healthcare services to consumers. The proliferation of 1 Health is a step forward in our mission.

1健康項目下，111可以為上游藥企和下游藥店傳遞價值。這種模式使其成為藥品從製造商到達消費者手中的最有效方式，因為整個過程是數字化和透明的。我們的使命一直是通過數字方式將藥品和醫療保健服務與消費者聯繫起來。 1 Health 的擴散是我們使命向前邁出的一步。

In the B2C sector, based on the digital platform and the chronic disease management capability, 111 is helping drug manufacturers to launch their drugs on our platform. On February 16, the first official flagship store of Hua Medicine went live on 111's platform. Immediately, dorzagliatin, the very first locally approved innovative diabetic oral drug in China, received nationwide coverage, which means patients across the whole country can access the drug on our platform from day 1 of the launch.

在B2C領域，111基於數字化平台和慢病管理能力，幫助藥企在我們的平台上線上市。 2月16日，華醫藥首家官方旗艦店在111平台上線。隨即，中國首個本土獲批的糖尿病口服創新藥多扎格列汀實現了全國覆蓋，這意味著全國患者從上市第一天起就可以在我們的平台上獲得該藥物。

111 also helps Hua Medicine to manage life cycle of patient care, including initial drug fulfillment, follow-on patient education, drug adherence management, online assistance of patient questions and refill. We're proud of the fact that our model not only can help patients in accessing newly launched drugs regardless of where they live in the country but also enable upstream drug manufacturers to leverage our digital capabilities to reach more patients and management with digital tools to achieve better business results.

111 還幫助華領醫藥管理患者護理的生命週期，包括初始藥物履行、後續患者教育、藥物依從性管理、患者問題在線幫助和補充。我們感到自豪的是，我們的模式不僅可以幫助患者獲得新推出的藥物，無論他們住在該國的哪個地方，而且還可以使上游藥物製造商利用我們的數字能力來接觸更多的患者，並通過數字工具進行管理，以實現更好的業務成果。

Now let's move on to our fourth quarter and full year 2022 results. In Q4, our operating revenue amounted to RMB 4.1 billion, representing a year-on-year increase of 19.9%. This is the 18th consecutive quarter of growth since the company's IPO.

現在讓我們繼續討論我們的第四季度和 2022 年全年業績。第四季度，我們實現營業收入41億元，同比增長19.9%。這是該公司自 IPO 以來連續第 18 個季度實現增長。

Q4's gross profit increased by 23.8% year-on-year. Gross profit margin increased from 5.9% in the same period last year to 6.1%.

Q4毛利同比增長23.8%。毛利率由去年同期的5.9%上升至6.1%。

Q4 generated positive cash flow of RMB 63.2 million from operating activities, the second consecutive quarter of positive cash flow.

第四季度經營活動產生正現金流 6320 萬元，連續第二個季度出現正現金流。

From CNY 959 million in 2017 to CNY 13.5 billion in 2022, our revenue scale has rapidly expanded 14 times in 5 years. In 2022, our total revenue reached CNY 15.5 billion, an increase of 8.8% year-on-year and gross profit increased by 35.2% year-on-year, 4x the growth rate of revenue. And the gross profit margin increased from 5% last year to 6.2% this year.

從2017年的9.59億元到2022年的135億元，我們的收入規模在5年內迅速擴大了14倍。 2022年，我們的總收入達到155億元，同比增長8.8%，毛利同比增長35.2%，是收入增速的4倍。毛利率從去年的5%上升到今年的6.2%。

Let's not forget the struggles we had to endure throughout the whole year with COVID Zero restrictions. The majority of the year, our operations were disrupted in many ways. I won't bore you with much details, but the 9% revenue growth and 35% margin growth is earned with tremendous team effort.

讓我們不要忘記我們在 COVID 零限制下全年不得不忍受的鬥爭。在這一年的大部分時間裡，我們的運營在很多方面都受到了乾擾。我不會用太多細節讓你厭煩，但 9% 的收入增長和 35% 的利潤增長是通過巨大的團隊努力獲得的。

Meanwhile, Q4 non-GAAP operation loss narrowed to 0.96% of net income from 2.22% in the same period last year. In fact, we achieved profitability in December of 2022.

與此同時，第四季度非美國通用會計準則運營虧損占淨收入的比例從去年同期的 2.22% 收窄至 0.96%。事實上，我們在 2022 年 12 月實現了盈利。

Throughout 2022, our operational efficiency continued to improve. Total sales and marketing expenses, general and administrative expenses and technology expenses decreased by 15.5% year-on-year and non-GAAP operating loss narrowed to 1.6% of net income for the full year from 4% in the same period last year.

整個 2022 年，我們的運營效率持續提升。總銷售和營銷費用、一般和行政費用以及技術費用同比下降 15.5%，非 GAAP 營業虧損佔全年淨收入的比例從去年同期的 4% 收窄至 1.6%。

As of December 31, 2022, cash and cash equivalents, restricted cash and short-term investments totaled CNY 922.7 million.

截至 2022 年 12 月 31 日，現金及現金等價物、受限制的現金和短期投資合計人民幣 9.227 億元。

I'd like to spend a minute to quickly talk about our ESG efforts. Over the past year, with the advantages of digital technology and integrated online and offline platform, the company has actively helped fight the pandemic.

我想花一點時間快速談談我們在 ESG 方面所做的努力。一年來，公司憑藉數字化技術優勢和線上線下一體化平台，積極助力抗擊疫情。

During the lockdown, the government deployed a small number of companies to deliver essential goods to residents who are locked down at home. 111 was appointed as one of the critical leading guaranteed enterprises in Shanghai. The company set up a virtual pandemic control command center as soon as the pandemic broke out in Shanghai in early 2022, mobilizing resources from 111 to help our community.

在封鎖期間，政府部署了少數公司向被封鎖在家中的居民運送必需品。 111被評為上海市重點龍頭擔保企業之一。 2022 年初，上海疫情爆發後，公司就建立了虛擬疫情防控指揮中心，動員 111 的資源幫助我們的社區。

We collected purchase orders via proprietary purchase channels and assigned special personnel to process them, whilst ensuring timely delivery to patients. 1 Clinic, 111's online hospital, launched free online services since the pandemic began and provided free online consultations, free prescription renewal for chronic disease sufferers and other medical services to the public. The company has proactively organized donations and offered anti-pandemic PPEs for enterprises resuming work and production.

我們通過專有採購渠道收集採購訂單，並指派專人處理，同時確保及時交付給患者。 111在線醫院1診所自疫情發生以來，推出免費在線服務，為公眾提供免費在線問診、慢性病患者免費續藥等醫療服務。公司積極組織捐贈，為複工復產企業提供防疫物資。

In the context of the post-COVID economic promotion measures, 111 was again picked by the government as the designated healthcare platform in the Shanghai electronic consumption voucher campaign in 2022. We provided services and offered citizens of Shanghai to redeem vouchers on our digital platform, helping government and the residents in consumption recovery. Everyone at 111 is proud to be able to contribute to the community. In the future, we will always firmly fulfill our social responsibilities and make continuous efforts to actively contribute to the construction of a healthy China.

在後 COVID 經濟促進措施的背景下，111 再次被政府選為 2022 年上海市電子消費券活動的指定醫療保健平台。我們提供服務，讓上海市民在我們的數字平台上兌換消費券，幫助政府和居民恢復消費。 111 的每個人都為能夠為社區做出貢獻而感到自豪。未來，我們將始終堅定履行社會責任，不斷努力，為健康中國建設積極貢獻力量。

What a year we had. In a way, we're very glad 2022 is behind us and COVID-19 has become vague memories. We overcame so many challenges and fought so hard for our business and achieved the great results. We grew revenue and margin on extremely difficult circumstances. Operating expenditure continues to show great trends which suggest that our operational efficiency will continue to improve. Our bottom line is trending towards breakeven. In fact, we achieved the profitability at a non-GAAP operating level in the month of December 2022.

我們度過了多麼美好的一年。在某種程度上，我們很高興 2022 年已經過去，COVID-19 已成為模糊的記憶。我們克服瞭如此多的挑戰，為我們的事業而奮鬥，取得了巨大的成就。我們在極其困難的情況下增加了收入和利潤。運營支出繼續呈現出良好的趨勢，這表明我們的運營效率將繼續提高。我們的底線趨於盈虧平衡。事實上，我們在 2022 年 12 月實現了非 GAAP 運營水平的盈利。

In short, we have made significant progress in our business metrics. We believe that our strong technical capabilities will continue to enable us to build scale and improve efficiency, which will create long-term and sustain the revenue and margin growth.

簡而言之，我們在業務指標方面取得了重大進展。我們相信，我們強大的技術能力將繼續使我們能夠擴大規模並提高效率，這將創造長期並維持收入和利潤增長。

Looking to the future, 111 will continue to operate on the principles of value creation, being customer-centric and strengthening its supplier base. We believe the government will continue to support the healthcare industry's digital migrations. The national strategy of strengthening the digital China infrastructure and the policies of the 14th 5-year plan and the goals for 2035 provided us with excellent regulatory tailwinds. And we're excited that we can play an important role of speeding up the digital transformation of the healthcare industry. We will double down our efforts in growing revenue and margin, improve our operational efficiency and achieve profitability.

展望未來，111將繼續以創造價值為原則，以客戶為中心，加強供應商基礎。我們相信政府將繼續支持醫療保健行業的數字化遷移。加強數字中國基礎設施建設的國家戰略和“十四五”規劃的政策以及 2035 年的目標為我們提供了極好的監管順風。我們很高興我們能夠在加速醫療保健行業的數字化轉型方面發揮重要作用。我們將加倍努力增加收入和利潤率，提高運營效率並實現盈利。

Considering our track record over the last 4 years, we have proven our capability in executing our strategy. We will continue to be better, delivering great results in the future. We wish to thank all the investors who have supported us all along.

考慮到我們過去 4 年的業績記錄，我們已經證明了我們執行戰略的能力。我們將繼續做得更好，在未來取得更好的成績。我們要感謝一直以來支持我們的所有投資者。

Then I will hand the call to our CFO, Mr. Luke Chen, to walk through our financial results. Thank you.

然後我會把電話轉給我們的首席財務官 Luke Chen 先生，讓他了解我們的財務業績。謝謝。

Thank you, Junling, and good morning or evening, everyone. I want to begin by thanking all of our colleagues for their resilience and hard work over fiscal year 2022 as we navigated a challenging environment for making necessary changes to improve our operations and cost efficiency while maintaining our competitive edge.

謝謝君玲，大家早上好或晚上好。首先，我要感謝我們所有的同事在 2022 財年的韌性和辛勤工作，因為我們在充滿挑戰的環境中航行，做出必要的改變，以改善我們的運營和成本效率，同時保持我們的競爭優勢。

Moving to the financials. My prepared remarks will focus on few key business and financial highlights. You can refer to the details of the fourth quarter and fiscal year 2022 results from Slide 19 to 22 in Section 3 of our presentation. Again, all comparisons are year-over-year and all numbers are in RMB unless otherwise stated.

轉向財務。我準備好的發言將集中在幾個關鍵的業務和財務亮點上。您可以在我們演示文稿的第 3 部分的幻燈片 19 至 22 中參考第四季度和 2022 財年業績的詳細信息。同樣，除非另有說明，否則所有比較均為同比，所有數字均以人民幣為單位。

Let's start with the fourth quarter results. Total net revenues for the quarter grew 20% to CNY 4.1 billion. We are pleased to report that our gross segment profit for the quarter has grown at 24%, which is faster than the revenue growth.

讓我們從第四季度的結果開始。本季度總淨收入增長 20% 至 41 億元人民幣。我們很高興地報告，本季度我們的分部毛利潤增長了 24%，快於收入增長。

Strong top line growth for the quarter was mainly attributed to our B2B segment revenue growth at 21% to CNY 4 billion. The gross segment profit for B2B segment has increased 31% with gross segment margin up from 5.2% to 5.6%, which reflected our ability to rapidly expand our business scale while steadily improve our margin. Our B2C segment revenue decreased 2% to CNY 126 billion with gross segment margin at 21%.

本季度強勁的營收增長主要歸功於我們的 B2B 業務收入增長 21% 至 40 億元人民幣。 B2B業務的分部毛利潤增長了31%，分部毛利率從5.2%上升至5.6%，反映了我們快速擴大業務規模同時穩步提高利潤率的能力。我們的 B2C 分部收入下降 2% 至人民幣 1,260 億元，分部毛利率為 21%。

Total operating expenses for the quarter were up 17% to CNY 363 million. And as a percentage of net revenue, total operating expenses for the quarter was down to 8.8% from 9% as we continue to enhance our operating leverage and optimize our operational efficiency.

本季度總運營費用增長 17% 至人民幣 3.63 億元。隨著我們繼續提高運營槓桿並優化運營效率，本季度總運營費用占淨收入的百分比從 9% 降至 8.8%。

Fulfillment expenses as a percentage in net revenue for the quarter was 2.9% as compared to 3% in the second quarter of last year. And excluding the share-based compensation, sales and marketing expenses as a percentage of net revenue for the quarter was 2.7%, down from 3.4% in the same quarter of last year.

本季度履行費用占淨收入的百分比為 2.9%，而去年第二季度為 3%。不包括基於股份的薪酬，銷售和營銷費用佔本季度淨收入的百分比為 2.7%，低於去年同期的 3.4%。

G&A expenses accounted for 0.9% of net revenue, down from 1%. And the technology expense accounted for 0.6% of net revenue as compared to 0.7% in the same quarter of last year.

G&A 費用占淨收入的 0.9%，低於 1%。技術費用占淨收入的 0.6%，而去年同期為 0.7%。

As a result, non-GAAP loss from operations for the quarter narrowed to RMB 40 million compared to the loss of RMB 77 million in the same quarter of last year.

因此，本季度非美國通用會計準則運營虧損收窄至人民幣 4,000 萬元，而去年同期為虧損人民幣 7,700 萬元。

As a percentage of net revenues, non-GAAP loss from operations decreased to less than 1% in the quarter from 2.2% as in the same quarter of last year.

作為淨收入的百分比，本季度非美國通用會計準則運營虧損從去年同期的 2.2% 降至不到 1%。

Non-GAAP net loss attributable to ordinary shareholders was CNY 46 million compared to CNY 84 million in the same quarter of last year. As the percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased to 1.1% in the quarter from 2.4% in the same quarter of last year.

歸屬於普通股股東的非美國通用會計準則淨虧損為人民幣 4600 萬元，而去年同期為人民幣 8400 萬元。作為占淨收入的百分比，歸屬於普通股股東的非美國通用會計準則淨虧損從去年同期的 2.4% 降至本季度的 1.1%。

As for our fiscal full year 2022, I would like to run through a few highlights. Again, you can refer to the details in our deck and our earnings release. Our comparison is on to full year 2021.

至於我們的 2022 財年全年，我想介紹一些亮點。同樣，您可以參考我們的平台和收益發布中的詳細信息。我們的比較對像是 2021 年全年。

Full year net revenues were CNY 13.5 billion, representing a year-over-year growth of 9%. Our B2B segment revenue grew 10% to CNY 13.1 billion. This result was achieved despite all the disruptions caused by the lockdowns across the country during the year. Our B2C segment revenue decreased 16% to CNY 442 million.

全年淨收入為人民幣 135 億元，同比增長 9%。我們的 B2B 業務收入增長 10% 至 131 億元人民幣。儘管這一年全國各地的封鎖造成了種種破壞，但仍取得了這一成果。我們的 B2C 業務收入下降 16% 至 4.42 億元人民幣。

Although our top line growth was not that satisfactory, we are pleased to report that we have achieved gross segment profit growth at 35%, which is 4x of the revenue growth rate.

儘管我們的營收增長並不令人滿意，但我們很高興地報告，我們已實現 35% 的毛利潤增長，這是收入增長率的 4 倍。

As a result, the combined gross segment margin was 6.2%, up from 5% a year ago. B2B gross segment margin was 5.7%, up from 4.3%, while our B2C segment was 21.8%, up from 20.9%.

因此，綜合毛利率為 6.2%，高於一年前的 5%。 B2B 分部毛利率為 5.7%，高於 4.3%，而我們的 B2C 分部為 21.8%，高於 20.9%。

For full year 2022, total operating expenses decreased to 4.8% to RMB 1.2 billion. As a percentage of net revenue, total operating expenses was 8.9%, down from 10.2% last year.

2022 年全年，總運營費用下降 4.8% 至 12 億元人民幣。總運營費用占淨收入的百分比為 8.9%，低於去年的 10.2%。

Fulfillment expenses accounted for 3% of net revenues this year, comparable to 2.9% last year.

履行費用佔今年淨收入的 3%，而去年為 2.9%。

Excluding the share-based compensation, our selling and marketing expenses as a percentage of net revenue reduced to 3% this year from 3.7% last year. G&A expenses account for 0.9% of net revenue this year, down from 1.1%. And the technology expenses account for 0.9% of net revenue this year as compared to 1.3% last year.

不包括基於股份的薪酬，我們的銷售和營銷費用占淨收入的百分比從去年的 3.7% 降至今年的 3%。 G&A 費用佔今年淨收入的 0.9%，低於 1.1%。技術支出佔今年淨收入的 0.9%，而去年為 1.3%。

As a percentage of net revenues, non-GAAP loss from operations for the year decreased to 1.6% this year from 4% last year.

從占淨收入的百分比來看，今年非美國通用會計準則運營虧損從去年的 4% 下降至 1.6%。

Non-GAAP net loss attributable to ordinary shareholders as a percentage of net revenues decreased to 1.9% this year from 4.2% last year.

歸屬於普通股股東的非美國通用會計準則淨虧損占淨收入的百分比從去年的 4.2% 降至今年的 1.9%。

We narrowed our loss amount by more than 50% this year versus last year and reached profitability in non-GAAP operating level in the month of December. We are confident that our strong technology capabilities will continue to enable us to build scale, improve efficiency and deliver profitability, maximizing values for our shareholders.

與去年相比，我們今年的虧損額減少了 50% 以上，並在 12 月份實現了非 GAAP 運營水平的盈利。我們相信，我們強大的技術能力將繼續使我們能夠擴大規模、提高效率並實現盈利，從而為我們的股東創造最大價值。

Please refer to Slide 23 to 30 of the appendix section for selected financial statements. A quick note on our cash position as of December 31, 2022, we had cash and cash equivalents, restricted cash and short-term investment of RMB 923 million.

選定的財務報表請參閱附錄部分的幻燈片 23 至 30。快速了解我們截至 2022 年 12 月 31 日的現金狀況，我們擁有現金和現金等價物、受限制的現金和短期投資 9.23 億元人民幣。

This concludes our prepared remarks. Thank you. Operator, we are now ready to begin our Q&A session.

我們準備好的發言到此結束。謝謝。接線員，我們現在準備開始我們的問答環節。

(Operator Instructions) Today's first question comes from Xipeng Feng with CICC.

（操作員說明）今天的第一個問題來自CICC 的Xipeng Feng。

This is Xipeng from CICC. Well, I have two questions. And the first one is, after the company achieved breakeven in last December, what is the specific profit expectation for 2023? And post-pandemic era, what are favorable changes for your company? And how will you respond and take on social responsibility? And these are my questions.

我是中金公司的喜鵬。好吧，我有兩個問題。第一個是公司在去年12月實現盈虧平衡後，2023年的具體盈利預期是多少？而後疫情時代，有哪些對貴公司有利的變化？您將如何應對和承擔社會責任？這些是我的問題。

Yes. Thank you, Xipeng. I'll take on your first question.

是的。謝謝你，西鵬。我來回答你的第一個問題。

Yes, thank you for that question. Indeed, we achieved profitability in December 2023 -- 2022. And moving into 2023, the management is very much optimistic about the prospect of us continuing to make profits. And if you look back the last 4 years, we grew the company from less than RMB 1 billion to today RMB 13.5 billion in revenue. And I'll remind you, our margin has been growing faster than revenue. And in the meantime, we are doing a great job in improving our operational efficiency.

是的，謝謝你提出這個問題。事實上，我們在 2023 年 12 月——2022 年實現了盈利。進入 2023 年，管理層對我們繼續盈利的前景非常樂觀。如果回顧過去 4 年，我們公司的收入從不到 10 億元人民幣增長到今天的 135 億元人民幣。我會提醒你，我們的利潤增長速度一直快於收入增長速度。與此同時，我們在提高運營效率方面做得很好。

If you look into the few buckets of the operation expenditure, be it the cost to fulfill our orders, be it the sales cost, the technology expenses, the G&A, it's all trending much better. Last year, we trimmed 15.5% of our operations compared to the (inaudible) percentage.

如果你查看運營支出的幾個部分，無論是完成訂單的成本，還是銷售成本、技術費用、一般與行政費用，所有趨勢都好得多。去年，與（聽不清）百分比相比，我們削減了 15.5% 的業務。

Seeing all those data -- all those data points give us a lot of optimism moving into 2023. Thank you, Xipeng.

看到所有這些數據——所有這些數據點讓我們對進入 2023 年充滿了樂觀。謝謝 Xipeng。

Let me take the second question of Xipeng. So I think that post COVID, the demand for health and well-being products is picking up, so that more consumers are going to drug stores, which are our customers to buy their medicine and other health products. So we expect an increase in sales for our business indeed.

我來接西鵬的第二個問題。所以我認為在 COVID 之後，對健康和福祉產品的需求正在回升，因此更多的消費者會去藥店，這是我們的客戶購買他們的藥品和其他健康產品。因此，我們預計我們的業務銷售額確實會增加。

During the pandemic, the Chinese government has seen the value of Internet to help hospitals and drugstores to reach customers and to help reduce COVID infection to meet the shortage of hospitals (inaudible) and also to improve the visibility of medication to patients in remote areas. So we can see that during the past probably a year or so, CFDA has launched serious new policies to promote online health.

在大流行期間，中國政府看到了互聯網的價值，它可以幫助醫院和藥店接觸到客戶，幫助減少 COVID 感染，以滿足醫院短缺（聽不清），並提高偏遠地區患者對藥物的了解。所以我們可以看到，在過去大概一年左右的時間裡，CFDA推出了嚴肅的新政策來促進在線健康。

Also, the pandemic has influenced the consumer to move to online. And those customers remain to enjoy the benefit or convenience of online services even after the pandemic. So the total number of users increased.

此外，大流行影響了消費者轉向在線。即使在大流行之後，這些客戶仍然可以享受在線服務的好處或便利。所以用戶總數增加了。

So all those changes present a tremendous opportunity for us. And we also need to take that opportunity and take on the social responsibility to align with our government to reach the health (inaudible). Those are my answers.

因此，所有這些變化為我們提供了巨大的機會。我們還需要抓住這個機會並承擔社會責任，與我們的政府保持一致以實現健康（聽不清）。這些就是我的答案。

It's very clear. And thanks for sharing and congratulations again on the company's program.

這很清楚。感謝您再次分享和祝賀公司的計劃。

And our next question today comes from Stephen Lee, an individual investor.

我們今天的下一個問題來自個人投資者 Stephen Lee。

Thanks for sharing your Q4 results, (inaudible). I have two questions. Firstly, I would like to know what will be the company's operational focus going forward.

感謝您分享您的第四季度結果，（聽不清）。我有兩個問題。首先，我想知道公司未來的運營重點是什麼。

Secondly, as the company's second consecutive quarter for generating positive operating cash flow, how do you plan to keep this trend and how (inaudible) calculation now?

其次，作為公司連續第二個季度產生正經營現金流，您打算如何保持這一趨勢以及現在如何（聽不清）計算？

Yes. Thank you, Steve. With regards to the question of operational focus, I think I briefly mentioned in my script. Essentially, we did a lot of soul searching in 2022 and the organization had some realignment on the strategic focuses operationally. And those are really value creation. We've got to evaluate the businesses on the merit of how much value it can create to our upstream and downstream customers.

是的。謝謝你，史蒂夫。關於操作重點的問題，我想我在我的腳本中簡要提到了。從本質上講，我們在 2022 年進行了大量的自我反省，並且該組織在運營上對戰略重點進行了一些調整。這些都是真正的價值創造。我們必鬚根據業務可以為我們的上游和下游客戶創造多少價值來評估業務。

And the second focus will be being customer-centric. And as in the past, we were more or less more focused on internal metrics rather than metrics that drive the organization towards creating value for customers.

第二個重點將是以客戶為中心。和過去一樣，我們或多或少更關注內部指標，而不是推動組織為客戶創造價值的指標。

And also the third focus is really to strengthen our supply base.

第三個重點是真正加強我們的供應基礎。

So in 2022, we kind of managed to restructure the business. We gave up some of the businesses with really low value. And we have really realigned all the, let's say, weekly business review metrics towards customers instead of our internal metrics like revenue and margin. And obviously, we worked really hard towards the suppliers. Although we have built some good relationships, they're not strategic enough, and we are making excellent progress with our digital technical products. So all the suppliers we have been talking to are delighted.

因此，在 2022 年，我們設法重組了業務。我們放棄了一些價值非常低的業務。而且我們真的重新調整了所有，比方說，每週針對客戶的業務審查指標，而不是我們的內部指標，如收入和利潤率。顯然，我們對供應商非常努力。儘管我們建立了一些良好的關係，但它們的戰略性不夠，而且我們在數字技術產品方面取得了長足的進步。因此，與我們交談過的所有供應商都很高興。

And all of those focuses will really create the following benefits, we believe, and one being the sustained revenue and margin growth and the improved operational efficiency. We should expect our OpEx continue to improve. And also all those results will really impact the bottom line, which is profitability.

我們相信，所有這些重點將真正創造以下好處，其中之一就是持續的收入和利潤增長以及運營效率的提高。我們應該期待我們的 OpEx 繼續改善。而且所有這些結果都會真正影響底線，即盈利能力。

Yes. On the cash flow, we are very pleased to see that we have achieved 2 competitive quarters for positive operating cash flow. And we are very confident that we'll be able to keep this good trend as we are very much close to profitability and we have been operating with very high efficiency. For example, our accounts payable days is around 45 days and our inventory days is about 30 days. And while we further build our business scale, we will be able to negotiate better trading terms with suppliers.

是的。在現金流方面，我們很高興地看到我們已經實現了 2 個具有競爭力的季度的正運營現金流。我們非常有信心能夠保持這種良好趨勢，因為我們非常接近盈利，而且我們一直以非常高的效率運營。例如，我們的應付賬款天數約為 45 天，庫存天數約為 30 天。在我們進一步擴大業務規模的同時，我們將能夠與供應商協商更好的貿易條件。

In terms of cash position, our cash and cash equivalents and restricted cash and short-term investment as of December year-end amounted to RMB 923 million, and we believe that we have sufficient cash reserve to support our business expansion.

在現金狀況方面，我們的現金及現金等價物以及受限制的現金和短期投資截至 12 月末為人民幣 9.23 億元，我們相信我們有足夠的現金儲備來支持我們的業務擴張。

And Steve, I hope we have answered your questions.

史蒂夫，我希望我們已經回答了你的問題。

And our next question today comes from Tom Craig at Cornerstone Investment.

我們今天的下一個問題來自 Cornerstone Investment 的湯姆克雷格。

This is Tom from Cornerstone. Congratulations on your performance last quarter. I have two questions. The first one is, what are the main factors driving the sustained improvement of the B2B gross margin? Is this improvement sustainable?

我是 Cornerstone 的湯姆。祝賀你上個季度的表現。我有兩個問題。第一個是，推動B2B毛利率持續提升的主要因素有哪些？這種改善是否可持續？

The second one is the company's (inaudible) expense ratio has been consistently decreasing. What is the main reason for this trend? Can it continue to decrease in the future?

第二個是公司的（聽不清）費用率一直在下降。造成這種趨勢的主要原因是什麼？未來能否繼續下降？

Okay. Tom, this is Harvey, I will take your first question regarding the margin of our B2B business. So first of all, we are a technology company. So I would like to thank my technology colleagues for their assistance, help us to drive our efficiency, including our dynamic inventory management system, which help us to get the best cost in each of our warehouse. So we can do dynamic transit within -- among all these warehouses to better serve our customer and also get the best profit.

好的。湯姆，我是哈維，我將回答你關於我們 B2B 業務利潤率的第一個問題。所以首先，我們是一家科技公司。所以我要感謝我的技術同事們的幫助，幫助我們提高效率，包括我們的動態庫存管理系統，它幫助我們在每個倉庫中獲得最佳成本。因此，我們可以在所有這些倉庫之間進行動態運輸，以更好地為我們的客戶服務並獲得最大利潤。

And also the other very good system called PIS, that is our Price Intelligence System. And it helps us to optimize our price real time and get a good balance on our profit as well as our customer experience on price. So all these tools really help us to get a much better profit.

還有另一個非常好的系統 PIS，即我們的價格情報系統。它幫助我們實時優化我們的價格，並在我們的利潤和客戶的價格體驗之間取得良好的平衡。所以所有這些工具確實幫助我們獲得了更好的利潤。

But besides the technology and tools, I think even more important is our relationship with the pharmaceutical companies. To further reduce our procurement costs, we directly source from various pharmaceutical companies to lower the cost of product. And we now source from over 500 global and domestic pharmaceutical companies. We will continue to deepen our strategic relationship with these companies.

但除了技術和工具，我認為更重要的是我們與製藥公司的關係。為進一步降低我們的採購成本，我們直接向多家製藥公司採購以降低產品成本。我們現在從 500 多家全球和國內製藥公司採購。我們將繼續深化與這些公司的戰略關係。

And just for everyone's information, in the past 2 months in this year, I have personally visited over 50 pharmaceutical companies. And we all -- we have a very deep discussion on post COVID, the environment, the customer behavior change. They all agree to tighten our direct relationship and to find a strategic way to better serve the patients and customers in post-COVID period.

順便告訴大家，在今年過去的兩個月裡，我親自走訪了50多家製藥公司。我們所有人 - 我們對後 COVID、環境、客戶行為變化進行了非常深入的討論。他們都同意加強我們的直接關係，並找到一種戰略方法，以便在後 COVID 時期更好地為患者和客戶提供服務。

So we definitely expect the momentum to continue. And furthermore, with the increase of demand of our customers, with the volume growth, we will definitely see more scalability in our business which will translate into better profit in our business. Thank you.

因此，我們絕對希望這種勢頭能夠繼續下去。此外，隨著客戶需求的增加，隨著銷量的增長，我們的業務肯定會看到更大的可擴展性，這將轉化為更好的業務利潤。謝謝。

Yes. So Tom, if I heard your question correctly, it's about OpEx, right? So what is driving the OpEx down and can it sustain? I want to answer the question from the second part, can it sustain? Absolutely, we're very confident of that. And we believe there is still much room for our OpEx to improve.

是的。所以湯姆，如果我沒聽錯你的問題，那就是關於運營支出，對吧？那麼，是什麼導致 OpEx 下降，它能否維持下去？我想回答第二部分的問題，它能維持嗎？當然，我們對此非常有信心。我們相信我們的 OpEx 仍有很大的改進空間。

And the short answer to what drives down the OpEx, the short answer is really our investment into technology. We advocate digitization and we must demonstrate us ourselves being digital-first.

對於降低運營支出的原因的簡短回答，簡短的回答實際上是我們對技術的投資。我們提倡數字化，我們必須證明我們自己是數字優先的。

And if you show up in a conference room today or anywhere or if you're traveling in some remote areas with a mobile phone, we actually exactly know what happens on the day in terms of sales. So not only do we know the overall company's sales, and we know precisely what happens, let's say, in Northeast China, in East China, in Northwest China, and in what customer segment, in what categories and even some SKUs. So knowing all that, it will give us a huge advantage in decision-making.

如果您今天或任何地方出現在會議室，或者如果您帶著手機在偏遠地區旅行，我們實際上完全知道當天的銷售情況。所以我們不僅知道整個公司的銷售情況，而且我們準確地知道發生了什麼，比如東北地區，華東地區，西北地區，以及什麼客戶群，什麼類別甚至一些SKU。所以知道所有這些，它將給我們在決策制定方面帶來巨大的優勢。

And each morning, we have over 1,000 people being the ground sales. Each morning, those ground sales people will be assigned a list of tasks for today's work. That assignment is not done by the manager. It's actually by the system. So being digital has a lot of advantages.

每天早上，我們都有 1,000 多人進行地面銷售。每天早上，這些地面銷售人員都會被分配一份今天工作的任務清單。該任務不是由經理完成的。這實際上是由系統。所以數字化有很多優勢。

So moving into the future, with the new technologies like ChatGPT available, there are more areas we can work on to be more efficient. And as we speak, we'll have a few projects going on, and we're experimenting and see how it can further reduce our OpEx.

因此，展望未來，隨著 ChatGPT 等新技術的出現，我們可以在更多領域開展工作以提高效率。正如我們所說，我們將進行一些項目，我們正在進行試驗，看看它如何進一步降低我們的運營支出。

And the other factor that contributed to the driving down of the OpEx is really we spent money wisely and we have to grow. Once our scale grows, and obviously, we can scale down the operating cost. And of course, in conclusion, we still have a lot of confidence to improve a lot more into the future.

導致 OpEx 下降的另一個因素實際上是我們明智地花錢，我們必須增長。一旦我們的規模擴大，很明顯，我們可以降低運營成本。當然，總而言之，我們仍然有信心在未來取得更大的進步。

And our next question today comes from [Francis Yang at BSV Capital].

我們今天的下一個問題來自 [BSV Capital 的 Francis Yang]。

Thank you, operator. This is Francis from BSV Capital. Congratulations again on your great performance. I've got two questions. The first one is the percentage of non-GAAP operation loss to net revenue has significantly narrowed. What's the main reason for this trend? And how does the company plan to maintain this trend?

謝謝你，運營商。我是 BSV Capital 的弗朗西斯。再次祝賀你的出色表現。我有兩個問題。第一個是非 GAAP 運營虧損占淨收入的百分比已顯著收窄。造成這種趨勢的主要原因是什麼？公司打算如何保持這一趨勢？

My second question is, does the company have any new technological developments in recent times? I'd love to hear you share about it.

我的第二個問題是，公司最近有什麼新的技術發展嗎？我很想听聽你分享這件事。

Yes. On the non-GAAP operating loss, in fiscal year 2022, our non-GAAP operating loss narrowed to 1.6% of net revenue as compared to 4% last year. And the fourth quarter non-GAAP operating loss was less than 1% of net revenue and we reached profitability at non-GAAP operating level in the month of December.

是的。關於非 GAAP 營業虧損，在 2022 財年，我們的非 GAAP 營業虧損從去年的 4% 收窄至淨收入的 1.6%。第四季度非 GAAP 運營虧損不到淨收入的 1%，我們在 12 月份實現了非 GAAP 運營水平的盈利。

As just 2 of my colleagues explained the margin expansion and our efficiency on expense, I would like to highlight this narrowing of the gap operating loss mainly attributable to 2 key drivers. The first, with the customer network we have built up throughout the years, we have to sell high-margin products and improve the quality of our revenue mix. We have focused more on profitable and healthy revenue expansion to improve our margin profile.

由於只有 2 位同事解釋了利潤率擴張和我們的費用效率，我想強調主要歸因於 2 個關鍵驅動因素的差距運營損失的縮小。首先，憑藉我們多年來建立的客戶網絡，我們必須銷售高利潤產品並提高收入組合的質量。我們更加關注盈利和健康的收入擴張，以改善我們的利潤率。

As you can see, we have delivered 35% growth rate in gross margin, which was 4x of our revenue growth rate. And our overall gross margin has improved from 5% to 6.2%.

如您所見，我們的毛利率增長率為 35%，是我們收入增長率的 4 倍。我們的整體毛利率從 5% 提高到 6.2%。

The second key driver is on the technology. We're being assisted with our own developed tech solutions. We have been able to streamline our operations and significantly improve our operating efficiency. We have achieved our revenue growth with much less expense investment. As our CEO just shared with you that our spending has been more disciplined.

第二個關鍵驅動因素是技術。我們得到了我們自己開發的技術解決方案的協助。我們已經能夠簡化我們的運營並顯著提高我們的運營效率。我們以更少的費用投資實現了收入增長。正如我們的首席執行官剛剛與您分享的那樣，我們的支出更加嚴格。

We will continue to work hard on these key 2 drivers together with the scale buildup to reach profitability.

我們將繼續在這兩個關鍵驅動因素上努力，同時擴大規模以實現盈利。

Taking the second question from Francis. Yes, let me take your second question from Francis about our technology investments. We believe -- we truly believe that technology forms our core competence. We have invested heavily and will continue to invest.

接聽 Francis 的第二個問題。是的，讓我回答弗朗西斯關於我們技術投資的第二個問題。我們相信——我們真的相信技術構成了我們的核心競爭力。我們投入了大量資金，並將繼續投入。

Let me just give a few examples on what we have done. Okay. First (inaudible) continue to improve our supply chain. For example, in the past, we have 7 fulfillment centers. And in China, it's very (inaudible) and constantly to build fulfillment centers. So we formed (inaudible) FCs with some of our suppliers, vendors (inaudible). And we made tremendous (inaudible) logistical side. So, in this year, we probably expect another 10 new we call (inaudible) centers to build up. That will help us to deliver more timely to our customers.

讓我舉幾個例子來說明我們所做的事情。好的。首先（聽不清）繼續改善我們的供應鏈。比如過去，我們有7個運營中心。在中國，非常（聽不清）並且不斷地建立履行中心。因此，我們與我們的一些供應商、供應商（聽不清）形成了（聽不清）FC。我們做了巨大的（聽不清）後勤方面。因此，在今年，我們可能期望再建立 10 個我們稱之為（聽不清）中心的新中心。這將有助於我們更及時地向客戶交付產品。

We also build a continued model to optimize (inaudible) in between the FCs. And also recently, we are applying (inaudible) to create health content in short videos and text. Some videos have created a lot of views. For example, one short video of less than 1 minute resulted in more than 590,000 views. So these are created by (inaudible) to talk about health advices.

我們還建立了一個持續的模型來優化 FC 之間的（聽不清）。最近，我們正在申請（聽不清）在短視頻和文本中創建健康內容。一些視頻創造了很多觀點。例如，一段不到1分鐘的短視頻，產生了超過59萬的瀏覽量。所以這些是由（聽不清）創建的，用於談論健康建議。

So along these lines, including the recent ChatGPT development, we are also (inaudible) try to apply ChatGPT to create health assistance for our users. We really are trying to invest in technology to advance our (inaudible) to create better customer experience.

因此，沿著這些思路，包括最近的 ChatGPT 開發，我們也（聽不清）嘗試應用 ChatGPT 為我們的用戶創建健康幫助。我們真的在努力投資技術來推進我們的（聽不清）創造更好的客戶體驗。

Yes, certainly. It was very clear. And the artificial intelligence integration sounds very exciting. We look forward to hearing more.

是的，當然了。很清楚。而且人工智能集成聽起來非常令人興奮。我們期待聽到更多。

Thank you. And our next question today comes from Stephanie (inaudible) with [Civic] Investments.

謝謝。我們今天的下一個問題來自 [Civic] Investments 的斯蒂芬妮（聽不清）。

This is Stephanie from Civic Investments, and congratulations on the growing revenues. And I have two questions. The first one is what are the company's plans for its OEM products in the future?

我是 Civic Investments 的斯蒂芬妮，祝賀收入不斷增長。我有兩個問題。第一個是公司未來對代工產品有何規劃？

And the second question is, what's the current progress of the company's privatization?

第二個問題，目前公司私有化的進展情況如何？

Stephanie, this is Harvey, I'll take your question regarding OEM. And actually, we call it private label. We have, I think in the last quarter (inaudible) 9 SKUs. But now we have launched 25 SKUs of our private label. And all of these 25 SKUs have been well accepted by our pharmacy customers.

斯蒂芬妮，我是哈維，我會回答你關於 OEM 的問題。實際上，我們稱之為自有品牌。我認為在上個季度（聽不清）我們有 9 個 SKU。但現在我們已經推出了 25 個自有品牌的 SKU。所有這 25 個 SKU 都已被我們的藥房客戶很好地接受。

And in those big (inaudible), private label products continued about 30% to 40% of their margin. So while our B2B customers, those individual stores or small chains, they are not able to have their own brand. So we put the tool, private label brand (inaudible) for different type of customers. And we also, this private able to help them to compete with those big ones in this area.

在那些大的（聽不清）中，自有品牌產品的利潤率繼續保持在 30% 到 40% 左右。因此，當我們的 B2B 客戶，那些個體商店或小型連鎖店時，他們無法擁有自己的品牌。因此，我們為不同類型的客戶提供工具、自有品牌（聽不清）。而且我們這個私人能夠幫助他們與該地區的那些大公司競爭。

And there are also about over 100 SKUs in our pipeline. And we expect to see a very fast increasing trend in this project.

我們的管道中還有大約 100 多個 SKU。我們希望看到這個項目有非常快速的增長趨勢。

Yes. On the privatization, we understand that the process of the privatization is still ongoing. And the independent committee is working with the (inaudible) Group on the privatization proposal. The company should make all necessary public announcement according to SEC rules. So I would suggest that you stay tuned on the announcement if there's any to be made by the company. Thank you.

是的。關於私有化，我們了解到私有化進程仍在進行中。獨立委員會正在與（聽不清）小組就私有化提案進行合作。公司應根據 SEC 規則發布所有必要的公告。因此，如果公司有任何公告，我建議您繼續關注公告。謝謝。

And our next question today comes from Adam Frank at [Greece Capital].

我們今天的下一個問題來自 [Greece Capital] 的 Adam Frank。

Congratulations on excellent performance in last quarter. I'm Adam Frank from [Greece Capital]. I've got two questions. First, that the company has any new business model innovation?

祝賀您在上個季度的出色表現。我是來自 [Greece Capital] 的 Adam Frank。我有兩個問題。第一，公司有什麼新的商業模式創新？

And the second is what efforts are company making to improve customer experience. Yes, there's 2 questions.

第二個是公司為改善客戶體驗所做的努力。是的，有 2 個問題。

Adam, very good question. Actually, regarding the new model, we are -- actually, we are piloting our new model almost every day, every week. Of course, some of them fail. But there are also some initiated has a very good result.

亞當，很好的問題。實際上，關於新模型，我們幾乎每天、每週都在試行我們的新模型。當然，其中一些失敗了。但是也有一些發起的有很好的效果。

For example, like our 1 Health program, we have 12,000 pharmacies and millions of patients we serve in this 1 Health program.

例如，就像我們的 1 Health 計劃一樣，我們有 12,000 家藥店和數百萬患者參與這個 1 Health 計劃。

Pharmaceutical companies are leveraging the 1 Health platform to perform various digital marketing, including the coverage of new terminals, new pharmacies and especially expansion to also remote area and lower-tier cities. And also to do patient education, do DOT, duration of treatment, et cetera. This is 1 Health platform. And this new S2B2C model has been well accepted by our many pharmaceutical partners.

藥企借助1Health平台進行各種數字營銷，包括新終端、新藥店的覆蓋，尤其是向偏遠地區和下線城市的拓展。還要進行患者教育、DOT、治療持續時間等。這是1健康平台。而這種新的S2B2C模式已經被我們眾多醫藥合作夥伴所接受。

And the other example probably you can -- I just mentioned about private label problem. So it's in a very good trend, well on track and our pharmaceutical partners, not only direct source -- we direct source from them, also some of our pharmaceutical strategic partners, they are also OEM for us.

另一個例子你可能可以——我剛剛提到了私人標籤問題。所以這是一個非常好的趨勢，在軌道上，我們的製藥合作夥伴，不僅是直接來源——我們直接從他們那裡採購，還有我們的一些製藥戰略合作夥伴，他們也是我們的原始設備製造商。

So all of these initiatives is part of our DNA, and we will continue to bring more initiatives to -- especially with post-COVID seasons. Every quarter, you should be able to see more and more initiatives in our announcements. Thank you.

因此，所有這些舉措都是我們 DNA 的一部分，我們將繼續採取更多舉措——尤其是在後 COVID 季節。每個季度，您應該能夠在我們的公告中看到越來越多的舉措。謝謝。

Let me take the question on our efforts in improving customer experience. In my prior answer, I mentioned about (inaudible). Also, I mentioned about shipments in the (inaudible). These are, in fact, a tremendous improvement for customer experience because we'll have more fulfillment centers and we'll also ship more products -- can ship more products into fulfillment centers closer to customers. All these efforts will help to shorten the time for the whole delivery.

讓我來談談我們在改善客戶體驗方面所做的努力。在我之前的回答中，我提到了（聽不清）。另外，我在（聽不清）中提到了發貨。事實上，這些都是客戶體驗的巨大改進，因為我們將擁有更多的履行中心，我們還將運送更多的產品——可以將更多的產品運送到離客戶更近的履行中心。所有這些努力將有助於縮短整個交付時間。

And right now, Junling mentioned that we are serving 890 cities and counties within 24 hours. So this is a tremendous improvement in customer experience as well as for reducing product damages on the road.

而眼下，君凌提到我們24小時服務890個市縣。因此，這極大地改善了客戶體驗並減少了產品在路上的損壞。

Another example of customer experience is assortment management. In the past, we just managed a nationwide assortment. And now we drove down one more level. We managed the demand deployment for each fulfillment center meeting the demand of local customers. So that will help increases our customers for this year. Just mentioned those 3 examples.

客戶體驗的另一個例子是分類管理。過去，我們只是管理全國范圍的分類。現在我們又降低了一層。我們管理每個履行中心的需求部署以滿足當地客戶的需求。因此，這將有助於增加我們今年的客戶。剛才提到了那三個例子。

Thank you. And ladies and gentlemen, this concludes today's question-and-answer session.

謝謝。女士們，先生們，今天的問答環節到此結束。

In closing, on behalf of the entire 111 management team, we'd like to thank you for your interest and participation in today's call. If you require any further information or have any interest in visiting 111 in Shanghai, China, please (inaudible) the company now. Thank you for joining the call today. This concludes the call. You may now disconnect your lines. Thank you.

最後，我們代表整個 111 管理團隊感謝您對今天電話會議的關注和參與。如果您需要任何進一步的信息或有興趣訪問中國上海的 111，請立即（聽不清）該公司。感謝您今天加入電話會議。通話到此結束。您現在可以斷開線路。謝謝。