What changed in 111, Inc.'s 2024 10-K compared to 2023?

Across the narrative sections we track, 111, Inc. (YI) added 502 paragraphs, removed 554, and edited 417 between the 2023 and 2024 10-K filings. The biggest movers are Item 4. Mine Safety Disclosures (+167/−190), Item 3. Legal Proceedings (+170/−184), Item 5. Market for Registrant's Common Equity (+118/−118).

What changed in 111, Inc.'s MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 3 new/edited paragraphs and 3 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did 111, Inc.'s Legal Proceedings (Item 3) change in 2024?

Item 3 shows 170 added/edited paragraphs and 184 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this YI 10-K diff come from?

The source filings are 111, Inc.'s official 2023 and 2024 Form 20-F annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

111, Inc.YI财报

Nasdaq

111, Inc. is a leading China-based digital healthcare provider offering online pharmacy, telehealth consultations, chronic disease management, and medical supply chain solutions. It serves individual consumers and institutional clients nationwide, focusing on expanding access to affordable quality healthcare in underserved regional markets.

What changed in 111, Inc.'s 20-F — 2023 vs 2024

Top changes in 111, Inc.'s 2024 20-F

502 paragraphs added · 554 removed · 417 edited across 5 sections

Item 4. Mine Safety Disclosures+167 / −190 · 129 edited
Item 3. Legal Proceedings+170 / −184 · 150 edited
Item 5. Market for Registrant's Common Equity+118 / −118 · 96 edited
Item 6. [Reserved]+44 / −59 · 39 edited
Item 7. Management's Discussion & Analysis+3 / −3 · 3 edited

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

150 edited+20 added−34 removed624 unchanged

2023 filing

2024 filing

If 1 Pharmacy Technology’s proposed listing plan is not successful, our ability to strengthen our market position and operations in the PRC could be materially impaired.

Risk Factors—Risks Related to American Depositary Shares—The trading price for the ADSs may be volatile” in this annual report. ● Techniques employed by short sellers may drive down the trading price of the ADSs. For details, see “Item. 3. Key Information—D.

For details, see “Item. 3. Key Information—D. Risk Factors—Risks Related to American Depositary Shares—The trading price for the ADSs may be volatile” in this annual report. ● Techniques employed by short sellers may drive down the trading price of the ADSs. For details, see “Item. 3. Key Information—D.

On the same day, the CSRC also published a series of guidance rules and Q&As in connection with the implementation of the Overseas Offering and Listing Measures. The Overseas Offering and Listing Measures establishes a new filing-based regime to regulate overseas offerings and listings by PRC domestic companies.

According to Circular on the Arrangements for the Filing-based Administration of Overseas Securities Offering and Listing by Domestic Companies promulgated by the CSRC on February 17, 2023, as of the date of implementation of the Overseas Offering and Listing Measures, a PRC domestic company which falls within the scope of filing and has already been listed overseas is not required to go through filing procedures immediately, but the filing shall be completed for subsequent refinancing or other filing-required matters.

The Revised Cybersecurity Review Measures provide that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any public listing in a foreign country.

As of the date of this annual report, no detailed interpretation or implementation rules of the Revised Cybersecurity Review Measures have been issued by any authority and it remains unclear as to whether the relevant requirements will be applicable to companies that are already listed in the United States, including us.

The Revised Cybersecurity Review Measures further provide that “critical information infrastructure operators” that procure internet products and services must be subject to the cybersecurity review if their activities affect or may affect national security, and relevant governmental authorities in the PRC may initiate cybersecurity review if they determine that an operator’s network products or services or data processing activities affect or may affect national security.

As of the date of this annual report, we have not been informed that we are a critical information infrastructure operator by any government authorities. Furthermore, the exact scope of “critical information infrastructure operators” under the current regulatory regime remains unclear, and the PRC government authorities may have wide discretion in the interpretation and enforcement of the applicable laws.

Therefore, it is uncertain whether we would be deemed to be a critical information infrastructure operator under PRC law. If we are deemed to be a critical information infrastructure operator under the PRC cybersecurity laws and regulations, we may be subject to obligations in addition to what we have performed under the PRC cybersecurity laws and regulations.

We cannot predict the impact of the Revised Cybersecurity Review Measures at this stage, and we will closely monitor and assess any development in the rule-making process.

We cannot assure you that relevant PRC governmental authorities, including the CSRC and the CAC, would reach the same conclusion as our PRC legal counsel, and hence, we may face regulatory actions or other sanctions from them.

Any such circumstance could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide regulations affecting our operations could limit our ability to attract new customers and/or users and cause the value of our securities to significantly decline.

Judgment of United States courts will not be directly enforced in Hong Kong as there are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the United States.

However, subject to certain conditions, including but not limited to when the judgment is for a fixed sum in a civil matter and not in respect of taxes, fines, penalties or similar charges, the judgment is final and conclusive upon the merits of the claim and has not been stayed or satisfied in full, the proceedings in which the judgment was obtained were not contrary to natural justice, were not procured by fraud and the enforcement of the judgment is not contrary to public policy of Hong Kong, Hong Kong courts may accept such judgment obtained from a United States court as a debt due under the rules of common law enforcement.

For the years ended December 31, 2021 and 2022, the payment of service fees from the former VIEs to 1 Pharmacy Technology amounted to RMB728.5 million and nil, respectively. There were no other assets transferred between the former VIEs, on one hand, and 111, Inc. and its subsidiaries, on the other hand, in 2021, 2022 and 2023.

We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. We conduct substantially all of our operations in the PRC and substantially all of our assets are located in the PRC. In addition, all of our directors and executive officers named in “Item 6. Directors, Senior Management and Employees—A.

We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. We conduct substantially all of our operations in the PRC and substantially all of our assets are located in the PRC. In addition, most of our directors and executive officers named in “Item 6. Directors, Senior Management and Employees—A.

In addition, the former VIEs received net payments from 111, Inc. and its subsidiaries of RMB30.5million and RMB140.1 million, respectively, in 2019 and 2021 and made net payment of RMB78.5 million to 111, Inc. and its subsidiaries in 2020, as part of the foregoing intra-group trades of goods.

In addition, the former VIEs received net payments from 111, Inc. and its subsidiaries of RMB30.5 million and RMB140.1 million, respectively, in 2019 and 2021 and made net payment of RMB78.5 million to 111, Inc. and its subsidiaries in 2020, as part of the foregoing intra-group trades of goods.

We are subject to certain risks in our pharmaceutical retail and wholesale businesses, including: ● inability to successfully execute effective advertising, marketing and promotional programs necessary to maintain and increase awareness of our brands, products and services; ● failure to implement effective pricing and other strategies in response to market competition; ● inability to respond to changes in demand and preferences of pharmacy customers and consumers in a timely manner; ● inability to stock an adequate supply of pharmaceutical and other health and wellness products that meet the demand of our pharmacy customers and consumers; ● overall consumer spending on healthcare in China; ● inability to obtain and maintain regulatory or governmental permits, approvals and clearances, or to pass PRC government inspections or audits; and ● the risk of, and resulting liability from, any contamination, injury or other harm caused by any use, misuse or misdiagnosis involving products distributed by us.

We are subject to certain risks in our pharmaceutical retail and wholesale businesses, including: ● inability to successfully execute effective advertising, marketing and promotional programs necessary to maintain and increase awareness of our brands, products and services; ● failure to implement effective pricing and other strategies in response to market competition; ● inability to respond to changes in demand and preferences of pharmacy customers and consumers in a timely manner; 18 Table of Contents ● inability to stock an adequate supply of pharmaceutical and other health and wellness products that meet the demand of our pharmacy customers and consumers; ● overall consumer spending on healthcare in China; ● inability to obtain and maintain regulatory or governmental permits, approvals and clearances, or to pass PRC government inspections or audits; and ● the risk of, and resulting liability from, any contamination, injury or other harm caused by any use, misuse or misdiagnosis involving products distributed by us.

Information on the Company-B. Business Overview- Regulations- Relating to Foreign Exchange and Dividend Distributions.” For PRC and United States federal income tax consideration of an investment in the ADSs, see “Item 10. Additional Information—E. Taxation.” 6 Table of Contents Permissions Required from the PRC Authorities for Our Operations We conduct our business primarily through our subsidiaries in China.

Information on the Company-B. Business Overview- Regulations- Relating to Foreign Exchange and Dividend Distributions.” For PRC and United States federal income tax considerations of an investment in the ADSs, see “Item 10. Additional Information—E. Taxation.” 6 Table of Contents Permissions Required from the PRC Authorities for Our Operations We conduct our business primarily through our subsidiaries in China.

For the years ended December 31, 2021, 2022 and 2023, the dividends that 111, Inc. received from its subsidiaries amounted to nil, nil and nil, respectively. 111, Inc. has not previously declared or paid any cash dividend or dividend in kind, and has no plan to declare or pay any dividends to investors in the near future on our shares or the ADSs representing our Class A ordinary shares.

For the years ended December 31, 2022, 2023, and 2024, the dividends that 111, Inc. received from its subsidiaries amounted to nil, nil, and nil, respectively. 111, Inc. has not previously declared or paid any cash dividend or dividend in kind, and has no plan to declare or pay any dividends to investors in the near future on our shares or the ADSs representing our Class A ordinary shares.

In particular, we face a number of data-related challenges related to our business operations, including: ● protecting the data in and hosted on our system, including against attacks on our system by external parties or fraudulent behavior by our employees; ● addressing concerns related to privacy and sharing, safety, security and other factors; and 18 Table of Contents ● complying with applicable laws, rules and regulations relating to the collection, storage, use, processing, transmission, provision, disclosure , deletion or security of personal information, including any requests from regulatory and government authorities relating to such data.

In particular, we face a number of data-related challenges related to our business operations, including: ● protecting the data in and hosted on our system, including against attacks on our system by external parties or fraudulent behavior by our employees; ● addressing concerns related to privacy and sharing, safety, security and other factors; and ● complying with applicable laws, rules and regulations relating to the collection, storage, use, processing, transmission, provision, disclosure , deletion or security of personal information, including any requests from regulatory and government authorities relating to such data.

Risk Factors—Risks Related to American Depositary Shares—Techniques employed by short sellers may drive down the trading price of the ADSs” in this annual report. 15 Table of Contents ● Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

Risk Factors—Risks Related to American Depositary Shares—Techniques employed by short sellers may drive down the trading price of the ADSs” in this annual report. ● Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

Risk Factors—Risks Related to Our Business and Industry—Our pharmaceutical retail and wholesale businesses are subject to a variety of risks, which may have a material and adverse effect on our business, financial condition and results of operations” in this annual report. ● Our business generates and processes a large amount of data, and complying with evolving laws and regulations regarding cybersecurity, information security, privacy and data protection and other related laws and requirements may be expensive and may force us to make adverse changes to our business.

Risk Factors—Risks Related to Our Business and Industry—Our pharmaceutical retail and wholesale businesses are subject to a variety of risks, which may have a material and adverse effect on our business, financial condition and results of operations” in this annual report. 14 Table of Contents ● Our business generates and processes a large amount of data, and complying with evolving laws and regulations regarding cybersecurity, information security, privacy and data protection and other related laws and requirements may be expensive and may force us to make adverse changes to our business.

Risk Factors—Risks Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations and sudden or unexpected changes in policies, laws and regulations in China could limit the legal protections available to us” in this annual report. ● The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.

Risk Factors—Risks Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations and sudden or unexpected changes in policies, laws and regulations in China could limit the legal protections available to us” in this annual report. 15 Table of Contents ● The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.

As of the date of this annual report, except as disclosed in this annual report, our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are necessary for the business operations of our subsidiaries in China, including, among others, the EDI License, Pharmaceutical Operation License, the Record-Filing Certificate for Business Operations of Class II Medical Devices, Permit for Business Operations of Class III Medical Devices, Internet Drug Information Service Qualification Certificate, License for Practicing of Medical Institutions, and Food Business License.

As of the date of this annual report, except as disclosed in this annual report, our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are necessary for the business operations of our subsidiaries in China, including, among others, the EDI License, Pharmaceutical Operation License, the Record-Filing Certificate for Business Operations of Class II Medical Devices, Permit for Business Operations of Class III Medical Devices, and Internet Drug Information Service Qualification Certificate.

If we are unable to avert these attacks and security breaches, we could be subject to significant legal and financial liability, our reputation would be harmed and we could sustain substantial revenue loss from lost sales and customer dissatisfaction. In addition, we may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks.

If we are unable to avert these attacks and security breaches, we could be subject to significant legal and financial liability, our reputation would be harmed and we could sustain substantial revenue loss from lost sales and customer dissatisfaction. 33 Table of Contents In addition, we may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks.

We cannot assure you that we will be able to maintain proper inventory levels for our pharmaceutical retail and wholesale operations, and any such failure may have a material and adverse effect on our business, financial condition, results of operations and prospects. 23 Table of Contents We closely monitor the inventory levels of other products of which our marketplace sellers manage inventories.

We cannot assure you that we will be able to maintain proper inventory levels for our pharmaceutical retail and wholesale operations, and any such failure may have a material and adverse effect on our business, financial condition, results of operations and prospects. We closely monitor the inventory levels of other products of which our marketplace sellers manage inventories.

On October 27, 2022, our board of directors resolved, effective December 31, 2022, that the exercise price per share of each option that was outstanding and not exercised, canceled, forfeited, or surrendered immediately prior to December 31, 2022, whether vested or unvested, shall be amended to USD0.01 per Share and all other terms of the share options granted remain unchanged.

On October 27, 2022, our board of directors resolved, effective December 31, 2022, that the exercise price per share of each option that was outstanding and not exercised, canceled, forfeited, or surrendered immediately prior to December 31, 2022, whether vested or unvested, shall be amended to US$0.01 per share and all other terms of the share options granted remain unchanged.

Based on the composition of our income and assets and the estimated value of our assets, including goodwill, which is based on the price of our ADSs, we believe that we were not a PFIC for our taxable year ended on December 31, 2023.

If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected. We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected. 32 Table of Contents We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

Risk Factors—Risks Related to Our Business and Industry—We may not be able to manage the growth of our business and our expansion plans and operations or implement our business strategies on schedule or within our budget, or at all” in this annual report. 13 Table of Contents ● We have incurred operating losses in the past, and may not be able to achieve or maintain profitability in the future.

Risk Factors—Risks Related to Our Business and Industry—We may not be able to manage the growth of our business and our expansion plans and operations or implement our business strategies on schedule or within our budget, or at all” in this annual report. ● We have incurred operating losses in the past, and may not be able to achieve or maintain profitability in the future.

As a result, our business, financial condition and results of operations may be materially and adversely affected. We may not be able to conduct our marketing activities effectively, properly, or at reasonable costs, and we are subject to limitations in promoting our services and products, which will have an impact on our business operations.

As a result, our business, financial condition and results of operations may be materially and adversely affected. 34 Table of Contents We may not be able to conduct our marketing activities effectively, properly, or at reasonable costs, and we are subject to limitations in promoting our services and products, which will have an impact on our business operations.

Any of these events could damage our reputation, materially disrupt our ecosystem and subject us to liability and claims, which may materially and adversely affect our business, financial condition and results of operations. An occurrence of a natural disaster, widespread health epidemic or other outbreaks could have a material adverse effect on our business, financial condition and results of operations.

Any of these events could damage our reputation, materially disrupt our ecosystem and subject us to liability and claims, which may materially and adversely affect our business, financial condition and results of operations. 36 Table of Contents An occurrence of a natural disaster, widespread health epidemic or other outbreaks could have a material adverse effect on our business, financial condition and results of operations.

Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” 35 Table of Contents Our business could be disrupted by network interruptions. Our business depends on the efficient and uninterrupted operation of our computer and communications systems and our entire information infrastructure is located in China.

Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” Our business could be disrupted by network interruptions. Our business depends on the efficient and uninterrupted operation of our computer and communications systems and our entire information infrastructure is located in China.

Business Overview— Regulations— Relating to Foreign Exchange and Dividend Distributions.” 40 Table of Contents Under PRC laws and regulations, our PRC subsidiaries may pay dividends only out of their accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations.

Business Overview— Regulations— Relating to Foreign Exchange and Dividend Distributions.” Under PRC laws and regulations, our PRC subsidiaries may pay dividends only out of their accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations.

As of March 31, 2024, our founders, Dr. Gang Yu and Mr. Junling Liu, beneficially own all of our issued and outstanding Class B ordinary shares.

As of March 31, 2025, our founders, Dr. Gang Yu and Mr. Junling Liu, beneficially own all of our issued and outstanding Class B ordinary shares.

If we are unable to attract or retain the personnel required to achieve our business objectives, our business could be severely disrupted. We do not maintain key-person insurance for members of our management team.

If we are unable to attract or retain the personnel required to achieve our business objectives, our business could be severely disrupted. 31 Table of Contents We do not maintain key-person insurance for members of our management team.

(4) The shareholders of Wuhan Central China Drug Trading Co., Ltd. include 1 Pharmacy Technology (70%) and Wuhan Zall Venture Capital Co., Ltd. (30%). (5) The shareholders of Gansu Yihaoyun Pharmacy Co., Ltd. include Chongqing Yihao Pharmacy Co., Ltd. (51%) and Gansu Rongkang Pharmaceutical Logistics Co., Ltd.

(5) The shareholders of Wuhan Central China Drug Trading Co., Ltd. include 1 Pharmacy Technology (70%) and Wuhan Zall Venture Capital Co., Ltd. (30%). (6) The shareholders of Gansu Yihaoyun Pharmacy Co., Ltd. include Chongqing Yihao Pharmacy Co., Ltd. (51%) and Gansu Rongkang Pharmaceutical Logistics Co., Ltd. (49%).

Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. See “Item 15.

Our management has concluded that our internal control over financial reporting was effective as of December 31, 2024. See “Item 15.

Accordingly, there can be no assurance that we will not be a PFIC for our 2024 or any future taxable year.

Accordingly, there can be no assurance that we will not be a PFIC for our 2025 or any future taxable year.

New partnerships and strategic alliances in the healthcare industry also can alter market dynamics and adversely impact our businesses and competitive positioning. The technologies that we and our competitors employ are evolving rapidly, and new developments frequently result in price competition, product obsolescence and altered market landscape.

New partnerships and strategic alliances in the healthcare industry also can alter market dynamics and adversely impact our businesses and competitive positioning. 17 Table of Contents The technologies that we and our competitors employ are evolving rapidly, and new developments frequently result in price competition, product obsolescence and altered market landscape.

In addition, China enacted its amended Company Law, which will come into effect on July 1, 2024. The changes are significant in many respects and will have deeply affect companies incorporated in China, including a new rule that requires shareholders of limited liability companies to make their capital contributions in full within five years.

In addition, China enacted its amended Company Law, which took effect on July 1, 2024. The changes are significant in many respects and deeply affect companies incorporated in China, including a new rule that requires shareholders of limited liability companies to make their capital contributions in full within five years.

See “Item 4. Information on the Company — B. Business Overview — Our Ecosystem.” We consider a variety of factors before entering into contractual arrangements with them.

See “Item 4. Information on the Company — B. Business Overview — Our Ecosystem.” 20 Table of Contents We consider a variety of factors before entering into contractual arrangements with them.

Payment for loan from Hong Kong subsidiary to 111, Inc. was nil, nil and RMB54 million in 2021, 2022 and 2023, respectively. Prior to the termination of the former VIE structure in February 2022, the former VIEs were able to transfer cash to 1 Pharmacy Technology by paying service fees pursuant to the contractual arrangements through which we controlled the former VIEs.

Payment for loan from Hong Kong subsidiary to 111, Inc. was nil, RMB54 million, and RMB103 million in 2022, 2023, and 2024, respectively. 4 Table of Contents Prior to the termination of the former VIE structure in February 2022, the former VIEs were able to transfer cash to 1 Pharmacy Technology by paying service fees pursuant to the contractual arrangements through which we controlled the former VIEs.

We have been advised by our counsel as to Cayman Islands law that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States.

We had net write-downs of our inventories to their net realizable value of RMB46.0 million, RMB28.5 million and RMB19.9 million (US$2.8 million) in 2021, 2022 and 2023, respectively. Inventory levels in excess of customer demand may result in inventory write-downs, expiration of products or an increase in inventory holding costs and a potential negative effect on our liquidity.

We had net write-downs of our inventories to their net realizable value of RMB28.5 million, RMB19.9 million, and RMB3.9 million (US$0.5 million) in 2022, 2023, and 2024, respectively. Inventory levels in excess of customer demand may result in inventory write-downs, expiration of products or an increase in inventory holding costs and a potential negative effect on our liquidity.

Substantially all of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

As of the date of this annual report, options to purchase 7,211,037 Class A ordinary shares and 60,000 restricted share units are granted and outstanding under the 2013 Policy, the 2014 Policy and the 2016 Plan, and options to purchase 2,182,198 Class A ordinary shares and 7,951,912 restricted share units are granted and outstanding under the 2018 Plan.

As of the date of this annual report, options to purchase 7,211,037 Class A ordinary shares and 60,000 restricted share units are granted and outstanding under the 2013 Policy, the 2014 Policy and the 2016 Plan, and options to purchase 2,182,198 Class A ordinary shares and 9,274,324 restricted share units are granted and outstanding under the 2018 Plan.

For details, see “Risk Factors—Risks Related to Doing Business in China—If the PCAOB is prevented from fully evaluating audits and quality control procedures of our auditor, investors may be deprived of the benefits of such PCAOB inspections.” Transfer of Funds and Other Assets through Our Organization Under relevant PRC laws and regulations, a Cayman Islands holding company and its subsidiaries are permitted to remit funds to the VIEs through loans, working capital support or payments for intra-group trades of goods rather than capital contributions, subject to approval or fling process from the competent governmental authorities.

For details, see “Risk Factors - Risks Related to Doing Business in China - If the PCAOB is prevented from fully evaluating audits and quality control procedures of the accounting firms that prepared the audit reports included in this annual report, investors may be deprived of the benefits of such PCAOB inspections.” Transfer of Funds and Other Assets through Our Organization Under relevant PRC laws and regulations, a Cayman Islands holding company and its subsidiaries are permitted to remit funds to the VIEs through loans, working capital support or payments for intra-group trades of goods rather than capital contributions, subject to approval or fling process from the competent governmental authorities.

While we cannot predict if the SEC will further challenge the four China-based accounting firms’ compliance with U.S. law in connection with U.S. regulatory requests for audit work papers or if the results of such a challenge would result in the SEC imposing penalties such as suspensions, if the accounting firms are subject to additional remedial measures, our ability to file our financial statements in compliance with SEC requirements could be impacted.

While we cannot predict if the SEC will further challenge the four China-based accounting firms’ compliance with U.S. law in connection with U.S. regulatory requests for audit work papers or if the results of such a challenge would result in the SEC imposing penalties such as suspensions, if any of the accounting firms that prepared the audit reports included in this annual report are subject to additional remedial measures, our ability to file our financial statements in compliance with SEC requirements could be impacted.

According to the agreement signed between 1 Pharmacy Technology and its investors in 2020, if the proposed STAR Listing is not completed before June 30, 2023, the investors have the right to request Yao Wang to redeem all or part of their equity at the cost of investment, plus an annual interest rate of 6%.

According to the agreement signed between 1 Pharmacy Technology and its investors in 2020, if the proposed STAR Listing was not completed by June 30, 2023, the investors would have the right to request that Yao Wang redeem all or part of their equity at the original investment cost, plus an annual interest rate of 6%.

As of March 31, 2024, our directors and executive officers collectively owned an aggregate of 92.3% of the total voting power of our outstanding ordinary shares. As a result, they have substantial influence over our business, including significant corporate actions such as mergers, consolidations, election of directors and other significant corporate actions.

As of March 31, 2025, our directors and executive officers collectively owned an aggregate of 91.55% of the total voting power of our outstanding ordinary shares. As a result, they have substantial influence over our business, including significant corporate actions such as mergers, consolidations, election of directors and other significant corporate actions.

These Class B ordinary shares constitute approximately 42.02% of our total outstanding share capital and 91.58% of the aggregate voting power of our total outstanding share capital due to the disparate voting powers associated with our dual-class share structure. See “Item 6. Directors, Senior Management and Employees—E.

These Class B ordinary shares constitute approximately 41.65% of our total outstanding share capital and 91.46% of the aggregate voting power of our total outstanding share capital due to the disparate voting powers associated with our dual-class share structure. See “Item 6. Directors, Senior Management and Employees—E.

Junling Liu, and a PRC subsidiary of the Company, being three of its four partners Tianjin Yaocheng Business Management Partnership (LP) Approximately 1.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaosheng Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaopeng Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaohua Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoming Business Management Partnership (LP) Approximately 0.15% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaotian Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoding Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yao Cheng Business Management Partnership (LP) Approximately 0.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaojun Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company 11 Table of Contents Tianjin Yaowei Business Management Partnership (LP) Approximately 0.08% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoan Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaogong Business Management Partnership (LP) Approximately 0.37% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company SAIF Partners (Nanjing) Equity Investment Fund (LP) Approximately 0.95% Unaffiliated third-party investor SAIF Partners (Huangshan) Tourist Culture Industrial Development Fund (LP) Approximately 0.29% Unaffiliated third-party investor SAIF Partners (Nanjing) Hengzhun Venture Capital Fund (LP) Approximately 0.19% Unaffiliated third-party investor Jiaxing Tengyuan Investment Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Shanghai Shenli Business Management Partnership (LP) Approximately 0.76% Unaffiliated third-party investor Huasai Zhikang (Shanghai) Equity Investment Fund Partnership (LP) Approximately 0.48% Unaffiliated third-party investor Shanghai Zhangjiang Torch Venture Capital Co., Ltd. Approximately 0.43% Unaffiliated third-party investor Shanghai Zhilin Yiqu Venture Capital Partnership (LP) Approximately 0.38% Unaffiliated third-party investor Shanghai Technology Venture Capital Co., Ltd. Approximately 0.29% Unaffiliated third-party investor Shanghai Pudong Renmin Zhaoyin Cultural Industry Equity Investment Fund Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Gongqingcheng Ideate Investment Management Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Shanghai Zhangjiang Technology Venture Capital Co., Ltd. Approximately 0.19% Unaffiliated third-party investor Hangzhou Hengqin Investment Management Partnership (LP) Approximately 0.10% Unaffiliated third-party investor (3) Guangdong Yihao Pharmacy Co., Ltd. and Guangdong Yihao Pharmaceutical Chain Co., Ltd. were the former VIEs prior to the termination of the contractual arrangements and transfer of equity interests in February 2022, at which time these entities became our directly owned subsidiaries.

Junling Liu, and a PRC subsidiary of the Company, being three of its four partners Tianjin Yaocheng Business Management Partnership (LP) Approximately 1.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaosheng Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaopeng Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaohua Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company 11 Table of Contents Name of Shareholders Shareholding Percentage Affiliation with the Company Tianjin Yaoming Business Management Partnership (LP) Approximately 0.15% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaotian Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoding Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yao Cheng Business Management Partnership (LP) Approximately 0.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaojun Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaowei Business Management Partnership (LP) Approximately 0.08% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoan Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaogong Business Management Partnership (LP) Approximately 0.37% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company SAIF Partners (Nanjing) Equity Investment Fund (LP) Approximately 0.86% Unaffiliated third-party investor SAIF Partners (Huangshan) Tourist Culture Industrial Development Fund (LP) Approximately 0.26% Unaffiliated third-party investor 12 Table of Contents Name of Shareholders Shareholding Percentage Affiliation with the Company SAIF Partners (Nanjing) Hengzhun Venture Capital Fund (LP) Approximately 0.17% Unaffiliated third-party investor Jiaxing Tengyuan Investment Partnership (LP) Approximately 0.26% Unaffiliated third-party investor Shanghai Shenli Business Management Partnership (LP) Approximately 0.68% Unaffiliated third-party investor Huasai Zhikang (Shanghai) Equity Investment Fund Partnership (LP) Approximately 0.43% Unaffiliated third-party investor Shanghai Zhangjiang Torch Venture Capital Co., Ltd. Approximately 0.43% Unaffiliated third-party investor Shanghai Zhilin Yiqu Venture Capital Partnership (LP) Approximately 0.34% Unaffiliated third-party investor Shanghai Technology Venture Capital Co., Ltd. Approximately 0.23% Unaffiliated third-party investor Shanghai Pudong Renmin Zhaoyin Cultural Industry Equity Investment Fund Partnership (LP) Approximately 0.26% Unaffiliated third-party investor Gongqingcheng Ideate Investment Management Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Shanghai Zhangjiang Technology Venture Capital Co., Ltd. Approximately 0.19% Unaffiliated third-party investor Hangzhou Hengqin Investment Management Partnership (LP) Approximately 0.09% Unaffiliated third-party investor Shanghai Yiyao Supply Chain Management Co., Ltd. Approximately 0.80% Subsidiary of the Company (4) Guangdong Yihao Pharmacy Co., Ltd. and Guangdong Yihao Pharmaceutical Chain Co., Ltd. were the former VIEs prior to the termination of the contractual arrangements and transfer of equity interests in February 2022, at which time these entities became our directly owned subsidiaries.

In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States. 8 Table of Contents We conduct substantially all of our operations in the PRC and substantially all of our assets are located in the PRC. In addition, all of our directors and executive officers named in “Item 6.

If we are unable to defend ourselves against such claims, among other things, we may be subject to civil liabilities for physical injury, death or other losses caused by our products, to criminal liabilities, and to the revocation of our business licenses. In addition, we may be required to suspend sales or cease sales of the relevant products.

The incurrence of indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or terms acceptable to us, if at all.

The sale of additional equity securities or equity-linked debt securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or terms acceptable to us, if at all.

As of the date of this annual report, through its intermediate holding company, 111, Inc. had made cumulative capital contributions of US$342.5 million to 111, Inc.’s PRC subsidiaries. Proceeds from loan from Hong Kong subsidiary to 111, Inc. was RMB42 million, RMB19 million and RMB167 million in 2021, 2022 and 2023, respectively.

As of the date of this annual report, through its intermediate holding company, 111, Inc. had made cumulative capital contributions of US$357.4 million to 111, Inc.’s PRC subsidiaries. Proceeds from loan from Hong Kong subsidiary to 111, Inc. was RMB19 million, RMB167 million, and nil in 2022, 2023, and 2024, respectively.

The lack of PCAOB inspections in China in the past made it difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures as compared to auditors that were subject to PCAOB inspections, although we expect the effectiveness of audit procedures or quality control procedures conducted by auditors in China will gradually improve, given the ability of PCAOB to conduct inspection of such auditor firms since 2022.

The lack of PCAOB inspections in China in the past made it difficult to evaluate the effectiveness of the accounting firms that prepared the audit reports included in this annual report’s audit procedures or quality control procedures as compared to auditors that were subject to PCAOB inspections, although we expect the effectiveness of audit procedures or quality control procedures conducted by auditors in China will gradually improve, given the ability of PCAOB to conduct inspection of such auditor firms since 2022.

On December 16, 2021, the PCAOB issued the HFCAA Determination Report to notify the SEC of its determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong (the “2021 Determinations”), including our auditor.

The PRC general health and wellness market is highly competitive. Our key competitors include pharmaceutical retail companies including traditional offline pharmacies, and online platforms, as well as B2B platforms and traditional pharmaceutical distributors, and companies that offer internet healthcare services. These companies may have substantially greater financial, technical, research and development, marketing, distribution, retail and other resources than we do.

Our key competitors include pharmaceutical retail companies including traditional offline pharmacies, and online platforms, as well as B2B platforms and traditional pharmaceutical distributors, and companies that offer internet healthcare services. These companies may have substantially greater financial, technical, research and development, marketing, distribution, retail and other resources than we do.

For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: Taxation Scenario Statutory Tax and Standard Rates Hypothetical pre-tax earnings in the PRC subsidiaries (other than 1 Pharmacy Technology)(1) 100.00 Tax on earnings at statutory rate of 25% at the 1 Pharmacy Technology level(2) (25.00) Less: net earnings impact of non-controlling shareholders (10.33) Net earnings available for distribution from 1 Pharmacy Technology to Yao Wang Corporation Limited(3) 64.67 Withholding tax at tax treaty rate of 10%(4) (6.47) Amount to be distributed as dividend at the Yao Wang Corporation Limited level and net distribution to 111, Inc. 58.2 Notes: (1) For purposes of this example, the tax calculation has been simplified.

For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: Taxation Scenario Statutory Tax and Standard Rates Hypothetical pre-tax earnings in the PRC subsidiaries (other than 1 Pharmacy Technology) (1) 100.00 Tax on earnings at statutory rate of 25% at the 1 Pharmacy Technology level (2) (25.00) Less: net earnings impact of non-controlling shareholders (8.22) Net earnings available for distribution from 1 Pharmacy Technology to Yao Wang Corporation Limited and Hong Kong Yiyaolian Co., Limited (“HK Yiyaolian,” one of our wholly-owned subsidiaries) (3) 66.78 Withholding tax at tax treaty rate of 10% (4) (6.68) Amount to be distributed as dividend at the Yao Wang Corporation Limited and HK Yiyaolian level and net distribution to 111, Inc. 60.10 Notes: (1) For purposes of this example, the tax calculation has been simplified.

We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.

Any of these actions by the PRC government may have a material adverse effect on our business and results of operations. 40 Table of Contents We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.

Risks Related to American Depositary Shares The trading price for the ADSs may be volatile. Since the ADSs became listed on Nasdaq on September 12, 2018, the trading price of the ADSs has ranged from US$1.19 to US$45.88. The trading prices of the ADSs are likely to be volatile and could fluctuate widely due to factors beyond our control.

Risks Related to American Depositary Shares The trading price for the ADSs may be volatile. Our ADSs became listed on Nasdaq on September 12, 2018. The trading prices of the ADSs are likely to be volatile and could fluctuate widely due to factors beyond our control.

Our PRC legal counsel, Commerce & Finance Law Offices, has advised us that, based on their understanding of the currently effective PRC laws and regulations including the Overseas Offering and Listing Measures, as of the date of this annual report, we are not required to obtain any prior approval or permission from or complete filing procedures with the CSRC or CAC for our historical offshore offerings to foreign investors which have been completed before the date of implementation of the Overseas Offering and Listing Measures, but we are required to go through filing procedures with CSRC for our future issuance or offering of securities (including shares, depository receipts, corporate bonds convertible into shares and other securities in nature of equity) to foreign investors if certain condition conditions set forth in the Overseas Offering and Listing Measures are met so that they are considered “indirect overseas offerings and listings by a PRC domestic company”.

In addition, we operate a customer service center to provide assistance to our pharmacy customers and consumers. If our customer service representatives fail to provide satisfactory service, or if waiting times are too long due to high volume of inquiries from customers at peak times, our brand and customer loyalty may be adversely affected.

If our customer service representatives fail to provide satisfactory service, or if waiting times are too long due to high volume of inquiries from customers at peak times, our brand and customer loyalty may be adversely affected.

In 2021, 2022 and 2023, no dividends or distributions were made to 111, Inc. by its subsidiaries. 4 Table of Contents Investors in our securities should note that, to the extent cash or assets in the business are in the PRC, or a PRC entity, the funds or assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of the Company and its subsidiaries in the PRC by the PRC government to transfer cash or assets.

Investors in our securities should note that, to the extent cash or assets in the business are in the PRC, or a PRC entity, the funds or assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of the Company and its subsidiaries in the PRC by the PRC government to transfer cash or assets.

We accept payments using a variety of methods, including payment on delivery, bank transfers, online payments with credit cards and debit cards issued by major banks in China, and payment through third-party online payment platforms.

Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks. We accept payments using a variety of methods, including payment on delivery, bank transfers, online payments with credit cards and debit cards issued by major banks in China, and payment through third-party online payment platforms.

Furthermore, it is not always possible to detect and prevent fraud or other misconduct committed by our employees, ecosystem participants or other third parties, and the precautions we take to prevent and detect such activities may not be effective.

However, we may be unable to identify non-compliance or suspicious transactions promptly, or at all. Furthermore, it is not always possible to detect and prevent fraud or other misconduct committed by our employees, ecosystem participants or other third parties, and the precautions we take to prevent and detect such activities may not be effective.

Any damage to our brand names or reputation as a result of these or other factors may cause our products to be perceived unfavorably by pharmacies, doctors, regulators and consumers and the existing and prospective employees, retail and wholesale pharmacies and third-party promoters, and our business operations and prospects could be materially and adversely affected as a result. 28 Table of Contents Our business may be materially and adversely affected by adverse news, scandals or other incidents associated with the PRC general health and wellness industry.

Failure to properly address these risks and uncertainties may materially and adversely affect our ability to carry out acquisitions and other expansion plans, integrate and consolidate newly acquired or newly formed businesses, and realize all or any of the anticipated benefits of such expansion, which may have a material adverse effect on our business, financial condition, results of operations and prospects. 17 Table of Contents We have incurred operating losses in the past, and may not be able to achieve or maintain profitability in the future.

Their failure to provide a high-quality customer experience to our pharmacy customers and consumers may adversely affect our pharmacy customers’ and consumers’ receptiveness of, and willingness to utilize our solution, which may damage our reputation and cause us to lose pharmacy customers and consumers. 26 Table of Contents In addition, we operate a customer service center to provide assistance to our pharmacy customers and consumers.

We can provide no assurance that we will be able to find suitable replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not be subject to material liability resulting from third parties’ challenges on our use of such properties. 27 Table of Contents Our wide variety of accepted payment methods subjects us to third-party payment processing-related risks.

Sales of ADSs in the public market, or the perception that these sales could occur, could cause the trading price of the ADSs to decline. As of March 31, 2024, we have 171,328,644 ordinary shares outstanding, including 99,328,644 Class A ordinary shares.

Sales of ADSs in the public market, or the perception that these sales could occur, could cause the trading price of the ADSs to decline. As of March 31, 2025, we have 173,348,718 ordinary shares outstanding, including 101,348,718 Class A ordinary shares.

Any failure to comply with such laws and regulations could materially and adversely affect our business, results of operations, financial condition and prospects. 21 Table of Contents Due to the uncertainties in the regulatory environment of the industries in which we operate, there can be no assurance that we have obtained or applied for all the approvals, permits and licenses required for conducting our business and all activities in the PRC, or that we would be able to maintain our existing approvals, permits and licenses or obtain any new approvals, permits and licenses if required by any future laws or regulations.

Due to the uncertainties in the regulatory environment of the industries in which we operate, there can be no assurance that we have obtained or applied for all the approvals, permits and licenses required for conducting our business and all activities in the PRC, or that we would be able to maintain our existing approvals, permits and licenses or obtain any new approvals, permits and licenses if required by any future laws or regulations.

Disruptions to, or instability of, our technology or external technology that allows our pharmacy customers and consumers to use our online services and products could materially harm our business and reputation. 32 Table of Contents Although we have employed significant resources to develop security measures against breaches, our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, misconduct or sabotage by our employees, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain.

Although we have employed significant resources to develop security measures against breaches, our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, misconduct or sabotage by our employees, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain.

If we revise these policies to reduce our costs and expenses, our pharmacy customers and consumers may be dissatisfied, which may result in loss of existing consumers and pharmacy customers or failure to acquire new consumers and pharmacy customers at a desirable pace, which may materially and adversely affect our results of operations. 33 Table of Contents If we are subject to higher product return rates, our business, financial condition and results of operations may be materially and adversely affected.

We have established a thirty-day product return policy in certain circumstances for specified reasons. In addition, pursuant to the Consumer Protection Law, consumers are generally entitled to return purchased products within seven days upon receipt without giving any reasons when they purchase the products from business operators on the internet.

In addition, pursuant to the Consumer Protection Law, consumers are generally entitled to return purchased products within seven days upon receipt without giving any reasons when they purchase the products from business operators on the internet.

(3) Yao Wang Corporation Limited holds 86.23% equity of 1 Pharmacy Technology. 5 Table of Contents (4) China’s Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a Foreign Invested Enterprise to its immediate holding company outside of Mainland China.

(3) Yao Wang Corporation Limited and HK Yiyaolian collectively hold 89.04% equity of 1 Pharmacy Technology. (4) China’s Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a Foreign Invested Enterprise to its immediate holding company outside of Mainland China.

If we fail to comply with these new laws and regulations described above, we may be ordered to rectify and terminate any actions that are deemed illegal by the government authorities and become subject to fines and other government sanctions, which may materially and adversely affect our business, financial condition, and results of operations. 19 Table of Contents Our privacy policies and practices concerning the collection, storage, use, processing and disclosure of user data are posted on our mobile app.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

129 edited+38 added−61 removed282 unchanged

2023 filing

2024 filing

Risk Factors—Risks Related to Our Business and Industry—Our business generates and processes a large amount of data, and complying with evolving laws and regulations regarding cybersecurity, information security, privacy and data protection and other related laws and requirements may be expensive and may force us to make adverse changes to our business.

The Measures for Supervision and Administration of Online Drug Sales, or the Online Drug Sales Measures were promulgated by the SAMR in August 2022 and took effect since December 1, 2022.

According to the Online Drug Sales Measures, the online drug sellers and the online drug transaction platform service providers shall take effective measures to ensure that the information in the whole process of the trading is authentic, accurate, complete and traceable, and shall comply with relevant regulations of the State on personal information protection.

Online drug retailers shall provide comprehensive risk warning to consumers before selling prescription drugs, and shall not, in violation of the provisions, give prescription drugs or class A over-the-counter drugs to individual for free in return for purchasing drugs or commodities.

The online drug sellers and third-party platforms shall perform their respective obligations to ensure the quality and safety of online drug selling, and shall report or file their relevant information to competent drug supervision and administration department.

However, a lower withholding tax rate might be applied if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate of 5% in the case of Hong Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain requirements specified by PRC tax authorities are satisfied. 90 Table of Contents Regulations Relating to Stock Incentive Plans According to the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company, or the Share Incentive Rules, which was issued by the SAFE in February 2012 and other regulations, directors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain exceptions, are required to register with the SAFE.

However, a lower withholding tax rate might be applied if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate of 5% in the case of Hong Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain requirements specified by PRC tax authorities are satisfied. 88 Table of Contents Regulations Relating to Stock Incentive Plans According to the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company, or the Share Incentive Rules, which was issued by the SAFE in February 2012 and other regulations, directors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain exceptions, are required to register with the SAFE.

Additionally, relevant governmental authorities in the PRC may initiate cybersecurity review if they determine an internet platform operator’s network products or services or data processing activities affect or may affect national security. 88 Table of Contents In July 2022, the CAC published the Safety Assessment Measures for Data Outbound Transfer, which stipulated that the data processors who transfer important data and personal information that are collected and generated within the territory of the People’s Republic of China outbound should be subject to security assessment under certain circumstances.

Additionally, relevant governmental authorities in the PRC may initiate cybersecurity review if they determine an internet platform operator’s network products or services or data processing activities affect or may affect national security. 86 Table of Contents In July 2022, the CAC published the Safety Assessment Measures for Data Outbound Transfer, which stipulated that the data processors who transfer important data and personal information that are collected and generated within the territory of the People’s Republic of China outbound should be subject to security assessment under certain circumstances.

In February 2022, we obtained direct equity ownership in all of our previous variable interest entities through terminating such contractual arrangements, the details of which are described in the paragraphs below. Shang Yaowang was dissolved in April 2024. In May 2018, Chongqing Yihao Pharmacy Co., Ltd. was established as a wholly owned subsidiary of Yihao Pharmacy in the PRC.

In February 2022, we obtained direct equity ownership in all of our previous variable interest entities through terminating such contractual arrangements, the details of which are described in the paragraphs below. Shanghai Yaowang was dissolved in April 2024. In May 2018, Chongqing Yihao Pharmacy Co., Ltd. was established as a wholly owned subsidiary of Yihao Pharmacy in the PRC.

Many of these laws and regulations are subject to changes and uncertain interpretations, and any failure to comply with these laws and regulations could result in negative publicity, legal proceedings, suspension or disruption of operations, increased cost of operations, or otherwise harm our business.” 60 Table of Contents Potential CSRC Approval and Filing Required for the Listing of Our ADSs On July 6, 2021, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities.

Many of these laws and regulations are subject to changes and uncertain interpretations, and any failure to comply with these laws and regulations could result in negative publicity, legal proceedings, suspension or disruption of operations, increased cost of operations, or otherwise harm our business.” Potential CSRC Approval and Filing Required for the Listing of Our ADSs On July 6, 2021, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities.

New product development decisions: more effective product development insight is made based on market feedback on products Digital marketing services The company has built a strong professional medicine marketing team, with the help from information advantages and management efficiency of digital technology, company can provide more focused drug marketing services, to achieve a more comprehensive, in-depth and accurate understanding of drugs in downstream pharmacies, and then help upstream companies to achieve incremental sales of drugs, hence benefits consumers, drugstores, pharmaceutical companies and other partners 64 Table of Contents Our Products and Services to Pharmacies We have enabled more than 497,000 offline pharmacies, as of December 31, 2023, to better serve their consumers.

New product development decisions: more effective product development insight is made based on market feedback on products Digital marketing services The company has built a strong professional medicine marketing team, with the help from information advantages and management efficiency of digital technology, company can provide more focused drug marketing services, to achieve a more comprehensive, in-depth and accurate understanding of drugs in downstream pharmacies, and then help upstream companies to achieve incremental sales of drugs, hence benefits consumers, drugstores, pharmaceutical companies and other partners 64 Table of Contents Our Products and Services to Pharmacies We have enabled more than 488,000 offline pharmacies, as of December 31, 2024, to better serve their consumers.

On February 27, 2024, we received a notice from the Buyer Group, stating that it would withdraw its Proposals and formally terminate further negotiation with the special committee of our board of directors regarding the transactions contemplated by the Proposal. 59 Table of Contents Our principal executive offices are located at 3-4/F, No.295 ZuChongZhi Road, Pudong New Area, Shanghai, the People’s Republic of China.

On February 27, 2024, we received a notice from the Buyer Group, stating that it would withdraw its Proposals and formally terminate further negotiation with the special committee of our board of directors regarding the transactions contemplated by the Proposal. Our principal executive offices are located at 3-4/F, No.295 ZuChongZhi Road, Pudong New Area, Shanghai, the People’s Republic of China.

Specifically, security assessment is required before any data can be transferred out of mainland China if: (i) the data transferred out of mainland China is important data; (ii) the data processor is a critical information infrastructure operator or data processor that processes personal information of more than one million individuals; (iii) data processor who transfer personal information out of mainland China has made outbound transfer of aggregately more than 100,000 individuals’ personal information or more than 10,000 individuals’ sensitive personal information since January 1st of the previous year; or (iv) otherwise required by the CAC.

Specifically, security assessment is required before any data can be transferred out of mainland China if: (i) the data transferred out of mainland China is important data; (ii) the data processor is a critical information infrastructure operator or data processor that processes personal information of more than one million individuals; (iii) data processor who transfer personal information out of mainland China has made outbound transfer of aggregately more than 100,000 individuals’ personal information or more than 10,000 individuals’ sensitive personal information since January 1 st of the previous year; or (iv) otherwise required by the CAC.

We create value for various participants in our integrated online and offline platform in the healthcare ecosystem in China: (i) pharmaceutical companies; (ii) distributors and marketplace sellers, who use our platform to distribute and sell their products; (iii) pharmacies, including independent pharmacies, pharmacy chains and in-house pharmacies within clinics and private hospitals who purchase pharmaceutical products and interact with consumers through our platform; (iv) consumers who purchase pharmaceutical and other health and wellness products and seek medical services; (v) medical professionals who provide healthcare services through our platform.

Pursuant to the 2021 Negative List, if a PRC domestic company engaging in the prohibited business stipulated in the 2021 Negative List seeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities.

Pursuant to the 2024 Negative List, if a PRC domestic company engaging in the prohibited business stipulated in the 2024 Negative List seeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities.

Our Services to Pharmaceutical Companies We source products from pharmaceutical companies and distributors, while at the same time providing them with data services and other value-added services. Omni-channel Service Our omni-channel model plays an important role in facilitating the commercialization of drugs across the nation, especially in the market outside of hospitals.

Our Services to Pharmaceutical Companies We source products from pharmaceutical companies and distributors, while at the same time providing them with data services and other value-added services. 62 Table of Contents Omni-channel Service Our omni-channel model plays an important role in facilitating the commercialization of drugs across the nation, especially in the market outside of hospitals.

We are committed to supporting and participating in socially responsible projects that align with our core values and mission, and to extend the benefits of our products and services through our technology-driven platform to the community at large. 75 Table of Contents In May 2023, we entered the Tibetan area for the prevention and control of hydatid disease.

We are committed to supporting and participating in socially responsible projects that align with our core values and mission, and to extend the benefits of our products and services through our technology-driven platform to the community at large. In May 2023, we entered the Tibetan area for the prevention and control of hydatid disease.

As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC in this regard. 61 Table of Contents B. Business Overview In 2010, our founders launched 1 Medicine Marketplace (1 药网 ), one of the first online retail pharmacies in China.

As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC in this regard. B. Business Overview In 2010, our founders launched 1 Medicine Marketplace (1 药网 ), one of the first online retail pharmacies in China.

This tool enables our sales team to identify the purchase intent of pharmacies more intuitively and to offer more customized recommendations. As a result, our on-the-ground sales coverage efficiency improved threefold. 67 Table of Contents Customer Experience We are committed to optimizing and achieving satisfaction of our pharmacy customers.

This tool enables our sales team to identify the purchase intent of pharmacies more intuitively and to offer more customized recommendations. As a result, our on-the-ground sales coverage efficiency improved threefold. Customer Experience We are committed to optimizing and achieving satisfaction of our pharmacy customers.

Enrolled pharmacies received pecuniary interest in 1 Pharmacy Technology based on the amounts of their total purchases. For further details, see Item 4. Information on the Company-A.

Enrolled pharmacies received pecuniary interest in 1 Pharmacy Technology based on the amounts of their total purchases. For further details, see “Item 4. Information on the Company-A.

Value-Added Tax Pursuant to the Provisional Regulation of the PRC on Value-Added Tax, which was promulgated by the State Council on December 13, 1993 and amended in 2008, 2016 and 2017 and its implementation rules, entities or individuals engaging in the sale of goods, the provision of processing services, repairs and replacement services, sale of services, intangible assets or real property, or the importation of goods within the territory of the PRC must pay value-added tax. 92 Table of Contents C.

However, we face intense competition in certain business segments and verticals: ● we face competition from traditional pharmaceutical distributors and a couple of B2B platforms. ● we also compete against other pharmaceutical retail companies including traditional offline pharmacies and online platforms, such as Ali Health and JD.com.

However, we face intense competition in certain business segments and verticals: ● we face competition from traditional pharmaceutical distributors and a couple of B2B platforms. 74 Table of Contents ● we also compete against other pharmaceutical retail companies including traditional offline pharmacies and online platforms, such as Ali Health and JD.com.

For discussion of our supply chain management and related technologies, please see “—Supply Chain Management.” Cloud-based Applications Our platform is built on highly scalable and reliable cloud-based technology architecture that can accommodate the increasing scale and complexity of our business operations.

For discussion of our supply chain management and related technologies, please see “—Supply Chain Management.” 69 Table of Contents Cloud-based Applications Our platform is built on highly scalable and reliable cloud-based technology architecture that can accommodate the increasing scale and complexity of our business operations.

Stabilizing the terminal price of drugs through intelligent supply chain and digital patient education capabilities, we make the medicines needed by the public accessible nationwide, helps patients fully understand and correctly use innovative drugs, reduces the cost of medication, improves the cost-effectiveness ratio of patients, and helps the country solve the current situation that it is difficult for the public to see a doctor and purchase costly medicines. 62 Table of Contents Our Ecosystem To digitize the healthcare industry, we connect pharmaceutical companies, pharmacies, medical professionals, insurance companies and consumers in our ecosystem, and we improve the efficiency and transparency of the pharmaceutical value chain.

Stabilizing the terminal price of drugs through intelligent supply chain and digital patient education capabilities, we make the medicines needed by the public accessible nationwide, helps patients fully understand and correctly use innovative drugs, reduces the cost of medication, improves the cost-effectiveness ratio of patients, and helps the country solve the current situation that it is difficult for the public to see a doctor and purchase costly medicines. Our Ecosystem To digitize the healthcare industry, we connect pharmaceutical companies, pharmacies, and consumers in our ecosystem, and we improve the efficiency and transparency of the pharmaceutical value chain.

(the “Sponsor,” and together with the Co-Founders, the “Buyer Group”), proposing to acquire all of outstanding Class A ordinary shares (the “Class A Shares”) of the Company, including Class A Shares represented by ADSs, that are not currently owned by the Buyer Group in a going-private transaction at a proposed purchase price of US$1.83 per Class A Share or US$3.66 per ADS in cash.

Our other products include personal care products such as skin care, birth control, sexual wellness products as well as baby products. We also sell seasonal and promotional items tailored to local consumer demand for convenience and quality. Since 2017, we have expanded our product offerings by introducing more health and wellness products.

Our other products include personal care products such as skin care, birth control, sexual wellness products as well as baby products. 68 Table of Contents We also sell seasonal and promotional items tailored to local consumer demand for convenience and quality. Since 2017, we have expanded our product offerings by introducing more health and wellness products.

Internet information in China is regulated and restricted from a national security standpoint. 86 Table of Contents In June 2017, the Cyber Security Law of the People’s Republic of China, or the Cyber Security Law, promulgated by SCNPC took effect, which is formulated to maintain the network security, safeguard the cyberspace sovereignty, national security and public interests, protect the lawful rights and interests of citizens, legal persons and other organizations, and requires that a network operator, which includes, among others, internet information services providers, take technical measures and other necessary measures to safeguard the safe and stable operation of the networks, effectively respond to the network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality and availability of network data.

In June 2017, the Cyber Security Law of the People’s Republic of China, or the Cyber Security Law, promulgated by SCNPC took effect, which is formulated to maintain the network security, safeguard the cyberspace sovereignty, national security and public interests, protect the lawful rights and interests of citizens, legal persons and other organizations, and requires that a network operator, which includes, among others, internet information services providers, take technical measures and other necessary measures to safeguard the safe and stable operation of the networks, effectively respond to the network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality and availability of network data.

This digital platform has made healthcare services more accessible, convenient, and affordable for individuals and businesses with great user experience. As the digital catalyst in the healthcare industry, we have rapidly developed our core competence by digitally connecting key players in this ecosystem.

This digital platform has made healthcare services more accessible, convenient, and affordable for individuals and businesses with great user experience. 61 Table of Contents As the digital catalyst in the healthcare industry, we have rapidly developed our core competence by digitally connecting key players in this ecosystem.

For the same product, the price from a pharmaceutical company is generally lower than from a distributor. We aim for qualification by major pharmaceutical companies as a “tier one” distributor so as to directly source from them. As of December 31, 2023, we had obtained such qualifications and directly source from approximately 500 pharmaceutical companies.

For the same product, the price from a pharmaceutical company is generally lower than from a distributor. We aim for qualification by major pharmaceutical companies as a “tier one” distributor so as to directly source from them. As of December 31, 2024, we had obtained such qualifications and directly source from more than 500 pharmaceutical companies.

On the 73rd International Children’s Day, we initiated an event to sell idle items organized by employees, with all proceeds directed to the public welfare project at the Children’s Hospital.

On the 73 rd International Children’s Day, we initiated an event to sell idle items organized by employees, with all proceeds directed to the public welfare project at the Children’s Hospital.

Our Direct Sales Model We primarily conduct our wholesale distribution business through our direct sales model, where we procure pharmaceutical products from pharmaceutical companies or distributors and sell to our pharmacy customers. As of December 31, 2023, we directly sourced from approximately 500 pharmaceutical companies.

Our Direct Sales Model We primarily conduct our wholesale distribution business through our direct sales model, where we procure pharmaceutical products from pharmaceutical companies or distributors and sell to our pharmacy customers. As of December 31, 2024, we directly sourced from more than 500 pharmaceutical companies.

On December 27, 2021 and October 26, 2022, the MOFCOM and the NDRC jointly promulgated the Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 Edition) and the Catalog of Industries for Encouraged Foreign Investment (2022 Edition) respectively, to replace the former negative lists and the Catalogue, which took effect on January 1, 2022 and January 1, 2023 respectively.

On September 9, 2024 and October 26, 2022, the MOFCOM and the NDRC jointly promulgated the Special Administrative Measures for Access of Foreign Investment (Negative List) (2024 Edition) and the Catalog of Industries for Encouraged Foreign Investment (2022 Edition) respectively, to replace the former negative lists and the Catalogue, which took effect on November 1, 2024 and January 1, 2023 respectively.

Junling Liu, and other PRC subsidiary of the Company, being three of its four partners Tianjin Yaocheng Business Management Partnership (LP) Approximately 1.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaosheng Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaopeng Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company 94 Table of Contents Tianjin Yaohua Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoming Business Management Partnership (LP) Approximately 0.15% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaotian Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoding Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yao Cheng Business Management Partnership (LP) Approximately 0.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaojun Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaowei Business Management Partnership (LP) Approximately 0.08% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoan Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaogong Business Management Partnership (LP) Approximately 0.37% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company SAIF Partners (Nanjing) Equity Investment Fund (LP) Approximately 0.95% Unaffiliated third-party investor SAIF Partners (Huangshan) Tourist Culture Industrial Development Fund (LP) Approximately 0.29% Unaffiliated third-party investor 95 Table of Contents SAIF Partners (Nanjing) Hengzhun Venture Capital Fund (LP) Approximately 0.19% Unaffiliated third-party investor Jiaxing Tengyuan Investment Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Shanghai Shenli Business Management Partnership (LP) Approximately 0.76% Unaffiliated third-party investor Huasai Zhikang (Shanghai) Equity Investment Fund Partnership (LP) Approximately 0.48% Unaffiliated third-party investor Shanghai Zhangjiang Torch Venture Capital Co., Ltd. Approximately 0.43% Unaffiliated third-party investor Shanghai Zhilin Yiqu Venture Capital Partnership (LP) Approximately 0.38% Unaffiliated third-party investor Shanghai Technology Venture Capital Co., Ltd. Approximately 0.29% Unaffiliated third-party investor Shanghai Pudong Renmin Zhaoyin Cultural Industry Equity Investment Fund Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Gongqingcheng Ideate Investment Management Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Shanghai Zhangjiang Technology Venture Capital Co., Ltd. Approximately 0.19% Unaffiliated third-party investor Hangzhou Hengqin Investment Management Partnership (LP) Approximately 0.10% Unaffiliated third-party investor (3) Guangdong Yihao Pharmacy Co., Ltd., Guangdong Yihao Pharmaceutical Chain Co., Ltd. and Shanghai Yaowang E-Commerce Co., Ltd. were the former VIEs prior to the termination of the contractual arrangements and transfer of equity interests in February 2022, at which time these entities became our directly owned subsidiaries.

Junling Liu, and a PRC subsidiary of the Company, being three of its four partners Tianjin Yaocheng Business Management Partnership (LP) Approximately 1.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaosheng Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaopeng Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaohua Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company 92 Table of Contents Name of Shareholders Shareholding Percentage Affiliation with the Company Tianjin Yaoming Business Management Partnership (LP) Approximately 0.15% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaotian Business Management Partnership (LP) Approximately 0.12% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoding Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yao Cheng Business Management Partnership (LP) Approximately 0.11% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaojun Business Management Partnership (LP) Approximately 0.13% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaowei Business Management Partnership (LP) Approximately 0.08% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaoan Business Management Partnership (LP) Approximately 0.14% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company Tianjin Yaogong Business Management Partnership (LP) Approximately 0.37% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform; its partners consist mainly of employees who are managers or above of 1 Pharmacy Technology and other PRC subsidiaries of the Company SAIF Partners (Nanjing) Equity Investment Fund (LP) Approximately 0.86% Unaffiliated third-party investor SAIF Partners (Huangshan) Tourist Culture Industrial Development Fund (LP) Approximately 0.26% Unaffiliated third-party investor SAIF Partners (Nanjing) Hengzhun Venture Capital Fund (LP) Approximately 0.17% Unaffiliated third-party investor Jiaxing Tengyuan Investment Partnership (LP) Approximately 0.26% Unaffiliated third-party investor 93 Table of Contents Name of Shareholders Shareholding Percentage Affiliation with the Company Shanghai Shenli Business Management Partnership (LP) Approximately 0.68% Unaffiliated third-party investor Huasai Zhikang (Shanghai) Equity Investment Fund Partnership (LP) Approximately 0.43% Unaffiliated third-party investor Shanghai Zhangjiang Torch Venture Capital Co., Ltd. Approximately 0.43% Unaffiliated third-party investor Shanghai Zhilin Yiqu Venture Capital Partnership (LP) Approximately 0.34% Unaffiliated third-party investor Shanghai Technology Venture Capital Co., Ltd. Approximately 0.23% Unaffiliated third-party investor Shanghai Pudong Renmin Zhaoyin Cultural Industry Equity Investment Fund Partnership (LP) Approximately 0.26% Unaffiliated third-party investor Gongqingcheng Ideate Investment Management Partnership (LP) Approximately 0.29% Unaffiliated third-party investor Shanghai Zhangjiang Technology Venture Capital Co., Ltd. Approximately 0.19% Unaffiliated third-party investor Hangzhou Hengqin Investment Management Partnership (LP) Approximately 0.09% Unaffiliated third-party investor Shanghai Yiyao Supply Chain Management Co., Ltd. Approximately 0.80% Subsidiary of the Company (4) Guangdong Yihao Pharmacy Co., Ltd., Guangdong Yihao Pharmaceutical Chain Co., Ltd. and Shanghai Yaowang E-Commerce Co., Ltd. were the former VIEs prior to the termination of the contractual arrangements and transfer of equity interests in February 2022, at which time these entities became our directly owned subsidiaries.

Instead of bulk purchases and maintaining large inventory, pharmacies procure their inventory with more precision, reducing their working capital needs and enabling them to quickly respond to market demand. As a result, we are able to improve the inventory turnover of our pharmacy customers.

The inventory on demand and just-in-time delivery offer significant benefits to our pharmacy customers. Instead of bulk purchases and maintaining large inventory, pharmacies procure their inventory with more precision, reducing their working capital needs and enabling them to quickly respond to market demand. As a result, we are able to improve the inventory turnover of our pharmacy customers.

Nutritional supplements . We display nutritional supplements, including a variety of vitamins, and dietary products. Contact lenses . We offer a comprehensive selection of contact lenses that cover all major brands. Medical supplies and devices . We offer a variety of general-purpose medical supplies and devices such as bandages and thermometers. Other products .

We offer a comprehensive selection of contact lenses that cover all major brands. Medical supplies and devices . We offer a variety of general-purpose medical supplies and devices such as bandages and thermometers. Other products .

We have 28 registered domain names, including 111.com.cn and yaoex.com. As of December 31, 2023, we had 327 registered trademarks, including our “1 药网 ” trademark. As of the same date, we had 23 authorized patents in the areas of digital health, big data analytics, and SMART supply chain technology with the China National Intellectual Property Administration.

We have 29 registered domain names, including 111.com.cn and yaoex.com. As of December 31, 2024, we had 334 registered trademarks, including our “1 药网 ” trademark. As of the same date, we had 33 granted patents in the areas of digital health, big data analytics, and SMART supply chain technology with the China National Intellectual Property Administration.

Our unique integrated retail and wholesale supply chain and inventory management allow us to share inventories among 1 Medicine Marketplace, 1 Pharmacy, and Yi Hao Pharmacy, significantly increasing our operational efficiency.

Our unique integrated retail and wholesale supply chain and inventory management allow us to share inventories among 1 Medicine Marketplace, 1 Pharmacy, and our authorized third-party wholesale partners, significantly increasing our operational efficiency.

Our inventory, fulfillment and delivery services are centrally managed from our headquarters. Our inventory management allows our retail and wholesale businesses to access and share all of our inventory resources. We continually seek to improve our inventory control and minimize inventory risk. We analyze historical sales data and days in inventory to establish inventory management plans.

Our inventory management allows our retail and wholesale businesses to access and share all of our inventory resources. We continually seek to improve our inventory control and minimize inventory risk. We analyze historical sales data and days in inventory to establish inventory management plans.

Our PIS also provides clients with pricing data intelligence generated from our collection and analysis of products and prices on the market, useful in our clients’ product procurement and pricing processes. 73 Table of Contents Inventory Management We manage our inventory, both retail and wholesale, in an integrated manner.

Our PIS also provides clients with pricing data intelligence generated from our collection and analysis of products and prices on the market, useful in our clients’ product procurement and pricing processes. Inventory Management We manage our inventory, both retail and wholesale, in an integrated manner. Our inventory, fulfillment and delivery services are centrally managed from our headquarters.

For external doctors, we generally require them to provide us with their qualifications and licenses and to strictly adhere to the work scope and quality requirements specified in their service agreements in compliance with applicable legal and regulatory requirements.

We conduct frequent evaluations of our in-house doctors, pharmacists and medical assistants. For external doctors, we generally require them to provide us with their qualifications and licenses and to strictly adhere to the work scope and quality requirements specified in their service agreements in compliance with applicable legal and regulatory requirements.

In January 2017, the SAIC issued the Interim Measures for No Reason Return of Online Purchased Products within Seven Days, which became effective in March 2017 and was amended in October 2020, further clarifying the scope of consumers’ rights to make returns without a reason, including exceptions, return procedures and online trading platform operators’ responsibility to formulate seven-day no-reason return rules and related consumer protection systems, continuously display such rules and systems on a notable location of the homepage, and ensure that consumers are able to read and download them conveniently and completely, and supervise the merchants for compliance with these rules. 83 Table of Contents Regulations Relating to Online Advertising Foreign Investment on Advertising The principal regulation governing foreign-invested advertising agencies in China are the Administrative Measures for Foreign Invested Advertising Enterprise, which was abolished due to the decision on Repealing the Administrative Measures for Foreign Invested Advertising Enterprise issued by SAIC in June 2015.

In June 2023, Chongqing Yihao Pharmacy Co., Ltd. purchased 51% of the equity interests in Inner Mongolia Yihao Pharmacy Co., Ltd. from Inner Mongolia Haodong Technology Co., Ltd.

In June 2023, Chongqing Yihao Pharmacy Co., Ltd. purchased 51% of the equity interests in Inner Mongolia Yihao Pharmacy Co., Ltd. from Inner Mongolia Haodong Technology Co., Ltd. In July 2024, Chongqing Yihao Pharmacy Co., Ltd. purchased 51% of the equity interests in Hubei Yihao Medicine Co., Ltd. from Hubei Yihui Medical Technology Co., Ltd.

Regulations relating to Internet Information Security and Privacy Protection PRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure.

Regulations Relating to Online Trading The Measures for the Supervision and Administration of Online Trading promulgated by the SAMR in March 2021, or the Online Trading Measures, which became effective since May 2021 and replaced the Administrative Measures for Online Trading promulgated by the SAIC in January 2014, stipulates the obligations of online trading operators, including the online trading platform operators, operators within the platform, self-built website operators and online trading operators that carry out online trading activities through other network services.

As of the date of this annual report, these drafts had yet to come into effect. 81 Table of Contents Regulations Relating to Online Trading The Measures for the Supervision and Administration of Online Trading promulgated by the SAMR in March 2021, or the Online Trading Measures, which became effective since May 2021 and replaced the Administrative Measures for Online Trading promulgated by the SAIC in January 2014, stipulates the obligations of online trading operators, including the online trading platform operators, operators within the platform, self-built website operators and online trading operators that carry out online trading activities through other network services.

Regulations Relating to Food Business General Administration on Food Operation The Food Safety Law of the People’s Republic of China, which was effective as from June 2009 and amended by the SCNPC in April 2015, December 2018 and April 2021 and became effective in April 2021, and the Implementation Regulations of the Food Safety Law of the PRC, which took effect as from July 2009 and were amended by the State Council in 2016 and 2019, regulate food safety and set up a system of the supervision, monitoring and evaluation of food safety and adopt food safety standards.

Since then, comprehensive pilot zones for cross-border e-commerce have been set up in more cities and areas. 82 Table of Contents Regulations Relating to Food Business General Administration on Food Operation The Food Safety Law of the People’s Republic of China, which was effective as from June 2009 and amended by the SCNPC in April 2015, December 2018 and April 2021 and became effective in April 2021, and the Implementation Regulations of the Food Safety Law of the PRC, which took effect as from July 2009 and were amended by the State Council in 2016 and 2019, regulate food safety and set up a system of the supervision, monitoring and evaluation of food safety and adopt food safety standards.

Regulations Relating to Intellectual Property Copyright China has adopted comprehensive legislation governing intellectual property rights, including trademarks and copyrights. China is a signatory to the primary international conventions on intellectual property rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to the WTO in December 2001.

China is a signatory to the primary international conventions on intellectual property rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to the WTO in December 2001.

Our Products and Services to Consumers Our Online Retail Pharmacy Our online retail pharmacy is an integral part of our holistic online and offline platform. In 2010, our founders launched our online retail pharmacy, 1 Medicine Marketplace, to fulfill the healthcare needs of consumers. 1 Medicine Marketplace is currently available through our 1 Medicine Marketplace app or website.

In 2010, our founders launched our online retail pharmacy, 1 Medicine Marketplace, to fulfill the healthcare needs of consumers. 1 Medicine Marketplace is currently available through our 1 Medicine Marketplace app or website.

The Implementation Rules for the Drug Administration Law, was promulgated by the State Council in August 2002 and amended in 2016 and 2019, which emphasized the detailed implementation rules of drugs administration. 79 Table of Contents According to the Measures on Prescription Drugs and OTC Drugs Classification Management (Trial) and the Interim Provisions on the Circulation of Prescription and OTC Drugs, which were both promulgated by the State Drug Administration, which was restructured and integrated into the CFDA, in 1999 and became effective in January 2000, drugs are divided into prescription drugs and over-the-counter drugs, or OTC drugs.

According to the Measures on Prescription Drugs and OTC Drugs Classification Management (Trial) and the Interim Provisions on the Circulation of Prescription and OTC Drugs, which were both promulgated by the State Drug Administration, which was restructured and integrated into the CFDA, in 1999 and became effective in January 2000, drugs are divided into prescription drugs and over-the-counter drugs, or OTC drugs.

On December 27, 2021, the NDRC and the MOFCOM jointly issued the Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 Edition), or the 2021 Negative List, which became effective on January 1, 2022.

On September 6, 2024, the NDRC and the MOFCOM jointly issued the Special Administrative Measures for Access of Foreign Investment (Negative List) (2024 Edition), or the 2024 Negative List, which became effective on November 1, 2024.

History and Development of the Company.” As of December 31, 2023, more than 12,000 participating pharmacy stores have participated in our 1 Health Membership program. 65 Table of Contents By joining the “1 Health ® ” drugstore alliance, drugstore users can enjoy a number of exclusive rights and interests, including: Right and Interest Content of rights and interests Centralized drug procurement services The company provides users with centralized procurement services, that is, to purchase platform best-selling products at a lower cost and enjoy the preferred exclusive products.

History and Development of the Company.” 65 Table of Contents By joining the “1 Health ® ” drugstore alliance, drugstore users can enjoy a number of exclusive rights and interests, including: Right and Interest Content of rights and interests Centralized drug procurement services The company provides users with centralized procurement services, that is, to purchase platform best-selling products at a lower cost and enjoy the preferred exclusive products.

In September 2022 and January 2023, Chongqing Yihao Pharmacy Co., Ltd. purchased 51% of the equity interests in Gansu Yihaoyun Pharmacy Co., Ltd. and Yunan Yaofang Pharmacy Co., Ltd. respectively from Gansu Rongkang Pharmaceutical Logistics Co., Ltd. and Shaohong Wei.

In September 2022, Chongqing Yihao Pharmacy Co., Ltd. purchased 51% of the equity interests in Gansu Yihaoyun Pharmacy Co., Ltd. from Gansu Rongkang Pharmaceutical Logistics Co., Ltd..

After assisting our pharmacy customers to open accounts and establishing initial relationships, our on-the-ground sales force frequently liaise with these pharmacies via in-person visits, telephone calls or other social network tools to share the latest promotional information and drive repeat purchases. 67 Table of Contents Our Products and Services to Consumers Our Online Retail Pharmacy Our online retail pharmacy is an integral part of our holistic online and offline platform.

According to the Administrative Measures for the Supervision and Administration of Operation and Use of Pharmaceuticals, promulgated by the SAMR in September 2023 and effective in January 2024, which replaced the Administrative Measures for the Supervision and Administration of Circulation of Pharmaceuticals and the Measures for the Administration of Pharmaceutical Operation License, pharmaceutical operation enterprises, medical institutions or other entities engaging in drug operation or using shall be responsible for the quality of pharmaceuticals they operate or use.

The pharmaceutical wholesale enterprises distributing prescription drugs and/or OTC drugs, as well as pharmaceutical retail enterprises selling prescription drugs and/or Class A OTC drugs are required to obtain the Pharmaceutical Operation License. 78 Table of Contents According to the Administrative Measures for the Supervision and Administration of Operation and Use of Pharmaceuticals, promulgated by the SAMR in September 2023 and effective in January 2024, which replaced the Administrative Measures for the Supervision and Administration of Circulation of Pharmaceuticals and the Measures for the Administration of Pharmaceutical Operation License, pharmaceutical operation enterprises, medical institutions or other entities engaging in drug operation or using shall be responsible for the quality of pharmaceuticals they operate or use.

We provide our consumers flexible payment options for both direct sales and marketplace models. Our payment options include in-person settlement (which is required and the only option for the purchase of prescription drugs), bank transfers, online payments with credit cards and debit cards, and payment through third-party online payment platforms, such as WeChat Payment and Alipay.

We provide our consumers flexible payment options for both direct sales and marketplace models. Our payment options include bank transfers, online payments with credit cards and debit cards, and payment through third-party online payment platforms, such as WeChat Payment and Alipay.

On September 15, 2018, our ADSs commenced trading on Nasdaq under the symbol “YI.” We raised from our initial public offering approximately US$ 101.2 million in net proceeds (including the net proceeds generated from the offering of additional 809,555 ADSs upon the underwriters’ partial exercise of their over-allotment option), after deducting underwriting commissions and the offering expenses payable by us. 58 Table of Contents On August 17, 2020, 1 Pharmacy Technology completed the capital injection from new investors with an aggregate of RMB419.82 million (approximately US$60.49 million).

For example, CIIOs are required to conduct network security test and risk assessment, report the assessment results to relevant regulatory authorities, and timely rectify the issues identified at least once a year. As of the date of this annual report, we have not been identified by a CIIO by the relevant regulatory authority.

Supply Chain Finance Service and Other Structured Payment Arrangements We offer convenient online loan application services to the clients of 1 Pharmacy, including pharmacies and wholesalers, when they purchase drugs on 1 Pharmacy.

We generally do not offer product return and exchange service unless the damages are caused by our fault. Supply Chain Finance Service and Other Structured Payment Arrangements We offer convenient online loan application services to the clients of 1 Pharmacy, including pharmacies and wholesalers, when they purchase drugs on 1 Pharmacy.

Our WMS enables us to closely monitor each step of the fulfillment process from guiding inventory receiving and put-away, optimizing picking and shipping of orders and advising on inventory replenishment.

We customize our proprietary warehouse management system to meet the specific needs of our pharmaceutical distribution business. Our WMS enables us to closely monitor each step of the fulfillment process from guiding inventory receiving and put-away, optimizing picking and shipping of orders and advising on inventory replenishment.

Furthermore, the foreign party investing in e-commerce business, as a type of value-added telecommunication services, has been allowed to hold up to 100% of the equity interests of the FITE based on the Notice of the Ministry of Industry and Information Technology on Removing the Restrictions on Foreign Equity Ratios in Online Data Processing and Transaction Processing (Operating E-commerce) Business issued on in June 2015 and the current effective Telecom Catalogue. 78 Table of Contents In July 2006, the Ministry of Information Industry, which was restructured and integrated into the MIIT, promulgated the Notice of the Ministry of Information Industry on Intensifying the Administration of Foreign Investment in Value-added Telecommunications Services, or the MII Notice, which reiterates certain requirements of the FITE Regulations and strengthens the administration by the MII.

Purchases by these customers are primarily made based on historical experience, and their inventory turnover days are generally long due to a lack of detailed, precise planning and bulk purchase patterns. In addition, their inventory level is subject to fluctuations as a result of seasonal or other factors beyond their control.

Our in-house medical team receives regular training on relevant safety policies, standards, protocols and procedures and is required to strictly comply with them in all aspects of our operations. We conduct frequent evaluations of our in-house doctors, pharmacists and medical assistants.

We have adopted stringent hiring procedures for doctors, pharmacists and medical assistants, which involve in-person interviews and assessments of technical knowledge. Our in-house medical team receives regular training on relevant safety policies, standards, protocols and procedures and is required to strictly comply with them in all aspects of our operations.

In November 2017 the General Office of the CFDA promulgated a Notice on Strengthening the Administration and Supervision of Internet Drug and Medical Devices Transaction, which specify the approval to conduct internet drug transaction service as the third-party platform is cancelled, but enterprises carrying out internet drug (including medical) transaction services shall establish a comprehensive supervision system in general and also request local counterparts of CFDA to implement day-to-day supervision and examination with respect to qualification access examination, products inspection, storage of transaction data and legal liabilities etc. 80 Table of Contents Online Sales of Drugs and Medical Device Under PRC laws and regulations, the drugs and medical devices are allowed to be sold online in general except the prescription drugs that cannot be sold by pharmaceutical manufacture and operating enterprise or medical institution directly to the public by post or via internet.

Partners in this model include pharmacies, public and private hospitals, clinics, community health centers, distributors, medical representatives and our 1 Medicine Marketplace app. This model offers multiple channels for pharmaceutical companies to simultaneously reach healthcare providers nationwide and educates them about new drugs and therapies.

Partners in this model include pharmacies, private hospitals, clinics, distributors, and our 1 Medicine Marketplace app. This model offers multiple channels for pharmaceutical companies to simultaneously reach healthcare providers nationwide and educates them about new drugs and therapies. This model significantly reduces time, resources and cost, which allow drugs to be distributed quickly and efficiently.

Our 1 Health Membership program is a membership model that effectively connects pharmaceutical companies with pharmacies and patients to empower small-to-mid size pharmacy chains, while promoting incremental products sales for pharmaceutical companies. This program allows pharmaceutical companies to identify market opportunities through data integration, and leverage on 1 Health’s sales power execute sales promotion strategy.

In November 2022, the NMPA issued the List of Drugs Prohibited to be Sold Online (First Edition) and the Announcement on Regulating the Filing and Reporting of Online Drug Sales, which provides detailed requirements for the filing of online drug transaction third-party platforms and the reporting of online drug seller. 82 Table of Contents In December 2017, the CFDA promulgated the Administration and Supervision Measures of Online Sales of Medical Devices, or the Online Medical Devices Sales Measures, which became effective in March 2018.

Regulation Relating to Value-added Telecommunications Services Telecommunications Regulations The Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, promulgated in September 2000 and amended in July 2014 and February 2016 respectively, are the primary PRC laws governing telecommunication services, and set out the general framework for the provision of telecommunication services by domestic PRC companies.

“Certain other industries” refer to, among others, important transportation services, important culture products and services, important information technology and internet products and services, and important finance services that are crucial to national security. 76 Table of Contents Regulation Relating to Value-added Telecommunications Services Telecommunications Regulations The Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, promulgated in September 2000 and amended in July 2014 and February 2016 respectively, are the primary PRC laws governing telecommunication services, and set out the general framework for the provision of telecommunication services by domestic PRC companies.

With respect to our fulfillment centers, we leased these facilities with a total area of approximately 186,152.56 square meters in Kunshan, Tianjin, Chongqing, Wuhan, Xi’an, Shenyang and Zhaoqing as of December 31, 2023. We lease our premises from unrelated third parties under operating lease agreements. Item 4A. Unresolved Staff Comments None. 96 Table of Contents

With respect to our fulfillment centers, we leased these facilities with a total area of approximately 160,803.65 square meters in Kunshan, Tianjin, Chongqing, Wuhan, Xi’an, Shenyang and Guangzhou as of December 31, 2024. We lease our premises from unrelated third parties under operating lease agreements.

On December 22, 2020, 1 Pharmacy Technology completed another round of financing with an aggregate of RMB515 million (approximately US$78.75 million). In connection with each round of the capital injection, the investors agreed to take all necessary and reasonable steps to facilitate the proposed listing of 1 Pharmacy Technology on the STAR Market.

In connection with each round of the capital injection, the investors agreed to take all necessary and reasonable steps to facilitate the proposed listing of 1 Pharmacy Technology on the STAR Market.

Pursuant to these laws and regulations, PRC companies must make contributions at specified levels for their employees to the relevant local social insurance and housing fund authorities.

Pursuant to these laws and regulations, PRC companies must make contributions at specified levels for their employees to the relevant local social insurance and housing fund authorities. Failure to comply with such laws and regulations may result in various fines and legal sanctions and supplemental contributions to the local social insurance and housing fund regulatory authorities.

In addition, any advertising operator or advertising publisher in violation of such requirements will be imposed a fine ranging from RMB200,000 to RMB1,000,000, and the advertisement fee received will be confiscated; in severe circumstances, the business license of such advertising operator or advertising publisher may be revoked. 85 Table of Contents Except that certain prescription drugs are prohibited from advertising, the advertisement of prescription drugs can be only made on designated medical or pharmaceutical journals.

To join the “1 Health ® ” ecosystem, pharmaceutical companies can enjoy the rights and interests as: Right and Interest Content of rights and interests Digital commercialization services The company provides digital view board for pharmaceutical enterprise partner who joined 1 Health program in depth.

This program allows pharmaceutical companies to identify market opportunities through data integration, and leverage on 1 Health’s sales power execute sales promotion strategy. 63 Table of Contents To join the “1 Health ® ” ecosystem, pharmaceutical companies can enjoy the rights and interests as: Right and Interest Content of rights and interests Digital commercialization services The company provides digital view board for pharmaceutical enterprise partner who joined 1 Health program in depth.

The purchase orders of our pharmacy customers on 1 Pharmacy are processed in real time. Typically, the order processing will take within 15 minutes, after which orders will be dispatched for delivery through our fulfillment network. The inventory on demand and just-in-time delivery offer significant benefits to our pharmacy customers.

Our pharmacy customers typically do not need to negotiate or enter into any purchase and sale agreement or make any purchase commitment. The purchase orders of our pharmacy customers on 1 Pharmacy are processed in real time. Typically, the order processing will take within 15 minutes, after which orders will be dispatched for delivery through our fulfillment network.

We are generally able to deliver to 23 provinces and cities within 24 hours, and nationwide within 72 hours. Risk Management and Internal Control We have adopted and implemented various policies and procedures to ensure rigorous risk management and internal control, and we are dedicated to continually improving these policies and procedures.

Risk Management and Internal Control We have adopted and implemented various policies and procedures to ensure rigorous risk management and internal control, and we are dedicated to continually improving these policies and procedures.

In addition, the EIT Law provides that a non-resident enterprise refers to an entity established under foreign law whose “de facto management bodies” are not within the PRC but which have an establishment or place of business in the PRC, or which do not have an establishment or place of business in the PRC but have income sourced within the PRC. 89 Table of Contents Enterprises that are recognized as high and new technology enterprises in accordance with the Administrative Measures Recognition of High and New Technology Enterprises are entitled to enjoy the preferential enterprise income tax rate of 15%.

Failure to comply with such laws and regulations may result in various fines and legal sanctions and supplemental contributions to the local social insurance and housing fund regulatory authorities. 91 Table of Contents Regulation Relating to Taxation Enterprise Income Tax Pursuant to the EIT Law promulgated by the National People’s Congress on March 16, 2007, which became effective from January 1, 2008 and was amended in 2017 and 2018, the income tax rate for both domestic and foreign-invested enterprises incorporated in the PRC is 25% commencing from January 1, 2008.

Regulation Relating to Taxation Enterprise Income Tax Pursuant to the EIT Law promulgated by the National People’s Congress on March 16, 2007, which became effective from January 1, 2008 and was amended in 2017 and 2018, the income tax rate for both domestic and foreign-invested enterprises incorporated in the PRC is 25% commencing from January 1, 2008.

As of the date of this annual report, uncertainties still exist in relation to the interpretation and implementation of the Cybersecurity Review Measures. Although we have not been identified as a CIIO by any regulatory authority, we cannot rule out the possibility that we, or certain of our customers or suppliers, may be deemed as a CIIO.

Although we have not been identified as a CIIO by any regulatory authority, we cannot rule out the possibility that we, or certain of our customers or suppliers, may be deemed as a CIIO.

We have never received any written notice or penalty for material non-compliance or violation of healthcare service quality and safety laws or regulations, nor have we received any recommendation for improvement with respect to healthcare service quality and safety from any government authority. 74 Table of Contents The skills, competence and attitude of our in-house medical team are essential for the quality of care that our users receive.

In order to further implement the Computer Software Protection Regulations, promulgated by the State Council in December 2001 and amended in 2011 and 2013 respectively, the National Copyright Administration issued Computer Software Copyright Registration Procedures in February 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights. 89 Table of Contents Trademark According to the Trademark Law of the People’s Republic of China, promulgated by the SCNPC in August 1982, and amended in 1993, 2001, 2013 and 2019 respectively, the Trademark Office of the SAMR is responsible for the registration and administration of trademarks in China.

In addition, there is a voluntary registration system administered by the Copyright Protection Centre of China. 87 Table of Contents In order to further implement the Computer Software Protection Regulations, promulgated by the State Council in December 2001 and amended in 2011 and 2013 respectively, the National Copyright Administration issued Computer Software Copyright Registration Procedures in February 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights.

Share Ownership.” 93 Table of Contents (2) The following table illustrates the details of the shareholders of 1 Pharmacy Technology: Name of Shareholders Shareholding Percentage Affiliation with the Company Yao Wang Corporation Limited 86.23% Hong Kong subsidiary of the Company Ningbo Youkai Venture Capital Partnership (LP) Approximately 1.55% Unaffiliated third-party investor Shanghai SOE Reform & Development Equity Investment Fund Partnership (LP) Approximately 1.03% Unaffiliated third-party investor Ningbo Liangji Industrial Co., Ltd. Approximately 0.72% Unaffiliated third-party investor Zhenjiang Huixin Equity Investment Partnership (LP) Approximately 0.57% Unaffiliated third-party investor Hezhou Hongshi Equity Investment Partnership (LP) Approximately 0.16% Unaffiliated third-party investor Shanghai Yaoxing Business Management Partnership (LP) Approximately 0.15% A limited partnership formed by certain current and former employees of 1 Pharmacy Technology and other PRC subsidiaries of the Company, with Mr.

Share Ownership.” (2) Yao Wang Corporation Limited and HK Yiyaolian, one of our wholly-owned subsidiaries, collectively hold 89.04% equity of 1 Pharmacy Technology. 91 Table of Contents (3) The following table illustrates the details of the shareholders of 1 Pharmacy Technology: Name of Shareholders Shareholding Percentage Affiliation with the Company Yao Wang Corporation Limited Approximately 86.29% Hong Kong subsidiary of the Company Ningbo Youkai Venture Capital Partnership (LP) Approximately 1.40% Unaffiliated third-party investor Shanghai SOE Reform & Development Equity Investment Fund Partnership (LP) Approximately 0.93% Unaffiliated third-party investor Ningbo Liangji Industrial Co., Ltd. Approximately 0.65% Unaffiliated third-party investor Zhenjiang Huixin Equity Investment Partnership (LP) Approximately 0.52% Unaffiliated third-party investor Hezhou Hongshi Equity Investment Partnership (LP) Approximately 0.14% Unaffiliated third-party investor Shanghai Yaoxing Business Management Partnership (LP) Approximately 0.14% A limited partnership formed by certain current and former employees of 1 Pharmacy Technology and other PRC subsidiaries of the Company Shanghai Yaoshu Business Management Partnership (LP) Approximately 0.10% A limited partnership formed by certain current and former employees of 1 Pharmacy Technology and other PRC subsidiaries of the Company Xinjiang Junying Hongyin Investment Management Partnership (LP) Approximately 0.05% Unaffiliated third-party investor Tianjin Gangling Business Management Partnership (LP) Approximately 1.81% A limited partnership formed as 1 Pharmacy Technology’s employee equity incentive platform, with the Company’s founders, Dr.

Regulations This section sets forth a summary of the most significant rules and regulations that affect our business activities in China. 76 Table of Contents Regulation Relating to Foreign Investment Investment in the PRC conducted by foreign investors and foreign-owned enterprises shall comply with the Guidance Catalogue of Industries for Foreign Investment, or the Catalogue, which was first issued in 1995 and amended from time to time.

Regulation Relating to Foreign Investment Investment in the PRC conducted by foreign investors and foreign-owned enterprises shall comply with the Guidance Catalogue of Industries for Foreign Investment, or the Catalogue, which was first issued in 1995 and amended from time to time.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

96 edited+22 added−22 removed75 unchanged

2023 filing

2024 filing

Financing Activities Net cash provided by financing activities in 2023 was RMB206.0 million (US$29.0 million), consisting of proceeds from short-term bank borrowings of RMB919.6 million (US$129.5 million), partially offset by repayment of short-term bank borrowings of RMB750.1 million (US$105.7 million) and proceeds from other financing arrangement of RMB1,451.4 million (US$204.4 million), partially offset by repayment under other financing arrangement of RMB1,415.1 million (US$199.3 million).

Net cash provided by financing activities in 2023 was RMB206.0 million (US$29.0 million), consisting of proceeds from short-term bank borrowings of RMB919.6 million (US$129.5 million), partially offset by repayment of short-term bank borrowings of RMB750.1 million (US$105.7 million) and proceeds from other financing arrangement of RMB1,451.4 million (US$204.4 million), partially offset by repayment under other financing arrangement of RMB1,415.1 million (US$199.3 million).

Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.

Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2024 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.

Unfavorable changes in any of these general industry conditions could negatively affect demand for our products and services and negatively and materially affect our results of operations. 97 Table of Contents We are affected by government policies and regulations that address all aspects of our operations, including qualifications and licensing requirements for online and offline sales and distribution of pharmaceutical and other health and wellness products, online healthcare services and online hospitals, among other things.

Unfavorable changes in any of these general industry conditions could negatively affect demand for our products and services and negatively and materially affect our results of operations. 95 Table of Contents We are affected by government policies and regulations that address all aspects of our operations, including qualifications and licensing requirements for online and offline sales and distribution of pharmaceutical and other health and wellness products, online healthcare services and online hospitals, among other things.

Our general and administrative expenses increased by 9.0% from RMB205.6 million in 2022 to RMB224.2 million (US$31.6 million) in 2023. We recorded the unrecognized share-based compensation of RMB62 million upon the cancellation of the share option plan at our subsidiary level. General and administrative expenses accounted for 1.5% of net revenue in 2023 as compared to 1.5% last year.

The decrease was primarily attributable to a decrease in the lease expenses of our warehouse. Fulfillment expenses accounted for 2.7% of net revenue in 2023 as compared to 3.0% last year. Selling and Marketing Expenses . Our selling and marketing expenses decreased by 2.1% from RMB457.9 million in 2022 to RMB448.4 million (US$63.2 million) in 2023.

The decrease was primarily attributable to a decrease in the lease expenses of our warehouse. Fulfillment expenses accounted for 2.7% of net revenue in 2023 as compared to 3.0% in 2022. Selling and Marketing Expenses . Our selling and marketing expenses decreased by 2.1% from RMB457.9 million in 2022 to RMB448.4 million (US$63.2 million) in 2023.

We expect our technology expenses could be decreased as a percentage of our total net revenues as we are able to leverage the scale of our business as we continue to grow. Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated.

We expect our technology expenses could be decreased as a percentage of our total net revenues as we are able to leverage the scale of our business as we continue to grow. 98 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated.

Risk Factors—Risks Related to Our Business and Our Industry —We have incurred operating losses in the past, and may not be able to achieve or maintain profitability in the future.” 107 Table of Contents We expect that substantially all of our future net revenues will be denominated in Renminbi.

Risk Factors—Risks Related to Our Business and Our Industry —We have incurred operating losses in the past, and may not be able to achieve or maintain profitability in the future.” We expect that substantially all of our future net revenues will be denominated in Renminbi.

General and administrative expenses primarily consist of payroll, bonus and employee benefit costs for corporate employees, legal, finance, rental expenses, and other corporate overhead costs. We expect our general and administrative expenses to decrease as a percentage of our total net revenues as we leverage the scale of our business. 100 Table of Contents Technology expenses .

The decrease was primarily attributable to a decrease in the payroll of sales staffs and expenses associated with the increasing efficiency of the B2B business. Selling and marketing expenses accounted for 3.0% of net revenue in 2023 as compared to 3.4% last year. General and Administrative Expenses .

Our net loss as a percentage of net revenues decreased from 5.0% in 2021 to 2.8% in 2022 and further to 2.4% in 2023. Key Factors Affecting Our Results of Operations Our results of operations are affected by general factors driving China’s general health and wellness industry, especially pharmaceutical retail and wholesale distribution and internet healthcare industries in China.

Our net loss as a percentage of net revenues decreased from 2.8% in 2022 to 2.4% in 2023 and further to 0.1% in 2024. Key Factors Affecting Our Results of Operations Our results of operations are affected by general factors driving China’s general health and wellness industry, especially pharmaceutical retail and wholesale distribution and internet healthcare industries in China.

Our selling and marketing expenses are a significant contributor to our operating costs and expenses, and they primary consist of payroll, bonus and employee benefits of sales and marketing staff, advertising costs, agency fees and costs for promotional materials. In 2021, 2022 and 2023, selling and marketing expenses amounted to 4.1%, 3.4% and 3.0% of our total net revenues, respectively.

Our selling and marketing expenses are a significant contributor to our operating costs and expenses, and they primary consist of payroll, bonus and employee benefits of sales and marketing staff, advertising costs, agency fees and costs for promotional materials. In 2022, 2023, and 2024, selling and marketing expenses amounted to 3.4%, 3.0% and 2.2% of our total net revenues, respectively.

No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends. China Enterprise Income Tax .

Not only did we serve consumers directly through our online retail pharmacy, we also enabled more than 10 offline pharmacies to better serve their consumers as of December 31, 2023. Our online wholesale pharmacy, 1 Pharmacy, serves as a one-stop shop for pharmacies to source a vast selection of pharmaceutical products.

Not only did we serve consumers directly through our online retail pharmacy, we also enabled more than 488,000 offline pharmacies to better serve their consumers as of December 31, 2024. Our online wholesale pharmacy, 1 Pharmacy, serves as a one-stop shop for pharmacies to source a vast selection of pharmaceutical products.

Product revenues from the B2B segment contributed 95.3%, 96.1% and 96.9% to our total net revenues in 2021, 2022 and 2023, respectively. We rely on a diverse array of online marketing channels to attract consumers, including using social media such as WeChat and Weibo and paid placement on major online search engines in China.

Product revenues from the B2B segment contributed 96.1%, 96.9%, and 97.5% to our total net revenues in 2022, 2023, and 2024, respectively. We rely on a diverse array of online marketing channels to attract consumers, including using social media such as WeChat and Weibo and paid placement on major online search engines in China.

Since April 1, 2022 to December 31, 2022, small-scale taxpayers are exempted from paying value-added tax. The MOF and the STA announced updates to these policies in January 2023.

Since April 1, 2022 to December 31, 2022, small-scale taxpayers are exempted from paying value-added tax. The MOF and the STA announced updates to these policies in January 2023. From January 1, 2023 to December 31, 2023, the value-added tax rate applicable to the small-scale taxpayers is reduced to 1%.

See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We may need additional capital but may not be able to obtain it on favorable terms or at all.” Additionally, historically we have not been profitable or generated positive operating cash flows.

Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We may need additional capital but may not be able to obtain it on favorable terms or at all.” Additionally, historically we have not been profitable, but we had generated positive operating cash flows in 2024.

The interest rate range for the borrowings in 2022 and 2023 were from 3.60% to 4.55 % per annum. In June 2020, 1 Pharmacy Technology entered into a credit agreement with Industrial Bank (IB) which provides a revolving credit facility that allows 1 Pharmacy Technology to borrow up to RMB100.0 million for working capital purpose in one year.

The interest rate range for the borrowings in 2023 and 2024 were from 3.65% to 3.75 % per annum. In June 2020, 1 Pharmacy Technology entered into a credit agreement with Industrial Bank (IB) which provides a revolving credit facility that allows 1 Pharmacy Technology to borrow up to RMB100.0 million for working capital purpose in one year.

When reviewing our financial statements, you should consider (1) our selection of critical accounting policies, (2) the judgment and other uncertainties affecting the application of such policies, and (3) the sensitivity of reported results to changes in conditions and assumptions. We made the following critical accounting estimates to prepare our financial statements.

Any draw down on the credit facility will be charged with interest at one-year loan prime rate published by People’s Bank of China plus 0.78%. In November 2022, the credit agreement was renewed and allows 1 Pharmacy Technology to borrow up to RMB200.0 million for working capital purpose in seven months.

Any draw down on the credit facility will be charged with interest at one-year loan prime rate published by People’s Bank of China plus 0.78%. In November 2022, the credit agreement was renewed and allows 1 Pharmacy Technology to borrow up to RMB 200.0 million for working capital purpose in twelve months and the agreement expired on November 13, 2023.

We have thus far accumulated considerable offline pharmacy resources, which contributed to the increase of product revenues from the B2B segment to RMB14.5 billion (US$2.0 billion) in 2023. We expect to further expand our offline pharmacy market and to develop this revenue stream.

We have thus far accumulated considerable offline pharmacy resources, which contributed to the increase of product revenues from the B2B segment to RMB14.0 billion (US$1.9 billion) in 2024. We expect to further expand our offline pharmacy market and to develop this revenue stream.

Since 2022, we have cooperated with a bank to provide facilities to our customers, who applied for loans directly with the bank. If the loans are approved by the bank, the proceeds, which represent the total order amount, are remitted to us by way of the customers’ entrustment. The term of the loan is typically three months.

Our net revenues experienced consistent monthly growth and are significantly impacted by the annual and mid-year e-commerce festivals. Product Revenues by Segment . Product revenues increased by 8.7% from RMB12.3 billion in 2021 to RMB13.4 billion (US$1.9 billion) in 2022, due to an increase in the number of offline customers through which more products were sold.

Our net revenues experienced consistent monthly growth and are significantly impacted by the annual and mid-year e-commerce festivals. Product Revenues by Segment . Product revenues increased by 10.7% from RMB13.4 billion in 2022 to RMB14.8 billion (US$2.1 billion) in 2023, due to an increase in the number of offline customers through which more products were sold.

We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all, and the availability of financing options will be affected by the slowdown in the growth or contraction of the global or Chinese economies or any liquidity or credit drainage in the global or Chinese finance sectors if triggered by the COVID-19 pandemic.

Remittance of dividends by a foreign invested company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiary, 1 Pharmacy Technology, has not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. 110 Table of Contents C.

Our revenue was RMB12.4 billion in 2021, RMB13.5 billion in 2022 and RMB14.9 billion (US$2.1 billion) in 2023, of which product revenues from the B2B segment were RMB11.8 billion, RMB13.0 billion and RMB14.5 billion (US$2.0 billion), respectively.

Our revenue was RMB13.5 billion in 2022, RMB14.9 billion in 2023, and RMB14.4 billion (US$2.0 billion) in 2024, of which product revenues from the B2B segment were RMB13.0 billion and RMB14.5 billion, and RMB14.0 billion (US$1.9 billion), respectively.

Our lease expenses for the years ended December 31, 2021, 2022 and 2023 were RMB73.8 million, RMB75.8 million and RMB62.6 million (US$8.8 million), respectively. Off-Balance Sheet Commitments and Arrangements We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.

Our lease expenses for the years ended December 31, 2022, 2023, and 2024 were RMB75.8 million, RMB62.6 million, and RMB48.5 million (US$6.6 million), respectively. 107 Table of Contents Off-Balance Sheet Commitments and Arrangements We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.

As of December 31, 2023, we had served more than 497,000 pharmacies, compared to over 435,000 pharmacies as of December 31, 2022 and 385,000 pharmacies as of December 31, 2021.

As of December 31, 2024, we had served more than 488,000 pharmacies, compared to over 497,000 pharmacies as of December 31, 2023 and over 435,000 pharmacies as of December 31, 2022.

If the proposed STAR Listing is not completed before June 30, 2023, the investors have the right to request Yao Wang to redeem all or part of their equity at the cost of investment, plus an annual interest rate of 6%.

If the proposed STAR Listing was not completed by June 30, 2023, the investors would have the right to request that Yao Wang redeem all or part of their equity at the original investment cost, plus an annual interest rate of 6%.

Our integrated business model is hallmarked by our flagship technology platforms: ● 1 Medicine Marketplace : Our virtual retail pharmacy provides consumers with a wide variety of pharmaceutical products and other merchandise. ● 1 Clinic : Our internet hospital provides consumers with cost-effective and convenient online consultation and electronic prescription services. ● 1 Pharmacy : Our online wholesale pharmacy serves as a one-stop shop for pharmacies to source a vast selection of pharmaceutical products.

Our integrated business model is hallmarked by our flagship technology platforms: ● 1 Medicine Marketplace : Our virtual retail pharmacy provides consumers with a wide variety of pharmaceutical products and other merchandise. ● 1 Pharmacy : Our online wholesale pharmacy serves as a one-stop shop for pharmacies to source a vast selection of pharmaceutical products.

In 2023, the principal items accounting for the changes in operating assets and liabilities were decrease in accounts payable of RMB176.7 million (US$24.9 million) and a decrease in accrued expense and other current liabilities of RMB229.9 million (US$32.4 million). The decrease in accrued expense and other current liabilities account was primarily due to the decrease in advance from customers.

As of December 31, 2022 and 2023, the outstanding borrowings from the factoring arrangement were RMB40.1 million and RMB40.4 million respectively, which is repayable within one year and are included in “Accrued expenses and other current liabilities” on the consolidated balance sheets.

The factoring fees charged from the institution were RMB2.1 million for the year ended December 31, 2024.As of December 31, 2023 and 2024, the outstanding borrowings from the factoring arrangement were RMB40.4 million and RMB30.0 million, respectively, which is repayable within one year and are included in “Accrued expenses and other current liabilities” on the consolidated balance sheets.

Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Technology and IT Infrastructure” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.

See “Item 4. Information on the Company—B. Business Overview—Technology and IT Infrastructure” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.

After considering all facts available to us as of the date of this annual report, we believe that our current cash and cash equivalents, short-term investments and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and capital expenditures for the next 12 months. 104 Table of Contents We intend to finance our long-term working capital requirements and capital expenditures from cash generated from operating activities and funds raised from financing activities.

Our service revenues decreased by 6.2% from RMB113.3 million in 2022 to RMB106.2 million (US$15.0 million) in 2023, which was primarily attributable to the decrease of our B2C digital marketing service revenues. We also generate service revenues by providing other ancillary services, mainly online medical consultation services for patients and digital marketing services for pharmaceutical companies.

Our service revenues increased by 0.3% from RMB106.2 million in 2023 to RMB106.5 million (US$14.6 million) in 2024, which was primarily attributable to the increase of our B2B digital marketing service revenues. We also generate service revenues by providing other ancillary services, mainly online medical consultation services for patients and digital marketing services for pharmaceutical companies.

As of December 31, 2021, 2022 and 2023, we had RMB661.4 million, RMB673.7 million and RMB603.5 million (US$85.0 million), respectively, in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and demand deposits.

As of December 31, 2022, 2023, and 2024, we had RMB673.7 million, RMB603.5 million, and RMB462.3 million (US$63.3 million), respectively, in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and demand deposits.

Technology Expenses . Our technology expenses decreased by 10.9% from RMB139.5 million in 2022 to RMB124.3 million (US$17.5 million) in 2023, mainly due to our increased efficiency in technology solutions and infrastructure and decreased cost in technology staff.

Investing Activities Net cash provided by investing activities in 2023 was RMB151.7 million (US$21.4 million), consisting primarily of purchases of short-term investments of RMB914.3 million (US$128.8 million), partially offset by proceeds from sale or maturity of short-term investments of RMB1,074.2 million (US$151.3 million).

Net cash provided by investing activities in 2023 was RMB151.7 million (US$21.4 million), consisting primarily of purchases of short-term investments of RMB914.3 million (US$128.8 million), partially offset by proceeds from sale or maturity of short-term investments of RMB1,074.2 million (US$151.3 million). 106 Table of Contents Net cash used in investing activities in 2022 was RMB47.2 million (US$6.8 million), consisting primarily of purchases of short-term investments of RMB1,268.9 million (US$184.0 million), partially offset by proceeds from sale or maturity of short-term investments of RMB1,254.5 million (US$181.9 million).

The following table sets forth material amounts of cash and short-term investments disaggregated by currency denomination as of December 31, 2023 in each jurisdiction in which our affiliated entities are domiciled: PRC Hong Kong Cayman Islands (RMB in thousands) Cash and short-term investments in RMB 483,839 123 130,499 Cash and short-term investments in US$ 1,457 1,306 36,443 We have adopted cash management policies to govern transfers of funds among 111, Inc. and its subsidiaries.

The following table sets forth material amounts of cash and short-term investments disaggregated by currency denomination as of December 31, 2024 in each jurisdiction in which our affiliated entities are domiciled: PRC Hong Kong Cayman Islands (RMB in thousands) Cash and short-term investments in RMB 401,309 312 28,653 Cash and short-term investments in US$ 1,477 1,105 29,433 We have adopted cash management policies to govern transfers of funds among 111, Inc. and its subsidiaries.

Fair value of ordinary shares of 1 Pharmacy We granted restricted shares of 1 Pharmacy Technology to our employees under Employee ownership plan of 1 Pharmacy Technology. 1 Pharmacy Technology has been a private company with no active quoted market prices for its ordinary shares.

We made the following critical accounting estimates to prepare our financial statements. 108 Table of Contents Fair value of ordinary shares of 1 Pharmacy We granted restricted shares of 1 Pharmacy Technology to our employees under Employee ownership plan of 1 Pharmacy Technology. 1 Pharmacy Technology has been a private company with no active quoted market prices for its ordinary shares.

The Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Net Revenues Our net revenues increased by 8.8% from RMB12.4 billion in 2021 to RMB13.5 billion (US$2.0 billion) in 2022. This increase was primarily due to the increase in product revenues from B2B segment.

The Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Net Revenues Our net revenues increased by 10.6% from RMB13.5 billion in 2022 to RMB14.9 billion (US$2.1 billion) in 2023. This increase was primarily due to the increase in product revenues from B2B segment.

The decrease in accrued expense and other current liabilities account was primarily due to the decrease in advance from customers. 108 Table of Contents Net cash used in operating activities in 2022 was RMB23.2 million (US$3.4 million) and primarily consisted of our net loss of RMB376.1 million (US$54.5 million), as adjusted for non-cash items and the effects of changes in operating assets and liabilities.

Net cash used in operating activities in 2022 was RMB23.2 million (US$3.4 million) and primarily consisted of our net loss of RMB376.1 million (US$54.5 million), as adjusted for non-cash items and the effects of changes in operating assets and liabilities.

In November 2022, we renewed the factoring agreement with an updated annual rate of 9%. In June 2023, we renewed the factoring agreement with an updated annual rate of 10.5%.

The interest expense was charged from the institution at annual rate of 8.5%. In November 2022, we renewed the factoring agreement with an updated annual rate of 9%. In June 2023, we renewed the factoring agreement with an updated annual rate of 10.5%.

As of December 31, 2022 and 2023, the outstanding borrowings from such arrangement were RMB64.1 million and RMB98.1 million respectively, which is repayable within one year and are included in “Accrued expenses and other current liabilities” on the consolidated balance sheets.

The interest expense was charged from the bank at annual rate of 4.35%. As of December 31, 2023 and 2024, the outstanding borrowings from such arrangement were RMB98.1 million and RMB nil, respectively, which is repayable within one year and are included in “Accrued expenses and other current liabilities” on the consolidated balance sheets.

Net Loss As a result of the foregoing, we recorded a net loss of RMB376.1 million (US$54.5 million) in 2022 as compared to a net loss of RMB621.0 million in 2021. Taxation Cayman Islands We are incorporated in the Cayman Islands.

Net Loss As a result of the foregoing, we recorded a net loss of RMB353.4 million (US$49.8 million) in 2023 as compared to a net loss of RMB376.1 million in 2022. Taxation Cayman Islands We are incorporated in the Cayman Islands.

During the year ended December 31, 2022 and 2023, RMB728.2 million and RMB779.6 million were drawn on above credit facility and RMB808.8 million and RMB700.5 million were repaid, with the balance of RMB119.0 million and RMB198.1 million outstanding as of December 31, 2022 and 2023, respectively.

During the years ended December 31, 2023 and 2024, RMB779.6 million and RMB347.9 million were drawn on above credit facility and RMB700.5 million and RMB496.0 million were repaid, with the balance of RMB198.1 million and RMB50.0 million outstanding as of December 31, 2023 and 2024, respectively.

Operating lease commitments The following table sets forth our operating lease commitments as of December 31, 2023: Less than 1 More than 5 Total year 1-3 years 3-5 years years (in RMB thousands) Operating lease commitments 111,085 45,999 55,438 9,648 — Total 111,085 45,999 55,438 9,648 — Our operating lease commitments relate to our leases of certain offices and fulfillment centers.

Operating lease commitments The following table sets forth our operating lease commitments as of December 31, 2024: Less than 1 More than 5 Total year 1-3 years 3-5 years years (in RMB thousands) Operating lease commitments 101,293 43,206 45,926 12,161 — Total 101,293 43,206 45,926 12,161 — Our operating lease commitments relate to our leases of certain offices and fulfillment centers.

Although management believes the Company’s forecast is reasonable, no assurance can be given, especially when the Company is still in a loss-making position. The discounted cash flows are sensitive due to changes in key forecast assumptions, including mainly revenue. The fair value of the shares granted during 2023 under Employee ownership plan of 1 Pharmacy Technology is RMB36.4 million.

Segment Cost of Products Sold Cost of products sold increased by 11.2% from RMB12.7 billion in 2022 to RMB14.1 billion (US$2.0 billion) in 2023, in line with our overall revenue growth, which is primarily attributable to the growth of sales in the B2B segment.

Our service revenues decreased by 6.2% from RMB113.3 million in 2022 to RMB106.2 million (US$15.0 million) in 2023, which was primarily attributable to the decrease of our B2C digital marketing service revenues in 2023. 100 Table of Contents Segment Cost of Products Sold Cost of products sold increased by 11.2% from RMB12.7 billion in 2022 to RMB14.1 billion (US$2.0 billion) in 2023, in line with our overall revenue growth, which is primarily attributable to the growth of sales in the B2B segment.

Since August 2021, we entered into a factoring agreement with a financial institution, pursuant to which the institution will make an advance payment of accounts with credit term of 30 days typically. We are required to pay the principal and interest to the institution on due. The interest expense was charged from the institution at annual rate of 8.5%.

We do not intend to renew the reverse factoring arrangement upon its expiration. Since August 2021, we entered into a factoring agreement with a financial institution, pursuant to which the institution will make an advance payment of accounts with credit term of 30 days typically. We are required to pay the principal and interest to the institution on due.

As we further enhance our technologies and IT infrastructure, we aim to create more value for these participants, increasing their engagement and connection and deepening our penetration in the healthcare ecosystem, which we anticipate will create additional monetization venues for us to drive our revenue growth. 98 Table of Contents Our Ability to Manage Our Mix of Product and Service Offerings Our results of operations are also affected by the mix of products and services we offer.

RMB30.0 million and RMB30.0 million were repaid in 2022 and 2023, with the balance of RMB30.0 million and RMB50.0 million outstanding as of December 31, 2022and 2023, respectively. In March 2023, The Group entered a revolving credit facility with China CITIC Bank that allows the Group to borrow up to RMB20.0 million for working capital purpose till December 31, 2023.

During the year ended December 31, 2024, RMB30.0 million with annual interest rate of 2.45% were obtained, with the balance of RMB30.0 million outstanding as of December31, 2024. In March 2023, The Group entered a revolving credit facility with China CITIC Bank that allows it to borrow up to RMB20.0 million for working capital purpose till December 31, 2023.

Our technology expenses decreased by 26.3% from RMB189.3 million in 2021 to RMB139.5 million (US$20.2 million) in 2022, mainly due to our increased efficiency in technology solutions and infrastructure and decreased cost in technology staff. Technology expenses accounted for 1.0% of net revenue in 2022 as compared to 1.5% last year.

Our technology expenses decreased by 44.0% from RMB124.3 million in 2023 to RMB69.6 million (US$9.5 million) in 2024, mainly due to our increased efficiency in technology solutions and infrastructure and decreased cost in technology staff. Technology expenses accounted for 0.5% of net revenue in 2024 as compared to 0.8% last year.

Net cash used in operating activities in 2021 was RMB688.8 million (US$108.1 million) and primarily consisted of our net loss of RMB621.0 million (US$97.5 million), as adjusted for non-cash items and the effects of changes in operating assets and liabilities.

Net cash used in operating activities in 2023 was RMB447.2 million (US$63.0 million) and primarily consisted of our net loss of RMB353.4 million (US$49.8 million), as adjusted for non-cash items and the effects of changes in operating assets and liabilities.

Our short-term investments consist of structured deposits from commercial banks with guaranteed principal and variable interest rates indexed to the performance of underlying assets and fund products purchased from certain financial institutions with maturities within one year.

In addition, as of December 31, 2022, 2023, and 2024, we had RMB205.9 million, RMB50.1 million, and RMB nil, respectively, in short-term investments. Our short-term investments consist of structured deposits from commercial banks with guaranteed principal and variable interest rates indexed to the performance of underlying assets and fund products purchased from certain financial institutions with maturities within one year.

We experienced an increase in product revenues from B2B segment, which increased by 9.8% to RMB13.0 billion (US$1.9 billion) from RMB11.8 billion last year. Product revenues from B2C segment decreased by 17.0% to RMB408.3 million (US$59.2 million) from RMB491.9 million last year mainly attributable to a shift of resources to our B2B segment. Service revenues .

We experienced an increase in product revenues from B2B segment, which increased by 11.5% to RMB14.5 billion (US$2.0 billion) from RMB13.0 billion in 2022. Product revenues from B2C segment decreased by 12.3% to RMB358.0 million (US$50.4 million) from RMB408.3 million in 2022 mainly attributable to a shift of resources to our B2B segment. Service revenues .

Net cash provided by investing activities in 2021 was RMB60.1 million (US$9.4 million), consisting primarily of purchases of short-term investments of RMB1,832.4 million (US$287.5 million), partially offset by proceeds from sale or maturity of short-term investments of RMB1,957.8 million (US$307.2 million).

Investing Activities Net cash provided by investing activities in 2024 was RMB37.4 million (US$5.1 million), consisting primarily of purchases of short-term investments of RMB460.0 million (US$63.0 million), partially offset by proceeds from sale or maturity of short-term investments of RMB511.2 million (US$70.0 million).

Capital Expenditures We made capital expenditures of RMB65.7 million, RMB31.7 million and RMB9.8 million (US$1.4 million) in 2021, 2022 and 2023, respectively. In these periods, our capital expenditures were primarily used for purchases of property, equipment and software to establish more fulfillment centers to meet the expected growth of our business.

In these periods, our capital expenditures were primarily used for purchases of property, equipment and software to establish more fulfillment centers to meet the expected growth of our business.

Key Components of Results of Operations Net Revenues The following table sets forth the components of our net revenues by amounts and percentages of our total net revenues for the periods presented: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Product revenues B2C 491,855 3.9 408,305 3.0 357,975 50,420 2.4 B2B 11,839,850 95.3 12,995,131 96.2 14,483,935 2,040,019 96.9 Sub total 12,331,705 99.2 13,403,436 99.2 14,841,910 2,090,439 99.3 Service revenues 94,197 0.8 113,262 0.8 106,219 14,960 0.7 Total 12,425,902 100.0 13,516,698 100.0 14,948,129 2,105,399 100.0 Product revenues .

Key Components of Results of Operations Net Revenues The following table sets forth the components of our net revenues by amounts and percentages of our total net revenues for the periods presented: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Product revenues B2C 408,305 3.0 357,975 2.4 261,197 35,784 1.8 B2B 12,995,131 96.2 14,483,935 96.9 14,033,543 1,922,587 97.5 Sub total 13,403,436 99.2 14,841,910 99.3 14,294,740 1,958,371 99.3 Service revenues 113,262 0.8 106,219 0.7 106,509 14,592 0.7 Total 13,516,698 100.0 14,948,129 100.0 14,401,249 1,972,963 100.0 Product revenues .

In September 2022, 1 Pharmacy Technology obtained loan from Shanghai Pudong Development Bank. The borrowing was guaranteed by Guangdong Yihao Pharmacy Co., Ltd. During the years ended December 31, 2022 and 2023, RMB30.0 million with annual interest rate of 4.00% and RMB50.0 million with annual interest rate of 3.65% were obtained.

The borrowing was guaranteed by Guangdong Yihao Pharmacy and the loan agreement expired in September 2024. During the years ended December 31, 2023 and 2024, RMB50.0 million with annual interest rate of 3.65% and RMB nil were obtained.

Key Information—Transfer of Funds and Other Assets through Our Organization.” Cash Flows The following table sets forth a summary of our cash flows for the years presented: For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Summary Consolidated Cash Flow Data: Net cash used in operating activities (688,837) (23,152) (447,244) (62,993) Net cash provided by (used in) investing activities 60,138 (47,173) 151,743 21,372 Net cash provided by financing activities 74,339 22,735 205,978 29,011 Net decrease (increase) in cash and cash equivalents, and restricted cash (557,862) (43,881) (93,243) (13,134) Cash and cash equivalents, and restricted cash at the beginning of period 1,318,534 760,672 716,791 100,958 Cash and cash equivalents, and restricted cash at the end of period 760,672 716,791 623,548 87,824 Operating Activities Net cash used in operating activities in 2023 was RMB447.2 million (US$63.0 million) and primarily consisted of our net loss of RMB353.4 million (US$49.8 million), as adjusted for non-cash items and the effects of changes in operating assets and liabilities.

Key Information—Transfer of Funds and Other Assets through Our Organization.” 105 Table of Contents Cash Flows The following table sets forth a summary of our cash flows for the years presented: For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Summary Consolidated Cash Flow Data: Net cash (used in) provided by operating activities (23,152) (447,244) 263,016 36,033 Net cash provided by (used in) investing activities (47,173) 151,743 37,376 5,120 Net cash provided by (used in) financing activities 22,735 205,978 (406,236) (55,654) Net decrease in cash and cash equivalents, and restricted cash (43,881) (93,243) (105,216) (14,415) Cash and cash equivalents, and restricted cash at the beginning of period 760,672 716,791 623,548 85,426 Cash and cash equivalents, and restricted cash at the end of period 716,791 623,548 518,332 71,011 Operating Activities Net cash provided by operating activities in 2024 was RMB263.0 million (US$36.0 million) and primarily consisted of our net loss of RMB20.8 million (US$2.8 million), as adjusted for non-cash items and the effects of changes in operating assets and liabilities.

Segment Profit/Loss As a result of the foregoing, our segment profit from our B2C segment decreased by 11.8% from RMB109.4 million in 2021 to RMB96.5 million (US$14.0 million) in 2022 because of the decrease in our revenues from the B2C segment.

Segment Profit/Loss As a result of the foregoing, our segment profit from our B2C segment decreased by 19.8% from RMB79.4 million in 2023 to RMB63.7 million (US$8.7 million) in 2024 because of the decrease in our revenues from the B2C segment.

Operating costs and expenses The following table sets forth the components of our operating costs and expenses by amounts and percentages of total operating costs and expenses for the periods presented: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating costs and expenses: Cost of products sold (11,804,807) 90.3 (12,676,722) 91.3 (14,099,151) (1,985,824) 92.2 Fulfillment expenses (355,836) 2.7 (401,414) 2.9 (400,538) (56,415) 2.6 Selling and marketing expenses (513,146) 3.9 (457,880) 3.3 (448,387) (63,154) 2.9 General and administrative expenses (206,981) 1.6 (205,623) 1.5 (224,202) (31,578) 1.5 Technology expenses (189,284) 1.4 (139,504) 1.0 (124,341) (17,513) 0.8 Other operating (expenses) income, net 2,012 0.1 (6,556) 0.0 (1,607) (226) 0.0 Total (13,068,042) 100.0 (13,887,699) 100.0 (15,298,226) (2,154,710) 100.0 Cost of products sold .

Operating costs and expenses The following table sets forth the components of our operating costs and expenses by amounts and percentages of total operating costs and expenses for the periods presented: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating costs and expenses: Cost of products sold (12,676,722) 91.3 (14,099,151) 92.2 (13,572,020) (1,859,359) 94.3 Fulfillment expenses (401,414) 2.9 (400,538) 2.6 (381,035) (52,202) 2.6 Selling and marketing expenses (457,880) 3.3 (448,387) 2.9 (313,897) (43,004) 2.2 General and administrative expenses (205,623) 1.5 (224,202) 1.5 (70,907) (9,714) 0.5 Technology expenses (139,504) 1.0 (124,341) 0.8 (69,635) (9,540) 0.5 Other operating (expenses) income, net (6,556) 0.0 (1,607) 0.0 8,359 1,145 (0.1) Total (13,887,699) 100.0 (15,298,226) 100.0 (14,399,135) (1,972,674) 100.0 Cost of products sold .

We generated net loss of RMB376.1 million and RMB353.4 million (US$49.8 million) in 2022 and 2023, respectively. We recorded net cash operating outflows of RMB23.2 million and RMB447.2 million (US$63.0 million) in 2022 and 2023, respectively.

We generated net loss of RMB353.4 million and RMB20.8 million (US$2.8 million) in 2023 and 2024, respectively. We recorded net cash operating outflows of RMB447.2 million in 2023. In contrast, we generated positive operating cash flows of RMB263.0 million (US$36.0 million) in 2024.

This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this annual report. For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands) Net Revenues: Product revenues 12,331,705 99.2 13,403,436 99.2 14,841,910 2,090,439 99.3 Service revenues 94,197 0.8 113,262 0.8 106,219 14,960 0.7 Total net revenues 12,425,902 100.0 13,516,698 100.0 14,948,129 2,105,399 100.0 Operating costs and expenses: Cost of products sold (11,804,807) (95.0) (12,676,722) (93.8) (14,099,151) (1,985,824) (94.3) Fulfillment expenses (355,836) (2.9) (401,414) (3.0) (400,538) (56,415) (2.7) Selling and marketing expenses(1) (513,146) (4.1) (457,880) (3.4) (448,387) (63,154) (3.0) General and administrative expenses(1) (206,981) (1.7) (205,623) (1.5) (224,202) (31,578) (1.5) Technology expenses(1) (189,284) (1.5) (139,504) (1.0) (124,341) (17,513) (0.8) Other operating (expenses) income, net 2,012 — (6,556) — (1,607) (226) — Total operating costs and expenses (13,068,042) (105.2) (13,887,699) (102.7) (15,298,226) (2,154,710) (102.3) Loss from operations (642,140) (5.2) (371,001) (2.7) (350,097) (49,311) (2.3) Interest income 9,776 0.1 8,118 0.1 8,834 1,244 0.1 Interest expense (5,488) — (13,443) (0.1) (20,141) (2,837) (0.1) Foreign exchange (loss) gain 1,937 — (7,875) (0.1) 610 86 — Other income, net 14,890 0.1 8,132 0.1 7,612 1,072 0.1 Loss before income taxes (621,025) (5.0) (376,069) (2.8) (353,182) (49,746) (2.4) Income tax expense — — — — (251) (35) — Net loss (621,025) (5.0) (376,069) (2.8) (353,433) (49,781) (2.4) (1) Share-based compensation expenses are allocated to operating expense line items as follows: For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) General and administrative expenses 69,718 86,992 113,536 15,991 Selling and marketing expenses 50,532 50,110 76,976 10,842 Technology expenses 25,343 20,282 35,658 5,022 Total 145,593 157,384 226,170 31,855 101 Table of Contents The Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Net Revenues Our net revenues increased by 10.6% from RMB13.5 billion in 2022 to RMB14.9 billion (US$2.1 billion) in 2023.

This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this annual report. For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands) Net Revenues: Product revenues 13,403,436 99.2 14,841,910 99.3 14,294,740 1,958,371 99.3 Service revenues 113,262 0.8 106,219 0.7 106,509 14,592 0.7 Total net revenues 13,516,698 100.0 14,948,129 100.0 14,401,249 1,972,963 100.0 Operating costs and expenses: Cost of products sold (12,676,722) (93.8) (14,099,151) (94.3) (13,572,020) (1,859,359) (94.2) Fulfillment expenses (401,414) (3.0) (400,538) (2.7) (381,035) (52,202) (2.6) Selling and marketing expenses(1) (457,880) (3.4) (448,387) (3.0) (313,897) (43,004) (2.2) General and administrative expenses(1) (205,623) (1.5) (224,202) (1.5) (70,907) (9,714) (0.5) Technology expenses(1) (139,504) (1.0) (124,341) (0.8) (69,635) (9,540) (0.5) Other operating (expenses) income, net (6,556) — (1,607) — 8,359 1,145 — Total operating costs and expenses (13,887,699) (102.7) (15,298,226) (102.3) (14,399,135) (1,972,674) (100.0) (Loss) Income from operations (371,001) (2.7) (350,097) (2.3) 2,114 289 — Interest income 8,118 0.1 8,834 0.1 7,041 965 0.1 Interest expense (13,443) (0.1) (20,141) (0.1) (28,331) (3,881) (0.2) Foreign exchange (loss) gain (7,875) (0.1) 610 — (909) (125) — Other income (loss), net 8,132 0.1 7,612 0.1 (595) (82) — Loss before income taxes (376,069) (2.8) (353,182) (2.4) (20,680) (2,834) (0.1) Income tax expense — — (251) — (96) (13) — Net loss (376,069) (2.8) (353,433) (2.4) (20,776) (2,847) (0.1) Share-based compensation expenses are allocated to operating expense line items as follows: For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) General and administrative expenses 86,992 113,536 9,230 1,264 Selling and marketing expenses 50,110 76,976 6,899 945 Technology expenses 20,282 35,658 4,020 551 Total 157,384 226,170 20,149 2,760 The Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Net Revenues Our net revenues decreased by 3.7% from RMB14.9 billion in 2023 to RMB14.4 billion (US$2.0 billion) in 2024.

Operating Costs and Expenses Our operating costs and expenses increased by 6.3% from RMB13.1 billion in 2021 to RMB13.9 billion (US$2.0 billion) in 2022, with increases in the following categories of operating expenses. Cost of Products Sold .

Operating Costs and Expenses Our operating costs and expenses decreased by 5.9% from RMB15.3 billion in 2023 to RMB14.4 billion (US$2.0 billion) in 2024, with decreases in the following categories of operating expenses. Cost of Products Sold .

Any draw down on the credit facility will be charged with interest at one-year loan prime rate published by People’s Bank of China plus 0.85%. The borrowings in the years ended December 31, 2021 and 2022 were guaranteed by Yihao Pharmacy.

Any draw down on the credit facility will be charged with interest at one-year loan prime rate published by People’s Bank of China plus 0.85% in 2022, plus 0.55% in 2023 and plus 0.55% in 2024, respectively and any draw down on the new committed credit facility will be charged with an average annual interest rate of 2.78% in 2024.

According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for 2021, 2022 and 2023 were increases of 0.9%, 2.0% and 1.4%, respectively. Although we have not been materially affected by inflation in the past, we may be affected if China experiences higher rates of inflation in the future. B.

Inflation To date, inflation in China has not materially affected our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for 2022, 2023, and 2024 were increases of 2.0%, 1.4%, and 0.2%, respectively.

Our product revenue from the B2B business segment in 2023 was RMB14.5 billion (US$2.0 billion), representing a 11.5% increase from 2022, and our product revenue from the B2C business segment in 2023 was RMB358.0 million (US$50.4 million), representing a 12.3% decrease from 2022. Service revenues .

Our product revenue from the B2B business segment in 2024 was RMB14.0 billion (US$1.9 billion), representing a 3.1% decrease from 2023, and our product revenue from the B2C business segment in 2024 was RMB261.2 million (US$35.8 million), representing a 27.0% decrease from 2023. 97 Table of Contents Service revenues .

In December 2022, the credit facility was renewed and allow us to borrow up to RMB500.0 million for another two years. Cash deposits or notes receivable are required to be pledged for any draw down of borrowings and notes payables from CZB. No loan with China Zheshang Bank (CZB) was entered in 2021 and 2022.

Cash deposits or notes receivable are required to be pledged for any draw down of borrowings and notes payables from CZB. No loan with China Zheshang Bank (CZB) was entered in 2021 and 2022. In September 2022, 1 Pharmacy Technology obtained loans from Shanghai Pudong Development Bank.

In September 2019, 1 Pharmacy Technology entered into a credit agreement with China Merchant Bank (CMB) which provides a revolving credit facility that allows 1 Pharmacy Technology to borrow up to RMB100.0 million for working capital purpose in one year.

We believe that our supply chain and effective inventory management, which have resulted in reduced inventory turnover days, support the growing scale of our business, free our valuable working capital and improve our liquidity. 102 Table of Contents In September 2019, 1 Pharmacy Technology entered into a credit agreement with China Merchant Bank (CMB) which provides a revolving credit facility that allows 1 Pharmacy Technology to borrow up to RMB100.0 million for working capital purpose in one year.

Adjustment for non-cash items primarily included RMB145.6 million (US$22.8 million) of share-based compensation, RMB46.0 million (US$7.2 million) of inventory write-down and RMB89.8 million (US$14.1 million) of noncash lease expense, partially offset by an increase in investment income of RMB7.8 million (US$1.2 million).

Adjustment for non-cash items primarily included RMB20.1 million (US$2.8 million) of share-based compensation, RMB3.9 million (US$0.5 million) of inventory write-down and RMB48.5 million (US$6.6 million) of noncash lease expense.

As a result the payment terms of our original accounts payables were substantially modified and considered extinguished as the nature of the original liability has changed from accounts payables to loan borrowings from the bank. The interest expense was charged from the bank at annual rate of 4.35%.

Pursuant to such agreement, certain suppliers of us were able to put their receivables from us to the bank for early payment. As a result the payment terms of our original accounts payables were substantially modified and considered extinguished as the nature of the original liability has changed from accounts payables to loan borrowings from the bank.

Selling and marketing expenses accounted for 3.4% of net revenue in 2022 as compared to 4.1% last year. General and Administrative Expenses . Our general and administrative expenses decreased by 0.7% from RMB207.0 million in 2021 to RMB205.6 million (US$29.8 million) in 2022. The decrease was primarily due to decreases of cost in managerial staff.

The decrease was primarily attributable to decreases in the payroll of sales staffs and share-based compensation. Selling and marketing expenses accounted for 2.2% of net revenue in 2024 as compared to 3.0% last year. General and Administrative Expenses . Our general and administrative expenses decreased by 68.4% from RMB224.2 million in 2023 to RMB70.9 million (US$9.7 million) in 2024.

During the years ended December 31, 2022 and 2023, RMB30.0 million and RMB20.0 million were drawn on this credit facility, RMB30.0 million and RMB30.0 million were repaid in 2022 and 2023, with the balance of RMB30.0 million and RMB20.0 million outstanding as of December 31, 2022 and 2023, respectively.

RMB30.0 million and RMB50.0 million were repaid in 2023 and 2024, with the balance of RMB50.0 million and RMB nil outstanding as of December 31, 2023 and 2024, respectively.

This amount has been recorded as redeemable non-controlling interests of RMB871 million and accrued expenses and other current liabilities of RMB240 million, including accrued interest, respectively as of December 31, 2023.

As of December 31, 2024, an amount of RMB 1.08 billion has been recorded under redeemable non-controlling interests and accrued expenses and other current liabilities.

We currently derive our revenues primarily from the sale and distribution of pharmaceutical and other health and wellness products to our pharmacy customers and consumers. We also earn commissions and service fees from marketplace sellers on our online marketplace. Different products and services have different cost structures. For example, the various services we provide generally have higher fixed costs.

We also earn commissions and service fees from marketplace sellers on our online marketplace. Different products and services have different cost structures. For example, the various services we provide generally have higher fixed costs. The revenue contributions from our online direct sales model, our online marketplace model and our services have a major influence on our profitability.

During the years ended December 31, 2023, RMB50.0 million were borrowed, with the balance of RMB50.0 million outstanding as of December 31, 2023. The interest rate range for the borrowings in was from 1.44% to 3.10% per annum in 2023. In addition, we entered into several agreements with financial institutions to further enhance our liquidity and capital resources.

During the year ended December 31, 2024, RMB31.0 million with annual interest rate of 3.00% were obtained, with the balance of RMB31.0 million outstanding as of December 31, 2024. In addition, we entered into several agreements with financial institutions to further enhance our liquidity and capital resources. Since 2021, we have maintained a structured payment arrangement with a bank.

The loan agreement with CCB includes covenants that Debt to Asset Ratio of 1 Pharmacy Technology should be no more than 70%, and the Liquidity Ratio should be no less than 1.0. 1 Pharmacy Technology was in compliance with the covenants as of payment due date in 2021. 105 Table of Contents We entered into a revolving credit facility with China Zheshang Bank (CZB) that allows us to borrow up to RMB500.0 million for working capital purpose since December 2018 and renewed in December 2020 which will expire in two years.

We entered into a revolving credit facility with China Zheshang Bank (CZB) that allows us to borrow up to RMB500.0 million for working capital purpose since December 2018 and renewed in December 2020 which expired in two years. In December 2022, the credit facility was renewed and allow us to borrow up to RMB500.0 million for another two years.

We also generate product revenues from the B2B segment through the sale of pharmaceutical products to pharmacies on 1 Pharmacy. 99 Table of Contents Our product revenues, in particular, those from B2B segment, have grown significantly and we expect continued growth as we attract more pharmacies as customers.

We also generate product revenues from the B2B segment through the sale of pharmaceutical products to pharmacies on 1 Pharmacy.

Technology expenses accounted for 0.8% of net revenue in 2023 as compared to 1.0% last year. 102 Table of Contents Net Loss As a result of the foregoing, we recorded a net loss of RMB353.4 million (US$49.8 million) in 2023 as compared to a net loss of RMB376.1 million in 2022.

Net Loss As a result of the foregoing, we recorded a net loss of RMB20.8 million (US$2.8 million) in 2024 as compared to a net loss of RMB353.4 million in 2023.

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Selected Financial Data — reserved (removed by SEC in 2021)

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2024 filing

Board Practices Board of Directors Our board of directors consists of six directors. A director is not required to hold any shares in our company to qualify to serve as a director.

C. Board Practices Board of Directors Our board of directors consists of six directors. A director is not required to hold any shares in our company to qualify to serve as a director.

The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; 116 Table of Contents ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days after March 31, 2024, including through the exercise of any option, warrant or other right or the conversion of any other security.

In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days after March 31, 2025, including through the exercise of any option, warrant or other right or the conversion of any other security.

Share Ownership The following table sets forth information with respect to the beneficial ownership of our shares as of March 31, 2024 by: ● each of our current directors and executive officers; and ● each person known to us to own beneficially more than 5% of our shares.

Share Ownership The following table sets forth information with respect to the beneficial ownership of our shares as of March 31, 2025 by: ● each of our current directors and executive officers; and ● each person known to us to own beneficially more than 5% of our shares.

Sun has served as an independent director and a member of the compensation committee of Leju Holdings Limited (NYSE: LEJU), a leading online-to-offline real estate services provider in China. Mr. Sun holds a bachelor’s degree from Shanghai Medical University in China. 112 Table of Contents Mr. Jun Luo has served as our independent director since September 2018. Mr.

Sun has served as an independent director and a member of the compensation committee of Leju Holdings Limited (NYSE: LEJU), a leading online-to-offline real estate services provider in China. Mr. Sun holds a bachelor’s degree from Shanghai Medical University in China. Mr. Jun Luo has served as our independent director since September 2018. Mr.

Options and other awards granted under the plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant, which may include the term of the award and the provisions applicable in the event the grantee’s employment or service terminates. 114 Table of Contents Exercise Price .

Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to fifteen votes per share. We issued Class A ordinary shares represented by the ADSs in our initial public offering in September 2018.

Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to fifteen votes per share. We issued Class A ordinary shares represented by the ADSs in our initial public offering in September 2018.

Dr. Yu has published 6 books and over 80 journal articles. Dr. Yu also holds three U.S. patents related to airline optimization solutions. Mr. Junling Liu is our co-founder and has served as our chairman and chief executive officer since 2015. Since September 2018, Mr. Liu has served as our co-chairman.

Dr. Yu has published 6 books and over 80 journal articles. Dr. Yu also holds three U.S. patents related to airline optimization solutions. 109 Table of Contents Mr. Junling Liu is our co-founder and has served as our chairman and chief executive officer since 2015. Since September 2018, Mr. Liu has served as our co-chairman.

As of the date of this annual report, options to purchase a total of 7,211,037 ordinary shares and 60,000 restricted share units were granted and outstanding under the 2013 Policy, the 2014 Policy and the 2016 Plan. 2018 Plan In August 2018, we adopted our 2018 Share Incentive Plan, or the 2018 Plan, which became effective on September 15, 2018, one day after the completion of our initial public offering, replacing the 2016 Plan in its entirety.

As of the date of this annual report, options to purchase 7,211,037 Class A ordinary shares and 60,000 restricted share units are granted and outstanding under the 2013 Policy, the 2014 Policy and the 2016 Plan. 111 Table of Contents 2018 Plan In August 2018, we adopted our 2018 Share Incentive Plan, or the 2018 Plan, which became effective on September 15, 2018, one day after the completion of our initial public offering, replacing the 2016 Plan in its entirety.

Dr. Yu co-founded and served as chairman of YHD.com, a leading e-commerce company in China. Dr. Yu currently serves as a director of Midea Group Co., Ltd. (SZSE: 000333), and as the co-chairman of the board of Zall Group (02098.HK). Prior to founding YHD.com, Dr.

Dr. Yu co-founded and served as chairman of YHD.com, a leading e-commerce company in China. Dr. Yu currently serves as a director of the board of Zall Group (02098.HK). Prior to founding YHD.com, Dr.

In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement. 113 Table of Contents Acceleration of Awards upon Change in Control .

In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement. Acceleration of Awards upon Change in Control .

The audit committee is responsible for, among other things: ● selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● meeting separately and periodically with management and the independent registered public accounting firm; and ● reporting regularly to the board. 117 Table of Contents Compensation Committee Our compensation committee consists of Gang Yu, Nee Chuan Teo and Jian Sun, and is chaired by Gang Yu.

For more details, see Notes 11 and 12 to our consolidated financial statements included elsewhere in this annual report. 115 Table of Contents The following table summarizes, as of the date of this annual report, the outstanding share incentive awards we have granted to our directors and executive officers under the 2013 Policy, the 2014 Policy, the 2016 Plan and the 2018 Plan: Ordinary Shares Underlying Outstanding Share Exercise Incentive Price Expiration Name Awards ($/Share) Grant Date Date 4/13/2020 4/12/2030 5/13/2020 5/12/2030 6/13/2020 6/12/2030 7/13/2020 7/12/2030 1/1/2021 12/31/2030 1/1/2022 12/31/2031 5/13/2022 5/12/2032 6/13/2022 6/12/2032 7/13/2022 7/12/2032 8/13/2022 8/12/2032 1/1/2023 12/31/2032 5/12/2023 5/11/2033 6/13/2023 6/12/2033 7/13/2023 7/12/2033 8/11/2023 8/10/2033 9/13/2023 9/12/2033 Gang Yu * † 10/13/2023 10/12/2033 11/13/2023 11/12/2033 12/13/2023 12/12/2033 1/12/2024 1/11/2034 2/7/2024 2/6/2034 3/13/2024 3/12/2034 4/12/2024 and 4/11/2034 5/13/2024 5/12/2034 4/13/2020 4/12/2030 5/13/2020 5/12/2030 6/13/2020 6/12/2030 7/13/2020 7/12/2030 5/13/2022 5/12/2032 6/13/2022 6/12/2032 7/13/2022 7/12/2032 8/13/2022 8/12/2032 5/12/2023 5/11/2033 Junling Liu * † 6/13/2023 6/12/2033 7/13/2023 7/12/2033 8/11/2023 8/10/2033 9/13/2023 9/12/2033 10/13/2023 10/12/2033 11/13/2023 11/12/2033 12/13/2023 12/12/2033 1/12/2024 1/11/2034 2/7/2024 2/6/2034 3/13/2024 3/12/2034 4/12/2024 and 4/11/2034 5/13/2024 5/12/2034 Lian Yong Chen * † 6/1/2019 5/31/2029 Nee Chuan Teo * † 9/12/2018 9/11/2028 Jian Sun * † 9/12/2018 9/11/2028 Jun Luo * † 9/12/2018 9/11/2028 All directors and executive officers as a group 459,610 * Less than one percent of our total outstanding shares. † Restricted share units. 116 Table of Contents C.

For more details, see Notes 11 and 12 to our consolidated financial statements included elsewhere in this annual report. 113 Table of Contents The following table summarizes, as of the date of this annual report, the outstanding share incentive awards we have granted to our directors and executive officers under the 2013 Policy, the 2014 Policy, the 2016 Plan and the 2018 Plan: Ordinary Shares Underlying Outstanding Share Exercise Incentive Price Expiration Name Awards ($/Share) Grant Date Date Gang Yu * † 4/13/2020 4/12/2030 5/13/2020 5/12/2030 6/13/2020 6/12/2030 7/13/2020 7/12/2030 1/1/2021 12/31/2030 1/1/2022 12/31/2031 5/13/2022 5/12/2032 6/13/2022 6/12/2032 7/13/2022 7/12/2032 8/13/2022 8/12/2032 1/1/2023 12/31/2032 5/12/2023 5/11/2033 6/13/2023 6/12/2033 7/13/2023 7/12/2033 8/11/2023 8/10/2033 9/13/2023 9/12/2033 10/13/2023 10/12/2033 11/13/2023 11/12/2033 12/13/2023 12/12/2033 1/12/2024 1/11/2034 2/7/2024 2/6/2034 3/13/2024 3/12/2034 4/12/2024 4/11/2034 5/13/2024 5/12/2034 6/13/2024 6/12/2034 7/12/2024 7/11/2034 8/13/2024 8/12/2034 9/13/2024 9/12/2034 10/12/2024 10/11/2034 11/13/2024 11/12/2034 12/13/2024 and 12/12/2034 1/13/2025 1/12/2035 Junling Liu * † 4/13/2020 4/12/2030 5/13/2020 5/12/2030 6/13/2020 6/12/2030 7/13/2020 7/12/2030 5/13/2022 5/12/2032 6/13/2022 6/12/2032 7/13/2022 7/12/2032 8/13/2022 8/12/2032 5/12/2023 5/11/2033 6/13/2023 6/12/2033 7/13/2023 7/12/2033 8/11/2023 8/10/2033 9/13/2023 9/12/2033 10/13/2023 10/12/2033 11/13/2023 11/12/2033 12/13/2023 12/12/2033 1/12/2024 1/11/2034 2/7/2024 2/6/2034 3/13/2024 3/12/2034 4/12/2024 4/11/2034 5/13/2024 5/12/2034 6/13/2024 6/12/2034 7/12/2024 7/11/2034 8/13/2024 8/12/2034 9/13/2024 9/12/2034 10/12/2024 10/11/2034 11/13/2024 11/12/2034 12/13/2024 and 12/12/2034 1/13/2025 1/12/2035 Yang Chen * † 3/31/2019 3/30/2029 2/28/2019 2/27/2029 1/1/2020 12/31/2029 1/1/2020 12/31/2029 4/13/2020 4/12/2030 5/13/2020 5/12/2030 6/13/2020 6/12/2030 114 Table of Contents Ordinary Shares Underlying Outstanding Share Exercise Incentive Price Expiration Name Awards ($/Share) Grant Date Date 7/13/2020 7/12/2030 1/1/2021 12/31/2030 1/1/2022 12/31/2031 5/13/2022 5/12/2032 6/13/2022 6/12/2032 7/13/2022 7/12/2032 8/13/2022 8/12/2032 1/1/2023 12/31/2032 5/12/2023 5/11/2033 6/13/2023 6/12/2033 7/1/2023 6/30/2033 7/13/2023 7/12/2033 8/11/2023 8/10/2033 9/8/2023 9/7/2033 9/13/2023 9/12/2033 10/13/2023 10/12/2033 11/13/2023 11/12/2033 12/13/2023 12/12/2033 1/12/2024 1/11/2034 2/7/2024 2/6/2034 3/13/2024 3/12/2034 4/12/2024 4/11/2034 5/13/2024 5/12/2034 6/13/2024 6/12/2034 7/12/2024 7/11/2034 8/13/2024 8/12/2034 9/13/2024 9/12/2034 10/12/2024 10/11/2034 11/13/2024 11/12/2034 12/13/2024 and 12/12/2034 1/13/2025 1/12/2035 Nee Chuan Teo * † 9/12/2018 9/11/2028 Jian Sun * † 9/12/2018 9/11/2028 Jun Luo * † 9/12/2018 9/11/2028 All directors and executive officers as a group 4,232,656 * Less than one percent of our total outstanding shares. † Restricted share units.

Luo received his bachelor’s degree in accounting from Shanghai University of Finance and Economics in 1994 and master’s degree in software engineering from Beihang University in China in 2010. B. Compensation For the year ended December 31, 2023, we paid an aggregate of approximately RMB7.44 million (US$1.05 million) in cash and other benefits to our directors and executive officers.

Luo received his bachelor’s degree in accounting from Shanghai University of Finance and Economics in 1994 and master’s degree in software engineering from Beihang University in China in 2010. B. Compensation For the year ended December 31, 2024, we paid an aggregate of approximately RMB9.89 million (US$1.35 million) in cash and other benefits to our directors and executive officers.

Audit Committee Our audit committee consists of Nee Chuan Teo, Jian Sun and Jun Luo, and is chaired by Nee Chuan Teo. Nee Chuan Teo, Jian Sun and Jun Luo each satisfies the “independence” requirements of Rule 5605(c)(2) of the Nasdaq Stock Market Rules and meet the independence standards under Rule 10A-3 under the Exchange Act.

Nee Chuan Teo, Jian Sun and Jun Luo each satisfies the “independence” requirements of Rule 5605(c)(2) of the Nasdaq Stock Market Rules and meet the independence standards under Rule 10A-3 under the Exchange Act.

Committees of the Board of Directors We have three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.

Employees The following table sets forth the numbers of our employees categorized by function as of December 31, 2023. As of December 31, 2023 Number % of Total Functions: Wholesale pharmacy business 662 44 % Retail pharmacy business 162 11 % Supply chain 143 9 % Procurement 274 18 % Research and development and IT 178 12 % General and administrative 101 7 % Total 1,520 100.0 As required by laws and regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments including, among other things, pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated benefit contribution plan.

Employees The following table sets forth the numbers of our employees categorized by function as of December 31, 2024. As of December 31, 2024 Number % of Total Functions: Wholesale pharmacy business 503 40.6 % Retail pharmacy business 134 10.8 % Supply chain 120 9.7 % Procurement 245 19.8 % Research and development and IT 144 11.6 % General and administrative 92 7.5 % Total 1,238 100.0 As required by laws and regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments including, among other things, pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated benefit contribution plan.

Jing Liu is the sole limited partner of Yiyao Partners. We issued class C ordinary shares to Gold Prized, and did not grant any rights associated with the class C ordinary shares held by Gold Prized to our directors and executive officers or any other employees.

We issued class C ordinary shares to Gold Prized, and did not grant any rights associated with the class C ordinary shares held by Gold Prized to our directors and executive officers or any other employees.

Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of the date of this annual report. Directors and Executive Officers Age Position/Title Gang Yu 64 Co-founder and Co-Chairman Junling Liu 59 Co-founder, Co-Chairman and Chief Executive Officer Lian Yong Chen 61 Director Nee Chuan Teo 53 Independent Director Jian Sun 59 Independent Director Jun Luo 56 Independent Director 111 Table of Contents Dr.

Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of the date of this annual report. Directors and Executive Officers Age Position/Title Gang Yu 65 Co-founder and Co-Chairman Junling Liu 60 Co-founder, Co-Chairman and Chief Executive Officer Yang Chen 54 Director Nee Chuan Teo 54 Independent Director Jian Sun 60 Independent Director Jun Luo 57 Independent Director Dr.

The calculations in the table below are based on 171,328,644 ordinary shares outstanding as of March 31, 2024, comprising of (i) 99,328,644 Class A ordinary shares, and (ii) 72,000,000 Class B ordinary shares. 120 Table of Contents Beneficial ownership is determined in accordance with the rules and regulations of the SEC.

The calculations in the table below are based on 173,348,718 ordinary shares outstanding as of March 31, 2025, comprising of (i) 101,348,718 Class A ordinary shares, and (ii) 72,000,000 Class B ordinary shares. 118 Table of Contents Beneficial ownership is determined in accordance with the rules and regulations of the SEC.

Nee Chuan Teo has served as our independent director since September 2018. Mr. Teo is the chief financial officer of bioduro-sundia, a famous company providing its biopharma customers a single end-to-end solution from early stage drug discovery to late stage manufacturing. Prior to joining bioduro-sundia, Mr.

Teo is the chief financial officer of bioduro-sundia, a famous company providing its biopharma customers a single end-to-end solution from early stage drug discovery to late stage manufacturing. Prior to joining bioduro-sundia, Mr.

To our knowledge, as of March 31, 2024, a total of 135,328,638 ordinary shares, representing approximately 78.99% of our total outstanding ordinary shares, were held by two record shareholders in the United States, including The Bank of New York Mellon, the depositary of our ADS program.

To our knowledge, as of March 31, 2025, a total of 137,348,712 ordinary shares, representing approximately 79.23% of our total outstanding ordinary shares, were held by two record shareholders in the United States, including The Bank of New York Mellon, the depositary of our ADS program.

Share Incentive Plans 2016 Plan We adopted our 2016 Share Incentive Plan, or the 2016 Plan, in January 2016, to promote our success and the interests of our shareholders by providing a means through which we may grant equity-based incentives to attract, motivate, retain and reward certain officers, employees, directors, consultants and other eligible persons to further link the interests of recipients with those of our shareholders generally.

Share Incentives Share Incentive Policies We adopted certain share incentive policies in December 2013 and August 2014, or the 2013 Policy and the 2014 Policy, respectively, for the purpose of granting share - based compensation awards to our officers, employees, directors, consultants and other eligible persons to incentivize their performance and promote the success of our business. 110 Table of Contents Share Incentive Plans 2016 Plan We adopted our 2016 Share Incentive Plan, or the 2016 Plan, in January 2016, to promote our success and the interests of our shareholders by providing a means through which we may grant equity-based incentives to attract, motivate, retain and reward certain officers, employees, directors, consultants and other eligible persons to further link the interests of recipients with those of our shareholders generally.

These shares, however, are not included in the computation of the percentage ownership of any other person. Percentage of total ordinary Percentage Class A Class B shares on an of aggregate Ordinary Ordinary as-converted voting Shares Shares basis power† Directors and Executive Officers:* Gang Yu (1)(9) ** 36,000,000 21.0 45.8 Junling Liu (2)(7) 1,131,134 36,000,000 21.7 45.9 Lian Yong Chen (3) 7,265,894 — 4.2 0.6 Nee Chuan Teo (4) ** — ** ** Jian Sun (5) ** — ** ** Jun Luo (6) ** — ** ** All directors and executive officers as a group 8,512,168 72,000,000 47.0 92.3 Principal Shareholders: Sunny Bay Global Limited (7) — 36,000,000 21.0 45.8 ClearVue Partners, L.P.

These shares, however, are not included in the computation of the percentage ownership of any other person. Percentage of total ordinary Percentage Class A Class B shares on an of aggregate Ordinary Ordinary as-converted voting Shares Shares basis power† Directors and Executive Officers: * Gang Yu (1) ** 36,000,000 20.8 45.7 Junling Liu (2)(6) 1,640,816 36,000,000 21.7 45.8 Yang Chen ** — ** ** Nee Chuan Teo (3) ** — ** ** Jian Sun (4) ** — ** ** Jun Luo (5) ** — ** ** All directors and executive officers as a group 2,523,314 72,000,000 47.0 92.3 Principal Shareholders: Sunny Bay Global Limited (6) — 36,000,000 21.0 45.8 First Pharmacia International (7) 8,690,562 — 5.1 0.7 Notes: * Except for Mr.

Under these agreements, we agree to indemnify them against certain liabilities and to reimburse them for expenses in connection with claims made by reason of their being a director or officer of our company. Board Diversity We value and consider broad diversity for our Board, including ethnicity, gender, nationality and age.

Junling Liu has the right to obtain within 60 days following March 31, 2024, upon the conversion of 9,535 RSUs as of March 31, 2024, at a ratio of one Class A ordinary share for each RSU.

Junling Liu has the right to obtain within 60 days following March 31, 2024, upon the conversion of 9,535 RSUs as of March 31, 2024, at a ratio of one Class A ordinary share for each RSU. (3) The business address of Mr. Nee Chuan Teo is 2201, Block 31, 388 Furongjiang Road, Shanghai, China.

Gold Prized is wholly owned by Shanghai Yiyao Enterprise Management Partners, or Yiyao Partners, a limited partnership formed in the PRC and owned by Ms. Jing Liu (0.81%), a family member of Mr. Junling Liu, and Ms. Ying Song (99.19%), a family member of Dr. Gang Yu. Ms. Ying Song is the general partner while Ms.

Jing Liu (0.81%), a family member of Mr. Junling Liu, and Ms. Ying Song (99.19%), a family member of Dr. Gang Yu. Ms. Ying Song is the general partner while Ms. Jing Liu is the sole limited partner of Yiyao Partners.

Our board of directors, or a committee designated by our board of directors, will administer the plan. The plan administration committee will determine the provisions and terms and conditions of each grant. Award Agreements .

The plan administration committee will determine the provisions and terms and conditions of each grant. Award Agreements .

Our Employee Share Holding Platform In November 2014, we established Gold Prized Investment Limited, or Gold Prized, a company incorporated in the British Virgin Islands, as an offshore employee shareholding platform to allow our employees in China to receive share incentives. 112 Table of Contents Gold Prized is wholly owned by Shanghai Yiyao Enterprise Management Partners, or Yiyao Partners, a limited partnership formed in the PRC and owned by Ms.

Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on a one-for-one basis. (1) Represents (i) 58,424 Class A shares held by Dr. Gang Yu, (ii) 36,000,000 Class B ordinary shares held by Dr. Gang Yu, and (iii) 9,535 Class A ordinary shares that Dr.

(1) Represents (i) 58,424 Class A shares held by Dr. Gang Yu, (ii) 36,000,000 Class B ordinary shares held by Dr. Gang Yu, and (iii) 9,535 Class A ordinary shares that Dr.

As of the date of this annual report, options to purchase a total of 2,182,198 Class A ordinary shares and 7,951,912 restricted share units were granted and outstanding under the 2018 Plan. The following paragraphs summarize the terms of the 2018 Plan: Plan Administration .

As of the date of this annual report, options to purchase 2,182,198 Class A ordinary shares and 9,274,324 restricted share units are granted and outstanding under the 2018 Plan. The following paragraphs summarize the terms of the 2018 Plan: Plan Administration . Our board of directors, or a committee designated by our board of directors, will administer the plan.

Each holder of our Class A ordinary shares is entitled to one vote per share. Each holder of our Class B ordinary shares is entitled to fifteen votes per share.

Each holder of our Class A ordinary shares is entitled to one vote per share. Each holder of our Class B ordinary shares is entitled to fifteen votes per share. Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on a one-for-one basis.

Subject to the foregoing, our officers are elected by and serve at the discretion of our board of directors. 118 Table of Contents Employment Agreements and Indemnification Agreements We have entered into employment agreements with our senior executive officers.

Upon both founders ceasing to be co-chairmen or chairman, our board shall elect and appoint the co-chairmen or chairman at their discretion. Subject to the foregoing, our officers are elected by and serve at the discretion of our board of directors. Employment Agreements and Indemnification Agreements We have entered into employment agreements with our senior executive officers.

Jian Sun is 124 Caobao Road, Xuhui District, Shanghai, China. (6) The business address of Mr. Jun Luo is Floor 3, 6B Tower, Huan Ya Technology Building, Lane 1228, Jiang Chang Road, Jing’an District, Shanghai, China. (7) Represents 36,000,000 Class B ordinary shares held by Sunny Bay Global Limited, a company incorporated in the British Virgin Islands.

(4) The business address of Mr. Jian Sun is 124 Caobao Road, Xuhui District, Shanghai, China. (5) The business address of Mr. Jun Luo is Floor 3, 6B Tower, Huan Ya Technology Building, Lane 1228, Jiang Chang Road, Jing’an District, Shanghai, China.

Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated upon.

The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated upon.

Nee Chuan Teo and Jian Sun each satisfies the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Rules. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.

Compensation Committee Our compensation committee consists of Gang Yu, Nee Chuan Teo and Jian Sun, and is chaired by Gang Yu. Nee Chuan Teo and Jian Sun each satisfies the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Rules.

The registered office address of First Pharmacia International is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman, KY1-9008, Cayman Islands.

The registered office address of First Pharmacia International is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman, KY1-9008, Cayman Islands. The information contained in this paragraph is based on the Schedule 13D/A filed by First Pharmacia International and certain other filers named therein on February 27, 2024.

Liu received his bachelor’s degree in education from Flinders University in Australia in 1991 and master’s degree in international business administration from Flinders University in 1998. Dr. Lian Yong Chen has served as our director since May 2019. He is currently the founding managing partner and CEO of 6 Dimensions Capital.

Liu received his bachelor’s degree in education from Flinders University in Australia in 1991 and master’s degree in international business administration from Flinders University in 1998. Mr. Yang Chen has served as our director since November 2024. Since February 2019, Mr. Chen has served as Senior Finance Executive of 1 Pharmacy Technology. Before joining us, Mr.

Sunny Bay Global Limited is wholly owned by Mr. Junling Liu. The registered office address of Sunny Bay Global Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.

The registered office address of Sunny Bay Global Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. 119 Table of Contents (7) Represents 8,690,562 Class A ordinary shares represented by ADSs directly held by First Pharmacia International, a Cayman Islands exempted company.

Removed

He has over 20 years of experience in the life sciences industry in China and the United States as a venture capitalist, senior management executive, entrepreneur, and scientific inventor. He was the founder and managing partner at Frontline BioVentures and a partner at FIL Capital Management (Hong Kong) Limited in Asia from May 2008 to March 2014. Dr.

Added

Chen served as Chief Financial Officer of iKang Healthcare Group Inc. (NASDAQ: KANG) from April 2013 to February 2019. Prior to that, Mr. Chen was Vice President of Finance and Strategy at Campbell Soup Asia Limited and Lee Kum Kee Sauce Group. He also held various senior finance positions at Dumex China, PepsiCo Greater China Region and Wyeth China.

Removed

Chen has been an executive director and the chairman of the board of Ocumension Therapeutics since May 2018 (being re-designed from executive Director to non-executive Director on July 20, 2021), a company listed on the Stock Exchange (stock code: 1477).

Added

Previously, Mr. Chen was an auditor at Arthur Andersen & Co. He received his bachelor’s degree from Shanghai University of Finance and Economics and his EMBA degree from Olin School of Business at Washington University. Mr. Nee Chuan Teo has served as our independent director since September 2018. Mr.

Removed

Since August 2018 to July 2021, he has served as a non-executive director at CStone Pharmaceuticals, a company listed on the main board of the Stock Exchange (stock code: 2616). Since January 2015 to March 2022, he has served as a non-executive Director at Hua Medicine, a company listed on the main board of the Stock Exchange (stock code: 2552).

Added

Each committee’s members and functions are described below. 115 Table of Contents Audit Committee Our audit committee consists of Nee Chuan Teo, Jian Sun and Jun Luo, and is chaired by Nee Chuan Teo.

Removed

He served as a director of Shanghai Hile Bio-Pharmaceutical Co. Ltd., a company listed on the Shanghai Stock Exchange (stock code: 603718) since December 2014 to May 2021. Since August 2019, he has been a non-executive director and chairman of the board of Cutia Therapeutics, a company listed on the main board of the Stock Exchange (stock code: 2487).

Added

Nee Chuan Teo, Mr. Jian Sun and Mr.

Removed

Since December 2019, he has been a non-executive Director of Neusoft Xikang Holdings Inc, a company listed on the main board of the Stock Exchange (stock code: 9686). Save as disclosed above, Dr. Lian Yong Chen is not and has not been a director of any other listed companies in the past three years. Dr.

Added

(6) Represents 36,000,000 Class B ordinary shares held by Sunny Bay Global Limited, a company incorporated in the British Virgin Islands. Sunny Bay Global Limited is wholly owned by Mr. Junling Liu.

Removed

Lian Yong Chen conducted postdoctoral research at the Massachusetts Institute of Technology after obtaining his Ph.D. degree in Chemistry (with top honor) from the University of Louvain, Louvain-La-Neuve in Belgium in July 1991. He obtained his Bachelor of Science degree in Chemistry from Peking University in June 1984. Mr.

Removed

Upon both founders ceasing to be co-chairmen or chairman, our board shall elect and appoint the co-chairmen or chairman at their discretion.

Removed

The table below provides certain information regarding the diversity of our board of directors as of the date of this report. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f) and related instructions.

Removed

Board Diversity Matrix (As of March 31, 2024) Country of Principal Executive Offices: People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 6 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 0 6 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 1 LGBTQ+ 0 Did Not Disclose Demographic Background 0 119 Table of Contents D.

Removed

(8) 15,848,264 — 9.3 1.3 First Pharmacia International (10) 8,690,562 — 5.1 0.7 Notes: * Except for Dr. Lian Yong Chen, Mr. Nee Chuan Teo, Mr. Jian Sun and Mr.

Removed

(3) Represents (i) 6,883,600 Class A Ordinary Shares represented by 3,441,800 ADSs directly held by 6 Dimensions Capital, L.P., (ii) 362,294 Class A Ordinary Shares represented by 181,147 ADSs directly held by 6 Dimensions Affiliates Fund, L.P., and (iii) 20,000 Class A ordinary shares that Dr.

Removed

Lian Yong Chen has the right to obtain within 60 days following March 31, 2023, upon the conversion of 20,000 RSUs as of March 31, 2023, at a ratio of one Class A ordinary share for each RSU. 6 Dimensions Capital GP, LLC is the general partner of both 6 Dimensions Capital, L.P. and 6 Dimensions Affiliates Fund, L.P. Dr.

Removed

Lian Yong Chen is the largest shareholder of and controls 6 Dimensions Capital GP, LLC. Dr. Chen may be deemed to beneficially own Class A Ordinary Shares represented by ADSs directly held by 6 Dimensions Capital, L.P. and 6 Dimensions Affiliates Fund, L.P.

Removed

The information contained in this paragraph is based on the Schedule 13D/A filed by 6 Dimensions Capital GP, LLC and certain other filers named therein on February 27, 2024. 121 Table of Contents (4) The business address of Mr. Nee Chuan Teo is 2201, Block 31, 388 Furongjiang Road, Shanghai, China. (5) The business address of Mr.

Removed

(8) Represents 15,848,264 Class A ordinary shares represented by 504 ADSs directly held by ClearVue Partners, L.P. and 7,923,628 ADSs directly held by ClearVue YW Holdings, Ltd..

Removed

ClearVue Partners, L.P. owns 100% of the equity interest in ClearVue YW Holdings, Ltd. and may be deemed to beneficially own Class A Ordinary Shares represented by ADSs directly held by ClearVue YW Holdings, Ltd.

Removed

ClearVue Partners GP, L.P. is the general partner of ClearVue Partners, L.P. and may be deemed to beneficially own Class A Ordinary Shares represented by ADSs directly held by ClearVue Partners, L.P. and Class A Ordinary Shares represented by ADSs directly held by ClearVue YW Holdings, Ltd..

Removed

The information contained in this paragraph is based on the Schedule 13D/A filed by ClearVue Partners, L.P. and certain other filers named therein on February 27, 2024 . (9) Represents 8,690,562 Class A ordinary shares represented by 4,345,281 ADSs directly held by First Pharmacia International, a Cayman Islands exempted company.

Removed

The information contained in this paragraph is based on the Schedule 13D/A filed by First Pharmacia International and certain other filers named therein on February 27, 2024. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

3 edited+0 added−0 removed3 unchanged

2023 filing

2024 filing

Yue Xuan and Ms. Jing Liu, who were the shareholders of Yihao Pharmacy, (2) a termination agreement with Yihao Pharmaceutical Chain and Yihao Pharmacy, (3) a termination agreement with Shanghai Yaowang and Yihao Pharmaceutical Chain. Yihao Pharmacy, Yihao Pharmaceutical Chain and Shanghai Yaowang were all the former VIEs that were subject to the contractual arrangements.

Jing Liu, who were the shareholders of Yihao Pharmacy, (2) a termination agreement with Yihao Pharmaceutical Chain and Yihao Pharmacy, (3) a termination agreement with Shanghai Yaowang and Yihao Pharmaceutical Chain. Yihao Pharmacy, Yihao Pharmaceutical Chain and Shanghai Yaowang were all the former VIEs that were subject to the contractual arrangements.

Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” 122 Table of Contents B. Related Party Transactions Termination of Contractual Arrangements with Variable Interest Entities On January 27, 2022, 1 Pharmacy Technology entered into (1) a termination agreement with Yihao Pharmacy, Mr.

Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions Termination of Contractual Arrangements with Variable Interest Entities On January 27, 2022, 1 Pharmacy Technology entered into (1) a termination agreement with Yihao Pharmacy, Mr. Yue Xuan and Ms.

Board Practices” Share Incentive Plans See “ Item 6. Directors, Senior Management and Employees—B. Compensation” C. Interests of Experts and Counsel Not applicable.

Board Practices.” 120 Table of Contents Share Incentive Plans See “ Item 6. Directors, Senior Management and Employees—B. Compensation.” C. Interests of Experts and Counsel Not applicable.

Other YI 10-K year-over-year comparisons

YI 10-K 2022 vs 2023