June 27, 2024, ST. PETERSBURG, FL – Water Tower Research (www.watertowerresearch.com) has published an Initiation of Coverage Report on 111, Inc. (NASDAQ: YI) titled, “Initiating Coverage: A Leader in China’s Digital Health Revolution”. The report can be accessed here.

Stewarded by an innovative technology leadership team with supply chain management expertise, 111 is one of China’s leading B2B tech-enabled healthcare platforms, operating in an industry where barriers to entry are quite formidable for new entrants. 111 has developed an evolving digitalized model with the mission to reshape the entire value chain of China’s healthcare industry through its robust technology infrastructure and strategic partnerships. 111’s expanding pharmaceutical supply chain embraces 5,000 upstream suppliers and more than 470,000 pharmacies. The platform is set up to serve as a one-stop shop for outside-of-hospital pharmacies, enabling them to source a large and expanding selection of pharmaceutical products for the ultimate benefit of their consumers.  

111 has enjoyed robust revenue growth, expanding at a ~40% CAGR since 2019. The Chinese government’s commitment to reform the country’s healthcare system to improve affordability and access, along with the accelerated digitalization of the system in the post-COVID era, present 111 with further significant headroom for growth. Moreover, the company achieved its first GAAP operating profit in 1Q24 due to its relentless pursuit of operating efficiency improvements. 111 has been adept at leveraging technology to emerge as the industry’s most cost-efficient, an important advantage in a low-margin business.

For all of its attributes, 111’s ADSs trade well below those of its B2B peers. On an EV/revenue basis, 111 trades at more than a 90% discount to YSB, Inc. (9885: HK), its most direct peer.

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Tags: B2B, B2C, Healthcare, medical products, Pharmacies, prescriptions