111, Inc.

Hello, ladies and gentlemen, and thank you for standing by for 111 Inc.' 's fourth quarter and fiscal year 2020 conference call. At this time, all participants are in the listen-only mode. After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now turn the meeting over to your host for today's call, Ms. Monica Moo, Investor Relations Director. Please proceed, Monica.

Thank you, Operator. Hello, everyone, and thank you for joining us today for 111's fourth quarter and fiscal year 2020 conference call. On the call today from 111 are Dr. Gong Yu, co-founder and executive chairman, Mr. Junling Liu, co-founder, chairman, and CEO, Mr. Luke Chen, CFO of our major subsidiary, Mr. Harvey Wong, co-COO, Mr. Barry Zhu, co-COO, Ms. Tiffany Zhuge, IR and BD Senior VP, Ms. Monica Mu, Investor Relations Director, and Mr. Alex Still, Finance Director. As a reminder, today's conference call is being broadcast live via webcast. In addition, a replay will be available on our website following the call. The company's earnings press release was distributed earlier today and together with our earnings presentation are available on the company's IR website at ir.111.com.cn. Before we get started, let me remind you that this call may contain forward-looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations and current markets and operating conditions, and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which would cause actual results to differ materially. For more information about these risks, please refer to the company's filings with the SEC. 111 does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise except as required under applicable law. Please note that all numbers are in RMB and all comparisons refer to year-over-year comparison unless otherwise stated. Please also refer to our earnings press release for detailed information of our comparative financial performance on a year-over-year basis. With that, I will turn the call over to our CEO, Mr. Junling Liu.

Good morning and good evening, everyone. Thank you for joining this call today for our fourth quarter and the full year 2020 results. Let me begin with an update on the COVID-19 pandemic. The past year plus has been difficult for all of us. But the global effort and the commitment to overcome this terrible disease has also shown the resilience of the human spirit. We'll continue to be in awe of the first responders working tirelessly throughout these unprecedented times, and together we will persevere and beat this disease. With the hard work from our dedicated employees and the safety and other operational protocols we have put in place, 111 has been able to service our customers and deliver critical care to patients without interruption throughout this difficult period. With the vaccine rollout, we are optimistic that an end to the pandemic is in sight as we continue to stay vigilant for the potentially more dangerous variants of the coronavirus. Moving on to our earnings, I'll begin with a brief look back on what we accomplished in 2020, our extraordinary journey of growth in Section 1 of the DEC, and a look ahead on 2021 and beyond. Then I'll hand it over to Luke to take you through the financials in Section 2. We will conclude our prepared remarks with guidance for Q1 2021 before we take your questions. In the fourth quarter, net revenue rose 96.1% year-over-year to 2.64 billion RMB, bringing the number for FY 2020 to 8.2 billion, more than doubling the net revenue of 3.95 billion achieved in FY 2019. This is the 10th consecutive quarter of revenue growth since our IPO. Non-GAAP net loss attributable to ordinary shareholders as a percentage of net revenues also decreased significantly from 22.3% in our first quarter post-IPO to 3.7% in this fourth quarter. Our business recorded a close to nine-fold increase from $959.5 million in FY 2017 This stellar performance was set in motion by our S2B2C model, which has continued to drive our multifaceted growth strategy and has allowed us to lead the charge in the digital transformation of the healthcare system in the new era of industry internet in China. Our mission is clear, to digitally connect patients with medicine and healthcare services. Our S2B2C model was built in two stages. Firstly, we developed the supply chain infrastructure, the S, that enables the model. From 1.1.1's inception, we have in our mind to build an innovative digital platform that would allow us to benefit from disrupting the status quo. But our supply chain infrastructure is more than the platform. It also encompasses our network of suppliers, pharmaceutical companies, distributors, marketplace vendors, and other service providers. This infrastructure is then digitally connected to our rapidly growing network of retail pharmacies, one of the bees in our model, offering them the capability for vast selection of products and assortment, cloud CRM, cloud clinic, speedy home delivery services, all of which enable them to better serve customers with enhanced efficiency and reduced cost. The same supply chain platform is also designed to bring value to doctors, the other B in our model. They are able to enjoy our service modules of cloud clinic, Cloud Pharmacy doctor-patient platform to provide follow-up care to patients, which improves the doctor-patient experience and drives positive care outcomes. Every day, patients travel to distant cities for medical care, and one of the challenges faced by doctors is being able to provide efficient and effective follow-up care once these patients return to their homes. On our platform, geography will no longer be a limitation, preventing doctors from engaging and interacting with their patients. Conducting regular post-discharge consultation and online refill of medicine can help reduce readmissions by detecting and mitigating potential complications early. Having established a robust foundation We then extended this model to bring value to patients, the C in S2B2C, by digitally connecting them to medicines and healthcare services. Through our supply chain platform, doctors and pharmacies are able to leverage different service modules to offer a variety of services to patients that never existed before. Our company takes great pride in creating a platform where customers from all around the country enjoy either pure digital or a combination of online plus offline services, which leads to better health outcomes. But our work doesn't end there. In the second stage of the build-out of our model, we seek to continually strengthen our infrastructure to further empower our network of retail pharmacies in service of patients. which is the S to P to C part of our model. From our cloud-based supply chain platform, we have applied AI and the big data analytics to help our retail pharmacy customers better manage their product selection, inventory control, and the timeliness of product delivery, resulting in high efficiency, lower cost, as well as greater engagement with more satisfied end consumers. We're making significant investment in the S to D to C space as well. In addition to AI, we're also investing in digital reps to make the doctor's life easier in patient care. For our network of suppliers, we continue to deepen and broaden our relationships with pharmaceutical companies through our omni-channel product commercialization services. adding value to all stakeholders in our ecosystem. For pharma companies, they gain access to a broader market for their new products while lowering marketing and distribution costs. For our retail pharmacy customers, they gain a wider selection of the latest products at a lower cost. For our doctors, they are able to access a variety of services so they can serve patients digitally. And for our end consumers, they benefit from being able to access the latest innovations brought to market by our supply chain platform. The advantages of our S2B2C model continues to attract new partners and has led to the rapid growth of our ecosystem in 2020. The number of global and domestic pharmaceutical companies we have a direct relationship with totaled over 330 as of Q4 2020, while our network of retail pharmacy customers is now the largest virtual network in China. With the support of our eight regional fulfillment centers, we provide 24-hour delivery to more than 300 cities in China. As we increase the number of our fulfillment centers and upgrade logistics management, fulfillment costs as a percentage of net revenue has improved significantly from 3.6% in Q4 2019 to 2.6% in Q4 2020. For the full year 2020, it improved from 3.3% to 2.8% year-over-year. During 2020, we continued to build on our momentum and deepen our market positions Through our main operation subsidiary, YaoFang Shanghai, which has raised two rounds of financing that amounted to 143 million US dollars from third-party investors, with the second round financing at a pre-money valuation of 10 billion RMB, or 1.5 billion US dollars. In connection with IPO on Shanghai Stock Exchange's SciTech Innovation Board, Looking ahead, we will continue to pursue the enormous market opportunities from the digital transformation of the healthcare market in China, which given the country's vast population, provides us with the opportunity to connect millions of people in lower tier cities to first rate healthcare services that have traditionally been available only to those living in tier one cities. In order to bridge the gap In patient access in 2021, we will focus on strengthening every facet of our S2B2C model and advancing our strategic plan to expedite business expansion. On the infrastructure side, we'll keep improving the AI and data processing capability of our technology, upping its power to handle higher volumes with greater predictive ability. With this, we'll be able to provide radiopharmacy greater control and the cost efficiency to drive their store sales growth and at the same time, further deepen the share of wallet among our existing radiopharmacy customers. The platform's enhanced capability will also allow us to virtually deploy more digital medical reps to further improve the effectiveness of our commercialization services. Doctors will be provided with tools to access latest innovations in medical science, and they are empowered to deliver better care to patients. On the supplier side, the services we provide to pharmaceutical companies in support of their commercialization effort help deepen our relationships with them. allowing us to source an even wider selection of medications for our pharmacy customers and doctors to benefit in consumer. These commercialization services also represent a major growth opportunity for us. Globally and in China, medical innovations have been happening at an unprecedented rate. As more and more new medications and devices come onto the market, competition becomes increasingly intense. 111's support during a product launch can improve a company's market position and increase the likelihood of a successful launch. Ultimately, our S2B2C model is a win-win for all, as we help to transform the healthcare system for the better. We believe that there are significant opportunities for us in the age of industry internet to expedite the digital transformation of healthcare system in China. We will work relentlessly to strengthen this model and pursue growth opportunities as we stay on track for a star listing and delivering even greater value to our shareholders. With that, I will hand the call to Luke to walk through our financial results. Thank you.