111, Inc.'s Inexorable Drive Towards Profitability

Summary

• 111, Inc. kept growing despite strong headwinds from pandemic lockdowns, which will continue to plague Q2 but not enough to lower FY22 outlook.
• 111, Inc. has plenty of growth avenues, particularly in high-margin services, which are growing at 70% from a very small base.
• Despite the higher cost related to Covid, the company showed impressive gross margin expansion and operational leverage, bringing it in sight of breakeven.
• The shares are still very cheap.
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Analyst’s Disclosure:I/we have a beneficial long position in the shares of YI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.