Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document Information [Line Items] | |
Entity Registrant Name | 111, Inc. |
Entity Central Index Key | 0001738906 |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Dec. 31, 2019 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Ex Transition Period | false |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Entity Interactive Data Current | Yes |
Ordinary Shares | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 164,120,024 |
Ordinary Shares | Ordinary shares Class A | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 92,120,024 |
Ordinary Shares | Ordinary shares Class B | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 72,000,000 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Current assets: | |||
Cash and cash equivalents | $ 83,496 | ¥ 581,281 | ¥ 853,740 |
Restricted cash | 16,726 | 116,441 | |
Short-term investments | 252,805 | ||
Accounts receivable, net of allowance of doubtful accounts of nil as of December 31, 2018 and 2019, respectively | 9,372 | 65,247 | 28,569 |
Notes receivable | 3,388 | 23,587 | |
Inventories | 69,848 | 486,271 | 210,836 |
Prepayments and other current assets | 29,965 | 208,604 | 161,147 |
Total current assets | 212,795 | 1,481,431 | 1,507,097 |
Property and equipment | 4,286 | 29,836 | 20,302 |
Intangible assets | 1,152 | 8,022 | 4,503 |
Long-term investments | 20 | 140 | 11,140 |
Operating lease right-of-use assets | 12,620 | 87,855 | |
Other non-current asset | 432 | 3,009 | 3,376 |
Total assets | 231,305 | 1,610,293 | 1,546,418 |
Current liabilities including amounts of the consolidated VIE without recourse to the Company (Note 2(b)): | |||
Short-term borrowings | 13,658 | 95,081 | |
Accounts payable | 63,825 | 444,334 | 212,258 |
Accrued expenses and other current liabilities | 33,613 | 234,008 | 102,261 |
Total current liabilities | 111,096 | 773,423 | 314,519 |
Long-term operating lease liabilities | 8,189 | 57,011 | |
Other non-current liabilities | 853 | 5,936 | 8,135 |
Total liabilities | 120,138 | 836,370 | 322,654 |
SHAREHOLDERS' (DEFICIT) EQUITY | |||
Treasury shares (nil and 1,485,862 shares as of December 31 2018 and 2019, respectively) | (3,302) | (22,991) | |
Additional paid-in capital | 374,398 | 2,606,486 | 2,540,878 |
Accumulated deficit | (270,524) | (1,883,335) | (1,383,729) |
Accumulated other comprehensive income | 10,980 | 76,441 | 67,073 |
Total shareholders' equity | 111,560 | 776,656 | 1,224,276 |
Non-controlling interest | (393) | (2,733) | (512) |
Total equity | 111,167 | 773,923 | 1,223,764 |
Total liabilities and equity | 231,305 | 1,610,293 | 1,546,418 |
Ordinary shares Class A | |||
SHAREHOLDERS' (DEFICIT) EQUITY | |||
Ordinary shares, value | 4 | 30 | 29 |
Ordinary shares Class B | |||
SHAREHOLDERS' (DEFICIT) EQUITY | |||
Ordinary shares, value | $ 4 | ¥ 25 | ¥ 25 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018CNY (¥)shares |
Accounts receivable, allowance of doubtful accounts | ¥ | ¥ 0 | ¥ 0 |
Treasury stock, shares | 1,485,862 | 0 |
Ordinary shares Class A | ||
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 96,588,106 | 91,088,106 |
Common stock, shares outstanding | 92,120,024 | 91,088,106 |
Ordinary shares Class B | ||
Common stock, shares authorized | 72,000,000 | 72,000,000 |
Common stock, shares issued | 72,000,000 | 72,000,000 |
Common stock, shares outstanding | 72,000,000 | 72,000,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
Net revenues: | ||||
Net revenues | $ 567,677 | ¥ 3,952,053 | ¥ 1,785,970 | ¥ 959,486 |
Operating costs and expenses: | ||||
Cost of products sold | (128,996) | (73,930) | (55,880) | |
Selling and marketing expenses | (48,919) | (340,562) | (260,040) | (190,074) |
General and administrative expenses | (17,740) | (123,501) | (98,759) | (53,434) |
Technology expenses | (8,892) | (61,902) | (71,248) | (48,133) |
Other operating income (expenses), net | (536) | (3,735) | (668) | 2,732 |
Total operating costs and expenses | (638,566) | (4,445,566) | (2,186,345) | (1,213,508) |
Loss from operations | (70,889) | (493,513) | (400,375) | (254,022) |
Interest income | 690 | 4,802 | 4,352 | 4,013 |
Interest expense | (520) | (3,622) | (55) | |
Foreign exchange (loss) gain | (1,484) | (10,328) | 2,459 | (3,492) |
Other income (loss), net | 120 | 834 | 11,531 | 4,229 |
Loss before income taxes | (72,083) | (501,827) | (382,033) | (249,327) |
Income tax expense | (8) | |||
Net loss | (72,083) | (501,827) | (382,041) | (249,327) |
Net loss attributable to non-controlling interest | 319 | 2,221 | 1,950 | 747 |
Net loss attributable to ordinary shareholders | (71,764) | (499,606) | (380,091) | (248,580) |
Other comprehensive income (loss) | ||||
Unrealized gains of available-for-sale securities, net of tax of nil for 2017, 2018 and 2019 | 1,054 | 7,335 | 8,734 | 5,181 |
Realized gains of available-for-sale securities, net of tax | (1,384) | (9,635) | (10,869) | (1,154) |
Foreign currency translation adjustments | 1,676 | 11,668 | 21,658 | (21,347) |
Comprehensive loss | $ (70,418) | ¥ (490,238) | ¥ (360,568) | ¥ (265,900) |
Loss per share: | ||||
Loss per share basic and diluted | (per share) | $ (0.44) | ¥ (3.05) | ¥ (3.82) | ¥ (3.45) |
Weighted average number of shares used in computation of loss per share: | ||||
Weighted average number of shares used in computation of loss per share, Basic and diluted | shares | 163,671,577 | 163,671,577 | 99,451,210 | 72,000,000 |
Product | ||||
Net revenues: | ||||
Net revenues | ¥ 3,929,698 | ¥ 1,770,227 | ¥ 949,217 | |
Operating costs and expenses: | ||||
Cost of products sold | $ (543,950) | (3,786,870) | (1,681,700) | (868,719) |
Fulfillment expenses | ||||
Operating costs and expenses: | ||||
Cost of products sold | $ (18,529) | ¥ (128,996) | ¥ (73,930) | ¥ (55,880) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
Unrealized gains of available-for-sale securities, tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY ¥ in Thousands, $ in Thousands | Ordinary SharesOrdinary shares Class ACNY (¥)shares | Ordinary SharesOrdinary shares Class BCNY (¥)shares | Treasury SharesCNY (¥)shares | Additional Paid-in CapitalCNY (¥) | Subscription receivablesCNY (¥) | Accumulated deficitCNY (¥) | Accumulated Other Comprehensive Income (Loss)CNY (¥) | Non-controlling InterestCNY (¥) | Ordinary shares Class Ashares | Ordinary shares Class Bshares | USD ($) | CNY (¥) |
Beginning balance at Dec. 31, 2016 | ¥ 25 | ¥ 2,200 | ¥ (2,225) | ¥ (755,058) | ¥ 64,870 | ¥ 2,185 | ¥ (688,003) | |||||
Beginning balance (in shares) at Dec. 31, 2016 | shares | 72,000,000 | |||||||||||
Changes in shareholders' (deficit) equity | ||||||||||||
Receipts of subscription receivables from shareholders | 25 | 25 | ||||||||||
Share-based compensation | 9,921 | 9,921 | ||||||||||
Net loss | (248,580) | (747) | (249,327) | |||||||||
Unrealized gains of available-for-sale securities, net of tax | 5,181 | 5,181 | ||||||||||
Reclassification of realized gains, net of tax | (1,154) | (1,154) | ||||||||||
Foreign currency translation | (21,347) | (21,347) | ||||||||||
Ending Balance at Dec. 31, 2017 | ¥ 25 | 12,121 | (2,200) | (1,003,638) | 47,550 | 1,438 | (944,704) | |||||
Ending Balance (in shares) at Dec. 31, 2017 | shares | 72,000,000 | |||||||||||
Changes in shareholders' (deficit) equity | ||||||||||||
Share surrendered for cancellation (Note13) | (2,200) | ¥ 2,200 | ||||||||||
Share-based compensation | 51,359 | 51,359 | ||||||||||
Re-designation of Class A ordinary shares into Class B ordinary shares (Note 13) | ¥ (25) | ¥ 25 | ||||||||||
Re-designation of Class A ordinary shares into Class B ordinary shares (Note 13) (in shares) | shares | (72,000,000) | 72,000,000 | ||||||||||
Issuance of ordinary shares upon initial public offering ("IPO"), net of issuance costs of RMB19,134 | ¥ 5 | 694,873 | 694,878 | |||||||||
Issuance of ordinary shares upon initial public offering ("IPO"), net of issuance costs of RMB19,134 (in shares) | shares | 15,969,110 | |||||||||||
Conversion of preferred shares into Class A ordinary shares upon IPO | ¥ 24 | 1,784,725 | 1,784,749 | |||||||||
Conversion of preferred shares into Class A ordinary shares upon IPO (in shares) | shares | 75,118,996 | |||||||||||
Net loss | (380,091) | (1,950) | (382,041) | |||||||||
Unrealized gains of available-for-sale securities, net of tax | 8,734 | 8,734 | ||||||||||
Reclassification of realized gains, net of tax | (10,869) | (10,869) | ||||||||||
Foreign currency translation | 21,658 | 21,658 | ||||||||||
Ending Balance at Dec. 31, 2018 | ¥ 29 | ¥ 25 | 2,540,878 | (1,383,729) | 67,073 | (512) | 1,223,764 | |||||
Ending Balance (in shares) at Dec. 31, 2018 | shares | 91,088,106 | 72,000,000 | 91,088,106 | 72,000,000 | ||||||||
Changes in shareholders' (deficit) equity | ||||||||||||
Share-based compensation | 54,281 | 54,281 | ||||||||||
Issuance of ordinary shares upon the exercise of stock options and vesting of restricted share units | ¥ 1 | 11,327 | 11,328 | |||||||||
Issuance of ordinary shares upon the exercise of stock options and vesting of restricted share units (in shares) | shares | 2,517,780 | |||||||||||
Repurchase of shares | ¥ (22,991) | (22,991) | ||||||||||
Repurchase of shares (in shares) | shares | (1,485,862) | 1,485,862 | ||||||||||
Net loss | (499,606) | (2,221) | $ (72,083) | (501,827) | ||||||||
Unrealized gains of available-for-sale securities, net of tax | 7,335 | 1,054 | 7,335 | |||||||||
Reclassification of realized gains, net of tax | (9,635) | (1,384) | (9,635) | |||||||||
Foreign currency translation | 11,668 | 1,676 | 11,668 | |||||||||
Ending Balance at Dec. 31, 2019 | ¥ 30 | ¥ 25 | ¥ (22,991) | ¥ 2,606,486 | ¥ (1,883,335) | ¥ 76,441 | ¥ (2,733) | $ 111,167 | ¥ 773,923 | |||
Ending Balance (in shares) at Dec. 31, 2019 | shares | 92,120,024 | 72,000,000 | 1,485,862 | 92,120,024 | 72,000,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Operating activities: | ||||
Net loss | $ (72,083) | ¥ (501,827) | ¥ (382,041) | ¥ (249,327) |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Share-based compensation | 7,797 | 54,281 | 51,359 | 9,921 |
Depreciation and amortization | 1,676 | 11,668 | 11,266 | 14,820 |
(Gain) loss on disposal of property and equipment | (1) | (5) | 1,110 | (10) |
Inventory provision | 113 | 790 | ||
Impairment loss | 1,580 | 11,000 | ||
Investment Income | (1,384) | (9,635) | (10,869) | |
Noncash lease expense | 3,648 | 25,394 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (5,268) | (36,678) | (8,171) | 7,990 |
Notes receivable | (3,388) | (23,587) | ||
Inventories | (39,677) | (276,225) | (66,780) | (9,322) |
Prepayments and other current assets | (6,818) | (47,457) | (56,329) | (7,459) |
Other non-current assets | 53 | 367 | (3,376) | |
Accounts payable | 33,336 | 232,076 | 84,118 | 30,157 |
Accrued expenses and other current liabilities | 10,684 | 74,376 | 28,560 | (1,142) |
Operating lease liabilities | (3,551) | (24,721) | ||
Other non-current liabilities | (316) | (2,199) | 8,135 | |
Net cash used in operating activities | (73,599) | (512,382) | (343,018) | (204,372) |
Investing activities: | ||||
Purchases of property and equipment | (2,877) | (20,030) | (14,443) | (6,798) |
Purchases of intangible assets | (658) | (4,580) | (376) | (62) |
Purchase of long-term investments | (140) | |||
Purchase of short-term investments | (86,328) | (601,000) | (519,187) | (109,380) |
Proceeds from sale or maturity of short-term investments | 123,977 | 863,106 | 578,359 | 80,198 |
Proceeds from disposition of property and equipment, net | 26 | 179 | 101 | 57 |
Net cash (used in) provided by investing activities | 34,140 | 237,675 | 44,454 | (36,125) |
Financing activities: | ||||
Proceeds from ordinary shareholders | 1,627 | 11,328 | 25 | |
Payments of share repurchase | (3,302) | (22,991) | ||
Proceeds from IPO, net of issuance cost | 694,878 | |||
Proceeds from short-term bank borrowings | 21,678 | 150,919 | ||
Repayment of short-term bank borrowings | (8,021) | (55,838) | ||
Net proceeds from other financing activities | 3,673 | 25,569 | ||
Proceeds from preferred shareholders | 277,819 | 49,475 | ||
Net cash provided by financing activities | 15,655 | 108,987 | 972,697 | 49,500 |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | 1,394 | 9,702 | 11,947 | (14,848) |
Net (decrease) increase in cash and cash equivalents, and restricted cash | (22,410) | (156,018) | 686,080 | (205,845) |
Cash and cash equivalents, and restricted cash at the beginning of the year | 122,632 | 853,740 | 167,660 | 373,505 |
Cash and cash equivalents, and restricted cash at the end of the year | 100,222 | 697,722 | 853,740 | 167,660 |
Supplemental disclosure of cash flow information: | ||||
Interest paid | 117 | 818 | ||
Income tax paid | 8 | |||
Supplemental disclosures of non-cash investing and financing activities: | ||||
Change in fair value of available-for-sale investments | 1,054 | 7,335 | 8,734 | 5,181 |
Purchases of property and equipment included in payables | $ 163 | ¥ 1,133 | ¥ 848 | ¥ 164 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES 111, Inc. (the "Company"), was incorporated under the laws of the Cayman Islands in May 2013. The Company, through its subsidiaries, variable interest entities ("VIEs") and VIE’s subsidiaries (collectively, the "Group"), operates an integrated online and offline platform in the healthcare ecosystem in China, whereby the Group is principally engaged in the sales of medical and wellness products through online retail and wholesale pharmacies and offline retail pharmacies, as well as provision of certain value-added services, such as online consultation services and e-prescription services to consumers in the People’s Republic of China (the "PRC"). The Group started to offer services in October 2012 through Guangdong Yihao Pharmacy Co., Ltd ("Yihao Pharmacy"), a consolidated VIE incorporated in the PRC and its subsidiaries which were acquired and controlled by the nominees of Dr. Gang Yu and Mr. Junling Liu (collectively, the "Founders") with each holding a 50% equity interest. In May 2013, the Company was incorporated by the Founders through their immediate family members, each maintaining identical ownership interests in Yihao Pharmacy. In September 2013, the Company, through its wholly owned subsidiary in PRC, entered into a series of contractual arrangements with Yihao Pharmacy and its nominee shareholders (see Note 2(b)) for a description of the VIE arrangements pursuant to which the Company and its subsidiary were established as the primary beneficiary of Yihao Pharmacy). As a result of these transactions entered into to accomplish the reorganization, there was no change in the economic ownership of the shareholders given Yihao Pharmacy and the Company had the same beneficial shareholders and identical interests prior to and after the reorganization, and as such, the reorganization lacked economic substance. Therefore, the Company accounted for these transactions akin to a reorganization of entities under common control. The reorganization was necessary to comply with the PRC law and regulations which restrict foreign ownership of companies engaged in providing internet content distribution services. In June 2016, the shareholding rights of the Company were transferred from the immediate family members to the Founders. As of December 31, 2019, the Group operates its business mainly through the following subsidiaries: Name of subsidiaries Date of Place of Percentage of Principal activities Yao Wang Corporation Limited ("Yao Wang") June 4, 2013 Hong Kong 100% Investment holding Yaofang Information Technology (Shanghai) Co., Ltd ("Yaofang" or "WFOE") August 12, 2013 Shanghai 100% Warehousing, logistics, research and development, and consulting Guangdong Yihao Pharmacy Co., Ltd. ("Yihao Pharmacy") March 7, 2003 Guangdong VIE Warehousing, logistics and procurement Guangdong Yihao Pharmaceutical Chain Co., Ltd. ("Yihao Pharmaceutical Chain") November 1, 2001 Guangdong VIE Retail Shanghai Yaowang E-commerce Co., Ltd. ("Shanghai Yaowang") January 15, 2013 Shanghai VIE Electronic Commerce Chengdu Yihao Pharmacy Co., Ltd. ("Chengdu Yihao Pharmacy") August 22, 2017 Chengdu VIE’s subsidiary Retail Anshun Southwest Internet Hospital Co., Ltd ("Southwest Internet Hospital" ) July 5, 2016 Anshun VIE’s subsidiary Internet hospital business Anshun Joint Diagnosis And Treatment Technology Co., Ltd ("Anshun Technology" ) February 8, 2017 Anshun VIE’s subsidiary Internet hospital business Wuhan Central China Drug Trading Co., Ltd. ("Wuhan Huazhong") August 5, 2015 Wuhan 70% Software development and information technology support Chongqing Yihao Pharmacy Co., Ltd.("Chongqing Yihao Pharmacy") May 18, 2018 Chongqing WFOE’s subsidiary Warehousing and logistics Tianjin Yihao Pharmacy Co., Ltd. ("Tianjin Yihao Pharmacy") June 20, 2018 Tianjin VIE's subsidiary Warehousing and logistics Kunshan Yifang Pharmacy Co., Ltd. ("Kunshan Yifang Pharmacy") July 30, 2018 Kunshan VIE's subsidiary Warehousing and logistics Hubei Yihao Pharmacy Co., Ltd (“Hubei Yihao Pharmacy”) Aug 31, 2019 Wuhuan WFOE's subsidiary Warehousing and logistics Fujian Yaofang Pharmacy Co.,Ltd (“Fujian Yaofang Pharmacy”) Aug 13, 2019 Fuzhou WFOE's subsidiary Warehousing and logistics |
SUMMARY OF PRINCIPAL ACCOUNTING
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (a) Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America ("US GAAP"). (b) Basis of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, VIEs and VIE’s subsidiaries for which the Company is the primary beneficiary. All intercompany transactions, balances and unrealized profit and losses have been eliminated upon consolidation. The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or the entity is structured with disproportionate voting rights, and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights. The Group is deemed as the primary beneficiary of and consolidates variable interest entities when the Group has the power to direct the activities that most significantly impact the economic success of the entities and effectively assumes the obligation to absorb losses or has the rights to receive benefits that are potentially significant to the entities. As a foreign-invested company engaged in Internet-based businesses, the Group is subject to significant restrictions under current PRC laws and regulations, specifically the Company and its PRC subsidiary, Yao Fang, as a wholly foreign owned enterprise ("WFOE"), are both restricted from holding the licenses that are necessary for the online operation in China. To comply with these restrictions, the Company conducts the online operations principally through Yihao Pharmacy. Yihao Pharmacy holds the licenses necessary to conduct the internet-related operations of 1 Drugstore and 1 Drug Mall in China. Since the Company does not have any equity interests in Yihao Pharmacy, in order to exercise effective control over its operations, the Company, through its wholly owned subsidiary, the WFOE, entered into a series of contractual arrangements with Yihao Pharmacy and its shareholders, pursuant to which the Company is entitled to receive effectively all economic benefits generated from Yihao Pharmacy shareholders’ equity interests in it. Details of the key agreements entered into between the WFOE, Yihao Pharmacy and each of its two individual shareholders nominated by the Founders ("Nominees") in September 2013 are as follows: The agreements that provide the Company effective control over the VIE include: Exclusive Option Agreement: Under the exclusive option agreement, the Nominees granted an irrevocable assets and equity option to WFOE, that entitles WFOE or its designated entity or individual to acquire all or a portion of the assets owned by Yihao Pharmacy and its subsidiaries and all the equity interests held by nominees in Yihao Pharmacy and its subsidiaries at its sole discretion, at zero price or the lowest price permitted under PRC laws then in effect. The option may be exercised by WFOE or its designee. The exclusive option agreement remains effective for the same period as the exclusive support service agreement. Proxy Agreement: Under the shareholder voting right proxy agreement, the Nominees irrevocably grant any person designated by WFOE the power to exercise all voting rights. This Agreement may not be terminated without the consent of WFOE, which may unilaterally terminate the agreement, by giving a thirty (30) day prior written notice to the Nominees. The proxy agreement remains in force for the same period as the exclusive support services agreement. The agreements that transfer economic benefits to the Company include: Equity Pledge Agreement: Under the equity pledge agreement, all of the equity interest in Yihao Pharmacy were pledged to WFOE to guarantee the performance of the obligations of Yihao Pharmacy and Nominees under the exclusive support services agreement, the proxy agreement, the exclusive option agreement, and repayment of all accounts payable to WFOE from time to time. If the Nominees or Yihao Pharmacy breach their respective contractual obligations, WFOE, as pledgee, will be entitled to certain rights, including the right to dispose the pledged equity interests. Pursuant to the equity pledge agreement, the Nominees shall not transfer, assign or otherwise create any new encumbrance on their respective equity interest in Yihao Pharmacy without the prior written consent of WFOE. The equity pledge right enjoyed by WFOE will expire when the Nominees and Yihao Pharmacy have fully performed their respective contractual obligations, including but not limited to pay services fees to the WFOE under the exclusive support services agreement, authorize the WFOE to act as its attorney-in fact to exercise shareholders’ rights of Nominees under the proxy agreements, grant exclusive option to the WFOE or any third party designated by WFOE to purchase all or part of their respective equity interests at the lowest price permitted by law under the exclusive option agreements, and repay all accounts payable to WFOE. Exclusive Support Service Agreement: Pursuant to the exclusive support service agreement, WFOE provides Yihao Pharmacy with a series of technical support services and is entitled to receive related fees. This agreement shall be in full force and effective until Yihao Pharmacy’s valid operation term as stated on business license expires. During the term of this agreement, WFOE shall be the exclusive provider of the services. Yihao Pharmacy shall not seek or accept similar services from other providers without the prior written approval of WFOE. The agreement will remain effective for ten years and will be automatically extended for another ten years thereafter, unless WFOE terminates the agreement or it is terminated in advance pursuant to other provisions of the agreement such as bankruptcy of one party or one party’s failure to perform its obligation for more than six consecutive months due to a force majeure event. In September 2019, exclusive support services agreements with each of the variable interest entities were amended, pursuant to which, the variable interest entities agree to pay service fees in an amount equivalent to the balance calculated as 3% of quarterly revenue (exclusive of revenue from related parties) of the variable interest entities on a quarterly basis. WFOE has the right to delay or waive payment of service fees at its discretion and the service fee level is subject to adjustment at any time upon mutual agreement between WFOE and the variable interest entities. Similar contractual agreements were also entered into by WFOE, Yihao Pharmaceutical Chain and Yao Wang, and their respective shareholders in September 2013 and September 2019. US GAAP provides guidance on the identification of VIE and financial reporting for entities over which control is achieved through means other than voting interests. The Group evaluates each of its interests in an entity to determine whether or not the investee is a VIE and, if so, whether the Group is the primary beneficiary of such VIE. In determining whether the Group is the primary beneficiary, the Group considers if the Group (1) has power to direct the activities that most significantly affect the economic performance of the VIE, and (2) receives the economic benefits of the VIE that could be significant to the VIE. If deemed the primary beneficiary, the Group consolidates the VIE. The irrevocable power of attorney has conveyed all shareholder rights held by the VIEs’ shareholders to WFOE, including the right to appoint board members who nominate the general managers of the VIEs to conduct day-to-day management of the VIEs’ businesses, and to approve significant transactions of the VIEs. In addition, the exclusive option agreements provide WFOE with a substantive kick-out right of the VIEs shareholders through an exclusive option to purchase all or any part of the shareholders’ equity interest in the VIEs at zero price or the lowest price permitted under PRC laws then in effect. In addition, through the exclusive support services agreements, the Company established the right to receive benefits from the VIEs that could potentially be significant to the VIEs, and through the equity pledge agreement, the Company has, in substance, an obligation to absorb losses of the VIEs that could potentially be significant to the VIEs. Risks in relation to the VIE structure The Group believes that the VIE arrangements are in compliance with PRC law and are legally enforceable. However, there are certain risks related to the VIE arrangements, which include but are not limited to the following: · If the Group’s ownership structure is found to be in violation of any existing or future PRC laws or regulations, the relevant governmental authorities, including the China Securities Regulatory Commission, would have broad discretion in dealing with such violation, including levying fines, confiscating its income or the income of the WFOE, Yao Fang, revoking the business licenses or operating licenses of the WFOE, shutting down the Group’s servers or blocking the Group’s websites, discontinuing or placing restrictions or onerous conditions on the Group’s operations, requiring the Group to undergo a costly and disruptive restructuring, restricting or prohibiting the Group’s use of various funding to finance its business and operations in China, and taking other regulatory or enforcement actions that could be harmful to the Group’s business; · The Group relies on contractual arrangements with the VIEs and their equity holders for a majority of its PRC operations, which may not be as effective as direct ownership in providing operational control; · The Group may have to incur significant cost to enforce, or may not be able to effectively enforce, the contractual arrangements with the VIEs and their equity holders in the event of a breach or non-compliance by the VIEs or their equity holders; · Under the contractual arrangements with the VIEs and their shareholders, (a) the Company may replace any such individual as a shareholder of the VIEs at the Company’s discretion, and (b) each of two individuals has executed a power of attorney to appoint the WFOE or its designated third party to vote on their behalf and exercise shareholder rights of the VIE. However, the Company cannot assure that these individuals will act in the best interests of the Company should any conflicts of interest arise, or that any conflicts of interest will be resolved in the Company’s favor. These individuals may breach or cause the VIE to breach the existing contractual arrangements. If the Company cannot resolve any conflicts of interest or disputes between the Company and any of these individuals, the Company would have to rely on legal proceedings, which may be expensive, time-consuming and disruptive to its operations. There is also substantial uncertainty as to the outcome of any such legal proceedings. The following amounts and balances of the VIEs were included in the Group’s consolidated financial statements after the elimination of intercompany balances and transactions: As of December 31, 2018 2019 Current Assets: Cash and cash equivalents 8,527 40,964 Restricted cash — 12,631 Accounts receivable, net 28,351 60,173 Notes receivable — 23,274 Inventories 210,285 389,195 Prepayments and other current assets 133,655 171,318 Total current assets 380,818 697,555 Property and equipment 9,962 15,599 Intangible assets, net 382 774 Long-term investments 11,140 140 Operating lease right-of-use assets — 67,103 Other non-current assets 1,446 2,078 Total assets 403,748 783,249 Current Liabilities: Short-term borrowings — (65,081) Accounts payable (211,954) (394,242) Accrued expenses and other current liabilities (50,356) (149,111) Total current liabilities (262,310) (608,434) Long-term operating lease liabilities — (47,750) Total liabilities (262,310) (656,184) Year Ended December 31, 2017 2018 2019 Net revenues 959,153 1,785,757 3,302,818 Total cost and expenses (930,567) (1,809,656) (3,383,187) Net income (loss) 28,586 (23,899) (80,369) Year Ended December 31, 2017 2018 2019 Net cash used in operating activities (124,409) (112,425) (263,750) Net cash used in investing activities (54) (7,308) (4,684) Net cash provided by financing activities — — 87,892 The VIEs contributed approximately 99%, 99% and 84%of the Group’s consolidated revenues for each of the years ended December 31, 2017, 2018 and 2019. As of December 31, 2018 and 2019, the VIEs accounted for an aggregate of approximately 26% and 49%, respectively, of the consolidated total assets, and approximately 81% and 78%, respectively, of the consolidated total liabilities. Since September 2013, WFOE started paying advertising fees and marketing fees to external suppliers for the VIEs and recharges all or portion of these expenses to the VIEs at cost given that VIEs are in a loss position. The advertising fees and marketing fees charged by WFOE were RMB 162,844, RMB 79,742 and RMB 126,831 for the years ended December 31, 2017, 2018 and 2019, respectively. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to its VIEs through loans to the shareholders of the VIEs or entrustment loans to the VIEs. The Group believes that there are no assets held in the consolidated VIE that can be used only to settle obligations of the VIEs, except for registered capital and the PRC statutory reserves. As the consolidated VIE is incorporated as a limited liability company under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the consolidated VIE. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of their statutory reserve and their share capital, to the Company in the form of loans and advances or cash dividends. (c) Use of estimates The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Areas where management uses subjective judgment include estimating inventory write-down, collectability of receivables, the useful lives of long-lived assets, assessing the impairment of long-term investments and long-lived assets, valuation of ordinary share, share-based compensation expenses, recoverability of deferred tax assets, sales return and the fair value of the financial instruments. Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates. (d) Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased. (e) Restricted cash Restricted cash mainly represents the Group's deposits to the bank as a form of security with respect to the Group's debt. The cash held as deposits in the bank are not available to fund the general operating purposes of the Group. (f) Short-term investments Short-term investments include wealth management products, which are certain financial products with variable interest rates purchased from certain financial institutions with an original maturity period of less than one year. The Group classifies the wealth management products as "available-for-sale" debt securities. These investments are recorded at fair market value with the unrealized gains or losses recorded in accumulated other comprehensive income (loss) as a component of shareholders’ (deficit) equity. The assessment of impairment of short-term investments is based on whether the decline in fair value is other-than-temporary. The Group assesses its available-for-sale debt securities for other-than-temporary impairment by considering factors including, but not limited to, its ability and intent to hold the individual security, severity of the impairment, expected duration of the impairment and forecasted recovery of fair values. If the Group determines a decline in fair value is other-than-temporary, the cost basis of the individual security is written down to fair value as a new cost basis and the amount of the write-down is accounted for as a realized loss charged in the consolidated statement of income and comprehensive income. The fair values of the investments would not be adjusted for subsequent recoveries in fair values. There was no impairment on available-for-sale debt securities for the years ended December 31, 2017, 2018 and 2019. (g) Accounts receivable, net Accounts receivable mainly consists of amounts receivable from product delivery service providers and payment processing service providers, which are recognized and carried at the original invoice amount less an allowance for doubtful accounts. The Group establishes an allowance for doubtful accounts primarily based on the age of the receivables and factors surrounding the credit risk of specific customers. (h) Inventories Inventories, consisting of products available for sale, are accounted for using the weighted average cost method, and are valued at lower of cost or the net realizable value. Adjustments are recorded to write down the cost of inventory to the estimated market value due to slow-moving or damaged products, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. Write-downs are recorded in cost of products sold in the consolidated statements of comprehensive loss. (i) Property and equipment Property and equipment are stated at cost less accumulated depreciation and impairment. The renovations, betterments and interest cost incurred during construction are capitalized. Property and equipment are depreciated at their costs less impairment and residual value, if any, over the estimated useful lives on a straight-line basis. The estimated useful lives are as follows: Leasehold improvements Shorter of the lease term or their estimated useful lives Furniture, fixtures and equipment 3 years Electronic equipment 3 years Vehicles 5 years Construction in progress represents leasehold improvements under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use. Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of comprehensive loss as the difference between the net sales proceeds and the carrying amount of the underlying asset. There was no interest cost capitalized during the years ended December 31, 2017, 2018 and 2019. (j) Intangible assets Intangible assets mainly consist of externally purchased software and licenses. Software are amortized over an estimated useful life of ten years on a straight-line basis. Licenses are amortized over the remaining estimated useful life on a straight-line basis. (k) Impairment of long-lived assets Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. For the years ended December 31, 2017, 2018 and 2019, there was no impairment of the Group’s long-lived assets. (l) Long-term investments The Group measures its equity securities without a readily determinable fair value at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As of December 31, 2018 and 2019, long-term investments were RMB 11,140 and 140, respectively. The Group is required to perform an impairment assessment of its investments whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. An impairment loss is recognized in the consolidated statements of comprehensive loss equal to the excess of the investment’s cost over its fair value when the impairment is deemed other-than-temporary. (m) Revenue recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014‑09, "Revenue from Contracts with Customers ("ASC 606"). This standard replaced existing revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. The ASU also includes guidance regarding the accounting for contract acquisition costs, which includes sales commissions. The Group has early adopted ASC 606 and all subsequent ASUs that modified ASC 606 on January 1, 2017 using the full retrospective method which requires the Group to present its financial statements for all periods as if Topic 606 had been applied to all prior periods. The Group follows five steps for its revenue recognition under ASC 606: · Step 1: Identify the contract (s) with a customer · Step 2: Identify the performance obligations in the contract · Step 3: Determine the transaction price · Step 4: Allocate the transaction price to the performance obligations in the contract · Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Group’s revenue is reported net of discount, value added tax and related surcharges. The primary sources of the Group’s revenues are as follows: Product Revenues The Group recognizes revenues from the sale of medicines, healthcare products and other wellness merchandise through its online platforms, including its internet website 1 Drugstore, cellular phone application, other online channels and its offline pharmacies, mainly to consumers and certain enterprises (the "B2C Business"). The Group also generates revenues from the sale of medicines to its pharmacy customers through the online platform 1 Drug Mall (the "B2B Business"). Under both B2C Business and B2B Business, revenues from product sales are recognized at the point in time when the delivery is made and when title and risk of loss transfers to the consumers and pharmacy customers. Revenues are measured as the amount of consideration the Group expects to receive in exchange for transferring products to consumers and pharmacy customers ("transaction price"). To the extent that the transaction price includes variable consideration, the Group estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method. Variable consideration is included in the transaction price if, in the Group’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Group provides the right of return in circumstances when there is packing or delivery damage or other quality problems identified within 30 days which is considered to be a form of variable consideration. The Group estimates sales returns based on historical experience and based on such, the amount of sales returns accrual was insignificant as of December 31, 2018 and 2019. The Group voluntarily provides discount coupons through its websites during its marketing activities. These coupons are not related to prior purchases, and can only be utilized in conjunction with subsequent purchases on the Group’s platforms. The coupons are recorded as a reduction of revenue at the time of use. Under both B2B and B2C Businesses the Group utilizes delivery service providers to deliver products to its consumers and pharmacy customers ("shipping activities") but the delivery service is not considered as a separate obligation as the shipping activities are performed before the consumers and pharmacy customers obtain control of the products. Therefore, shipping activities are not considered a separate promised service to the consumers and pharmacy customers, but rather are activities to fulfill the Group’s promise to transfer the products and are recorded as fulfillment expenses. Product revenues are recorded net of surcharges and value added tax ("VAT") ranging from 0% to 17% for different kinds of products based on the sales amount. Surcharges are sales related taxes representing the City Maintenance and Construction Tax and Education Surtax. The Group records revenues on a gross basis because the Group controls the products before they are transferred to the consumers and pharmacy customers determined on the basis that: (1) the Group is primarily responsible for fulfilling its promise to deliver the specified products to consumers and pharmacy customers; (2) the Group has inventory risk before the specified products are transferred to a consumers and pharmacy customers or after transfer of control to the consumers and pharmacy customers, and (3) the Group has discretion in establishing the price for the specified products. Service revenues Service revenues primarily consist of fees charged to third-party marketplace sellers for whom the Group acts as an agent to facilitate the marketplace sellers’ online sales of their products through the online platforms 1 Drugstore and 1 Drug Mall, which is referred to as marketplace service ("MP") revenue. The Group has determined it is not the principal in the arrangement as it is not responsible to fulfill the order for the specified products, it does not bear the inventory risk for the products, nor does it have the ability to establish prices. The Group charges the marketplace sellers commission fees equal to an agreed percentage of the sales price of the product when a sale is completed and also charges market place sellers an annual non-refundable up-front fee for platform usage. The promise to the customer, which is the marketplace seller, is to arrange for the sale which is considered as one performance obligation. Therefore, the Group recognizes the up-front fee and commission at the point in time when the sale is completed. (n) Cost of products sold Cost of products sold consists of the purchase price of products and inbound shipping charges. The Group periodically receives rebates from certain vendors in the form of cash or credits that the Group can apply against trade amounts owed to vendors pursuant to a binding arrangement only if the Group completes a specified cumulative level of purchases within a specified time period. The rebates do not represent a payment for assets or services delivered to the vendor or a reimbursement of costs incurred by the Group to sell vendors’ products. The Group accounts for the rebates received from its vendors as a reduction to the price the Group pays for the products purchased and therefore records such amounts as a reduction of cost of products sold when recognized in the consolidated financial statements. Rebates are earned based on reaching minimum purchase thresholds within a specified period, typically on a fiscal quarterly or annual basis. Cost of products does not include other direct costs related to cost of product sales such as shipping and handling expense, payroll and benefits of logistics staff, logistics centers rental expenses and depreciation expenses. Therefore, the Group’s cost of products sold may not be comparable to other companies which include such expenses in their cost of products. (o) Fulfillment expenses Fulfillment expenses primarily consist of payroll, bonus and benefits of logistics staff, logistics centers rental expenses, shipping and handling expenses, and packaging expenses. (p) Selling and marketing expenses Selling and marketing expenses primarily consist of payroll, bonus and benefits of sales and marketing staff, advertising costs, agency fees and costs for promotional materials. Advertising expenses are charged to the statements of comprehensive loss in the period incurred. The amounts of advertising expenses incurred were RMB62,749, RMB30,221 and RMB30,447 for the years ended December 31, 2017, 2018 and 2019, respectively. (q) Technology expenses Technology expenses primarily consist of technology infrastructure expenses, payroll, bonus and benefits of the employees in technology and system department as well as costs associated with the computer, storage and telecommunications infrastructure for internal use and enhancement to the Group's websites and platform applications. For internal and external use software, the Group expenses all costs incurred for the preliminary project stage and post implementation-operation stage of development, and costs associated with repair or maintenance of the existing platform. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life. The amount of the Group’s technology expenses qualifying for capitalization has been insignificant, and as a result, all development costs incurred for development of internal used software have been expensed as incurred. (r) General and administrative expenses General and administrative expenses primarily consist of payroll, bonus and benefit costs for corporate employees, legal, finance, rental expenses and other corporate overhead costs. (s) Government grants Government grants represent rewards provided by the relevant PRC government authorities to the Group for tax refunds and support for investment in certain local districts, which are typically granted based on the amount of investments the Group made as well as income generated by the Group in such districts. Such subsidies allow the Group full discretion to utilize the funds and are used by the Group for general corporate purposes. Normally, the Group does not receive written confirmation from local governments indicating the approval of the cash subsidy before cash is received, and therefore cash subsidies are recognized when received and when all the conditions for their receipts have been satisfied. Government grants recognized were RMB3,282, RMB2,166 and RMB358 for the years ended December 31, 2017, 2018 and 2019, respectively, which were recorded in other operating income (expenses), net. (t) Income Taxes Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Group is required to estimate its income taxes in each of the jurisdictions in which it operates. The Group accounts for income taxes using the liability method. Under this method, deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income. Deferred tax assets are reduced by a valuation allowance when, based upon the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. (u) Value ad |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2019 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 3. SHORT-TERM INVESTMENTS Short-term investments as of December 31, 2018 and 2019 were as follows: As of December 31, 2018 2019 Wealth Management Products 252,805 — The Group classifies the wealth management products as "available-for-sale" debt securities which are recorded at fair value. For the years ended December 31, 2017, 2018 and 2019, the Group recorded RMB5,181, RMB8,734 and RMB 7,335 increase in fair value of these available-for-sale debt securities, net of tax, in other comprehensive income (loss), respectively, and RMB1,154, RMB10,869 and RMB 9,635 of realized gains transferred from other comprehensive income to other income when the security was sold. No impairment charges were recorded for the years ended December 31, 2017, 2018 and 2019, respectively. |
NOTES RECEIVABLE
NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
NOTES RECEIVABLE | |
NOTES RECEIVABLE | 4. NOTES RECEIVABLE As of December 31, 2019, the total note receivable balance was RMB 23,587 and among which RMB 14,264 were pledged as collateral for short-term borrowings (see Note 10). |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES | |
INVENTORIES | 5. INVENTORIES Inventories as of December 31, 2018 and 2019 were as follows: As of December 31, 2018 2019 Products 210,836 486,271 Write-downs of nil and RMB 790 has been made to the inventories as of December 31, 2018 and 2019, respectively. |
PREPAYMENT AND OTHER CURRENT AS
PREPAYMENT AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
PREPAYMENT AND OTHER CURRENT ASSETS | |
PREPAYMENT AND OTHER CURRENT ASSETS | 6 . PREPAYMENT AND OTHER CURRENT ASSETS Prepayment and other current assets, as of December 31, 2018 and 2019 were as follows: As of December 31, 2018 2019 Value added tax recoverable 70,908 112,362 Rebate receivable from suppliers 58,827 57,749 Deposits (Note) 11,602 8,831 Advance to suppliers 3,315 14,807 Prepaid IT & Insurance expense 5,034 7,249 Interest receivable 2,124 612 Others 9,337 6,994 Total 161,147 208,604 Note: Deposits consist of amounts paid to certain vendors for advertising and rentals utilized within one year. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 7. PROPERTY AND EQUIPMENT Property and equipment consists of the following: As of December 31, 2018 2019 Cost: Leasehold improvements 34,147 42,858 Electronic equipment 18,730 22,373 Furniture, fixtures and equipment 8,566 15,426 Vehicles 595 898 62,038 81,555 Less: Accumulated depreciation (41,736) (51,719) 20,302 29,836 Construction in progress — — Property and equipment, net 20,302 29,836 Depreciation expense was RMB14,203, RMB10,643 and RMB10,607 for the years ended December 31, 2017, 2018 and 2019, respectively. |
LONG-TERM INVESTMENTS
LONG-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2019 | |
Long-term investments | |
LONG-TERM INVESTMENTS | 8. LONG-TERM INVESTMENTS Long-term investments as of December 31, 2018 and 2019 were as follows: As of December 31, 2018 2019 Equity securities without a readily determinable fair value: Xixi 11,000 — Longyan Huiyuan 140 140 Total 11,140 140 In June 2015, the Group purchased 5.21% equity interest in Shanghai Xixi Maternal and Baby Care Service Co., Ltd. ("Xixi") at the consideration of RMB11,000. In September 2017, the Group purchased 1% equity interest in Longyan Huiyuan Pharmacy Co., Ltd. ("Longyan Huiyuan") at the consideration of RMB140. The Group measures its equity securities without a readily determinable fair value at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Nil, nil and RMB 11,000 impairment was recorded for the Group's long-term investments for the years ended December 31, 2017, 2018 and 2019. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | 9. LEASES The Group has operating leases for offices and warehouses. The Group recognized ROU assets of RMB 87,855, and corresponding current liabilities of RMB 31,099 in accrued expense and other current liabilities, and long-term operating lease liabilities of RMB 57,011, as of December 31, 2019. The weighted average remaining lease term was approximately 3.5 years (between 1 and 10 years) as of December 31, 2019, and the weighted average discount rate was 5.6% for the year ended December 31, 2019. Total lease expense related to short-term leases was insignificant for the year ended December 31, 2019. Lease expenses were RMB 23,871, RMB 27,089 and RMB 29,715 for the year ended December 31, 2017, 2018 and 2019. The maturities of lease liabilities in accordance with Leases (Topic 842) in each of the next five years and thereafter as of December 31, 2019 were as follows: Year Ending December 31, 2020 34,948 2021 24,091 2022 15,668 2023 10,807 2024 7,208 Thereafter 4,292 Total lease payment 97,014 Less: imputed interest (8,984) Present value of minimum operating lease payments 88,030 Cash paid for amounts included in the measurement of operating lease liabilities for the year ended 31, December 2019 were RMB 29,042. Right-of-use assets obtained in exchange for the operating lease liabilities in non-cash transactions for the year ended 31, December 2019 were RMB 50,841. The undiscounted future minimum payments under non-cancelable operating leases as of December 31, 2018, prior to the adoption of the Lease ASUs was as follows: Year Ending December 31, 2019 30,443 2020 27,496 2021 14,322 2022 8,299 2023 7,835 Thereafter 16,509 Total lease payment 104,904 |
SHORT-TERM BORROWINGS
SHORT-TERM BORROWINGS | 12 Months Ended |
Dec. 31, 2019 | |
SHORT-TERM BORROWINGS | |
SHORT-TERM BORROWINGS | 10. SHORT-TERM BORROWINGS Short-term borrowings were nil and RMB 95,081 as of December 31, 2018 and 2019, respectively, which consisted of borrowings from financial institutions. All of these borrowings were repayable within one year. In December 2018, certain subsidiaries of the Group entered into a revolving credit facility that allows the Group to borrow up to RMB 500,000 for working capital purpose which will expire in two years. Any draw down on the credit facility will mature within 6 months. Cash deposits or notes receivable are required to be pledged for any draw down. As of December 31, 2018, no amounts had been drawn on the line of credit facility. During the year ended December 31, 2019, RMB 112,334 were drawn down and RMB 47,253 were repaid with the balance of RMB65,081 outstanding as of December 31, 2019. As of December 31, 2019, RMB 116,441 restricted cash deposits and RMB 14,264 notes receivable were pledged to the bank. The weighted average interest rate for the borrowings in 2019 was approximately 4.35 % per annum. In September 2019, Yaofang entered into a credit agreement which provides a revolving credit facility that allows Yaofang to borrow up to RMB 100,000 for working capital purpose in one year. Any draw down on the credit facility will be charged with interest at six-month loan prime rate published by People's Bank of China. The borrowings were guaranteed by Yihao Pharmacy. During the year ended 2019, RMB 38,585 were drawn down and RMB 8,585 were repaid with the balance of RMB30,000 outstanding as of December 31, 2019. The weighted average interest rate for the borrowings in 2019 was approximately 4.35 % per annum. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities as of December 31, 2018 and 2019 were as follows: As of December 31, 2018 2019 Accrued advertising expense 10,492 4,551 Salary and welfare payables 25,042 28,579 Accrued fulfillment expenses 8,891 14,378 Accrued delivery service fees 7,153 16,255 Payable to marketplace sellers (note 1) 10,510 15,444 Deposits from marketplace sellers 6,015 11,311 Advance from customers 15,489 63,456 Tax Payables 2,466 2,691 Current portion of operating lease liabilities — 31,099 Other financing payable (note 2) — 25,569 Others 16,203 20,675 Total 102,261 234,008 Note 1: Amounts relate to cash collected on behalf of marketplace sellers for products sold through the Group’s online platform. Note 2: Starting in 2019, the Group entered into a series of agreements with a third party financing company, pursuant to which the third party financing company will provide credit to certain B2B customers who chose to participate. Under the terms of the agreement, the financing company will make an advance payment of a majority of a B2B customer's order to the Group. Credit terms to the customer are typically 30 days. Customers are required to pay the amount owed to the Group when it is due, and the Group will normally repay the money to the financing company on the same day. The balance represents the advances to Group which are outstanding as of December 31, 2019. |
OTHER NON-CURRENT LIABILITIES
OTHER NON-CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
OTHER NON-CURRENT LIABILITIES | |
OTHER NON-CURRENT LIABILITIES | 12. OTHER NON-CURRENT LIABILITIES As of December 31, 2018 2019 ADR Reimbursement (note) 8,135 5,936 Note: According to the American Depositary Receipts (the “ADR”) arrangements signed in August 2018, the Group has the right to receive reimbursements as a return for using Depositary Bank’s services, subject to compliance by the Group with the terms of the agreement. The Group performed a detailed assessment of the requirements and recognizes the reimbursements it is expected to be entitled to over the five-year contract term. RMB 663 and RMB 2,199 was recorded in other income for the year ended December 31, 2018 and 2019, respectively. RMB 5,936 was recorded in other non-current liabilities and RMB 2,199 representing the current portion was recorded in accrued expenses and other current liabilities s of December 31, 2019. |
ORDINARY SHARES
ORDINARY SHARES | 12 Months Ended |
Dec. 31, 2019 | |
ORDINARY SHARES | |
ORDINARY SHARES | 13. ORDINARY SHARES As of December 31, 2017, the authorized shares consist of 72,000,000 Class A ordinary shares, 839,209,895 Class B ordinary shares, and 13,671,109 Class C ordinary shares. In 2015 and 2016, the Group issued total of 1,607,901 Class C Ordinary Shares to Gold Prized Investment Limited (‘‘Gold Prized’’) to establish a reserve pool for future issuance of equity share incentive to the Group’s employees. While these ordinary shares were legally issued to Gold Prized, the voting rights and associated economic rights remained with the Group. As such, none of these ordinary shares were considered to be granted under the incentive plan, and the Company accounted for these shares as issued but not outstanding. In June 2018, Gold Prized irrevocably surrendered these 1,607,901 Class C ordinary shares (“Surrendered Shares”) registered under its name to the Group resulting in the cancellation of the related subscription receivable of RMB2,200, which has no effect on the Group’s total (deficit) equity amount. The Surrendered Shares were cancelled with effect from June 2018 and the Company reserved those shares in the authorized share capital to be issued pursuant to the Plan. In September 2018, with the effective of the revised Articles of Association, the Company’s authorized share capital was changed to US$50 divided into 1,000,000,000 shares comprising (i) 800,000,000 Class A ordinary shares of a par value of US$0.00005 each, (ii) 72,000,000 Class B ordinary shares of a par value of US$0.00005 each and (iii) 128,000,000 shares of a par value of US$0.00005 each of such class or classes as Company’s board of directors may determine. All 72,000,000 issued and outstanding Class A ordinary shares beneficially owned by Dr. Gang Yu and Mr. Junling Liu were re-designated as Class B ordinary shares, and all other issued and outstanding shares were re-designated as Class A ordinary shares. Each Class A ordinary share entitles the holder to one vote, and each Class B ordinary share entitles the holder to fifteen votes on all matters subject to the vote at general meetings of the Company. . In September 2018, 75,118,996 preferred shares were converted into Class A ordinary shares and the Company issued 15,969,110 Class A ordinary shares with the completion of the IPO. On January 25, 2019, 5,500,000 Class A ordinary shares were issued to the Company's depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise of stock options or vesting of restricted stocks under the 2013 Share Incentive Policy, 2014 Share Incentive Policy, 2016 Share Incentive Plan and 2018 Share Incentive Plan (together, the "Plans"). As of December 31, 2019, 2,517,780 Class A ordinary shares are issued and outstanding upon the exercise of stock options and vesting of restricted stocks, and 2,982,220 Class A ordinary shares are deemed issued but not outstanding as they have not been transferred to grantees. |
NET REVENUE
NET REVENUE | 12 Months Ended |
Dec. 31, 2019 | |
NET REVENUE | |
NET REVENUE | 14. NET REVENUE Disaggregation of revenues All of the Group’s revenues for the years ended December 31, 2017, 2018 and 2019 were generated within the PRC. The following table illustrates the disaggregation of the Group’s revenue streams by type of customers and nature of services the Group offered: Year Ended December 31, 2017 2018 2019 Product Revenues 949,217 1,770,227 3,929,698 B2C Business 862,327 847,476 763,254 B2B Business 86,890 922,751 3,166,444 Service Revenues 10,269 15,743 22,355 MP Service 8,767 12,375 17,239 Other Services 1,502 3,368 5,116 Total 959,486 1,785,970 3,952,053 Contract balance The typical contract term of MP service is no more than one year and the remaining unsatisfied performance obligation as of December 31, 2018 and 2019 was insignificant. In some arrangements from which product revenue is generated, the Group receives advance payments from consumers and pharmacy customers before the product is delivered, which is recorded as advance from customers included in the accrued expenses and other current liabilities on the consolidated balance sheet. The movements of the Group’s accounts receivable and advances from customers are as follows: Accounts Advances from Receivable Customers Opening Balance as of January 1, 2018 20,398 11,722 Increase/(decrease), net 8,171 3,767 Ending Balance as of December 31, 2018 28,569 15,489 Increase/(decrease), net Ending Balance as of December 31, 2019 Revenue amounted RMB11,722 and RMB15,489 were recognized in the years ended December 31, 2018 and 2019, respectively that were included in the balance of advance from customers at the beginning of the each year. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 15. SHARE-BASED COMPENSATION In September 2013, the Board of Directors of the Company approved an Equity Incentive Plan (the ‘‘Plan’’), under which, the Board of Directors may grant options to purchase ordinary shares to officers and directors, employees and individual advisors who render services to the Group to purchase an aggregate of no more than 1,287,500 ordinary shares of the Group (‘‘Option Pool’’). From 2014 to 2019, the Board of Directors approved to increase the Option Pool to 15,301,990 ordinary shares. Employee Share options During the years ended December 31, 2017, 2018 and 2019, options to purchase 2,303,900, 5,296,204 shares and 1,063,293 shares respectively, were granted to the Group’s employees. The weighted-average grant-date exercise price of the options granted to employees in 2017, 2018 and 2019 was US$1.84, US$2.17 and US$4.12 per share, respectively. The options granted have a contractual term of 10 years and generally vest over a four-year period, with two typical vesting schedules: (1) 40% of the awards vesting one year after the grant date, with the remaining 60% of the awards vesting evenly on an annual basis over the 3 years thereafter; or (2) 25% of the awards vesting on the anniversary of the grant date each year. The Black Scholes model was applied in determining the estimated fair value of the options granted. The model requires the input of highly subjective assumptions. The following table presents the assumptions used to estimate the fair values of the share options granted for the years ended December 31, 2017, 2018 and 2019: 2017 2018 2019 Risk-free rate of return 1.31%~1.76% 2.01%~2.63% 1.68%~2.63% Contractual life of option 10 years 10 years 10 years Estimated volatility rate 25% 27%~38% 30%~41% Dividend yield Nil Nil Nil Fair value per ordinary share US$5.89~$7.30 US$3.00 ~$9.51 US$2.37 ~$3.40 The weighted-average grant-date fair value of the options granted in 2017, 2018 and 2019 is US$3.98, US$5.69 and US$0.49 per share, respectively. A summary of employee option activity under the Plan during the years ended December 31, 2018 and 2019 is presented below: Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic Options price term value US$ Years US$ Outstanding at January 1, 2017 3,461,650 1.00 8.46 3,843 Granted 2,303,900 1.84 Forfeited (1,866,225) 1.56 Outstanding at December 31, 2017 3,899,325 1.22 7.98 7,970 Granted 5,296,204 2.17 Forfeited (304,900) 1.96 Outstanding at December 31, 2018 8,890,629 1.76 8.28 36,888 Granted 4.12 Forfeited (2,086,050) 1.99 Exercised (1,962,484) 0.76 Outstanding at December 31, 2019 5,905,388 22,807 Vested and Exercisable as of December 31, 2019 1,960,367 1.87 7,151 Vested or expected to vest as of December 31, 2019 5,905,388 2.44 22,807 Non-Employee Share options At January 1, 2017, options to purchase 1,045,962 shares were outstanding with weighted average exercise price of US$1.00 and 975,962 options have been vested. During the years ended December 31, 2017, 2018 and 2019, options to purchase 25,625 shares, 35,000 shares and nil shares respectively, were issued to individual advisors who are non-employees of the Group, all with an exercise price of US$1.99. Options totaling 254,068 were exercised in year 2019. The options were issued in payment for their consultation services which was expected to be performed over 4 years from the date of issuance. As services are performed, 25% of the awards vest on the anniversary of the grant date each year. The estimated fair value of the awards were determined using the Black Scholes model with the same assumptions used in employee share options. As of December 31, 2019, 852,519 options were outstanding of which, 810,957 are vested and exercisable and the remainder are expected to vest. Restricted share units The fair value of restricted share units with service conditions or performance conditions is based on the fair market value of the underlying ordinary shares on the date of grant. In 2019, the Group granted 3,050,427 restricted share units and vest over a four-year period that 25% of the awards vesting on the anniversary of the grant date each year. The following table summarized the Group's restricted share unit activity in 2019. Number of Weighted Average Grant Date Restricted Stocks Fair Value US$ Restricted share units outstanding at January 1, 2019 — — Granted 3,050,427 3.90 Forfeited (195,200) 3.10 Vested (301,228) 4.60 Restricted share units outstanding at December 31, 2019 2,553,999 3.88 Share-based compensation for all share options The Group recorded share based compensation expense of RMB 9,921, RMB 51,359 and RMB 54,281 for the years ended December 31, 2017, 2018 and 2019, respectively, which were classified in the accompanying consolidated statements of operations as follows: Year Ended December 31, 2017 2018 2019 RMB RMB RMB General and administrative expenses 5,176 22,477 25,412 Selling and marketing expenses 3,674 23,561 24,772 Technology and content expenses 1,071 5,321 4,097 Total 9,921 51,359 54,281 As of December 31, 2019, there was RMB 137,361 of total unrecognized compensation expense related to unvested share options. That cost is expected to be recognized over a weighted-average period of 2.4 years. |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
LOSS PER SHARE | |
LOSS PER SHARE | 16. LOSS PER SHARE The following table sets forth the computation of basic and diluted loss per share for the years indicated: Year Ended December 31, 2017 2018 2019 Net loss attributable to ordinary shareholders (248,580) (380,091) (499,606) Weighted average number of ordinary shares-basic and diluted 72,000,000 99,451,210 163,671,577 Net loss per share-basic and diluted (3.45) (3.82) (3.05) As of December 31, 2017, the Company issued 4,200,000 Series A convertible preferred shares, 11,396,178 Series B convertible preferred shares, 31,739,234 Series C convertible preferred shares and 27,783,584 Series D convertible preferred shares to preferred shareholders. In September 2018, all these preferred shares were converted into Class A ordinary shares with the completion of the IPO. The Group has determined that its convertible Preferred Shares are participating securities as the Preferred Shares participate in undistributed earnings on an as-if-converted basis. The holders of the Preferred Shares are entitled to receive dividends on a pro rata basis, as if their shares had been converted into ordinary shares. Accordingly, the Group uses the two-class method of computing net earnings per share, for ordinary and Preferred Shares according to participation rights in undistributed earnings. However, undistributed net loss is only allocated to ordinary shareholders because holders of Preferred Shares are not contractually obligated to share losses. As a result of the Group’s net loss for the three years ended December 31, 2017, 2018 and 2019, Series A, B, C and D Preferred Shares and share options outstanding in the respective periods were excluded from the calculation of diluted loss per share as their inclusion would have been anti-dilutive. Year Ended December 31, 2017 2018 2019 Series A Preferred Shares 4,200,000 — — Series B Preferred Shares 11,396,178 — — Series C Preferred Shares 31,739,234 — — Series D Preferred Shares 27,783,584 — — Share options 5,010,912 9,997,216 9,311,906 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | 17. INCOME TAXES Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Hong Kong Yao Wang is subject to Hong Kong profit tax at a rate of 16.5%. No Hong Kong profit tax has been provided as the Group has not had assessable profit that was earned in or derived from Hong Kong during the years presented. PRC Under the Law of the People’s Republic of China on Enterprise Income Tax ("EIT Law"), domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of 25%. High-technology enterprises may obtain a preferential tax rate of 15% provided they meet the related criteria. In December 2019, Yaofang received approval from certain government authorities to be classified as a "High and New Technology Enterprise" ("HNTE") and became subject to a 15% statutory tax rate, effective January 1, 2019. The HNTE qualification is valid for three years through 2021. There is no provision for income taxes because the Company and all of its owned subsidiaries are in cumulative loss positions for all the periods presented. A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows: Year Ended December 31, 2018 2019 PRC statutory tax rate 25 % 25 % Tax effect of other expenses that are not deductible in determining taxable profit (9) % (3) % Effect of changing tax rate due to high-tech enterprise qualification — (11) % Effect of enacted tax rate change — 5 % Effect of change in valuation allowance (16) % (16) % Effective tax rate 0 % 0 % The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2018 and 2019 are as follows: As of December 31, 2018 2019 Deferred tax assets: Net loss carryforward 256,850 337,214 Deductible advertising expense 17,964 19,613 Accrued expenses and payroll payable 12,399 10,805 Others 88 890 Valuation allowance (287,301) (368,522) Total deferred tax assets — — Deferred tax liabilities: Total deferred tax liabilities — — As of December 31, 2018 and 2019, valuation allowance of RMB287,301 and RMB368,522 was provided, respectively. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carryforward periods provided for in the tax law. As of December 31, 2019, the Group had tax loss carryforwards of RMB 1,462,175 which will expire between 2020 and 2024 if not used. The Group determines whether or not a tax position is "more-likely-than-not" of being sustained upon audit based solely on the technical merits of the position. The Group does not anticipate any significant changes to its liability for unrecognized tax benefits within the next 12 months. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of income taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined, but an underpayment of income tax liability exceeding RMB100 is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The Group’s PRC subsidiaries are therefore subject to examination by the PRC tax authorities from 2014 through 2019 on non-transfer pricing matters, and from 2010 through 2019 on transfer pricing matters. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS The table below sets forth the related party and its relationship with the Group Name of related party Relationship with the Group Zhejiang Youzhan Information Technology Co., Ltd. Entity controlled by Chief Operating Officers of the Group In September 2018, the Group purchased electronic equipment RMB157 from Zhejiang Youzhan Information Technology Co., Ltd., and there were no similar purchases occurred in 2019. The following table presents amounts owed from related parties as of December 31, 2018 and 2019: As of December 31, 2018 2019 Accrued expenses and other current liabilities 157 — |
MAINLAND CHINA CONTRIBUTION PLA
MAINLAND CHINA CONTRIBUTION PLAN | 12 Months Ended |
Dec. 31, 2019 | |
MAINLAND CHINA CONTRIBUTION PLAN | |
MAINLAND CHINA CONTRIBUTION PLAN | 19. MAINLAND CHINA CONTRIBUTION PLAN Full time employees of the Group in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Group to accrue for these benefits based on a certain percentage of the employees’ salaries. The total contribution for such employee benefits were RMB31,500, RMB44,598 and RMB50,046 for the years ended December 31, 2017, 2018 and 2019, respectively. The Group has no ongoing obligation to its employees subsequent to its contributions to the PRC plan. |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 20. RESTRICTED NET ASSETS Pursuant to laws applicable to entities incorporated in the PRC, the subsidiaries of the Group in the PRC must make appropriations from after-tax profit to non-distributable reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires annual appropriation of 10% of after tax profit (as determined under accounting principles generally accepted in the PRC at each year-end) until the accumulative amount of such reserve fund reaches 50% of their registered capital; the other fund appropriations are at the subsidiaries’ discretion. These reserve funds can only be used for the specific purposes of offsetting future losses, enterprise expansion and staff bonus and welfare and are not distributable as cash dividends. During the years ended December 31, 2017, 2018 and 2019, no appropriation to statutory reserves was made because the PRC subsidiaries had substantial losses during such periods. In addition, due to restrictions on the distribution of share capital from the Company’s PRC subsidiaries, the PRC subsidiaries share capital of RMB 1,531,183 and RMB 1,667,461 at December 31, 2018 and 2019 is considered restricted, which are not available for distribution to the Company by its PRC subsidiaries in the form of dividends, loans or advances. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 21. COMMITMENTS AND CONTINGENCIES The Group is subject to periodic legal or administrative proceedings in the ordinary course of its business. The Group does not believe that any currently pending legal or administrative proceeding to which the Group is a party will have a material adverse effect on the financial statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENT | 22. SUBSEQUENT EVENTS The subsequent events have been evaluated through April 16, 2020, which is the date the audited consolidated financial statements were available to be issued. From January to April 2020, the Company granted options to purchase 740,000 ordinary shares with the exercise price of $2.52 per share under the Plan and 511,152 restricted share units to Group’s employees, which will vest over a four-year period with 25% of the awards vesting on the anniversary of the grant date each year. 910,042 share options were exercised and 209,974 restricted share units were vested from January to April 2020. From January to April 2020, the Company repurchased total of 511,758 ordinary shares with the total consideration of approximately $1.7 million . |
ADDITIONAL FINANCIAL INFORMATIO
ADDITIONAL FINANCIAL INFORMATION-FINANCIAL STATEMENTS SCHEDULE I | 12 Months Ended |
Dec. 31, 2019 | |
ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I | |
ADDITIONAL FINANCIAL INFORMATION-FINANCIAL STATEMENTS SCHEDULE I | ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I 111, INC. FINANCIAL INFORMATION FOR PARENT COMPANY BALANCE SHEETS (Amounts in thousands, except for share data and per share data, unless otherwise stated) 2018 2019 2019 RMB RMB US$ (Note 2 (ag)) ASSETS Current assets: Cash and cash equivalents 262,859 176,001 25,281 Short-term investments 115,815 — — Prepayments and other current assets 538,543 608,918 87,466 Total current assets 917,217 784,919 112,747 Long-term investments 317,478 — — Total assets 1,234,695 784,919 112,747 LIABILITIES AND EQUITY Other current liabilities 2,284 2,327 334 Other non-current liabilities 8,135 5,936 853 Total liabilities 10,419 8,263 1,187 SHAREHOLDERS' (DEFICIT) EQUITY Ordinary shares Class A ($0.00005 par value per share; 800,000,000 and 800,000,000 shares authorized, 91,088,106 and 96,588,106 shares issued and 91,088,106 and 92,120,024 outstanding as of December 31, 2018 and 2019, respectively) 29 30 4 Ordinary shares Class B ($0.00005 par value per share; 72,000,000 shares authorized, 72,000,000 shares issued and outstanding as of December 31, 2018 and 2019, respectively) 25 25 4 Treasury shares (nil and 1,485,862 shares as of December 31 2018 and 2019, respectively) — (22,991) (3,302) Additional paid-in capital 2,540,878 2,606,486 374,398 Accumulated deficit (1,383,729) (1,883,335) (270,524) Accumulated other comprehensive income 67,073 76,441 10,980 Total shareholders' equity 1,224,276 776,656 111,560 Total liabilities, mezzanine equity and equity 1,234,695 784,919 112,747 ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I 111, INC. FINANCIAL INFORMATION FOR PARENT COMPANY STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands, unless otherwise stated) Years Ended December 31, 2017 2018 2019 2019 RMB RMB RMB US$ (Note 2 (ag)) Operating expenses: General and administrative expenses (834) (2,145) (8,523) (1,224) Interest income (expense), net — 371 593 85 Other operating income (expense), net — 31 — — Other income, net — 3,253 7,161 1,029 (loss) Income before tax (834) 1,510 (769) (110) Share of loss of subsidiaries and VIEs (247,746) (381,601) (498,837) (71,654) Net loss attributable to ordinary shareholders (248,580) (380,091) (499,606) (71,764) Other comprehensive income (loss) Unrealized securities holding gains (loss), net of tax of nil for 2017, 2018 and 2019 2,196 (286) 3,356 482 Realized securities holding (gains), net of tax of nil for 2017, 2018 and 2019 — (399) (4,962) (713) Foreign currency translation adjustments (21,347) 21,658 11,668 1,676 Unrealized securities holding gains (loss) of subsidiaries and VIEs, net of tax of nil for 2017, 2018 and 2019 1,831 9,020 3,979 572 Realized securities holding loss of subsidiaries and VIEs, net of tax of nil for 2017, 2018 and 2019 — (10,470) (4,673) (671) Comprehensive loss (265,900) (360,568) (490,238) (70,418) ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I 111, INC FINANCIAL INFORMATION FOR PARENT COMPANY STATEMENTS OF CASH FLOWS (Amounts in thousands, unless otherwise stated) Years Ended December 31, 2017 2018 2019 2019 RMB RMB RMB US$ (Note 2 (ag)) Operating activities: Net loss (248,580) (380,091) (499,606) (71,764) Adjustments to reconcile net income to net cash (used in) provided by operating activities: Share of loss of subsidiaries and VIEs 247,746 381,601 498,837 71,654 Other current liabilities — 2,284 43 6 Other non-current liabilities 8,135 (2,199) (316) Investment income (2,591) (4,962) (713) Net Cash (used in) provided by operating activities (834) 9,338 (7,887) (1,133) Investing activities: Purchase of long-term investments — (821,962) — — Payment for shareholder loan to subsidiaries — — (203,388) (29,215) Proceeds from sale or maturity of short-term investments — 25,160 117,214 16,837 Net cash used in investing activities — (796,802) (86,174) (12,378) Financing activities: Proceeds from ordinary shareholders 25 — 11,328 1,627 Payment of share repurchase — — (22,991) (3,302) Proceeds from IPO, net of issuance cost — 694,878 — — Proceeds of preferred shareholders — 277,819 — — Net cash provided by (used in) financing activities 25 972,697 (11,663) (1,675) Effect of exchange rate changes on cash and cash equivalents, and restricted cash (147) 75,672 18,866 2,710 Net (decrease) increase in cash and cash equivalents, and restricted cash (956) 260,905 (86,858) (12,476) Cash and cash equivalents, and restricted cash at the beginning of the year 2,910 1,954 262,859 37,757 Cash and cash equivalents, and restricted cash at the end of the year 1,954 262,859 176,001 25,281 ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I 111, INC. FINANCIAL INFORMATION FOR PARENT COMPANY Note to Schedule I Schedule I has been provided pursuant to the requirements of Rule 12‑04(a) and 5‑04‑(c) of Regulation S-X, which require condensed financial information as to the financial position, change in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The condensed financial information has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries. Such investments in subsidiaries are presented on the balance sheets as investment in subsidiaries and the profit of the subsidiaries is presented as income in investment in subsidiaries. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements. As of December 31, 2019, there are no material contingencies, mandatory dividend, significant provisions for long-term obligations or guarantees of the Company, except for those which have separately disclosed in the consolidated financial statements. |
SUMMARY OF PRINCIPAL ACCOUNTI_2
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Basis of presentation | (a) Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America ("US GAAP"). |
Basis of consolidation | (b) Basis of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, VIEs and VIE’s subsidiaries for which the Company is the primary beneficiary. All intercompany transactions, balances and unrealized profit and losses have been eliminated upon consolidation. The Group evaluates the need to consolidate certain variable interest entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or the entity is structured with disproportionate voting rights, and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights. The Group is deemed as the primary beneficiary of and consolidates variable interest entities when the Group has the power to direct the activities that most significantly impact the economic success of the entities and effectively assumes the obligation to absorb losses or has the rights to receive benefits that are potentially significant to the entities. As a foreign-invested company engaged in Internet-based businesses, the Group is subject to significant restrictions under current PRC laws and regulations, specifically the Company and its PRC subsidiary, Yao Fang, as a wholly foreign owned enterprise ("WFOE"), are both restricted from holding the licenses that are necessary for the online operation in China. To comply with these restrictions, the Company conducts the online operations principally through Yihao Pharmacy. Yihao Pharmacy holds the licenses necessary to conduct the internet-related operations of 1 Drugstore and 1 Drug Mall in China. Since the Company does not have any equity interests in Yihao Pharmacy, in order to exercise effective control over its operations, the Company, through its wholly owned subsidiary, the WFOE, entered into a series of contractual arrangements with Yihao Pharmacy and its shareholders, pursuant to which the Company is entitled to receive effectively all economic benefits generated from Yihao Pharmacy shareholders’ equity interests in it. Details of the key agreements entered into between the WFOE, Yihao Pharmacy and each of its two individual shareholders nominated by the Founders ("Nominees") in September 2013 are as follows: The agreements that provide the Company effective control over the VIE include: Exclusive Option Agreement: Under the exclusive option agreement, the Nominees granted an irrevocable assets and equity option to WFOE, that entitles WFOE or its designated entity or individual to acquire all or a portion of the assets owned by Yihao Pharmacy and its subsidiaries and all the equity interests held by nominees in Yihao Pharmacy and its subsidiaries at its sole discretion, at zero price or the lowest price permitted under PRC laws then in effect. The option may be exercised by WFOE or its designee. The exclusive option agreement remains effective for the same period as the exclusive support service agreement. Proxy Agreement: Under the shareholder voting right proxy agreement, the Nominees irrevocably grant any person designated by WFOE the power to exercise all voting rights. This Agreement may not be terminated without the consent of WFOE, which may unilaterally terminate the agreement, by giving a thirty (30) day prior written notice to the Nominees. The proxy agreement remains in force for the same period as the exclusive support services agreement. The agreements that transfer economic benefits to the Company include: Equity Pledge Agreement: Under the equity pledge agreement, all of the equity interest in Yihao Pharmacy were pledged to WFOE to guarantee the performance of the obligations of Yihao Pharmacy and Nominees under the exclusive support services agreement, the proxy agreement, the exclusive option agreement, and repayment of all accounts payable to WFOE from time to time. If the Nominees or Yihao Pharmacy breach their respective contractual obligations, WFOE, as pledgee, will be entitled to certain rights, including the right to dispose the pledged equity interests. Pursuant to the equity pledge agreement, the Nominees shall not transfer, assign or otherwise create any new encumbrance on their respective equity interest in Yihao Pharmacy without the prior written consent of WFOE. The equity pledge right enjoyed by WFOE will expire when the Nominees and Yihao Pharmacy have fully performed their respective contractual obligations, including but not limited to pay services fees to the WFOE under the exclusive support services agreement, authorize the WFOE to act as its attorney-in fact to exercise shareholders’ rights of Nominees under the proxy agreements, grant exclusive option to the WFOE or any third party designated by WFOE to purchase all or part of their respective equity interests at the lowest price permitted by law under the exclusive option agreements, and repay all accounts payable to WFOE. Exclusive Support Service Agreement: Pursuant to the exclusive support service agreement, WFOE provides Yihao Pharmacy with a series of technical support services and is entitled to receive related fees. This agreement shall be in full force and effective until Yihao Pharmacy’s valid operation term as stated on business license expires. During the term of this agreement, WFOE shall be the exclusive provider of the services. Yihao Pharmacy shall not seek or accept similar services from other providers without the prior written approval of WFOE. The agreement will remain effective for ten years and will be automatically extended for another ten years thereafter, unless WFOE terminates the agreement or it is terminated in advance pursuant to other provisions of the agreement such as bankruptcy of one party or one party’s failure to perform its obligation for more than six consecutive months due to a force majeure event. In September 2019, exclusive support services agreements with each of the variable interest entities were amended, pursuant to which, the variable interest entities agree to pay service fees in an amount equivalent to the balance calculated as 3% of quarterly revenue (exclusive of revenue from related parties) of the variable interest entities on a quarterly basis. WFOE has the right to delay or waive payment of service fees at its discretion and the service fee level is subject to adjustment at any time upon mutual agreement between WFOE and the variable interest entities. Similar contractual agreements were also entered into by WFOE, Yihao Pharmaceutical Chain and Yao Wang, and their respective shareholders in September 2013 and September 2019. US GAAP provides guidance on the identification of VIE and financial reporting for entities over which control is achieved through means other than voting interests. The Group evaluates each of its interests in an entity to determine whether or not the investee is a VIE and, if so, whether the Group is the primary beneficiary of such VIE. In determining whether the Group is the primary beneficiary, the Group considers if the Group (1) has power to direct the activities that most significantly affect the economic performance of the VIE, and (2) receives the economic benefits of the VIE that could be significant to the VIE. If deemed the primary beneficiary, the Group consolidates the VIE. The irrevocable power of attorney has conveyed all shareholder rights held by the VIEs’ shareholders to WFOE, including the right to appoint board members who nominate the general managers of the VIEs to conduct day-to-day management of the VIEs’ businesses, and to approve significant transactions of the VIEs. In addition, the exclusive option agreements provide WFOE with a substantive kick-out right of the VIEs shareholders through an exclusive option to purchase all or any part of the shareholders’ equity interest in the VIEs at zero price or the lowest price permitted under PRC laws then in effect. In addition, through the exclusive support services agreements, the Company established the right to receive benefits from the VIEs that could potentially be significant to the VIEs, and through the equity pledge agreement, the Company has, in substance, an obligation to absorb losses of the VIEs that could potentially be significant to the VIEs. Risks in relation to the VIE structure The Group believes that the VIE arrangements are in compliance with PRC law and are legally enforceable. However, there are certain risks related to the VIE arrangements, which include but are not limited to the following: · If the Group’s ownership structure is found to be in violation of any existing or future PRC laws or regulations, the relevant governmental authorities, including the China Securities Regulatory Commission, would have broad discretion in dealing with such violation, including levying fines, confiscating its income or the income of the WFOE, Yao Fang, revoking the business licenses or operating licenses of the WFOE, shutting down the Group’s servers or blocking the Group’s websites, discontinuing or placing restrictions or onerous conditions on the Group’s operations, requiring the Group to undergo a costly and disruptive restructuring, restricting or prohibiting the Group’s use of various funding to finance its business and operations in China, and taking other regulatory or enforcement actions that could be harmful to the Group’s business; · The Group relies on contractual arrangements with the VIEs and their equity holders for a majority of its PRC operations, which may not be as effective as direct ownership in providing operational control; · The Group may have to incur significant cost to enforce, or may not be able to effectively enforce, the contractual arrangements with the VIEs and their equity holders in the event of a breach or non-compliance by the VIEs or their equity holders; · Under the contractual arrangements with the VIEs and their shareholders, (a) the Company may replace any such individual as a shareholder of the VIEs at the Company’s discretion, and (b) each of two individuals has executed a power of attorney to appoint the WFOE or its designated third party to vote on their behalf and exercise shareholder rights of the VIE. However, the Company cannot assure that these individuals will act in the best interests of the Company should any conflicts of interest arise, or that any conflicts of interest will be resolved in the Company’s favor. These individuals may breach or cause the VIE to breach the existing contractual arrangements. If the Company cannot resolve any conflicts of interest or disputes between the Company and any of these individuals, the Company would have to rely on legal proceedings, which may be expensive, time-consuming and disruptive to its operations. There is also substantial uncertainty as to the outcome of any such legal proceedings. The following amounts and balances of the VIEs were included in the Group’s consolidated financial statements after the elimination of intercompany balances and transactions: As of December 31, 2018 2019 Current Assets: Cash and cash equivalents 8,527 40,964 Restricted cash — 12,631 Accounts receivable, net 28,351 60,173 Notes receivable — 23,274 Inventories 210,285 389,195 Prepayments and other current assets 133,655 171,318 Total current assets 380,818 697,555 Property and equipment 9,962 15,599 Intangible assets, net 382 774 Long-term investments 11,140 140 Operating lease right-of-use assets — 67,103 Other non-current assets 1,446 2,078 Total assets 403,748 783,249 Current Liabilities: Short-term borrowings — (65,081) Accounts payable (211,954) (394,242) Accrued expenses and other current liabilities (50,356) (149,111) Total current liabilities (262,310) (608,434) Long-term operating lease liabilities — (47,750) Total liabilities (262,310) (656,184) Year Ended December 31, 2017 2018 2019 Net revenues 959,153 1,785,757 3,302,818 Total cost and expenses (930,567) (1,809,656) (3,383,187) Net income (loss) 28,586 (23,899) (80,369) Year Ended December 31, 2017 2018 2019 Net cash used in operating activities (124,409) (112,425) (263,750) Net cash used in investing activities (54) (7,308) (4,684) Net cash provided by financing activities — — 87,892 The VIEs contributed approximately 99%, 99% and 84%of the Group’s consolidated revenues for each of the years ended December 31, 2017, 2018 and 2019. As of December 31, 2018 and 2019, the VIEs accounted for an aggregate of approximately 26% and 49%, respectively, of the consolidated total assets, and approximately 81% and 78%, respectively, of the consolidated total liabilities. Since September 2013, WFOE started paying advertising fees and marketing fees to external suppliers for the VIEs and recharges all or portion of these expenses to the VIEs at cost given that VIEs are in a loss position. The advertising fees and marketing fees charged by WFOE were RMB 162,844, RMB 79,742 and RMB 126,831 for the years ended December 31, 2017, 2018 and 2019, respectively. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to its VIEs through loans to the shareholders of the VIEs or entrustment loans to the VIEs. The Group believes that there are no assets held in the consolidated VIE that can be used only to settle obligations of the VIEs, except for registered capital and the PRC statutory reserves. As the consolidated VIE is incorporated as a limited liability company under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the consolidated VIE. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of their statutory reserve and their share capital, to the Company in the form of loans and advances or cash dividends. |
Use of estimates | (c) Use of estimates The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Areas where management uses subjective judgment include estimating inventory write-down, collectability of receivables, the useful lives of long-lived assets, assessing the impairment of long-term investments and long-lived assets, valuation of ordinary share, share-based compensation expenses, recoverability of deferred tax assets, sales return and the fair value of the financial instruments. Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates. |
Cash and cash equivalents | (d) Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less when purchased. |
Restricted cash | (e) Restricted cash Restricted cash mainly represents the Group's deposits to the bank as a form of security with respect to the Group's debt. The cash held as deposits in the bank are not available to fund the general operating purposes of the Group. |
Short-term investments | (f) Short-term investments Short-term investments include wealth management products, which are certain financial products with variable interest rates purchased from certain financial institutions with an original maturity period of less than one year. The Group classifies the wealth management products as "available-for-sale" debt securities. These investments are recorded at fair market value with the unrealized gains or losses recorded in accumulated other comprehensive income (loss) as a component of shareholders’ (deficit) equity. The assessment of impairment of short-term investments is based on whether the decline in fair value is other-than-temporary. The Group assesses its available-for-sale debt securities for other-than-temporary impairment by considering factors including, but not limited to, its ability and intent to hold the individual security, severity of the impairment, expected duration of the impairment and forecasted recovery of fair values. If the Group determines a decline in fair value is other-than-temporary, the cost basis of the individual security is written down to fair value as a new cost basis and the amount of the write-down is accounted for as a realized loss charged in the consolidated statement of income and comprehensive income. The fair values of the investments would not be adjusted for subsequent recoveries in fair values. There was no impairment on available-for-sale debt securities for the years ended December 31, 2017, 2018 and 2019. |
Accounts receivable, net | (g) Accounts receivable, net Accounts receivable mainly consists of amounts receivable from product delivery service providers and payment processing service providers, which are recognized and carried at the original invoice amount less an allowance for doubtful accounts. The Group establishes an allowance for doubtful accounts primarily based on the age of the receivables and factors surrounding the credit risk of specific customers. |
Inventories | (h) Inventories Inventories, consisting of products available for sale, are accounted for using the weighted average cost method, and are valued at lower of cost or the net realizable value. Adjustments are recorded to write down the cost of inventory to the estimated market value due to slow-moving or damaged products, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. Write-downs are recorded in cost of products sold in the consolidated statements of comprehensive loss. |
Property and equipment | (i) Property and equipment Property and equipment are stated at cost less accumulated depreciation and impairment. The renovations, betterments and interest cost incurred during construction are capitalized. Property and equipment are depreciated at their costs less impairment and residual value, if any, over the estimated useful lives on a straight-line basis. The estimated useful lives are as follows: Leasehold improvements Shorter of the lease term or their estimated useful lives Furniture, fixtures and equipment 3 years Electronic equipment 3 years Vehicles 5 years Construction in progress represents leasehold improvements under construction or being installed and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct costs. Construction in progress is transferred to leasehold improvements and depreciation commences when the asset is ready for its intended use. Expenditures for repairs and maintenance are expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of comprehensive loss as the difference between the net sales proceeds and the carrying amount of the underlying asset. There was no interest cost capitalized during the years ended December 31, 2017, 2018 and 2019. |
Intangible assets | (j) Intangible assets Intangible assets mainly consist of externally purchased software and licenses. Software are amortized over an estimated useful life of ten years on a straight-line basis. Licenses are amortized over the remaining estimated useful life on a straight-line basis. |
Impairment of long-lived assets | (k) Impairment of long-lived assets Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. For the years ended December 31, 2017, 2018 and 2019, there was no impairment of the Group’s long-lived assets. |
Long-term investments | (l) Long-term investments The Group measures its equity securities without a readily determinable fair value at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As of December 31, 2018 and 2019, long-term investments were RMB 11,140 and 140, respectively. The Group is required to perform an impairment assessment of its investments whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. An impairment loss is recognized in the consolidated statements of comprehensive loss equal to the excess of the investment’s cost over its fair value when the impairment is deemed other-than-temporary. |
Revenue recognition | (m) Revenue recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014‑09, "Revenue from Contracts with Customers ("ASC 606"). This standard replaced existing revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. The ASU also includes guidance regarding the accounting for contract acquisition costs, which includes sales commissions. The Group has early adopted ASC 606 and all subsequent ASUs that modified ASC 606 on January 1, 2017 using the full retrospective method which requires the Group to present its financial statements for all periods as if Topic 606 had been applied to all prior periods. The Group follows five steps for its revenue recognition under ASC 606: · Step 1: Identify the contract (s) with a customer · Step 2: Identify the performance obligations in the contract · Step 3: Determine the transaction price · Step 4: Allocate the transaction price to the performance obligations in the contract · Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Group’s revenue is reported net of discount, value added tax and related surcharges. The primary sources of the Group’s revenues are as follows: Product Revenues The Group recognizes revenues from the sale of medicines, healthcare products and other wellness merchandise through its online platforms, including its internet website 1 Drugstore, cellular phone application, other online channels and its offline pharmacies, mainly to consumers and certain enterprises (the "B2C Business"). The Group also generates revenues from the sale of medicines to its pharmacy customers through the online platform 1 Drug Mall (the "B2B Business"). Under both B2C Business and B2B Business, revenues from product sales are recognized at the point in time when the delivery is made and when title and risk of loss transfers to the consumers and pharmacy customers. Revenues are measured as the amount of consideration the Group expects to receive in exchange for transferring products to consumers and pharmacy customers ("transaction price"). To the extent that the transaction price includes variable consideration, the Group estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method. Variable consideration is included in the transaction price if, in the Group’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Group provides the right of return in circumstances when there is packing or delivery damage or other quality problems identified within 30 days which is considered to be a form of variable consideration. The Group estimates sales returns based on historical experience and based on such, the amount of sales returns accrual was insignificant as of December 31, 2018 and 2019. The Group voluntarily provides discount coupons through its websites during its marketing activities. These coupons are not related to prior purchases, and can only be utilized in conjunction with subsequent purchases on the Group’s platforms. The coupons are recorded as a reduction of revenue at the time of use. Under both B2B and B2C Businesses the Group utilizes delivery service providers to deliver products to its consumers and pharmacy customers ("shipping activities") but the delivery service is not considered as a separate obligation as the shipping activities are performed before the consumers and pharmacy customers obtain control of the products. Therefore, shipping activities are not considered a separate promised service to the consumers and pharmacy customers, but rather are activities to fulfill the Group’s promise to transfer the products and are recorded as fulfillment expenses. Product revenues are recorded net of surcharges and value added tax ("VAT") ranging from 0% to 17% for different kinds of products based on the sales amount. Surcharges are sales related taxes representing the City Maintenance and Construction Tax and Education Surtax. The Group records revenues on a gross basis because the Group controls the products before they are transferred to the consumers and pharmacy customers determined on the basis that: (1) the Group is primarily responsible for fulfilling its promise to deliver the specified products to consumers and pharmacy customers; (2) the Group has inventory risk before the specified products are transferred to a consumers and pharmacy customers or after transfer of control to the consumers and pharmacy customers, and (3) the Group has discretion in establishing the price for the specified products. Service revenues Service revenues primarily consist of fees charged to third-party marketplace sellers for whom the Group acts as an agent to facilitate the marketplace sellers’ online sales of their products through the online platforms 1 Drugstore and 1 Drug Mall, which is referred to as marketplace service ("MP") revenue. The Group has determined it is not the principal in the arrangement as it is not responsible to fulfill the order for the specified products, it does not bear the inventory risk for the products, nor does it have the ability to establish prices. The Group charges the marketplace sellers commission fees equal to an agreed percentage of the sales price of the product when a sale is completed and also charges market place sellers an annual non-refundable up-front fee for platform usage. The promise to the customer, which is the marketplace seller, is to arrange for the sale which is considered as one performance obligation. Therefore, the Group recognizes the up-front fee and commission at the point in time when the sale is completed. |
Cost of products sold | (n) Cost of products sold Cost of products sold consists of the purchase price of products and inbound shipping charges. The Group periodically receives rebates from certain vendors in the form of cash or credits that the Group can apply against trade amounts owed to vendors pursuant to a binding arrangement only if the Group completes a specified cumulative level of purchases within a specified time period. The rebates do not represent a payment for assets or services delivered to the vendor or a reimbursement of costs incurred by the Group to sell vendors’ products. The Group accounts for the rebates received from its vendors as a reduction to the price the Group pays for the products purchased and therefore records such amounts as a reduction of cost of products sold when recognized in the consolidated financial statements. Rebates are earned based on reaching minimum purchase thresholds within a specified period, typically on a fiscal quarterly or annual basis. Cost of products does not include other direct costs related to cost of product sales such as shipping and handling expense, payroll and benefits of logistics staff, logistics centers rental expenses and depreciation expenses. Therefore, the Group’s cost of products sold may not be comparable to other companies which include such expenses in their cost of products. |
Fulfillment expenses | (o) Fulfillment expenses Fulfillment expenses primarily consist of payroll, bonus and benefits of logistics staff, logistics centers rental expenses, shipping and handling expenses, and packaging expenses. |
Selling and marketing expenses | (p) Selling and marketing expenses Selling and marketing expenses primarily consist of payroll, bonus and benefits of sales and marketing staff, advertising costs, agency fees and costs for promotional materials. Advertising expenses are charged to the statements of comprehensive loss in the period incurred. The amounts of advertising expenses incurred were RMB62,749, RMB30,221 and RMB30,447 for the years ended December 31, 2017, 2018 and 2019, respectively. |
Technology expenses | (q) Technology expenses Technology expenses primarily consist of technology infrastructure expenses, payroll, bonus and benefits of the employees in technology and system department as well as costs associated with the computer, storage and telecommunications infrastructure for internal use and enhancement to the Group's websites and platform applications. For internal and external use software, the Group expenses all costs incurred for the preliminary project stage and post implementation-operation stage of development, and costs associated with repair or maintenance of the existing platform. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life. The amount of the Group’s technology expenses qualifying for capitalization has been insignificant, and as a result, all development costs incurred for development of internal used software have been expensed as incurred. |
General and administrative expenses | (r) General and administrative expenses General and administrative expenses primarily consist of payroll, bonus and benefit costs for corporate employees, legal, finance, rental expenses and other corporate overhead costs. |
Government grants | (s) Government grants Government grants represent rewards provided by the relevant PRC government authorities to the Group for tax refunds and support for investment in certain local districts, which are typically granted based on the amount of investments the Group made as well as income generated by the Group in such districts. Such subsidies allow the Group full discretion to utilize the funds and are used by the Group for general corporate purposes. Normally, the Group does not receive written confirmation from local governments indicating the approval of the cash subsidy before cash is received, and therefore cash subsidies are recognized when received and when all the conditions for their receipts have been satisfied. Government grants recognized were RMB3,282, RMB2,166 and RMB358 for the years ended December 31, 2017, 2018 and 2019, respectively, which were recorded in other operating income (expenses), net. |
Income Taxes | (t) Income Taxes Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Group is required to estimate its income taxes in each of the jurisdictions in which it operates. The Group accounts for income taxes using the liability method. Under this method, deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income. Deferred tax assets are reduced by a valuation allowance when, based upon the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. |
Value added taxes | (u) Value added taxes The Group’s PRC subsidiaries are subject to VAT at rates ranged from 0% to 17% on proceeds received from customers, and are entitled to a deduction for VAT already paid or borne on the products purchased by them. The VAT balance is recorded in other current assets or other current liabilities on the consolidated balance sheets. |
Comprehensive income (loss) | (v) Comprehensive income (loss) Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. During the periods presented, comprehensive income (loss) is reported in the consolidated statements of comprehensive loss, and other comprehensive loss includes foreign currency translation adjustments and fair value change of available-for-sale debt securities. |
Foreign currency translation | (w) Foreign currency translation The reporting currency of the Group is the Renminbi ("RMB"). The functional currency of the Company and Yao Wang is the United States dollar ("US dollar"). The functional currency of all the other significant subsidiaries and the variable interest entities is RMB. The determination of the respective functional currency is based on the criteria of Accounting Standard Codification ("ASC") 830, Foreign Currency Matters . Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the consolidated statements of comprehensive loss. Assets and liabilities are translated from each entity’s functional currency to the reporting currency at the exchange rate on the balance sheet date. Equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of accumulated other comprehensive loss in the consolidated statements of shareholders’ (deficit) equity. |
Concentration of credit risk | (x) Concentration of credit risk Financial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, accounts receivable and prepayments. The Group places its cash and cash equivalents, restricted cash and short-term investments with financial institutions with high-credit ratings and quality. Accounts receivable mainly consist of amounts receivable from product delivery service providers and payment processing service providers, which are all with good collection history. There are no significant concentrations of credit risk. With respect to prepayments, the Group performs on-going credit evaluations of the financial condition of these suppliers. Concentration of customers There were no customers individually representing 10% or more of revenues for the years ended December 31, 2017, 2018 and 2019. The following customer accounted for 10% or more of balances of accounts receivable as of December 31, 2018 and 2019: As of December 31, 2018 2019 Accounts receivable: A * 18.8 % Concentration of suppliers The following supplier accounted for 10% or more of purchases for the years ended December 31, 2017, 2018 and 2019: Year Ended December 31, 2017 2018 2019 Product purchases: A 14.1 % 13.9 % * B * 12.7 % * The following suppliers accounted for 10% or more of balances of accounts payable as of December 31, 2018 and 2019: As of December 31, 2018 2019 Accounts payable: A 18.9 % * * Less than 10%. |
Foreign currency risk | (y) Foreign currency risk Renminbi ("RMB") is not a freely convertible currency. The State Administration of Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The cash and cash equivalents of the Group included aggregated amounts of RMB 17,810 and RMB 336,583, which were denominated in RMB, as of December 31, 2018 and 2019, respectively. |
Fair value | (z) Fair value Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be used to measure fair value include: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates. The estimated fair value of the Group's financial instruments of which the inputs used to value are classified as Level 2 and are not reported at fair value, including cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable, other current liabilities, approximates their carrying value due to their short-term nature. Since January 1, 2018, the Group adopted the ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10). Under the new ASC, entities no longer use the cost method of accounting as it was applied before and the new ASC requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, a company can elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer (the "measurement alternative"). After management's assessment of each of the equity investments described in Note 8, management concluded that investments do not have readily determinable fair values, and elects the measurement alternative. |
Share-based compensation | (aa) Share-based compensation Awards Granted to Employees The Group grants share options and restricted share units to eligible employees and accounts for these share based awards in accordance with ASC 718 Compensation-Stock Compensation. Employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required; or b) using straight-line vesting method over the requisite service period, which is the vesting period. To the extent the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation expense relating to those awards are reversed. Prior to the IPO of the Company, the fair value of the stock options granted to employees is determined with the assistance of an independent third party valuation firm. The Black Scholes option pricing model was applied in determining the estimated fair value of the options granted to employees. After the IPO of the Company, in determining the fair value of the share options and Ordinary Share Units, the closing market price of the underlying shares on the grant date is applied. Awards Granted to Non-Employees Prior to the adoption of Accounting Standard Update 2018-07 Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting on January 1, 2019, the Group has accounted for equity instruments issued to non-employees in accordance with the provisions of ASC 505, Equity-based payments to nonemployees. All transactions in which goods or services are received in exchange for equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. As there is no performance commitment associated with the equity instrument issued to non-employees, the Group remeasures the awards using the then-current fair value at each reporting date until the measurement date, generally when the services are completed and awards are vested, and attributes the changes in those fair values over the service period by straight-line method. The Group adopted ASU 2018-07 on January 1, 2019 using the modified retrospective method and recognized the cost of services received from a nonemployee in exchange for an equity instrument based on the award’s grant-date fair value. Unvested equity-based payments to nonemployees have been remeasured at fair value as of the adoption date. The adoption did not have material effect on the consolidated financial statements. |
Treasury shares | (ab) Treasury shares Treasury shares represent shares repurchased by the Company that are no longer outstanding and are held by the Company. Treasury shares are accounted for under the cost method. As of December 31, 2019, under the repurchase plan, the Company had repurchased an aggregate of 1,485,862 ordinary shares on the open market for total cash consideration of RMB 22,991. The repurchased shares are presented as "treasury shares" in shareholders' equity on the Group's consolidated balance sheets. |
Earnings (loss) per share | (ac) Earnings (loss) per share Basic earnings (loss) per ordinary share is computed by dividing net income (loss) attributable to ordinary shareholders by weighted average number of ordinary shares outstanding during the period. Diluted earnings (loss) per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Group has stock options and restricted share units, which could potentially dilute basic earnings per share in the future. To calculate the number of shares for diluted income per share, the effect of the stock options and restricted share units is computed using the treasury stock method. In September 2018, the Company’s shareholders voted in favor of a proposal to adopt a dual-class share structure, pursuant to which the Company’s authorized share capital were reclassified and redesigned into Class A ordinary shares and Class B ordinary shares (Note 13). Both Class A ordinary shares and Class B ordinary shares are entitled to the same dividend right, as such, this dual class share structure has no impacts to the earnings per share calculation. Basic earnings per share and diluted earnings per share are the same for each Class A ordinary shares and Class B ordinary shares. |
Segment reporting | (ad) Segment reporting In accordance with ASC 280, Segment Reporting, the Group’s chief operating decision maker ("CODM") has been identified as the Co-Chairmen and Chief Executive Officer, who reviews the segment information when making decisions about allocating resources and assessing performance of the Group. The Group organized its operations into two segments: B2C segment and B2B segment. There are no internal revenue transactions between the reportable segments. The Group does not distinguish expenses between segments in its internal reporting, and reports expenses by nature as a whole. Furthermore, the Group’s CODM is not provided with asset information by segment. As such, no asset information by segment is presented. The following tables summarize the Group’s product revenues and segment profit/(loss) generated by its segments. Year Ended December 31, 2017 2018 2019 B2C segment Product revenues 862,327 847,476 763,254 Cost of products sold* (780,137) (767,073) (654,796) Segment profit for B2C Business 82,190 80,403 108,458 B2B segment Product revenues 86,890 922,751 3,166,444 Cost of products sold* (88,582) (914,627) (3,132,074) Segment (loss) profit for B2B Model (1,692) 8,124 34,370 Total segment profit 80,498 88,527 142,828 * For segment reporting purpose, purchase rebate is allocated to B2C segment and B2B segment primarily based on the amount of cost of products sold for each segment. Cost of products sold does not include other direct costs related to cost of product sales such as shipping and handling expense, payroll and benefits of logistic staff, logistic centers rental expenses and depreciation expenses, which are recorded in the fulfillment expenses. As the Group operates in the PRC and all of the Group’s long-lived assets are located in the PRC, no geographical segments are presented. The following is the reconciliation of reportable segment revenues to the Group’s consolidated revenue: Year Ended December 31, 2017 2018 2019 Total revenues for reportable segments 949,217 1,770,227 3,929,698 Service revenues 10,269 15,743 22,355 Total consolidated revenues 959,486 1,785,970 3,952,053 The following is a reconciliation of the reportable segments’ measures of profit or loss to the Group’s consolidated loss before income taxes: Year Ended December 31, 2017 2018 2019 Total profit for reportable segments 80,498 88,527 142,828 Unallocated amounts: Service Revenues 10,269 15,743 22,355 Fulfillment expenses (55,880) (73,930) (128,996) Selling and marketing expenses (190,074) (260,040) (340,562) General and administrative expenses (53,434) (98,759) (123,501) Technology expenses (48,133) (71,248) (61,902) Other operating income (expenses), net 2,732 (668) (3,735) Interest income 4,013 4,352 4,802 Interest expense (55) — (3,622) Foreign exchange (loss) gain (3,492) 2,459 (10,328) Other income (loss),net 4,229 11,531 834 Loss before income tax (249,327) (382,033) (501,827) Revenues from different product groups and services are as follows: Year Ended December 31, 2017 2018 2019 Product Revenues 949,217 1,770,227 3,929,698 Drugs 649,341 1,489,917 3,595,419 Nutritional supplements 123,214 190,425 245,644 Contact lenses. 107,275 47,295 18,110 Medical supplies and devices 49,414 26,563 50,178 Other products. 19,973 16,027 20,347 Service Revenues 10,269 15,743 22,355 MP Service 8,767 12,375 17,239 Other Services 1,502 3,368 5,116 Total 959,486 1,785,970 3,952,053 |
Leases | (ae) Leases Before January 1, 2019, the Group adopted the ASC Topic 840, Leases, each lease is classified at the inception date as either a capital lease or an operating lease. All the Group’s leases were classified as operating lease under ASC Topic 840. The Group’s reporting for periods prior to January 1, 2019 continued to be reported in accordance with Leases (Topic 840). After January 1, 2019, the Group adopted the ASC Topic 842, Leases (“ASC 842”). The Group determines if a contract is or contains a lease at the inception of the contract, and the Group classifies that lease as a finance lease if it meets certain criteria or as an operating lease when it does not. For a contract, in which the Group is a lessee, that contains fixed payments for both lease and non-lease components, the Group has elected to account for lease and non-lease components separately. At the commencement date of a lease, the Group recognizes a lease liability for future fixed lease payments and a right-of-use ("ROU") asset representing the right to use the underlying asset during the lease term. The lease liability is initially measured as the present value of the future fixed lease payments that will be made over the lease term. The lease term includes lessee options to extend the lease and periods occurring after a lessee early termination option, only to the extent it is reasonably certain that the Group will exercise such extension options and not exercise such early termination options, respectively. The future fixed lease payments are discounted using the rate implicit in the lease, if available, or the incremental borrowing rate ("IBR"). Upon adoption of ASU 2016-02, the Group elected to use the remaining lease term as of January 1, 2019 in the Group's estimation of the applicable discount rate for leases that were in place at adoption. For the initial measurement of the lease liability for leases commencing after January 1, 2019, the Group use the discount rate as of the commencement date of the lease, incorporating the entire lease term. Additionally, the Group elected not to recognize leases with lease terms of 12 months or less at the commencement date in the consolidated balance sheets. Current maturities and long-term portions of operating lease liabilities are classified as accrued expenses and other current liabilities and long-term operating lease liabilities, respectively, in the consolidated balance sheets. The ROU asset is measured at the amount of the lease liability with adjustments, if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred by the Group and lease incentives. The Group will evaluate the carrying value of ROU assets if there are indicators of impairment and review the recoverability of the related asset group. If the carrying value of the asset group is determined to not be recoverable and is in excess of the estimated fair value, the Group will record an impairment loss in other expenses in the consolidated statements of operations. ROU assets for operating leases are included in operating lease right-of-use assets in the consolidated balance sheets. The Group’s leases include offices and warehouses, which are all classified as operating leases with fixed lease payments, or minimum payments, as contractually stated in the lease agreement. For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term. |
Recently issued accounting pronouncements | (af) Recently issued accounting pronouncements New Accounting Pronouncements Recently Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASC 842 which supersedes the lease recognition requirements in ASC 840, Leases, (“ASC 840”). The most prominent of the changes in ASC 842 is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Consistent with ASC 840, leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statements of operations. In July 2018, the FASB issued an accounting standard update which amended ASC 842 and offered an additional (and optional) transition method by which entities could elect not to recast the comparative periods presented in financial statements in the period of adoption. The Group adopted the new standard on January 1, 2019, using the optional adoption method whereby the Group did not adjust comparative period financial statements. Consequently, prior period balances and disclosures have not been restated. The Group elected the package of transition provisions available for expired or existing contracts, which allowed the Group to carry forward its historical assessments of (i) whether contracts are or contain leases, (ii) lease classification and (iii) initial direct costs. For leases in place upon adoption, the Group used the remaining lease term as of January 1, 2019 in determining the IBR. For the initial measurement of the lease liabilities for leases commencing on or after January 1, 2019, the IBR at the lease commencement date was applied. The adoption of ASC 842 resulted in the balance sheet recognition of additional lease assets and lease liabilities of approximately RMB 62,408 and RMB 61,037 as of January 1, 2019, respectively. Additionally, the adoption of ASC 842 did not materially affect the Group's consolidated statements of comprehensive loss or consolidated statements of cash flows. The impact on the consolidated balance sheets upon adoption of ASC 842 was as follows: December 31, 2018 January 1, 2019 Effect of the adoption As reported of ASC 842 As adjusted ASSETS Prepayments and other current assets 161,147 (1,371) 159,776 Operating lease right-of-use assets — 62,408 62,408 Total assets 1,546,418 61,037 1,607,455 LIABILITIES AND EQUITY Accrued expenses and other current liabilities 102,261 19,795 122,056 Long-term operating lease liabilities — 41,242 41,242 Total liabilities 322,654 61,037 383,691 Total equity 1,223,764 — 1,223,764 Total liabilities and equity 1,546,418 61,037 1,607,455 In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance consistent with the accounting for employee share-based compensation. The Group early-adopted ASU 2018-07 on January 1, 2019 using the modified retrospective method. The adoption of this new standard generally requires the accounting for equity-based payments to nonemployees to be consistent with the accounting for employees. As a result, the Group recognized the cost of services received from a nonemployee in exchange for an equity instrument based on the award’s grant-date fair value. Unvested equity-based payments to nonemployees have been remeasured at fair value as of the adoption date. The adoption did not have material effect on the consolidated financial statements. New Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326)". ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 will become effective for annual and interim periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In November 2019, ASU 2019-10 amends the effective dates for ASU 2016-13. The Group is in the process of evaluating the impact on the consolidated financial statements. In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. This guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Certain disclosures required by this guidance must be applied on a retrospective basis and others on a prospective basis. The guidance will be effective for fiscal years beginning after December 15, 2019, although early adoption is permitted. The Group does not expect this standard to have a material effect on its consolidated financial statements. |
Convenience translation | (ag) Convenience translation Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss, and consolidated statements of cash flows from RMB into US dollar as of and for the year ended December 31, 2019 are solely for the convenience of the readers and were calculated at the rate of 6.9618, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2019. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US dollar at that rate on December 31, 2019, or at any other rate. |
ORGANIZATION AND PRINCIPAL AC_2
ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
Schedule of subsidiaries | As of December 31, 2019, the Group operates its business mainly through the following subsidiaries: Name of subsidiaries Date of Place of Percentage of Principal activities Yao Wang Corporation Limited ("Yao Wang") June 4, 2013 Hong Kong 100% Investment holding Yaofang Information Technology (Shanghai) Co., Ltd ("Yaofang" or "WFOE") August 12, 2013 Shanghai 100% Warehousing, logistics, research and development, and consulting Guangdong Yihao Pharmacy Co., Ltd. ("Yihao Pharmacy") March 7, 2003 Guangdong VIE Warehousing, logistics and procurement Guangdong Yihao Pharmaceutical Chain Co., Ltd. ("Yihao Pharmaceutical Chain") November 1, 2001 Guangdong VIE Retail Shanghai Yaowang E-commerce Co., Ltd. ("Shanghai Yaowang") January 15, 2013 Shanghai VIE Electronic Commerce Chengdu Yihao Pharmacy Co., Ltd. ("Chengdu Yihao Pharmacy") August 22, 2017 Chengdu VIE’s subsidiary Retail Anshun Southwest Internet Hospital Co., Ltd ("Southwest Internet Hospital" ) July 5, 2016 Anshun VIE’s subsidiary Internet hospital business Anshun Joint Diagnosis And Treatment Technology Co., Ltd ("Anshun Technology" ) February 8, 2017 Anshun VIE’s subsidiary Internet hospital business Wuhan Central China Drug Trading Co., Ltd. ("Wuhan Huazhong") August 5, 2015 Wuhan 70% Software development and information technology support Chongqing Yihao Pharmacy Co., Ltd.("Chongqing Yihao Pharmacy") May 18, 2018 Chongqing WFOE’s subsidiary Warehousing and logistics Tianjin Yihao Pharmacy Co., Ltd. ("Tianjin Yihao Pharmacy") June 20, 2018 Tianjin VIE's subsidiary Warehousing and logistics Kunshan Yifang Pharmacy Co., Ltd. ("Kunshan Yifang Pharmacy") July 30, 2018 Kunshan VIE's subsidiary Warehousing and logistics Hubei Yihao Pharmacy Co., Ltd (“Hubei Yihao Pharmacy”) Aug 31, 2019 Wuhuan WFOE's subsidiary Warehousing and logistics Fujian Yaofang Pharmacy Co.,Ltd (“Fujian Yaofang Pharmacy”) Aug 13, 2019 Fuzhou WFOE's subsidiary Warehousing and logistics |
SUMMARY OF PRINCIPAL ACCOUNTI_3
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |
Schedule of amounts and balances of the VIEs were included in the Group's consolidated financial statements after the elimination of intercompany balances and transactions | As of December 31, 2018 2019 Current Assets: Cash and cash equivalents 8,527 40,964 Restricted cash — 12,631 Accounts receivable, net 28,351 60,173 Notes receivable — 23,274 Inventories 210,285 389,195 Prepayments and other current assets 133,655 171,318 Total current assets 380,818 697,555 Property and equipment 9,962 15,599 Intangible assets, net 382 774 Long-term investments 11,140 140 Operating lease right-of-use assets — 67,103 Other non-current assets 1,446 2,078 Total assets 403,748 783,249 Current Liabilities: Short-term borrowings — (65,081) Accounts payable (211,954) (394,242) Accrued expenses and other current liabilities (50,356) (149,111) Total current liabilities (262,310) (608,434) Long-term operating lease liabilities — (47,750) Total liabilities (262,310) (656,184) Year Ended December 31, 2017 2018 2019 Net revenues 959,153 1,785,757 3,302,818 Total cost and expenses (930,567) (1,809,656) (3,383,187) Net income (loss) 28,586 (23,899) (80,369) Year Ended December 31, 2017 2018 2019 Net cash used in operating activities (124,409) (112,425) (263,750) Net cash used in investing activities (54) (7,308) (4,684) Net cash provided by financing activities — — 87,892 |
Schedule of estimated useful lives | Leasehold improvements Shorter of the lease term or their estimated useful lives Furniture, fixtures and equipment 3 years Electronic equipment 3 years Vehicles 5 years |
Schedule of concentration of customers and suppliers | As of December 31, 2018 2019 Accounts receivable: A * 18.8 % The following supplier accounted for 10% or more of purchases for the years ended December 31, 2017, 2018 and 2019: Year Ended December 31, 2017 2018 2019 Product purchases: A 14.1 % 13.9 % * B * 12.7 % * The following suppliers accounted for 10% or more of balances of accounts payable as of December 31, 2018 and 2019: As of December 31, 2018 2019 Accounts payable: A 18.9 % * * Less than 10%. |
Schedule of product revenues and segment profit/(loss) generated by its segments | Year Ended December 31, 2017 2018 2019 B2C segment Product revenues 862,327 847,476 763,254 Cost of products sold* (780,137) (767,073) (654,796) Segment profit for B2C Business 82,190 80,403 108,458 B2B segment Product revenues 86,890 922,751 3,166,444 Cost of products sold* (88,582) (914,627) (3,132,074) Segment (loss) profit for B2B Model (1,692) 8,124 34,370 Total segment profit 80,498 88,527 142,828 * For segment reporting purpose, purchase rebate is allocated to B2C segment and B2B segment primarily based on the amount of cost of products sold for each segment. Cost of products sold does not include other direct costs related to cost of product sales such as shipping and handling expense, payroll and benefits of logistic staff, logistic centers rental expenses and depreciation expenses, which are recorded in the fulfillment expenses. |
Schedule of reconciliation of reportable segments revenue to the Group's consolidated revenues | Year Ended December 31, 2017 2018 2019 Total revenues for reportable segments 949,217 1,770,227 3,929,698 Service revenues 10,269 15,743 22,355 Total consolidated revenues 959,486 1,785,970 3,952,053 |
Schedule of reconciliation of the reportable segments' measures of profit or loss to the Group's consolidated loss before income taxes | Year Ended December 31, 2017 2018 2019 Total profit for reportable segments 80,498 88,527 142,828 Unallocated amounts: Service Revenues 10,269 15,743 22,355 Fulfillment expenses (55,880) (73,930) (128,996) Selling and marketing expenses (190,074) (260,040) (340,562) General and administrative expenses (53,434) (98,759) (123,501) Technology expenses (48,133) (71,248) (61,902) Other operating income (expenses), net 2,732 (668) (3,735) Interest income 4,013 4,352 4,802 Interest expense (55) — (3,622) Foreign exchange (loss) gain (3,492) 2,459 (10,328) Other income (loss),net 4,229 11,531 834 Loss before income tax (249,327) (382,033) (501,827) |
Schedule of revenues from different product groups and services | Year Ended December 31, 2017 2018 2019 Product Revenues 949,217 1,770,227 3,929,698 Drugs 649,341 1,489,917 3,595,419 Nutritional supplements 123,214 190,425 245,644 Contact lenses. 107,275 47,295 18,110 Medical supplies and devices 49,414 26,563 50,178 Other products. 19,973 16,027 20,347 Service Revenues 10,269 15,743 22,355 MP Service 8,767 12,375 17,239 Other Services 1,502 3,368 5,116 Total 959,486 1,785,970 3,952,053 |
Schedule of impact on consolidated balance sheet | December 31, 2018 January 1, 2019 Effect of the adoption As reported of ASC 842 As adjusted ASSETS Prepayments and other current assets 161,147 (1,371) 159,776 Operating lease right-of-use assets — 62,408 62,408 Total assets 1,546,418 61,037 1,607,455 LIABILITIES AND EQUITY Accrued expenses and other current liabilities 102,261 19,795 122,056 Long-term operating lease liabilities — 41,242 41,242 Total liabilities 322,654 61,037 383,691 Total equity 1,223,764 — 1,223,764 Total liabilities and equity 1,546,418 61,037 1,607,455 |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SHORT-TERM INVESTMENTS | |
Schedule of short-term investments | As of December 31, 2018 2019 Wealth Management Products 252,805 — |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES | |
Schedule of Inventories | As of December 31, 2018 2019 Products 210,836 486,271 |
PREPAYMENT AND OTHER CURRENT _2
PREPAYMENT AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PREPAYMENT AND OTHER CURRENT ASSETS | |
Schedule of prepayment and other current assets | As of December 31, 2018 2019 Value added tax recoverable 70,908 112,362 Rebate receivable from suppliers 58,827 57,749 Deposits (Note) 11,602 8,831 Advance to suppliers 3,315 14,807 Prepaid IT & Insurance expense 5,034 7,249 Interest receivable 2,124 612 Others 9,337 6,994 Total 161,147 208,604 Note: Deposits consist of amounts paid to certain vendors for advertising and rentals utilized within one year. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | As of December 31, 2018 2019 Cost: Leasehold improvements 34,147 42,858 Electronic equipment 18,730 22,373 Furniture, fixtures and equipment 8,566 15,426 Vehicles 595 898 62,038 81,555 Less: Accumulated depreciation (41,736) (51,719) 20,302 29,836 Construction in progress — — Property and equipment, net 20,302 29,836 |
LONG-TERM INVESTMENTS (Tables)
LONG-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-term investments | |
Schedule of long-term investments | As of December 31, 2018 2019 Equity securities without a readily determinable fair value: Xixi 11,000 — Longyan Huiyuan 140 140 Total 11,140 140 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
Schedule of maturities of lease liabilities | The maturities of lease liabilities in accordance with Leases (Topic 842) in each of the next five years and thereafter as of December 31, 2019 were as follows: Year Ending December 31, 2020 34,948 2021 24,091 2022 15,668 2023 10,807 2024 7,208 Thereafter 4,292 Total lease payment 97,014 Less: imputed interest (8,984) Present value of minimum operating lease payments 88,030 The undiscounted future minimum payments under non-cancelable operating leases as of December 31, 2018, prior to the adoption of the Lease ASUs was as follows: Year Ending December 31, 2019 30,443 2020 27,496 2021 14,322 2022 8,299 2023 7,835 Thereafter 16,509 Total lease payment 104,904 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2018 2019 Accrued advertising expense 10,492 4,551 Salary and welfare payables 25,042 28,579 Accrued fulfillment expenses 8,891 14,378 Accrued delivery service fees 7,153 16,255 Payable to marketplace sellers (note 1) 10,510 15,444 Deposits from marketplace sellers 6,015 11,311 Advance from customers 15,489 63,456 Tax Payables 2,466 2,691 Current portion of operating lease liabilities — 31,099 Other financing payable (note 2) — 25,569 Others 16,203 20,675 Total 102,261 234,008 Note 1: Amounts relate to cash collected on behalf of marketplace sellers for products sold through the Group’s online platform. Note 2: Starting in 2019, the Group entered into a series of agreements with a third party financing company, pursuant to which the third party financing company will provide credit to certain B2B customers who chose to participate. Under the terms of the agreement, the financing company will make an advance payment of a majority of a B2B customer's order to the Group. Credit terms to the customer are typically 30 days. Customers are required to pay the amount owed to the Group when it is due, and the Group will normally repay the money to the financing company on the same day. The balance represents the advances to Group which are outstanding as of December 31, 2019. |
OTHER NON-CURRENT LIABILITIES (
OTHER NON-CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER NON-CURRENT LIABILITIES | |
Schedule of other non-current liabilities | As of December 31, 2018 2019 ADR Reimbursement (note) 8,135 5,936 |
NET REVENUE (Tables)
NET REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NET REVENUE | |
Table illustrates disaggregation of the Group's revenue streams by type of customers and nature of services the Group offered | Year Ended December 31, 2017 2018 2019 Product Revenues 949,217 1,770,227 3,929,698 B2C Business 862,327 847,476 763,254 B2B Business 86,890 922,751 3,166,444 Service Revenues 10,269 15,743 22,355 MP Service 8,767 12,375 17,239 Other Services 1,502 3,368 5,116 Total 959,486 1,785,970 3,952,053 |
Schedule of movements of the Group's accounts receivable and advances from customers | Accounts Advances from Receivable Customers Opening Balance as of January 1, 2018 20,398 11,722 Increase/(decrease), net 8,171 3,767 Ending Balance as of December 31, 2018 28,569 15,489 Increase/(decrease), net Ending Balance as of December 31, 2019 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED COMPENSATION | |
Schedule of assumptions used to estimate the fair values of the share options granted | 2017 2018 2019 Risk-free rate of return 1.31%~1.76% 2.01%~2.63% 1.68%~2.63% Contractual life of option 10 years 10 years 10 years Estimated volatility rate 25% 27%~38% 30%~41% Dividend yield Nil Nil Nil Fair value per ordinary share US$5.89~$7.30 US$3.00 ~$9.51 US$2.37 ~$3.40 |
Schedule of employee option activity under the Plan | Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic Options price term value US$ Years US$ Outstanding at January 1, 2017 3,461,650 1.00 8.46 3,843 Granted 2,303,900 1.84 Forfeited (1,866,225) 1.56 Outstanding at December 31, 2017 3,899,325 1.22 7.98 7,970 Granted 5,296,204 2.17 Forfeited (304,900) 1.96 Outstanding at December 31, 2018 8,890,629 1.76 8.28 36,888 Granted 4.12 Forfeited (2,086,050) 1.99 Exercised (1,962,484) 0.76 Outstanding at December 31, 2019 5,905,388 22,807 Vested and Exercisable as of December 31, 2019 1,960,367 1.87 7,151 Vested or expected to vest as of December 31, 2019 5,905,388 2.44 22,807 |
Schedule of restricted share unit | Number of Weighted Average Grant Date Restricted Stocks Fair Value US$ Restricted share units outstanding at January 1, 2019 — — Granted 3,050,427 3.90 Forfeited (195,200) 3.10 Vested (301,228) 4.60 Restricted share units outstanding at December 31, 2019 2,553,999 3.88 |
Schedule of share based compensation expense | Year Ended December 31, 2017 2018 2019 RMB RMB RMB General and administrative expenses 5,176 22,477 25,412 Selling and marketing expenses 3,674 23,561 24,772 Technology and content expenses 1,071 5,321 4,097 Total 9,921 51,359 54,281 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LOSS PER SHARE | |
Schedule of computation of basic and diluted loss per share | Year Ended December 31, 2017 2018 2019 Net loss attributable to ordinary shareholders (248,580) (380,091) (499,606) Weighted average number of ordinary shares-basic and diluted 72,000,000 99,451,210 163,671,577 Net loss per share-basic and diluted (3.45) (3.82) (3.05) |
Summary of share options outstanding excluded from calculation of diluted loss per share | Year Ended December 31, 2017 2018 2019 Series A Preferred Shares 4,200,000 — — Series B Preferred Shares 11,396,178 — — Series C Preferred Shares 31,739,234 — — Series D Preferred Shares 27,783,584 — — Share options 5,010,912 9,997,216 9,311,906 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of reconciliation between the effective income tax rate and the PRC statutory income tax rate | Year Ended December 31, 2018 2019 PRC statutory tax rate 25 % 25 % Tax effect of other expenses that are not deductible in determining taxable profit (9) % (3) % Effect of changing tax rate due to high-tech enterprise qualification — (11) % Effect of enacted tax rate change — 5 % Effect of change in valuation allowance (16) % (16) % Effective tax rate 0 % 0 % |
Schedule of principal components of the deferred tax assets and liabilities | As of December 31, 2018 2019 Deferred tax assets: Net loss carryforward 256,850 337,214 Deductible advertising expense 17,964 19,613 Accrued expenses and payroll payable 12,399 10,805 Others 88 890 Valuation allowance (287,301) (368,522) Total deferred tax assets — — Deferred tax liabilities: Total deferred tax liabilities — — |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
Schedule of of related parties | Name of related party Relationship with the Group Zhejiang Youzhan Information Technology Co., Ltd. Entity controlled by Chief Operating Officers of the Group As of December 31, 2018 2019 Accrued expenses and other current liabilities 157 — |
ORGANIZATION AND PRINCIPAL AC_3
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) | Dec. 31, 2019 |
Yao Wang | |
Organization | |
Percentage of shareholdings | 100.00% |
Yao Fang or WFOE | |
Organization | |
Percentage of shareholdings | 100.00% |
Wuhan Huazhong | |
Organization | |
Percentage of shareholdings | 70.00% |
SUMMARY OF PRINCIPAL ACCOUNTI_4
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Basis of consolidation (Details) | 12 Months Ended | |
Dec. 31, 2019itemstore | Sep. 30, 2013shareholder | |
Basis of consolidation | ||
Number of Drug Mall | 1 | |
Number of individual shareholders nominated by the Founders | shareholder | 2 | |
Proxy Agreement | ||
Basis of consolidation | ||
Prior written notice period to terminate the agreement | 30 days | |
Exclusive Support Service Agreement | ||
Basis of consolidation | ||
Term of agreement (in years) | 10 years | |
Extended term of agreement (in years) | 10 years | |
Consecutive months to terminate or advance terminate of agreement in failure to perform its obligation | 6 months | |
China | ||
Basis of consolidation | ||
Number of Drugstore | store | 1 | |
Number of Drug Mall | 1 |
SUMMARY OF PRINCIPAL ACCOUNTI_5
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Balances of the VIEs and Short-term investments (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Sep. 30, 2019 | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) | |
Current assets: | |||||||
Cash and cash equivalents | $ 83,496 | ¥ 853,740 | ¥ 581,281 | ||||
Restricted cash | 16,726 | 116,441 | |||||
Short-term investments | 252,805 | ||||||
Accounts receivable | 9,372 | 28,569 | ¥ 20,398 | 65,247 | |||
Notes receivable | 3,388 | 23,587 | |||||
Inventories | 69,848 | 210,836 | 486,271 | ||||
Prepayments and other current assets | 29,965 | 161,147 | 208,604 | ¥ 159,776 | |||
Total current assets | 212,795 | 1,507,097 | 1,481,431 | ||||
Property and equipment | 4,286 | 20,302 | 29,836 | ||||
Intangible assets, net | 1,152 | 4,503 | 8,022 | ||||
Long-term investments | 20 | 11,140 | 140 | ||||
Operating lease right-of-use assets | 12,620 | 87,855 | 62,408 | ||||
Other non-current assets | 432 | 3,376 | 3,009 | ||||
Total assets | 231,305 | 1,546,418 | 1,610,293 | 1,607,455 | |||
Current liabilities | |||||||
Short-term borrowings | (13,658) | (95,081) | |||||
Accounts payable | (63,825) | (212,258) | (444,334) | ||||
Accrued expenses and other current liabilities | (33,613) | (102,261) | (234,008) | (122,056) | |||
Total current liabilities | (111,096) | (314,519) | (773,423) | ||||
Long-term operating lease liabilities | (8,189) | (57,011) | (41,242) | ||||
Total liabilities | (120,138) | (322,654) | (836,370) | ¥ (383,691) | |||
Product revenues | 567,677 | ¥ 3,952,053 | 1,785,970 | 959,486 | |||
Total cost and expenses | (638,566) | (4,445,566) | (2,186,345) | (1,213,508) | |||
Net income (loss) | (71,764) | (499,606) | (380,091) | (248,580) | |||
Net cash used in operating activities | (73,599) | (512,382) | (343,018) | (204,372) | |||
Net cash used in investing activities | 34,140 | 237,675 | 44,454 | (36,125) | |||
Net cash provided by financing activities | $ 15,655 | 108,987 | 972,697 | 49,500 | |||
Short-term investments | |||||||
Impairment on available-for-sale debt securities | 0 | 0 | 0 | ||||
VIEs | |||||||
Current assets: | |||||||
Cash and cash equivalents | 8,527 | 40,964 | |||||
Restricted cash | 12,631 | ||||||
Accounts receivable | 28,351 | 60,173 | |||||
Notes receivable | 23,274 | ||||||
Inventories | 210,285 | 389,195 | |||||
Prepayments and other current assets | 133,655 | 171,318 | |||||
Total current assets | 380,818 | 697,555 | |||||
Property and equipment | 9,962 | 15,599 | |||||
Intangible assets, net | 382 | 774 | |||||
Long-term investments | 11,140 | 140 | |||||
Operating lease right-of-use assets | 67,103 | ||||||
Other non-current assets | 1,446 | 2,078 | |||||
Total assets | 403,748 | 783,249 | |||||
Current liabilities | |||||||
Short-term borrowings | (65,081) | ||||||
Accounts payable | (211,954) | (394,242) | |||||
Accrued expenses and other current liabilities | (50,356) | (149,111) | |||||
Total current liabilities | (262,310) | (608,434) | |||||
Long-term operating lease liabilities | (47,750) | ||||||
Total liabilities | (262,310) | ¥ (656,184) | |||||
Product revenues | 3,302,818 | 1,785,757 | 959,153 | ||||
Total cost and expenses | (3,383,187) | (1,809,656) | (930,567) | ||||
Net income (loss) | (80,369) | (23,899) | 28,586 | ||||
Net cash used in operating activities | (263,750) | (112,425) | (124,409) | ||||
Net cash used in investing activities | (4,684) | ¥ (7,308) | ¥ (54) | ||||
Net cash provided by financing activities | ¥ 87,892 | ||||||
Percentage of consolidated revenues | 3.00% | 84.00% | 84.00% | 99.00% | 99.00% | ||
Percentage of consolidated total assets | 49.00% | 49.00% | 26.00% | ||||
Percentage of consolidated total liabilities | 78.00% | 78.00% | 81.00% | ||||
Yao Fang or WFOE | VIEs | |||||||
Current liabilities | |||||||
Advertising fees and marketing fees charged by WFOE | ¥ 126,831 | ¥ 79,742 | ¥ 162,844 |
SUMMARY OF PRINCIPAL ACCOUNTI_6
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Property and equipment (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment | |||
Interest cost capitalized | ¥ 0 | ¥ 0 | ¥ 0 |
Furniture, fixtures and equipment | |||
Property and equipment | |||
Estimated useful lives | 3 years | ||
Electronic equipment | |||
Property and equipment | |||
Estimated useful lives | 3 years | ||
Vehicles | |||
Property and equipment | |||
Estimated useful lives | 5 years |
SUMMARY OF PRINCIPAL ACCOUNTI_7
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Intangible assets and Others (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | |
Impairment of long-lived assets | |||||
Impairment of the Group's long-lived assets | ¥ 0 | ¥ 0 | ¥ 0 | ||
Long-term investments | |||||
Long-term investments | 11,140 | $ 20 | ¥ 140 | ||
Impairment on long-term investments | ¥ 11,000 | 0 | ¥ 0 | ||
Equity method investments | |||||
Long-term investments | |||||
Long-term investments | ¥ 11,140 | ¥ 140 |
SUMMARY OF PRINCIPAL ACCOUNTI_8
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Product Revenues and Service revenues (Details) | 12 Months Ended |
Dec. 31, 2019item | |
Product revenues | |
Number of Drug Mall | 1 |
Warranty period | 30 days |
Minimum percentage of surcharges and value added tax | 0.00% |
Maximum percentage of surcharges and value added tax | 17.00% |
Service revenues | |
Number of performance obligation | 1 |
SUMMARY OF PRINCIPAL ACCOUNTI_9
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Selling and marketing expenses and Others (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Selling and marketing expenses | |||
Advertising expenses | ¥ 30,447 | ¥ 30,221 | ¥ 62,749 |
Government grants | |||
Government grants | ¥ 358 | ¥ 2,166 | ¥ 3,282 |
Value added taxes | |||
Minimum percentage value added tax | 0.00% | ||
Maximum percentage value added tax | 17.00% |
SUMMARY OF PRINCIPAL ACCOUNT_10
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Concentration of credit risk (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017 | Dec. 31, 2019CNY (¥) | |
Foreign currency risk | ||||
Cash and cash equivalents | $ 83,496 | ¥ 853,740 | ¥ 581,281 | |
A | ||||
Concentration of credit risk | ||||
Concentration risk (as a percent) | 18.80% | |||
Foreign currency risk, Renminbi ("RMB") | ||||
Foreign currency risk | ||||
Cash and cash equivalents | ¥ 17,810 | ¥ 336,583 | ||
Accounts receivable | ||||
Concentration of credit risk | ||||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% | |
Product purchases | Suppliers risk | A | ||||
Concentration of credit risk | ||||
Concentration risk (as a percent) | 13.90% | 14.10% | ||
Product purchases | Suppliers risk | B | ||||
Concentration of credit risk | ||||
Concentration risk (as a percent) | 12.70% | |||
Accounts payable | Suppliers risk | A | ||||
Concentration of credit risk | ||||
Concentration risk (as a percent) | 18.90% |
SUMMARY OF PRINCIPAL ACCOUNT_11
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Treasury Stock (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($)shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018shares |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |||
Treasury stock, shares | 1,485,862 | 1,485,862 | 0 |
Repurchase of treasury stock value | $ 3,302 | ¥ 22,991 |
SUMMARY OF PRINCIPAL ACCOUNT_12
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Product revenues and segment profit/(loss) (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)segment | Dec. 31, 2019CNY (¥)segment | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Segment reporting | ||||
Number of operating segment | segment | 2 | 2 | ||
Product revenues | $ 567,677 | ¥ 3,952,053 | ¥ 1,785,970 | ¥ 959,486 |
Cost of products sold | (128,996) | (73,930) | (55,880) | |
Segment (loss)/profit | 142,828 | 88,527 | 80,498 | |
B2C segment | ||||
Segment reporting | ||||
Product revenues | 763,254 | 847,476 | 862,327 | |
Cost of products sold | (654,796) | (767,073) | (780,137) | |
Segment (loss)/profit | 108,458 | 80,403 | 82,190 | |
B2B segment | ||||
Segment reporting | ||||
Product revenues | 3,166,444 | 922,751 | 86,890 | |
Cost of products sold | (3,132,074) | (914,627) | (88,582) | |
Segment (loss)/profit | ¥ 34,370 | ¥ 8,124 | ¥ (1,692) |
SUMMARY OF PRINCIPAL ACCOUNT_13
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Reconciliation of reportable segment revenues (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Segment reporting | ||||
Net revenues | $ 567,677 | ¥ 3,952,053 | ¥ 1,785,970 | ¥ 959,486 |
Total profit for reportable segments | 142,828 | 88,527 | 80,498 | |
Unallocated amounts: | ||||
Net revenues | 567,677 | 3,952,053 | 1,785,970 | 959,486 |
Cost of products sold | (128,996) | (73,930) | (55,880) | |
Selling and marketing expenses | (48,919) | (340,562) | (260,040) | (190,074) |
General and administrative expenses | (17,740) | (123,501) | (98,759) | (53,434) |
Technology expenses | (8,892) | (61,902) | (71,248) | (48,133) |
Other operating income (expenses), net | (536) | (3,735) | (668) | 2,732 |
Interest income | 690 | 4,802 | 4,352 | 4,013 |
Interest expense | (520) | (3,622) | (55) | |
Foreign exchange (loss) gain | (1,484) | (10,328) | 2,459 | (3,492) |
Other income, net | 120 | 834 | 11,531 | 4,229 |
Loss before income taxes | (72,083) | (501,827) | (382,033) | (249,327) |
Product | ||||
Segment reporting | ||||
Net revenues | 3,929,698 | 1,770,227 | 949,217 | |
Unallocated amounts: | ||||
Net revenues | 3,929,698 | 1,770,227 | 949,217 | |
Cost of products sold | $ (543,950) | (3,786,870) | (1,681,700) | (868,719) |
Service | ||||
Segment reporting | ||||
Net revenues | 22,355 | 15,743 | 10,269 | |
Unallocated amounts: | ||||
Net revenues | ¥ 22,355 | ¥ 15,743 | ¥ 10,269 |
SUMMARY OF PRINCIPAL ACCOUNT_14
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Revenues from different product groups and services (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Segment reporting | ||||
Net revenues | $ 567,677 | ¥ 3,952,053 | ¥ 1,785,970 | ¥ 959,486 |
Product | ||||
Segment reporting | ||||
Net revenues | 3,929,698 | 1,770,227 | 949,217 | |
Drugs | ||||
Segment reporting | ||||
Net revenues | 3,595,419 | 1,489,917 | 649,341 | |
Nutritional supplements | ||||
Segment reporting | ||||
Net revenues | 245,644 | 190,425 | 123,214 | |
Contact lenses. | ||||
Segment reporting | ||||
Net revenues | 18,110 | 47,295 | 107,275 | |
Medical supplies and devices | ||||
Segment reporting | ||||
Net revenues | 50,178 | 26,563 | 49,414 | |
Other products. | ||||
Segment reporting | ||||
Net revenues | 20,347 | 16,027 | 19,973 | |
Service | ||||
Segment reporting | ||||
Net revenues | 22,355 | 15,743 | 10,269 | |
MP Service | ||||
Segment reporting | ||||
Net revenues | 17,239 | 12,375 | 8,767 | |
Other Services | ||||
Segment reporting | ||||
Net revenues | ¥ 5,116 | ¥ 3,368 | ¥ 1,502 |
SUMMARY OF PRINCIPAL ACCOUNT_15
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Leases (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) |
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES | |||
Operating lease right-of-use assets | $ 12,620 | ¥ 87,855 | ¥ 62,408 |
Lease liabilities | ¥ 88,030 | ¥ 61,037 |
SUMMARY OF PRINCIPAL ACCOUNT_16
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Impact on consolidated balance sheet adoption of ASC 842 (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) |
ASSETS | ||||||
Prepayments and other current assets | $ 29,965 | ¥ 208,604 | ¥ 159,776 | ¥ 161,147 | ||
Operating lease right-of-use assets | 12,620 | 87,855 | 62,408 | |||
Total assets | 231,305 | 1,610,293 | 1,607,455 | 1,546,418 | ||
LIABILITIES AND EQUITY | ||||||
Accrued expenses and other current liabilities | 33,613 | 234,008 | 122,056 | 102,261 | ||
Long-term operating lease liabilities | 8,189 | 57,011 | 41,242 | |||
Total liabilities | 120,138 | 836,370 | 383,691 | 322,654 | ||
Total equity | 111,167 | 773,923 | 1,223,764 | 1,223,764 | ¥ (944,704) | ¥ (688,003) |
Total liabilities and equity | $ 231,305 | ¥ 1,610,293 | 1,607,455 | ¥ 1,546,418 | ||
Restatement adjustment | ASU No. 201602 | ||||||
ASSETS | ||||||
Prepayments and other current assets | (1,371) | |||||
Operating lease right-of-use assets | 62,408 | |||||
Total assets | 61,037 | |||||
LIABILITIES AND EQUITY | ||||||
Accrued expenses and other current liabilities | 19,795 | |||||
Long-term operating lease liabilities | 41,242 | |||||
Total liabilities | 61,037 | |||||
Total liabilities and equity | ¥ 61,037 |
SUMMARY OF PRINCIPAL ACCOUNT_17
SUMMARY OF PRINCIPAL ACCOUNTING POLICIES - Convenience translation (Details) | Dec. 31, 2019 |
Convenience translation | |
Convenience translation rate (in RMB/USD) | 6.9618 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Short-term investments | ||||
Short-term investments | ¥ 252,805 | |||
Change in fair value of available-for-sale investments | $ 1,054 | ¥ 7,335 | 8,734 | ¥ 5,181 |
Realized gains transferred from other comprehensive income to other income (loss) | 9,635 | 10,869 | 1,154 | |
Impairment charges | ¥ 0 | 0 | ¥ 0 | |
Wealth Management Products | ||||
Short-term investments | ||||
Short-term investments | ¥ 252,805 |
NOTES RECEIVABLE (Details)
NOTES RECEIVABLE (Details) - Dec. 31, 2019 ¥ in Thousands, $ in Thousands | USD ($) | CNY (¥) |
Notes receivable | ||
Notes receivable | $ 3,388 | ¥ 23,587 |
Pledged as collateral | Borrowings | ||
Notes receivable | ||
Notes receivable | 23,587 | |
Pledged as collateral | Notes receivable | ||
Notes receivable | ||
Notes receivable | ¥ 14,264 |
INVENTORIES (Details)
INVENTORIES (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | |
INVENTORIES | ||||
Products | ¥ 210,836 | $ 69,848 | ¥ 486,271 | |
Write-downs | ¥ 790 | ¥ 0 |
PREPAYMENT AND OTHER CURRENT _3
PREPAYMENT AND OTHER CURRENT ASSETS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
PREPAYMENT AND OTHER CURRENT ASSETS | ||||
Value added tax recoverable | ¥ 112,362 | ¥ 70,908 | ||
Rebate receivable from suppliers | 57,749 | 58,827 | ||
Deposits (Note) | 8,831 | 11,602 | ||
Advance to suppliers | 14,807 | 3,315 | ||
Prepaid IT & Insurance expense | 7,249 | 5,034 | ||
Interest receivable | 612 | 2,124 | ||
Others | 6,994 | 9,337 | ||
Total | $ 29,965 | ¥ 208,604 | ¥ 159,776 | ¥ 161,147 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | |
Cost | ¥ 62,038 | ¥ 81,555 | |||
Less: Accumulated depreciation | (41,736) | (51,719) | |||
Property and equipment excluding construction in progress | 20,302 | 29,836 | |||
Property and equipment, net | 20,302 | $ 4,286 | 29,836 | ||
Depreciation expense | ¥ 10,607 | 10,643 | ¥ 14,203 | ||
Leasehold improvements | |||||
Cost | 34,147 | 42,858 | |||
Electronic equipment | |||||
Cost | 18,730 | 22,373 | |||
Furniture, fixtures and equipment | |||||
Cost | 8,566 | 15,426 | |||
Vehicles | |||||
Cost | ¥ 595 | ¥ 898 |
LONG-TERM INVESTMENTS (Details)
LONG-TERM INVESTMENTS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2015 | |
Long-term investments | |||||
Equity securities without a readily determinable fair value | ¥ 140 | ¥ 11,140 | |||
Impairment on long-term investments | 11,000 | 0 | ¥ 0 | ||
Xixi | |||||
Long-term investments | |||||
Equity securities without a readily determinable fair value | 11,000 | ||||
Percentage of equity interest | 5.21% | ||||
Cash consideration | ¥ 11,000 | ||||
Longyan Huiyuan | |||||
Long-term investments | |||||
Equity securities without a readily determinable fair value | ¥ 140 | ¥ 140 | |||
Percentage of equity interest | 1.00% | ||||
Cash consideration | ¥ 140 |
LEASES (Details)
LEASES (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) | |
LEASES | ||||||
Operating lease right-of-use assets | $ 12,620 | ¥ 87,855 | ¥ 62,408 | |||
Current portion of operating lease liabilities | ¥ 31,099 | |||||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Current portion of operating lease liabilities | Current portion of operating lease liabilities | ||||
Long-term operating lease liabilities | $ 8,189 | ¥ 57,011 | 41,242 | |||
Weighted average remaining lease term (in years) | 3 years 6 months | 3 years 6 months | ||||
Weighted average discount rate (as a percent) | 5.60% | 5.60% | ||||
Lease expenses | ¥ 29,715 | ¥ 27,089 | ¥ 23,871 | |||
Cash paid for operating lease liabilities | 29,042 | |||||
Right-of-use assets obtained in exchange for the operating lease liabilities | ¥ 50,841 | |||||
Expected discounted and undiscounted lease payments under non-cancelable leases: | ||||||
December 31, 2020 / December 31, 2019 | ¥ 34,948 | 30,443 | ||||
December 31, 2021 / December 31, 2020 | 24,091 | 27,496 | ||||
December 31, 2022 / December 31, 2021 | 15,668 | 14,322 | ||||
December 31, 2023 / December 31, 2022 | 10,807 | 8,299 | ||||
December 31, 2024 / December 31, 2023 | 7,208 | 7,835 | ||||
Thereafter | 4,292 | 16,509 | ||||
Total lease payment | 97,014 | 104,904 | ||||
Less: imputed interest | (8,984) | |||||
Lease liabilities | ¥ 88,030 | ¥ 61,037 | ||||
Minimum | ||||||
LEASES | ||||||
Lease term (in years) | 1 year | 1 year | ||||
Maximum | ||||||
LEASES | ||||||
Lease term (in years) | 10 years | 10 years |
SHORT-TERM BORROWINGS (Details)
SHORT-TERM BORROWINGS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Sep. 30, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Notes receivable | |||||
Short-term Debt | $ 13,658 | ¥ 95,081 | |||
Revolving credit facility | |||||
Notes receivable | |||||
Short-term Debt | 95,081 | ¥ 0 | |||
Bank A | Revolving credit facility | |||||
Notes receivable | |||||
Weighted average interest rate | 4.35% | ||||
Maximum borrowing capacity | 112,334 | ¥ 500,000 | |||
Line of credit drawn down facility | ¥ 47,253 | ||||
Bank A | Revolving credit facility | Cash deposits | |||||
Notes receivable | |||||
Pledged assets | 116,441 | ||||
Bank A | Revolving credit facility | Notes receivable | |||||
Notes receivable | |||||
Pledged assets | 14,264 | ||||
Bank A | Revolving credit facility | Borrowings | |||||
Notes receivable | |||||
Outstanding line of credit | 47,253 | ||||
Bank A | Revolving credit facility | Notes payable | |||||
Notes receivable | |||||
Outstanding line of credit | ¥ 65,081 | ||||
Bank B | Revolving credit facility | |||||
Notes receivable | |||||
Weighted average interest rate | 4.35% | 4.35% | |||
Maximum borrowing capacity | ¥ 38,585 | ¥ 100,000 | |||
Outstanding line of credit | ¥ 30,000 | ||||
Line of credit drawn down facility | ¥ 8,585 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||||
Accrued advertising expense | ¥ 4,551 | ¥ 10,492 | |||
Salary and welfare payables | 28,579 | 25,042 | |||
Accrued fulfillment expenses | 14,378 | 8,891 | |||
Accrued delivery service fees | 16,255 | 7,153 | |||
Payable to marketplace sellers (note 1) | 15,444 | 10,510 | |||
Deposits from marketplace sellers | 11,311 | 6,015 | |||
Advances from customers | 63,456 | 15,489 | ¥ 11,722 | ||
Tax Payables | 2,691 | 2,466 | |||
Current portion of operating lease liabilities | 31,099 | ||||
Other financing payable (note 2) | 25,569 | ||||
Others | 20,675 | 16,203 | |||
Total | $ 33,613 | ¥ 234,008 | ¥ 122,056 | ¥ 102,261 |
OTHER NON-CURRENT LIABILITIES_2
OTHER NON-CURRENT LIABILITIES (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | |
OTHER NON-CURRENT LIABILITIES | ||||
ADR reimbursement, non-current | ¥ 8,135 | ¥ 5,936 | ||
Other non-current liabilities | 8,135 | $ 853 | 5,936 | |
Reimbursements, other income | ¥ 2,199 | ¥ 663 | ||
ADR reimbursement, current | ¥ 2,199 |
ORDINARY SHARES (Details)
ORDINARY SHARES (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | Jan. 25, 2019shares | Sep. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2018CNY (¥)shares | Dec. 31, 2019$ / sharesshares | Dec. 31, 2018$ / sharesshares | Dec. 31, 2016shares | Dec. 31, 2015shares | Dec. 31, 2017shares |
Class of Stock [Line Items] | ||||||||
Shares authorized (in shares) | 1,000,000,000 | |||||||
Dividends | $ | $ 50 | |||||||
Ordinary shares Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Shares authorized (in shares) | 800,000,000 | 800,000,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.00005 | $ 0.00005 | ||||||
Ordinary shares, outstanding | 92,120,024 | 91,088,106 | ||||||
Common stock, shares, issued, not outstanding (in shares) | 2,982,220 | |||||||
Ordinary shares Class B | ||||||||
Class of Stock [Line Items] | ||||||||
Shares authorized (in shares) | 72,000,000 | 72,000,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.00005 | $ 0.00005 | ||||||
Ordinary shares, outstanding | 72,000,000 | 72,000,000 | ||||||
Ordinary shares Class C | Gold Prized | ||||||||
Class of Stock [Line Items] | ||||||||
Subscription receivable | ¥ | ¥ 2,200 | |||||||
Ordinary Shares | Ordinary shares Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Shares authorized (in shares) | 800,000,000 | 72,000,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.00005 | |||||||
Shares issued | 5,500,000 | 15,969,110 | 15,969,110 | |||||
Ordinary shares issued | 2,517,780 | |||||||
Ordinary shares, outstanding | 92,120,024 | 91,088,106 | 72,000,000 | 72,000,000 | ||||
Conversion of preferred shares into Class A ordinary shares upon IPO (in shares) | 75,118,996 | 75,118,996 | ||||||
Issuance of ordinary shares upon initial public offering ("IPO"), net of issuance costs of RMB19,134 (in shares) | 5,500,000 | 15,969,110 | 15,969,110 | |||||
Re-designation of Class A ordinary shares into Class B ordinary shares (Note 13) (in shares) | 72,000,000 | (72,000,000) | ||||||
Ordinary Shares | Ordinary shares Class B | ||||||||
Class of Stock [Line Items] | ||||||||
Shares authorized (in shares) | 72,000,000 | 839,209,895 | ||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.00005 | |||||||
Ordinary shares, outstanding | 72,000,000 | 72,000,000 | ||||||
Re-designation of Class A ordinary shares into Class B ordinary shares (Note 13) (in shares) | 72,000,000 | |||||||
Ordinary Shares | Ordinary shares Class C | ||||||||
Class of Stock [Line Items] | ||||||||
Shares authorized (in shares) | 128,000,000 | 13,671,109 | ||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.00005 | |||||||
Ordinary Shares | Ordinary shares Class C | Gold Prized | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued | 1,607,901 | 1,607,901 | ||||||
Issuance of ordinary shares upon initial public offering ("IPO"), net of issuance costs of RMB19,134 (in shares) | 1,607,901 | 1,607,901 | ||||||
Number of Surrendered Shares | 1,607,901 | |||||||
Equity Incentive Plan | Ordinary shares Class A | ||||||||
Class of Stock [Line Items] | ||||||||
Ordinary shares issued | 2,517,780 | |||||||
Ordinary shares, outstanding | 2,517,780 |
NET REVENUE - Disaggregation of
NET REVENUE - Disaggregation of revenues (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Disaggregation of revenues | ||||
Net revenues | $ 567,677 | ¥ 3,952,053 | ¥ 1,785,970 | ¥ 959,486 |
Product | ||||
Disaggregation of revenues | ||||
Net revenues | 3,929,698 | 1,770,227 | 949,217 | |
B2C segment | ||||
Disaggregation of revenues | ||||
Net revenues | 763,254 | 847,476 | 862,327 | |
B2B segment | ||||
Disaggregation of revenues | ||||
Net revenues | 3,166,444 | 922,751 | 86,890 | |
Service | ||||
Disaggregation of revenues | ||||
Net revenues | 22,355 | 15,743 | 10,269 | |
MP Service | ||||
Disaggregation of revenues | ||||
Net revenues | 17,239 | 12,375 | 8,767 | |
Other Services | ||||
Disaggregation of revenues | ||||
Net revenues | ¥ 5,116 | ¥ 3,368 | ¥ 1,502 |
NET REVENUE - Contract balance
NET REVENUE - Contract balance (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Accounts Receivable | ||||
Opening Balance | ¥ 28,569 | ¥ 20,398 | ||
Increase/(decrease), net | $ 5,268 | 36,678 | 8,171 | ¥ (7,990) |
Ending Balance | $ 9,372 | 65,247 | 28,569 | 20,398 |
Advances from Customers | ||||
Opening Balance | 15,489 | 11,722 | ||
Increase/(decrease), net | 47,967 | 3,767 | ||
Ending Balance | ¥ 63,456 | ¥ 15,489 | ¥ 11,722 | |
MP Service | ||||
Contract balance | ||||
Maximum term of contract with customer | 1 year | 1 year | 1 year |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - Equity Incentive Plan - Ordinary Shares | Sep. 30, 2013shares |
Maximum | |
SHARE-BASED COMPENSATION | |
Number of shares authorized for issuance under share-based payment arrangement | 1,287,500 |
Board of Directors | |
SHARE-BASED COMPENSATION | |
Number of shares authorized for issuance under share-based payment arrangement | 15,301,990 |
SHARE-BASED COMPENSATION - Empl
SHARE-BASED COMPENSATION - Employee Share options (Details) - Stock Options - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SHARE-BASED COMPENSATION | |||
Share options granted (in shares) | 1,063,293 | 5,296,204 | 2,303,900 |
Share options granted (in dollars per share) | $ 4.12 | $ 2.17 | $ 1.84 |
Contractual term of options granted | 10 years | 10 years | 10 years |
Vesting period | 4 years | 4 years | 4 years |
Percentage of stock awards vesting each year | 25.00% | 25.00% | 25.00% |
One year after grant date | |||
SHARE-BASED COMPENSATION | |||
Vesting period | 1 year | 1 year | 1 year |
Vesting percentage (as a percent) | 40.00% | 40.00% | 40.00% |
Annual basis over 3 years | |||
SHARE-BASED COMPENSATION | |||
Vesting period | 3 years | 3 years | 3 years |
Vesting percentage (as a percent) | 60.00% | 60.00% | 60.00% |
SHARE-BASED COMPENSATION - Assu
SHARE-BASED COMPENSATION - Assumptions used to estimate the fair values of the share options granted (Details) - Stock Options - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SHARE-BASED COMPENSATION | |||
Contractual life of option | 10 years | 10 years | 10 years |
Dividend yield | 0.00% | 0.00% | 0.00% |
Weighted-average grant-date fair value of the options granted | $ 0.49 | $ 5.69 | $ 3.98 |
Minimum | |||
SHARE-BASED COMPENSATION | |||
Risk-free rate of return, minimum | 1.68% | 2.01% | 1.31% |
Estimated volatility rate, minimum | 30.00% | 27.00% | |
Fair value per ordinary share | $ 2.37 | $ 3 | $ 5.89 |
Maximum | |||
SHARE-BASED COMPENSATION | |||
Risk-free rate of return, maximum | 2.63% | 2.63% | 1.76% |
Estimated volatility rate, maximum | 41.00% | 38.00% | |
Fair value per ordinary share | $ 3.40 | $ 9.51 | $ 7.30 |
SHARE-BASED COMPENSATION - Em_2
SHARE-BASED COMPENSATION - Employee option activity (Details) - Stock Options $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)shares | |
Summary of employee option activity under the Plan | |||||
Outstanding at beginning of the year (in shares) | shares | 8,890,629 | 3,899,325 | 3,461,650 | ||
Granted (in shares) | shares | 1,063,293 | 5,296,204 | 2,303,900 | ||
Forfeited (in shares) | shares | (2,086,050) | (304,900) | (1,866,225) | ||
Exercised (in shares) | shares | (1,962,484) | ||||
Outstanding at end of the year (in shares) | shares | 5,905,388 | 8,890,629 | 3,899,325 | 3,461,650 | |
Vested and Exercisable at end of the year (in shares) | shares | 1,960,367 | ||||
Vested and expected to vest at end of the year (in shares) | shares | 5,905,388 | ||||
Weighted Average Exercise Price | |||||
Outstanding at beginning of the year (in dollars per share) | $ / shares | $ 1.76 | $ 1.22 | $ 1 | ||
Share options granted (in dollars per share) | $ / shares | 4.12 | 2.17 | 1.84 | ||
Forfeited (in dollars per share) | $ / shares | 1.99 | 1.96 | 1.56 | ||
Exercised (in dollars per share) | $ / shares | 0.76 | ||||
Outstanding at end of the year (in dollars per share) | $ / shares | 2.44 | $ 1.76 | $ 1.22 | $ 1 | |
Vested and Exercisable at end of the year (in dollars per share) | $ / shares | 1.87 | ||||
Vested and expected to vest at end of the year (in dollars per share) | $ / shares | $ 2.44 | ||||
Weighted average remaining contractual term | |||||
Outstanding (in years) | 7 years 11 months 16 days | 8 years 3 months 11 days | 7 years 11 months 23 days | 8 years 5 months 16 days | |
Vested and Exercisable (in years) | 3 years 10 months 6 days | ||||
Vested and expected to vest (in years) | 7 years 11 months 16 days | ||||
Average intrinsic value | |||||
Outstanding at beginning of the year | $ | $ 36,888 | $ 7,970 | $ 3,843 | ||
Outstanding at end of the year | $ | $ 22,807 | $ 36,888 | $ 7,970 | $ 3,843 | |
Vested and Exercisable at end of the year | ¥ | ¥ 7,151 | ||||
Vested and expected to vest at end of the year | ¥ | ¥ 22,807 |
SHARE-BASED COMPENSATION - Non-
SHARE-BASED COMPENSATION - Non-Employee Share options (Details) - Non-Employee Share options - $ / shares | Jan. 01, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
SHARE-BASED COMPENSATION | ||||
Options outstanding (in shares) | 1,045,962 | 852,519 | ||
Options outstanding (in dollars per share) | $ 1 | |||
Share options vested (in shares) | 975,962 | |||
Share options granted (in shares) | 0 | 35,000 | 25,625 | |
Exercise price of share options granted (in dollars per share) | $ 1.99 | $ 1.99 | $ 1.99 | |
Share options exercised (in shares) | 254,068 | |||
Contractual term of options granted | 4 years | 4 years | 4 years | |
Percentage of stock awards vesting each year | 25.00% | |||
Vested and exercisable (in shares) | 810,957 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Share Units (Details) - Restricted share units | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
SHARE-BASED COMPENSATION | |
Granted | 3,050,427 |
Vesting period | 4 years |
Number of Restricted Stocks | |
Beginning balance | |
Granted | 3,050,427 |
Forfeited | (195,200) |
Vested | (301,228) |
Ending balance | 2,553,999 |
Weighted Average Grant Date Fair Value | |
Beginning balance | $ / shares | |
Granted | $ / shares | $ 3.90 |
Forfeited | $ / shares | 3.10 |
Vested | $ / shares | 4.60 |
Ending balance | $ / shares | $ 3.88 |
First year anniversary | |
SHARE-BASED COMPENSATION | |
Vesting percentage (as a percent) | 25.00% |
Second year anniversary | |
SHARE-BASED COMPENSATION | |
Vesting percentage (as a percent) | 25.00% |
Third year anniversary | |
SHARE-BASED COMPENSATION | |
Vesting percentage (as a percent) | 25.00% |
Fourth year anniversary | |
SHARE-BASED COMPENSATION | |
Vesting percentage (as a percent) | 25.00% |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share-based compensation for all share options (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SHARE-BASED COMPENSATION | |||
Share based compensation expense | ¥ 54,281 | ¥ 51,359 | ¥ 9,921 |
Unrecognized compensation expense related to unvested share options | ¥ 137,361 | ||
Weighted-average period, compensation expense is expected to be recognized | 2 years 4 months 24 days | ||
General and administrative expenses | |||
SHARE-BASED COMPENSATION | |||
Share based compensation expense | ¥ 25,412 | 22,477 | 5,176 |
Selling and marketing expenses | |||
SHARE-BASED COMPENSATION | |||
Share based compensation expense | 24,772 | 23,561 | 3,674 |
Technology and content expenses | |||
SHARE-BASED COMPENSATION | |||
Share based compensation expense | ¥ 4,097 | ¥ 5,321 | ¥ 1,071 |
LOSS PER SHARE - Computation of
LOSS PER SHARE - Computation of basic and diluted loss per share (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
LOSS PER SHARE | ||||
Net loss attributable to ordinary shareholders | $ (71,764) | ¥ (499,606) | ¥ (380,091) | ¥ (248,580) |
Weighted average number of ordinary shares-basic and diluted | 163,671,577 | 163,671,577 | 99,451,210 | 72,000,000 |
Net loss per share-basic and diluted | (per share) | $ (0.44) | ¥ (3.05) | ¥ (3.82) | ¥ (3.45) |
LOSS PER SHARE - Shae options o
LOSS PER SHARE - Shae options outstanding excluded from calculation of diluted loss per share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Series A convertible preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Excluded from the calculation of diluted loss per share (in shares) | 4,200,000 | ||
Series B convertible preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Excluded from the calculation of diluted loss per share (in shares) | 11,396,178 | ||
Series C convertible preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Excluded from the calculation of diluted loss per share (in shares) | 31,739,234 | ||
Series D convertible preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Excluded from the calculation of diluted loss per share (in shares) | 27,783,584 | ||
Share options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Excluded from the calculation of diluted loss per share (in shares) | 9,311,906 | 9,997,216 | 5,010,912 |
INCOME TAXES (Details)
INCOME TAXES (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes | ||
Provision for income taxes | ¥ 8 | |
Hong Kong | ||
Income Taxes | ||
Provision for income taxes | ¥ 0 | |
Reconciliation between the effective income tax rate and the PRC statutory income tax rate (as a percent) | ||
Statutory tax rate | 16.50% | |
PRC | ||
Income Taxes | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate for High and New Technology Enterprises, Percent | 15.00% | |
Reconciliation between the effective income tax rate and the PRC statutory income tax rate (as a percent) | ||
Statutory tax rate | 25.00% | 25.00% |
Tax effect of other expenses that are not deductible in determining taxable profit | (3.00%) | (9.00%) |
Effect of changing tax rate due to high-tech enterprise qualification | (11.00%) | |
Effect of enacted tax rate change | 5.00% | |
Effect of change in valuation allowance | (16.00%) | (16.00%) |
Effective tax rate | 0.00% | 0.00% |
INCOME TAXES - Principal compon
INCOME TAXES - Principal components of deferred income tax assets and liabilities (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred tax assets: | ||
Net loss carryforward | ¥ 337,214 | ¥ 256,850 |
Deductible advertising expense | 19,613 | 17,964 |
Accrued expenses and payroll payable | 10,805 | 12,399 |
Others | 890 | 88 |
Valuation allowance | (368,522) | ¥ (287,301) |
Tax loss carryforwards | ¥ 1,462,175 | |
Statute of limitations period according to the PRC Tax Administration and Collection Law (in years) | 3 years | |
Extension period for statute of limitations under special circumstances (in years) | 5 years | |
Amount of minimum underpayment of tax liability listed as special circumstance for extension period for statute of limitations | ¥ 100 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - CNY (¥) ¥ in Thousands | 1 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2018 | |
Amounts owed from related parties | ||
Accrued expenses and other current liabilities | ¥ 157 | |
Chief Operating Officer | Zhejiang Youzhan Information Technology Co., Ltd. | ||
RELATED PARTY TRANSACTIONS | ||
Related party, purchases | ¥ 157 |
MAINLAND CHINA CONTRIBUTION P_2
MAINLAND CHINA CONTRIBUTION PLAN (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
MAINLAND CHINA CONTRIBUTION PLAN | |||
Contribution for employee benefits | ¥ 50,046 | ¥ 44,598 | ¥ 31,500 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
RESTRICTED NET ASSETS | |||
Appropriations from after-tax profit to general reserve fund (as a percent) | 10.00% | ||
Limit of statutory reserve fund as a percentage of registered capital, after which allocations to statutory reserves are no longer required | 50.00% | ||
Appropriation to statutory reserve | ¥ 0 | ¥ 0 | ¥ 0 |
Restricted share capital | ¥ 1,667,461 | ¥ 1,531,183 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ / shares in Units, ¥ in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)shares | |
SUBSEQUENT EVENTS | ||
Purchases of treasury shares | ¥ | ¥ 22,991 | |
Restricted share units | ||
SUBSEQUENT EVENTS | ||
Restricted share units granted (in shares) | 3,050,427 | |
Vesting period | 4 years | |
Restricted share units vested (in shares) | 301,228 | |
Subsequent Event | ||
SUBSEQUENT EVENTS | ||
Share options granted (in shares) | 740,000 | |
Exercise price of share options granted (in dollars per share) | $ / shares | $ 2.52 | |
Share options exercised (in shares) | 910,042 | |
Purchases of treasury shares (in shares) | 511,758 | |
Purchases of treasury shares | $ | $ 1.7 | |
Subsequent Event | Restricted share units | ||
SUBSEQUENT EVENTS | ||
Restricted share units granted (in shares) | 511,152 | |
Vesting period | 4 years | |
Vesting percentage (as a percent) | 25.00% | |
Restricted share units vested (in shares) | 209,974 |
ADDITIONAL FINANCIAL INFORMAT_2
ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I - BALANCE SHEETS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Current assets: | ||||
Cash and cash equivalents | $ 83,496 | ¥ 581,281 | ¥ 853,740 | |
Short-term investments | 252,805 | |||
Prepayments and other current assets | 29,965 | 208,604 | ¥ 159,776 | 161,147 |
Total current assets | 212,795 | 1,481,431 | 1,507,097 | |
Long-term investments | 20 | 140 | 11,140 | |
Total assets | 231,305 | 1,610,293 | 1,607,455 | 1,546,418 |
Other non-current liabilities | 853 | 5,936 | 8,135 | |
Total liabilities | 120,138 | 836,370 | 383,691 | 322,654 |
SHAREHOLDERS' (DEFICIT) EQUITY | ||||
Treasury shares (nil and 1,485,862 shares as of December 31 2018 and 2019, respectively) | (3,302) | (22,991) | ||
Additional paid-in capital | 374,398 | 2,606,486 | 2,540,878 | |
Accumulated deficit | (270,524) | (1,883,335) | (1,383,729) | |
Accumulated other comprehensive income | 10,980 | 76,441 | 67,073 | |
Total shareholders' equity | 111,560 | 776,656 | 1,224,276 | |
Total liabilities and equity | 231,305 | 1,610,293 | ¥ 1,607,455 | 1,546,418 |
Ordinary shares Class A | ||||
SHAREHOLDERS' (DEFICIT) EQUITY | ||||
Ordinary shares, value | 4 | 30 | 29 | |
Ordinary shares Class B | ||||
SHAREHOLDERS' (DEFICIT) EQUITY | ||||
Ordinary shares, value | 4 | 25 | 25 | |
Parent | ||||
Current assets: | ||||
Cash and cash equivalents | 25,281 | 176,001 | 262,859 | |
Short-term investments | 115,815 | |||
Prepayments and other current assets | 87,466 | 608,918 | 538,543 | |
Total current assets | 112,747 | 784,919 | 917,217 | |
Long-term investments | 317,478 | |||
Total assets | 112,747 | 784,919 | 1,234,695 | |
Other current liabilities | 334 | 2,327 | 2,284 | |
Other non-current liabilities | 853 | 5,936 | 8,135 | |
Total liabilities | 1,187 | 8,263 | 10,419 | |
SHAREHOLDERS' (DEFICIT) EQUITY | ||||
Treasury shares (nil and 1,485,862 shares as of December 31 2018 and 2019, respectively) | (3,302) | (22,991) | ||
Additional paid-in capital | 374,398 | 2,606,486 | 2,540,878 | |
Accumulated deficit | (270,524) | (1,883,335) | (1,383,729) | |
Accumulated other comprehensive income | 10,980 | 76,441 | 67,073 | |
Total shareholders' equity | 111,560 | 776,656 | 1,224,276 | |
Total liabilities and equity | 112,747 | 784,919 | 1,234,695 | |
Parent | Ordinary shares Class A | ||||
SHAREHOLDERS' (DEFICIT) EQUITY | ||||
Ordinary shares, value | 4 | 30 | 29 | |
Parent | Ordinary shares Class B | ||||
SHAREHOLDERS' (DEFICIT) EQUITY | ||||
Ordinary shares, value | $ 4 | ¥ 25 | ¥ 25 |
ADDITIONAL FINANCIAL INFORMAT_3
ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I - BALANCE SHEETS - Additional Information (Details) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Common stock, shares authorized | 1,000,000,000 | ||
Treasury stock, shares | 1,485,862 | 0 | |
Ordinary shares Class A | |||
Common stock, par value (in dollars per share) | $ 0.00005 | $ 0.00005 | |
Common stock, shares authorized | 800,000,000 | 800,000,000 | |
Common stock, shares issued | 96,588,106 | 91,088,106 | |
Common stock, shares outstanding | 92,120,024 | 91,088,106 | |
Ordinary shares Class B | |||
Common stock, par value (in dollars per share) | $ 0.00005 | $ 0.00005 | |
Common stock, shares authorized | 72,000,000 | 72,000,000 | |
Common stock, shares issued | 72,000,000 | 72,000,000 | |
Common stock, shares outstanding | 72,000,000 | 72,000,000 | |
Parent | |||
Treasury stock, shares | 1,485,862 | 0 | |
Parent | Ordinary shares Class A | |||
Common stock, par value (in dollars per share) | $ 0.00005 | ||
Common stock, shares authorized | 800,000,000 | 800,000,000 | |
Common stock, shares issued | 96,588,106 | 91,088,106 | |
Common stock, shares outstanding | 92,120,024 | 91,088,106 | |
Parent | Ordinary shares Class B | |||
Common stock, par value (in dollars per share) | $ 0.00005 | ||
Common stock, shares authorized | 72,000,000 | 72,000,000 | |
Common stock, shares issued | 72,000,000 | 72,000,000 | |
Common stock, shares outstanding | 72,000,000 | 72,000,000 |
ADDITIONAL FINANCIAL INFORMAT_4
ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I - STATEMENTS OF COMPREHENSIVE LOSS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Operating expenses: | ||||
General and administrative expenses | $ (17,740) | ¥ (123,501) | ¥ (98,759) | ¥ (53,434) |
Other operating income (expense), net | (536) | (3,735) | (668) | 2,732 |
Other income, net | 120 | 834 | 11,531 | 4,229 |
Loss before income taxes | (72,083) | (501,827) | (382,033) | (249,327) |
Net Income (Loss) Available to Common Stockholders, Basic | (71,764) | (499,606) | (380,091) | (248,580) |
Net loss | (72,083) | (501,827) | (382,041) | (249,327) |
Net loss attributable to ordinary shareholders | (71,764) | (499,606) | (380,091) | (248,580) |
Other comprehensive income (loss) | ||||
Unrealized gains of available-for-sale securities, net of tax of nil for 2017, 2018 and 2019 | 1,054 | 7,335 | 8,734 | 5,181 |
Realized gains of available-for-sale securities, net of tax | (1,384) | (9,635) | (10,869) | (1,154) |
Foreign currency translation adjustments | 1,676 | 11,668 | 21,658 | (21,347) |
Comprehensive loss | (70,418) | (490,238) | (360,568) | (265,900) |
Parent | ||||
Operating expenses: | ||||
General and administrative expenses | (1,224) | (8,523) | (2,145) | (834) |
Interest income (expense), net | 85 | 593 | 371 | |
Other operating income (expense), net | 31 | |||
Other income, net | 1,029 | 7,161 | 3,253 | |
Loss before income taxes | (110) | (769) | 1,510 | (834) |
Share of loss of subsidiaries and VIEs | (71,654) | (498,837) | (381,601) | (247,746) |
Net Income (Loss) Available to Common Stockholders, Basic | (71,764) | (499,606) | (380,091) | (248,580) |
Net loss | (71,764) | (499,606) | (380,091) | (248,580) |
Net loss attributable to ordinary shareholders | (71,764) | (499,606) | (380,091) | (248,580) |
Other comprehensive income (loss) | ||||
Unrealized gains of available-for-sale securities, net of tax of nil for 2017, 2018 and 2019 | 482 | 3,356 | (286) | 2,196 |
Realized gains of available-for-sale securities, net of tax | (713) | (4,962) | (399) | |
Foreign currency translation adjustments | 1,676 | 11,668 | 21,658 | (21,347) |
Unrealized securities holding gains (loss) of subsidiaries and VIEs, net of tax of nil for 2017, 2018 and 2019 | 572 | 3,979 | 9,020 | 1,831 |
Realized securities holding loss of subsidiaries and VIEs, net of tax of nil for 2017, 2018 and 2019 | (671) | (4,673) | (10,470) | |
Comprehensive loss | $ (70,418) | ¥ (490,238) | ¥ (360,568) | ¥ (265,900) |
ADDITIONAL FINANCIAL INFORMAT_5
ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I - STATEMENTS OF COMPREHENSIVE LOSS - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Unrealized securities holding gains, tax | ¥ 0 | ¥ 0 | ¥ 0 |
Parent | |||
Unrealized securities holding gains, tax | 0 | 0 | 0 |
Realized securities holding (gains), tax | 0 | 0 | 0 |
Unrealized securities holding gains of subsidiaries and VIEs, tax | 0 | 0 | 0 |
Realized securities holding (gains) of subsidiaries and VIEs, tax | ¥ 0 | ¥ 0 | ¥ 0 |
ADDITIONAL FINANCIAL INFORMAT_6
ADDITIONAL FINANCIAL INFORMATION - FINANCIAL STATEMENTS SCHEDULE I - STATEMENTS OF CASH FLOWS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Operating activities: | ||||
Net loss | $ (72,083) | ¥ (501,827) | ¥ (382,041) | ¥ (249,327) |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Other non-current liabilities | (316) | (2,199) | 8,135 | |
Net cash used in operating activities | (73,599) | (512,382) | (343,018) | (204,372) |
Investing activities: | ||||
Purchase of long-term investments | (140) | |||
Proceeds from sale or maturity of short-term investments | 123,977 | 863,106 | 578,359 | 80,198 |
Net cash (used in) provided by investing activities | 34,140 | 237,675 | 44,454 | (36,125) |
Financing activities: | ||||
Proceeds from ordinary shareholders | 1,627 | 11,328 | 25 | |
Payments of share repurchase | 3,302 | 22,991 | ||
Proceeds from IPO, net of issuance cost | 694,878 | |||
Proceeds of preferred shareholders | 277,819 | 49,475 | ||
Net cash provided by financing activities | 15,655 | 108,987 | 972,697 | 49,500 |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | 1,394 | 9,702 | 11,947 | (14,848) |
Net (decrease) increase in cash and cash equivalents, and restricted cash | (22,410) | (156,018) | 686,080 | (205,845) |
Cash and cash equivalents, and restricted cash at the beginning of the year | 122,632 | 853,740 | 167,660 | 373,505 |
Cash and cash equivalents, and restricted cash at the end of the year | 100,222 | 697,722 | 853,740 | 167,660 |
Parent | ||||
Operating activities: | ||||
Net loss | (71,764) | (499,606) | (380,091) | (248,580) |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Share of loss of subsidiaries and VIEs | 71,654 | 498,837 | 381,601 | 247,746 |
Other current liabilities | 6 | 43 | 2,284 | |
Other non-current liabilities | (316) | (2,199) | 8,135 | |
Investment income | (713) | (4,962) | (2,591) | |
Net cash used in operating activities | (1,133) | (7,887) | 9,338 | (834) |
Investing activities: | ||||
Purchase of long-term investments | (821,962) | |||
Payment for shareholder loan to subsidiaries | (29,215) | (203,388) | ||
Proceeds from sale or maturity of short-term investments | 16,837 | 117,214 | 25,160 | |
Net cash (used in) provided by investing activities | (12,378) | (86,174) | (796,802) | |
Financing activities: | ||||
Proceeds from ordinary shareholders | 1,627 | 11,328 | 25 | |
Payments of share repurchase | (3,302) | (22,991) | ||
Proceeds from IPO, net of issuance cost | 694,878 | |||
Proceeds of preferred shareholders | 277,819 | |||
Net cash provided by financing activities | (1,675) | (11,663) | 972,697 | 25 |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | 2,710 | 18,866 | 75,672 | (147) |
Net (decrease) increase in cash and cash equivalents, and restricted cash | (12,476) | (86,858) | 260,905 | (956) |
Cash and cash equivalents, and restricted cash at the beginning of the year | 37,757 | 262,859 | 1,954 | 2,910 |
Cash and cash equivalents, and restricted cash at the end of the year | $ 25,281 | ¥ 176,001 | ¥ 262,859 | ¥ 1,954 |