111, Inc. founders propose $4.52-per-ADS buyout as Chinese healthcare platform weighs going private

111, Inc. (NASDAQ: YI) has received an unsolicited proposal from a buyer group led by its co-founders to take the Chinese digital healthcare company private for $4.52 per American depositary share, putting another United States-listed Chinese company into play as insiders seek control of businesses trading well below earlier market valuations.

The preliminary and non-binding proposal was submitted by Gang Yu, co-founder and co-chairman of 111, Inc., Junling Liu, co-founder, co-chairman and chief executive officer, and Huadeng Tech BioArray Ventures Ltd. The group wants to acquire all outstanding Class A ordinary shares that it does not already own for $0.226 per share in cash, equivalent to $4.52 for each American depositary share because every ADS represents 20 Class A shares.

The proposal was dated September 16, 2026 and disclosed by 111, Inc. on September 17. Importantly, the board has only received the approach and has not yet determined whether the proposed price or other terms are acceptable, meaning investors are dealing with a potential transaction rather than a signed acquisition agreement.

How large is the premium in the $4.52-per-ADS offer for 111, Inc.?

111, Inc. shares closed at $3.38 on September 16, immediately before disclosure of the proposed going-private transaction. The $4.52 cash proposal therefore represents a premium of approximately 34% to that closing price, giving public shareholders a meaningful uplift compared with the company’s latest unaffected market valuation.

The size of the premium will likely become one of the central issues as the board evaluates the offer. A significant premium can make an insider-led buyout attractive to shareholders who have endured weak public-market valuations, but it does not automatically establish that the price reflects the company’s longer-term value, particularly when the buyers already have detailed knowledge of the business and its strategic outlook.

The buyer group intends to finance the transaction using equity capital. The proposal contemplates rollover equity in 111, Inc. together with cash contributions from Huadeng Tech BioArray Ventures Ltd or its affiliates, rather than relying exclusively on acquisition debt to fund the purchase.

Why are the co-founders seeking to take 111, Inc. private?

The bid comes during a period of significant strategic change at 111, Inc. The company has been moving away from a more asset-heavy pharmaceutical distribution model toward what management describes as a technology-enabled, asset-light healthcare platform, reducing exposure to lower-return operations while attempting to improve margins and operating efficiency.

111, Inc. operates across several parts of China’s healthcare and pharmaceutical distribution ecosystem. Its businesses include the 1 Pharmacy online retail platform, the 1 Clinic internet healthcare service and the 1 Medicine platform serving pharmacies that purchase pharmaceutical products and related healthcare supplies.

The company also provides cloud-based tools to offline pharmacies and operates an omni-channel drug commercialisation platform for pharmaceutical partners. This gives 111, Inc. exposure to both consumer healthcare spending and business-to-business pharmaceutical distribution, although the combination has historically produced substantial revenue with relatively thin margins.

What do 111, Inc.’s latest financial results reveal about the business?

111, Inc. generated approximately RMB12.56 billion, or about $1.80 billion, of net revenue during 2025. Despite that scale, margins remained narrow, with the company reporting a net loss of roughly RMB22.5 million for the year as it continued restructuring its operations.

The transformation became more visible during the first quarter of 2026. Net revenue fell 33.1% year over year to RMB2.4 billion, equivalent to approximately $342.4 million, as 111, Inc. continued reducing lower-quality revenue and shifting its operating model. The company reported a first-quarter operating loss of RMB20 million and a net loss of RMB26.8 million.

Those headline declines do not tell the entire story. Revenue from promotional products increased sharply during the quarter, marketplace service revenue also expanded, and fulfilment expenses fell faster than overall revenue. Management has been attempting to demonstrate that a smaller but more efficient business can eventually produce better economics than the high-volume distribution model that previously drove much of 111, Inc.’s sales.

Why might private ownership suit 111, Inc.’s restructuring strategy?

A going-private transaction could give management more flexibility to complete the company’s restructuring without the same pressure from quarterly public-market expectations. Shifting a large healthcare platform away from low-margin distribution toward technology, marketplace services and more profitable pharmaceutical commercialisation can temporarily reduce revenue even when the strategic objective is to improve returns.

That creates an uncomfortable dynamic for a public company because investors may focus on falling headline sales while management focuses on improving the composition of those sales. Private ownership could allow the co-founders and their financial partner to pursue the transition over a longer period without having the company’s valuation continuously reset by thinly traded public shares.

The same logic, however, explains why independent board scrutiny will be important. If the restructuring succeeds and margins improve substantially, the buyers could potentially capture much of that future upside after removing the company from Nasdaq. Public shareholders therefore need to evaluate not only the premium to the current market price but also whether $4.52 adequately values the business after its strategic transition.

What should investors watch as the 111, Inc. takeover proposal develops?

The immediate milestone is the board’s response. 111, Inc. has cautioned that it has not yet had an opportunity to carefully review or evaluate the proposal and has not made any decision about how to respond. There is no guarantee that the preliminary approach will result in a definitive offer, a signed merger agreement or a completed transaction.

Insider-led going-private transactions can involve additional governance considerations because members of management may effectively sit on opposite sides of the deal from public shareholders. Independent directors and external advisers typically become particularly important when evaluating whether the price and process are fair to investors who will be cashed out.

The offer also arrives after a volatile period for 111, Inc. shares. The stock closed at $3.38 on September 16 after trading between $3.28 and $3.50 during the session, leaving the proposed $4.52 buyout price comfortably above the latest public-market level but still requiring shareholders to consider the company’s longer-term potential.

Could the 111, Inc. proposal signal more Chinese companies leaving US exchanges?

The proposed transaction fits a broader pattern in which founders, strategic investors and financial sponsors periodically seek to privatise United States-listed Chinese companies whose market valuations no longer reflect the levels seen during earlier periods of stronger investor enthusiasm. Smaller companies can also face limited research coverage and comparatively low trading liquidity, reducing some of the benefits associated with maintaining a public listing.

For 111, Inc., the potential transaction is particularly notable because the company is restructuring rather than simply operating a mature business with predictable cash flows. The proposed buyers are effectively making a bet that the platform can become more valuable under a leaner model focused on technology, healthcare services, pharmaceutical commercialisation and higher-quality revenue.

The central question is therefore not simply whether shareholders receive a premium to the September 16 closing price. The more important issue is whether $4.52 per ADS adequately compensates investors for giving up their exposure to the potential benefits of 111, Inc.’s ongoing transformation.

Until the board completes its review, the proposal remains only a preliminary expression of interest. A higher price, revised terms, a competing approach or no transaction at all remain possible outcomes, making the next formal response from 111, Inc. the key development to watch.