Earnings release
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Waterdrop Inc. Announces Third Quarter 2024 Unaudited Financial Results BEIJING, Dec. 11, 2024 // -- Waterdrop Inc. ("Waterdrop", the "Company" or "we") (NYSE: WDH), a leading technologyplatform dedicated to insurance and healthcare service with a positive social impact, today announced its unauditedfinancial results for the three and nine months ended September 30, 2024. Financial and Operational Highlights for the Third Quarter of 2024 Marked improvement in profitability and healthy liquidity: In the third quarter of 2024, net profit attributable to ourordinary shareholders reached RMB92.8 million, representing a year-over-year growth of 152.6%. As of September30, 2024, we continued to generate positive operating cash flow during the third quarter of 2024.Strong business performance: For the third quarter of 2024, the first-year premiums ("FYP") generated through ourinsurance business amounted to RMB2,041.8 million (US$290.9 million), representing an increase of 20.4% year overyear. Net operating revenue was RMB704.1 million (US$100.3 million), representing an increase of 2.6% year overyear.Expanded crowdfunding coverage: As of September 30, 2024, around 466 million people cumulatively had donatedan aggregate of RMB66.3 billion to 3.32 million patients through Waterdrop Medical Crowdfunding.Dependable performance in patient recruitment: As of September 30, 2024, the Company had cumulatively enrolledover 9,500 patients into 1,137 clinical trial programs through the E-Find Platform. Mr. Peng Shen, Founder, Chairman, and Chief Executive Officer of Waterdrop, commented, "We are delighted to announceanother quarter of robust profitability, with net profit attributable to ordinary shareholders reaching 2.5 times that of thethird quarter last year. Our insurance business has achieved a 14.8% quarter-over-quarter growth in FYP and maintained an operating profitmargin above 20%. We delivered solid FYP growth in both short-term and long-term insurance, driven by user acquisition,innovative tailor-made products, and the contribution of Shenlanbao. I believe with our data-driven user insights, uniqueproduct offerings, and diversified distribution channels, we are well-positioned to maintain a strong competitiveadvantage. This quarter marks a significant milestone for our medical crowdfunding business and the industry as a whole, followingthe issuance of the 'Measures for Administration of Online Service Platforms for Individuals Seeking Financial Help'released by Ministry of Civil Affairs of PRC and other government departments on September 5, 2024. The Measures forAdministration officially announce the legal framework of fundraising sector, and offer guidance on management andinformation transparency. During this quarter, our digital clinical trial solution income continued its growth, realizing a quarter-over-quarter increaseof 17.4%. We collaborated with a total of 184 pharmaceutical companies and contract research organizations ("CROs").Moreover, we enrolled 909 patients and initiated services for 88 new programs during the third quarter of 2024. We are also delighted to report notable progress in AI. Internally, 'AI Consultant', a conversational AI agent powered by our'Waterdrop Guardian' large language model, has reached the capacity to generate million yuan in monthly premiums byserving user inquires. Meanwhile, a new application, 'AI Service Quality Agent', was deployed to streamline the servicequality inspection process by replacing manual work. Externally, we launched 'AI Top Sales Platform 3.0', a conversationalAI platform that customizes AI sales agents for businesses, and have initiated pilots with insurance carriers and companiesin non-insurance sectors. We value the trust from our investors and prioritize shareholder returns. By the end of November 2024, the Company hadcumulatively repurchased approximately 50.9 million ADSs from the open market. Moreover, we recently completed oursecond special cash dividend of approximately US$7.3 million. With our strong execution capability, ample cash reserves and continuous profitability, we will continue to focus onfostering sustainable growth, and strive to deliver substantial returns to our shareholders and investors." Financial Results for the Third Quarter of 2024
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Net operating revenue for the third quarter of 2024 increased by 2.6% year over year to RMB704.1 million (US$100.3million) from RMB686.5 million for the same period of 2023. On a quarter-over-quarter basis, net operating revenueincreased by 4.1%. Insurance-related income includes insurance brokerage income and technical service income. Insurance brokerageincome represents brokerage commissions earned from insurance companies. Technical service income is derivedfrom providing technical services including customer relationship maintenance, customer complaint management,claim review, and user referral services, among other things, to insurance companies, insurance brokers, and agencycompanies. Our insurance-related income amounted to RMB600.7 million (US$85.6 million) in the third quarter of2024, representing a decrease of 3.0% year over year from RMB619.3 million for the third quarter of 2023, which wasmainly due to the decrease in technical service income. On a quarter-over-quarter basis, insurance-related incomeincreased by 4.7%.Crowdfunding service fees represent the service income earned when patients successfully withdraw the proceedsfrom their crowdfunding campaigns. Our role is to operate the Waterdrop Medical Crowdfunding platform to providecrowdfunding related services through the internet, enabling patients with significant medical bills to seek help fromcaring hearts through technology (the "medical crowdfunding services"). Our medical crowdfunding servicesgenerally consist of providing technical and internet support, managing, reviewing and supervising thecrowdfunding campaigns, providing comprehensive risk management and anti-fraud measures, and facilitating thecollection and transfer of the funds. For the third quarter of 2024, we generated RMB65.8 million (US$9.4 million) inservice fees, representing an increase of 83.0% year over year from RMB36.0 million for the third quarter of 2023. Ona quarter-over-quarter basis, crowdfunding service fees decreased by 5.0%.Digital clinical trial solution income represents the service income earned from our customers mainly includingbiopharmaceutical companies and leading biotechnology companies. We match qualified and suitable patients forenrollment in clinical trials for our customers and generate digital clinical trial solution revenue for successfulmatches and we typically charge our customers a fixed unit price per successful match. For the third quarter of 2024,our digital clinical trial solution income amounted to RMB24.3 million (US$3.5 million), representing a decrease of12.1% from RMB27.6 million in the same period of 2023. On a quarter-over-quarter basis, digital clinical trial solutionincome increased by 17.4%. Operating costs and expenses decreased by 1.6% year over year to RMB677.7 million (US$96.6 million) for the third quarterof 2024. On a quarter-over-quarter basis, operating costs and expenses increased by 8.6%. Operating costs increased by 9.1% year over year to RMB340.6 million (US$48.5 million) for the third quarter of 2024,as compared with RMB312.3 million for the third quarter of 2023, which was primarily driven by (i) an increase ofRMB46.5 million in costs of referral and service fees, partially offset by (ii) a decrease of RMB10.0 million in personnelcosts, and (iii) a decrease of RMB7.0 million in the costs for crowdfunding consultants team. On a quarter-over-quarter basis, operating costs increased by 6.7% from RMB319.1 million, primarily due to (i) an increase of RMB32.6million in costs of referral and service fees, partially offset by (ii) a decrease of RMB8.9 million in personnel costs, and(iii) a decrease of RMB5.1 million in the costs for crowdfunding consultants team.Sales and marketing expenses decreased by 7.7% year over year to RMB173.2 million (US$24.7 million) for the thirdquarter of 2024, as compared with RMB187.7 million for the same quarter of 2023. The decrease was primarily due to(i) a decrease of RMB36.5 million in personnel costs and share-based compensation expenses, partially offset by (ii)an increase of RMB21.1 million in marketing expenses to third-party traffic channels. On a quarter-over-quarter basis,sales and marketing expenses increased by 10.0% from RMB157.4 million, primarily due to (i) an increase of RMB14.4million in marketing expenses to third-party traffic channels, (ii) an increase of RMB4.5 million in outsourced salesand marketing service fees to third parties, and partially offset by (iii) a decrease of RMB3.1 million in sales andmarketing personnel costs and share-based compensation expensesGeneral and administrative expenses decreased by 3.2% year over year to RMB111.0 million (US$15.8 million) for thethird quarter of 2024, compared with RMB114.6 million for the same quarter of 2023. The year-over-year variancewas due to (i) a decrease of RMB24.8 million in professional service fees, (ii) a decrease of RMB5.8 million inpersonnel costs and share-based compensation expenses, partially offset by (iii) an increase of RMB10.6 million inallowance for doubtful accounts, and (iv) an increase of RMB20.6 million impairment loss for intangible assetsrelated to the acquisition of Shenzhen Cunzhen Qiushi Technology Co., Ltd. and its subsidiaries ("Shenlanbao"). On aquarter-over-quarter basis, general and administrative expenses increased by 18.1% from RMB94.0 million, due to (i)an increase of RMB20.6 million impairment loss for intangible assets related to the acquisition of Shenlanbao, (ii) anincrease of RMB6.9 million in personnel costs and share-based compensation expenses, partially offset by (iii) adecrease of RMB6.8 million in professional service fees, and (iv) a decrease of RMB3.1 million allowance for doubtfulaccounts.Research and development expenses decreased by 28.4% year over year to RMB53.0 million (US$7.5 million) for thethird quarter of 2024, compared with RMB73.9 million for the same period of 2023. The decrease was primarily due toa decrease of RMB18.9 million in personnel costs and share-based compensation expenses. On a quarter-over-quarter basis, research and development expenses remained stable.
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for the third quarter of 2024 was RMB26.5 million (US$3.8 million), as compared with an operating loss of RMB2.1 millionfor the third quarter of 2023 and an operating profit of RMB52.4 million for the second quarter of 2024. for the third quarter of 2024 was RMB36.0 million (US$5.1 million), as compared with RMB32.9 million for the thirdquarter of 2023 and RMB37.5 million for the second quarter of 2024. for the third quarter of 2024 was RMB7.8 million (US$1.1 million), as compared with RMB1.5 million for the third quarter of2023 and an income tax expense of RMB7.0 million for the second quarter of 2024. for the third quarter of 2024 was RMB92.8 million (US$13.2 million), as compared with RMB36.7 million for the same periodof 2023, and RMB88.3 million for the second quarter of 2024. for the third quarter of 2024 was RMB126.0 million (US$18.0 million), as compared with RMB74.3 million for the sameperiod of 2023, and RMB108.7 million for the second quarter of 2024. As of September 30, 2024, cash position of the Company was RMB3,440.1 million (US$490.2 million), as compared withRMB3,571.6 million as of December 31, 2023. See the sections entitled "Non-GAAP Financial Measure" and "Reconciliations of GAAP and Non-GAAP Results" for moreinformation about the non-GAAP measures referred to in this announcement. Cash position includes cash and cash equivalents, short-term investments, and long-term debt investments includedin long-term investments.Share Repurchase Programs Pursuant to the share repurchase programs launched in September 2021, September 2022, September 2023 andSeptember 2024, respectively, we had cumulatively repurchased approximately 50.9 million ADSs from the open marketwith cash for a total consideration of approximately US$102.3 million as of November 30, 2024. Supplemental Information We organize and report our business in three operating segments: Insurance, which mainly includes Waterdrop Insurance Marketplace, Shenlanbao Insurance Marketplace andtechnical support service;Crowdfunding, which mainly includes Waterdrop Medical Crowdfunding; andOthers, which mainly include Digital Clinical Trial Solution and other new initiatives. The table below sets forth the segment operating results, with the nine-month comparative figures retrospectivelyadjusted to conform to this presentation. For the Three Months Ended For the Nine Months Ended September 30,2023 June 30,2024 September 30,2024 September30, 2023* September 302024 RMB RMB RMB USD RMB RMB U (All amounts in thousands) Operating revenue, net Insurance 619,269 573,832 600,726 85,603 1,753,049 1,781,335 253 Crowdfunding 35,971 69,323 65,839 9,382 122,670 202,512 28 Others 31,238 33,001 37,576 5,354 95,624 101,150 14 Total consolidated operating revenue, net 686,478 676,156 704,141 100,339 1,971,343 2,084,997 29 Operating profit/(loss) Insurance 145,200 122,955 122,501 17,457 399,914 374,619 53 Crowdfunding (68,793) (22,936) (17,902) (2,551) (194,058) (73,075) (10 Others (43,713) (27,450) (31,716) (4,520) (128,157) (90,598) (12 Total segment operating profit 32,694 72,569 72,883 10,386 77,699 210,946 30 Unallocated item** (34,762) (20,205) (46,413) (6,614) (111,081) (85,748) (12 Total consolidated operating (loss)/profit (2,068) 52,364 26,470 3,772 (33,382) 125,198 17 Total other income 36,914 38,366 60,842 8,670 126,520 141,989 20 Profit before income tax 34,846 90,730 87,312 12,442 93,138 267,187 38 (1) (2)
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Income tax benefit/(expense) 1,479 (7,026) 7,843 1,118 14,609 (7,771) (1 Net profit 36,325 83,704 95,155 13,560 107,747 259,416 36 * Starting from the second quarter of 2023, our chief operating decision maker began managing the business through t operating segments and assessing performance and allocating resources under this new operating segment structure nine-month comparative figures were retrospectively adjusted to conform to this presentation. ** The share-based compensation and impairment of intangible assets acquired from business combination represent unallocated items in the segment information because our management does not consider these as part of the segme operating performance measure.Exchange Rate This announcement contains translations of certain RMB amounts into U.S. dollars ("USD" or "US$") at specified rates solelyfor the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate ofRMB7.0176 to US$1.00, the noon buying rate in effect on September 30, 2024 in the H.10 statistical release of the FederalReserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USDor RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculatedusing the numbers presented in the financial statements contained in this earnings release. Non-GAAP Financial Measure The Company uses non-GAAP financial measure, adjusted net profit attributable to our ordinary shareholders, inevaluating the Company's operating results and for financial and operational decision-making purposes. Adjusted netprofit attributable to our ordinary shareholders represents net profit attributable to our ordinary shareholders excludingshare-based compensation expense attributable to our ordinary shareholders, foreign currency exchange gain or losses,impairment of intangible assets acquired from business combination and related tax effects on non-GAAP adjustments The non-GAAP financial measure is not presented in accordance with U.S. GAAP and may be different from non-GAAPmethods of accounting and reporting used by other companies. The non-GAAP financial measure has limitations asanalytical tools and when assessing the Company's operating performance, investors should not consider it in isolation, oras a substitute for net loss or other consolidated statements of comprehensive loss data prepared in accordance with U.S.GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on asingle financial measure. Investors are encouraged to review the Company's historical non-GAAP financial measure to themost directly comparable GAAP measure. Adjusted net profit attributable to our ordinary shareholders presented here maynot be comparable to similarly titled measure presented by other companies. Other companies may calculate similarlytitled measure differently, limiting its usefulness as a comparative measure to our data. The Company mitigates these limitations by reconciling the non-GAAP financial measure to the most comparable U.S.GAAP performance measure, all of which should be considered when evaluating the Company's performance. For more information on the non-GAAP financial measure, please see the table captioned "Reconciliation of GAAP andNon-GAAP Results" set forth at the end of this press release. Safe Harbor Statement This press release contains statements that may constitute "forward-looking" statements pursuant to the "safe harbor"provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identifiedby terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "likely to"and similar statements. Among other things, quotations in this announcement, contain forward-looking statements.Waterdrop may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual reportto shareholders, in press releases and other written materials and in oral statements made by its officers, directors oremployees to third parties. Statements that are not historical facts, including statements about Waterdrop's beliefs, plansand expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Anumber of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: Waterdrop's mission, goals and strategies; Waterdrop's future businessdevelopment, financial condition and results of operations; the expected growth of the insurance, medical crowdfundingand healthcare industry in China; Waterdrop's expectations regarding demand for and market acceptance of our productsand services; Waterdrop's expectations regarding its relationships with consumers, insurance carriers and other partners;competition in the industry and relevant government policies and regulations relating to insurance, medical crowdfundingand healthcare industry. Further information regarding these and other risks is included in Waterdrop's filings with the SEC.All information provided in this press release is as of the date of this press release, and Waterdrop does not undertake anyobligation to update any forward-looking statement, except as required under applicable law. Conference Call Information
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Waterdrop's management team will hold a conference call on December 11, 2024 at 7:00 AM U.S. Eastern Time (8:00 PMBeijing/Hong Kong Time on the same day) to discuss the financial results. Dial-in details for the earnings conference callare as follows: International: 1-412-317-6061 United States Toll Free: 1-888-317-6003 Hong Kong Toll Free: 800-963976 Hong Kong: 852-58081995 Mainland China: 4001-206115 Chinese Line (Mandarin) Entry Number: 4533234 English Interpretation Line (Listen-only Mode) Entry Number: 2061532Participants can choose between the Chinese and the English interpretation lines. Please note that the Englishinterpretation option will be in listen-only mode. Please dial in 15 minutes before the call is scheduled to begin andprovide the Elite Entry Number to join the call. Telephone replays will be accessible two hours after the conclusion of the conference call until December 18, 2024 bydialing the following numbers: United States Toll Free: 1-877-344-7529 International: 1-412-317-0088 Chinese Line Access Code: 6305770 English Interpretation Line Access Code: 9765426A live and archived webcast of the conference call will also be available at the Company's investor relations website athttp://ir.waterdrop-inc.com/. About Waterdrop Inc. Waterdrop Inc. (NYSE: WDH) is a leading technology platform dedicated to insurance and healthcare service with apositive social impact. Founded in 2016, with the comprehensive coverage of Waterdrop Insurance Marketplace andWaterdrop Medical Crowdfunding, Waterdrop aims to bring insurance and healthcare service to billions throughtechnology. For more information, please visit . For investor inquiries, please contact Waterdrop Inc. WATERDROP INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands, unless otherwise noted) As of December 31, 2023 September 30, 2024 RMB RMB USD Assets Current assets Cash and cash equivalents 396,905 442,145 63,005 Restricted cash 577,121 474,683 67,642 Short-term investments 2,996,527 1,912,873 272,582 Accounts receivable, net 693,110 755,427 107,647 Current contract assets 572,871 631,507 89,989 Amount due from related parties 65 250 36 Prepaid expense and other assets 189,846 192,153 27,381 Total current assets 5,426,445 4,409,038 628,282 Non-current assets Non-current contract assets 134,383 141,262 20,130 Property, equipment and software, net 33,878 237,616 33,860 Intangible assets, net 177,407 153,043 21,808 Long-term investments 211,758 1,122,407 159,942 Right of use assets, net 59,851 55,149 7,859 Deferred tax assets 24,190 29,297 4,175 Goodwill 80,751 80,751 11,507
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Total non-current assets 722,218 1,819,525 259,281 Total assets 6,148,663 6,228,563 887,563 Liabilities, Mezzanine Equity and Shareholders' Equity Current liabilities Amount due to related parties 9,509 10,043 1,431 Insurance premium payables 591,953 493,596 70,337 Accrued expenses and other current liabilities 597,684 724,610 103,256 Short-term loans 137,557 148,544 21,167 Current lease liabilities 32,908 35,946 5,122 Total current liabilities 1,369,611 1,412,739 201,313 Non-current liabilities Non-current lease liabilities 27,293 18,464 2,631 Deferred tax liabilities 73,305 85,713 12,214 Total non-current liabilities 100,598 104,177 14,845 Total liabilities 1,470,209 1,516,916 216,158 Mezzanine Equity Redeemable non-controlling interests 92,760 90,449 12,889 Shareholders' equity Class A ordinary shares 112 113 16 Class B ordinary shares 27 27 4 Treasury stock (12) (15) (2) Additional paid-in capital 7,003,423 6,821,616 972,073 Accumulated other comprehensive income 144,107 99,693 14,206 Accumulated deficit (2,561,963) (2,300,236) (327,781) Total shareholders' equity 4,585,694 4,621,198 658,516 Total liabilities, mezzanine equity and shareholders' equity 6,148,663 6,228,563 887,563 WATERDROP INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND C (All amounts in thousands, except for share and per share data, or o For the Three Months Ended September 30, 2023 June 30, 2024 September RMB RMB RMB Operating revenue, net 686,478 676,156 704,141 Operating costs and expenses(i) Operating costs (312,278) (319,101) (340,560) Sales and marketing expenses (187,685) (157,413) (173,172) General and administrative expenses (114,641) (93,978) (110,988) Research and development expenses (73,942) (53,300) (52,951) Total operating costs and expenses (688,546) (623,792) (677,671) Operating (loss)/profit (2,068) 52,364 26,470 Other income Interest income 32,890 37,510 36,005 Foreign currency exchange (loss)/gain (3,734) (444) 7,909 Others, net 7,758 1,300 16,928 Profit before income tax 34,846 90,730 87,312 Income tax benefit/(expense) 1,479 (7,026) 7,843
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Net profit 36,325 83,704 95,155 Net (loss)/profit attributable to mezzanine equity classified as non-controlling interests shareholders (417) (4,586) 2,350 Net profit attributable to ordinary shareholders 36,742 88,290 92,805 Other comprehensive income: Foreign currency translation adjustment, net of tax 8,983 13,497 (83,054) Unrealized loss on available for sale investments, net of tax - - - Total comprehensive income 45,308 97,201 12,101 Total comprehensive (loss)/profit attributable to mezzanine equity classified as non- controlling interests shareholders (417) (4,586) 2,350 Total comprehensive income attributable to ordinary shareholders 45,725 101,787 9,751 Weighted average number of ordinary shares used in computing net profit per share Basic 3,719,628,339 3,660,589,600 3,624,431,887 3 Diluted 3,808,529,672 3,734,346,444 3,689,357,838 3 Net profit per share attributable to ordinary shareholders Basic 0.01 0.02 0.03 Diluted 0.01 0.02 0.03 (i) Share-based compensation expenses are included in the operating costs and expenses as follows. For the Three Months Ended September 30, 2023 June 30, 2024 September RMB RMB RMB Sales and marketing expenses (8,944) (1,320) (1,993) General and administrative expenses (22,060) (16,285) (21,297) Research and development expenses (3,758) (2,600) (2,563) Total (34,762) (20,205) (25,853) WATERDROP INC. RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS (All amounts in thousands, unless otherwise noted) For the Three Months Ended September 30, 2023 June 30, 2024 September 30, 2024 Sep RMB RMB RMB USD Net profit attributable to the Company's ordinary shareholders 36,742 88,290 92,805 13,225 Add: Share-based compensation expense attributable tothe Company's ordinary shareholders 33,810 20,015 25,673 3,658 Foreign currency exchange loss/(gain) 3,734 444 (7,909) (1,127) Impairment of intangible assets acquired frombusiness combination - - 20,560 2,930 Tax effects on non-GAAP adjustments - - (5,140) (732) Adjusted net profit attributable to the Company'sordinary shareholders 74,286 108,749 125,989 17,954
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SOURCE Waterdrop Inc.