Waterdrop Reports Net Operating Revenue of $145.5 Million, Starts Share Repurchase Program Valued up to $50 Million

Waterdrop, a platform dedicated to insurance and healthcare service, today reported a net operating revenue YoY increase of 38.0% to 939.4 million yuan ($145.5 million) in the second quarter of this year. Furthermore, the Board of the company has approved a share repurchase program to buy back its own ordinary shares in the form of American Depository Receipts (ADRs) with an aggregate value of up to $50 million during the 12-month period.

The increase of net operating income is mainly from the company’s insurance-related business including brokerage and technical service. The insurance-related income amounted to 899.1 million yuan in Q2, accounting for over 95% of its net operating income. The result represents an increase of 38.3% year-over-year, which was mainly driven by strong first-year premiums (FYP) growth.

Adjusted net loss attributable to Waterdrop for the second quarter of 2021 was 570.1 million yuan, compared with adjusted net profit 89.8 million yuan for the same period of 2020.

For Waterdrop, which listed on New York Stock Exchange in May, there was no net operating revenue from management fee income for the second quarter of 2021, compared to 30.4 million yuan for the second quarter of 2020, which was mainly due to the cessation of the mutual aid business at the end of March 2021. Following this adjustment, the corresponding management fee income from mutual aid business is no longer a revenue stream for the company.

A total of 4.2 million customers purchased insurance policies from Waterdrop during the second quarter of 2021, an increase of 53.0% year over year. The number of cumulative insurance customers reached 102.1 million and cumulative paying insurance customers reached 24.9 million as of June 30, 2021. The FYP per customer increased to 1,267 yuan, or 26.9% year over year.

The FYP generated through the Waterdrop Insurance Marketplace for the second quarter reached 5,357 million yuan, representing an increase of 94.1% year over year. The company expects the FYP generated through the service to be in the range of 4.3 to 4.6 billion yuan for the third quarter of 2021.

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Operating costs and expenses increased by 160.5% year-over-year to 1,754.7 million yuan for the second quarter of 2021 from 673.6 million yuan for the same period of 2020. Business expansion, brand promotion and the growth of the company’s agency team are the main reasons for the increase in operating costs.

“We will further improve our cost structure and adjust our budget plan through more refined operational management and stricter cost controls. In the third quarter, we expect to materially reduce our sales and marketing expenses,” said Shi Kangping, Chief Financial Officer of Waterdrop.