Waterdrop Inc. Announces First Quarter 2023 Unaudited Financial Results
Financial and Operational Highlights for the First Quarter of 2023
- Resilient Business Performance: For the first quarter of 2023, the first-year premiums ("FYP") generated through our Waterdrop Insurance Marketplace amounted to
RMB1,692.0 million (US ), representing an increase of$246.4 million 6.3% quarter over quarter. Our net operating revenue wasRMB606.2 million (US ), representing a decrease of$88.3 million 10.8% quarter over quarter. - Effective cost control and sustained profitability: For the first quarter of 2023, our operating costs decreased by
11.0% , and total operating costs and expenses decreased by1.8% quarter over quarter. Our net profit reachedRMB49.7 million (US ), continuing the trend in profitability since the beginning of 2022. Our solid financial performance highlights our achievements in cost control and profit enhancement.$7.2 million - Positive operating cash flow: As of March 31, 2023, our cash and cash equivalents and short-term investments balance amounted to
RMB3,597.3 million (US ). We continued to generate positive operating cash flow, and have cash outflow of investing and financing activities.$523.8 million - Further expanded product offerings: As of March 31, 2023, we offered 876 insurance products on our platform, as compared with 775 as of December 31, 2022. In the first quarter of 2023, the FYP generated from critical illness insurance products accounted for
26.9% of overall FYP generated through our Waterdrop Insurance Marketplace. - As of March 31, 2023, around 432 million people cumulatively had donated an aggregate of approximately
RMB58.4 billion to over 2.86 million patients through Waterdrop Medical Crowdfunding.
Mr. Peng Shen, Founder, Chairman, and Chief Executive Officer of Waterdrop, commented, "In the first quarter, we continued to demonstrate resilient and high-quality development, with net operating revenue reaching
For our insurance business, we further optimized our user acquisition strategies during the first quarter and saw a quarterly increase in the number of new users. Meanwhile, we continually streamlined channel operations and improved our service quality. As a result, our renewal rate sustained at a high level. We also continued to enrich our product offerings, including tailored products for specific user groups, specially the underaged and the elderly. On the technology side, we further upgraded our AI-empowered dialogue robot,.which can now conduct a ten-minute call independently and is expected to help accelerate business development to a greater extent.
As for the medical crowdfunding business, we have focused on optimizing and improving our operational capabilities. By adjusting risk control strategies, we have basically eliminated cases with unreasonable fundraising targets. Our Operational Transparency Committee has also established a mechanism to examine service processes and improve the practice of consultants. Meanwhile, we continued to actively collaborate with multiple parties to crack down on dishonest fundraising practices. This year, we were honored as the "Consumer New Force" Integrity Commitment Enterprise at the Integrity Beijing 3.15 Gala.
In terms of clinical trial solution business, as the impact of the pandemic and holidays gradually subsided, E-find Patient Platform showed continued growth. In the first quarter, we successfully enrolled over 700 patients and launched more than 70 clinical trial programs, boosting the progress of drug development for over 120 pharmaceutical companies and CROs. E-find Patient Platform maintained competitive in the field of oncology while consciously exploring other diseases, including but not limited to psoriasis, atopic dermatitis, and asthma.
Moving forward, we will continue to play an active role in promoting the multi-level diversification of medical payment system in
Financial Results for the First Quarter of 2023
Operating revenue, net
Net operating revenue for the first quarter of 2023 decreased by
- Insurance-related income includes insurance brokerage income and technical service income. Insurance brokerage income represents brokerage commissions earned from insurance companies. Technical service income is derived from 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 agency companies. Our insurance-related income amounted to
RMB536.3 million (US ) in the first quarter of 2023, representing a decrease of$78.1 million 14.6% year over year fromRMB628.2 million for the first quarter of 2022, which was mainly due to the decrease in insurance brokerage income. - Crowdfunding service fees represent the service income earned when patients successfully withdraw the proceeds from their crowdfunding campaigns. Our role is to operate the Waterdrop Medical Crowdfunding platform to provide crowdfunding related services through the internet, enabling patients with significant medical bills to seek help from caring hearts through technology (the "medical crowdfunding services"). Our medical crowdfunding services generally consist of providing technical and internet support, managing, reviewing and supervising the crowdfunding campaigns, providing comprehensive risk management and anti-fraud measures, and facilitating the collection and transfer of the funds. Since April 7, 2022, our crowdfunding platform has ceased to fully subsidize the related cost and started to charge a service fee of
3% of the funds raised, up to a maximum amount ofRMB5,000 for a single campaign. Considering the specific situation of each case, we may selectively subsidize the service fee for certain extremely needy patients. For the first quarter of 2023, we generatedRMB42.0 million (US ) in service fees, as compared to nil in the same period of 2022.$6.1 million - Digital clinical trial solution income represents the service income earned from our customers mainly including biopharmaceutical companies and leading biotechnology companies. We match qualified and suitable patients for enrollment in clinical trials for our customers and generate digital clinical trial solution revenue for successful matches and we typically charge our customers a fixed unit price per successful match. For the first quarter of 2023, our clinical trial solution income amounted to
RMB22.8 million (US ), as compared to$3.3 million RMB8.6 million in the same period of 2022.
Operating costs and expenses
Operating costs and expenses increased by
- Operating costs increased by
60.1% year over year toRMB248.0 million (US ) for the first quarter of 2023, as compared with$36.1 million RMB154.9 million for the first quarter of 2022, which was primarily driven by (i) aRMB29.1 million increase in professional and outsourced customer service fees, (ii) an increase ofRMB61.5 million mainly due to recording the crowdfunding consultants team costs as operating costs rather than as sales and marketing expense, as we started to generate crowdfunding service fees since April 2022, and (iii) aRMB8.9 million increase in the costs for patient recruitment consultants team. On a quarter-over-quarter basis, operating costs decreased by11.0% in the first quarter of 2023, primarily due to theRMB25.9 million decrease in professional and outsourced customer service fees. - Sales and marketing expenses decreased by
15.1% year over year toRMB173.4 million (US ) for the first quarter of 2023, as compared with$25.2 million RMB204.3 million for the same quarter of 2022. The decrease was primarily due to (i) a decrease ofRMB61.5 million in crowdfunding related direct costs recorded from under sales and marketing expenses to under operating costs as above mentioned, partially offset by (i) aRMB19.8 million increase in marketing expenses to third-party traffic channels, and (ii) aRMB24.9 million increase in personnel cost. On a quarter-over-quarter basis, sales and marketing expenses increased by25.8% in the first quarter of 2023, primarily due to theRMB29.4 million increase in marketing expenses to third-party traffic channels. - General and administrative expenses decreased by
6.1% year over year toRMB95.8 million (US ) for the first quarter of 2023, compared with$13.9 million RMB102.0 million for the same quarter of 2022. The year-over-year variance was due to a decrease ofRMB16.3 million allowance for doubtful accounts, partially offset by aRMB9.3 million increase in personnel cost. On a quarter-over-quarter basis, general and administrative expenses decreased by19.2% in the first quarter of 2023, primarily due to (i)RMB19.7 million decrease in allowance for doubtful accounts, and (ii)RMB8.2 million decrease in professional service fees. - Research and development expenses increased by
11.2% year over year toRMB78.7 million (US ) for the first quarter of 2023, compared with$11.5 million RMB70.8 million for the same period of 2022. The increase was primarily due toRMB10.1 million increases in research and development personnel costs and share-based compensation expenses. On a quarter-over-quarter basis, research and development expenses increased by9.8% fromRMB71.7 million , which was mainly due toRMB7.0 million increases in research and development personnel costs and share-based compensation expenses.
Operating profit for the first quarter of 2023 was
Interest income for the first quarter of 2023 was
Income tax benefit for the first quarter of 2023 was
Net profit attributable to Waterdrop for the first quarter of 2023 was
Adjusted net profit attributable to Waterdrop for the first quarter of 2023 was
Cash and cash equivalents and short-term investments
As of March 31, 2023, the Company had combined cash and cash equivalents and short-term investments of
Share Repurchase Plan
Pursuant to the share repurchase program launched in September 2021 and amended in September 2022, as of May 31, 2023, we cumulatively repurchased approximately 24.9 million ADSs from the open market with cash for a total consideration of approximately
Exchange Rate
This announcement contains translations of certain RMB amounts into
Non-GAAP Financial Measures
The Company uses non-GAAP financial measure, adjusted net profit, in evaluating the Company's operating results and for financial and operational decision-making purposes. Adjusted net profit represents net profit excluding share-based compensation expense and foreign currency exchange gain or losses. Such adjustments have no impact on income tax.
The non-GAAP financial measure is not presented in accordance with
The Company mitigates these limitations by reconciling the non-GAAP financial measure to the most comparable
For more information on the non-GAAP financial measures, please see the table captioned "Reconciliation of GAAP and Non-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
Conference Call Information
Waterdrop's management team will hold a conference call on June 2, 2023 at 8:00 AM
International: | 1-412-317-6061 |
United States Toll Free: | 1-888-317-6003 |
Hong Kong Toll Free: | 800-963976 |
852-58081995 | |
Mainland | 4001-206115 |
Chinese Line (Mandarin) Entry Number: | 6683992 |
English Interpretation Line (Listen-only Mode) Entry Number: | 8700524 |
Participants can choose between the Chinese and the English interpretation lines. Please note that the English interpretation option will be in listen-only mode. Please dial in 15 minutes before the call is scheduled to begin and provide the Elite Entry Number to join the call.
Telephone replays will be accessible two hours after the conclusion of the conference call through June 9, 2023 by dialing the following numbers:
United States Toll Free: | 1-877-344-7529 |
International: | 1-412-317-0088 |
Chinese Line Access Code: | 1702325 |
English Interpretation Line Access Code: | 8201572 |
A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.waterdrop-inc.com/.
About Waterdrop Inc.
Waterdrop Inc. (NYSE: WDH) is a leading technology platform dedicated to insurance and healthcare service with a positive social impact. Founded in 2016, with the comprehensive coverage of Waterdrop Insurance Marketplace and Waterdrop Medical Crowdfunding, Waterdrop aims to bring insurance and healthcare service to billions through technology. For more information, please visit www.waterdrop-inc.com.
For investor inquiries, please contact
Waterdrop Inc.
IR@shuidi-inc.com
WATERDROP INC. | |||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(All amounts in thousands, unless otherwise noted) | |||||
As of | |||||
December 31, 2022 | March 31, 2023 | ||||
RMB | RMB | USD | |||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | 1,574,171 | 722,800 | 105,248 | ||
Restricted cash | 517,364 | 523,644 | 76,248 | ||
Short-term investments | 2,130,377 | 2,874,526 | 418,563 | ||
Accounts receivable, net | 675,796 | 692,826 | 100,883 | ||
Current contract assets | 450,085 | 456,233 | 66,433 | ||
Amount due from related parties | 358 | 107 | 16 | ||
Prepaid expense and other assets | 342,468 | 257,578 | 37,507 | ||
Total current assets | 5,690,619 | 5,527,714 | 804,898 | ||
Non-current assets | |||||
Non-current contract assets | 103,591 | 104,591 | 15,230 | ||
Property, equipment and software, net | 31,397 | 31,465 | 4,582 | ||
Intangible assets, net | 56,614 | 56,580 | 8,239 | ||
Long-term investments | 11,969 | 9,900 | 1,442 | ||
Right of use assets, net | 18,447 | 70,162 | 10,216 | ||
Deferred tax assets | 6,166 | 7,016 | 1,022 | ||
Goodwill | 3,420 | 3,420 | 498 | ||
Total non-current assets | 231,604 | 283,134 | 41,229 | ||
Total assets | 5,922,223 | 5,810,848 | 846,127 | ||
Liabilities and Shareholders' Equity | |||||
Current liabilities | |||||
Amount due to related parties | 11,553 | 11,009 | 1,603 | ||
Insurance premium payables | 516,661 | 523,151 | 76,177 | ||
Accrued expenses and other current liabilities | 584,123 | 535,351 | 77,953 | ||
Current lease liabilities | 9,354 | 29,583 | 4,308 | ||
Total current liabilities | 1,121,691 | 1,099,094 | 160,041 | ||
Non-current liabilities | |||||
Non-current lease liabilities | 4,701 | 40,586 | 5,910 | ||
Deferred tax liabilities | 29,703 | 25,252 | 3,677 | ||
Total non-current liabilities | 34,404 | 65,838 | 9,587 | ||
Total liabilities | 1,156,095 | 1,164,932 | 169,628 | ||
Shareholders' equity | |||||
Class A ordinary shares | 108 | 109 | 16 | ||
Class B ordinary shares | 27 | 27 | 4 | ||
Treasury stock | (3) | (7) | (1) | ||
Additional paid-in capital | 7,384,670 | 7,211,658 | 1,050,099 | ||
Accumulated other comprehensive income | 108,245 | 113,588 | 16,540 | ||
Accumulated deficit | (2,726,919) | (2,679,459) | (390,159) | ||
Total shareholders' equity | 4,766,128 | 4,645,916 | 676,499 | ||
Total liabilities and shareholders' equity | 5,922,223 | 5,810,848 | 846,127 |
WATERDROP INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||
(All amounts in thousands, except for share and per share data, or otherwise noted) | ||||||||
For the Three Months Ended | ||||||||
March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||
RMB | RMB | RMB | USD | |||||
Operating revenue, net | 648,688 | 679,470 | 606,165 | 88,264 | ||||
Operating costs and expenses(i) | ||||||||
Operating costs | (154,880) | (278,573) | (247,983) | (36,109) | ||||
Sales and marketing expenses | (204,343) | (137,793) | (173,401) | (25,249) | ||||
General and administrative expenses | (101,995) | (118,563) | (95,798) | (13,949) | ||||
Research and development expenses | (70,825) | (71,685) | (78,655) | (11,453) | ||||
Total operating costs and expenses | (532,043) | (606,614) | (595,837) | (86,760) | ||||
Operating profit | 116,645 | 72,856 | 10,328 | 1,504 | ||||
Other income | ||||||||
Interest income | 14,492 | 27,677 | 30,876 | 4,496 | ||||
Foreign currency exchange gain | 653 | 4,260 | 282 | 41 | ||||
Others, net | 24,489 | 21,954 | 5,613 | 817 | ||||
Profit before income tax | 156,279 | 126,747 | 47,099 | 6,858 | ||||
Income tax (expense)/benefit | (51,321) | (545) | 2,626 | 382 | ||||
Net profit attributable to Waterdrop Inc. | 104,958 | 126,202 | 49,725 | 7,240 | ||||
Net profit attributable to ordinary shareholders | 104,958 | 126,202 | 49,725 | 7,240 | ||||
Net profit | 104,958 | 126,202 | 49,725 | 7,240 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation adjustment, net of tax | (7,783) | (40,297) | 3,386 | 493 | ||||
Unrealized (loss)/gains on available for sale investments, net of tax | 1,072 | (4,339) | 1,957 | 285 | ||||
Comprehensive income | 98,247 | 81,566 | 55,068 | 8,018 | ||||
Weighted average number of ordinary shares used in computing | ||||||||
Basic | 3,938,758,720 | 3,903,634,639 | 3,866,785,745 | 3,866,785,745 | ||||
Diluted | 4,017,949,706 | 4,067,145,456 | 4,027,428,601 | 4,027,428,601 | ||||
Net profit per share attributable to ordinary shareholders | ||||||||
Basic | 0.03 | 0.03 | 0.01 | 0.00 | ||||
Diluted | 0.03 | 0.03 | 0.01 | 0.00 | ||||
(i) Share-based compensation expenses are included in the operating costs and expenses as follows. | ||||||||
For the Three Months Ended | ||||||||
March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||
RMB | RMB | RMB | USD | |||||
Sales and marketing expenses | (2,802) | (9,635) | (16,529) | (2,407) | ||||
General and administrative expenses | (16,921) | (23,886) | (26,460) | (3,853) | ||||
Research and development expenses | (3,284) | (4,201) | (3,937) | (573) | ||||
Total | (23,007) | (37,722) | (46,926) | (6,833) |
WATERDROP INC. | ||||||||
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS | ||||||||
(All amounts in thousands, unless otherwise noted) | ||||||||
For the Three Months Ended | ||||||||
March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||
RMB | RMB | RMB | USD | |||||
Net profit | 104,958 | 126,202 | 49,725 | 7,240 | ||||
Add: | ||||||||
Share-based compensation expense | 23,007 | 37,722 | 46,926 | 6,833 | ||||
Foreign currency exchange gain | (653) | (4,260) | (282) | (41) | ||||
Adjusted net profit | 127,312 | 159,664 | 96,369 | 14,032 |
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SOURCE Waterdrop Inc.