Waterdrop Inc. Announces Third Quarter 2023 Unaudited Financial Results
- None.
- Net operating revenue for Q3 2023 decreased by 11.1% year over year. The FYP generated through Shenlanbao amounted to RMB102.3 million, accounting for 6.0% of overall FYP. Crowdfunding service fees decreased by 39.0% year over year. Operating costs and expenses increased by 7.6% year over year. Waterdrop reported an operating loss of RMB2.1 million for Q3 2023.
Financial and Operational Highlights for the Third Quarter of 2023
- High-quality business performance: For the third quarter of 2023, the first-year premiums ("FYP") generated through our insurance business amounted to
RMB1,695.4 million (US ), representing a decrease of$232.4 million 5.0% year over year. Our net operating revenue wasRMB686.5 million (US ), representing an increase of$94.1 million 1.1% quarter over quarter. - Positive operating cash flow: As of September 30, 2023, our cash and cash equivalents and short-term investments balance amounted to
RMB3,139.0 million (US ). We continued to generate positive operating cash flow, and have cash outflow of investing and financing activities.$430.2 million - Further expanded product offerings: As of September 30, 2023, we offered 1,253 insurance products cumulatively on our platform, as compared with 1,050 as of June 30, 2023. In the third quarter of 2023, the FYP generated from critical illness insurance products accounted for
24.4% of overall FYP, up by 2.6 percentage points quarter-over-quarter. - As of September 30, 2023, around 445 million people cumulatively had donated an aggregate of approximately
RMB61.3 billion to over 3.03 million patients through Waterdrop Medical Crowdfunding. - Solidifying market position in patient recruitment: As of September 30, 2023, we cumulatively enrolled more than 6,000 patients into over 800 clinical trial programs through E-Find Platform.
Mr. Peng Shen, Founder, Chairman, and Chief Executive Officer of Waterdrop, commented, "We are pleased to report seven consecutive quarters of profitability. Our net profit reached
Amid market turbulence, our insurance business continued to provide our users with high-quality service through multiple channels and innovative product offerings. During the quarter, we further strengthened content creation capability applying Artificial Intelligence Generated Content ("AIGC") technologies and increased the number of new users by
We are happy to announce that during this quarter we have completed the acquisition of
The synergy with Shenlanbao greatly enhanced our overall capability in serving long-term insurance users. The FYP of long-term insurance policies generated through our insurance business, including Waterdrop Insurance Marketplace and Shenlanbao Insurance Marketplace, reached
In medical crowdfunding business, our Operational Transparency Committee continuously improved the transparency of fundraising activities. Meanwhile, we took concrete steps to refine our consultant services, boosting the Net Promoter Score rated by patients to
E-Find Platform sustained a rapid development with a
Looking forward, we will continue to leverage our advantages in big data and technologies and further integrate our resources in domestic insurance and healthcare industries to create more value for our users."
Financial Results for the Third Quarter of 2023
Operating revenue, net
Net operating revenue for the third 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
RMB619.3 million (US ) in the third quarter of 2023, representing a decrease of$84.9 million 10.7% year over year fromRMB693.5 million for the third quarter of 2022, which was mainly due to the decrease in insurance brokerage income. On a quarter-over-quarter basis, insurance-related income increased by3.7% . - 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. For the third quarter of 2023, we generated
RMB36.0 million (US ) in service fees, representing a decrease of$4.9 million 39.0% year over year fromRMB59.0 million for the third quarter of 2022. - 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 third quarter of 2023, our clinical trial solution income amounted to
RMB27.6 million (US ), representing an increase of$3.8 million 60.7% fromRMB17.2 million in the same period of 2022.
Operating costs and expenses
Total Operating costs and expenses increased by
- Operating costs decreased by
8.5% year over year toRMB312.3 million (US ) for the third quarter of 2023, as compared with$42.8 million RMB341.3 million for the third quarter of 2022, which was primarily driven by (i) aRMB9.4 million decrease in costs of referral and service fees, and (ii) aRMB19.5 million decrease in the cost of one-year health insurance coverage related to the termination of mutual aid plan based on the final settlement information which occurred in the third quarter of 2022. On a quarter-over-quarter basis, operating costs decreased by6.3% in the third quarter of 2023, primarily due to theRMB21.4 million decrease in costs of referral and service fees. - Sales and marketing expenses increased by
36.1% year over year toRMB187.7 million (US ) for the third quarter of 2023, as compared with$25.7 million RMB137.9 million for the same quarter of 2022. The increase was primarily due to (i) the consolidation of Shenlanbao which generated sales and marketing expenses ofRMB28.1 million , as we started to consolidate the financial statements of Shenlanbao into our consolidated financial statements in the third quarter of 2023, (ii) aRMB14.4 million increase in marketing expenses to third-party traffic channels, and (iii) aRMB9.1 million increase in sales and marketing personnel costs and share-based compensation expenses. On a quarter-over-quarter basis, sales and marketing expenses decreased by8.2% in the third quarter of 2023, primarily due to aRMB41.3 million decrease in marketing expenses to third-party traffic channels, partially offset by the consolidation of the financial statements of Shenlanbao. - General and administrative expenses increased by
39.7% year over year toRMB114.6 million (US ) for the third quarter of 2023, compared with$15.7 million RMB82.0 million for the same quarter of 2022. The year-over-year variance was due to the consolidation of the financial statements of Shenlanbao, which generated general and administrative expenses ofRMB11.2 million , and an increase ofRMB19.1 million in professional service fees. On a quarter-over-quarter basis, general and administrative expenses increased by19.4% in the third quarter of 2023, due to the consolidation of the financial statements of Shenlanbao, and an increase ofRMB8.7 million professional service fees. - Research and development expenses decreased by
5.7% year over year toRMB73.9 million (US ) for the third quarter of 2023, compared with$10.1 million RMB78.4 million for the same period of 2022. The decrease was primarily due to a total ofRMB5.7 million decreases in research and development personnel costs and share-based compensation expenses. On a quarter-over-quarter basis, research and development expenses decreased by14.7% fromRMB86.7 million , which was mainly due to a total ofRMB13.0 million decrease in research and development personnel costs and share-based compensation expenses.
Operating loss for the third quarter of 2023 was
Interest income for the third quarter of 2023 was
Income tax benefit for the third quarter of 2023 was
Net profit for the third quarter of 2023 was
Adjusted net profit for the third quarter of 2023 was
Cash and cash equivalents and short-term investments
As of September 30, 2023, the Company had combined cash and cash equivalents and short-term investments of
Share Repurchase Plans
Pursuant to the share repurchase programs launched in September 2021 and September 2022, respectively, and the new share repurchase program adopted in September 2023, as of November 30, 2023, we had cumulatively repurchased approximately 38.5 million ADSs from the open market with cash for a total consideration of approximately
Supplemental Information
Starting from the second quarter of 2023, our chief operating decision makers start to manage the business by three operating segments and assess the performance and allocate resources under the new operating segment structure.
Therefore, we organize and report our business in three operating segments:
- Insurance, which mainly includes Waterdrop Insurance Marketplace, Shenlanbao Insurance Marketplace and technical support service;
- Crowdfunding, which mainly includes Waterdrop Medical Crowdfunding; and
- Others, which mainly include Digital Clinical Trial Solution and other new initiatives.
As a result, we have updated our segments reporting information to reflect the new operating and reporting structure.
Comparative figures were retrospectively adjusted to conform to this presentation.
For the Three Months Ended | For the Nine Months Ended | |||||||||||||
September 30, 2022 | June 30, 2023 | September 30, 2023 | September 30, 2022 | September 30, 2023 | ||||||||||
RMB | RMB | RMB | USD | RMB | RMB | USD | ||||||||
(All amounts in thousands) | ||||||||||||||
Operating revenue, net | ||||||||||||||
Insurance* | 693,522 | 597,437 | 619,269 | 84,878 | 1,947,684 | 1,753,049 | 240,275 | |||||||
Crowdfunding | 59,001 | 44,677 | 35,971 | 4,930 | 115,062 | 122,670 | 16,813 | |||||||
Others | 19,669 | 36,586 | 31,238 | 4,282 | 59,552 | 95,624 | 13,107 | |||||||
Total consolidated operating revenue, net | 772,192 | 678,700 | 686,478 | 94,090 | 2,122,298 | 1,971,343 | 270,195 | |||||||
Operating profit/(loss) | ||||||||||||||
Insurance* | 271,142 | 99,759 | 145,200 | 19,901 | 822,829 | 399,914 | 54,813 | |||||||
Crowdfunding | (44,998) | (64,131) | (68,793) | (9,429) | (195,334) | (194,058) | (26,598) | |||||||
Others | (68,029) | (47,877) | (43,713) | (5,990) | (148,060) | (128,157) | (17,566) | |||||||
Total segment operating profit/(loss) | 158,115 | (12,249) | 32,694 | 4,482 | 479,435 | 77,699 | 10,649 | |||||||
Unallocated item** | (25,552) | (29,393) | (34,762) | (4,765) | (74,304) | (111,081) | (15,225) | |||||||
Total consolidated operating profit/(loss) | 132,563 | (41,642) | (2,068) | (283) | 405,131 | (33,382) | (4,576) | |||||||
Total other income | 27,917 | 52,835 | 36,914 | 5,059 | 98,815 | 126,520 | 17,341 | |||||||
Profit before income tax | 160,480 | 11,193 | 34,846 | 4,776 | 503,946 | 93,138 | 12,765 | |||||||
Income tax benefit/(expense) | 9,134 | 10,504 | 1,479 | 203 | (22,431) | 14,609 | 2,002 | |||||||
Net profit | 169,614 | 21,697 | 36,325 | 4,979 | 481,515 | 107,747 | 14,767 | |||||||
* The Company started to consolidate the financial results of Shenlanbao since July 4, 2023 and reported the results of Shenlanbao under the Insurance segment. | ||||||||||||||
** The share-based compensation represents an unallocated item in the segment information because our management does not consider this as part of the segment operating performance measure. |
Recent Development
Status Update of Acquisition of Cunzhen Qiushi
Since the previously announced acquisition plan of Cunzhen Qiushi on June 9, 2023, the Company completed the acquisition of
Exchange Rate
This announcement contains translations of certain RMB amounts into
Non-GAAP Financial Measure
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, the impact of terminating the mutual aid plan 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 measure, 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 December 7, 2023 at 7:00 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: | 6584947 |
English Interpretation Line (Listen-only Mode) Entry Number: | 1088026 |
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 September 14, 2023 by dialing the following numbers:
United States Toll Free: | 1-877-344-7529 |
International: | 1-412-317-0088 |
Chinese Line Access Code: | 1180932 |
English Interpretation Line Access Code: | 5039328 |
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 | September 30, 2023 | ||||
RMB | RMB | USD | |||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | 1,574,171 | 441,167 | 60,467 | ||
Restricted cash | 517,364 | 551,341 | 75,568 | ||
Short-term investments | 2,130,377 | 2,697,817 | 369,767 | ||
Accounts receivable, net | 675,796 | 817,638 | 112,067 | ||
Current contract assets | 450,085 | 569,966 | 78,120 | ||
Amount due from related parties | 358 | 410 | 56 | ||
Prepaid expense and other assets | 342,468 | 215,531 | 29,541 | ||
Total current assets | 5,690,619 | 5,293,870 | 725,586 | ||
Non-current assets | |||||
Non-current contract assets | 103,591 | 124,222 | 17,026 | ||
Property, equipment and software, net | 31,397 | 37,618 | 5,156 | ||
Intangible assets, net | 56,614 | 177,536 | 24,333 | ||
Long-term investments | 11,969 | 216,305 | 29,647 | ||
Right of use assets, net | 18,447 | 66,192 | 9,072 | ||
Deferred tax assets | 6,166 | 14,872 | 2,038 | ||
Goodwill* | 3,420 | 80,751 | 11,068 | ||
Total non-current assets | 231,604 | 717,496 | 98,340 | ||
Total assets | 5,922,223 | 6,011,366 | 823,926 | ||
Liabilities, Mezzanine Equity and Shareholders' Equity | |||||
Current liabilities | |||||
Amount due to related parties | 11,553 | 11,604 | 1,590 | ||
Insurance premium payables | 516,661 | 571,552 | 78,338 | ||
Accrued expenses and other current liabilities | 584,123 | 671,790 | 92,076 | ||
Current lease liabilities | 9,354 | 32,982 | 4,521 | ||
Total current liabilities | 1,121,691 | 1,287,928 | 176,525 | ||
Non-current liabilities | |||||
Non-current lease liabilities | 4,701 | 33,164 | 4,546 | ||
Deferred tax liabilities | 29,703 | 48,425 | 6,637 | ||
Total non-current liabilities | 34,404 | 81,589 | 11,183 | ||
Total liabilities | 1,156,095 | 1,369,517 | 187,708 | ||
Mezzanine Equity | |||||
Redeemable non-controlling interests | - | 96,713 | 13,256 | ||
Shareholders' equity | |||||
Class A ordinary shares | 108 | 111 | 15 | ||
Class B ordinary shares | 27 | 27 | 4 | ||
Treasury stock | (3) | (13) | (2) | ||
Additional paid-in capital | 7,384,670 | 6,983,368 | 957,150 | ||
Accumulated other comprehensive income | 108,245 | 183,497 | 25,150 | ||
Accumulated deficit | (2,726,919) | (2,621,854) | (359,355) | ||
Total shareholders' equity | 4,766,128 | 4,545,136 | 622,962 | ||
Total liabilities, mezzanine equity and shareholders' equity | 5,922,223 | 6,011,366 | 823,926 | ||
* As the Company recognized provisional amounts for items exchanged at the date of acquisition of Cunzhen Qiushi, the amount of goodwill and other items may be subject to adjustments during the measurement period. |
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 | For the Nine Months Ended | |||||||||||||
September 30, 2022 | June 30, 2023 | September 30, 2023 | September 30, 2022 | September 30, 2023 | ||||||||||
RMB | RMB | RMB | USD | RMB | RMB | USD | ||||||||
Operating revenue, net | 772,192 | 678,700 | 686,478 | 94,090 | 2,122,298 | 1,971,343 | 270,195 | |||||||
Operating costs and expenses(i) | ||||||||||||||
Operating costs | (341,293) | (333,140) | (312,278) | (42,801) | (740,789) | (893,401) | (122,451) | |||||||
Sales and marketing expenses | (137,919) | (204,548) | (187,685) | (25,724) | (486,685) | (565,634) | (77,527) | |||||||
General and administrative expenses | (82,039) | (95,997) | (114,641) | (15,713) | (270,088) | (306,436) | (42,001) | |||||||
Research and development expenses | (78,378) | (86,657) | (73,942) | (10,135) | (219,605) | (239,254) | (32,792) | |||||||
Total operating costs and expenses | (639,629) | (720,342) | (688,546) | (94,373) | (1,717,167) | (2,004,725) | (274,771) | |||||||
Operating profit/(loss) | 132,563 | (41,642) | (2,068) | (283) | 405,131 | (33,382) | (4,576) | |||||||
Other income | ||||||||||||||
Interest income | 24,331 | 37,618 | 32,890 | 4,508 | 54,036 | 101,384 | 13,896 | |||||||
Foreign currency exchange (loss)/gain | (1,012) | 838 | (3,734) | (512) | (196) | (2,614) | (358) | |||||||
Others, net | 4,598 | 14,379 | 7,758 | 1,063 | 44,975 | 27,750 | 3,803 | |||||||
Profit before income tax | 160,480 | 11,193 | 34,846 | 4,776 | 503,946 | 93,138 | 12,765 | |||||||
Income tax benefit/(expense) | 9,134 | 10,504 | 1,479 | 203 | (22,431) | 14,609 | 2,002 | |||||||
Net profit | 169,614 | 21,697 | 36,325 | 4,979 | 481,515 | 107,747 | 14,767 | |||||||
Net loss attributable to non-controlling interests shareholders | - | - | (417) | (57) | - | (417) | (57) | |||||||
Net profit attributable to ordinary shareholders | 169,614 | 21,697 | 36,742 | 5,036 | 481,515 | 108,164 | 14,824 | |||||||
Other comprehensive income: | ||||||||||||||
Foreign currency translation adjustment, net of tax | 93,742 | 64,434 | 8,983 | 1,231 | 169,860 | 76,803 | 10,527 | |||||||
Unrealized gains/(loss) on available for sale investments, net of tax | 341 | (3,508) | - | - | 4,513 | (1,551) | (213) | |||||||
Total Comprehensive income | 263,697 | 82,623 | 45,308 | 6,210 | 655,888 | 182,999 | 25,081 | |||||||
Weighted average number of ordinary shares used in computing net profit per share | ||||||||||||||
Basic | 3,916,993,146 | 3,795,521,186 | 3,719,628,339 | 3,719,628,339 | 3,927,371,780 | 3,793,678,209 | 3,793,678,209 | |||||||
Diluted | 3,999,147,416 | 3,949,592,050 | 3,808,529,672 | 3,808,529,672 | 4,007,639,428 | 3,921,118,226 | 3,921,118,226 | |||||||
Net profit per share attributable to ordinary shareholders | ||||||||||||||
Basic | 0.04 | 0.01 | 0.01 | 0.00 | 0.12 | 0.03 | 0.00 | |||||||
Diluted | 0.04 | 0.01 | 0.01 | 0.00 | 0.12 | 0.03 | 0.00 | |||||||
(i) Share-based compensation expenses are included in the operating costs and expenses as follows. | ||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||
September 30, 2022 | June 30, 2023 | September 30, 2023 | September 30, 2022 | September 30, 2023 | ||||||||||
RMB | RMB | RMB | USD | RMB | RMB | USD | ||||||||
Sales and marketing expenses | (1,912) | (7,888) | (8,944) | (1,226) | (6,485) | (33,361) | (4,573) | |||||||
General and administrative expenses | (19,665) | (18,122) | (22,060) | (3,024) | (56,562) | (66,642) | (9,134) | |||||||
Research and development expenses | (3,975) | (3,383) | (3,758) | (515) | (11,257) | (11,078) | (1,518) | |||||||
Total | (25,552) | (29,393) | (34,762) | (4,765) | (74,304) | (111,081) | (15,225) |
WATERDROP INC. | ||||||||||||||
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS | ||||||||||||||
(All amounts in thousands, unless otherwise noted) | ||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||
September 30, 2022 | June 30, 2023 | September 30, 2023 | September 30, 2022 | September 30, 2023 | ||||||||||
RMB | RMB | RMB | USD | RMB | RMB | USD | ||||||||
Net profit | 169,614 | 21,697 | 36,325 | 4,979 | 481,515 | 107,747 | 14,767 | |||||||
Add: | ||||||||||||||
Share-based compensation expense | 25,552 | 29,393 | 34,762 | 4,765 | 74,304 | 111,081 | 15,225 | |||||||
Foreign currency exchange loss/(gain) | 1,012 | (838) | 3,734 | 512 | 196 | 2,614 | 358 | |||||||
Impact of terminating the mutual aid plan (ii) | 19,549 | - | - | - | 19,549 | - | - | |||||||
Adjusted net profit | 215,727 | 50,252 | 74,821 | 10,256 | 575,564 | 221,442 | 30,350 | |||||||
(ii) This represents the estimated cost of medical expenses and cost of one-year health insurance coverage. |
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SOURCE Waterdrop Inc.
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