Waterdrop, Inc. (NYSE:WDH) Q4 2023 Earnings Conference Call March 26, 2024 8:00 AM ET Company Participants Peng Shen - Chairman & Chief Executive Officer Conference Call Participants Unidentified Company Representative Good morning, everyone. This is Tracy Lisang [ph], Investor Relations, required to welcome everyone to Waterdrop's Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. As a reminder, today's conference call is being recorded. Please note the discussion today will contain forward-look ...

Exhibit 99.1 Waterdrop Inc. Announces Fourth Quarter and Fiscal Year 2023 Unaudited Financial Results and a Special Cash Dividend BEIJING, March 26, 2024 /PRNewswire/ - Waterdrop Inc. ("Waterdrop", the "Company" or "we") (NYSE: WDH), a leading technology platform dedicated to insurance and healthcare service with a positive social impact, today announced its unaudited financial results for the three months and full year ended December 31, 2023 and a special cash dividend. Financial and Operational Highlight ...

编者按： 新技术重塑新商业，新商业引领新变革，未来呼啸而来，这是企业家与科学家发生化学作用的春天。 《中国企业家》杂志与《证券日报》联合出品了《2024商业新变量·科学跨年》 特别栏目，邀请到硬科技赛道、新商业领域的企业创始人，解码“2024商业新变量”。 科技驱动下的创新，道阻且长，但我们依然笃信光明涌动的明天，愿意展现那些卓越拼搏者的剪影。 我们将从硬科技的视角，观察浪潮激变，聊透关键抉择，陪伴最有活力的你，从兔年走向龙年，从少有人走的路，走向星辰大海。 2016年，在美团成长为百亿美元估值的超级独角兽时，曾作为10号员工加入美团创业团队的沈鹏，毅然选择离开美团，创办了水滴公司，开启了他的创业之路。 创业8年来，水滴旗下已形成了3个业务板块，分别是以水滴保为代表的保险保障、以水滴筹为代表的大病求助和以翼帆医药为代表的医药创新。 回首当初放弃了三分之一的美团期权去创业的选择，沈鹏坦言，在美团的经历为自己打开了一个更大的视野。在自己还没有真正成为管理者时，就在接触一些更先进的思想和管理方式，让自己相对地能把握住一些事情的本质。据沈鹏介绍，截至2023年Q3，公司已实现连续7个季度盈利。 “青春是有限的，要把有 ...

1月30日，水滴公司“水滴成海 星辰璀璨”水滴星辰全新品牌发布会在京举办，水滴星辰是水滴公司倾力打造的“线下高端保险中介服务品牌”，致力于为客户提供全生命周期的保险保障规划及服务。北京保险行业协会相关负责人，北京保险中介行业协会中介工作部副主任孔祥燕，中英人寿、富德生命人寿、弘康人寿、京东安联等十四家保司相关负责人，水滴公司创始人兼CEO沈鹏，水滴公司合伙人、水滴保险经纪有限公司董事长郭南洋，水滴保险经纪渠道副总裁王牧等领导和嘉宾出席。 图：“水滴星辰”品牌诞生 水滴星辰上线，打造高净值人群最信赖的服务平台 水滴公司(WDH.US)自2016年成立至今，坚持以“用互联网科技助推广大人民群众有保可医，保障亿万家庭”为使命，致力于为用户提供健康保障解决方案。2017年，水滴公司推出互联网保险经纪平台“水滴保”，随后启动线下经纪人业务，不断探索线上线下融合发展的新路径。沈鹏表示：水滴会坚定地持续投入线下经纪人业务，以用户需求为核心，建立一支面向未来的、高质量、高口碑的经纪人队伍。 图：水滴公司创始人兼CEO沈鹏进行分享 相关数据显示，55岁以上的中老年人群将成为未来保险行业的增量市场。他们有较强的医疗、养老和财 ...

2023年12月22日，水滴公司保险业务板块管理团队与招商信诺高层进行了一次深入的交流与探讨。水滴保总经理冉伟、网销和规划师业务负责人蒋圆圆、保险商品管理中心负责人谭瑾等一行人，受到了招商信诺网电事业部总裁顾育匡、DTC及互联网业务部总经理赵翠等领导的热情接待。双方就未来战略合作展开深度讨论，将进一步加强在保险产品创新及服务提升上的协作，共同应对行业挑战，抓住发展机遇。 自2019年以来，水滴与招商信诺在保险业务领域展开了紧密合作。先后上线了重疾、意外、终身年金等特色产品，从客户利益出发，紧贴客户需求，不断搭建和升级产品和服务体系，为少儿、成人、老人等各个群体提供高性价比的产品和更佳的服务体验。 随着保险行业回归保障本源的趋势，保险行业也需要围绕大养老、大健康的金融生态圈进行调整布局，更加聚焦于保障类产品的研发和销售。对于未来的合作，双方均表示将继续秉承“客户第一”的理念，持续推进创新和优化服务。招商信诺已推出大健康全球战略，结合国内“百城千家万店”以及股东信诺全球220万家医疗资源，打造“健康险+健康管理”的服务模式。这一战略与水滴保险业务板块的理念高度契合，水滴将继续利用互联网科技，与招商信诺共同探索如 ...

Financial Data and Key Metrics Changes - In Q3 2023, the company reported revenue of approximately RMB6.9 billion, maintaining a profitable trend for the past seven quarters, with cash profit reaching RMB36.3 million, reflecting a growth of 67% year-over-year [5][28] - The combined cash, cash equivalents, and short-term investments stood at RMB3.1 billion, providing flexibility and stability for long-term growth [5][28] - Adjusted net profit attributed to the company in Q3 was RMB74.8 million, while GAAP net profit was RMB36.3 million [28] Business Line Data and Key Metrics Changes - The insurance marketplace continued to enhance product metrics through demand insights and quality improvements, contributing to stable net profit [6] - The Medical Crowdfunding platform served over 3 million patients and raised over RMB61.3 billion, with user numbers and underwriting amounts continuing to grow [21] - The clinical solutions business generated revenue of about RMB27.6 million, representing a year-on-year growth of 16.7% [23] Market Data and Key Metrics Changes - The first-year premium (FYP) for life insurance reached RMB16.95 billion, with a 38% contribution from long-term insurance [13] - The FYP for long-term insurance business was RMB640 million, an increase of 17% year-over-year and 9% quarter-over-quarter [15] - The average premium per policy for long-term insurance increased by 43% year-over-year [15] Company Strategy and Development Direction - The company aims to enhance user-centric services and digital transformation in the insurance business, focusing on long-term, healthy, and stable development [10][11] - The strategy includes leveraging big data to increase industry penetration globally and seeking cooperation and investment opportunities in the insurance and healthcare sectors [11] - The company is committed to enhancing its ESG efforts and has initiated various initiatives related to environmental protection and corporate governance [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the domestic economy in China is still recovering, with adjustments in product policies temporarily impacting the life insurance business [4] - The company expressed confidence in the industry despite facing a challenging micro environment, emphasizing a focus on high-quality development and organic growth [10][12] - Management highlighted the importance of technology empowerment and AI capabilities to build core competitiveness and support long-term strategies [11] Other Important Information - The company has cumulatively repurchased about 38.5 million ADSs from the open market, reflecting strong confidence in long-term sustainable development [10] - The company actively participated in public welfare initiatives, collaborating with charitable foundations to assist areas affected by disasters [9] Q&A Session Summary - The Q&A session concluded without specific questions being documented in the provided content, indicating a wrap-up of the conference call [28]

Exhibit 99.1 Waterdrop Inc. Announces Third Quarter 2023 Unaudited Financial Results BEIJING, Dec. 7, 2023 /PRNewswire/—Waterdrop Inc. ("Waterdrop", the "Company" or "we") (NYSE: WDH), a leading technology platform dedicated to insurance and healthcare service with a positive social impact, today announced its unaudited financial results for the third quarter ended September 30, 2023. Financial and Operational Highlights for the Third Quarter of 2023 • High-quality business performance: For the third quarte ...

Financial Data and Key Metrics Changes - The company's revenue for Q2 2023 reached RMB 679 million, showing a 12% increase compared to RMB 606 million in Q1 2023, but slightly lower than RMB 711 million in Q2 2022 [29] - Net profit for Q2 2023 was RMB 21.7 million, with an adjusted profit attributed to Waterdrop of RMB 50.3 million, marking six consecutive quarters of GAAP profit [32] - Cash reserves stood at RMB 3.4 billion as of June 30, 2023, providing a strong financial buffer for future growth [32] Business Line Data and Key Metrics Changes - Insurance-related income was RMB 597 million, reflecting an 11.4% sequential increase [29] - Digital clinical trial solution income reached RMB 29.4 million, achieving a significant year-on-year growth of 167% and a sequential increase of 28.9% [29] - The crowdfunding segment incurred an operating loss of RMB 64.1 million, while the insurance segment had an operating profit of RMB 99.8 million [32] Market Data and Key Metrics Changes - The company reported a 30% sequential growth in short-term insurance, achieving a first-year premium (FYP) of RMB 1.6 billion [14] - Long-term insurance FYP reached RMB 590 million, representing a 29% sequential growth [14] - The online brokerage channel experienced a 113% sequential growth in FYP, driven by new insurance products targeting younger users [15] Company Strategy and Development Direction - The company aims to leverage its ample cash reserves for operations and investment opportunities in the insurance and healthcare sectors [11][12] - Future strategies include enhancing digital transformation, improving service models, and increasing industry penetration globally [11] - The company is committed to maintaining a user-centric approach and solidifying its leading position in the insurance and healthcare sectors [4][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging macro environment while focusing on long-term value and user satisfaction [4][10] - The company plans to continue investing in technology and AI to enhance operational efficiency and service quality [8][19] - Management highlighted the importance of corporate social responsibility (CSR) initiatives and ESG commitments as part of their long-term strategy [9][10] Other Important Information - The company has repurchased 37.5 million ADS shares for approximately $86.1 million and plans to repurchase up to $50 million more in the next 12 months [10] - The Waterdrop Charity platform has collaborated with about 110 charitable organizations, raising approximately RMB 1.3 billion from over 65 million donors [8] Q&A Session Summary Question: What are the growth prospects for the insurance segment? - The insurance segment has shown strong performance with significant sequential growth in both short-term and long-term insurance products, indicating a robust market demand [14][15] Question: How is the company addressing the challenges in the crowdfunding segment? - The company is enhancing operational transparency and governance in the crowdfunding platform to improve authenticity and donor trust [21][22] Question: What are the company's plans for technology investment? - The company is increasing investments in AI and technology to improve service delivery and operational efficiency across various business lines [19][30]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Financial and Operational Highlights for Q2 2023](index=1&type=section&id=Financial%20and%20Operational%20Highlights%20for%20the%20Second%20Quarter%20of%202023) Waterdrop Inc. reported resilient Q2 2023 performance with significant QoQ growth in FYP and net operating revenue, maintaining strong cash and expanding product offerings Q2 2023 Financial and Operational Highlights | Metric | Value (RMB) | YoY Change | QoQ Change | | :------------------------------------ | :-------------------- | :--------- | :--------- | | First-Year Premiums (FYP) | 2,197.0 million | N/A | +29.8% | | Net Operating Revenue | 678.7 million | -3.2% | +12.0% | | Cash & Cash Equivalents & Short-term Investments (as of Jun 30, 2023) | 3,399.2 million | N/A | N/A | | Insurance Products Offered (as of Jun 30, 2023) | 1,050 | N/A | +174 (from 876) | | Critical Illness Insurance FYP Share | 21.8% | N/A | N/A | - Waterdrop Medical Crowdfunding cumulatively facilitated donations of approximately **RMB60.1 billion** from around **439 million** people to over **2.95 million** patients[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted user-centric development, sequential growth in insurance users, product innovation, and strong E-Find Platform performance - The insurance business witnessed sequential growth in new users and maintained a consistently high policy renewal rate, with new product offerings like the Blue Ocean Lifetime Health Insurance[3](index=3&type=chunk) - The medical crowdfunding business focused on operational transparency and refining consultant services to safeguard patient and donor rights[4](index=4&type=chunk) - The E-Find Platform collaborated with **132** pharmaceutical companies and CROs, enrolled over **900** patients, onboarded **80** new clinical trial programs, and initiated its first full-cycle clinical trial operation project, demonstrating strong performance in digital patient recruiting[4](index=4&type=chunk) [Financial Results for Q2 2023](index=1&type=section&id=Financial%20Results%20for%20the%20Second%20Quarter%20of%202023) [Operating Revenue, Net](index=1&type=section&id=Operating%20revenue,%20net) Net operating revenue reached **RMB678.7 million** in Q2 2023, a 3.2% YoY decrease and 12.0% QoQ increase, influenced by varied segment income Net Operating Revenue (RMB million) | Period | Amount | YoY Change | QoQ Change | | :----- | :----- | :--------- | :--------- | | Q2 2023 | 678.7 | -3.2% | +12.0% | | Q2 2022 | 701.4 | N/A | N/A | [Insurance-related Income](index=1&type=section&id=Insurance-related%20income) Insurance-related Income (RMB million) | Period | Amount | YoY Change | | :----- | :----- | :--------- | | Q2 2023 | 597.4 | -4.6% | | Q2 2022 | 625.9 | N/A | - The decrease in insurance-related income was mainly due to a decrease in technical service income[6](index=6&type=chunk) [Crowdfunding Service Fees](index=2&type=section&id=Crowdfunding%20service%20fees) Crowdfunding Service Fees (RMB million) | Period | Amount | YoY Change | | :----- | :----- | :--------- | | Q2 2023 | 44.7 | -20.3% | | Q2 2022 | 56.1 | N/A | - The crowdfunding platform ceased fully subsidizing costs and started charging a **3%** service fee (up to **RMB5,000**) since April 7, 2022, with selective subsidies for special needs[7](index=7&type=chunk) [Digital Clinical Trial Solution Income](index=2&type=section&id=Digital%20clinical%20trial%20solution%20income) Digital Clinical Trial Solution Income (RMB million) | Period | Amount | | :----- | :----- | | Q2 2023 | 29.4 | | Q2 2022 | 11.0 | [Operating Costs and Expenses](index=2&type=section&id=Operating%20costs%20and%20expenses) Total operating costs and expenses increased significantly by **32.1%** YoY and **20.9%** QoQ to **RMB720.3 million**, driven by increases in operating costs and sales and marketing expenses Total Operating Costs and Expenses (RMB million) | Period | Amount | YoY Change | QoQ Change | | :----- | :----- | :--------- | :--------- | | Q2 2023 | 720.3 | +32.1% | +20.9% | [Operating Costs](index=2&type=section&id=Operating%20costs) Operating Costs (RMB million) | Period | Amount | YoY Change | QoQ Change | | :----- | :----- | :--------- | :--------- | | Q2 2023 | 333.1 | +36.2% | +34.3% | - The increase was primarily driven by a **RMB74.2 million** increase in costs of referral and service fees (YoY) and a **RMB8.9 million** increase in costs for the patient recruitment consultants team (YoY)[9](index=9&type=chunk) [Sales and Marketing Expenses](index=2&type=section&id=Sales%20and%20marketing%20expenses) Sales and Marketing Expenses (RMB million) | Period | Amount | YoY Change | QoQ Change | | :----- | :----- | :--------- | :--------- | | Q2 2023 | 204.5 | +41.6% | +18.0% | - The increase was primarily due to a **RMB50.7 million** increase in marketing expenses to third-party traffic channels (YoY)[9](index=9&type=chunk) [General and Administrative Expenses](index=2&type=section&id=General%20and%20administrative%20expenses) General and Administrative Expenses (RMB million) | Period | Amount | YoY Change | QoQ Change | | :----- | :----- | :--------- | :--------- | | Q2 2023 | 96.0 | +11.6% | Stable | - The year-over-year variance was due to a **RMB9.9 million** increase in professional service fees[9](index=9&type=chunk) [Research and Development Expenses](index=2&type=section&id=Research%20and%20development%20expenses) Research and Development Expenses (RMB million) | Period | Amount | YoY Change | QoQ Change | | :----- | :----- | :--------- | :--------- | | Q2 2023 | 86.7 | +23.1% | +10.2% | - The increase was primarily due to **RMB15.0 million** increases in research and development personnel costs and share-based compensation expenses (YoY)[9](index=9&type=chunk) [Operating Profit/(Loss)](index=2&type=section&id=Operating%20loss) The company reported an operating loss of **RMB41.6 million** in Q2 2023, a significant decline from **RMB155.9 million** profit in Q2 2022 and **RMB10.3 million** in Q1 2023 Operating Profit/(Loss) (RMB million) | Period | Amount | | :----- | :----- | | Q2 2023 | (41.6) | | Q2 2022 | 155.9 | | Q1 2023 | 10.3 | [Other Income and Net Profit](index=3&type=section&id=Other%20Income%20and%20Net%20Profit) Waterdrop achieved a net profit of **RMB21.7 million** in Q2 2023, despite an operating loss, supported by interest income and tax benefits [Interest Income](index=3&type=section&id=Interest%20income) Interest Income (RMB million) | Period | Amount | | :----- | :----- | | Q2 2023 | 37.6 | | Q2 2022 | 15.2 | - The increase in interest income was primarily due to the increase in short-term investments[11](index=11&type=chunk) [Income Tax Benefit](index=3&type=section&id=Income%20tax%20benefit) Income Tax Benefit (RMB million) | Period | Amount | | :----- | :----- | | Q2 2023 | 10.5 | | Q2 2022 | 19.8 | [Net Profit and Adjusted Net Profit](index=3&type=section&id=Net%20profit%20attributable%20to%20Waterdrop%20for%20the%20second%20quarter%20of%202023) Net Profit Attributable to Waterdrop (RMB million) | Period | Amount | | :----- | :----- | | Q2 2023 | 21.7 | | Q2 2022 | 206.9 | | Q1 2023 | 49.7 | Adjusted Net Profit Attributable to Waterdrop (RMB million) | Period | Amount | | :----- | :----- | | Q2 2023 | 50.3 | | Q2 2022 | 232.5 | | Q1 2023 | 96.4 | [Financial Position and Capital Management](index=3&type=section&id=Financial%20Position%20and%20Capital%20Management) [Cash and Cash Equivalents and Short-term Investments](index=3&type=section&id=Cash%20and%20cash%20equivalents%20and%20short-term%20investments) Waterdrop maintained a strong liquidity position with combined cash and short-term investments totaling **RMB3,399.2 million** as of June 30, 2023 Cash and Cash Equivalents and Short-term Investments (RMB million) | Date | Amount | | :----------- | :----------- | | Jun 30, 2023 | 3,399.2 | | Dec 31, 2022 | 3,704.5 | [Share Repurchase Plans](index=3&type=section&id=Share%20Repurchase%20Plans) Waterdrop completed **US$86.1 million** in ADSs repurchases and approved a new **US$50 million** share repurchase program - As of August 31, 2023, approximately **37.5 million ADSs** were cumulatively repurchased for a total consideration of approximately **US$86.1 million** under the previous program[13](index=13&type=chunk) - A new share repurchase program was approved on September 6, 2023, authorizing repurchases of up to **US$50 million** in ordinary shares (in the form of ADSs) over the twelve-month period through September 6, 2024[14](index=14&type=chunk) - The new repurchase program will be funded by existing cash on the Company's balance sheet[14](index=14&type=chunk) [Business Segments and Recent Developments](index=3&type=section&id=Business%20Segments%20and%20Recent%20Developments) [Segment Reporting Structure Update](index=3&type=section&id=Supplemental%20Information) Effective Q2 2023, Waterdrop updated its segment reporting into Insurance, Crowdfunding, and Others, with comparative figures adjusted retrospectively - Starting from Q2 2023, the company manages and reports its business in three operating segments: Insurance (Waterdrop Insurance Marketplace and technical support), Crowdfunding (Waterdrop Medical Crowdfunding), and Others (Digital Clinical Trial Solution and new initiatives)[15](index=15&type=chunk) [Segment Performance Overview](index=4&type=section&id=Segment%20Performance%20Overview) In Q2 2023, the Insurance segment generated most revenue and profit, while Crowdfunding and 'Others' segments reported operating losses Segment Operating Revenue (RMB thousands) | Segment | Q2 2023 | Q1 2023 | Q2 2022 | | :-------- | :------ | :------ | :------ | | Insurance | 597,437 | 536,343 | 625,927 | | Crowdfunding | 44,677 | 42,022 | 56,061 | | Others | 36,586 | 27,800 | 19,430 | | **Total** | **678,700** | **606,165** | **701,418** | Segment Operating Profit/(Loss) (RMB thousands) | Segment | Q2 2023 | Q1 2023 | Q2 2022 | | :-------- | :------ | :------ | :------ | | Insurance | 99,759 | 154,955 | 270,843 | | Crowdfunding | (64,131) | (61,134) | (45,783) | | Others | (47,877) | (36,567) | (43,392) | | **Total Segment** | **(12,249)** | **57,254** | **181,668** | [Recent Development: Acquisition of Cunzhen Qiushi](index=4&type=section&id=Recent%20Development) Waterdrop initiated the acquisition of Shenzhen Cunzhen Qiushi Technology Co., Ltd. (Shenlanbao), acquiring **56%** equity interest on July 4, 2023 - Waterdrop acquired **56%** of the equity interest of Shenzhen Cunzhen Qiushi Technology Co., Ltd. (Shenlanbao) on July 4, 2023[17](index=17&type=chunk) - The remaining **44%** equity interest of Cunzhen Qiushi will be acquired in stages: **4%** within six months after the first closing, and the final **40%** in three batches over the following three years[17](index=17&type=chunk) [Additional Information](index=4&type=section&id=Additional%20Information) [Exchange Rate Information](index=4&type=section&id=Exchange%20Rate) The report provides USD translations for convenience, using an exchange rate of **RMB7.2513 to US$1.00** as of June 30, 2023 - All translations from RMB to USD were made at the rate of **RMB7.2513 to US$1.00**, the noon buying rate in effect on June 30, 2023[18](index=18&type=chunk) [Non-GAAP Financial Measure Explanation](index=5&type=section&id=Non-GAAP%20Financial%20Measure) Waterdrop uses 'adjusted net profit' as a non-GAAP financial measure, excluding share-based compensation and foreign currency exchange gains/losses, to evaluate operating results - The company uses 'adjusted net profit' as a non-GAAP financial measure for evaluating operating results and financial/operational decision-making[19](index=19&type=chunk) - Adjusted net profit represents net profit excluding share-based compensation expense and foreign currency exchange gain or losses[19](index=19&type=chunk) - The non-GAAP measure is not presented in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for GAAP measures[20](index=20&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Safe%20Harbor%20Statement) The press release contains forward-looking statements regarding Waterdrop's future business, financial condition, and industry growth, which involve inherent risks and uncertainties - The press release contains forward-looking statements identifiable by terms such as 'will,' 'expects,' 'anticipates,' etc[22](index=22&type=chunk) - These statements involve inherent risks and uncertainties, including those related to future business development, financial condition, industry growth, market acceptance, relationships with partners, competition, and government regulations[22](index=22&type=chunk) - Waterdrop does not undertake any obligation to update any forward-looking statement, except as required under applicable law[22](index=22&type=chunk) [Conference Call Details](index=5&type=section&id=Conference%20Call%20Information) Waterdrop's management held a conference call on September 7, 2023, to discuss the financial results, with dial-in details and webcast information provided - A conference call was held on September 7, 2023, at 8:00 AM U.S. Eastern Time to discuss the financial results[24](index=24&type=chunk) - Dial-in details for international, U.S. toll-free, Hong Kong, and Mainland China lines were provided, along with specific entry numbers for Chinese and English interpretation lines[25](index=25&type=chunk) - A live and archived webcast of the conference call is available at the Company's investor relations website[27](index=27&type=chunk) [About Waterdrop Inc.](index=6&type=section&id=About%20Waterdrop%20Inc.) Waterdrop Inc. is a leading technology platform founded in 2016, dedicated to insurance and healthcare services with a positive social impact - Waterdrop Inc. (NYSE: WDH) is a leading technology platform dedicated to insurance and healthcare service with a positive social impact, founded in 2016[28](index=28&type=chunk) - The company aims to bring insurance and healthcare services to billions through technology, with comprehensive coverage from Waterdrop Insurance Marketplace and Waterdrop Medical Crowdfunding[28](index=28&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Unaudited Condensed Consolidated Balance Sheets](index=7&type=section&id=WATERDROP%20INC.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet as of June 30, 2023, shows total assets of **RMB5,880.790 million** and total liabilities of **RMB1,278.812 million**, with current assets decreasing slightly Condensed Consolidated Balance Sheets (RMB thousands) | Metric | Dec 31, 2022 | Jun 30, 2023 | | :--------------------------------- | :----------- | :----------- | | Total Assets | 5,922,223 | 5,880,790 | | Current Assets | 5,690,619 | 5,499,873 | | Cash and cash equivalents | 1,574,171 | 644,340 | | Short-term investments | 2,130,377 | 2,754,859 | | Total Liabilities | 1,156,095 | 1,278,812 | | Total Shareholders' Equity | 4,766,128 | 4,601,978 | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income](index=8&type=section&id=WATERDROP%20INC.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) The Q2 2023 statement of operations shows **RMB678.7 million** net operating revenue and **RMB21.7 million** net profit, with increased operating costs leading to an operating loss Condensed Consolidated Statements of Operations (RMB thousands) | Metric | Q2 2023 | Q1 2023 | Q2 2022 | | :-------------------------------------- | :------ | :------ | :------ | | Operating revenue, net | 678,700 | 606,165 | 701,418 | | Total operating costs and expenses | (720,342) | (595,837) | (545,495) | | Operating profit/(loss) | (41,642) | 10,328 | 155,923 | | Interest income | 37,618 | 30,876 | 15,213 | | Net profit attributable to Waterdrop Inc. | 21,697 | 49,725 | 206,943 | Share-based Compensation Expenses (RMB thousands) | Category | Q2 2023 | Q1 2023 | Q2 2022 | | :-------------------------------- | :------ | :------ | :------ | | Sales and marketing expenses | (7,888) | (16,529) | (1,771) | | General and administrative expenses | (18,122) | (26,460) | (19,976) | | Research and development expenses | (3,383) | (3,937) | (3,998) | | **Total** | **(29,393)** | **(46,926)** | **(25,745)** | [Reconciliations of GAAP and Non-GAAP Results](index=9&type=section&id=WATERDROP%20INC.%20RECONCILIATIONS%20OF%20GAAP%20AND%20NON-GAAP%20RESULTS) Adjusted net profit for Q2 2023 was **RMB50.3 million**, derived by adjusting GAAP net profit for share-based compensation and foreign currency exchange gain Reconciliation of GAAP and Non-GAAP Results (RMB thousands) | Metric | Q2 2023 | Q1 2023 | Q2 2022 | | :----------------------------- | :------ | :------ | :------ | | Net profit | 21,697 | 49,725 | 206,943 | | Add: Share-based compensation expense | 29,393 | 46,926 | 25,745 | | Foreign currency exchange gain | (838) | (282) | (163) | | **Adjusted net profit** | **50,252** | **96,369** | **232,525** |

[Q1 2023 Financial Results Overview](index=1&type=section&id=Waterdrop%20Inc.%20Announces%20First%20Quarter%202023%20Unaudited%20Financial%20Results) Waterdrop Inc. reported resilient Q1 2023 performance, achieving increased FYP, sustained profitability, and strategic advancements [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights%20for%20the%20First%20Quarter%20of%202023) In Q1 2023, Waterdrop demonstrated resilient business performance with a quarter-over-quarter increase in first-year premiums, maintaining profitability and a strong cash position Q1 2023 Key Financial & Operational Metrics | Metric | Value (RMB million) | Change (QoQ) | | :--- | :--- | :--- | | First-Year Premiums (FYP) | 1,692.0 | ▲ 6.3% | | Net Operating Revenue | 606.2 | ▼ 10.8% | | Net Profit | 49.7 | - | | Operating Costs | - | ▼ 11.0% | | Total Operating Costs & Expenses | - | ▼ 1.8% | | Cash, Cash Equivalents & Short-term Investments | 3,597.3 | - | - The number of insurance products offered on the platform increased to **876** as of March 31, 2023, up from 775 at the end of 2022[2](index=2&type=chunk) - As of March 31, 2023, Waterdrop Medical Crowdfunding has cumulatively facilitated approximately **RMB 58.4 billion** in donations from **432 million** people to over **2.86 million** patients[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Mr. Peng Shen highlighted the company's resilient and high-quality development, achieving another profitable quarter with strategic initiatives in user acquisition, risk control, and platform expansion - Insurance Business: Focused on optimizing user acquisition, streamlining channel operations, enriching product offerings for the underaged and elderly, and upgrading its AI-empowered dialogue robot[4](index=4&type=chunk) - Medical Crowdfunding: Improved operational capabilities and risk control strategies to eliminate unreasonable fundraising targets, collaborating with multiple parties to combat dishonest fundraising practices[5](index=5&type=chunk) - Clinical Trial Solutions (E-find Patient Platform): Enrolled over **700 patients** and launched more than **70 clinical trial programs** in Q1, serving over **120 pharmaceutical companies** and CROs, expanding from oncology to other diseases[6](index=6&type=chunk) [Detailed Financial Results](index=2&type=section&id=Financial%20Results%20for%20the%20First%20Quarter%20of%202023) This section details Waterdrop's Q1 2023 financial performance, including revenue, costs, profitability, and cash position [Net Operating Revenue](index=2&type=section&id=Operating%20revenue%2C%20net) Net operating revenue for Q1 2023 was RMB 606.2 million, a 6.6% decrease year-over-year, primarily due to a decline in insurance-related income, offset by new crowdfunding service fees and growth in digital clinical trial solutions Q1 2023 Net Operating Revenue Breakdown (YoY) | Revenue Stream | Q1 2023 (RMB million) | Q1 2022 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | **Total Net Operating Revenue** | **606.2** | **648.7** | **▼ 6.6%** | | Insurance-related Income | 536.3 | 628.2 | ▼ 14.6% | | Crowdfunding Service Fees | 42.0 | 0 | N/A | | Digital Clinical Trial Solution Income | 22.8 | 8.6 | ▲ 165.1% | [Operating Costs and Expenses](index=2&type=section&id=Operating%20costs%20and%20expenses) Total operating costs and expenses increased by 12.0% year-over-year to RMB 595.8 million, driven by reclassification of crowdfunding consultant costs, while sales and marketing expenses decreased Q1 2023 Operating Costs and Expenses Breakdown (YoY) | Expense Category | Q1 2023 (RMB million) | Q1 2022 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | **Total Operating Costs & Expenses** | **595.8** | **532.0** | **▲ 12.0%** | | Operating Costs | 248.0 | 154.9 | ▲ 60.1% | | Sales and Marketing Expenses | 173.4 | 204.3 | ▼ 15.1% | | General and Administrative Expenses | 95.8 | 102.0 | ▼ 6.1% | | Research and Development Expenses | 78.7 | 70.8 | ▲ 11.2% | - The primary driver for the YoY increase in operating costs was the reclassification of **RMB 61.5 million** in crowdfunding consultant team costs from sales and marketing expenses, as the company began generating crowdfunding service fees in April 2022[9](index=9&type=chunk) [Profitability](index=3&type=section&id=Profitability) Waterdrop remained profitable in Q1 2023 with a net profit of RMB 49.7 million and an adjusted net profit of RMB 96.4 million, despite declines from previous periods Profitability Metrics Comparison | Metric | Q1 2023 (RMB million) | Q4 2022 (RMB million) | Q1 2022 (RMB million) | | :--- | :--- | :--- | :--- | | Operating Profit | 10.3 | 72.9 | 116.6 | | Net Profit Attributable to Waterdrop | 49.7 | 126.2 | 105.0 | | Adjusted Net Profit | 96.4 | 159.7 | 127.3 | [Cash Position and Share Repurchase](index=3&type=section&id=Cash%20and%20Share%20Repurchase) The company maintained a strong balance sheet with RMB 3,597.3 million in cash, cash equivalents, and short-term investments, while continuing its share repurchase program - As of March 31, 2023, the company's combined cash, cash equivalents, and short-term investments totaled **RMB 3,597.3 million** (**US$523.8 million**)[13](index=13&type=chunk) - Under its share repurchase plan, the company has cumulatively repurchased approximately **24.9 million ADSs** for a total of **US$61.2 million** as of May 31, 2023[14](index=14&type=chunk) [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section details the company's non-GAAP financial measures and provides information on the Q1 2023 results conference call [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes adjusted net profit, a non-GAAP financial measure, for evaluating operational performance by excluding share-based compensation expenses and foreign currency exchange gains or losses - Adjusted net profit is a non-GAAP measure that excludes share-based compensation expense and foreign currency exchange gains or losses from the GAAP net profit[16](index=16&type=chunk) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Waterdrop's management will host a conference call on June 2, 2023, at 8:00 AM U.S. Eastern Time to discuss the first-quarter financial results - A conference call to discuss Q1 2023 financial results is scheduled for **June 2, 2023, at 8:00 AM U.S. Eastern Time**[20](index=20&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated balance sheets, statements of operations, and GAAP to non-GAAP reconciliation [Condensed Consolidated Balance Sheets](index=5&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2023, Waterdrop reported total assets of RMB 5,810.8 million, total liabilities of RMB 1,164.9 million, and total shareholders' equity of RMB 4,645.9 million, indicating strong liquidity Balance Sheet Summary (as of March 31, 2023) | Item | Amount (RMB thousands) | | :--- | :--- | | Total Assets | 5,810,848 | | Total Liabilities | 1,164,932 | | Total Shareholders' Equity | 4,645,916 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) For the three months ended March 31, 2023, the company generated net operating revenue of RMB 606.2 million, resulting in an operating profit of RMB 10.3 million and a net profit attributable to Waterdrop Inc. of RMB 49.7 million Statement of Operations Summary (for Q1 2023) | Item | Amount (RMB thousands) | | :--- | :--- | | Net Operating Revenue | 606,165 | | Total Operating Costs and Expenses | (595,837) | | Operating Profit | 10,328 | | Net Profit Attributable to Waterdrop Inc. | 49,725 | [Reconciliation of GAAP and Non-GAAP Results](index=8&type=section&id=RECONCILIATIONS%20OF%20GAAP%20AND%20NON-GAAP%20RESULTS) The company provides a reconciliation of its GAAP net profit to its non-GAAP adjusted net profit, showing an adjusted net profit of RMB 96.4 million for Q1 2023 after accounting for share-based compensation and foreign currency exchange gains Q1 2023 GAAP to Non-GAAP Reconciliation | Item | Amount (RMB thousands) | | :--- | :--- | | Net Profit (GAAP) | 49,725 | | Add: Share-based compensation expense | 46,926 | | Add: Foreign currency exchange gain | (282) | | **Adjusted Net Profit (Non-GAAP)** | **96,369** |