Waterdrop(US:WDH)2022-03-23 18:24Financial Data and Key Metrics Changes - The company's net operating revenue decreased by 27.3% year-over-year to RMB604 million from RMB830 million, and decreased by 25.6% on a comparable basis [41] - Operating costs and expenses decreased significantly by 38.6% year-over-year to RMB678 million, with a quarter-over-quarter decrease of 47.5% [42] - The company incurred a net loss of RMB71 million on a GAAP basis, while generating an adjusted net profit of RMB5.9 million, compared to a net loss of RMB404 million and an adjusted net loss of RMB191 million in the same quarter of last year [45] Business Line Data and Key Metrics Changes - The first full quarter of the new business model led to a significant improvement in operating efficiency, with a reported adjusted net profit of RMB5.9 million in Q4 compared to a loss of RMB453 million in Q3 [16][41] - The retention rate increased significantly, driving the take rate of the short-term insurance business to 33% in Q4 [17] - The average productivity of long-term insurance consultants reached RMB66,000 per month, an increase of 66% compared to Q3 [19] Market Data and Key Metrics Changes - The annual growth in gross written premium (GWP) for the health insurance sector was only 3% in 2021, the lowest in the past 10 years, with GWP seeing a decrease of 3% year-over-year for both the third and fourth quarters [14] - The total profit of life and health insurance companies decreased by 47% year-over-year, reflecting the industry's adjustment phase [14] Company Strategy and Development Direction - The company has shifted its strategy from rapid user base growth to pursuing higher quality development, focusing on sustainable growth and profitability [8][9] - Waterdrop plans to continue investing in technology and innovation while optimizing its business model to comply with new regulatory guidelines [12][20] - The company aims to achieve profitability in its established business on a non-GAAP basis for the year 2022 [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of China's health insurance market despite short-term challenges [10][13] - The company views recent regulatory changes as an opportunity for industry consolidation and improvement in the competitive landscape [12][26] - Management emphasized the importance of cost control and operational efficiency to navigate the current market conditions [54] Other Important Information - The company has initiated a share repurchase plan, buying back approximately 1.3 million ADSs since its announcement [11] - Waterdrop's Medical Crowdfunding business has helped raise over RMB48.4 billion, reinforcing its market-leading position [27] Q&A Session Summary Question: Can you discuss the renewal rate and strategy for existing customers? - The premium renewal rate improved to 89% in December 2021 from 62% in September 2021, with strategies including upgraded renewal products and more coverage options [48][49] Question: What drove the improvement in profitability and can we expect this to continue? - The significant reduction in operating costs and marketing expenses contributed to profitability, with expectations for continued improvement in 2022 [51][54] Question: What is the target for first-year premium growth next year? - The company expects revenue growth to stabilize in 2022, focusing on sustainable models rather than aggressive expansion [60]