Waterdrop Inc. Announces 4th Quarter and Fiscal Year 2022 Unaudited Financial Results.

BEIJING: 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 fourth quarter and fiscal year ended December 31, 2022.

Financial and Operational Highlights for the Fourth Quarter of and Fiscal Year 2022

Resilient business development and healthy revenue growth: For the fourth quarter of 2022, the first-year premiums ("FYP") generated through our Waterdrop Insurance Marketplace amounted to RMB1,591.9 million (US$230.8 million), a decrease of 16.2% year over year. Our net operating revenue was RMB679.5 million (US$98.5 million), which represents an increase of 12.5% year over year, and extends our growth momentum as we made further progress on reforming our business strategy.

Effective financial discipline and sustained profitability: For the fourth quarter of 2022, our sales and marketing expenses decreased by 42.8%, and total operating costs and expenses decreased by 10.5% year over year. Our net profit reached RMB126.2 million (US$18.3 million), continuing the trend in profitability since the beginning of 2022. Our solid financial performance highlights our achievements in cost control and profit enhancement.

Positive cash flow: As of December 31, 2022, our cash and cash equivalents and short-term investments balance increased by RMB116.0 million from the end of the third quarter of 2022 to RMB3,704.5 million (US$537.1 million), as we continued to generate positive operating cash flow, partially offset by the investing and financing cash outflow.

Further expanded product offerings: As of December 31, 2022, we offered 775 insurance products on our platform, as compared with 536 as of September 30, 2022. In the fourth quarter of 2022, the FYP generated from critical illness insurance products increased by 25.7% year over year and accounted for 29.0% of overall FYP generated through our Waterdrop Insurance Marketplace.

As of December 31, 2022, approximately 426 million people cumulatively had donated an aggregate of approximately RMB56.9 billion to over 2.77 million patients through Waterdrop Medical Crowdfunding.

Mr. Peng Shen, Founder, Chairman, and Chief Executive Officer of Waterdrop, commented, "We demonstrated resilience and delivered net operating revenue of RMB 2.8 billion and net profit of RMB 607.7 million in the year of 2022. We are pleased to have achieved the profitability target we set for the full year of 2022, enabled by our substantial business scale, efficient operations, and strong financial discipline. Despite the challenging operating environment in the fourth quarter, we were pleased to have generated positive operating cash flow for the whole year.

In terms of the insurance business, despite the temporary external headwinds such as the pandemic and industry adjustments, we have been proactively optimizing our business operations and consistently exploring new customer acquisition channels. By streamlining our transaction processes to be more user-centric and enriching insurance product offerings, we consistently strengthened our user lifecycle management and our take rates and the repurchase and renewal rates remained at high levels. In addition, we adhered to promoting insurance product diversification and business innovation. For instance, regarding products for customers with illness, we cooperated with a world top insurer to launch a customized product against leukemia recurrence for the patients to meet their evolving protection needs and fill the market gaps.

As for the medical crowdfunding business, in the fourth quarter, our Operational Transparency Committee made further improvements, which enabled the transparency from a single campaign to the whole medical fundraising platform. To be more specific, we began to make available the monthly billings, including the fund overview and breakdown of the funds raised on our crowdfunding platform, as well as the...

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