FAST NEWS: Waterdrop Flows to Profit After Cost-Control Measures

The latest: Online insurer Waterdrop Inc. (WDH.US) successfully turned a loss into a profit in the first quarter of the year, with a net profit of 105 million yuan ($15.6 million) from a net loss of 370 million yuan in the same period last year, according to its latest results published on Wednesday.

Looking up: The company’s cost-control measures since the third quarter of last year have borne fruit, with operating costs and expenses dropping 60.4% to 532 million yuan in the first quarter – the main reason for the turnaround.

Take Note: Its first-quarter revenue was 649 million yuan, down 26.6% year-over-year, mainly due to lower insurance brokerage income and zero net operating revenue from management fees following the closure of its mutual aid business in March last year.

Digging Deeper: Waterdrop Inc. was founded by Meituan (3690.HK) co-founder Shen Peng in 2016 and listed in New York in May last year. It originally operated a mutual aid business with a crowdfunding platform, providing a channel to patients seeking financing for expensive medical treatments. But Chinese regulators had other ideas and believed that companies like his needed official licensing to provide such services. As a result, the company shut down the business in March last year and focused on online insurance brokerage, it also underwent a business model transformation to pursue a new growth model with both quality and quantity, with initial results in the first quarter of this year.

Market Reaction: Waterdrop’s U.S.-listed shares sank 4.4% to $1.52 on Wednesday, losing 87% of their market value from last May’s IPO price of $12.

Translation by Jony Ho

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