Waterdrop Q1 Earnings Call Highlights

Key Points

• Revenue jumped 64.8% year over year to CNY 1.24 billion in Q1 2026, driven mainly by a surge in insurance-related income. Waterdrop said it is targeting about 40% full-year top-line growth while keeping operating profit broadly stable.
• Insurance remained the main growth engine, with segment revenue up 74.1% to CNY 1.15 billion and operating margin improving to 13.3%. Management said growth was supported by higher marketing and AI investment, alongside product expansion in areas like cancer and disability coverage.
• AI adoption expanded across the business, with user-facing AI tools adding about CNY 87 million in incremental premiums and service agents handling more than 1 million interactions per month. Waterdrop also reported 75 LLM-related patent applications and continued beta testing of internal AI tools for sales and service teams.

Waterdrop NYSE: WDH reported sharply higher first-quarter 2026 revenue as its insurance business continued to scale, while profit attributable to ordinary shareholders declined year over year amid increased marketing and technology investment.

Founder, Chairman and CEO Shen Peng said total revenue rose 64.8% from a year earlier to CNY 1.24 billion. Net profit attributable to ordinary shareholders was more than CNY 98 million, and the company has maintained GAAP profitability for 17 consecutive quarters since the first quarter of 2022, he said.

Shen said Waterdrop is prioritizing growth in 2026, supported by greater marketing investment and AI development. The company is targeting approximately 40% top-line growth for the full year, while operating profit scale is expected to remain “broadly stable.”

Insurance Revenue Drives First-Quarter Growth

Waterdrop’s insurance-related income reached CNY 1.15 billion in the quarter, up 74.1% year over year, according to management. The segment generated operating profit of CNY 150 million, with an operating margin of 13.3%.

Yuan Wei, director and general manager of the insurance business, said the growth reflected the continuation of Waterdrop’s user acquisition strategy, including increased spending on public-domain user targeting, traffic channels and AI. While insurance income declined sequentially, the segment’s operating margin improved by two percentage points, which management attributed to cutting some lower-return traffic channels and refining mature channels.

Waterdrop also highlighted product expansion in the quarter. First-year premiums from products for customers with pre-existing conditions rose 24.3% year over year, while disability insurance products contributed CNY 89 million in first-year premiums. The company said it upgraded its inclusive cancer medical insurance product to expand coverage for out-of-hospital prescriptions, related medical devices and advanced cancer therapies. It also launched a cancer-specific disease product with simpler health disclosure requirements.

On customer service, the company said it introduced a dedicated complaint hotline, connected payment channels with customer service systems to speed refund handling and simplified procedures for elderly customers whose children act on their behalf.

AI Tools Expanded Across Insurance Operations

Shen said Waterdrop is accelerating its transition toward becoming an “AI-native company.” As of March 31, 2026, the company had filed 75 large-language-model-related patent applications, including nine international applications, and had recently received two additional national invention patents in intelligent semantic understanding and multimodal recognition.

In insurance, management said user-facing AI applications contributed approximately CNY 87 million in incremental premiums during the quarter, up 17.7% sequentially. Those applications include AI insurance and medical insurance experts deployed through mini programs, WeChat, phone calls and WeCom.

The company said KEYI.AI had handled more than 10,000 underwriting inquiries to date. In late March, Waterdrop began internal beta testing of Claw Copilot on CRM and WeCom, combining product knowledge, KEYI.AI and other agent tools to support consultants with product questions, sales lead review, talk-track refinement and performance analytics.

Management said its AI user service agent now supports more than 1 million service interactions per month, while its AI Service Quality Copilot is delivering efficiency of more than twice a manual-only baseline. Waterdrop’s low-code AI platform, Waterdrop CDAI, now offers more than 30 purpose-built agents for internal teams and external clients.

Crowdfunding Platform Remains Stable

Waterdrop said its medical crowdfunding platform remained stable in the quarter. As of the end of March 2026, approximately 494 million people had cumulatively donated CNY 73.5 billion to 3.785 million patients through the platform, according to Yao Hu, who reviewed the crowdfunding and healthcare businesses.

Yao said the company focused on AI-assisted review capabilities and improved service in linguistically diverse regions. Waterdrop said its risk model now applies preset rules for preliminary screening and first-pass reviews, freeing risk specialists to focus on more complex cases.

The company also added minority-language specialists and created a dedicated service team involving translators and risk-control specialists to support consultations, document guidance and dispute resolution while maintaining compliance and risk controls.

Healthcare Business Adds Programs and Partners

In Waterdrop’s digital clinical trial solutions business, Yao said the company partnered with 243 pharmaceutical companies and contract research organizations and initiated services for 128 new programs during the quarter.

The company said patient enrollment on its E-Find platform rose 16% year over year in the quarter, while newly signed projects increased 53%. As of the end of the first quarter, the platform had cumulatively enrolled more than 50,500 patients.

Waterdrop said its intelligent drug-patient matching technology received a national invention patent in January 2026. During the quarter, the company focused on upstream data structuring and connecting those capabilities with its matching engine to generate suitability recommendations against trial protocols. Management said the company is also building a medical case library for complex indications and rare cancers.

Expenses Rise as Company Invests in Traffic and Technology

Head of Finance Xu Xiaying said total operating costs and expenses were approximately CNY 1.16 billion, up 71.5% year over year. Operating costs rose 30.1% to CNY 487 million, driven by business expansion, including higher referral and service costs, short message service costs and personnel costs.

Sales and marketing expenses increased to CNY 541 million from CNY 172 million a year earlier, mainly due to higher traffic investments. General and administrative expenses declined 4.3% to CNY 71.7 million, while research and development expenses rose 11.5% to CNY 62.7 million, mainly due to higher cloud and technical service costs.

Operating profit was approximately CNY 79.95 million, up 5.3% year over year. Net profit attributable to ordinary shareholders was approximately CNY 98.4 million, down 9.1% from a year earlier.

Waterdrop ended March with cash and cash equivalents, short-term investments and other cash positions totaling approximately CNY 2.88 billion. Shen said the company completed its fifth cash dividend since its initial public offering in early May, totaling approximately $10.8 million. By the end of May 2026, Waterdrop had repurchased approximately 61.8 million American depositary shares for about $120 million, bringing cumulative cash dividends and repurchases since the IPO to approximately $170 million.

About Waterdrop NYSE: WDH

Waterdrop Inc NYSE: WDH is a China-based insurtech and health protection platform that leverages digital technology to connect consumers with insurance and healthcare services. Through its mobile app and online marketplace, Waterdrop offers a range of microinsurance and critical illness products designed to provide affordable coverage for everyday risks. The platform also features crowdfunding channels that enable users to contribute to medical expense relief for individuals facing serious health challenges.

Since its founding in 2016 and headquartered in Shanghai, Waterdrop has grown its partner network to include leading insurance carriers and medical institutions across mainland China.

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