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Waterdrop (WDH)
NYSE:WDH
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Waterdrop
(NYSE:WDH)
Rating:74Outperform
Price Target:
$2.00
▲(6.95% Upside)
Positive Factors
AI Integration
AI integration enhances operational efficiency, improving customer acquisition and sales processes, which supports long-term growth and competitiveness.
Insurance Business Growth
Strong growth in insurance premiums indicates robust demand and effective market penetration, contributing to sustainable revenue growth.
Financial Stability
A low debt-to-equity ratio reflects financial stability and resilience, providing flexibility for future investments and growth opportunities.
Negative Factors
Cash Flow Challenges
Lack of cash flow generation could hinder operational flexibility and investment capacity, posing risks to long-term financial health.
Increased Operating Costs
Rising operating costs can pressure margins and profitability, potentially affecting the company's ability to sustain growth.
Marketing Expenses
Higher marketing expenses may strain resources and require careful management to ensure they translate into effective customer acquisition.
Waterdrop (WDH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$683.54M
Dividend Yield0.86%
Average Volume (3M)358.53K
Price to Earnings (P/E)11.3
Beta (1Y)0.87
Revenue Growth9.50%
EPS Growth69.82%
CountryUS
Employees3,057
SectorFinancial
Sector Strength70
IndustryInsurance - Diversified
Share Statistics
EPS (TTM)<0.01
Shares Outstanding281,472,020
10 Day Avg. Volume554,577
30 Day Avg. Volume358,526
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.28
Enterprise Value/Revenue0.07
Enterprise Value/Gross Profit0.13
Enterprise Value/Ebitda1.05
Forecast
1Y Price Target
$2.00Price Target Upside6.95% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering0
Waterdrop Business Overview & Revenue Model
Company DescriptionWaterdrop Inc. (WDH) is a leading technology platform dedicated to insurance and healthcare service sectors, primarily operating in China. The company offers a variety of products and services through its online platform, including medical crowdfunding, insurance brokerage, and mutual aid programs. Waterdrop's mission is to leverage technology to make healthcare more affordable and accessible to its users.
How the Company Makes MoneyWaterdrop generates revenue primarily through its insurance brokerage services, where it earns commissions on insurance policies sold through its platform. The company collaborates with numerous insurance providers to offer a wide range of products, including health, life, and accident insurance. Additionally, Waterdrop has developed a medical crowdfunding platform that allows individuals to raise funds for medical expenses, although this service typically focuses on user engagement rather than direct monetization. Key partnerships with insurance companies and healthcare institutions enhance Waterdrop's ability to provide comprehensive services, contributing to the company's overall earnings.
Waterdrop Earnings Call Summary
Earnings Call Date:Sep 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Dec 03, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and profit growth driven by AI integration and a robust insurance business, alongside strategic shareholder returns and social initiatives. While there were increases in operating costs, the positive aspects significantly outweighed the negatives.Q2-2025 Updates
Positive Updates
Revenue and Operating Profit Growth
Quarterly revenue increased by 23.9% year over year, and operating profit rose by 85.9% year over year, improving the operating margin by 3.9 percentage points.
Insurance Business Growth
First-year premium in the insurance business increased by 80.2% year over year and 53.1% quarter over quarter. Insurance-related revenue rose by 28.7% year over year and 12.2% quarter over quarter.
AI Integration and Technological Advancements
Integration of AI significantly improved operational efficiency across customer acquisition, sales, underwriting, and other processes. Developed new AI tools and filed 60 patent applications related to large language models.
Shareholder Returns
Enhanced cash dividend of $10.9 million, a 50% increase over the previous dividend, and continued share repurchase program with 55.7 million ADS repurchased for $109 million.
Healthcare Sector and Social Initiatives
Raised medical funds for 3.54 million patients, partnered with 118 public charitable organizations, and initiated over 15,500 public welfare projects. Participated in relief efforts for Swab disease in North China.
Negative Updates
Increased Operating Costs
Total operating costs and expenses increased by 18.7% year over year, with marketing expenses rising by 26.3% due to increased spending on third-party traffic channels.
Decline in General and Administrative Expenses
General and administrative expenses decreased by 21.9% year over year, primarily due to tightened operational control and reduced allowance for credit losses.
Company Guidance
During the second quarter of 2025, Waterdrop reported significant financial growth, with quarterly revenue rising by 23.9% year-over-year and 11.2% quarter-over-quarter. The company attributed this success to the integration of AI technologies, which boosted operational efficiency and resulted in an 85.9% increase in operating profit, enhancing the operating margin by 3.9 percentage points. The insurance sector saw robust growth, with first-year premiums up 80.2% year-over-year and 53.1% quarter-over-quarter, contributing to a 28.7% year-over-year increase in insurance-related revenue. The company's commitment to AI innovation was underscored by 60 patent applications, nine of which were filed internationally. Additionally, Waterdrop's strategic initiatives included a 50% increase in cash dividends to $10.9 million and an ongoing share repurchase program, which has seen approximately 55.7 million ADS repurchased since 2021. Overall, the company's efforts in AI-driven innovations and social initiatives have reinforced its market position and facilitated value creation for shareholders and the industry.Waterdrop Financial Statement Overview
Summary
Waterdrop's financial performance shows strong profitability and financial stability, with significant improvements in income statement metrics and a robust balance sheet. However, the absence of operating and free cash flow in 2024 indicates potential cash management challenges.Income Statement
Waterdrop has demonstrated a strong recovery in its income statement metrics. The company achieved a notable increase in its gross profit margin, from 39.7% in 2023 to 52.5% in 2024. The net profit margin also improved significantly, reaching 13.3% in 2024 compared to 6.4% in 2023. Revenue growth was steady at 5.4%. The EBIT margin turned positive, indicating improved operational performance. However, the EBITDA margin showed a modest increase, suggesting room for further enhancement in operational efficiency.73
Positive
Balance Sheet
The balance sheet reflects a robust financial position with a low debt-to-equity ratio of 0.05, highlighting low leverage and financial stability. The return on equity improved to 7.7% in 2024, up from 3.6% in 2023, demonstrating better profitability. The equity ratio remained strong at 74.3%, indicating a solid equity base relative to total assets. The company's conservative debt management and strong equity position contribute to its financial resilience.79
Positive
Cash Flow
Waterdrop's cash flow performance is mixed. The operating cash flow to net income ratio is unavailable for 2024 due to zero operating cash flow. The free cash flow to net income ratio could not be assessed for the same reason. The absence of free cash flow in 2024 indicates potential challenges in generating cash from operations, despite improvements in net income. This highlights a need for better cash flow management.55
Neutral
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.77B | 2.63B | 2.80B | 3.21B | 3.03B |
| Gross Profit | 1.46B | 1.04B | 1.78B | 2.15B | 2.29B |
| EBITDA | 191.71M | 6.81M | 500.96M | -1.84B | -483.18M |
| Net Income | 367.51M | 167.22M | 607.72M | -1.57B | -663.85M |
Balance Sheet | |||||
| Total Assets | 6.45B | 6.15B | 5.92B | 5.25B | 4.71B |
| Cash, Cash Equivalents and Short-Term Investments | 2.60B | 3.39B | 3.70B | 2.79B | 2.26B |
| Total Debt | 243.92M | 197.76M | 14.05M | 58.59M | 64.26M |
| Total Liabilities | 1.58B | 1.47B | 1.16B | 1.28B | 1.52B |
| Stockholders Equity | 4.80B | 4.59B | 4.77B | 3.97B | 3.18B |
Cash Flow | |||||
| Free Cash Flow | 218.84M | 392.99M | 753.82M | -1.13B | -803.82M |
| Operating Cash Flow | 437.25M | 406.52M | 765.71M | -1.10B | -777.11M |
| Investing Cash Flow | 291.64M | -1.17B | -139.82M | -846.90M | -1.22B |
| Financing Cash Flow | -198.58M | -377.24M | -57.46M | 2.12B | 2.05B |
Waterdrop Technical Analysis
Positive
1.87
Price Trends
1.72
Positive
1.54
Positive
1.39
Positive
Market Momentum
0.04
Negative
59.86
Neutral
35.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDH, the sentiment is Positive. The current price of 1.87 is above the 20-day moving average (MA) of 1.81, above the 50-day MA of 1.72, and above the 200-day MA of 1.39, indicating a bullish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 59.86 is Neutral, neither overbought nor oversold. The STOCH value of 35.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WDH.
Waterdrop Risk Analysis
Waterdrop disclosed 104 risk factors in its most recent earnings report. Waterdrop reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
We have made investments in generative AI and may face uncertainties with respect to its commercialization and the evolving laws and regulations applicable to us. Q4, 2023
2.
We may be materially adversely affected by the changes and evolvement in the regulation of medical crowdfunding business. Q4, 2023
3.
The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us. Q4, 2023
Waterdrop Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $1.09B | 8.75 | 20.11% | 4.14% | 9.52% | ― | |
77 Outperform | ― | ― | 10.70% | -39.16% | |||
74 Outperform | $683.54M | 11.35 | 9.11% | 0.86% | 9.50% | 69.82% | |
68 Neutral | $18.10B | 11.52 | 9.93% | 3.73% | 9.70% | 1.14% | |
66 Neutral | $1.83B | 17.57 | -1.83% | 2.30% | 20.42% | -110.82% | |
63 Neutral | $3.04B | 70.82 | 60.58% | ― | 23.49% | 60.38% | |
52 Neutral | $9.53M | 1.89 | -24.49% | ― | 10.82% | ― |
* Financial Sector Average
Performance Comparison
WDH
Waterdrop
1.89
0.88
87.13%
ESGR
Enstar Group
337.91
17.03
5.31%
FGNX
Fundamental Global
7.18
-15.81
-68.77%
IGIC
International General Insurance Holdings
24.28
6.82
39.06%
GSHD
GooseHead Insurance
80.97
-3.45
-4.09%
FIHL
Fidelis Insurance Holdings Ltd.
17.42
0.23
1.34%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.