20-F: Waterdrop Inc. Reports Strong Revenue Growth in 2025

Waterdrop Inc. announced its 2025 annual results, showcasing a significant increase in net operating revenue driven by its insurance business, alongside strategic AI integration and continued growth in its medical crowdfunding and healthcare services.

Summary

• Waterdrop Inc. reported a substantial increase in net operating revenue for 2025, reaching RMB 3,977.8 million (US$568.8 million), a 43.5% rise from 2024.
• The insurance business was the primary driver of this growth, with revenue increasing by 51.3% to RMB 3,576.6 million (US$511.4 million), largely due to enhanced technical services and increased insurance brokerage income.
• The company's medical crowdfunding segment saw a slight decrease in revenue to RMB 261.6 million (US$37.4 million), while other business segments also experienced minor declines.
• Operating profit significantly improved, reaching RMB 370.9 million (US$53.0 million) in 2025, a notable increase from RMB 178.2 million in 2024, reflecting improved operational efficiency and AI integration.
• Net profit attributable to ordinary shareholders grew to RMB 568.9 million (US$81.4 million) in 2025, up from RMB 367.5 million in 2024.
• The company continued to invest in AI technologies, launching several AI-powered applications across its insurance operations, including AI Medical Insurance Experts and KEYI.AI, aiming to enhance user experience and operational efficiency.
• Waterdrop Medical Crowdfunding platform was officially designated as a government-recognized online personal help-seeking service platform in mainland China in December 2024.
• The company repurchased ADSs totaling US$40.8 million in 2025 and US$9.5 million in the first three months of 2026 under its share repurchase programs.
• Waterdrop Inc. declared multiple cash dividends throughout 2024 and 2025, demonstrating a commitment to returning value to shareholders.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing positively due to strong revenue and profit growth, successful AI integration, and strategic business developments, although risks related to regulatory environment and competition remain.

Positives

• Net operating revenue increased by 43.5% to RMB 3,977.8 million (US$568.8 million) in 2025.
• Insurance business revenue grew by 51.3% to RMB 3,576.6 million (US$511.4 million) in 2025.
• Operating profit increased to RMB 370.9 million (US$53.0 million) in 2025, up from RMB 178.2 million in 2024.
• Net profit attributable to ordinary shareholders rose to RMB 568.9 million (US$81.4 million) in 2025.
• The company successfully integrated AI technologies across its operations, leading to a 45.4% increase in per-capita productivity.
• Waterdrop Medical Crowdfunding platform received government designation as a recognized online personal help-seeking service platform.
• The company maintained a strong cash position with RMB 1,131.4 million (US$161.8 million) in cash and cash equivalents and restricted cash as of December 31, 2025.
• Multiple cash dividends were declared and paid throughout 2024 and 2025, indicating financial health and shareholder return focus.

Negatives

• Crowdfunding service revenue slightly decreased by 2.2% to RMB 261.6 million (US$37.4 million) in 2025.
• Operating costs increased by 39.1% to RMB 3,606.9 million (US$515.8 million) in 2025, primarily due to business expansion.
• Sales and marketing expenses increased significantly by 61.3% to RMB 1,120.9 million (US$160.3 million) in 2025, driven by increased marketing investments.
• The company's R&D expenses increased by 7.5% to RMB 232.7 million (US$33.3 million) in 2025, indicating continued investment in technology development.
• The company's net operating revenue from other business segments slightly decreased by 0.6% to RMB 139.6 million (US$20.0 million) in 2025.

Risks

• The company's operations are primarily conducted in China and are subject to complex and evolving PRC laws and regulations, including those related to foreign investment, data privacy, cybersecurity, and the internet industry.
• The VIE structure used to operate in China carries inherent risks, including potential regulatory challenges and the possibility of deconsolidation, which could materially affect operations.
• The company faces intense competition in the insurance brokerage, medical crowdfunding, and healthcare industries, with potential for market share erosion.
• The company has a history of net losses and may not be able to maintain profitability or positive cash flows from operating activities in the future.
• Changes in the regulatory regime for insurance-related businesses in China could introduce new requirements and uncertainties.
• The company's reliance on third-party traffic channels and service providers could lead to increased costs or restricted access.
• The company's business operations are subject to risks related to natural disasters, health epidemics, and other outbreaks.
• The company faces uncertainties with respect to the commercialization and application of AI technologies and the evolving laws and regulations governing AI.
• The company's ability to raise additional capital on favorable terms or at all could be impacted by market conditions and regulatory developments.
• The company's ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act (HFCAA) in the future if the PCAOB is unable to inspect auditors in mainland China.
• The company's dual-class voting structure concentrates significant voting power in the hands of a few individuals, potentially limiting the influence of other shareholders.
• The company is a controlled company under NYSE listing standards, allowing it to rely on exemptions from certain corporate governance requirements.

Future Outlook

The company expects continued growth driven by its insurance business, further integration of AI technologies, and expansion in healthcare services. However, it faces ongoing risks related to regulatory changes in China, intense competition, and the evolving legal landscape for VIE structures and technology companies.

Management Comments

• Mr. Peng Shen, Chairman and CEO, highlighted the strong revenue growth in 2025, driven by the insurance business and enhanced technical services, alongside the successful deployment of AI technologies.
• The company's strategic investments in AI, including the launch of Waterdrop Guardian suite and Waterdrop Sea.AI platform, are expected to further improve operational efficiency and user experience.
• Management emphasized the importance of the government designation for Waterdrop Medical Crowdfunding platform, signaling a new era of healthier and more regulated development for the sector.
• The company is committed to balancing business expansion with disciplined cost management, leveraging its scalable business model and AI-driven framework to improve per-capita productivity.

Industry Context

StockSavvy.ai notes that Waterdrop Inc.'s performance reflects broader trends in China's insurtech and healthcare sectors, including the increasing adoption of digital platforms, the growing demand for health and life insurance, and the integration of AI in financial services. The company's ability to navigate the complex and evolving regulatory environment in China will be crucial for its continued success.

Comparison to Industry Standards

• Waterdrop's revenue growth of 43.5% in 2025 significantly outpaces the general growth rates observed in the broader Chinese insurance market, which has seen more moderate expansion.
• The company's investment in AI technologies, such as its Waterdrop Guardian suite, positions it at the forefront of innovation within the insurtech industry, potentially offering a competitive advantage over traditional players who are slower to adopt such technologies.
• The successful patient enrollment of 4,153 in 584 clinical trials in 2025 demonstrates a growing capability in the CRO services sector, though direct comparisons to industry benchmarks are difficult without more specific data on trial complexity and success rates.
• The company's FYP per policy for long-term insurance products increased to RMB 8,602 in 2025, indicating a positive trend in upselling and customer value realization, which is a key performance indicator for growth-oriented insurance intermediaries.

Corporate Governance

Legal Proceedings

• The company was named as a defendant in a putative shareholder class action lawsuit in the past, which it successfully defended against. No new material legal proceedings were disclosed.
• The company is subject to various legal or administrative claims and proceedings in the ordinary course of business, but does not believe any currently pending proceedings will have a material adverse effect on its business or financial condition.

Related Party Transactions

• Transactions with Tencent Group include payment processing fees (RMB 22.1 million in 2025), marketing services (RMB 0.002 million in 2025), and cloud technology services (RMB 31.5 million in 2025).
• The company provided advertising services to Tencent Group (RMB 0.3 million in 2025).
• Amounts due to Tencent Group were RMB 9.3 million as of December 31, 2025.
• Amounts due from Tencent Group were RMB 0.2 million as of December 31, 2025.

Stakeholder Impact

• Shareholders: Positive impact from revenue growth, improved profitability, and dividend payments. Potential risks from VIE structure and regulatory changes remain.
• Employees: Continued investment in training and development, with 51.4% of employees being female and 4.7% from ethnic minority groups as of December 31, 2025.
• Customers: Enhanced user experience through AI integration and a wider range of insurance products. Medical crowdfunding platform designation by the government provides increased trust.
• Business Partners (Insurance Carriers): Continued collaboration with 103 insurance carriers, with potential for deeper partnerships through technical services and co-developed products.

Next Steps

• Continue to invest in AI technologies and expand AI-powered product offerings.
• Focus on growing the insurance business through user acquisition, product diversification, and enhanced customer service.
• Further develop and leverage the medical crowdfunding and healthcare services segments.
• Monitor and adapt to the evolving regulatory landscape in China.
• Continue share repurchase programs to return value to shareholders.

Key Dates

Recommendation

Waterdrop Inc. has demonstrated strong financial performance in 2025 with significant revenue and profit growth, largely driven by its insurance segment and successful AI integration. The company's strategic initiatives, including share repurchases and dividend payments, are positive. However, the ongoing risks associated with the VIE structure, evolving PRC regulations, intense competition, and the significant increase in sales and marketing expenses warrant a cautious approach. While the company is well-positioned for future growth, the current risk factors suggest a 'hold' recommendation until these uncertainties are better resolved or mitigated.

Keywords

Waterdrop Inc., SEC Filing, Form 20-F, Annual Report, Insurance Brokerage, Medical Crowdfunding, Healthcare Services, AI Technology, Financial Results, Revenue Growth, Operating Profit, Net Profit, Share Repurchase, Dividends, VIE Structure, PRC Regulations, Cybersecurity, Data Privacy, Tencent, Shenlanbao