Detailed narrative
Overall Q2 FY26 Performance and Profitability
Waterdrop reported total revenue of CNY 1.45 billion in Q2 FY26, marking a 72.8% year-over-year increase. The company achieved a net profit attributable to ordinary shareholders of CNY 130 million, extending its profitability streak to 18 consecutive quarters. Operating profit reached CNY 111 million, up 14.3% year-over-year and 39.2% quarter-over-quarter, demonstrating strong operational leverage.
Insurance Business Growth and Product Innovation
The insurance business was a primary growth driver, with revenue reaching CNY 1.33 billion, an 80.5% year-over-year increase, and operating profit of CNY 180 million, up 20% quarter-over-quarter. The company launched several new products, including a long-term critical illness insurance, a new health product with 5-year guaranteed renewability, and a specified disease insurance offering lifetime coverage without health disclosure, catering to evolving market demands.
Medical Crowdfunding and Healthcare Business Expansion
Waterdrop Medical Crowdfunding has cumulatively supported 3.82 million patients, with total contributions reaching CNY 74.7 billion. The healthcare business, particularly digital clinical trials, saw patient enrollment grow 54% year-over-year to over 1,500 patients this quarter, with accumulated patients surpassing 17,000. The company expanded its partnerships, signing 167 new products and collaborating with 255 pharmaceutical companies and CROs.
AI Integration and Efficiency Gains
AI capabilities are deeply integrated across Waterdrop's core businesses, from user acquisition and conversion to underwriting and claims. AI-driven tools generated nearly CNY 100 million in revenue by supporting user computation and purchase decisions. The AI Super Pre-Sales Assistant consistently outperformed human life planners on annual premium, with its user base growing nearly 50% sequentially, enhancing efficiency and extending the reach of life planners.
Shareholder Returns and Capital Allocation
The Board approved a cash dividend of $0.03 per ADS, totaling approximately $10.8 million, payable in early November 2026. Additionally, a new share repurchase program of up to $50 million was authorized for the next 12 months. These initiatives underscore the company's commitment to returning value to shareholders, supported by ample cash reserves of CNY 2.653 billion as of June 30, 2026.
Customer Acquisition Strategy and Cost Management
Waterdrop maintained an active user acquisition pace, with newly acquired insurance customers up 32.3% sequentially. Sales and marketing expenses increased significantly to CNY 638 million, primarily due to a CNY 450 million increase in public domain traffic investment. Management emphasized leveraging AI to align product supply with user profiles and improve conversion efficiency, rather than solely pursuing cost reduction, expecting user value from current acquisitions to be realized over time⏳.
Hong Kong Insurance Market and Pre-existing Conditions
Management addressed concerns about media reports on potential tax policy changes affecting Hong Kong insurance products, noting some impact on customer sentiment but asserting that fundamental drivers remain unchanged. The company also highlighted the growing opportunity in health insurance for individuals with pre-existing conditions, viewing it as a significant demand-side opportunity and a clear path for commercial insurance to expand coverage through segmented risk assessment and tailored products.