Tencent-backed Waterdrop tumbles in NYSE debut

Chinese insurance technology company Waterdrop Inc began its first trading day on Friday by debuting below its offer price, a rocky start as a public company, on Wall Street.

The Tencent-backed enterprise's stock opened at $10.25 on the New York Stock Exchange, below its offer price of $12. Its share tumbled more than 19 percent to close at $9.7 on the New York debut Friday.

Trading under the symbol "WDH", the Beijing-based company has raised $360 million in its IPO.

Shen Peng, Waterdrop's founder and CEO, said in an interview with media in Beijing that the company will focus on domestic business in short term, especially serving people from cities below the third tier and the tech-savvy young generation.

"In the long run, we hope to work with more partners, including insurance companies, healthcare institutions and pharmaceutical enterprises, to build Waterdrop into a China's version of UnitedHealth Group, allowing more users to enjoy treatment at a lower cost," Shen said.

Yang Guang, co-founder of Waterdrop Inc, said the company will focus more on expanding the current business and fostering healthy development than profit.

Positioning itself as a leading technology platform dedicated to insurance and healthcare service, the company said it would use the net proceeds from this offering to enhance and expand its operation in healthcare service and insurance business, for research and development and general corporate purposes.

The company reported its net operating revenue increased by 100.4 percent to 3 billion yuan ($464 million) in 2020, which was primarily due to the substantial rise in net operating revenue from brokerage income. And it registered a net loss of 663.9 million yuan in 2020.

Waterdrop primarily generates brokerage income from selling insurance policies underwritten by insurance carriers. As of December 31, 2020, the company's cumulative number of paying insurance consumers was 19.2 million, while first year premiums generated through Waterdrop Insurance Marketplace were 14.4 billion yuan in 2020.

According to an iResearch report, the total healthcare service expenditures in China reached 7 trillion yuan in 2019, among which 4.7 trillion yuan was not covered by the social medical insurance, commercial insurance, or other supplemental medical protection.

Waterdrop's insurance marketplace and medical crowdfunding platforms rank No 1 in terms of brand awareness among independent third-party insurance distribution platforms and medical crowdfunding platforms, respectively, iResearch said.

According to the report, Waterdrop has become the largest independent third-party insurance platform in China in terms of life and health insurance first year premiums. Through its medical crowdfunding, mutual aid platforms, and its insurance marketplace, Waterdrop has built a massive social network of protection and support for people, raising awareness of insurance and ultimately providing insurance and healthcare service to consumers in China, iRsearch said.