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NEW YORK, Nov. 12, 2021 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that a class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of investors that purchased or otherwise acquired Waterdrop Inc. (“Waterdrop” or the “Company”) (NYSE: WDH) securities pursuant and/or traceable to the offering documents issued in connection with Waterdrop’s May 2021 initial public offering (the “IPO”). Investors have until November 15, 2021 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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On June 17, 2021, Waterdrop issued a press release announcing Waterdrop’s financial results for the quarter conducted before the IPO. In doing so, Waterdrop reported that its operating costs and expenses had ballooned over 75%, or RMB579.1 million, to RMB1,343.9 million (US$205.1 million). As a result, Waterdrop suffered an operating loss for the quarter of RMB460.6 million (US$70.3 million), compared with operating loss of RMB111.1 million for the same period of 2020 – a more than four-fold increase. This rapid increase in operating expenses was due largely to the cessation of Waterdrop’s mutual aid business and growing customer acquisition costs.
Then, on August 11, 2021, multiple news sources reported that China’s banking and insurance watchdog, the China Banking and Insurance Regulatory Commission, had issued an order directing insurance companies to cease improper marketing and pricing practices rampant in the industry and enhance their user privacy protections. Failure to comply would reportedly result in the offenders being “severely punished” by Chinese authorities. As Bloomberg reported, “[r]egulators have since moved to shutter some operations including mutual aid healthcare platforms operated by Waterdrop.” The article continued: “he latest move will stymie growth in an industry that had been expected to grow to 2.5 trillion yuan ($385 billion) in a decade.”
Finally, on September 8, 2021, Waterdrop revealed that its operating losses for the quarter ended June 30, 2021 had continued to accelerate, totaling RMB815.4 million (US$126.3 million), compared with an operating profit of RMB7.2 million for the same period of 2020. This was once again due to a sharp increase in Waterdrop’s operating costs and expenses, as Waterdrop’s operating costs and expenses during the quarter increased by RMB1,081.1 million, or 160.5% year over year, to RMB1,754.7 million (US$271.8 million) from RMB673.6 million for the same period of 2020.
On September 13, 2021, Waterdrop ADSs dropped to a low of just $3 per ADS –75% below the price at which Waterdrop ADSs were sold to the investing public just four months previously.