Guoyuan International: Maintains Buy Rating on Waterdrop, Inc. ADR Class A (WDH.US), AI Drives Rapid Performance Growth

Title context: Guoyuan International: Maintains Buy Rating on Waterdrop, Inc. ADR Class A (WDH.US), AI Drives Rapid Performance Growth Text: After Waterdrop, Inc. ADR Class A (WDH.US) released its second-quarter 2026 results, Guoyuan International issued a research report stating that it maintains a Buy rating on Waterdrop, Inc. ADR Class A with a target price of US$1.25. The report noted that in this quarter, Waterdrop, Inc. ADR Class A achieved rapid revenue growth, with AI fully embedded across the entire chain of customer acquisition, underwriting, and claims. In the second quarter, AI assistance generated nearly RMB 100 million in incremental premiums. Looking ahead to 2026, the company is expected to achieve rapid year-on-year revenue growth, continuing its revenue-driven growth operating posture. Waterdrop, Inc. ADR Class A's second-quarter 2026 revenue was RMB 1.448 billion, up 72.8% year on year. Among this, second-quarter insurance-related revenue increased 80.5% year on year. This was mainly due to enhanced risk assessment service capabilities and growth in first-year premiums generated through the platform. The research report analysis pointed out that deep AI empowerment was the core engine of this quarter's performance. The company has formed a three-layer AI architecture of "intelligent front-end interaction, automated mid-office underwriting, and data-driven back-office risk control." In the second quarter, the AI system assisted in generating nearly RMB 100 million in incremental premiums, and first-year scale premiums for long-term insurance increased 33.4% quarter on quarter. In terms of product innovation, leveraging massive claims data accumulation and insights into user needs, Waterdrop, Inc. ADR Class A broke the traditional static logic of uniformly rejecting people with chronic conditions and made it possible for users with pre-existing conditions to purchase insurance. In this quarter, Waterdrop, Inc. ADR Class A launched the industry's first long-term critical illness product with no health declaration and a 5-year guaranteed renewal period, "Rongyibao," and added the industry's first specific disease insurance with lifetime no health declaration, achieving a leap in underwriting logic from "insuring healthy people" to "insuring more people." Management judged at the earnings call that, as data connections between medical insurance and commercial insurance gradually open up, health insurance for people with pre-existing conditions is expected to evolve into a mass-market protection product similar to auto insurance, with broad market space. In addition, Waterdrop, Inc. ADR Class A's Yifan Pharmaceuticals achieved better-than-expected growth. In this quarter, patient enrollment increased 54% year on year, cumulative services exceeded 17,000 people, and enrollment in chronic disease trials increased 80% year on year. AI matching compressed pharmaceutical companies' recruitment cycle from the "week" level to the "day" level, and the second growth curve is accelerating. Waterdrop, Inc. ADR Class A founder and CEO Shen Peng said: "Waterdrop, Inc. ADR Class A has always regarded technology as the core engine of the company's development. At present, AI capabilities have been deeply embedded in various business platforms, enabling us to more accurately grasp the growing market demand in existing businesses and consolidate and strengthen competitive barriers. In the future, we will continue to strengthen technology and AI capability building, steadily advance business expansion, maintain strategic investment, and create long-term, sustainable value for shareholders."