UOB Kay Hian has released a research report indicating that Waterdrop Inc. (WDH.US) delivered a solid performance in the second quarter of 2026, with sustained momentum in both revenue and profit growth. Following an upward revision to its earnings forecast, the brokerage has maintained its "Buy" rating on the company and raised its price target to $2.23.
According to the report, Waterdrop achieved a net profit attributable to shareholders of RMB 126 million in the second quarter of 2026. On the revenue front, net operating income reached RMB 1.448 billion for the quarter, representing a 72.8% year-over-year increase. Within this, the insurance segment saw revenue climb 80.5% year-over-year, while first-year premiums from long-term insurance products grew 33.4% quarter-over-quarter. Revenue from digital clinical trial solutions also rose 26.8% year-over-year.
UOB Kay Hian emphasized in its report that the deep deployment of AI technology at Waterdrop has become a core engine driving growth and operational efficiency. Management noted that the "AI Medical Insurance Expert" contributed a 25.6% quarter-over-quarter increase in premium contribution during the second quarter, benefiting from continuous enhancements in AI-driven demand insights and conversion tools.
Looking ahead, Waterdrop has positioned AI as a company-wide engine for growth and efficiency, with plans to increase AI-related investments while keeping research and development expenses as a percentage of revenue within a reasonable range. On the product innovation front, leveraging its extensive claims data and insights into user needs, the company has moved beyond the traditional static approach of outright rejecting coverage for individuals with chronic conditions, making it possible for such users to obtain insurance.
During the quarter, Waterdrop launched "Rongyibao," the industry's first long-term critical illness product that requires no health declaration and offers guaranteed renewability for five years, covering over 100 major diseases with optional accidental death and disability benefits. The company also expanded its "Jixing Gaozhao" product line by adding the industry's first lifelong specific-disease insurance policy that waives health declarations entirely.
Shen Peng, Founder and CEO of Waterdrop, stated: "Technology has always been the core engine of our company's development. Today, AI capabilities are deeply embedded across all our business platforms, enabling us to more precisely capture the growing market demand within our existing operations and strengthen our competitive moats. Going forward, we will continue to bolster our technology and AI capabilities, steadily advance business expansion, and maintain strategic investments to create long-term, sustainable value for shareholders."