# EDGAR Filing Document

**Accession Number:** 0001823986
**File Stem:** 0001104659-26-049772
**Filing Date:** 2026-4
**Character Count:** 1055980
**Document Hash:** 2eeb7028595be323553155a9ffa31633
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-26-049772.hdr.sgml**: 20260428

**ACCESSION NUMBER**: 0001104659-26-049772

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 145

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260428

**DATE AS OF CHANGE**: 20260428

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Waterdrop Inc.
- **CENTRAL INDEX KEY:** 0001823986
- **STANDARD INDUSTRIAL CLASSIFICATION:** INSURANCE AGENTS BROKERS & SERVICES [6411]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40376
- **FILM NUMBER:** 26903120

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** BLOCK C, WANGJING SCIENCE PARK
- **STREET 2:** NO. 2 LIZE ZHONGER ROAD, CHAOYANG
- **CITY:** BEIJING
- **PROVINCE COUNTRY:** F4
- **ZIP:** 100102
- **BUSINESS PHONE:** 861053394997

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** BLOCK C, WANGJING SCIENCE PARK
- **STREET 2:** NO. 2 LIZE ZHONGER ROAD, CHAOYANG
- **CITY:** BEIJING
- **PROVINCE COUNTRY:** F4
- **ZIP:** 100102

?xml version='1.0' encoding='ASCII'? Waterdrop Inc._December 31, 2025

[**Table of Contents**](#TOC)

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

(Mark One)

**☐** **REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**☒** **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the fiscal year ended December 31, 2025.**

**OR**

**☐** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**☐** **SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**Date of event requiring this shell company report ________**

**For the transition period from ________ to ________**

**Commission file number: 001-40376**

**Waterdrop Inc.**

**(Exact name of Registrant as specified in its charter)**

**N/A**

**(Translation of Registrant's name into English)**

**Cayman Islands**

**(Jurisdiction of incorporation or organization)**

**Room B802, 8th Floor, No. 203 Wangjing Lize Zhongyuan Zone 2**

**Chaoyang District, Beijing 100101**

**People's Republic of China**

**+86 10 5339-4997**

**(Address of Principal Executive Offices)**

**Xiaoying Xu, Vice President of Finance, Head of Finance**

**Telephone: +86 10 5339-4997**

**Email:IR@shuidi-inc.com**

**Room B802, 8th Floor, No. 203 Wangjing Lize Zhongyuan Zone 2**

**Chaoyang District, Beijing 100101**

**People's Republic of China**

**(Name, Telephone, Email and/or Facsimile Number and Address of Company Contact Person)**

Securities registered or to be registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading**<br>**Symbol(s)** | **Name of each exchange**<br>**on which registered** |
| **American depositary shares (each ADS represents ten of our Class A ordinary shares, par value US$0.000005 per share)** | **WDH** | **New York Stock Exchange** |
| **Class A ordinary shares, par value US$0.000005 per share\*** |  | **New York Stock Exchange** |

---

\* Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares.

**Securities registered or to be registered pursuant to Section 12(g) of the Act:**

**None**

**(Title of Class)**

**Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:**

[**Table of Contents**](#TOC)

**None**

**(Title of Class)**

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

2,806,929,941 Class A ordinary shares (excluding 475,326,580 Class A ordinary shares, comprising of Class A ordinary shares issued to the depositary for bulk issuance of ADSs and reserved for future issuances upon the exercise or vesting of awards granted under share incentive plans, and Class A ordinary shares in the form of ADSs held in treasury) and 801,904,979 Class B ordinary shares, par value US$0.000005 per share, as of December 31, 2025.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes&nbsp;&nbsp;&nbsp;&nbsp;☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes&nbsp;&nbsp;&nbsp;&nbsp;☒ No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes&nbsp;&nbsp;&nbsp;&nbsp;☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes&nbsp;&nbsp;&nbsp;&nbsp;☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ &nbsp;&nbsp;&nbsp;&nbsp; Accelerated filer ☒ Non-accelerated filer ☐ <br> &nbsp;&nbsp;&nbsp;&nbsp; Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Yes&nbsp;&nbsp;&nbsp;&nbsp;☒ No

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Yes&nbsp;&nbsp;&nbsp;&nbsp;☒ No

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to§240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ &nbsp;&nbsp;&nbsp;&nbsp; International Financial Reporting Standards as issued ☐ &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; Other ☐ <br> &nbsp;&nbsp;&nbsp;&nbsp; by the International Accounting Standards Board &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item&nbsp;&nbsp;&nbsp;&nbsp;17&nbsp;&nbsp;&nbsp;&nbsp;☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes&nbsp;&nbsp;&nbsp;&nbsp;☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes&nbsp;&nbsp;&nbsp;&nbsp;☐ No

------

[**Table of Contents**](#TOC)

#### **TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| [INTRODUCTION](#INTRODUCTION_965389) | [INTRODUCTION](#INTRODUCTION_965389) | 1 |
| [FORWARD-LOOKING INFORMATION](#FORWARDLOOKINGINFORMATION_964332) | [FORWARD-LOOKING INFORMATION](#FORWARDLOOKINGINFORMATION_964332) | 2 |
| [PART I](#PARTI_836797) |  | 3 |
| [Item 1.](#Item1IdentityofDirectorsSeniorManagement) | [Identity of Directors, Senior Management and Advisers](#Item1IdentityofDirectorsSeniorManagement) | 3 |
| [Item 2.](#Item2OfferStatisticsandExpectedTimetable) | [Offer Statistics and Expected Timetable](#Item2OfferStatisticsandExpectedTimetable) | 3 |
| [Item 3.](#Item3KeyInformation_646779) | [Key Information](#Item3KeyInformation_646779) | 3 |
| [Item 4.](#Item4InformationontheCompany_37348) | [Information on the Company](#Item4InformationontheCompany_37348) | 69 |
| [Item 4A.](#Item4AUnresolvedStaffComments_111065) | [Unresolved Staff Comments](#Item4AUnresolvedStaffComments_111065) | 109 |
| [Item 5.](#Item5OperatingandFinancialReviewandProsp) | [Operating and Financial Review and Prospects](#Item5OperatingandFinancialReviewandProsp) | 110 |
| [Item 6.](#Item6DirectorsSeniorManagementandEmploye) | [Directors, Senior Management and Employees](#Item6DirectorsSeniorManagementandEmploye) | 124 |
| [Item 7.](#Item7MajorShareholdersandRelatedPartyTra) | [Major Shareholders and Related Party Transactions](#Item7MajorShareholdersandRelatedPartyTra) | 135 |
| [Item 8.](#Item8FinancialInformation_788574) | [Financial Information](#Item8FinancialInformation_788574) | 137 |
| [Item 9.](#Item9TheOfferandListing_651102) | [The Offer and Listing](#Item9TheOfferandListing_651102) | 138 |
| [Item 10.](#Item10AdditionalInformation_837461) | [Additional Information](#Item10AdditionalInformation_837461) | 139 |
| [Item 11.](#Item11QuantitativeandQualitativeDisclosu) | [Quantitative and Qualitative Disclosures about Market Risk](#Item11QuantitativeandQualitativeDisclosu) | 154 |
| [Item 12.](#Item12DescriptionofSecuritiesOtherthanEq) | [Description of Securities Other than Equity Securities](#Item12DescriptionofSecuritiesOtherthanEq) | 155 |
| [PART II](#PARTII_631272) |  | 158 |
| [Item 13.](#Item13DefaultsDividendArrearagesandDelin) | [Defaults, Dividend Arrearages and Delinquencies](#Item13DefaultsDividendArrearagesandDelin) | 158 |
| [Item 14.](#Item14MaterialModificationstotheRightsof) | [Material Modifications to the Rights of Security Holders and Use of Proceeds](#Item14MaterialModificationstotheRightsof) | 158 |
| [Item 15.](#Item15ControlsandProcedures_2629) | [Controls and Procedures](#Item15ControlsandProcedures_2629) | 158 |
| [Item 16A.](#Item16AAuditCommitteeFinancialExpert_546) | [Audit Committee Financial Expert](#Item16AAuditCommitteeFinancialExpert_546) | 159 |
| [Item 16B.](#Item16BCodeofEthics_191611) | [Code of Ethics](#Item16BCodeofEthics_191611) | 159 |
| [Item 16C.](#Item16CPrincipalAccountantFeesandService) | [Principal Accountant Fees and Services](#Item16CPrincipalAccountantFeesandService) | 159 |
| [Item 16D.](#Item16DExemptionsfromtheListingStandards) | [Exemptions from the Listing Standards for Audit Committees](#Item16DExemptionsfromtheListingStandards) | 159 |
| [Item 16E.](#Item16EPurchasesofEquitySecuritiesbytheI) | [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](#Item16EPurchasesofEquitySecuritiesbytheI) | 159 |
| [Item 16F.](#Item16FChangeinRegistrantsCertifyingAcco) | [Change in Registrant's Certifying Accountant](#Item16FChangeinRegistrantsCertifyingAcco) | 160 |
| [Item 16G.](#Item16GCorporateGovernance_6531) | [Corporate Governance](#Item16GCorporateGovernance_6531) | 160 |
| [Item 16H.](#Item16HMineSafetyDisclosure_333200) | [Mine Safety Disclosure](#Item16HMineSafetyDisclosure_333200) | 161 |
| [Item 16I.](#Item16IDisclosureRegardingForeignJurisdi) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](#Item16IDisclosureRegardingForeignJurisdi) | 161 |
| [Item 16J.](#Item16JInsiderTradingPolicies_707555) | [Insider Trading Policies](#Item16JInsiderTradingPolicies_707555) | 161 |
| [Item 16K.](#Item16KCybersecurity_901481) | [Cybersecurity](#Item16KCybersecurity_901481) | 161 |
| [PART III](#PARTIII_760146) |  | 163 |
| [Item 17.](#Item17FinancialStatements_582120) | [Financial Statements](#Item17FinancialStatements_582120) | 163 |
| [Item 18.](#Item18FinancialStatements_708803) | [Financial Statements](#Item18FinancialStatements_708803) | 163 |
| [Item 19.](#Item19Exhibits_75155) | [Exhibits](#Item19Exhibits_75155) | 164 |
| [SIGNATURES](#SIGNATURES_674462) |  | 169 |

---

i

[**Table of Contents**](#TOC)

#### INTRODUCTION
Unless otherwise indicated or the context otherwise requires, references in this annual report to:

● "ADRs" are to the American depositary receipts which may evidence the ADSs;

● "ADSs" are to the American depositary shares, each of which represents ten Class A ordinary shares;

● "China" or the "PRC" are to the People's Republic of China, including Hong Kong, Macau and Taiwan; and "mainland China" refers to the People's Republic of China, excluding Hong Kong, Macau and Taiwan. The operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong. While entities and businesses in Hong Kong operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to our operations in Hong Kong, if the laws applicable to mainland China become applicable to entities and businesses in Hong Kong in the future;

● "Class A ordinary shares" refer to our Class A ordinary shares, par value US$0.000005 per share; "Class B ordinary shares" refer to our Class B ordinary shares, par value US$0.000005 per share;

● "CRO" are to Contract Research Organization;

● "CSO" are to Contract Sales Organization;

● "FYP" are to first year premiums, which include all premiums that policyholders are obligated to pay for short-term policies and the premiums that policyholders are obligated to pay in the first policy year for long-term policies;

● "Hong Kong" or "HK" are to the Hong Kong Special Administrative Region of the PRC;

● "LLM" are to large language model;

● "ordinary shares" are to our Class A ordinary shares and Class B ordinary shares, par value US$0.000005 per share;

● "our WFOE" are to Beijing Waterdrop Technology Group Co., Ltd., or Waterdrop Technology, formerly known as Beijing Absolute Health Co., Ltd.;

● "RMB" and "Renminbi" are to the legal currency of China;

● "Shenlanbao" are to Shenzhen Cunzhen Qiushi Technology Co., Ltd. and its subsidiaries;

● "the VIEs" are to Beijing Zhuiqiu Jizhi Technology Co., Ltd., or Zhuiqiu Jizhi, Beijing Shuidi Hubao Technology Co., Ltd., or Shuidi Hubao, Beijing Shuidi Hulian Technology Co., Ltd., or Shuidi Hulian, Beijing Zongqing Xiangqian Technology Co., Ltd., or Zongqing Xiangqian, and Beijing Guangmu Weichen Technology Co., Ltd., or Guangmu Weichen;

● "US$," "U.S. dollars," "$," and "dollars" are to the legal currency of the United States; and

● "Waterdrop," "we," "us," "our company" and "our" are to Waterdrop Inc., our Cayman Islands holding company and its subsidiaries. We conduct our operations primarily through (i) our subsidiaries in mainland China and (ii) the VIEs, with which we maintain contractual agreements. The consolidated VIEs are the companies that are incorporated and conducting operations in mainland China, and their financial results have been consolidated into our consolidated financial statements under U.S. GAAP for accounting purposes.

Our reporting currency is the Renminbi. This annual report also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB6.9931 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2025. We make no representation that the Renminbi or U.S. dollars amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

Due to rounding, numbers presented throughout this annual report may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

[**Table of Contents**](#TOC)

#### FORWARD-LOOKING INFORMATION
This annual report contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "likely to" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:

● our mission, goals and strategies;

● our future business development, financial conditions and results of operations;

● the growth of the insurance, medical crowdfunding and healthcare industries in China;

● our expectations regarding demand for and market acceptance of our products and services;

● our expectations regarding our relationships with consumers, insurance carriers and other partners;

● competition in the industries we operate; and

● government policies and regulations relating to our industry.

You should read this annual report and the documents that we refer to in this annual report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this annual report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

[**Table of Contents**](#TOC)

#### PART I

#### Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.

#### Item 2. Offer Statistics and Expected Timetable
Not applicable.

#### Item 3. Key Information
Waterdrop Inc. is not an operating company in China but rather a Cayman Islands holding company with no material operations of its own and no equity ownership in the VIEs (defined below). We conduct our operations primarily through (i) our subsidiaries in mainland China and (ii) the VIEs, with which we maintain contractual agreements. The laws and regulations of mainland China restrict and impose conditions on foreign direct investment in companies involved in the provision of value-added telecommunication services, insurance brokerage services or insurance agency services. Therefore, we operate such businesses in China through the variable interest entities, Zhuiqiu Jizhi, Shuidi Hubao, Shuidi Hulian, Zongqing Xiangqian and Guangmu Weichen, which we refer to as the VIEs in this annual report, and rely on contractual arrangements among our subsidiaries in mainland China, the VIEs and their shareholders to control the business operations of the VIEs. Revenues contributed by the VIEs accounted for 88.6%, 83.4% and 64.9% of our total net revenues for the fiscal years 2023, 2024 and 2025, respectively. As used in this annual report, "Waterdrop," "we," "us," "our company" or "our" refers to Waterdrop Inc. and its subsidiaries. Investors in our ADSs thus are not purchasing equity interest in the VIEs but instead are purchasing equity interest in Waterdrop Inc., a Cayman Islands holding company, and may never directly hold equity interests in the VIEs in mainland China. The consolidated VIEs are mainland China companies conducting operations in mainland China, and their financial results have been consolidated into our consolidated financial statements under U.S. GAAP for accounting purposes. Waterdrop Inc. is a holding company with no operations of its own. We do not have any equity ownership in the consolidated VIEs.

Our corporate structure is subject to risks associated with our contractual arrangements with the VIEs. Investors may not directly hold equity interests in the VIEs or in the businesses that are conducted by the VIEs, and the VIE structure provides contractual exposure to foreign investment in mainland China-based companies which involve foreign investment restrictions. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with the laws and regulations in mainland China, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. This may result in the VIEs being deconsolidated, which would materially and adversely affect our operations, and our ADSs may decline significantly in value or become worthless. The legality and enforceability of the contractual agreements between our subsidiaries in mainland China, the VIEs, and their nominee shareholders, as a whole, have not been tested in a court of law in mainland China as of the date of this annual report. Our holding company, our subsidiaries in mainland China, the VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of the VIEs and our company as a whole. The PRC regulatory authorities could disallow the VIE structure, which would likely result in a material adverse change in our operations, and our ordinary shares or our ADSs may decline significantly in value or become worthless. As such, the VIE structure involves unique risks to investors of our holding company. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under "Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure."

[**Table of Contents**](#TOC)

We face various legal and operational risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving laws and regulations in mainland China. In recent years, the PRC government has issued statements and regulatory actions relating to areas such as regulatory approvals on offshore offerings, the use of VIE structure, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. For example, on February 17, 2023, China Securities Regulatory Commission, or the CSRC, issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which became effective on March 31, 2023. Pursuant to these regulations, China-based companies that directly or indirectly offer or list their securities in an overseas market must file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing. These regulations also provide that a China-based company must file with the CSRC within three business days after completion of its follow-on offering of securities after it is listed in an overseas market. There remain uncertainties with respect to how the CSRC filing procedures under these regulations would be applied to, and implicate, the procedures, timetables and outcomes of our future offering or other capital raising activities. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors and accept foreign investments or list on another foreign exchange, or cause the value of such securities to significantly decline or be worthless. For a detailed description of risks related to doing business in China, see "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China."

Risks and uncertainties arising from the legal system in mainland China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in mainland China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us."

#### Our Holding Company Structure and VIE Contractual Arrangements
Waterdrop Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries in mainland China and the VIEs. Our value-added telecommunication services, insurance brokerage services or insurance agency services in mainland China have been conducted through the VIEs in order to comply with the laws and regulations in mainland China, which restrict and impose conditions on foreign direct investment in companies involved in the provision of value-added telecommunication services, insurance brokerage services or insurance agency services.

[**Table of Contents**](#TOC)

The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries, the VIEs and the VIEs' principal subsidiaries:

![Graphic](wdh-20251231x20f007.jpg)

*Notes:*

&nbsp;&nbsp;&nbsp;&nbsp;(1) Mr. Peng Shen holds 100% of the equity interests in Beijing Shuidi Hubao Technology Co., Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Mr. Peng Shen holds 100% of the equity interests in Beijing Zhuiqiu Jizhi Technology Co., Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Mr. Peng Shen and Mr. Wei Ran, each holds 99% and 1% of the equity interests in Beijing Zongqing Xiangqian Technology Co., Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Ms. Xiaolei Sun and Ms. Nian Liu, each holds 99% and 1% of the equity interests in Beijing Guangmu Weichen Technology Co., Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Mr. Peng Shen and Mr. Wei Ran, each holds 99% and 1% of the equity interests in Beijing Shuidi Hulian Technology Co., Ltd.

[**Table of Contents**](#TOC)

#### Permissions Required from the Authorities in Mainland China for Our Operations
We conduct our business primarily through our subsidiaries in mainland China, the VIEs and their subsidiaries in mainland China. Our operations in China are governed by the laws and regulations in mainland China. As of the date of this annual report, our subsidiaries in mainland China, the VIEs and their subsidiaries have obtained the requisite licenses and permits from the PRC governmental authorities that are material for the business operations of our holding company, the VIEs and their subsidiaries in mainland China, including, among others, licenses to conduct insurance brokerage business and insurance agency business, and license for provision of internet information services. Given the interpretation and implementation of the laws and regulations and the enforcement practice by governmental authorities are evolving, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see "Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations."

As of the date of this annual report, except for the licenses and approvals that have been granted and except as disclosed in this annual report, we, our subsidiaries in mainland China and the VIEs are not required to obtain approval or permission from the CSRC, the Cyberspace Administration of China or any other entity that is required to approve the VIEs' operations or required for us to offer securities to foreign investors under any currently effective laws, regulations and regulatory rules in mainland China. However, in connection with any future overseas capital markets activities, we may need to file with the CSRC, undergo a cybersecurity review conducted by the Cyberspace Administration of China, or meet other regulatory requirements that may be adopted in the future by the authorities in mainland China. To the extent such requirements are or become applicable, we cannot assure you that we would be able to comply with them. Any failure to obtain or delay in obtaining such approval or completing such procedures could subject us to restrictions and penalties imposed by the CSRC, the Cyberspace Administration of China or other PRC regulatory authorities, which could include fines and penalties on our operations in China, delays of or restrictions on the repatriation of the proceeds from our offshore offerings into mainland China, or other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government's significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs."

Furthermore, in connection with issuance of securities to foreign investors, in recent years, the PRC government has strengthened oversight over offerings that are conducted overseas and/or foreign investment in China-based issuers. Any such action could significantly limit or completely hinder our ability to conduct future offerings of securities to investors and accept foreign investments. For more detailed information, see "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The filing, approval or other administration requirements of the CSRC or other PRC governmental authorities may be required in connection with our offshore offerings under the law in mainland China, and, if required, we cannot predict whether or for how long we will be able to complete such filing, obtain such approval or meet such requirements."

[**Table of Contents**](#TOC)

#### The Holding Foreign Companies Accountable Act
Our auditor is located in mainland China. Pursuant to the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act that was signed into law on December 29, 2022, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. As of the date of this annual report, the PCAOB has not issued any new determination that it is unable to inspect or investigate completely registered public accounting firms headquartered in any jurisdiction. For this reason, we do not expect to be identified so after we file this annual report on Form 20-F for the fiscal year ended December 31, 2025. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections" and "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment."

#### Cash Transfers and Dividend Distribution
Waterdrop Inc., our Cayman Islands holding company, transfers cash to our wholly-owned Hong Kong subsidiary, by making capital contributions or providing loans, and our Hong Kong subsidiary transfers cash to our subsidiaries in mainland China by making capital contributions or providing loans to them.

Waterdrop Inc. and its subsidiaries are not able to make direct capital contribution to the VIEs and their subsidiaries. However, they may transfer cash to the VIEs by loans or by making payment to the VIEs for inter-group transactions.

The following table sets forth the amount of the transfers for the periods presented.

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31,**  | **Years Ended December 31,**  | **Years Ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **(RMB in millions)** | **(RMB in millions)** | **(RMB in millions)** |
| Capital contributions from Waterdrop Inc. to its subsidiaries | 6 | 15 |  |
| Loans from its subsidiaries to Waterdrop Inc. | 1650 | 1878 | 440 |
| Loans repayment received by its subsidiaries from Waterdrop Inc. | 3565 | 884 | 232 |
| Loans from its subsidiaries to the VIEs and their subsidiaries | 8972 | 6290 | 3927 |
| Loans repayment received by subsidiaries from VIEs and their subsidiaries | 8863 | 6875 | 3736 |
| Service fees received by WFOE from the VIEs and their subsidiaries<sup>(1)</sup> | 596 | 597 | 375 |

---

*Note:*

&nbsp;&nbsp;&nbsp;&nbsp;(1) The cash flows between our WFOE and the VIEs and their subsidiaries included the service fees paid for services contemplated by the exclusive business cooperation agreements.

[**Table of Contents**](#TOC)

The VIEs may transfer cash to our WFOE by paying service fees according to the exclusive business cooperation agreements. Pursuant to these agreements between the VIEs and our WFOE, our WFOE has the exclusive right to provide the VIEs with consulting, technical services and other services required by the VIEs' business. Without our WFOE's prior written consent, the VIEs may not accept the same or similar consulting, technical services and other services provided by any third party during the term of the agreement. The VIEs agree to pay our WFOE service fees based on the operating profit generated by the VIEs on an annual basis. For the years ended December 31, 2023, 2024 and 2025, service fees of RMB596 million, RMB597 million and RMB375 million were paid to the WFOE by the VIEs under the agreements, respectively.

For the years ended December 31, 2023, 2024 and 2025, no dividends or distributions were made to Waterdrop Inc. by our subsidiaries. For the years ended December 31, 2023, 2024 and 2025, dividends of nil, RMB158.7 million and RMB130.4 million were paid to shareholders of record as of designated record dates.

For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within mainland China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend to Waterdrop Inc. by our PRC subsidiaries in the future:

---

| | |
|:---|:---|
|  | **Taxation Scenario**<sup>(1)</sup><br>**Statutory Tax and Standard Rates** |
| Hypothetical pre-tax earnings<sup>(2)</sup> | 100% |
| Tax on earnings at statutory rate of 25%<sup>(3)</sup> | (25)% |
| Net earnings available for distribution | 75% |
| Withholding tax at standard rate of 10%<sup>(4)</sup> | (7.5)% |
| Net distribution to Waterdrop Inc./shareholders | 67.5% |

---

*Notes:*

&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in mainland China.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Under the terms of VIE agreements, our WFOE may charge the VIEs for services provided to the VIEs. These fees shall be recognized as expenses of the VIEs, with a corresponding amount as service income by our WFOE and eliminate in consolidation. For income tax purposes, our WFOE and the VIEs file income tax returns on a separate company basis. The fees paid are recognized as a tax deduction by the VIEs and as income by our WFOE and are tax neutral.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Certain of our subsidiaries qualifies for a 15% preferential income tax rate in mainland China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.

&nbsp;&nbsp;&nbsp;&nbsp;(4) The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign-invested enterprise to its immediate holding company outside of mainland China. A lower withholding income tax rate of 5% is applied if the immediate holding company of the foreign-invested enterprise is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with mainland China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our WFOE under tax neutral contractual arrangements. If, in the future, the accumulated earnings of the VIE exceed the fees paid to our WFOE (or if the current and contemplated fee structure between the intercompany entities is determined to be non-substantive and disallowed by Chinese tax authorities), the VIEs could, as a matter of last resort, make a non-deductible transfer to our subsidiaries in mainland China for the amounts of the stranded cash in the VIEs. This would result in such transfer being non-deductible expenses for the VIEs but still taxable income for our WFOE.

[**Table of Contents**](#TOC)

As Waterdrop Inc. is a Cayman Islands holding company with no material operations of its own, its ability to pay dividends may depend upon dividends paid by our subsidiaries in mainland China. Our subsidiaries in mainland China in turn generate income from their own operations, and in addition enjoy all economic benefit and receive service fees from the VIEs pursuant to the exclusive business cooperation agreement with the VIEs. If our existing subsidiaries in mainland China or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to distribute earnings or pay dividends to us. Under the law in mainland China, each of our subsidiaries and the VIEs in mainland China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, each of our subsidiaries and the VIEs in mainland China may allocate a portion of its after-tax profits based on mainland China accounting standards to a surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of mainland China is subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE, and declaration and payment of withholding tax. Additionally, if our subsidiaries in mainland China and the VIEs incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends or make other distributions to us. Our subsidiaries in mainland China have not paid dividends and will not be able to pay dividends until it generates accumulated profits and meets the requirements for statutory reserve funds. For more details, see "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Regulation in mainland China of loans to and direct investment in the entities in mainland China by offshore holding companies may delay us from using the proceeds of financing activities to make loans or additional capital contributions to our subsidiaries in mainland China and to make loans to the VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business" and "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Governmental regulation of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment."

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#### Financial Information Related to the VIEs
The following table presents the condensed consolidating balance sheet data for the VIEs and other entities as of the dates presented.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** |
|  | <br>**Waterdrop**<br>**Inc.** | <br>**Primary Beneficiary**<br>**Of VIEs** | **Other non-**<br>**VIE**<br>**subsidiaries** | <br>**VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| Cash and cash equivalents | 88969 | 87802 | 112648 | 193584 |  | 483003 |
| Restricted cash |  |  |  | 648450 |  | 648450 |
| Short-term investments | 14636 | 396557 | 3569 | 115906 |  | 530668 |
| Accounts receivable |  | 835124 | 11402 | 460937 | (46999) | 1260464 |
| Current contract assets |  |  | 5136 | 801780 |  | 806916 |
| Amount due from related parties |  | 100 |  | 109 |  | 209 |
| Prepaid expense and other assets | 21590 | 9715 | 20061 | 199747 | (29) | 251084 |
| Amounts due from the entities within our company | 235966 | 1486889 | 2373165 | 280671 | (4376691) |  |
| Non-current contract assets |  |  | 6509 | 289007 |  | 295516 |
| Property, equipment and software, net |  | 17270 | 231938 | 6490 |  | 255698 |
| Intangible assets, net |  | 11078 |  | 174103 | (8041) | 177140 |
| Long-term investments | 2268000 |  |  | 16102 |  | 2284102 |
| Investment in Non-VIE subsidiaries and amounts due from the entities within our company (non-current) | 2887445 | 1200 |  |  | (2888645) |  |
| Investment in VIEs and their subsidiaries |  | (318180) |  |  | 318180 |  |
| Right of use assets, net |  |  | 3288 | 20667 |  | 23955 |
| Deferred tax assets |  |  |  | 2870 |  | 2870 |
| Goodwill |  |  |  | 80751 |  | 80751 |
| **Total assets** | **5516606** | **2527555** | **2767716** | **3291174** | **(7002225)** | **7100826** |
| Amount due to related parties |  | 9323 |  | 1 |  | 9324 |
| Insurance premium payables |  |  |  | 684800 |  | 684800 |
| Accrued expenses and other current liabilities  | 1099 | 367484 | 65995 | 729682 | (23812) | 1140448 |
| Short-term loans |  | 47000 |  |  |  | 47000 |
| Current lease liabilities  |  |  | 2137 | 8751 |  | 10888 |
| Amounts due to the entities within our company | 363579 | 307819 | 1176678 | 2154734 | (4002810) |  |
| Non-current lease liabilities | **—** |  | 587 | 12053 |  | 12640 |
| Deferred tax liabilities  | **—** |  |  | 43374 | 424 | 43798 |
| **Total liabilities** | **364678** | **731626** | **1245397** | **3633395** | **(4026198)** | **1948898** |

---

[**Table of Contents**](#TOC)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | <br>**Waterdrop**<br>**Inc.** | <br>**Primary Beneficiary**<br>**Of VIEs** | **Other non-**<br>**VIE**<br>**subsidiaries** | <br>**VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| Cash and cash equivalents | 589440 | 115945 | 70587 | 210351 |  | 986323 |
| Restricted cash |  |  |  | 520588 |  | 520588 |
| Short-term investments | 566434 | 406524 | 469322 | 170339 |  | 1612619 |
| Accounts receivable |  | 157934 | 20424 | 537848 |  | 716206 |
| Current contract assets |  |  | 5400 | 614036 |  | 619436 |
| Amount due from related parties |  | 100 |  | 157 |  | 257 |
| Prepaid expense and other assets | 22875 | 13002 | 17012 | 129752 |  | 182641 |
| Amounts due from the entities within our company | 163933 | 1545045 | 2108645 | 394283 | (4211906) |  |
| Non-current contract assets |  |  | 3894 | 149855 |  | 153749 |
| Property, equipment and software, net |  | 20255 | 214703 | 5066 |  | 240024 |
| Intangible assets, net |  | 13442 |  | 149846 | (10277) | 153011 |
| Long-term investments | 1100057 |  |  | 14103 |  | 1114160 |
| Investment in Non-VIE subsidiaries and amounts due from the entities within our company (non-current) | 2502969 | 1200 |  |  | (2504169) |  |
| Investment in VIEs and their subsidiaries |  | (381933) |  |  | 381933 |  |
| Right of use assets, net |  | 20949 | 5666 | 20257 |  | 46872 |
| Deferred tax assets |  |  |  | 27028 |  | 27028 |
| Goodwill |  |  |  | 80751 |  | 80751 |
| **Total assets** | **4945708** | **1912463** | **2915653** | **3024260** | **(6344419)** | **6453665** |
| Amount due to related parties |  | 10363 |  | 253 |  | 10616 |
| Insurance premium payables |  |  |  | 537344 |  | 537344 |
| Accrued expenses and other current liabilities | 1563 | 120187 | 47353 | 534932 |  | 704035 |
| Short-term loans |  | 198373 |  |  |  | 198373 |
| Current lease liabilities |  | 18017 | 3324 | 13232 |  | 34573 |
| Amounts due to the entities within our company | 146710 | 391898 | 1125137 | 2154293 | (3818038) |  |
| Non-current lease liabilities | **—** | 2933 | 1792 | 6246 |  | 10971 |
| Deferred tax liabilities | **—** |  |  | 83760 | 425 | 84185 |
| **Total liabilities** | **148273** | **741771** | **1177606** | **3330060** | **(3817613)** | **1580097** |

---

[**Table of Contents**](#TOC)

The following table presents the condensed consolidating statements of operations for the VIEs and other entities for the periods presented.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** |
|  | <br>**Waterdrop** <br>**Inc.** | <br>**Primary**<br>**Beneficiary of VIEs** | **Other non-**<br>**VIE**<br>**subsidiaries** | <br>**VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| **Operating revenue, net** | **—** | **1512758** | **333178** | **2579851** | **(448026)** | **3977761** |
| Operating costs |  | (384327) | (297922) | (1475428) | 214515 | (1943162) |
| Sales and marketing expenses | (3316) | (222295) | (37770) | (857548) |  | (1120929) |
| General and administrative expenses | (21246) | (217335) | (31626) | (275477) | 235555 | (310129) |
| Research and development expenses | (159) | (197546) | (525) | (34453) |  | (232683) |
| **Total operating costs and expenses** | **(24721)** | **(1021503)** | **(367843)** | **(2642906)** | **450070** | **(3606903)** |
| **Operating (loss)/profit** | **(24721)** | **491255** | **(34665)** | **(63055)** | **2044** | **370858** |
| Equity in profit of subsidiaries and VIEs | 467631 | (28154) |  |  | (439477) |  |
| **Net profit/(loss)** | **568936** | **496406** | **(32655)** | **(30513)** | **(437117)** | **565057** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** |
|  | <br>**Waterdrop** <br>**Inc.** | <br>**Primary**<br>**Beneficiary of VIEs** | **Other non-**<br>**VIE**<br>**subsidiaries** | <br>**VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| **Operating revenue, net** | **—** | **757820** | **193072** | **2312629** | **(491700)** | **2771821** |
| Operating costs |  | (139363) | (176860) | (1242211) | 243694 | (1314740) |
| Sales and marketing expenses | (3555) | (118230) | (24359) | (548625) |  | (694769) |
| General and administrative expenses | (38278) | (229897) | (18563) | (330906) | 249992 | (367652) |
| Research and development expenses | (742) | (188152) | (10) | (27598) |  | (216502) |
| **Total operating costs and expenses** | **(42575)** | **(675642)** | **(219792)** | **(2149340)** | **493686** | **(2593663)** |
| **Operating (loss)/profit** | **(42575)** | **82178** | **(26720)** | **163289** | **1986** | **178158** |
| Equity in profit of subsidiaries and VIEs | 304704 | 189637 |  |  | (494341) |  |
| **Net profit/(loss)** | **367510** | **292671** | **(4594)** | **185295** | **(489999)** | **350883** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** |
|  | <br>**Waterdrop**<br>**Inc.** | <br>**Primary**<br>**Beneficiary of VIEs** | **Other non-**<br>**VIE**<br>**subsidiaries** | <br>**VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| **Operating revenue, net** | **—** | **824244** | **51235** | **2331678** | **(576450)** | **2630707** |
| Operating costs |  | (137866) | (44634) | (1171282) | 158238 | (1195544) |
| Sales and marketing expenses | (12317) | (155478) | (18587) | (554069) |  | (740451) |
| General and administrative expenses | (73712) | (257382) | (7612) | (484180) | 420491 | (402395) |
| Research and development expenses | (1031) | (267000) | 9 | (31038) |  | (299060) |
| **Total operating costs and expenses** | **(87060)** | **(817726)** | **(70824)** | **(2240569)** | **578729** | **(2637450)** |
| **Operating (loss)/profit** | **(87060)** | **6518** | **(19589)** | **91109** | **2279** | **(6743)** |
| Equity in profit of subsidiaries and VIEs | 221959 | 227813 |  |  | (449772) |  |
| **Net profit/(loss)** | **167221** | **296391** | **(77968)** | **121441** | **(343400)** | **163685** |

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[**Table of Contents**](#TOC)

The following table presents condensed consolidating cash flow data for the VIEs and other entities for the years ended presented.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** | **For the Year Ended December 31, 2025** |
|  | **Waterdrop**<br>**Inc.** | **Primary Beneficiary**<br>**of VIEs** | **Other non-VIE**<br>**subsidiaries** | **VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| Net cash provided by/(used in) operating activities | 427168 | 418094 | (295912) | (305429) |  | 243921 |
| Net cash (used in)/provided by investing activities | (703412) | (294673) | 292247 | 222300 | 258798 | (224740) |
| Net cash (used in)/provided by financing activities | (215217) | (151548) | 68126 | 183503 | (258798) | (373934) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** | **For the Year Ended December 31, 2024** |
|  | **Waterdrop**<br>**Inc.** | **Primary Beneficiary**<br>**of VIEs** | **Other non-VIE**<br>**subsidiaries** | **VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| Net cash provided by/(used in) operating activities | 1615062 | (447373) | (1546843) | 816404 |  | 437250 |
| Net cash (used in)/provided by investing activities | (922670) | 479597 | 1509901 | (204603) | (570588) | 291637 |
| Net cash (used in)/provided by financing activities | (258425) | 59847 | 14909 | (585498) | 570588 | (198579) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** | **For the Year Ended December 31, 2023** |
|  | **Waterdrop** <br>**Inc.** | **Primary Beneficiary**<br>**of VIEs** | **Other non-VIE**<br>**subsidiaries** | **VIEs and their**<br>**subsidiaries** | <br>**Elimination** | <br>**Consolidated** |
|  | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** | **(RMB in thousands)** |
| Net cash provided by/(used in) operating activities | 621178 | 69715 | (536388) | 252011 |  | 406516 |
| Net cash (used in)/provided by investing activities | (299737) | (1104857) | 351187 | (573368) | 453815 | (1172960) |
| Net cash (used in)/provided by financing activities | (514315) | 476331 | 5933 | 108628 | (453815) | (377238) |

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[**Table of Contents**](#TOC)

**A.** **[Reserved]**

The following selected consolidated statements of comprehensive income data for the years ended December 31, 2023, 2024 and 2025, selected consolidated balance sheet data as of December 31, 2024 and 2025 and selected consolidated cash flow data for the years ended December 31, 2023, 2024 and 2025 have been derived from our audited consolidated financial statements included elsewhere in this annual report. The following selected consolidated statements of comprehensive loss data for the years ended December 31, 2021 and 2022, selected consolidated balance sheet data as of December 31, 2021, 2022 and 2023 and selected consolidated cash flow data for the years ended December 31, 2021 and 2022 have been derived from our audited consolidated financial statements not included in this annual report. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. You should read this "Selected Financial Data" section together with our consolidated financial statements and the related notes and "Item 5. Operating and Financial Review and Prospects" included elsewhere in this annual report. Our historical results are not necessarily indicative of results we expect for future periods.

The following table sets forth a summary of our consolidated statements of comprehensive (loss)/income for the years ended December 31, 2021, 2022, 2023, 2024 and 2025.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  |
|  | **2021** | **2022** | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** |
| **Operating revenue, net** | **3205914** | **2801768** | **2630707** | **2771821** | **3977761** | **568812** |
| **Operating costs and expenses** |  |  |  |  |  |  |
| Operating costs | (1054475) | (1019362) | (1195544) | (1314740) | (1943162) | (277868) |
| Sales and marketing expenses | (3104769) | (624478) | (740451) | (694769) | (1120929) | (160291) |
| General and administrative expenses | (530522) | (388651) | (402395) | (367652) | (310129) | (44348) |
| Research and development expenses | (378990) | (291290) | (299060) | (216502) | (232683) | (33273) |
| **Total operating costs and expenses** | **(5068756)** | **(2323781)** | **(2637450)** | **(2593663)** | **(3606903)** | **(515780)** |
| **Operating (loss)/profit** | **(1862842)** | **477987** | **(6743)** | **178158** | **370858** | **53032** |
| **Other income/(expenses)** |  |  |  |  |  |  |
| Interest income | 48662 | 81713 | 136043 | 149121 | 135697 | 19404 |
| Foreign currency exchange (loss)/gain | 9349 | 4064 | 4342 | 8016 | 276 | 39 |
| Others, net | 9764 | 66929 | 30598 | 25295 | 36618 | 5236 |
| **(Loss)/profit before income tax, and share of results of equity method investee** | **(1795067)** | **630693** | **164240** | **360590** | **543449** | **77711** |
| Income tax (expense)/benefit | 220987 | (22976) | (555) | (9707) | 21608 | 3090 |
| **Net (loss)/profit** | **(1574080)** | **607717** | **163685** | **350883** | **565057** | **80801** |
| Preferred shares redemption value accretion | (152287) |  |  |  |  |  |
| Net loss attributable to mezzanine equity classified as non-controlling interest |  |  | (3536) | (16627) | (3879) | (555) |
| **Net (loss)/profit attributable to ordinary shareholders** | **(1726367)** | **607717** | **167221** | **367510** | **568936** | **81356** |
| **Weighted average number of ordinary shares used in computing net (loss)/profit per share** |  |  |  |  |  |  |
| Basic | 2990507749 | 3921388720 | 3769679736 | 3650504339 | 3615328154 | 3615328154 |
| Diluted | 2990507749 | 4022467160 | 3880861496 | 3719776955 | 3713518076 | 3713518076 |
| **Net (loss)/profit per share attributable to ordinary shareholders** |  |  |  |  |  |  |
| Basic | (0.58) | 0.15 | 0.04 | 0.10 | 0.16 | 0.02 |
| Diluted | (0.58) | 0.15 | 0.04 | 0.10 | 0.15 | 0.02 |

---

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The following table presents our selected consolidated balance sheet data as of December 31, 2021, 2022, 2023, 2024 and 2025.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  |
|  | **2021** | **2022** | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| **Selected Consolidated Balance Sheet Data:** |  |  |  |  |  |  |
| Cash and cash equivalents | 817719 | 1574171 | 396905 | 986323 | 483003 | 69069 |
| Restricted cash | 667664 | 517364 | 577121 | 520588 | 648450 | 92727 |
| Short-term investments | 1969362 | 2130377 | 2996527 | 1612619 | 530668 | 75885 |
| Accounts receivable, net | 643843 | 675796 | 693110 | 716206 | 1260464 | 180244 |
| Contract assets | 593500 | 553676 | 707254 | 773185 | 1102432 | 157645 |
| Long-term investments | 11812 | 11969 | 211758 | 1114160 | 2284102 | 326622 |
| **Total assets** | **5250599** | **5922223** | **6148663** | **6453665** | **7100826** | **1015405** |
| Insurance premium payables<sup>(1)</sup> | 685028 | 516661 | 591953 | 537344 | 684800 | 97925 |
| Deferred revenue<sup>(2)</sup> | 803 |  |  |  |  |  |
| Accrued expenses and other current liabilities<sup>(3)</sup> | 498752 | 584123 | 597684 | 704035 | 1140448 | 163082 |
| Short-term loans |  |  | 137557 | 198373 | 47000 | 6721 |
| Deferred tax liabilities<sup>(4)</sup> | 13551 | 29703 | 73305 | 84185 | 43798 | 6263 |
| **Total liabilities** | **1277173** | **1156095** | **1470209** | **1580097** | **1948898** | **278688** |
| **Total mezzanine equity** | **—** |  | 92760 | 76133 |  |  |
| **Total shareholders' equity** | **3973426** | **4766128** | **4585694** | **4797435** | **5151928** | **736717** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to us of RMB685.0 million, RMB516.7 million, RMB592.0 million, RMB537.3 million and RMB684.8 million as of December 31, 2021, 2022, 2023, 2024 and 2025, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Includes amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to us of RMB0.8 million, nil, nil, nil and nil as of December 31, 2021, 2022, 2023, 2024 and 2025, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Includes amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to us of RMB413.4 million, RMB454.0 million, RMB490.7 million, RMB534.9 million and RMB729.7 million as of December 31, 2021, 2022, 2023, 2024 and 2025, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Includes amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to us of RMB13.1 million, RMB29.3 million, RMB72.9 million, RMB83.8 million and RMB43.4 million as of December 31, 2021, 2022, 2023, 2024 and 2025, respectively.

The following table sets forth our selected consolidated cash flow data for the years ended December 31, 2021, 2022, 2023, 2024 and 2025.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2021** | **2022** | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Net cash (used in)/provided by operating activities | (1096652) | 765705 | 406516 | 437250 | 243921 | 34881 |
| Net cash (used in)/provided by investing activities | (846898) | (139819) | (1172960) | 291637 | (224740) | (32138) |
| Net cash provided by/(used in) financing activities | 2119670 | (57457) | (377238) | (198579) | (373934) | (53471) |
| Effect of exchange rate changes on cash and cash equivalents | (14086) | 37723 | 26173 | 2577 | (20705) | (2961) |
| Net increase/(decrease) in cash and cash equivalents and restricted cash | 162034 | 606152 | (1117509) | 532885 | (375458) | (53689) |
| Total cash and cash equivalents and restricted cash at beginning of year | 1323349 | 1485383 | 2091535 | 974026 | 1506911 | 215485 |
| **Total cash and cash equivalents and restricted cash at end of year** | **1485383** | **2091535** | **974026** | **1506911** | **1131453** | **161796** |

---

**B. Capitalization and Indebtedness**

Not applicable.

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**C. Reasons for the Offer and Use of Proceeds**

Not applicable.

**D. Risk Factors**

#### Summary of Risk Factors
Investing in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs. The following list summarizes some, but not all, of these risks.

#### Risks Related to Our Business and Industry
● Our business and growth are significantly affected by the future prospects of third-party insurance brokerage and agency, medical crowdfunding and healthcare industries, which are rapidly evolving.

● Our limited operating history and evolving business model make it difficult to evaluate our business and future prospects and the risks and challenges we may encounter.

● We face intense competition and could lose market share, which could adversely affect our results of operations.

● We have a history of net losses and negative cash flows from operating activities, and we may not be able to maintain profitability or continue to generate positive cash flows from operating activities in the future.

● We face uncertainties relating to the change of regulatory regime for insurance related business.

● If we are unable to manage the risks presented by our international expansion, our financial results and future prospects will be adversely impacted.

● We may be materially adversely affected by the changes and evolvement in the regulation of medical crowdfunding business

● The administration, interpretation and enforcement of the regulations applicable to us are evolving and involve uncertainties. We may not be able to stay in constant compliance with the rapidly evolving regulations.

● Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations.

● We have been or may be subject to penalties for failure to manage our personnel engaging in insurance brokerage activities.

● Our historical growth rate may not be indicative of our future performance and if we fail to effectively manage our growth, our business, financial condition and results of operations could be adversely affected.

● We have made investments and allocated resources in the development and application of AI technologies and may face uncertainties with respect to its commercialization and application and the evolving laws and regulations.

● Any harm to our brand or reputation may materially and adversely affect our business.

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#### Risks Related to Our Corporate Structure
● Waterdrop Inc. is a Cayman Islands holding company with no equity ownership in the VIEs and we conduct our operations in China primarily through (i) our subsidiaries in mainland China and (ii) the VIEs, with which we have maintained contractual arrangements. Investors in our ADSs thus are not purchasing equity interest in our operating entities in China but instead are purchasing equity interest in a Cayman Islands holding company. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with the laws and regulations in mainland China, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our subsidiaries in mainland China, the VIEs, and investors of our company face potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of the VIEs and our company as a whole. See "Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with regulations in mainland China relating to relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations" on page 42 for details.

#### Risks Related to Doing Business in China
● Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations" on page 48 for details.

● PRC government's significant authority in regulating the industries that we operate and our operations and its oversight over securities offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government's significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs" on page 48 for details.

● Evolvements of the legal system in mainland China, including the enforcement of rules and regulations in China and the risk that such rules and regulations can change quickly, could result in uncertainties that could have a material adverse change in our operations and the value of our ADSs. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us" on page 49 for details.

● We may rely on dividends and other distributions on equity paid by our subsidiaries in mainland China to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries in mainland China to make payments to us could have a material and adverse effect on our ability to conduct our business. See the risk factor on page 57 for details.

● The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections. See the risk factor on page 59 for details.

● Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. See the risk factor on page 60 for details.

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#### Risks Related to Our ADSs
● The trading price of the ADSs has been and may be volatile, which could result in substantial losses to investors.

● If securities or industry analysts cease to publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.

● Our dual-class voting structure may limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

#### Risks Related to Our Business and Industry
***Our business and growth are significantly affected by the future prospects of third-party insurance brokerage and agency, medical crowdfunding and healthcare industries, which are rapidly evolving.***

We primarily operate in three rapidly evolving industries. Our business and growth are highly dependent on the future growth and proliferation of third-party insurance brokerage and agency, medical crowdfunding and healthcare industries in China, which could be affected by many factors beyond our control.

Firstly, third-party insurance brokerage and agency industry in China could be affected by, from the insurance carrier side, the close integration with and improvements in online infrastructure and technology, efficient access to insurance consumers, consumer base and insights, user acquisition costs and the separation of insurance product design and sales; and from the consumer side, by the continued formation of consumers' online insurance policy purchasing habits, the selection, price and popularity of insurance products offered by insurance carriers, the demand for convenience, the reliability and security of third-party insurance brokerage and agency platforms and online insurance policy buying or claim settlement experience. In addition, third-party insurance brokerage and agency industry may also be affected by the overall prosperity of health and life insurance industry and the regulatory regime.

Secondly, the medical crowdfunding industry in China could be affected by the medical cost borne by patients, development of self-discipline conventions driven by industry leaders, the coverage of China's social medical insurance provided by the Chinese government and regulatory policies. See also "—We may be materially adversely affected by the changes and evolvement in the regulation of medical crowdfunding business."

Thirdly, our operation could also be significantly affected by the development of the healthcare industry, an adjacent industry to third-party insurance brokerage and agency and medical crowdfunding industries in China. Healthcare related business is subject to multiple regulations in mainland China, such as regulations governing pharmacy, distribution of pharmaceutical and healthcare products, healthcare, internet healthcare, clinical trials and insurance claim processing. New laws, regulations and regulatory requirements have been and may continue to be promulgated and implemented from time to time. We face challenges brought by these new laws, regulations and regulatory requirements, as well as uncertainties in the interpretation and application thereof. Moreover, there exist uncertainties as to how the regulatory environment might change. Any violation of the laws, rules and regulations may result in penalties and, under certain circumstances, criminal liabilities. Major internet companies or traditional online healthcare service providers in China may start to offer or strengthen their offerings of competing products and services in the healthcare industry, utilizing their large user base and cross-selling advantages. As a result, our business and growth potential could be materially and adversely affected.

***Our limited operating history and evolving business model make it difficult to evaluate our business and future prospects and the risks and challenges we may encounter.***

We commenced our operation in 2016. Our evaluations of the business and prediction about our future performance may not be as accurate as they would be if we had a longer operating history. In the event that actual results differ from our expectation or we adjust our estimates in future periods, the investors' perceptions of our business and future prospects could change materially, which may adversely affect our ADS price.

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We have been actively exploring boundaries and synergy values of our business and expanding our services. We started with the mutual aid plan services in May 2016, under which we generated management fee income as an operator of the mutual aid plans, and then launched Waterdrop Medical Crowdfunding in July 2016. We began to distribute insurance products underwritten by insurance carriers in our Waterdrop Insurance Marketplace in May 2017, through which we earn brokerage income. We started to charge service fees for medical crowdfunding services in early 2022. There is no assurance that we could bring in new patients to our Waterdrop Medical Crowdfunding platform at the scale as before if patients alternatively initiate crowdfunding campaigns on other platforms providing free crowdfunding services. See "—If we fail to bring in new patients to and attract more donations on our Waterdrop Medical Crowdfunding platform, our business and results of operations could be adversely affected." We recorded a growth in technical service income in 2025 which may significantly fluctuate in the future. See "—Our historical performance may not be indicative of our future performance and if we fail to effectively manage our business, our financial condition and results of operations could be adversely affected." In addition, we may also encounter reputational risks, negative feedback from patients and donors, and regulatory uncertainties as we start charging service fees for medical crowdfunding services. Further, we may also enter into other healthcare related industries under our mission to bring insurance and healthcare service to billions through technology. If our healthcare related products and services do not maintain and drive customers' engagement or if we fail to provide superior customer experience, we may fail to attract new customers or retain sufficient customers for our healthcare related business. Our healthcare business may become increasingly complex in terms of both business model and scale. Moreover, if we are unable to boost the growth of our healthcare related business and operations, or implement our business strategies successfully, we may discontinue or adjust our business model. Our constantly evolving business model makes it difficult to evaluate the risks and challenges we may encounter.

***We face intense competition and could lose market share, which could adversely affect our results of operations.***

The third-party insurance brokerage and agency industry in China is intensely competitive. Our current or potential competitors include (i) online third-party brokers and agents such as Ant Group and WeSure; and (ii) offline third-party brokers and agents such as Mingya and Datong. New competitors may emerge at any time. We also face competition from traditional insurance intermediaries such as bancassurance, tied agency channel of insurance carriers and direct sales channel of insurance carriers. Additional players may also enter into the rapidly evolving medical crowdfunding space from time to time. We also face intensive competition as more companies tap into the global clinical research and development third-party service market where many market players exist. We also face competition in other healthcare service market as we are exploring healthcare-related business initiatives.

In recent years, the third-party brokerage and agency industry is undergoing fundamental transformation, creating both opportunities and challenges. Insurance carriers are increasingly demanding more sophisticated support in digital infrastructure integration, data analytics for consumer insights, and efficient distribution solutions. At the same time, consumers are developing stronger preferences for seamless online experiences, transparent product comparisons, and efficient claim settlements. These dual pressures require us to continuously adapt our service models and technological capabilities, which entails significant investment and operational adjustments. However, we cannot guarantee that our new initiatives and development will be effective, which could materially impair our competitive position.

In such competitive environment, we face intensifying competition across multiple fronts. The rising cost of user acquisition poses significant challenges to our growth plans. Developing service differentiators that resonate with evolving market demands requires constant innovation. Maintaining strong relationships with insurance partners becomes more difficult as carriers develop alternative distribution channels. Effectively communicating our value proposition to both consumers and insurers in this crowded marketplace demands substantial marketing resources. Furthermore, the evolving regulatory landscape may introduce new compliance requirements that could constrain our operational flexibility. Should we fail to adequately address these competitive pressures, or if market development diverges from our expectations, our business prospects and financial performance could be materially adversely affected.

In addition, existing or potential competitors may have substantially greater brand recognition and possess more financial, marketing and research resources than we do. Our competitors may introduce platforms with more attractive products, content, features, services or solutions with competitive pricing or enhanced performance that we cannot match. Some of our competitors may have more resources to develop or acquire new technologies and react quicker to changing requirements of consumers.

Furthermore, for the online insurance marketplace industry we operate in, our target insurance policy purchasers, PRC residents with potential insurance needs, may seek insurance products and services in well-equipped and developed neighboring insurance markets. We may fail to compete effectively with our competitors and industry participants in neighboring insurance markets.

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***We have a history of net losses and negative cash flows from operating activities, and we may not be able to maintain profitability or continue to generate positive cash flows from operating activities in the future.***

Even though we had net profits and net cash provided by our operating activities in 2023, 2024 and 2025, we incurred net losses and had negative cash flows from operating activities in the past and we may not be able to maintain profitability or continue to achieve positive cash flows from operating activities in the future.

Our operating costs and expenses may increase in the foreseeable future as we grow our business, acquire new users, invest and innovate in our technology infrastructure, develop our product and service offerings, and increase brand recognition. Any of these efforts may incur significant capital investment and recurring costs, change our existing revenue and cost structures, and affect our ability to maintain profitability. If we fail to maintain profitability or continue to generate positive cash flows from operating activities, we may have to finance ourselves with equity or debt financing, which may not be available at price term favorable to us or at all.

#### We face uncertainties relating to the change of regulatory regime for insurance related business.
We operate in a highly regulated industry in mainland China, and the regulatory regime continues to evolve. Before the establishment of the National Administration of Financial Regulation, the China Banking and Insurance Regulatory Commission has extensive authority to supervise and regulate the insurance industry in mainland China. On May 18, 2023, the National Administration of Financial Regulation was established to govern insurance related business in mainland China. Since the insurance industry in mainland China is evolving rapidly, the regulators have been enhancing their supervision and enforcement actions over this industry in recent years, and new laws, regulations and regulatory requirements have been promulgated and implemented from time to time. We face challenges brought by these new laws, regulations and regulatory requirements, as well as uncertainties in the application thereof. Moreover, there exist uncertainties as to how the regulatory environment might change.

On December 7, 2020, the China Banking and Insurance Regulatory Commission published the Regulatory Measures for Online Insurance Business, which became effective on February 1, 2021. Shuidi Insurance Brokerage conducts online insurance brokerage business in mainland China and is subject to such measures. These regulations significantly change the regulatory framework for online insurance business in various aspects. For details of the Regulatory Measures for Online Insurance Business, see "Item 4. Information on the Company— B. Business Overview—Regulation—Regulations on Internet Insurance Business." The measures require online insurance transactions being conducted through online interfaces operated by insurance institutions only, and prohibit insurance institutions from setting default options for customers or imposing any restrictions on the cancellation of automatic payment to affect customer's choice during the sales process of insurance products. While measures do not explicitly permit non-insurance institutions to engage in marketing activities for online insurance products, these measures prohibit such entities from conducting insurance related businesses, such as product consultations, comparison of insurance products, trial calculation of insurance premiums, quotation and comparison of quotations, drafting insurance plans for policyholders, processing insurance application formalities and premium collection.

We currently engage third-party user acquisition channels to attract consumers for the insurance products offered on our platform. If such cooperation is deemed non-compliant with the Regulatory Measures for Online Insurance Business, we may be required to modify our business practice, which may result in a reduction in our attraction to consumers. In addition, compliance with these heightened regulatory requirements may be costly. While we strive to maintain compliance, we cannot assure you that our business operations will remain fully compliant with these regulations at all times, or we will be able to rectify the non-compliance incidents in a timely manner.

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The regulatory framework in mainland China's insurance industry is evolving and undergoing significant changes. Further regulatory development may introduce new regulatory requirements, including disclosure on insurance product information, monetization strategies and sales practices. These changes may require us to adjust our business practice and operations. For example, on October 12, 2021, the China Banking and Insurance Regulatory Commission published the Circular on Further Regulating Certain Issues on Internet Life Insurance Business, or the Circular 108. The Circular 108 requires that the premium of certain short-term (i.e., less than one year) insurance products, such as accident insurance and health insurance, shall be paid in equal installments. We used to provide our consumers the option of monthly payments and the first month payment of premium of certain insurance products is typically lower than subsequent installments. We have adjusted the payment regime to comply with the Circular 108 accordingly. The adjustment of such payment regime may have resulted in a reduction in our attractiveness to potential consumers. The Circular 108 also sets the upper limits on the predetermined fee rate and average supplemental fee rate for certain insurance products, which may affect the amount of insurance brokerage commission we charge on the insurance products and adversely affect our financial condition. In addition, insurance intermediary institutions selling ordinary life insurance products (excluding fixed-term life insurance) and annuity insurance products with terms exceeding ten years must meet certain conditions, including, among others, having not received any material administrative penalty or regulatory actions imposed or taken by any governmental authorities over the last twelve months. Therefore, we may be restricted from selling such insurance products under the Circular 108 if we are imposed with material administrative penalty imposed by PRC governmental authorities. Furthermore, the Circular 108 prohibits customer service personnel of insurance intermediary institutions from actively promoting internet insurance products and provides that their salaries shall not be associated with the sales assessment indicators of internet personal insurance business. It remains uncertain as to how the circular will be implemented and whether the circular will have a material impact on our business, financial conditions, result of operations and prospects. The attention of our management team could be diverted to these efforts to cope with an evolving regulatory or competitive environment. Meanwhile, staying compliant with the restriction may result in limitation to our business scope, limitation to our product and service offerings, and reduction in our attraction to consumers. As a result, our business and results of operations might be materially and adversely affected.

As we gradually expand our insurance operations to Hong Kong and other regions, we face significant regulatory complexities which we may not be familiar with. We face material risks in ensuring compliance across jurisdictions. While we have implemented compliance policies and training programs, evolving regulatory landscapes in relevant jurisdictions create ongoing challenges. We cannot guarantee complete prevention of violations, particularly given the difficulties in monitoring third-party intermediaries. Any regulatory action, even resulting from isolated incidents, could lead to fines, license restrictions, or reputational damage that would materially impact our operations and financial performance in Hong Kong and other regions. In addition, our Hong Kong operations depend on maintaining our insurance brokerage license, which requires periodic renewal subject to regulator's discretionary approval. The regulators follow established rules and maintain broad discretion to modify requirements or impose new conditions during review, and any adverse findings could delay or prevent renewal. Failure to secure timely renewal would have immediate operational consequences, prohibiting new business and disrupting brokerage fee collection on existing policies. Although we maintain dedicated compliance resources and engage proactively with regulators, the subjective nature of renewal criteria and evolving regulatory expectations create inherent uncertainty. If we cannot successfully renew our insurance brokerage license in a timely manner, or at all, our business operations in Hong Kong and other regions and our financial performance may be materially adversely affected.

***If we are unable to manage the risks presented by our international expansion, our financial results and future prospects will be adversely impacted.***

We have expanded business operations into overseas markets. However, we have limited history and experience operating in jurisdictions outside of mainland China. We have made certain investments, and may further make significant investments to expand our international operations and compete with local competitors. Such investments may not be successful and may negatively affect our operating results. Conducting our business internationally, particularly in countries in which we have limited experience, subjects us to various risks, which include, among others:

● operational and compliance challenges caused by distance, language, and cultural differences;

● the resources required to build a local management team in each new market and to localize our service offerings to appeal to consumers in that market;

● local key management personnel may fail to meet the rigorous operational, regulatory, and strategic requirements necessary for effective operation, optimal decision-making, and market entry;

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● lack of local AI talents which may impede our ability to effectively implement and innovate with advanced AI solutions, potentially weakening our competitive position;

● compliance challenges caused by unfamiliar laws and regulations;

● competition with businesses that understand local markets better than we do, that have pre-existing relationships with potential consumers in those markets, or that are favored by government or regulatory authorities in those markets;

● international geopolitical tensions;

● political, social and economic instability in any jurisdiction where we operate;

● international export controls and economic and trade sanctions;

● legal uncertainty including uncertainty resulting from unique local laws or a lack of clear legal precedent;

● regulatory press and licenses requirements from local authorities in insurance, crowdfunding or other industries;

● fluctuations in currency exchange rates;

● managing operations in markets in which offline activities are favored over online platform or service;

● adverse tax consequences, including the complexities of foreign value added tax systems, and restrictions on the repatriation of earnings;

● increased financial accounting and reporting burdens, and complexities associated with implementing and maintaining adequate internal controls;

● difficulties in implementing and maintaining the financial systems and processes needed to enable compliance across multiple offerings and jurisdictions; and

● reduced or varied protection for intellectual property rights in some markets.

These risks could adversely affect our international operations, which could in turn adversely affect our business, financial condition, and operating results.

***We may be materially adversely affected by the changes and evolvement in the regulation of medical crowdfunding business.***

Our medical crowdfunding business is subject to regulation by various government authorities in mainland China, including among others, the Ministry of Civil Affairs, the CAC, and the MIIT. As the medical crowdfunding industry is relatively nascent and is still in its early stages of development, we expect to experience strengthened regulatory environment along with rapid industry evolution.

On December 29, 2023, the Standing Committee of the National People's Congress published the Decision to Amend the PRC Charity Law, which took effect on September 5, 2024. The amended PRC Charity Law extends scrutiny to the medical crowdfunding business. Pursuant to the amended PRC Charity Law, internet platforms that provide services to facilitate individual help-seeking activities shall be designated by the Ministry of Civil Affairs and shall verify the authenticity of such help-seeking information and disclose relevant information to the public in a timely and comprehensive manner. It also provides that more detailed rules will be stipulated by the Ministry of Civil Affairs, along with other government authorities.

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On July 26, 2024, the Ministry of Civil Affairs and other government authorities, jointly published the Administrative Measures for Online Personal Help-seeking Service Platforms, which became effective on September 5, 2024. These measures aim to regulate the operation of online platforms that provide help-seeking services. They confirm that online personal help-seeking service platforms must be supervised and designated by the Ministry of Civil Affairs of the PRC and provide specific requirements. The regulations also provide that online personal help-seeking service platforms can charge reasonable fees, including, among others, establishment of a robust information security management system, prominent disclosure of platform rules, and the creation of independent deposit accounts to manage and use funds for their designated purposes. In addition, these platforms are required to ensure the authenticity of help-seeking posts, actively monitor content to prevent fraudulent, misleading, or harmful information, and implement mechanisms for reporting suspicious activity. The regulations also allow platforms to charge reasonable fees for their services. In December 2024, our Waterdrop Medical Crowdfunding platform has been designated by the Ministry of Civil Affairs as one of the government recognized online personal help-seeking service platforms in mainland China.

As the regulatory framework related to medical crowdfunding business develops, we may be subject to new or additional requirements related to governance, ownership structures or other aspects of our medical crowdfunding business operations in the future. If the PRC authorities promulgate any laws, rules or regulations in future which impose new or additional requirements on our medical crowdfunding business, we cannot assure you that we will be able to comply with them, or adjust or rectify our business operation, in a timely manner, or at all. In such cases, we may face penalties such as the imposition of fines and the discontinuation or restriction of our operations. If any of the foregoing or other changes of the applicable laws, rules and regulations in mainland China that have any adverse impact on our businesses was to occur, our business and financial condition might be materially and adversely affected.

***The administration, interpretation and enforcement of the regulations applicable to us are evolving and involve uncertainties. We may not be able to stay in constant compliance with the rapidly evolving regulations.***

Our business is subject to governmental supervision and regulation by various PRC governmental authorities, and regulatory bodies may view matters or interpret laws and regulations differently than they have in the past or in a manner adverse to our business. Regulatory authorities have discretion in administration, interpretation and enforcement of these laws, regulations and regulatory requirements, as well as the authority to impose regulatory sanctions on industry participants. In certain circumstances it may be difficult to determine which actions or omissions may be deemed to be in violation of applicable laws, regulations or regulatory requirements. For example, historically, we have offered certain insurance consumers insurance coverage upgrades as part of our sales and marketing activities and the outreaching and conversation by our customer service personnel with such users were considered as conducting telesales of insurance products business by the local regulatory authorities. Pursuant to the laws in mainland China, insurance companies can operate telesales of insurance products business through establishing call centers or collaborating with insurance agencies. We have implemented various measures in response to the alleged non-compliance. As of the date of this annual report, we have cooperated with insurance companies to conduct telesales of insurance products business through Tairui Insurance Agency Co., Ltd., a wholly-owned subsidiary of Zongqing Xiangqian. In particular, we also examined our practice and set up strict internal control policies to deter our customer service personnel misconduct, including among others, prohibiting our customer service personnel from active calling out without the prior consent of users. However, we cannot assure you that our customer service personnel will not engage in any misconduct, and we are uncertain as to whether our rectification measures will be sufficient to ensure full compliance with the regulatory requirements due to the lack of detailed interpretation and implementation of these requirements. Furthermore, due to the lack of further interpretations, the exact definition and scope of "conducting telesales of insurance products business" under the current regulatory regime is unclear. It is uncertain whether we would be deemed to operate telesales of insurance products business because of the conversation by our customer service personnel. Given the evolving regulatory environment of the insurance industry, we cannot assure you that we will not be required in the future by the governmental authorities to obtain approval or license to continue our customer services or complete qualification registration for our customer service personnel in a timely manner. If we fail to comply with these laws and regulations, we could be subject to penalties and operational disruption and our financial condition and results of operations could be adversely affected.

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Moreover, we have from time to time been subject, and are likely again in the future to be subject to PRC regulatory inquiries, inspections and investigations. If any non-compliance incident in our business operation is identified, we may be required to take rectification measures in accordance with applicable laws and regulations, or be subject to other regulatory actions, including administrative penalties. For example, in 2023, certain non-compliance incidents relating to our sale of internet insurance products were identified, including our failure to update the information of internet insurance products in a timely manner and retain records of internet insurance transactions in accordance with applicable laws. We were required to rectify such non-compliance incidents within the prescribed time period. In the past, we were also subject to administrative penalties for conducting insurance business in areas where we did not have branches, in violation of applicable laws and regulations. In addition, regulatory scrutiny may also arise from branch-level operations, personnel conduct, the quality of business information and local implementation issues. We have in the past been subject to administrative regulatory actions, and we may in the future receive additional warnings, fines, rectification orders, sanctions against responsible personnel or other measures relating to our branches, responsible personnel, local practices, marketing conduct, information accuracy, policy administration, qualification management or other matters. Even where any single incident is not material in amount, such matters may lead to broader reviews, enhanced supervision, remediation costs, reputational harm, operational disruption and a heightened risk of additional findings across our business. We cannot assure you that we will be able to fully rectify all non-compliance incidents in a timely manner or fully satisfy the regulatory requirements, or we will not be subject to any future regulatory reviews and inspections where other non-compliance incidents might be identified, which might materially and adversely affect our business, financial condition, results of operations and prospects. For example, the current laws and regulations in mainland China remain unclear as to whether our customer service personnel are required to complete the qualification registration as insurance brokerage practitioners in accordance with the laws and regulations in mainland China. In light of the dynamic regulatory landscape, we cannot promise we will not need government approval or licenses for our customer services or staff in the future. Failure to meet these regulations may result in fines, disruptions, and harm to our finances and performance.

In addition, we have been expanding our businesses and may enter into new business areas as we see fit. Due to the complexities and uncertainties of the laws and regulations in mainland China, Hong Kong, or other regions governing the new industries we are going to operate our business in, we cannot assure you that all our new business operations in the future will be in compliance with the laws and regulations applicable to the new industries.

***Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations.***

Our business is subject to regulation, and we are required to obtain applicable licenses, permits and approvals from different PRC regulatory authorities in order to conduct or expand our business, including, but not limited to, licenses to conduct insurance brokerage and insurance agency businesses, and license for provision of internet information services. As of the date of this annual report, we have obtained and maintained all licenses and permits material to our business as described above as required by the PRC regulatory authorities. We cannot assure you that we will be able to maintain existing licenses and permits or renew any of them when their current term expires. If we are unable to maintain one or more of the current licenses and permits, or obtain such renewals, the operations and prospects of our business could be materially disrupted. Furthermore, if the governmental authorities consider that we were operating without the proper approvals, licenses or permits, or the governmental authorities promulgate new laws and regulations that require additional approvals or licenses or impose additional restrictions on the operation of any part of our business and we are not able to obtain such approvals, licenses or permits or adjust our business model in a timely manner, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue our relevant business. Any of these actions by the governmental authorities may have a material adverse effect on our business and results of operations.

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***We have been or may be subject to penalties for failure to manage our personnel engaging in insurance brokerage activities.***

The practice of insurance intermediary personnel is strictly regulated under the laws and regulations in mainland China. Personnel who engage in insurance brokerage activities are required to be registered with the insurance intermediary regulatory information system of the China Banking and Insurance Regulatory Commission. Insurance brokerage companies that engage in unregistered personnel may be subject to warnings, fines and other penalties by regulatory authorities. On April 16, 2019, the China Banking and Insurance Regulatory Commission issued the Notice for Professional Insurance Intermediaries to Conduct the Verification of Insurance Practitioners' Practice Registration, requiring that all insurance intermediary institutions to complete the registration for their personnel with the local branches where such personnel are practicing and to complete examination and verification of the registration of all of the registered personnel by July 31, 2019. Some of our insurance brokerage personnel were found being registered with Shuidi Insurance Brokerage rather than its branches where such personnel were practicing. We have been subject to administrative penalties for failure to complete practice registration for our insurance brokerage personnel. We have rectified the identified non-compliance matter related to registration for some of our insurance brokerage personnel. We cannot assure you that we will be able to complete the registration for all of our insurance brokerage personnel in a timely manner due to the increasing number of our insurance brokerage personnel, or that the regulatory authorities would not retrospectively find deficiency in the registration of these personnel and subject us to penalties. Furthermore, the personnel can only practice within the scope specified by the insurance brokerage company that he/she is registered with. We have implemented policies to ensure our insurance brokerage personnel to practice in compliance with the laws and regulations in mainland China. Nevertheless, there can be no assurance that all of such personnel will not practice outside the scope specified by us, or that such personnel will strictly abide by these policies or take their responsibilities under the applicable laws and regulations in connection with insurance brokerage services, which may subject to fines and other administrative proceedings.

***Our historical performance may not be indicative of our future performance and if we fail to effectively manage our business, our financial condition and results of operations could be adversely affected.***

We had achieved rapid growth in the past, particularly in terms of the number of insurance consumers, the FYP generated through us, and cumulative fund we help patients raise. However, in 2022, we experienced decreases in FYP and revenue as well as the number of new users on our insurance business. Although we began to record increases in FYP and the number of new users as a result of our improved business operations in 2023, 2024 and 2025, there is no assurance that we will be able to resume or maintain our historical performance in future periods. If our growth rates continue to slow or decline, investors' perceptions of our business and prospects may be adversely affected and the market price of our ADSs could decline.

We generate technical service income from services provided to insurance companies, insurance brokers, agency companies and other business partners, including analytics and intelligent recommendation service, risk assessment technical service, CRM system-based technical services and marketing services. Our ability to sustain and expand such income depends on a number of factors that are subject to substantial uncertainty, including the continued demand for these services, the volume and quality of the data available to support them, our relationships with business partners, our ability to demonstrate measurable value to customers, pricing pressure, collection risk, the continued legality and commercial acceptability of the service scope and delivery model, and the evolving regulatory landscape.

We cannot assure you that we will be able to effectively implement our business plans. We started with the mutual aid plan services in May 2016, under which we generated management fee income as an operator of the mutual aid plans, and then launched Waterdrop Medical Crowdfunding in July 2016. We began to distribute insurance products underwritten by insurance carriers in our Waterdrop Insurance Marketplace in May 2017, through which we earn brokerage income, and we had experienced significant business growth in the past. However, subject to the uncertainty of the macroeconomy, industry and regulatory conditions, we cannot assure you that our FYP and revenue from the insurance business will continue to grow in the foreseeable future. While we plan to further expand user coverage and engagement to improve mindshare, penetrate further into the insurance value chain with strategic partners, invest in data analysis, AI and technology infrastructure and deepen partnership with medical institutions to build up health ecosystem, we cannot assure you that our growth initiatives will succeed. In addition, we are proactively seeking innovative opportunities in healthcare industry. For instance, we have developed a digital platform, E-Find Patient Recruitment, for patient recruitment since late 2021. In 2025, we successfully enrolled 4,153 patients, representing an increase of 21.8% as compared to 2024. However, there is no assurance that we will be able to continue to grow our healthcare related business and operations.

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***We have made investments and allocated resources in the development and application of AI technologies and may face uncertainties with respect to their commercialization and application and the evolving laws and regulations.***

We have made investments and allocated significant resources in AI areas, including hiring and retaining specialized talent and upgrading our technology infrastructure. In 2025, we significantly expanded the deployment of AI across our business operations by launching and scaling our AI-powered products and platforms, including AI Customer Service Agent ("Baoxiaohui" in Chinese), an AI-powered insurance customer service solution, KEYI.AI, an AI-assisted preliminary underwriting assessment tool, AI Medical Insurance Experts, an AI-driven medical insurance advisory service, AI Service Quality Copilot, an AI-driven service quality inspection tool, Waterdrop Sea.AI, an AI agent development platform, and ClawSquare, an AI agent collaboration platform currently under internal development. As of December 31, 2025, we had filed 72 large language model ("LLM") related patent applications. AI has become a core component of our operational strategy and a material driver of our revenue growth and cost efficiency. We plan to continue to invest capital and other resources into our AI-enabled business operations. However, many of such AI technologies and solutions are still in the growing stages and the commercialization of these new technologies is still subject to uncertainties. Therefore, we cannot assure you that our investment and exploration in AI technology and AI-enabled products and services will be successful. Our operating results may also suffer if our AI technologies are not responsive to the needs of our users, customers and partners, inappropriately timed with market opportunities, or marketed ineffectively. We also face intense competition as many players have also devoted significant resources in the research and development of these technologies. We may also not alter our business practices in time to avoid or reduce adverse effects from any of the foregoing risks. In addition, the regulatory and legal framework on AI applications in mainland China is also evolving rapidly. In recent years, the PRC government authorities have released a series of laws and regulations related to AI services, including the Administration Provisions on Algorithmic Recommendation of Internet Information Services, the Administrative Provisions on Deep Synthesis of Internet Information Services, the Interim Measures on the Management of Generative AI Services, the Measures for Labeling of AI-Generated and Synthetic Content, and National Standards on Generative AI Data Annotation Security and Pre-training Data Security. These regulations may apply to certain AI functionalities that we deploy, depending on their specific use cases. For example, pursuant to the Interim Measures on the Management of Generative Artificial Intelligence Services, the service providers that provide generative artificial intelligence services with public opinion attribute or social mobilization ability are required to apply for security assessment with the national cybersecurity administration authorities in accordance with laws and regulations, and complete the filing for algorithm services in accordance with the Administration Provisions on Algorithmic Recommendation of Internet Information Services. We have completed the filing for "Waterdrop Guardian" (or "Shuishou" in Chinese), one of our proprietary large language models for multiple scenarios in the insurance business. However, as the regulatory framework of AI is still at its nascent stage in China, the interpretation and implementation of the existing measures are evolving rapidly and the PRC regulatory agencies, including the Cyberspace Administration of China, may adopt new laws, regulations, rules, implementation measures and interpretations in the field of vertical AI, which may increase our compliance costs. We will take relevant measures to comply with the new legal requirements. We have completed PRC in-depth synthesis service algorithm filing with the relevant PRC governmental authorities. However, we cannot assure you that our compliance measures are, or will be, always considered sufficient under PRC laws and regulations. Any failure or perceived failure to comply with these laws and regulations could cause negative publicity and disruptions to our business operations, subject us to legal liabilities and adversely affect our financial results.

Our operations involving AI technologies are subject to laws, regulations, and governmental policies that continue to develop across multiple jurisdictions in which we operate. Regulatory frameworks governing AI—including generative AI, data privacy, and automated decision-making—may change significantly. Complying with existing or future regulations may increase our compliance costs, require us to modify our products or business practices, or limit our ability to offer certain AI-driven features.

We utilize AI technologies, including large language models, to power certain functionalities in our products and services, such as our "Waterdrop Guardian" suite. The development and operation of AI technologies involve complex technical processes, and our AI technologies may not always perform as expected. If the data used is incomplete, inaccurate, or subject to insufficient usage rights, the performance of our products and services could be affected.

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Furthermore, as we expand the use of AI in our product or service offerings, uncertainty with respect to new and emerging AI technologies, such as vertical AI, may require us to incur additional investment in the development of appropriate protections and safeguards for handling the use of data with AI technologies, which may be costly and could impact our expenses. AI technologies, including vertical AI, may create content that is factually inaccurate or flawed. Such content may expose us to brand or reputational harm and/or legal liability. It is uncertain how various laws related to online services, intermediary liability, and other issues will apply to such content. The use of certain AI technologies presents emerging ethical and social issues, and if we offer solutions that draw scrutiny or controversy due to their perceived or actual impact on users or on society as a whole, we may experience brand or reputational harm, competitive harm, and/or legal liability. It is not possible to predict all of the risks related to the use of AI, and developments in regulatory frameworks governing the use of AI and in related stakeholder expectations may adversely affect our ability to develop and use AI or subject us to liability.

#### Any harm to our brand or reputation may materially and adversely affect our business.
The brand recognition and reputation of our "Waterdrop" or "Shuidi" brand and the successful maintenance and enhancement of our brand and reputation have contributed and will continue to contribute significantly to our success and growth.

Any negative perception and publicity, whether or not justified, such as complaints and accidents in relation to user experience or quality of services, including inappropriate behavior of the crowdfunding consultants, customer service staff, sales personnel, agents and other related personnel, and our purported inability to satisfy certain user requirements, could tarnish our reputation and reduce the value of our brand. Further, our competitors may fabricate complaints or negative publicity about us for the purpose of vicious competition. We face the ongoing risk of misinformation being disseminated through social media channels that we leverage, which may contain fabricated sensitive topics of which purposes are to generate traffic and gain popularity. Unverified claims, rumors or false accusations concerning our platform may be circulated, which could potentially harm our platform's reputation and users' confidence. With the increased use of social network, adverse publicity can be disseminated quickly and broadly, making it increasingly difficult for us to respond and mitigate effectively.

We are also subject to negative publicity regarding our platform participants, whose activities are out of our control. Negative public perception on the insurance products by insurance carriers on our platform or that insurance carriers on our platform do not provide satisfactory customer services, even if factually incorrect or based on isolated incidents, could undermine the trust and credibility we have established and have a negative impact on our ability to attract new users or retain our current users.

***Our insurance business may be negatively affected if the insurance carriers on our platform do not continue their relationship with us or if their operations fail.***

Our relationship with insurance carriers is crucial to our success. We generate a substantial portion of our revenues from commission fees paid by insurance carriers. Certain insurance carriers have accounted for a significant portion of our revenues in the past. For example, Ergo China Life Insurance accounted for over 10% of our total operating revenue for the year ended December 31, 2025. If one or more of them fail to make payments to us, the settlement of our accounts receivable and financial position would be materially and adversely affected. While we continually seek to diversify insurance carriers on our platform, there can be no assurance that the concentration will decrease. See "—We may have difficulty in collecting receivables due timely, which may affect our cash flow and credit risks management."

Our arrangements with insurance carriers are typically not exclusive, and they may have similar arrangements with our competitors. If insurance carriers are dissatisfied with our services and solutions or find us ineffective in enhancing their profitability, they may terminate their relationships with us. Further, if insurance carriers dispute that we have engaged in misconducts in violation of the contracts, such as sales misrepresentation, they may claim breach of contract liability or even initiate legal proceedings against us. Moreover, insurance carriers we work with may develop their own technology capabilities to serve policy holders online.

Furthermore, if insurance carriers or the reinsurance companies they partner with fail to properly fulfill their obligations as insurers under the insurance policies sold on our platform, our users may lose faith in our platform.

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***A significant portion of the FYP generated through us is contributed by a limited number of insurance products. If we cannot continue to offer these insurance products on our platform for any reason or the popularity of these products declines, our brokerage income may decrease.***

A significant portion of the FYP generated through us is from a limited number of popular insurance products, primarily our health and life insurance products. We believe the concentration was partially due to the comprehensive protection coverage with reasonable policy terms which makes these insurance products more attractive than others. Although we plan to continue diversifying our product offerings, launch more tailor-made insurance products, expand our user base and generate brokerage income from a wider variety of insurance products, we cannot guarantee you that we will be able to succeed, and that such concentration will decrease. If we cannot continue to offer these popular insurance products for any reason or the popularity of these products decline, our brokerage income may decrease.

***Our revenue and profitability might be adversely impacted if the commission level of our insurance brokerage service declines.***

We are engaged in the insurance brokerage business and derive revenues primarily from commission fees paid by the insurance carriers whose insurance policies our consumers purchase. The commission fee rates are negotiated between insurance carriers and us, and are based on the premiums that the insurance products charge. Commission fee rates and premiums can change based on the prevailing economic, regulatory, taxation and competitive factors that affect insurance carriers. These factors, which are beyond our control, include the capacity of insurance carriers to place new business, profits of insurance carriers, consumer demand for insurance products, the availability of comparable products from other insurance carriers at lower costs, and the availability of alternative insurance products, such as government benefits and self-insurance plans, to consumers. In addition, premium rates for certain insurance products are regulated by the National Administration of Financial Regulation. Because we do not determine, and cannot predict, the timing or extent of premium or commission fee rate changes, we cannot predict the effect any of these changes may have on our operations. Any decrease in premiums or commission fee rates may significantly affect our profitability. Pursuant to applicable PRC laws, insurance companies shall submit relevant reports and information related to their insurance products in accordance with relevant PRC laws and regulations, such as the statements of insurance product design and fee rate, and shall strictly implement the "consistency of regulatory reporting and actual actions" policy which requires the commission rates paid by companies engaged in personal insurance business and the fee rates in the reporting documents submitted by insurance companies to insurance regulatory authorities should be consistent. In a press conference held by the National Administration of Financial Regulation on October 20, 2023, an officer of the National Administration of Financial Regulation stated that the National Administration of Financial Regulation would promptly start to implement the "consistency of regulatory reporting and actual actions" policy in the channels of individual insurance agents, insurance brokers and insurance agents. The implementation of the "consistency of regulatory reporting and actual actions" policy may lead to a decrease in commission rates in the insurance intermediary industry, increase operational pressure, raise compliance requirements, which may affect our income and operational costs.

***We leverage third-party user acquisition channels to attract new users to our platforms and may incur significant costs in paying service fees to our user acquisition channels.***

In addition to growing our user base organically, we also cooperate with our user acquisition channels to convert their user traffic into user base of our platform. If our user acquisition channels, for example, due to not being satisfied with the service fee, do not renew their agreements with us, choose to work with our competitors, or terminate their cooperation with us, we may lose potential users and our business and results of operations will be negatively affected. In addition, if our user acquisition channels lose influence over their traffic or otherwise fail to effectively convert their users to our users, our business and results of operations may suffer.

Furthermore, we have incurred significant expenses for paying third-party user acquisition channels marketing fees. If certain of existing third-party user acquisition channels require higher rates of marketing fees or we fail to negotiate favorable terms with them or find new third-party user acquisition channels, our cost of user acquisition may increase, and our results of operations may be adversely affected.

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Our dependence on third-party traffic channels and related service providers may increase from time to time, and the economics of such channels may deteriorate materially. We rely on third-party platforms, referral and service providers, messaging and authentication infrastructure, and other external channels for user acquisition, user onboarding, conversion and retention. The costs of these channels and services may fluctuate significantly, including due to changes in platform algorithms, pricing models, traffic allocation policies, advertising rules, anti-spam or privacy restrictions, identity-verification requirements, SMS costs, service availability, competitive bidding dynamics or our own product mix and growth strategy. If traffic acquisition or onboarding costs rise materially, if conversion efficiency declines, if access to important channels is restricted or suspended, or if the terms imposed by such third parties become less favorable, our growth, profitability and operating flexibility could be materially and adversely affected. We cannot assure the retention of users from third-party traffic channels, which could materially affect operating results and financial performance.

***We may not be successful in increasing the sales of long-term health and life insurance products.***

As the consumers' awareness for health protection and insurance products in China were still substantially lower than in developed countries, many insurance consumers on our platform start with purchases of short-term protection products. We began to offer long-term health and life insurance products at the end of 2018, and we have been endeavoring to raise consumer awareness, and demonstrate the value and importance of long-term health and life insurance, through our interactions with them. The FYP of long-term health and life insurance products generated through us increased to RMB3,023 million in 2025 from RMB2,269 million in 2024. The increase was primarily due to the synergy we have achieved following the acquisition of Shenlanbao. We cannot assure you that we will always be successful in migrating our insurance consumers to long-term health and life insurance products, or otherwise increasing the sales of long-term health and life insurance products. If such failure occurs, our results of operation may be adversely affected.

***If we fail to bring in new patients to and attract more donations on our Waterdrop Medical Crowdfunding platform, our business and results of operations could be adversely affected.***

We mainly rely on our offline crowdfunding consultants to bring in new patients and rely on social network link sharing practice to reach potential donors. The success of our Waterdrop Medical Crowdfunding platform largely depends on our ability to bring in new patients to and attract more donations on our platform. We must continue to help patients efficiently launch crowdfunding campaigns and withdraw the funds raised for medical treatments. The number of donors and amount of funds raised largely depend on the wide dissemination starting from the patients' relatives, friends and acquaintances, and expansion of outreach through the social network, which may be beyond our control. If we fail to bring in new patients to or attract more donations on our Waterdrop Medical Crowdfunding platform, our business, financial condition and results of operations will be adversely affected.

#### Our offline crowdfunding consulting activities at hospitals conducted by crowdfunding consultants may be restricted or banned.
The operation of our Waterdrop Medical Crowdfunding platform largely relies on offline crowdfunding consulting activities at hospitals conducted by crowdfunding consultants. Our crowdfunding consultants play an important role in identifying patients in need of medical funds and assisting them in completing personal information and uploading medical documentation and other verification documents relating to their medical records and financial status. If our relationship with hospitals worsens, the crowdfunding consultants may be banned from entering the hospitals or patients' wards, which may materially affect our offline crowdfunding consultancy of our crowdfunding business.

***Failure to deal effectively with any fraud perpetrated on our platforms could harm our business and reputation.***

We face risks with respect to fraudulent activities on our platforms. We cannot fully eliminate insurance fraud and adverse selection insurance behaviors. Some patients on Waterdrop Medical Crowdfunding platform have been reportedly falsifying medical or financial records to raise funds.

Although we have implemented various measures to detect and reduce the occurrence of fraudulent activities on our platform, there can be no assurance that these measures will be effective in combating fraudulent transactions. In addition, illegal, fraudulent or collusive activities by our employees, crowdfunding consultants or third-party agents could also subject us to liability and negative publicity. Any illegal, fraudulent or collusive activity could severely damage our brand and reputation as an operator of a trusted online platform, which could adversely affect our business.

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***If we fail to bring in and retain new consumers and increase engagement of existing users of our insurance business, our business and results of operations could be adversely affected.***

Our future growth depends on our ability to continue to bring in and retain consumers and increase engagement of existing consumers of our insurance business. We may not be able to locate or have access to sufficient number of new consumers. In addition, we must stay abreast of emerging user preferences and product trends that will appeal to existing and potential participants and consumers. Our platforms make personalized recommendations of insurance products to users based on their needs, and offer a comprehensive suite of services to ensure a smooth and efficient experience. For users on our insurance marketplace, we also develop insurance products in cooperation with insurance carriers to meet their evolving needs. Our ability to provide these products and services is dependent on our expertise and our data analytical capabilities. However, there is no assurance that the products and services that we offer will cater to the needs of potential or existing users, sustain for a period of time that we expect them to, or be welcomed or accepted by the market at all. If we cannot acquire new users or if users cannot find their desired insurance products on our platform at attractive prices and terms, or if they find their experience with us dissatisfactory, they may use our products and services less, or not at all, lose trust in us, terminate their memberships, surrender their existing policies and turn to other platforms, which in turn may materially and adversely affect our business, financial condition and results of operations.

***We may have difficulty in recruiting patients for our clinical trials. If our dropout rate is higher than anticipated, clinical trial results may be adversely affected, which in turn may have a material and adverse impact on our patient recruitment business. Also, clinical trial patient recruitment services are subject to risks of customer needs, data compliance and regulatory review or changes, which could adversely affect our reputation, business, financial condition, results of operations and prospects.***

We launched our clinical trial patient recruitment services in December 2021. We have developed the digital platform, E-Find, to help pharmaceutical companies find matches for clinical trials. People in need, mostly patients, can have access to investigational new drugs and frontier innovative therapies through E-Find. Identifying, screening and enrolling patients to participate in clinical trials is critical to the success of such new business, and we may not be able to identify, recruit and enroll a sufficient number of patients with the required or desired characteristics to complete the clinical trials in a timely manner. We may have difficulty enrolling patients, for example, if the competitors of the pharmaceutical companies we cooperate with have ongoing clinical trials for similar products and the patients who would otherwise be eligible for our clinical trials instead enroll in the competitors' clinical trials.

Our patient recruitment businesses are also subject to privacy protection and data compliance risks. Before patients enroll in clinical trials, we collect and maintain medical data, treatment records and other personal data. We are subject to the privacy laws and regulations. Although we have taken measures to maintain the confidentiality of medical records and personal data of patients prior to enrolling in clinical trials so that they cannot be accessed without proper authorization, we cannot assure you that such measures are effective in ensuring our compliance with the laws and regulations, or that we are able to prevent the enrollees' private information or medical records being divulged without their consent. For example, our information technology systems may be hacked, and personal data could leak due to theft or misuse of personal information arising from misconduct or negligence, leading to disclosure. In addition, the clinical trials are conducted by third-party biopharmaceutical and biotechnology companies that we cooperate with, and we cannot ensure that their professionals involved in the clinical trials will always comply with our data privacy measures. Furthermore, any changes in the laws and regulations may affect our ability to use medical data and subject us to liability for the use of such data for previously permitted purposes. Any failure to protect the confidentiality of the medical records and personal data of patients or any restrictions on our use of medical data or any liability arising therefrom could materially and adversely affect our business, financial condition and results of operations. If our relationship with hospitals worsens, the patient recruitment consultants may be banned from entering the hospitals or patients' wards, which may materially affect our offline patient recruitment consultancy of our business.

We may also experience enrollment delays related to increased or unforeseen regulatory, legal and logistical requirements at certain clinical trial sites. Prolonged regulatory review and contractual discussions with individual clinical trial sites may cause such delays. Any delays in planned clinical trials could result in increased costs, delays in advancing the product candidates of the pharmaceutical companies we cooperate with and testing the effectiveness of product candidates or in termination of the clinical trials altogether, which in turn may have a material and adverse impact on our patient recruitment business.

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***Our patient service and CRO service businesses are subject to risks of customer needs, industry trends, trade secrets, and regulatory review or changes, which could adversely affect our reputation, business, financial condition, results of operations and prospects.***

We are exploring our patient service and CRO service businesses, which are still in an early stage and the success of which may be affected by various factors. Further, in face of rapidly changing opportunities, we may explore other pharmaceutical business such as CSO service business. We believe that these new businesses will provide us with long-term growth opportunities. However, we cannot assure you that we will always be able to deliver the quality of services that meets our users' standards and evolving needs. As we explore new ways to provide better and more comprehensive patient management services covering the full life cycle of patients with critical illness, we may make material mistakes that could negatively impact or obviate the usefulness of results of our services, which could adversely affect our reputation, business, financial condition, results of operations and prospects.

In addition, there can be no assurance that the industries we plan to enter into, such as CRO, patient service or CSO industries, will continue to grow at the rates we expect. Any slowdown or reversal of any of these trends could materially and adversely affect demand for our services. Furthermore, government agencies and industry regulatory bodies may impose strict rules, regulations or industry standards on relating to medical consultation and illness management service. The services we provide to our users are subject to and must comply with various applicable legal and regulatory requirements. Any adverse findings by such regulatory authorities or other regulatory or legal noncompliance may result in severe penalties against us. In addition, regulatory authorities may change the laws and regulations from time to time. As a result, our existing compliance procedures may not be adequate for new legal and regulatory requirements, and we may need to incur additional compliance costs and become exposed to negative findings from the governmental authorities.

***We may have difficulty in collecting receivables due timely, which may affect our cash flow and credit risks management.***

Inability to collect receivables due in a timely manner may affect our cash flow, increase bad debt expenses, and expose us to heightened credit risks. Delays or difficulties in collecting receivables may lead to cash flow disruptions, which may affect our ability to fulfill our short-term obligations, invest in strategic initiatives and maintain sufficient liquidity. Our working capital management may be impacted, which may potentially pose operational challenges on us and even cause potential breaches of contractual agreements if not fulfilled timely. For example, our accounts receivable primarily represents relevant income receivable from insurance carriers. Along with the expansion of our insurance business, insurance-related income from the insurance carriers would increase accordingly, which on the other hand would cause an increase in the accounts receivable. In addition, E-Find Patient Recruitment, as a supplier, relies on partnerships with pharmaceutical and biotech companies, which may fail to settle the payment due in a timely manner. If our business partners delay or default on their payments, deterioration or termination of our relationship with them or a general decrease in business with them, we may not be able to fully recover the outstanding amounts due from them and we may have to make provision for impairment, write off the relevant receivables and/or incur legal costs to enforce our rights. Our business, financial condition and results of operations may be materially and adversely affected if significant receivables are not settled on time, or at all. Receivables collection issues, if persistently existent, may harm our market perception, erode the investor confidence and impact our shareholder value.

***Regulatory actions, legal proceedings and customer complaints against us could harm our reputation and have a material adverse effect on our business, results of operations, financial condition and prospects.***

We were involved in litigations and other disputes in the ordinary course of our business, which include lawsuits, arbitration, regulatory proceedings and other disputes relating to our business. Along with the growth and expansion of our business, we may be involved in litigations, regulatory proceedings and other disputes arising outside the ordinary course of our business. Such litigations, proceedings and disputes may result in claims for actual damages, freezing of our assets, diversion of our management's attention and reputational damage to us and our management, as well as legal proceedings against our directors, officers or employees, and the probability and amount of liability, if any, may remain unknown for long periods of time. Given the uncertainty, complexity and scope of many of these litigation and regulatory matters, their outcome generally cannot be predicted with any reasonable degree of certainty. Therefore, our reserves for such matters may be inadequate. Moreover, even if we eventually prevail in these matters, we could incur significant legal fees or suffer significant reputational harm, or we may be unable to enforce the prevailing judgement.

We were named as a defendant in a putative shareholder class action lawsuit in the past and successfully defended against the putative shareholder class action lawsuit. However, we may be involved in similar class action lawsuits in the future. Any such class action lawsuit, whether or not successful, may utilize a significant portion of our cash resources, divert management's attention from the day-to-day operations of our company, harm our reputation and restrict our ability to raise capital in the future, all of which could harm our business. We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results.

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***Our current risk management system may not be able to exhaustively identify or mitigate all risks to which we are exposed.***

We have established risk management, quality control and internal control systems, consisting of policies and procedures that we believe are appropriate for our business. However, the implementation of such policies and procedures may involve human error and mistakes. Moreover, we may be exposed to fraud or other misconduct committed by our employees, crowdfunding consultants, customer service personnel or other third parties, including but not limited to our users and business partners, or other events that are out of our control.

***We may not be able to ensure the accurate and complete disclosure of insurance product information.***

Our users rely on the insurance product information we provide on our platform. We had in the past failed to provide legally required disclosure on our platform to the attention of our users, including failure to indicate name of certain insurance products for filing on visible place of our platform and failure to indicate payment methods for insurance premiums, issuance and delivery methods for insurance documentation, the procedure for policy cancellation and payment method for refund of cancelled policies and had been subject to fines. We had rectified the abovementioned failure in disclosure. If we provide any inaccurate or incomplete information on our platform due to either our own fault or that of insurance carriers, our consumers making the insurance purchase relying on the information may fail to receive the protection they expect and we may be warned or penalized by regulatory authorities, and our reputation could be harmed and we could experience reduced user traffic to our platform.

#### We may not be able to recommend the insurance products most suitable to our users.
Our search and recommendation engine may fail to function properly. The data provided to us by our users, insurance carriers and user acquisition channels may not be accurate or up to date. Our insurance agents and consultants may not fully understand users' insurance needs and recommend suitable products to them. If our users are recommended insurance products that do not suit their protection needs, they may lose trust in our platform. Meanwhile, insurance carriers may find our recommendation ineffective. Our users and insurance carriers may consequently be reluctant to continue to use our platform.

#### Some of our shareholders offer similar products or services competing with ours.
Some of our shareholders also offer products and services competing with ours. For example, WeSure, Tencent's online insurance brokerage platform offers online insurance distribution services as we do. Tencent beneficially owns 830,085,007 ordinary shares of ours, based on the information contained in the Schedule 13D jointly filed by Tencent Holdings Limited and others with the SEC on May 17, 2021, representing approximately 23.1% of our total issued and outstanding shares as of March 31, 2026. Internet conglomerates in China, such as Tencent and Meituan, have strong technological capabilities, and may independently develop more products and services competing with ours in the future. If competition between us and our shareholders becomes more intense in the future or they cease to cooperate with or provide support to us, our business and results of operations may be materially and adversely affected.

***We face risks in properly managing the large amount of cash contributed by donors in our crowdfunding platform and participants of mutual aid plans.***

The funds contributed by donors in our crowdfunding platform and participants of mutual aid plans in the past are deposited in segregated bank accounts. We have entered into agreements with a commercial bank to act as a custodian bank and manage the different accounts. The bank follows our instructions with regard to withdrawal or transfer of funds. If we send incorrect instructions to the bank, the funds may be mistakenly withdrawn or transferred, which may give rise to disputes and claims against us.

***We may face disruption to our technology systems and resulting interruptions in the availability of our services.***

The satisfactory performance, reliability and availability of our technology systems are critical to our success. We rely on our scalable technology infrastructure and corresponding mobile apps, Weixin Official Accounts and Mini Programs connecting our network with those of our various platform users. However, our technology systems or infrastructure may not function properly at all times. We may be unable to monitor and ensure high-quality maintenance and upgrade of our technology systems and infrastructure, and users may experience service outages and delays in accessing and using our platforms as we seek to source additional capacity. For instance, our medical crowdfunding needs constant calculation of amounts donated by donors and distributed to patients, which may require additional capacity as our businesses scale.

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Our technology systems may also experience telecommunications failures, computer viruses, failures during the process of upgrading or replacing software, databases or components, power outages, hardware failures, user errors, or other attempts to harm our technology systems, which may result in the unavailability or slowdown of our platform or certain functions, delays or errors in transaction processing, loss of data, inability to accept and fulfill user request, reduced fund raised, FYP or size of mutual plans and the attractiveness of our platform. Further, hackers, acting individually or in coordinated groups, may also launch distributed denial of service attacks or other coordinated attacks that may cause service outages or other interruptions in our business.

***Our business is subject to complex and evolving laws and regulations regarding data privacy and cybersecurity. Failure to protect confidential information of our users and network against security breaches could damage our reputation and brand and substantially harm our business and results of operations.***

Our platform stores and processes certain personal and other sensitive data provided by users on our platforms, and we make certain personal information provided by the user or third-party data providers available to banks or insurance carriers with user consent. Personally identifiable and other confidential information is increasingly subject to legislation and regulations in mainland China and numerous foreign jurisdictions. The PRC governmental authorities have enacted a series of laws and regulations relating to the protection of privacy and personal information, under which internet service providers and other network operators are required to clearly indicate the purposes, methods and scope of any information collection and usage, to obtain appropriate user consent and to establish user information protection systems with appropriate remedial measures. However, this regulatory framework for privacy issues in mainland China and worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. For example, on August 20, 2021, the Standing Committee of the National People's Congress of China promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection. Our mobile apps, websites and mini programs only collect basic user personal information that is necessary to provide the corresponding services. We do not collect any sensitive personal information or other excessive personal information that is not related to the corresponding services. We update our privacy policies from time to time to meet the latest regulatory requirements of the governmental authorities and adopt technical measures to protect data and ensure cybersecurity in a systematic way. Nonetheless, the Personal Information Protection Law raises the protection requirements for processing personal information, and many specific requirements of the Personal Information Protection Law remain to be clarified by governmental authorities and courts in practice. We may be required to make further adjustments to our business practices to comply with the personal information protection laws and regulations. See "Item 4. Information on the Company— B. Business Overview—Regulation."

In addition, regulatory requirements on cybersecurity and data privacy are constantly evolving and can be subject to significant changes. The regulators in mainland China have been increasingly focused on regulation in the areas of cybersecurity and data protection in recent years. For example, on June 10, 2021, the Standing Committee of the National People's Congress promulgated the PRC Data Security Law, which took effect in September 2021. The Data Security Law, among others, provides for a security review procedure for the data activities that may affect national security. On December 28, 2021, the Cyberspace Administration of China, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and several other PRC governmental authorities jointly issued the Cybersecurity Review Measures, which provide that critical information infrastructure operators that procure internet products and services and network platform operators engaging in data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulate that network platform operators holding over one million users' personal information shall apply with the Cybersecurity Review Office for a cybersecurity review before public offering at a foreign stock exchange. As of the date of this annual report, we have not been involved in any formal investigations on cybersecurity review made by the Cyberspace Administration of China. However, given the Cybersecurity Review Measures were relatively new, it remains uncertain how these measures would affect us.

Furthermore, on September 24, 2024, the Cyberspace Administration of China released the Administration Regulations on the Network Data Security, which provides that network data processors conduct network data processing activities that affects or may possibly affect national security must conduct national security review in accordance with relevant laws and regulations. These regulations also provide that network data processors processing personal information of over 10 million individuals shall fulfill certain requirements for processing important data and require network data processors to take certain precautionary measures, such as identifying important data and conducting annual risk assessment. Furthermore, these regulations allow network data processors to provide personal information overseas only if it is strictly necessary for fulfilling statutory obligations. These regulations also establish certain obligations of online platform service providers, including offering users an option to turn off personalized recommendations. See "Item 4. Information on the Company— B. Business Overview—Regulation." However, these regulations remain unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities. If we are not able to comply with the cybersecurity and network data security requirements in a timely manner, or at all, we may be subject to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our applications from the application stores, among other sanctions, which could materially and adversely affect our business and results of operations.

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The laws and regulations in mainland China relating to data privacy and cybersecurity, including, among others, the PRC Cybersecurity Law and the PRC Data Security Law are relatively new and subject to interpretation by the regulators. Although we have taken various measures to comply with all applicable laws and regulations regarding cybersecurity and data privacy in mainland China, we cannot assure you that the measures we have taken or will take are adequate under relevant laws, and we may be held liable in the event of any violation of the laws and regulations. We expect that these areas will receive greater public scrutiny and attention from regulators and more frequent and rigid investigation or review by regulators, which will increase our compliance costs and subject us to heightened risks and challenges. If we are unable to manage these risks, we could become subject to penalties, fines, suspension of business and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected.

In addition to laws, regulations and other applicable rules regarding privacy and privacy advocacy, industry groups or other private parties may propose new and different privacy standards. We cannot assure you that our existing privacy and personal protection system and technical measures will always be considered sufficient under applicable laws, regulations and other privacy standards. We could be adversely affected if legislation or regulations in mainland China are expanded to require changes in business practices or privacy policies, or if the PRC governmental authorities interpret or implement their legislation or regulations in ways that negatively affect our business. We may also be subject to additional regulations, laws and policies adopted by the local governments to apply more stringent social and ethical standards in data privacy resulting from the increased global focus on this area.

#### We may not be able to access or accumulate sufficient data for business analysis.
We highly rely on our data in every step of our business, in particular, the entire insurance value chain, including research and co-design of insurance products, risk assessment, claim settlement, and policy holder services. We also rely on our data in the development and operation of medical crowdfunding and healthcare business. We currently also use external data sources for our business analysis, which can become unavailable due to regulatory restrictions or other reasons.

***Our business may be negatively impacted if the information that we receive from third parties for user verification purpose is inaccurate.***

In order to verify the personal and financial information provided by our users, we obtain information from independent third-party data providers. We accordingly establish personal profiles for users and process the users' crowdfunding campaigns, insurance policy purchase request and claims settlement applications based on such information we collect and the comparison of the information from third parties against those provided by the users themselves. However, as credit reporting systems for individuals in China are in their early stages of development, there are limited public sources available to verify the financial and other information of individual user, and the systems may not be able to reflect the actual profiles of these users constantly and accurately. Although we have developed our risk assessment and control procedures and policies and have devoted efforts to verifying the information provided by the users before we offer them our products or services, the effectiveness of such risk assessment is conditioned on the accuracy and completeness of the user information we obtain. We cannot guarantee the completeness or accuracy of any information we obtain with respect to any particular user. If the data and information we rely on are inaccurate or obsolete, we are exposed to higher risks of fraudulent user behavior. As a result, our business and operations could be materially and adversely affected.

#### We may fail to maintain the capability and accuracy in actuarial analysis.
We operate an intelligent system where we code underwriting criteria set by insurance carriers in our system and the system automatically generates eligibility for purchasing insurance products. Leveraging our deep understanding of consumer needs and actuarial capabilities, we also collaborate with some insurance carriers to co-design new insurance products. The proper functioning of our actuarial and statistical analysis, product pricing suggestion, risk assessment, financial control, accounting, user database, customer service and other data processing systems is highly critical to our business and our ability to compete effectively. We rely on our dedicated talents with actuarial expertise to conduct actuarial analysis, and we rely on our research and development team to enhance our data capabilities to perform pricing modeling. We cannot assure you that we will successfully retain our employees with actuarial expertise or to hire new ones.

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***If insurance carriers, user acquisition channel partners, other business partners, outsourced customer service personnel, insurance agents, insurance brokers, or other ecosystem participants engage in any misconduct or cause errors to occur in our operation, our business could be materially and adversely affected.***

We are exposed to the risk of misconduct by third-party user acquisition channel partners, outsourced customer service personnel, insurance agents, insurance brokers, or other ecosystem participant and/or business partners to interact with users and provide various services. Misconduct could include making misrepresentations when marketing insurance products to users, hindering insurance applicants from making full and accurate mandatory disclosures or inducing applicants to make misrepresentations, hiding or falsifying material information in relation to insurance contracts terms, fabricating or altering insurance contracts without authorization from relevant parties, selling false policies, or providing false documents on behalf of the insurance applicants, falsifying insurance transaction business or fraudulently returning insurance policies to obtain commissions, colluding with applicants, insureds, or beneficiaries to obtain insurance benefits, coercing, inducing or restricting the applicant to enter into an insurance contract by taking advantage of his/her administrative power, position or the advantage of his/her occupation or by other unfair means, misappropriating, withholding or occupying insurance premiums or insurance benefits, disclosing trade secrets of the insurer, the applicant or the insured known in the business activities, failing to disclose legally required information to users, engaging in false claims or otherwise not complying with laws and regulations, our internal policies or procedures or contract terms with us. Any of the aforementioned misconducts by parties we cooperate with, whether unintentional or otherwise, may cause potential liabilities on us, and further subject us to regulatory actions and penalties, and result in serious reputational harm. If any third parties that are important to our operations are sanctioned by regulatory actions, our business operations will be disrupted or otherwise negatively affected. In addition, the general increase in misconduct in the industry could potentially harm the reputation of the industry and have an adverse impact on our business.

#### We are subject to payment processing risks.
We accept a wide variety of payment methods, including bank transfers and online payments through third-party online payment platforms, such as Weixin Pay, UnionPay and Alipay, in order to ensure smooth user experience. For certain payment methods, we pay varying transaction fees, which may increase over time and increase our operating costs and lower our profit margins. We may also be subject to fraud, money laundering and other illegal activities in connection with the various payment methods we accept if we cannot implement risk assessment measures effectively.

We are also subject to various regulations, rules and requirements, regulatory or otherwise, governing online payment processing and fund transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply with. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from users, process electronic fund transfers or facilitate other types of online payments.

***Our future growth depends on the further acceptance of the internet as an effective platform for distributing insurance products and content as well as for medical crowdfunding.***

The internet, and particularly the mobile internet, has gained increasing popularity in China as a platform for insurance products and content as well as for medical crowdfunding in recent years. However, certain participants in the insurance industry, especially traditional insurance companies, and many insurance clients have limited experience in handling insurance products and content online, and some insurance customers may have reservations about using online platforms. For example, clients may not find online content to be reliable sources of insurance product information. Some insurance companies and reinsurance companies may not believe online platforms are secure for risk assessment and underwriting support. Others may not find online platforms effective when promoting and providing their products and services, especially to targeted clients in lower-tier cities or rural areas. In addition, the online medical crowdfunding industry is relatively nascent and is at its early stages of development. The donors may be concerned of the genuineness of medical crowdfunding campaigns initiated through internet platforms and the effective tracking of the use of proceeds from donations by internet platforms. The fundraisers may also cast doubt on the transparency of the online fundraising campaigns. If we fail to educate the insurance customers, donors or fundraisers about the value of our platforms and our products and services, our growth will be limited and our business, financial performance and prospects may be materially and adversely affected. The further acceptance of the internet and particularly the mobile internet as an effective and efficient platform for insurance products and content, and medical crowdfunding is also affected by factors beyond our control, including negative publicity and restrictive regulatory measures. If online and mobile networks do not achieve adequate acceptance in the market, our growth prospects, results of operations and financial condition could be harmed.

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***User growth and activity on mobile devices depend upon effective use of our mobile applications and third-party mobile operating systems that we do not control.***

We are dependent on our users' downloading and effective use of our mobile applications for their particular devices. We are further dependent on the interoperability of our mobile applications with third-party mobile operating systems that we do not control, such as iOS and Android, and any changes in such systems that degrade the functionality of our mobile applications could adversely affect the usage of our applications on mobile devices.

As new mobile devices and operating platforms are released, we may experience delay or difficulties in updating and integrating our mobile applications for these alternative devices and platforms and we may need to devote significant resources to the development, support and maintenance of such applications. Problems may also arise with our relationships with providers of mobile operating systems or mobile application download stores, such as our applications may receive unfavorable treatment compared to competing applications on the download stores. In the event that it becomes difficult for our consumers to access and use our applications on their mobile devices, our consumer growth could be harmed and our business and results of operations may be adversely affected.

#### We may fail to protect our intellectual properties.
We regard our software registrations, trademarks, patents, domain names, know-how, proprietary technologies and similar intellectual properties as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others to protect our proprietary rights. See "Item 4. Information on the Company—B. Business Overview—Intellectual Property." Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages.

Pursuant to the applicable laws in mainland China relating to intellectual properties, it may take months or even years to register, maintain and enforce intellectual property rights in mainland China. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in mainland China. In particular, some of our trademark applications for certain categories have been rejected, and we have applied for administrative reviews on such rejections. However, there can be no assurance that we will obtain such trademarks and any other trademarks that are crucial to our business in the future. Thus, we may be unable to prevent others from using such trademarks or suing us for infringement, or even unable to continue to use such trademarks in our business.

Preventing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can also provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in maintaining, protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

#### We may be subject to intellectual property infringement claims.
We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties. We may be from time to time in the future subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how or other intellectual property rights that are infringed upon by our products, services or other aspects of our business without our awareness. If any third-party infringement claims are brought against us, we may be forced to divert management's time and other resources from our business and operations to defend against these claims, regardless of their merits.

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***We may fail to make necessary or desirable strategic alliance, acquisition or investment, and we may not be able to achieve the benefits we expect from the alliances, acquisition or investments we make.***

We may pursue selected strategic alliances and potential strategic acquisitions that are supplemental to our business and operations, including opportunities that can help us expand our product and service offerings and improve our technology system. However, strategic alliances with third parties could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance or default by counterparties, and increased expenses in establishing these new alliances, any of which may materially and adversely affect our business. In addition, we may have limited ability to control or monitor the actions of our strategic partners. To the extent a strategic partner suffers any negative publicity as a result of its business operations, our reputation may be negatively affected by virtue of our association with such party.

The costs of identifying and consummating strategic acquisitions may be significant and subsequent integrations of newly acquired companies, businesses, assets and technologies would require significant managerial and financial resources and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our growth and business operations. In addition, investments and acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities and exposure to potential unknown liabilities of the acquired business. The cost and duration of integrating newly acquired businesses could also materially exceed our expectations. If our portfolios do not perform as we expect, our results of operation and profitability may be adversely affected. In June 2023, we entered into definitive transaction documents in relation to the acquisition of Shenlanbao, which provides insurance knowledge-based content and insurance product reviews through multiple online channels to attract users, and convert them into insurance consumers to generate commission. Pursuant to these transaction agreements, we agreed to acquire up to 100% of the equity interest in Shenlanbao through multiple closings. We completed the acquisition of 60% of the equity interest in Shenlanbao with a cash payment of RMB216.0 million in 2023. In March 2025, we entered into an additional agreement in relation to the acquisition of the remaining 40% of the equity interest in Shenlanbao. All of the closing conditions for the acquisition of the remaining 40% of the equity interest in Shenlanbao had been met as of June 30, 2025, and since then, Shenlanbao has been 100% owned by us. The transaction was treated as an equity transaction and the difference between the consideration paid and the carrying amount of the previously recorded redeemable non-controlling interest was recognized in equity. We have consolidated the financial results of Shenlanbao into our consolidated financial statements since July 2023. In 2023, 2024 and 2025, we recorded goodwill and other intangible assets of RMB198.3 million, RMB177.8 million and RMB177.8 million (US$25.4 million) as a result of the acquisition of Shenlanbao. If the acquired businesses or assets do not generate the financial results we expect and incur losses, or if any goodwill and other intangible assets impairment test triggering event occurs, we may need to revalue or write down the value of goodwill and other intangible assets in connection with such acquisitions, which would harm our results of operations.

Given that some of our investees are emerging companies that are still in the development stages, investments in such companies are inherently risky. These companies may also have relatively short operating histories and it may cost a significant time for these companies to grow their business and to gain traction in the industry. Moreover, they may not have sufficient resources to fulfill their financial obligations, particularly during economic slowdowns. Meanwhile, we are diversifying investment portfolios. Some of our investees are funds that are subject to lock-up periods and may require several years before exit opportunities arise. Our investments in these portfolios are therefore relatively speculative and subject to a number of risks. Accordingly, we may fail to realize our anticipated returns on investments in such investees, and may even experience a total loss on such investments. Furthermore, the due diligence that we performed in our investments may not reveal all material facts needed for investment decision-making and may not guarantee that our investments would be successful. General operational risks, such as inadequate or failed internal controls of our investees, may also expose our investments to risks. If any of these risks were to happen, our business, financial condition and results of operations may be adversely and materially impacted.

***Failure to maintain our cooperation with Tencent could have a material adverse effect on our business and prospects for growth.***

Our business has benefited from our collaboration with Tencent, one of our principal shareholders, and we expect to continually leverage our collaboration with Tencent in the foreseeable future. Tencent beneficially owns 830,085,007 ordinary shares of ours, based on the information contained in the Schedule 13D jointly filed by Tencent Holdings Limited and others with the SEC on May 17, 2021, representing approximately 23.1% of our total issued and outstanding shares as of March 31, 2026.

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The user acquisition of our medical crowdfunding business largely relies on Weixin-based link sharing practice. Once a crowdfunding campaign is launched, a link to the crowdfunding campaign will be created and available for sharing. Starting from sharing by the patients' relatives, friends and acquaintances, the link will be widely disseminated to a broader social network, which greatly helps the increase of number of donors and amount of fund raised. If the link sharing practice is restricted or becomes otherwise unavailable, the patients may not be able to raise enough funds for medical treatment, which may divert them to other crowdfunding platforms and the user acquisition of our medical crowdfunding business will be materially affected. Our insurance marketplace, which partially relies on traffic from our medical crowdfunding business, may also suffer.

In addition, we also operate our business through our Weixin Official Accounts and Mini Programs. Users may access our products or services through Weixin Mini Programs operated by us. Furthermore, there are links embedded in the publications on our Weixin Official Accounts or Mini Programs which will direct the users to download or launch our applications. If our Weixin Official Accounts or Mini Programs cannot work due to service shutdown or the links directing to our own apps are not available, our users may not be able to use or easily access our products or services.

We cannot assure you that we will be able to maintain the current level of cooperation with Tencent in the future. If our collaborative relationship with Tencent, particularly regarding the Weixin-based link sharing practice, is terminated or curtailed, or if any of the commercial terms between us and Tencent are revised, or if our products and services cannot be adequately or continue to be promoted by Tencent for any reason, our ability to operate our business may be impaired and we may, in the worst-case scenario, completely lose our ability to conduct links sharing practice, operate our Weixin Official Accounts and Mini Programs or promote our business on Tencent platforms. In addition, Tencent may invest in our direct or indirect competitors, and may devote resources or attention to the other companies in which it has an interest.

#### Our success depends on the continuing efforts of our senior management and key employees.
Our future success is significantly dependent upon the continued service of our senior management and other key employees. If we lose their service, we may not be able to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new staff, which could severely disrupt our business and growth. Our founder and chief executive officer, Mr. Peng Shen, and other management members are critical to our vision, strategic direction, culture and overall business success. If there is any internal organizational structure change or change in responsibilities for our management or key personnel, or if one or more of our senior management members were unable or unwilling to continue in their present positions, the operation of our business and our business prospects may be adversely affected. Our employees, including members of our management, may choose to pursue other opportunities. If we are unable to motivate or retain key employees, our business may be severely disrupted and our prospects could suffer. In addition, although we have entered into confidentiality and non-competition agreements with our management, there is no assurance that our management members would not join our competitors or form a competing business. If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements or we may not be able to enforce them at all.

#### If we are unable to recruit, train and retain talents, our business may be materially and adversely affected.
We believe our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for personnel with expertise in insurance, sales and marketing, technology and risk management is extremely intense in China. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In addition, we invest significant time and resources in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training new employees, and our ability to serve users and business partners could diminish, resulting in a material adverse effect to our business.

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#### We may not be able to raise additional capital when desired, on favorable terms or at all.
We need to make continued investments in facilities, hardware, software, technological systems and to retain talents to remain competitive. Due to the unpredictable nature of the capital markets and our industry, there can be no assurance that we will be able to raise additional capital on terms favorable to us, or at all, if and when required, especially if we experience disappointing operating results. If adequate capital is not available to us as required, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our infrastructure or respond to competitive pressures could be significantly limited. If we do raise additional funds through the issuance of equity or convertible debt securities, the ownership interests of our shareholders could be significantly diluted. These newly issued securities may have rights, preferences or privileges on par with or senior to those of existing shareholders.

***Our insurance coverage may not be adequate, which could expose us to significant costs and business disruptions.***

We maintain certain insurance policies to safeguard us against risks and unexpected events. We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for our employees pursuant to applicable laws. We do not maintain business interruption insurance. We consider our insurance coverage to be sufficient for our business operations in China. However, we cannot assure you that our insurance coverage is sufficient to prevent us from any loss or that we will be able to successfully claim our losses under our current insurance policy on a timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected.

***If we fail to implement and maintain an effective system of internal controls over financial reporting, or if identified control issues are not timely and effectively addressed, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.***

We are subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules and regulations of the New York Stock Exchange, or the NYSE. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting.

Our management has concluded that our internal control over financial reporting was effective as of December 31, 2025. See "Item 15. Controls and Procedures—Management's Annual Report on Internal Control over Financial Reporting." However, if we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to produce timely and accurate financial statements and may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If that were to happen, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which could lead to a decline in the market price of our ADSs and we could be subject to sanctions or investigations by the NYSE, SEC or other regulatory authorities. We may also be required to restate our financial statements for prior periods. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs, management time and other resources in an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements.

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#### We have granted and may continue to grant awards under our share incentive plans.
We adopted our 2018 Share Incentive Plan, as amended and restated, which we refer to as the 2018 Plan, and our 2021 Share Incentive Plan, as amended and restated, which we refer to as the 2021 Plan, for the purpose of granting share-based compensation awards to employees, directors and consultants to secure and retain the services of eligible award recipients and to provide incentives for such persons to exert maximum efforts for our success. We recognize expenses in our consolidated financial statements in accordance with U.S. GAAP. Under the 2018 Plan and the 2021 Plan, we are authorized to grant options, restricted shares, restricted share units and other types of share awards. As of March 31, 2026, the maximum aggregate number of Class A ordinary shares which may be issued pursuant to all awards under the 2018 Plan is 384,159,746 Class A ordinary shares, and we have outstanding options with respect to 63,818,050 Class A ordinary shares and outstanding restricted share units with respect to 35,721,640 Class A ordinary shares granted to our employees, directors and consultants under the 2018 Plan. As of March 31, 2026, the maximum aggregate number of Class A ordinary shares that may be issued pursuant to all awards under the 2021 Plan is 456,028,400 Class A ordinary shares, and we have outstanding restricted share units with respect to 65,949,170 Class A ordinary shares granted to our employees, directors and consultants under the 2021 Plan. We expect to incur substantial share-based compensation expenses in the future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations. Further, we may re-evaluate the vesting schedules, lock-up period, exercise price or other key terms applicable to the grants under our equity incentive plan from time to time. If we choose to do so, we may experience substantial change in our share-based compensation charges in the future reporting periods. For further information on our equity incentive plan and information on our recognition of related expenses, please see "Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans."

***A severe or prolonged downturn in Chinese or global economy could materially and adversely affect our business and financial condition.***

The Chinese and global macroeconomic environment faces numerous challenges. The growth rate of the Chinese economy has been slowing since 2010 and the Chinese population began to decline in 2022. Heightened geopolitical tensions in various regions of the world may have negative effects to the global economy. In particular, there are significant uncertainties associated with the future relationship between the United States and China with respect to a wide range of issues including investment policies, trade policies, treaties, government regulations and tariffs. The U.S. government has taken actions that have impacted, and may continue to impact, companies like us with a substantial presence in China. A non-exhaustive list of such actions includes legislative measures aiming to prohibit or restrict U.S. investment in China-based companies that operates in certain industries, sanctions or trade restrictions targeting China, increased tariffs on imports from China, and ban or enhanced review of transactions with, or inbound investments from, China-based companies. China has responded by taking a series of measures such as implementing retaliatory tariffs, trade barriers, and other regulatory actions, and new measures may be adopted from time to time. The tension between these two countries may escalate, potentially disrupting cross-border commerce, capital flows, and investor sentiment, leading to increased compliance costs, operational disruptions, and constraints on our access to capital markets. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the Chinese or global economy may materially and adversely affect our business, results of operations and financial condition.

***The current tensions in international trade and rising international political tensions may adversely affect our business, financial condition, and results of operations.***

In recent years, there have been heightened trade and political tensions in international relations, particularly between the United States and China. These tensions have affected both diplomatic and economic ties between the two countries and created uncertainties to the international economy as a whole. Heightened tensions could reduce levels of trade, investments, technological exchanges, and other economic activities between major economies. The existing tensions and any further deterioration in the relationship between the United States and China and between other countries may have a negative impact on the general, economic, political, and social conditions around the globe, United States and China in particular, and thus adversely impact our business, financial condition, and results of operations.

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The U.S. government has implemented policies restricting international trade and investment, such as tariffs, export controls, economic or trade sanctions, and foreign investment filing and approval requirements. These actions may materially and adversely affect international trade, global financial markets, and the stability of the global economic condition. For example, the tensions between the United States and China in recent years have led to additional, or higher tariffs imposed by the United States on products imported from China and restrictions on the sale of certain products into the United States. China has responded by imposing, and proposing to impose additional, or higher tariffs on products imported from the United States, among other measures. In addition, international political tensions have escalated and continue to be subject to uncertainties with respect to a wide range of issues. Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities, which would materially and adversely affect the global economic conditions and the stability of global financial markets. These developments may also lead to increased compliance costs, operational disruptions, and potential constraints on our access to capital markets. The possibility of the U.S. government delisting China-associated companies from U.S. stock exchanges, as recently reported in the media, creates uncertainty regarding our ability to maintain our NYSE listing. Any further escalation of international tensions may have a negative impact on the general, economic, political, and social conditions of the countries where we operate and, in turn, adversely impact our business, financial condition, and results of operations.

In addition, the United States government has taken efforts to limit the outbound U.S. investments to China. In particular, the Department of Treasury issued a final rule to implement the executive order, providing details on technical specifications and other aspects of the operative regulations, which came into effect on January 2, 2025. This is referred to as the Outbound Investment Rule. The Outbound Investment Rule imposes investment prohibitions and notification requirements on U.S. persons for a wide range of investments in entities associated with "countries of concern," currently only China, that are engaged in activities relating to (i) semiconductors and microelectronics, (ii) quantum information technologies, and (iii) artificial intelligence systems. These entities are collectively defined as "Covered Foreign Persons." U.S. persons subject to the Outbound Investment Rule are prohibited from making, or required to report, transactions involving Covered Foreign Persons that are defined as "covered transactions," although the Outbound Investment Rule excludes some investments from the scope of covered transactions, including those in publicly traded securities. The Outbound Investment Rule introduces new hurdles and uncertainties for cross-border collaborations, investments, and funding opportunities of China-based issuers including us. We do not believe that Waterdrop Inc. would be defined as a Covered Foreign Person under the Outbound Investment Rule because we do not engage in a "covered activity" (as defined in the Outbound Investment Rule) or otherwise meet the definition of Covered Foreign Persons provided in the Outbound Investment Rule. However, there is no assurance that the U.S. Department of Treasury will take the same view as ours. If we were to be deemed a "Covered Foreign Person," and if U.S. persons were to engage in a "covered transaction" (as defined under the Outbound Investment Rule) that involves the acquisition of our equity interests, such U.S. persons may need to make a notification pursuant to the Outbound Investment Rule. In addition, even though U.S. persons' acquisitions of publicly traded securities (such as our ADSs) will be exempted from the scope of covered transactions under the Outbound Investment Rule, the rule could still limit our ability to raise capital or contingent equity capital from U.S. investors given that the relevant laws, regulations, and policies continue to evolve and we cannot rule out the possibility of being deemed a Covered Foreign Person in the future due to different views taken by the U.S. Department of Treasury, potential amendments to the Outbound Investment Rule or the introduction of additional regulations. For example, the U.S. government has issued a broadly worded "America First Trade Policy" and an "America First Investment Policy" that seek to further restrict U.S. investments involving China (including possibly expanding technologies subject to investment restrictions and narrowing related exceptions (including those related to publicly traded securities)). It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term and the ability of Chinese companies to raise capital from U.S. investors. Furthermore, on December 18, 2025, the Comprehensive Outbound Investment National Security Act of 2025, or the COINS Act, was signed into law. The COINS Act largely preserves the core framework of the Outbound Investment Rule, while expanding its scope and coverage in certain respects. The COINS Act will not become effective until the U.S. Department of the Treasury issues implementing regulations, which must be promulgated through notice-and-comment rulemaking and no later than March 13, 2027. Accordingly, the Treasury may amend, expand or otherwise modify existing outbound investment prohibitions and restrictions pursuant to the COINS Act.

Moreover, sanctions and export control measures are unilaterally imposed by the U.S. or other jurisdictions from time to time. For example, on September 29, 2025, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued an immediately effective interim final rule that, among others, extends Entity List and Military End-User List restrictions to entities that are 50% or more owned, directly or indirectly, by parties designated on those lists. This rule is currently suspended for one year. If implemented, these measures are expected to have significant impact on the targeted countries, markets and/or entities, making compliance more complicated and time-consuming and increasing the risk of inadvertent omissions. Chinese companies may be affected by such sanctions or export control measures. We may also be exposed to risks in dealing with business partners subject to sanctions or export controls. As a result, we could be required to incur additional costs to comply with these regulations and measures and could face penalties for any violation, even if inadvertent.

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Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities across the globe, which would have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on the demand of our services, and thus negatively affect our business, prospects, financial condition, and results of operations.

***We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations.***

Our business could be materially and adversely affected by natural disasters, health epidemics or other public safety concerns affecting China. Natural disasters, such as severe weather conditions, a snowstorm, flood or hazardous air pollution, or other outbreaks, may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to operate our platform and provide services and solutions. In recent years, there have been outbreaks of epidemics in China and globally, such as COVID-19, H1N1 flu, avian flu or another epidemic. Our business operations could be disrupted by any of these epidemics. Our business could also be adversely affected if our employees are affected by health epidemics, such as new variants of COVID-19 or outbreaks of other diseases. In addition, our results of operations could be adversely affected to the extent that any health epidemic harms the Chinese economy in general. A prolonged outbreak of any of these illnesses or other adverse public health developments in China or elsewhere in the world could have a material adverse effect on our business operations. Such outbreaks could significantly impact the insurance industry, which could severely disrupt our operations and adversely affect our business, financial condition and results of operations. Our headquarters are located in Beijing, where most of our management and employees currently reside. Most of our system hardware and back-up systems are hosted in facilities located in Shanghai. Consequently, if any natural disasters, health epidemics or other public safety concerns were to affect Beijing and Shanghai, our operation may experience material disruptions, which may materially and adversely affect our business, financial condition and results of operations.

#### Risks Related to Our Corporate Structure
***If the PRC government finds that the agreements that establish the structure for operating some of our operations do not comply with regulations in mainland China relating to relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.***

We are a Cayman Islands holding company with no equity ownership in the VIEs and we conduct our operations in China primarily through (i) our subsidiaries in mainland China and (ii) the VIEs, with which we have maintained contractual arrangements. Holders of our ADSs thus are not holding equity interest in our operating entities in China but instead are holding equity interest in a Cayman Islands holding company. The legality and enforceability of the contractual agreements between our subsidiaries in mainland China, the VIEs, and their nominee shareholders, as a whole, have not been tested in a court of law in mainland China as of the date of this annual report. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with the laws and regulations in mainland China, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our ADSs may decline in value or become worthless if we are unable to assert our contractual rights over the assets of the VIE, which contributes 64.9% of our revenues in 2025. Our holding company in the Cayman Islands, the VIEs and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of the VIEs and our company.

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Foreign ownership in entities that provide value-added telecommunication services is subject to restrictions under current PRC laws and regulations, unless certain exceptions are available. Specifically, foreign ownership of a value-added telecommunication service provider may not exceed 50% (except for e-commerce, domestic multi-party communication, storage and forwarding classes and call centers) under the Special Administrative Measures for Access of Foreign Investment (Negative List) (2024 Edition), which is jointly promulgated by the National Development and Reform Commission and the Ministry of Commerce and became effective on November 1, 2024. Foreign investment in the insurance industry in mainland China is extensively regulated and the relevant authorities have broad discretion in approving the conversion of a domestic company engaged in insurance-related business into a foreign-invested entity. To comply with the applicable laws and regulations in mainland China, we conduct such business through the VIEs and their subsidiaries, including Zongqing Xiangqian and Shuidi Insurance Brokerage. As of the date of this annual report, Zongqing Xiangqian and certain subsidiaries of Zongqing Xiangqian hold the license for provision of internet information services. Shuidi Insurance Brokerage and certain other subsidiaries hold the Insurance Intermediary License issued by the National Financial Regulatory Administration, which allows them to conduct insurance brokerage and agency business in China. In addition, Tairui Insurance Agency Co., Ltd. and Haike (Tianjin) Insurance Brokerage Co., Ltd, respectively, hold the Insurance Intermediary License issued by the local branch of National Financial Regulatory Administration, which allows it to conduct insurance agency business in China. Our WFOE, Waterdrop Technology, has entered into a series of contractual arrangements with the VIEs and their shareholders, which enable us to:

● direct the activities of the VIEs;

● receive substantially all of the economic benefits and bear the obligation to absorb substantially all of the losses of the VIEs; and

● have an exclusive option to purchase all or part of the equity interests and assets in the VIEs when and to the extent permitted by the law in mainland China.

As a result of these contractual arrangements, we are the primary beneficiary of the VIEs for accounting purposes, and have satisfied the conditions to consolidate the financial results of the VIEs and their subsidiaries into our consolidated financial statements under U.S. GAAP. For a detailed discussion of these contractual arrangements, see "Item 4. Information on the Company—C. Organizational Structure."

In the opinion of our PRC legal counsel, Han Kun Law Offices, as of the date of this annual report, (i) the ownership structures of our WFOE and the VIEs in China, currently are not in violation of any explicit provisions of laws and regulations in mainland China that are currently in effect; and (ii) the agreements under the contractual arrangements between our WFOE, the VIEs and their shareholders governed by law in mainland China are valid, binding and enforceable against each party thereto in accordance with their terms.

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However, we have been further advised by our PRC legal counsel that the interpretation and application of current and future laws, regulations and rules in mainland China are evolving. The PRC regulatory authorities may take a view contrary to the opinion of our PRC legal counsel. It is uncertain whether any new laws or regulations in mainland China relating to variable interest entity structure will be adopted or if adopted, what they would provide. For example, on February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which aimed to regulate both direct and indirect overseas offering and listing of China-based domestic companies' securities by adopting a filing-based regulatory regime. Companies in China that seek to offer and list securities in overseas markets, in direct or indirect means, are required to fulfill the filing procedures with the CSRC and submit required information. At the press conference in relation to the promulgation of these regulations on February 17, 2023, the CSRC officials clarified that, as for companies seeking overseas offering and listing with VIE structures and applying to file with the CSRC, the CSRC will solicit opinions from other PRC regulatory authorities and proceed with the filing of the overseas listing of such companies if such companies duly meet the compliance requirements. If we fail to complete the filing with the CSRC in a timely manner, or at all, for our further capital raising activities, which are subject to filing requirements under these regulations, we may be required to unwind the VIEs or adjust our business operations to meet the filing requirements and our ability to raise or utilize funds could be materially and adversely affected. However, as these regulations are relatively new, they remain uncertain as to its interpretation, implementation and enforcement, in particular, for companies with VIE structures, and there also remain uncertainties how they will affect our operations in China and our future capital-raising activities. If the ownership structures, contractual arrangements and business of our company, our subsidiaries in mainland China, the VIEs or their subsidiaries are found to be in violation of any existing or future laws or regulations in mainland China, or fail to obtain or maintain any of the required permits or approvals to operate our business, the PRC regulatory authorities would have the discretion to take actions in dealing with such violations or failures in accordance with applicable laws, including:

● revoking the business licenses and/or operating licenses of such entities;

● imposing fines on us;

● confiscating any of our income that they deem to be obtained through illegal operations;

● discontinuing or placing restrictions or onerous conditions on our operations;

● placing restrictions on our right to collect revenues;

● shutting down our servers or blocking our applications/websites;

● requiring us to restructure our ownership structure or operations;

● restricting or prohibiting our use of the proceeds from our financing activities to finance the business and operations of the VIEs and their subsidiaries; or

● taking other regulatory or enforcement actions that could be harmful to our business.

Any of these events could cause significant disruption to our business operations and severely damage our reputation, which would in turn have a material adverse effect on our financial condition and results of operations. If occurrences of any of these events results in our inability to direct the activities of the VIEs and their subsidiaries in China that most significantly impact its economic performance, and/or our failure to receive the economic benefits and residual returns from the VIEs and their subsidiaries, and we are not able to restructure our ownership structure and operations in a satisfactory manner, we may not be able to consolidate the financial results of the VIEs or their subsidiaries into our consolidated financial statements in accordance with U.S. GAAP.

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***The contractual arrangements with the VIEs and their shareholders may not be as effective as direct ownership in providing operational control.***

We have to rely on the contractual arrangements with the VIEs and their shareholders to operate our business in China, including provision of certain value-added telecommunication services and insurance brokerage services. These contractual arrangements, however, may not be as effective as direct ownership in providing us with control over the VIEs. For example, the VIEs and their shareholders could breach their contractual arrangements with us by, among other things, failing to conduct the operations of the VIEs in an acceptable manner or taking other actions that are detrimental to our interests.

If we had direct ownership of the VIEs in mainland China, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we can only rely on the performance by the VIEs and their shareholders of their obligations under the contracts to consolidate the financial results of the VIEs or their subsidiaries into our consolidated financial statements in accordance with U.S. GAAP. The shareholders of the VIEs may not act in the best interests of our company or may not perform their obligations under these contracts. If any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of law and arbitration, litigation and other legal proceedings in mainland China and it may be difficult to precisely predict the outcome of such legal proceedings. See "—Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business."

***Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.***

If the VIEs or their shareholders fail to perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements to conduct business operations in China and may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under the law in mainland China, including seeking specific performance or injunctive relief, and contractual remedies, which we cannot assure you will be sufficient or effective. For example, if the shareholders of the VIEs were to refuse to transfer their equity interests in the VIEs to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations. In addition, if there are any disputes or governmental proceedings involving any interest in such shareholders' equity interests in the VIEs, our ability to exercise shareholders' rights or foreclose the share pledges according to the contractual arrangements may be impaired. If these disputes or proceedings were to impair our contractual arrangements with the VIEs, we may not be able to continue to consolidate the financial results of the VIEs or their subsidiaries into our consolidated financial statements in accordance with U.S. GAAP, which would in turn result in a material adverse effect on our business, operations and financial condition.

***Our contractual arrangements are governed by the law in mainland China. Accordingly, these contracts would be interpreted in accordance with the law in mainland China, and any disputes would be resolved in accordance with legal procedures in mainland China, which may not protect you as much as those of other jurisdictions, such as the United States.***

All the agreements under our contractual arrangements are governed by the law in mainland China and provide for the resolution of disputes through arbitration in mainland China. Accordingly, these contracts would be interpreted in accordance with the law in mainland China and any disputes would be resolved in accordance with the legal procedures in mainland China. As a result, we cannot assure you that these contractual arrangements could be enforced as anticipated. See "—Risks Related to Doing Business in China—The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us." Meanwhile, there are very few precedents and formal guidance as to how contractual arrangements in the context of a consolidated variable interest entity should be interpreted or enforced under the law in mainland China. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under the law in mainland China, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in the courts in mainland China through arbitration award recognition proceedings, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to consolidate the financial results of the VIEs or their subsidiaries into our consolidated financial statements in accordance with U.S. GAAP, and our ability to conduct our business may be negatively affected.

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#### The shareholders of the VIEs may have actual or potential conflicts of interest with us.
The shareholders of the VIEs may have actual or potential conflicts of interest with us. These shareholders may breach, or cause the VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIEs, which would have a material and adverse effect on our ability to direct the activities of the VIEs and receive economic benefits from them. For example, the shareholders may be able to cause our agreements with the VIEs to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the exclusive option agreements with these shareholders to request them to transfer all of their equity interests in the VIEs to a mainland China entity or individual designated by us, to the extent permitted by the law in mainland China. For individuals who are also our directors and officers, we rely on them to abide by the laws of the Cayman Islands, which provide that directors and officers owe a fiduciary duty to the company that requires them to act in good faith and in what they believe to be the best interests of the company and not to use their position for personal gains. The shareholders of the VIEs have executed powers of attorney to appoint our WFOE or a person designated by our WFOE to vote on their behalf and exercise voting rights as shareholders of the VIEs. If we cannot resolve any conflict of interest or dispute between us and the shareholders of the VIEs, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

The shareholders of the VIEs may be involved in personal disputes with third parties or other incidents that may have an adverse effect on their respective equity interests in the VIEs and the validity or enforceability of our contractual arrangements with the VIEs and their shareholders. For example, in the event that any of the shareholders of the VIEs divorces his spouse, the spouse may claim that the equity interest of the VIEs held by such shareholder is part of their community property and should be divided between such shareholder and his spouse. If such claim is supported by the court, relevant equity interests may be obtained by the shareholder's spouse or another third party who is not subject to obligations under our contractual arrangements, which could result in a loss of the control over the VIEs and therefore affect our ability to consolidate the financial results of the VIEs into our consolidated financial statements under U.S. GAAP for accounting purposes. Similarly, if any of the equity interests of the VIEs is inherited by a third party with whom the current contractual arrangements are not binding, we could lose our control over the VIEs or have to maintain such control by incurring unpredictable costs, which could cause significant disruption to our business and operations and harm our financial condition and results of operations.

Although under our current contractual arrangements, (i) each of the spouses of Mr. Peng Shen, Mr. Wei Ran and Ms. Nian Liu has respectively executed a spousal consent letter, under which each spouse agrees that she/he will not raise any claims against the equity interest, and will take every action to ensure the performance of the contractual arrangements, and (ii) the VIEs and their shareholders shall not assign any of their respective rights or obligations to any third party without the prior written consent of our WFOE, we cannot assure you that these undertakings and arrangements will be complied with or effectively enforced. In the case any of them is breached or becomes unenforceable and leads to legal proceedings, it could disrupt our business, distract our management's attention and subject us to substantial uncertainties as to the outcome of any such legal proceedings.

***Contractual arrangements in relation to the VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.***

Under applicable laws and regulations in mainland China, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements in relation to the VIEs were not entered into on an arm's length basis in such a way as to result in an impermissible reduction in taxes under applicable laws, rules and regulations in mainland China, and adjust income of the VIEs in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by the VIEs for mainland China tax purposes, which could in turn increase their tax liabilities without reducing the tax expenses of our subsidiaries in mainland China. In addition, the PRC tax authorities may impose late payment fees and other penalties on the VIEs for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if the VIEs' tax liabilities increase or if they are required to pay late payment fees and other penalties.

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***We may lose the ability to use and enjoy assets held by the VIEs that are critical to the operation of our business if the VIEs declare bankruptcy or become subject to a dissolution or liquidation proceeding.***

The VIEs hold certain assets that may be critical to the operation of our business, including permits, domain names and most of our intellectual property rights. If the shareholders of the VIEs breach the contractual arrangements and voluntarily liquidate the VIEs or their subsidiaries, or if the VIEs or their subsidiaries declare bankruptcy and all or part of their assets become subject to liens or rights of third-party creditors or are otherwise disposed of without our consent, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. In addition, if the VIEs or their subsidiaries undergo an involuntary liquidation proceeding, third-party creditors may claim rights to some or all of their assets, thereby hindering our ability to operate our business, which could materially or adversely affect our business, financial condition and results of operations.

***Our current corporate structure and business operations may be substantially affected by the PRC Foreign Investment Law.***

On March 15, 2019, the National People's Congress promulgated the PRC Foreign Investment Law, which took effect on January 1, 2020. On December 26, 2019, the PRC State Council approved the Implementation Rules of PRC Foreign Investment Law, which came into effect on January 1, 2020. Since the PRC Foreign Investment Law and its implementation rules are relatively new, its interpretation and implementation are still evolving. The PRC Foreign Investment law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately "controlled" by foreign investors. However, it has a catch-all provision under definition of "foreign investment" that includes investments made by foreign investors in mainland China through other means as provided by laws, administrative regulations or the PRC State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the PRC State Council to provide for contractual arrangements as a form of foreign investment, at which time it will be uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in mainland China, and if yes, how our contractual arrangements should be dealt with.

The PRC Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either "restricted" or "prohibited" from foreign investment in the "negative list", which is most recently jointly promulgated by the National Development and Reform Commission and the Ministry of Commerce and took effective on November 1, 2024. The PRC Foreign Investment Law provides that foreign-invested entities operating in "restricted" or "prohibited" industries will require market entry clearance and other approvals from the PRC governmental authorities. If our contractual rights over the VIEs through contractual arrangements are deemed as foreign investment in the future, and any business of the VIEs is "restricted" or "prohibited" from foreign investment under the "negative list" effective at the time, we may be deemed to be in violation of the PRC Foreign Investment Law, the contractual arrangements that allow us to direct the activities of the VIEs may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.

Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face uncertainties as to whether we can complete such actions in a timely manner or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations.

***If we exercise the option to acquire equity interest of the VIEs, this equity interest transfer may subject us to certain limitations and substantial costs.***

Pursuant to the contractual arrangements, our WFOE has the irrevocable and exclusive right to purchase all or any part of the equity interest in the VIEs from the VIEs' shareholders at any time and from time to time in their absolute discretion to the extent permitted by the laws in mainland China. The consideration our WFOE pays for such purchases will be a nominal price or the lowest price as permitted under applicable laws in mainland China or an amount equal to the registered capital contributed by the relevant shareholder. This equity transfer may be subject to approvals from, filings with, or reporting to competent authorities, such as the Ministry of Commerce, the Ministry of Industry and Information Technology, the State Administration of Market Regulation, and/or their local competent branches. In addition, the equity transfer price may be subject to review and tax adjustment by the tax authorities.

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#### Risks Related to Doing Business in China
***Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations.***

Substantially all of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by economic, political and social conditions in China generally.

While the Chinese economy has experienced significant growth over the past decades, there can be no assurance that the growth would be maintained or be even among various sectors of the economy, and the rate of growth has been slowing since 2012. Any adverse changes in economic conditions in China, in the government policies or the laws and regulations in mainland China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to a reduction in demand for our services and adversely affect our competitive position.

Our ability to successfully maintain or grow our business operations in China depends on various factors, which are beyond our control. These factors include, among others, macro-economic and other market conditions, political stability, social conditions, measures to control inflation or deflation, changes in the rate or method of taxation, changes in laws, regulations and administrative directives or their interpretation, and changes in industry policies. If we fail to take timely and appropriate measures to adapt to any of the changes or challenges, our business, results of operations and financial condition could be materially and adversely affected. In addition, the PRC government has oversight and discretion over the conduct of our business in accordance with the laws and regulations in mainland China and may influence our operations. Our failure to comply with applicable laws could result in a material adverse change in our business operations and/or the value of our securities.

***The PRC government's significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.***

We conduct our business primarily in mainland China. Our operations in mainland China are governed by the laws and regulations in mainland China. The PRC government has significant oversight and discretion over the conduct of our business in accordance with the laws and regulations in mainland China, and it may intervene in or influence our operations as it deems appropriate to advance regulatory and societal goals and policy positions. For example, the PRC government has strengthened oversight over offerings that are conducted overseas and/or foreign investment in China-based issuers. On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which became effective on March 31, 2023. Pursuant to these regulations, China-based companies that directly or indirectly offer or list their securities in an overseas market must file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing. These regulations also provide that a China-based company must file with the CSRC within three business days after completion of its follow-on offering of securities after it is listed in an overseas market. If it is determined that we are subject to filing requirements imposed by the CSRC under these regulations or approvals from other PRC regulatory authorities or other procedures, including the cybersecurity review under the revised Measures for Cybersecurity Review, for our future offshore offerings, it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and any such approval could be rescinded. In addition, new regulations and policies may significantly affect the industries in which we operate, which could result in a material adverse change in our operation and/or the value of our ADSs.

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#### The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us.
The legal system in mainland China is a civil law system based on written statutes, where prior court decisions have limited precedential value. The legal system in mainland China is evolving, and the interpretations of many laws, regulations and rules and enforcement of these laws, regulations and rules may be subject to change. For instance, on December 29, 2023, the Standing Committee of the National People's Congress promulgated the amended PRC Company Law, which took effect on July 1, 2024. The new PRC Company Law makes substantial changes to the current PRC Company Law in a number of areas, including, among others, imposing time limit for capital contribution to existing and future companies so that companies which are established before the effectiveness of the new PRC Company Law with a term of capital contributions exceeding the time limit must adjust their schedule of capital contribution unless otherwise permitted by the laws and regulations or the State Council. On July 1, 2024, the SAMR issued the Provisions of the State Council on Implementing the Registered Capital Registration and Management System under the PRC Company Law, which further specify the detailed requirements and measures of the registration and management of registered capital under the new Company Law. We may be required to fulfill our capital contribution obligations to our PRC subsidiaries or to provide financial support to the nominee shareholders of the VIEs within a significantly shorter timeframe than currently stipulated pursuant to the new PRC Company Law.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since the judicial and administrative authorities in mainland China have discretion in interpreting and implementing statutory and contractual terms, it may be difficult to predict the outcome of a judicial or administrative proceeding. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results of operations.

Furthermore, the legal system in mainland China is based, in part, on government policies and internal rules. As a result, we may not always be aware of our violation of these policies and rules until sometime after the violation. Such unpredictability towards our contractual, property (including intellectual property) and procedural rights could adversely affect our business and impede our ability to continue our operations.

***We may be adversely affected by the complexity and changes in regulation of internet-related businesses and companies in mainland China.***

The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies operating in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations.

We only have contractual arrangements with the VIEs. We do not directly own the VIEs due to the restriction of foreign investment in certain businesses, including internet information provision services. This may subject us to sanctions, or compromise enforceability of related contractual arrangements, which may result in significant disruption to our business.

The evolving regulatory system in mainland China for the internet industry may lead to the establishment of new regulatory agencies. For example, in March 2018, the PRC State Council announced the establishment of a new department, the Office of the Central Cyberspace Affairs Commission (with the involvement of the PRC State Council Information Office, the Ministry of Industry and Information Technology, and the Ministry of Public Security). The primary role of this new agency is to facilitate the policy-making and legislative development in this field, to direct and coordinate with other departments in connection with online content administration and to deal with cross-ministry regulatory matters in relation to the internet industry, and the National Computer Network and Information Security Management Center was adjusted to be managed by the Office of the Central Cyberspace Affairs Commission Office instead of the Ministry of Industry and Information Technology. In March 2023, the PRC State Council announced to establish the National Data Bureau, which will be responsible for certain matters that are currently regulated by the Central Cyberspace Affairs Commission and the National Development and Reform Commission, such as coordinating the sharing and development of the national data resources.

We have obtained the license for provision of internet information services and other permits required for operating our business. However, if we fail to obtain, maintain or renew such licenses, or obtain any additional licenses and permits or make any records or filings required by new laws or regulations required for our new business in a timely manner or at all, we could be subject to liabilities or penalties, and our operations could be adversely affected.

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The interpretation and application of existing laws, regulations and policies in mainland China and possible new laws, regulations or policies relating to the internet industry have created uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, internet businesses in China, including our business. We cannot assure you that we have obtained all the permits or licenses required for conducting our business in China or will be able to maintain our existing licenses or obtain new ones. If the PRC government considers that we were operating without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or imposes additional restrictions on the operation of any part of our business, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses and require us to discontinue our relevant business or impose restrictions on the affected portion of our business. Any of these actions by the PRC government may have a material adverse impact on our business and results of operations.

***You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.***

We are an exempted company incorporated under the laws of the Cayman Islands, however, we conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and substantially all of them are China nationals. As a result, it may be difficult for our shareholders to effect service of process upon us or our management residing in China. In addition, mainland China does not have treaties providing for reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and some other countries and regions. Therefore, recognition and enforcement in mainland China of judgments of a court in any of these non-mainland China jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

***It may be difficult for overseas regulators to conduct investigation or collect evidence within China.***

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in mainland China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside mainland China. Although the PRC authorities may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. The Provisions on Strengthening Confidentiality and Archives Management of Overseas Securities Issuance and Listing by Domestic Enterprises, which became effective on March 31, 2023, provides that the investigation and evidence collection in relation to the oversea securities offering and listing of the China-based domestic companies by the overseas securities regulatory authorities and other authorities shall be conducted through the cross-border cooperation mechanism for supervision and administration and the China-based domestic companies shall obtain the prior consent from the CSRC or relevant authorities before cooperating with such overseas securities regulatory authorities or relevant authorities in connection with the inspections or investigations or providing required documents to such overseas securities regulatory authorities or relevant authorities. The inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may increase difficulties faced by you in protecting your interests. See also "—Risks Related to Our ADSs—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law" for risks associated with investing in us as a Cayman Islands company.

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***If we are classified as a mainland China resident enterprise for mainland China income tax purposes, such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders and ADS holders.***

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of mainland China with "de facto management body" within mainland China is considered a "resident enterprise" and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term "de facto management body" as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation issued the Circular of the State Administration of Taxation on Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the De Facto Standards of Organizational Management, which provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled enterprise that is incorporated offshore is located in mainland China. Although this circular only applies to offshore enterprises controlled by mainland China enterprises or mainland China enterprise groups, not those controlled by mainland China individuals or foreigners, the criteria set forth in the circular may reflect the general position of the State Administration of Taxation on how the "de facto management body" text should be applied in determining the tax resident status of all offshore enterprises. According to the Circular of the State Administration of Taxation on Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the De Facto Standards of Organizational Management, an offshore incorporated enterprise controlled by a mainland China enterprise or a mainland China enterprise group will be regarded as a mainland China tax resident by virtue of having its "de facto management body" in mainland China and will be subject to mainland China enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in mainland China; (ii) decisions relating to the enterprise's financial and human resource matters are made or are subject to approval by organizations or personnel in mainland China; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in mainland China; and (iv) at least 50% of voting board members or senior executives habitually reside in mainland China.

We believe none of our entities outside of mainland China is a mainland China resident enterprise for mainland China tax purposes. However, the tax resident status of an enterprise is subject to determination by the tax authorities in mainland China and uncertainties remain with respect to the interpretation of the term "de facto management body." If the tax authorities in mainland China determine that Waterdrop Inc. is a mainland China resident enterprise for enterprise income tax purposes, we could be subject to mainland China tax at a rate of 25% on our worldwide income, which could materially reduce our net income, and we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ADSs. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to mainland China tax at a rate of 10% on gains realized on the sale or other disposition of ADSs or Class A ordinary shares, if such income is treated as sourced from within China. Furthermore, if we are deemed a mainland China resident enterprise, dividends payable to our non-PRC individual shareholders (including our ADS holders) and any gain realized on the transfer of ADSs or Class A ordinary shares by such shareholders may be subject to mainland China tax at a rate of 20% (and such mainland China tax may be withheld at source in the case of dividends). Any mainland China income tax liability may be reduced under applicable tax treaties. However, it is unclear whether in practice non-mainland China shareholders of Waterdrop Inc. would be able to obtain the benefits of any tax treaties between their country of tax residence and mainland China in the event that we are treated as a mainland China resident enterprise. Any such tax may reduce the returns on your investment in the ADSs or Class A ordinary shares.

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***We face uncertainties with respect to indirect transfers of equity interests in mainland China resident enterprises by their non-mainland China holding companies.***

We face uncertainties regarding the reporting on and consequences of previous private equity financing transactions involving the transfer and exchange of shares in our company by non-resident investors. In February 2015, the State Administration of Taxation issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7. Pursuant to Bulletin 7, an "indirect transfer" of the assets in mainland China, including a transfer of equity interests in an unlisted non-mainland China holding company of a mainland China resident enterprise, by non-mainland China resident enterprises may be re-characterized and treated as a direct transfer of the underlying assets in mainland China, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of mainland China enterprise income tax. As a result, gains derived from such indirect transfer may be subject to mainland China enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a mainland China resident enterprise. Bulletin 7 also introduced safe harbors for internal group restructurings and the purchase and sale of equity securities through a public securities market. On October 17, 2017, the State Administration of Taxation issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or the Bulletin 37, which came into effect on December 1, 2017. The Bulletin 37 further clarifies the practice and procedure of the withholding of nonresident enterprise income tax.

We face uncertainties on the reporting and consequences of future private equity financing transactions, share exchanges or other transactions involving the transfer of shares in our company by investors that are non-mainland China resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our subsidiaries in mainland China to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed under Bulletin 7 and Bulletin 37, and may be required to expend valuable resources to comply with them or to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have a material adverse effect on our financial condition and results of operations.

***If our preferential tax treatments and government subsidies are revoked or become unavailable or if the calculation of our tax liability is successfully challenged by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.***

The PRC government has provided tax incentives to our subsidiaries in mainland China, including reduced enterprise income tax rates. For example, under the PRC Enterprise Income Tax Law and its implementation rules, the statutory enterprise income tax rate is 25%. However, the income tax of an enterprise that has been determined to be a high and new technology enterprise can be reduced to a preferential rate of 15%. Any increase in the enterprise income tax rate applicable to our subsidiaries in mainland China, or any discontinuation, retroactive or future reduction or refund of any of the preferential tax treatments and local government subsidies currently enjoyed by our subsidiaries in mainland China, could adversely affect our business, financial condition and results of operations.

Further, in the ordinary course of our business, we are subject to complex income tax and other tax regulations, and significant judgment is required in the determination of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities successfully challenge our position and we are required to pay tax, interest and penalties in excess of our tax provisions, our financial condition and results of operations would be materially and adversely affected.

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***The M&A Rules and certain other regulations in mainland China establish procedures and requirements for certain acquisitions of PRC companies, which could make it difficult for us to pursue growth through acquisitions.***

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, and some other regulations and rules concerning mergers and acquisitions established complex procedures and requirements for some acquisitions of companies in mainland China by foreign investors, including requirements in some instances that the Ministry of Commerce, be notified in advance of any change-of-control transaction in which a foreign investor takes control of a domestic enterprise in mainland China. Moreover, the PRC Anti-Monopoly Law promulgated by the Standing Committee of the PRC National People's Congress, which was promulgated on August 1, 2008 and most recently amended on June 24, 2022, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the Ministry of Commerce before they can be completed. The PRC Anti-Monopoly Law, which was amended in June 2022, increases the fines for illegal concentration of business operators to no more than ten percent of its last year's sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competitions, or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition. It also provides that the governmental authorities shall investigate a transaction where there is any evidence that the concentration has or may have the effect of eliminating or restricting competitions, even if such concentration does not reach the filing threshold. On February 7, 2021, the Anti-Monopoly Committee of the PRC State Council published the Anti-Monopoly Guidelines for the Internet Platform Economy Sector, which intends to regulate abuse of a dominant position and other anti-competitive practices by online platform operators and the related service providers on online platforms. It also stipulates that any concentration of undertakings involving variable interest entities shall fall within the scope of anti-monopoly review. If a concentration of undertakings meets the thresholds for clearance under the applicable laws, an internet platform operator shall report such concentration of undertakings to the anti-monopoly law enforcement agency under the PRC State Council in advance. Therefore, our acquisitions of other entities that we make in the future (whether by ourselves, our subsidiaries or through the VIEs) and that meets the thresholds for clearance, may be required to be report to and approved by the anti-monopoly law enforcement agency in the PRC, and we may be subject to penalty including but not limited to a fine if we fail to comply with such requirement.

In addition, the security review rules issued by the Ministry of Commerce that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. On December 19, 2020, the Measures for the Security Review for Foreign Investment was jointly issued by the National Development and Reform Commission and the Ministry of Commerce and took effect from January 18, 2021. The Measures for the Security Review for Foreign Investment specified provisions concerning the security review mechanism on foreign investment, including the types of investments subject to review, review scopes and procedures, among others.

In the future, we may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the above-mentioned regulations and other rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the Ministry of Commerce or its local counterparts or other governmental authorities, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

***The filing, approval or other administration requirements of the CSRC or other PRC governmental authorities may be required in connection with our offshore offerings under the law in mainland China, and, if required, we cannot predict whether or for how long we will be able to complete such filing, obtain such approval or meet such requirements.***

On July 6, 2021, the PRC governmental authorities issued Opinions on Strictly Scrutinizing Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.

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Pursuant to Cybersecurity Review Measures, which were issued on December 28, 2021 and became effective on February 15, 2022, network platform operators holding over one million users' personal information must apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. However, given the Cybersecurity Review Measures were relatively new, it remains uncertain as to how these measures would affect us. We cannot assure you that we would be able to complete the applicable cybersecurity review procedures in a timely manner, or at all, if we are required to do so. In addition, on September 24, 2024, the Cyberspace Administration of China published the Administration Regulations on the Network Data Security, which provides that network data processors conduct network data processing activities that affects or may possibly affect national security must conduct national security review in accordance with relevant laws and regulations. However, these regulations remain unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities, it remains uncertain how PRC governmental authorities will regulate overseas listing in general and how we will be affected.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which became effective on March 31, 2023. Pursuant to these regulations, companies in China that directly or indirectly offer or list their securities in an overseas market must file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing. These regulations also provide that a company in China must file with the CSRC within three business days after completion of its follow-on offering of securities after it is listed in an overseas market. If the company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, it may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. According to the Notice on Administration of the Filing of Overseas Offering and Listing by Domestic Companies issued by the CSRC on February 17, 2023, the China-based companies that have been listed overseas before March 31, 2023 are not required to file with the CSRC in connection with the historical offerings, although these companies are required to fulfill filing obligations with the CSRC in connection with their additional capital raising activities in accordance with the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies. Based on the foregoing, we are not required to complete filing with the CSRC for our historical offerings but may be subject to the filing requirements for our future capital raising activities, if any, under these regulations. As these regulations are relatively new, their interpretation, application and enforcement remain uncertain, and this is particularly true for companies conducting their operations in China through variable interest entities. There remain uncertainties with respect to how the CSRC filing procedures under these regulations would be applied to, and implicate, the procedures, timetables and outcomes of our future offering or other capital raising activities.

On February 24, 2023, the CSRC, jointly with other governmental authorities, published the Provisions on Strengthening Confidentiality and Archives Management of Overseas Securities Issuance and Listing by Domestic Enterprises, which became effective on March 31, 2023. Pursuant to these provisions, China-based companies that offer and list securities in overseas markets shall establish confidentiality and archives system. These China-based companies shall obtain approval from the competent authorities and file with the confidential administration authorities, either by itself or its offshore listing entity, when providing or publicly filing documents and materials related to state secrets or secrets of the governmental authorities to relevant securities companies, securities service institutions or offshore regulatory authorities. In addition, these companies shall complete required procedures if the documents or materials filed may adversely affect national security or public interests once publicly disclosed, or if these companies provide accounting files or copies to relevant securities companies, securities service institutions, overseas regulators and individuals.

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If it is determined that we are subject to filing requirements imposed by the CSRC under the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies or approvals from other PRC regulatory authorities or other procedures, including the cybersecurity review under the revised Measures for Cybersecurity Review, for our future offshore offerings, it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and any such approval could be rescinded. Any failure to obtain or delay in completing such procedures or obtaining such approval for our offshore offerings, or a rescission of any such approval if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to file with the CSRC or failure to seek approval from other governmental authorities for our offshore offerings. These regulatory authorities may impose fines and penalties on our operations in mainland China, limit our ability to pay dividends outside of mainland China, limit our operating privileges in mainland China, delay or restrict the repatriation of the proceeds from our offshore offerings into mainland China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our shares. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of the shares.

***Any failure to comply with the regulations in mainland China regarding the registration requirements for employee share incentive plans may subject our share incentive plan participants or us to fines and other legal or administrative sanctions.***

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, replacing earlier rules promulgated in 2007. Pursuant to these rules, mainland China citizens and non-mainland China citizens who reside in mainland China for a continual period of not less than one year and participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the subsidiaries in mainland China of such overseas-listed company, and complete certain other procedures. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are mainland China citizens or who reside in mainland China for a continual period of not less than one year and who have been granted options are subject to these regulations. Failure to complete SAFE registrations may subject them to fines of up to RMB300,000 for entities and up to RMB50,000 for individuals, and legal sanctions and may also limit our ability to contribute additional capital into our subsidiaries in mainland China and limit the ability of our subsidiaries in mainland China to distribute dividends to us. In addition, laws and regulations and their interpretation may change from time to time, and there remains uncertainties with respect to their implementation, which could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under the law in mainland China. See "Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Share Incentive Plans."

In addition, the State Administration of Taxation has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in mainland China who exercise share options or are granted restricted shares will be subject to individual income tax of mainland China. Our subsidiaries in mainland China have obligations to file documents related to employee share options or restricted shares with the tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or we fail to withhold their income taxes according to the laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. See "Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Share Incentive Plans."

***Failure to comply with the laws and regulations in mainland China on leased property may expose us to potential fines and negatively affect our ability to use the properties we lease.***

Our leasehold interests in leased properties have not been registered with the PRC governmental authorities as required by the law in mainland China, which may expose us to potential fines if we fail to remediate after receiving any notice from the PRC governmental authorities. Failure to complete the lease registration will not affect the legal effectiveness of the lease agreements according to the law in mainland China, but the real estate administrative authorities may require the parties to the lease agreements to complete lease registration within a prescribed period of time, and the failure to do so may subject the parties to fines from RMB1,000 to RMB10,000 for each of such lease agreements.

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Certain lessors of our leased properties have not provided us with valid property ownership certificates or any other documentation proving their right to lease those properties to us. If our lessors are not the owners of the properties or they have not obtained consents from the owners or their lessors or permits from the governmental authorities, our leases could be invalidated.

As of the date of this annual report, we are not aware of any actions, claims or investigations threatened against us or our lessors with respect to the defects in our leasehold interests. However, if any of our leases is terminated as a result of challenges by third parties or governmental authorities for lack of title certificates or proof of authorization to lease, we do not expect to be subject to any fines or penalties, but we may be forced to relocate the affected offices and incur additional expenses relating to such relocation.

***Regulations in mainland China relating to offshore investment activities by mainland China residents may limit the ability of our subsidiaries in mainland China to change their registered capital or distribute profits to us or otherwise expose us or our mainland China resident beneficial owners to liability and penalties under the laws in mainland China.***

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires mainland China residents (including mainland China individuals and mainland China corporate entities as well as foreign individuals that are deemed as mainland China residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires amendment to SAFE registrations in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a mainland China individual shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle, such as increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are mainland China residents and may be applicable to any offshore acquisitions that we make in the future.

If our shareholders who are mainland China residents or entities do not complete their registration with the local SAFE branches, our subsidiaries in mainland China may be prohibited from distributing its profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our subsidiaries in mainland China. In February 2015, SAFE promulgated a Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Circular 13, effective in June 2015. Under SAFE Circular 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, shall be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

We have used our best efforts to notify mainland China residents or entities who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being mainland China residents to complete the foreign exchange registrations. However, we may not be informed of the identities of all the mainland China residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements. As of the date of this annual report, Mr. Peng Shen and Mr. Wei Ran, who currently hold direct or indirect ownership interests in our company, have completed the initial registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37. We cannot assure you that all shareholders or beneficial owners of ours who are mainland China residents, including the beneficiaries of certain trusts directly or indirectly holding interest in our company have complied with, and will in the future make, obtain or update any applicable registrations or approvals required by SAFE regulations.

The failure or inability of such shareholders or beneficial owners to comply with SAFE Circular 37 or other SAFE regulations, or failure by us to amend the foreign exchange registrations of our subsidiaries in mainland China, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit the ability of our subsidiaries in mainland China to make distributions or pay dividends to us or affect our ownership structure. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under the law in mainland China for circumventing applicable foreign exchange restrictions. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.

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Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the governmental authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a China-based domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

***We may be materially adversely affected if our shareholders and beneficial owners who are mainland China entities fail to comply with the overseas investment regulations in mainland China.***

On December 26, 2017, the National Development and Reform Commission promulgated the Administrative Measures on Overseas Investments of Enterprises, which took effect as of March 1, 2018. According to the order, non-sensitive overseas investment projects are subject to record-filing requirements with the National Development and Reform Commission. On September 6, 2014, the Ministry of Commerce promulgated the Administrative Measures on Overseas Investments, which took effect as of October 6, 2014. According to this regulation, overseas investments of mainland China enterprises that involve non-sensitive countries and regions and non-sensitive industries are subject to record-filing requirements with the Ministry of Commerce. According to the Circular of the State Administration of Foreign Exchange on Issuing the Regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions, which was promulgated by SAFE on July 13, 2009 and took effect on August 1, 2009, mainland China enterprises must register for overseas direct investment with a local SAFE branch.

We may not be fully informed of the identities of all our shareholders or beneficial owners who are mainland China entities, and we cannot provide any assurance that all of our shareholders and beneficial owners who are mainland China entities will comply with our request to complete the overseas direct investment procedures under the aforementioned regulations or other related rules in a timely manner, or at all. If they fail to complete the filings or registrations required by the overseas direct investment regulations, the authorities may order them to suspend or cease the implementation of such investment and make corrections within a specified time, which may adversely affect our business, financial condition and results of operations.

***We may rely on dividends and other distributions on equity paid by our subsidiaries in mainland China to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries in mainland China to make payments to us could have a material and adverse effect on our ability to conduct our business.***

We are a Cayman Islands holding company and we may rely principally on dividends and other distributions on equity from our subsidiaries in mainland China for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders for services of any debt we may incur. If any of our subsidiaries in mainland China incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Under the laws and regulations in mainland China, our subsidiaries in mainland China, which are foreign-owned enterprises, may pay dividends only out of their respective accumulated profits as determined in accordance with the accounting standards and regulations in mainland China. In addition, a foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Such reserve funds cannot be distributed to us as dividends. At its discretion, a foreign-owned enterprise may allocate a portion of its after-tax profits based on the accounting standards in mainland China to an enterprise expansion fund, or a staff welfare and bonus fund.

Our subsidiaries in mainland China generate essentially all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our subsidiaries in mainland China to use their Renminbi revenues to pay dividends to us.

The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of our subsidiaries in mainland China to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

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In addition, the PRC Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% is applicable to dividends payable by mainland China companies to non-mainland China resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the central PRC government and governments of other countries or regions where the non-mainland China resident enterprises are incorporated.

***Regulation in mainland China of loans to and direct investment in the entities in mainland China by offshore holding companies may delay us from using the proceeds of financing activities to make loans or additional capital contributions to our subsidiaries in mainland China and to make loans to the VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.***

Any funds we transfer to our subsidiaries in mainland China, either as a shareholder loan or as an increase in registered capital, as well as any loans we provide to the VIEs, are subject to approval by or registration with the governmental authorities in China. According to the regulations on foreign invested enterprises in mainland China, capital contributions to our subsidiaries in mainland China are subject to the registration with the PRC State Administration for Market Regulation or its local counterpart and registration with a local bank authorized by SAFE. In addition, (i) any foreign loan procured by our subsidiaries in mainland China is required to be registered with SAFE or its local branches and (ii) any of our subsidiaries in mainland China may not procure loans which exceed the difference between its total investment amount and registered capital or, as an alternative, only procure loans subject to the calculation approach and limitation as provided by the People's Bank of China. Additionally, any medium or long-term loans to be provided by us to the VIEs must be registered with the National Development and Reform Commission and SAFE or its local branches. We may not be able to obtain these government approvals or complete such registrations in a timely manner, or at all, with respect to future capital contributions or foreign loans by us to our subsidiaries in mainland China or loans by us to the VIEs. If we fail to receive such approvals or complete such registration or filing, our ability to use the proceeds of financing activities to capitalize our operations in China may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

***Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.***

The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People's Bank of China. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against the U.S. dollar and other currencies is affected by changes in China's political and economic conditions and by China's foreign exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or China or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.

Substantially all of our income and expenses are denominated in Renminbi and our reporting currency is Renminbi. Significant revaluation of the Renminbi may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would reduce the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of paying dividends or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S. dollar amount available to us.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any material hedging transactions to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by the exchange control regulations in mainland China that restrict our ability to convert Renminbi into foreign currency.

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***Governmental regulation of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.***

The PRC government imposes regulations on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of mainland China requires approval or registration in accordance with regulatory requirements. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from our subsidiaries in mainland China to fund any cash and financing requirements we may have. Under existing foreign exchange regulations in mainland China, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our subsidiaries in mainland China may be used to pay dividends to our company. However, approval from or registration with appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of mainland China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our subsidiaries in mainland China and VIEs to pay off their respective debt in a currency other than Renminbi owed to entities outside mainland China, or to make other capital expenditure payments outside mainland China in a currency other than Renminbi.

The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If we are unable to obtain sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the ADSs.

#### Our failure to fully comply with labor-related laws in mainland China may expose us to potential penalties.
Companies operating in mainland China are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments given the different levels of economic development in different locations. We did not pay, or were not able to pay, certain past social security and housing fund contributions in strict compliance with the regulations in mainland China for and on behalf of our employees. Although we have recorded accruals for estimated underpaid amounts and late payment in our financial statements, we may be subject to penalties for our failure to make payments in accordance with the applicable laws and regulations in mainland China. We may be required to make up the contributions for these plans as well as to pay late fees and fines. We have not made any accruals for penalties that may be imposed by the PRC governmental authorities in the financial statements. If we are subject to fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected.

***The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.***

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we and investors in the ADSs were deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting firm's audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we and investors in our ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the ADSs to lose confidence in audit procedures performed by our auditors and reported financial information and the quality of our financial statements.

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***Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.***

Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. As of the date of this annual report, the PCAOB has not issued any new determination that it is unable to inspect or investigate completely registered public accounting firms headquartered in any jurisdiction. For this reason, we do not expect to be identified so after we file this annual report on Form 20-F for the fiscal year ended December 31, 2025.

Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

#### Risks Related to Our ADSs
***The trading price of the ADSs has been and may be volatile, which could result in substantial losses to investors.***

Our ADSs became listed on the NYSE on May 7, 2021. The closing trading price of our ADSs ranged from US$1.12 to US$2.04 per ADS in 2025. The trading price of the ADSs has been volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies in relevant industries and those with business operations located mainly in China that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following:

● variations in our revenues, earnings, cash flow;

● fluctuations in operating metrics;

● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

● announcements of new solutions and services and expansions by us or our competitors;

● termination or non-renewal of contracts or any other material adverse change in our relationship with our key customers or strategic investors;

● changes in financial estimates by securities analysts;

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● detrimental negative publicity about us, our competitors or our industry;

● additions or departures of key personnel;

● release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;

● regulatory developments affecting us or our industry; and

● potential litigation or regulatory investigations.

Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade. Furthermore, the stock market in general experiences price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our ADSs. Volatility or a lack of positive performance in our ADS price may also adversely affect our ability to retain key employees, most of whom have been granted share incentives.

In the past, shareholders of public companies have often brought securities class action suits against companies following periods of instability in the market price of their securities. We were named as a defendant in a putative shareholder class action lawsuit in the past, which we successfully defended ourselves against. Involving in a class action suit could divert a significant amount of our management's attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

***If securities or industry analysts cease to publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.***

The trading market for the ADSs may be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade the ADSs, the market price for the ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for the ADSs to decline.

***Our dual-class voting structure may limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.***

Our authorized and issued ordinary shares are divided into Class A ordinary shares and Class B ordinary shares (with certain shares remaining undesignated, with power for our directors to designate and issue such classes of shares as they think fit). Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to nine votes per share. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. In addition, the Class B ordinary shares held by Mr. Peng Shen or his affiliated entities shall be automatically immediately converted into the same number of Class A ordinary shares in the event that Mr. Shen ceases to be employed by and ceases to act as a director of our Company.

As of March 31, 2026, Mr. Peng Shen beneficially owns all of our issued Class B ordinary shares and held approximately 72.1% of the aggregate voting power of our total issued and outstanding share capital due to the disparate voting powers associated with our dual-class share structure. As a result of the dual-class share structure and the concentration of ownership, holders of Class B ordinary shares have considerable influence over matters such as decisions regarding mergers and consolidations, election of directors, and other significant corporate actions. Such holders may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay, or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our ADSs. This concentrated control may limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover, or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.

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***We are a "controlled company" within the meaning of the NYSE Listed Company Manual and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.***

We are a "controlled company" as defined under the NYSE Listed Company Manual because Mr. Peng Shen, our chairman of the board of directors and chief executive officer, owns more than 50% of our total voting power. For so long as we remain a "controlled company" under that definition, we are permitted to elect to rely, and may rely, on exemptions from certain corporate governance rules, including an exemption from the rule that a majority of our board of directors must be independent directors or that we have to establish a nominating committee and a compensation committee composed entirely of independent directors. Currently, we rely on the exemption with respect to the requirements that (i) a majority of our board of directors be composed of independent directors, (ii) a nominating committee composed entirely of independent directors, and (iii) a compensation committee composed entirely of independent directors. If we choose to rely on additional exemptions in the future, our shareholders may not be afforded the same protection that they would otherwise enjoy under these exempted NYSE corporate governance listing standards.

***Because the amount, timing, and whether or not we distribute dividends at all is entirely at the discretion of our board of directors, you must rely on price appreciation of our ADSs for return on your investment.***

Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands exempted company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, although we declared cash dividend on several occasions in recent years, the return on your investment in our ADSs will still likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

***Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.***

Sales of our ADSs, ordinary shares, or other equity securities in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. All ADSs representing our Class A ordinary shares are freely transferable by persons other than our "affiliates" without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act.

In the future, we may sell additional ordinary shares, ADSs, or other equity securities to raise capital, and our existing shareholders could sell substantial amounts of the ordinary shares or ADSs, including those issued upon the exercise of outstanding options, in the public market. We cannot predict the size of such future issuance or the effect, if any, that they may have on the market price for our ADSs. The issuance and sale of a substantial amounts of ordinary shares, ADSs, or other equity securities, or the perception that such issuances and sales may occur, could adversely affect the market price of our ADSs and impair our ability to raise capital through the sale of additional equity securities.

Certain holders of our Class A ordinary shares have the right to cause us to register under the Securities Act the sale of their shares. Registration of these shares under the Securities Act would result in ADSs representing these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the form of ADSs in the public market could cause the price of our ADSs to decline.

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***Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and the ADSs.***

Our currently effective memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, including Class A ordinary shares represented by ADSs. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of the ADSs may fall and the voting and other rights of the holders of our Class A ordinary shares and the ADSs may be materially and adversely affected.

***Our memorandum and articles of association and the deposit agreement provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive judicial forum within the U.S. for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, and any suit, action or proceeding arising out of or relating in any way to the ADSs or the deposit agreement, which could limit the ability of holders of our Class A ordinary shares, the ADSs or other securities to obtain a favorable judicial forum for disputes with us, our directors and officers, the depositary, and potentially others.***

Our currently effective memorandum and articles of association provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether such legal suit, action, or proceeding also involves parties other than our company. The deposit agreement provides that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) shall have exclusive jurisdiction over any suit, action or proceeding against or involving us or the depositary, arising out of or relating in any way to the deposit agreement or the transactions contemplated thereby or by virtue of owning the ADSs. The enforceability of similar federal court choice of forum provisions in other companies' organizational documents has been challenged in legal proceedings in the United States, and it is possible that a court could find this type of provision to be inapplicable or unenforceable. If a court were to find the federal choice of forum provision contained in our memorandum and articles of association or the deposit agreement to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. If upheld, the forum selection clause in our memorandum and articles of association, as well as the forum selection provision in the deposit agreement, may limit a security-holder's ability to bring a claim against us, our directors and officers, the depositary, and potentially others in his or her preferred judicial forum, and this limitation may discourage such lawsuits. Holders of our shares or the ADSs will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder pursuant to the exclusive forum provision in the memorandum and articles of association and deposit agreement. In addition, the forum selection provision of the deposit agreement does not effect the right of an ADS holder or the depositary to require any claim against us, including a federal securities law claim, to be submitted to arbitration or to commence an action in any court in aid of that arbitration provision or to enter judgment upon or enforce any arbitration award.

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***The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to direct the voting of the underlying Class A ordinary shares represented by your ADSs.***

Holders of ADSs do not have the same rights as our registered shareholders. As a holder of ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise the voting rights attached to the Class A ordinary shares underlying your ADSs indirectly by giving voting instructions to the depositary in accordance with the provisions of the deposit agreement. Where any matter is to be put to a vote at a general meeting, then upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the underlying Class A ordinary shares represented by your ADSs in accordance with your instructions. You will not be able to directly exercise your right to vote with respect to the underlying Class A ordinary shares unless you cancel and withdraw the shares and become the registered holder of such shares prior to the record date for the general meeting.

When a general meeting is convened, you may not receive sufficient advance notice of the fleeting to withdraw the Class A ordinary shares represented by your ADSs and become the registered holder of such shares to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at the general meeting. In addition, under our currently effective memorandum and articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the underlying Class A ordinary shares represented by your ADSs and from becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. Where any matter is to be put to a vote at a general meeting, upon our instruction the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented by your ADSs.

In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to direct how the underlying Class A ordinary shares represented by your ADSs are voted and you may have no legal remedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders' meeting.

Further, under the deposit agreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote the Class A ordinary shares underlying your ADSs at shareholders' meetings unless:

● we have instructed the depositary that we do not wish a discretionary proxy to be given;

● we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;

● a matter to be voted on at the meeting would have a material adverse impact on shareholders; or

● the voting at the meeting is to be made on a show of hands.

The effect of this discretionary proxy is that you cannot prevent our Class A ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may adversely affect your interests and make it more difficult for shareholders to influence the management of our company. Holders of our Class A ordinary shares are not subject to this discretionary proxy.

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#### You may be subject to limitations on transfer of your ADSs.
Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

***You may experience dilution of your holdings due to inability to participate in rights offerings.***

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

***You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.***

We are an exempted company with limited liability incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, as amended from time to time, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take actions against our directors, actions by our minority shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedents in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, with respect to Cayman Islands companies, plaintiffs may face special obstacles, including but not limited to those relating to jurisdiction and standing, in attempting to assert derivative claims in state or federal courts of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect or obtain register of members or corporate records (other than the memorandum and articles of association, any special resolutions passed by shareholders, and the registers of mortgages and charges of such companies). Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies. Our directors have discretion under our memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see "Item 10. Additional Information—B. Memorandum and Articles of Association—Differences in Corporate Law."

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#### Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. Substantially all of our current operations are conducted in China. In addition, substantially all of our current directors and officers are nationals and residents of countries other than the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers.

***Your rights to pursue claims against the depositary as a holder of ADSs are limited by the terms of the deposit agreement.***

The deposit agreement governing the ADSs representing our Class A ordinary shares provides that, subject to the right to require a claim to be settled by arbitration, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws, to the fullest extent permitted by law. However, you will not be deemed to and you will not be able to, by agreeing to the terms of the deposit agreement, waive our or the depositary's compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder.

If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the City of New York, which has nonexclusive jurisdiction over matters arising under the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waive the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the deposit agreement.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

The deposit agreement also provides that ADSs holders and the depositary have the right to elect to have any claim against us arising out of or relating to our Class A ordinary shares, ADSs, ADRs or the deposit agreement settled by arbitration in New York, New York rather than in a court of law, and to have any judgment rendered by the arbitrators entered in any court having jurisdiction. The arbitral tribunal in any such arbitration would not have the authority to award any consequential, special, or punitive damages or other damages not measured by the prevailing party's actual damages and may not make any ruling, finding or award that does not conform to the provisions of the deposit agreement. The deposit agreement does not give us the right to require that any claim, whether brought by us or against us, be arbitrated. The optional arbitration provision does not apply to claims under federal securities laws or claims other than in connection with our IPO.

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***We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.***

As a company with less than US$1.235 billion in revenues for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. Therefore, we may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company's internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies. As a result, if we elect not to comply with such reporting and other requirements, in particular the auditor attestation requirements, our investors may not have access to certain information they may deem important.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We do not plan to "opt out" of such exemptions afforded to an emerging growth company. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

***As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE listing standards.***

As a Cayman Islands company listed on the NYSE, we are subject to the NYSE listing standards, which requires listed companies to have, among other things, a majority of their board members to be independent and independent director oversight of executive compensation and nomination of directors. However, NYSE rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NYSE listing standards.

We are permitted to elect to rely on home country practice to be exempted from the corporate governance requirements. If we choose to follow home country practice in the future, our shareholders may be afforded less protection than they would otherwise enjoy if we complied fully with the NYSE listing standards.

***We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.***

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

● the sections of the Exchange Act regulating liability for insiders who profit from trades made in a short period of time;

● the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and

● certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the NYSE. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

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***We believe we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the taxable year ended December 31, 2025, which could result in adverse U.S. federal income tax consequences to U.S. Holders of the ADSs or our Class A ordinary shares.***

A non-U.S. corporation, such as our company, will be considered a PFIC for any taxable year if either (i) at least 75% of its gross income is passive income or (ii) at least 50% of the value of its assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. Although the law in this regard is not entirely clear, we treat our consolidated VIEs (including their subsidiaries) as being owned by us for U.S. federal income tax purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated with them. As a result, we consolidate their results of operations into our consolidated U.S. GAAP financial statements.

Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash and investments), and the market price of our ADSs, we believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended December 31, 2025, and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.

If we are treated as a PFIC for any taxable year during which a U.S. Holder (as defined in "Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations") holds our ADSs or Class A ordinary shares, such U.S. Holder will generally be subject to reporting requirements and may incur significantly increased United States income tax on gain recognized on the sale or other disposition of the ADSs or Class A ordinary shares and on the receipt of distributions on the ADSs or Class A ordinary shares to the extent such distribution is treated as an "excess distribution" under the U.S. federal income tax rules. Further, if we are a PFIC for any year during which a U.S. Holder holds our ADSs or Class A ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or Class A ordinary shares, unless we were to cease to be a PFIC and the U.S. Holder were to make a "deemed sale" election with respect to the ADSs or Class A ordinary shares. See "Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations" and "Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules."

***We incur increased costs as a result of being a public company, particularly after we cease to qualify as an "emerging growth company."***

We are now a public company and incur increased legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, and NYSE, impose various requirements on the corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly.

Operating as a public company makes it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate the number of additional costs we may incur or the timing of such costs.

In addition, as an emerging growth company, we will still incur expenses in relation to management assessment according to requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002. After we are no longer an "emerging growth company," we expect to incur additional significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.

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| **Item 4.** | **Information on the Company** |

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A. **History and Development of the Company**

We commenced our operation through Beijing Zongqing Xiangqian Technology Co., Ltd. (formerly known as Beijing Weizhong Culture Technology Co., Ltd.), or Zongqing Xiangqian, in 2016. We launched Waterdrop Mutual Aid platform in May 2016 and then launched Waterdrop Medical Crowdfunding platform for critical illness crowdfunding in July 2016. Beijing Shuidi Hubao Technology Co., Ltd., or Shuidi Hubao, was established in December 2016 to operate Waterdrop Medical Crowdfunding platform. Beijing Shuidi Hulian Technology Co., Ltd., or Shuidi Hulian, was established in December 2016 to operate Waterdrop Mutual Aid platform. We acquired Shuidi Insurance Brokerage Co., Ltd. (formerly known as Baoduoduo Insurance Brokerage Co., Ltd.), or Shuidi Insurance Brokerage, in September 2016 to conduct insurance brokerage business and Tairui Insurance Agency Co., Ltd. in June 2020 to conduct insurance agency business and launched our Waterdrop Insurance Marketplace in May 2017. Beijing Zhuiqiu Jizhi Technology Co., Ltd., or Zhuiqiu Jizhi was established in February 2018, which acquired Tianjin Jingbin Internet Technology Co., Ltd. in October 2019 to invest in and incubate new businesses. Miaoyi Hulian (Beijing) Technology Co., Ltd. was established in July 2018 to operate general healthcare and pharmaceutical services.

In May 2018, Waterdrop Inc. was incorporated in the Cayman Islands as an offshore holding company to facilitate our offshore financing activities. Shortly following its incorporation, Waterdrop Inc. established a wholly-owned subsidiary in Hong Kong, Waterdrop Group HK Limited, or Waterdrop HK. In October 2018, Waterdrop HK established its wholly-owned subsidiary in China, Waterdrop Technology.

In November 2018, we entered into a series of contractual arrangements with Zongqing Xiangqian and Shuidi Hubao and their shareholders through Waterdrop Technology. In July 2019, we further restructured and entered into a series of contractual arrangements with Shuidi Hulian and its shareholders. Prior to that, Shuidi Hulian was a subsidiary of Zongqing Xiangqian. In October 2019, we entered into a series of contractual arrangements with Zhuiqiu Jizhi and its shareholders through Waterdrop Technology. In December 2021, we entered into a series of contractual arrangements with Guangmu Weichen through Waterdrop Technology. As a result of the foregoing, we are regarded as the primary beneficiary of Zongqing Xiangqian, Shuidi Hubao, Shuidi Hulian, Zhuiqiu Jizhi and Guangmu Weichen for accounting purposes, and have satisfied the conditions to consolidate the financial results of such VIEs and their subsidiaries into our consolidated financial statements in accordance with U.S. GAAP.

In May 2021, we listed our ADSs on the New York Stock Exchange under the symbol "WDH."

Since late 2021, we have developed a digital platform, E-Find Patient Recruitment, for patient recruitment. E-Find helps pharmaceutical companies find matches for clinical trials. People in need, mostly patients, can have access to investigational new drugs and frontier innovative therapies at reduced treatment costs through E-Find.

In June 2023, we acquired Shenlanbao, which provides insurance knowledge-based content and insurance-product reviews through multiple online channels to attract users and convert them into insurance consumers to generate commission. In March 2025, we entered into a separate and new share purchase agreement with all non-controlling shareholders of Shenlanbao to acquire all the remaining equity interests in Shenlanbao. All of the closing conditions included in the new agreement had been met as of June 30, 2025, and since then, Shenlanbao has been wholly owned by us.

In December 2024, Waterdrop Medical Crowdfunding was designated by the Ministry of Civil Affairs of the People's Republic of China as the personal help-seeking online service platform, signifying a new era of healthier and more regulated development for personal help-seeking online service platforms.

In 2025, we launched a series of AI applications purpose-built for the insurance sector, including "KEYI.AI", an intelligent underwriting assistant that reduced manual processing time from several minutes to near-instantaneous decisions, and "Waterdrop Sea.AI", a low-code platform for the rapid development and deployment of AI agents.

Our principal executive offices are located at Room B802, 8th Floor, No. 203 Wangjing Lize Zhongyuan Zone 2, Chaoyang District, Beijing, People's Republic of China. Our telephone number at this address is +86 10 5339-4997. Our registered office in the Cayman Islands is located at the Office of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.

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All information we file with the SEC can be obtained over the internet at the SEC's website at *www.sec.gov*. You can also find information on our website *ir.waterdrop-inc.com.* The information contained on our website is not a part of this annual report.

**B. Business Overview**

We are a leading technology platform dedicated to insurance and healthcare service with a positive social impact.

**Insurance Business**

We provide various health and life insurance products to meet the growing protection demand of our consumers. As a portal for both insurance consumers and insurance carriers, our insurance business integrates data, systems and services, and facilitates smooth execution flow and consumer experience leveraging our technology capabilities.

#### Consumers of Insurance Business
Our insurance business aims to serve consumers with growing awareness in insurance protection who are yet underserved by insurance carriers or brokers in a traditional manner. As of December 31, 2025, the cumulative number of insurance consumers we served, including those we served through Shenlanbao Insurance Marketplace following our acquisition of Shenlanbao, was approximately 123.4 million, 38.9 million of which were paying insurance consumers.

Our insurance users include bread winners from lower-tier cities who are not fully covered by insurance carriers or agents, the younger generation of internet users who are new to insurance, and consumers who otherwise cannot afford or are not aware of insurance products without affordable insurance products and consumer education that we offer.

Consumers come to our insurance business through a variety of channels. We have cooperated with third-party traffic channels to acquire users in the public domain. Additionally, our medical crowdfunding operation also directs traffic to our insurance marketplace. Our private domain channels, primarily social media followers, returning users whose policies have expired, and existing users renewing or adding policies for themselves or their families, also form a significant source of users.

#### Products Tailored for Consumers of Insurance Business
We offer a wide array of health and life insurance products. As of December 31, 2025, we collaborated with 103 insurance carriers to offer 2,379 types of health and life insurance products on Waterdrop Insurance Marketplace. Out of the 2,379 types of products: 1,105 were short-term health insurance, while 1,274 were long-term health and life insurance; 1,721 were health insurance, while 658 were life insurance. We generally select and offer products that represent great value, address demands of our consumers, or have already gained popularity on the market. For most products, we offer consumers the flexibility of monthly or annual payment options.

Utilizing our in-depth understanding of consumer needs, alongside our data analytics and actuarial expertise, we partner with select insurance carriers to co-develop new products and iterate on existing insurance offerings. We actively drive industry-wide product innovation to better address evolving market demands. In 2025, we introduced "Kan Bing Bao (看病保)," an industry-first long-term guaranteed renewable medical insurance product offering both a health declaration waiver and a zero deductible, and "Quan Jia Fu (全家福) Family Protection Plan," a single-policy solution covering multiple family members. Our specialized offerings for consumers with pre-existing health conditions continue to gain broader market adoption by lowering barriers to coverage for those underserved by traditional health insurance.

Currently, co-developed products constitute a majority of insurance products offered on Waterdrop Insurance Marketplace. Following the design phase, we are able to establish system connectivity with the relevant insurance carriers and bring a co-developed product to market in as little as one week. Such products are underwritten by our insurance carrier partners and are generally offered exclusively on Waterdrop Insurance Marketplace, strengthening our collaborative relationships with these insurance carriers while enhancing our platform's attractiveness to consumers.

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The tables below set forth the summary of insurance products we offered.

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| | | |
|:---|:---|:---|
| | **For the Year Ended**  | **For the Year Ended**  |
| | **December 31,**  | **December 31,**  |
| | **2025** | **2025** |
| <br>**FYP** <sup>(1)</sup> | **(RMB million)** | **(%)** |
| Short-term insurance | 19960 | 86.8 |
| Long-term insurance | 3023 | 13.2 |
| **Total** | **22983** | **100.0** |

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| | | |
|:---|:---|:---|
| | **For the Year Ended**  | **For the Year Ended**  |
| | **December 31,**  | **December 31,**  |
| | **2025** | **2025** |
| <br>**Number of Policies** <sup>(1)</sup> | **(thousand)** | **(%)** |
| Short-term insurance | 12774 | 97.3 |
| Long-term insurance | 351 | 2.7 |
| **Total** | **13125** | **100.0** |

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| | | |
|:---|:---|:---|
| | **For the Year Ended**  | **For the Year Ended**  |
| | **December 31,**  | **December 31,**  |
| | **2025** | **2025** |
| <br>**FYP** <sup>(1)</sup> | **(RMB million)** | **(%)** |
| Health insurance |  |  |
| &nbsp;&nbsp;Medical insurance | 16498 | 71.8 |
| &nbsp;&nbsp;Casualty insurance | 514 | 2.2 |
| &nbsp;&nbsp;Critical illness insurance | 4092 | 17.8 |
| &nbsp;&nbsp;Others<sup>(2)</sup> | 398 | 1.8 |
| Life insurance | 1481 | 6.4 |
| **Total** | **22983** | **100.0** |

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| | | |
|:---|:---|:---|
| | **For the Year Ended**  | **For the Year Ended**  |
| | **December 31,**  | **December 31,**  |
| | **2025** | **2025** |
| <br>**Number of Policies** <sup>(1)</sup> | **(thousand)** | **(%)** |
| Health insurance |  |  |
| &nbsp;&nbsp;Medical insurance | 10086 | 76.8 |
| &nbsp;&nbsp;Casualty insurance | 857 | 6.5 |
| &nbsp;&nbsp;Critical illness insurance | 2094 | 16.0 |
| &nbsp;&nbsp;Others<sup>(2)</sup> | 71 | 0.6 |
| Life insurance | 17 | 0.1 |
| **Total** | **13125** | **100.0** |

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*Notes:*

&nbsp;&nbsp;&nbsp;&nbsp;(1) The calculation of FYP and number of policies includes those insurance products offered through Shenlanbao Insurance Marketplace.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Mainly consist of disability insurance.

***AI-embedded service process and operational flow***

Our insurance business offers consumers a range of AI-integrated channels to explore and select health plans, including intelligent self-service online platforms and technology-assisted consultations conducted by experienced advisors. The acquisition of Shenlanbao has further strengthened our expertise in providing long-term insurance consultation services.

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*Short-Term Insurance Sales on Online Marketplace*

Upon acquisition, consumers are directed to our online insurance marketplace, accessible through our mobile applications, Weixin Official Accounts, or Mini Programs. Our proprietary algorithms analyze user interests and behavioral signals in real time to generate product recommendations tailored to users' needs and profile. AI capabilities are embedded to further enhance user experience. Our AI Medical Insurance Experts interact with users with relevant needs through voice interactions, delivering product recommendations and preliminary support, and improve the efficiency of initial lead engagement and follow-up. For users seeking assistance, AI Pro Insurance, an LLM-powered conversational agent, is available around the clock to provide immediate and accurate responses to inquiries through a chat interface, enhancing overall user satisfaction.

*Long-Term Insurance Advisory*

As users transition from short-term policyholders to prospective long-term insurance consumers, they develop a deeper awareness of their health protection needs and seek more comprehensive coverage. To address this, we have established a hybrid advisory model that combines AI-driven pre-sales engagement with dedicated human consultation.

At the pre-sales stage, our AI Super Pre-Sales Assistant and Xiao Bao AI Consultant conduct initial consultations with users to gather essential user profiles, which are then routed to experienced human consultants for follow-up. Our intelligent assignment system matches users to consultants based on advisor expertise and user needs, ensuring continuity and quality throughout the advisory process.

To further enhance consultant productivity and advisory accuracy, we equip our consulting team with a set of proprietary AI tools. Life Planner Copilot is an AI-powered knowledge assistant that enables consultants to query product terms and coverage details across a database of over 7,000 insurance products, delivering instant and accurate responses to complex product questions. KEYI.AI assists consultants in conducting real-time eligibility assessments, determining whether a user meets the health declaration requirements of their products of interest and enabling consultants to provide more accurate and efficient advisory.

Through our online marketplace and advisory services, we help users navigate their insurance journey and build a meaningful foundation of life and health protection.

*Post-Sales Service, Claims Review and Quality Control*

Our post-sales service operates on a hybrid model combining human expertise and AI capability, ensuring every policyholder inquiry is addressed with speed and precision. Our AI Customer Service Agent serves as the frontline of our post-sales operation, available across both text and voice channels, with over a million inquiries answered in a single month.

Beyond inquiry resolution, we have deployed an intelligent claims review system that automates claim information compilation and conducts preliminary claim assessments on behalf of select insurance carriers, compressing the claims cycle and delivering a materially improved experience for policyholders at one of the most critical touchpoints in their insurance journey.

Maintaining consistent service quality is central to our operations. Our dedicated quality assurance team conducts systematic reviews of service interactions to ensure adherence to established service standards. To improve the efficiency and coverage of this process, we have deployed AI Service Quality Copilot to automate first-pass quality reviews. As of the fourth quarter of 2025, the system has improved per-capita quality review efficiency by 175% since deployment.

*Shenlanbao Insurance Marketplace*

Shenlanbao provides insurance knowledge-based content and insurance product reviews through multiple online channels to attract users and convert them into insurance consumers to generate commission. We acquired a 60% equity interest in Shenlanbao in 2023, and completed the acquisition of the remaining 40% in 2025, making Shenlanbao a wholly-owned subsidiary. Since we acquired control of Shenlanbao in July 2023, its financial results have been consolidated into our financial statements.

***Partnership with Insurance Carriers***

As of December 31, 2025, we collaborated with 103 insurance carriers, including life and health insurance carriers and P&C insurance carriers. The depth and breadth of our insurance carrier network allows us to present a comprehensive suite of product options to consumers.

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Our insurance platform is built on a secure and scalable infrastructure that is connected to the systems of insurance carriers. The connected systems process product, policy and consumer information, and integrate functions such as new insurance policy entry, underwriting verification, premium collection (initial or renewal), insurance policy renewal (automatic or manual), after-sales administrative services (cancellation and refund), and other insurance policy related administrative services.

*Commission Structure*

We generate commission revenues from selling insurance policies that are underwritten by insurance carriers through our platform. We are generally paid commissions as a percentage of premiums paid. The payment mode of premiums depends on the products, premiums for short-term insurance products are usually paid annually or monthly, while premiums for long-term insurance products are paid lump-sum, annually, or monthly. The commission structure encourages collaboration between us and insurance carriers to increase consumer satisfaction and retention by choosing health and life insurance products that best fit consumers' needs, which drives better outcomes for both carriers and consumers.

*Technical Services to Insurance Carriers*

We provide a range of technical services to insurance companies, brokers, and agency companies, including data analytics and intelligent recommendation services, risk assessment, customer relationship management, customer complaint management, claims assistance and investigation, and user referral services, among others.

For certain insurance company partners, we offer risk assessment services. Leveraging our proprietary data assets and sophisticated risk assessment models, we have developed an intelligent system capable of identifying, evaluating, and quantifying the underwriting risks of policy applicants in real time. The system draws upon extensive historical business data, behavioral analytics, and multi-dimensional risk indicators to generate dynamic risk profiles, enabling our partners to make more informed and timely underwriting decisions.

We provide marketing services to select insurance carriers across our website and mobile applications. Our user analytics and intelligent recommendation engine accurately matches insurance products to individual users and dynamically customizes display pages to reflect each user's profile and preferences.

In addition, our proprietary customer relationship management ("CRM") system streamlines insurance product sales and customer relationship management for select insurance brokerage and agency companies.

**Waterdrop Medical Crowdfunding**

We launched our medical crowdfunding platform, Waterdrop Medical Crowdfunding, in July 2016 to provide medical costs support by bringing together those who are seeking help and who are willing to help through social network. As of December 31, 2025, around 490 million people cumulatively had donated an aggregate of RMB72.3 billion to 3.68 million patients through Waterdrop Medical Crowdfunding.

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***Systematic and Efficient Crowdfunding Process***

The full cycle of a crowdfunding campaign includes campaign initiation, online dissemination and crowdfunding, and fund withdrawal.

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*Campaign Initiation*

Patients or their representatives can launch crowdfunding campaigns on our platform by creating personalized pages describing their story and situation in detail supported by pictures, including personal background, medical conditions, estimated medical costs, financial status, and crowdfunding goals. After our review and approval, these pages will be published online for sharing.

*Online Dissemination and Fundraising*

Patients can share their campaigns through our applications, Weixin Official Account and Mini Programs, allowing friends, family and acquaintances to view their story and donate directly through crowdfunding links. Social network visibility of donors encourages further sharing and contributions. We may enhance campaign visibility with technical support, and campaign pages also contain promotion of our online insurance marketplace.

*Fund Withdrawal*

Patients can initiate a withdrawal application by submitting medical records and bills online. Our team diligently reviews each application before approving or declining the fund withdrawal request. Following successful disbursement and utilization of funds for medical treatment, donors receive personalized updates expressing gratitude and detailing how their contributions have positively impacted the patient's care.

From our inception through December 2021, we provided crowdfunding services free of charge, bearing all associated operational expenses. Beginning in early 2022, we introduced a platform service fee for campaigns conducted through Waterdrop Medical Crowdfunding. The fee is charged at a modest percentage of each withdrawal amount, subject to a predetermined maximum cap per campaign. The collected fees are used to support our ongoing operations and platform development.

***Risk Assessment for Waterdrop Medical Crowdfunding***

*Rigorous Vetting with AI-driven Verification*

Through our multi-dimensional vetting process, we can take appropriate and timely steps when fraud and risks arise. We adopt a preliminary information verification and approval procedure at the campaign initiation stage, using blacklist databases to filter out ineligible patients. We then review the campaign pages, perform real-name authentication, and validate submitted receipts through a model that integrates a Medical Knowledge Graph with credential validation. This model cross-references clinical logic, pharmacy qualifications, and other data to precisely identify fabricated receipts and prevent fund misappropriation.

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Throughout the campaign, we use real-time fraud detection methods, including social network validation and big data analytics. An LLM-powered engine scans campaign content, comments and hidden clues, feeding insights into a risk identification matrix that tracks high-risk scenarios and continuously improves detection accuracy. We will suspend the campaign immediately if any potential fraud or misuse is detected, which automatically triggers a manual investigation. We may monitor fund usage and patient status post-withdrawal, disbursing funds in installments and requiring payment receipts for subsequent releases. Upon confirmation of fraud or misuse, we will refund the successfully retrieved funds to donors, and take legal action if needed to ensure accountability and protect donors on our platform.

*Transparent and Secure Fund Management*

Before releasing funds to patients, we implement a 24-hour contestability period for inspection and supervision. If any complaints or rejections are received, we will suspend fund remittance and investigate. Donations for confirmed fraud campaigns will be refunded. Additionally, we collaborate with hospitals to directly remit funds to hospital accounts in certain situations, bypassing personal patient accounts to prevent fraud. Our evaluation system gives donors clear insights into how their contributions are allocated and used, further enhancing transparency and traceability of fund distribution.

To further enhance security, we partner with a trusted third-party commercial bank to manage custodial accounts for each patient. Funds are released only after patient applications receive our approval, and if funds are misused or any fraud is detected, we immediately investigate, refund the successfully retrieved funds to donors, and take legal action if needed.

These measures collectively ensure accountability, transparency, and protection for all stakeholders.

*Healthy Growth in the Regulated Environment*

Under the guidance of the Ministry of Civil Affairs, we co-drafted and implemented the Internet Medical Crowdfunding Platform Self-Discipline Convention, which establishes a blacklist for patients who falsify records, exaggerate conditions, or misuse funds. This list is publicly available and regularly updated, and platforms adhering to the convention deny services to blacklisted patients.

On September 5, 2024, the Ministry of Civil Affairs of the PRC, along with other government authorities, jointly announced the Administrative Measures for Online Personal Help-seeking Service Platforms, establishing the legal framework for the fundraising sector and providing guidance on management and information transparency. Building on this framework, our Waterdrop Medical Crowdfunding platform was designated as one of the government-recognized online personal help-seeking service platforms in mainland China.

***Dedicated Crowdfunding Consultants Team***

As of December 31, 2025, we have an offline crowdfunding consultant team serving patients across 31 provinces and 311 cities nationwide, as well as an online team for direct users. These consultants handle enquiries, conduct initial patient verification, and review campaigns. They undergo specialized training in standard procedures and medical knowledge, and are evaluated based on campaign success, service quality, and compliance, not on quantity.

**Healthcare and Pharmaceutical Services**

We proactively seek innovative opportunities in a broader healthcare industry to achieve a full user life-cycle coverage and enrich our ecosystem. We believe our healthcare and pharmaceutical services extend our service coverage to capture patients' healthcare spending after getting crowdfunding fund raised or insurance claim payment. We leverage core competencies in data analysis, efficient and customized services, and healthcare expertise, focused on improving health outcomes, lowering healthcare costs and creating value for patients, medical service providers and pharmaceutical companies.

***Digital Clinical Trial Solution***

We have developed a digital platform, E-Find Patient Recruitment, for patient recruitment since late 2021. E-Find helps pharmaceutical companies find matches for clinical trials. People in need, mostly patients, can have access to investigational new drugs and frontier innovative therapies at reduced treatment costs through E-Find. Faster patient enrollment could help save the cost and speed up the process of investigational new drug development and product launch.

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Clients of our patient recruitment services mainly include multinational and Chinese biopharmaceutical companies and leading biotechnology companies. In 2025, we cooperated with 298 pharmaceutical companies and CROs. Our patient recruitment services cover Phase I to Phase III clinical trials for a wide range of therapeutic areas, including oncology, chronic diseases and rare diseases.

Leveraging the patient resources from Waterdrop Medical Crowdfunding, we have a wide reach of patients for potential trial enrollment across all major therapeutic areas and all geographical locations. To efficiently match these patients with suitable clinical trials, our subsidiary Beijing Yifan Fengshun Medical Technology Co., Ltd. secured the first national invention patent in China regarding intelligent patient matching technology for clinical drug trials. Capable of deeply interpreting complex medical records and trial protocols, our system enables high-precision, automated matching between patients and clinical trials. After identifying potential subjects, we will obtain their consent before we refer these patients to our clients who will work with trial sites for further determination on their enrollment eligibility.

In 2025, we successfully enrolled 4,153 patients in 584 clinical trials. We match qualified and suitable patients for enrollment in clinical trials for our clients and generate revenue for successful matches. We typically charge our clients a fixed unit price per successful match.

Building upon our success in patient recruitment service, we are also actively exploring other services that are related to clinical trials and along the CRO service value chain.

**Big Data, Technology and Infrastructure**

***Technology Team***

As of December 31, 2025, our R&D team consisted of 335 personnel, who were mainly based in our Beijing headquarters. Our R&D team has extensive experience with leading internet technology and healthcare companies, and supports our long-term business growth by (i) maintaining and strengthening all our platforms and application systems, (ii) actively participating in our business development and new business initiatives, exploring user needs and technology solutions, (iii) collaborating with and empowering external parties including insurance carriers to facilitate smooth execution and data flow, and (iv) actively tracking cutting-edge technologies, including next generation AI technologies, applied in medical and life and health insurance industries. We are committed to continually investing in R&D to strengthen our technological capabilities.

***Data Advantage and Modern Cloud Infrastructure***

Our advanced data analysis capabilities utilize algorithms to process data collected during onboarding and throughout the consumer lifecycle. This allows us to create detailed user profiles that inform our understanding of individual needs and risk profiles, making our data capabilities difficult for competitors to replicate. We operate integrated proprietary technology systems and AI applications that enhance user acquisition, service, and retention, ensuring responses to insights in real time.

We prioritize user data protection by collecting information with consent and adhering to legal standards. Our comprehensive security measures include anonymization, encryption, and strict access protocols to safeguard personal information. We maintain rigorous internal controls and employ technical solutions to mitigate risks, ensuring that only authorized personnel access sensitive data. To comply with evolving data privacy laws, we have established a Data Security Committee and engage external experts to continuously enhance our security framework.

We engineered our systems for rapid scalability, with modern cloud infrastructure, proper information security controls, and third-party expert support. We primarily host our services on servers and network infrastructure of top cloud computing vendors. Our network infrastructure delivers the stability to meet demands for high volume transactions processed on our platforms and data volume, the scalability to support increased traffic over time, and the flexibility to quickly launch new products or services. We regularly monitor the performance of our infrastructure and platforms and continuously upgrade them to achieve higher stability and flexibility.

***In-depth Integration of Algorithms in Daily Business Operations***

Our strategic deployment of advanced algorithms exemplifies how we harness the power of big data to drive operational excellence. These technologies allow for more precise targeting of potential policyholders, proactive risk mitigation and streamlined claims processing. This data-driven approach not only improves decision-making but also reinforces our competitive advantage in the insurance industry, supporting sustainable growth and innovation.

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*Intelligent Lead Generation and Distribution*

Our algorithms enable us to efficiently target leads most likely to convert into policyholders, allocate marketing investments, monitor acquisition costs, capture user attributes from engagement, and adjust real-time placements based on instant marketing performance.

Our proprietary software assesses leads in real time based on various factors. We utilize automatic speech recognition to convert voice data into text, analyze conversations for user intent and emotions, and match each user in need of assistance with a suitable support representative.

*Intelligent Risk Assessment*

Our risk assessment system leverages proprietary data assets and real-time behavioral analytics to support fraud prevention across our business activities. In Waterdrop Insurance Marketplace, the system is designed to improve transaction experience while enhancing verification efficiency and fraud detection capabilities.

The system employs a two-stage risk control architecture. In the first stage, user-submitted information is evaluated in real time against a proprietary big data system, generating an initial risk profile. In the second stage, a behavioral risk engine performs anomaly detection and risk scoring across behavioral, channel, and contextual dimensions. Following the composite assessment, the system assigns a risk rating to each case, which determines the level of verification required and the corresponding intervention protocol.

The risk assessment system is designed to improve over time through continuous model retraining on accumulated claims data, enabling rapid customization of rule sets for new insurance products. This iterative approach reduces reliance on manual review and lowers operational costs over time.

*Intelligent Claims Review*

Under our claims service brand "Bangbangpei (帮帮赔)", we provide users with end-to-end digital claims services. At the document submission stage, our intelligent document management tool automatically extracts and categorizes user-submitted materials using optical character recognition ("OCR"), and flags potential errors in real time, improving submission completeness and accelerating the claims process.

After a claim is filed, our proprietary intelligent claims adjustment model and rules engine evaluate the case against applicable policy terms, with claim outcomes available in as little as a few minutes. Users simultaneously receive a structured interpretation of the outcome, explaining the result with reference to relevant policy terms and review criteria. We also offer text-to-speech ("TTS") voice interpretation that allows users to read while listening, and assign dedicated support consultants for elderly users where needed.

***Large Language Model and AI Empowerment***

Our expertise in data intelligence and ongoing algorithm development positions us to leverage the transformative capabilities of LLMs. By integrating general-purpose LLMs with our proprietary technology and a vast repository of industry-specific data collected through daily operations, we have developed a set of insurance-focused AI capabilities. As of December 31, 2025, we had filed 169 patent applications in the field of artificial intelligence, including 72 relating to large language models. These innovations have enabled the launch of several AI applications, collectively branded as "Waterdrop Guardian" (or "Shuishou" in Chinese), symbolizing our commitment to safeguarding our users' health. These applications are already operational and provide valuable first-mover insights into how LLM technologies can reshape the insurance landscape.

*"Waterdrop Guardian" Application Suite*

The "Waterdrop Guardian" suite comprises a series of proprietary AI applications integrated across our core business operations:

**AI Medical Insurance Experts:** Utilize automated speech synthesis and natural language processing to conduct communications with prospective users based on their needs. By analyzing user profiles in real time, this application delivers data-driven medical insurance recommendations, thereby increasing the efficiency of our initial lead engagement and conversion efforts.

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**AI Pro Insurance:** Functions as a 24/7 automated interface accessible within select mobile application and Weixin Mini Program. This tool is engineered to address user inquiries in real time, ensuring continuous service availability and optimizing user engagement while reducing reliance on traditional manual support.

**AI Super Pre-Sales Assistant** and **Xiao Bao AI Consultant:** These conversational agents facilitate preliminary user intake and information gathering across diverse digital platforms. By automating the initial consultation phase and lead qualification, these tools ensure a seamless transition of high-intent prospects to our human consultants for specialized advisory services.

**AI Customer Service Agent:** Operates through both text and voice interfaces to provide 24/7 post-sales assistance. This application handles high-frequency policy inquiries and administrative requests, significantly reducing response latency and allowing our support staff to focus on complex, high-touch customer needs.

**AI Service Quality Copilot:** Modernizes our internal compliance frameworks by replacing traditional manual review processes with automated, large-scale quality assurance. This tool increases the frequency and consistency of our service audits across different communication channels, effectively mitigating operational risks associated with human error and regulatory non-compliance.

**Life Planner Copilot:** Facilitates enhanced operational efficiency for our consultants by providing a conversational interface to query a comprehensive database of over 7,000 insurance products. This tool enables the real-time retrieval of complex product terms and coverage specifications, thereby streamlining the advisory process and improving the accuracy of information delivered to potential policyholders.

**KEYI.AI:** Assists our consultant team in performing real-time preliminary eligibility assessments by evaluating prospective users against specific health declaration requirements for various insurance products. By automating the initial screening process, this platform enhances the accuracy of our preliminary underwriting assessments and improves the overall technical efficiency of our advisory workflow.

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*Waterdrop Sea.AI*

In September 2025, we introduced Waterdrop Sea.AI, a centralized low-code platform designed to institutionalize our AI capabilities. This platform consolidates core technologies and modular functionalities derived from our deployed AI applications, effectively translating proprietary domain expertise into a scalable development framework. This infrastructure enables personnel to develop and deploy tailored AI solutions with minimal programming, facilitating the rapid integration of automated marketing, lead generation, and customer service tools across our mobile apps and Weixin interfaces. As an example, our Xiao Bao AI Consultant was developed utilizing this platform's underlying architecture, demonstrating the platform's ability to streamline the transition from research and development to operational deployment.

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**ESG and CSR**

Since our inception, we have attached great importance to social value, corporate governance and environmental protection, and have been committed to creating a sustainable business model. We aim to make unremitting efforts to build a brighter future for all users, employees and business partners through in-depth analysis of social issues and with the power of technology and digitalization.

We have published an ESG report annually for four consecutive years since 2022. In 2025, we received an "A+" ESG rating from Lianhe Equator.

***Promote social sustainability through our core business***

As of December 31, 2025, around 490 million people cumulatively had donated an aggregate of RMB72.3 billion to 3.68 million patients through our Waterdrop Medical Crowdfunding.

***Integrate ESG management into key decisions of our company***

As a member of the United Nations Global Compact and a practitioner of sustainable development, Waterdrop shoulders the mission of "bring insurance and healthcare service to billions through technology," and integrates ESG into daily operations, environmental protection, talent development and community investments. In 2023, we formulated and internally released the Management Measures for Environmental, Social and Governance Practices of Waterdrop Inc. and established a top-down ESG governance structure, promoting high-quality and sustainable development. In 2024, we unveiled our ESG logo. The visual design, featuring multi-colored water droplets, corresponds to the five strategic ESG pillars—Community, Intelligence, Operation, Talent, and Environment—providing a vivid interpretation of the Company's commitment to ESG. In 2025, we released "the Waterdrop Inc. Management Measures on Environmental, Social and Governance Work V2.0", further clarifying the key areas of ESG management and consolidating the foundation for our sustainable development.

***Adhere to low-carbon development and achieve healthy and sustainable operations***

We attach great importance to the environmental impact of our operation and actively engage in energy conservation and emission reduction measures. In light of the global climate change, we actively respond to the United Nations Sustainable Development Goals and national carbon peaking and carbon neutrality strategy, and endeavor to minimize the impact of our operations on the environment through environmental management, green office, awareness advocacy and other means. In 2025, we consumed a total of approximately 1,129,000 kWh of electricity. We are committed to cultivating the awareness of energy conservation and environmental protection among our employees. In 2025, we held 15 training sessions on water conservation and electricity conservation for office administrative staff. We also actively promoted paperless office administration process.

***Care for the development of employees to enhance the humanistic value***

We highly value employee equality and their diversified development. As of December 31, 2025, our employees came from more than 16 different ethnic minority groups, with ethnic minority groups accounting for 4.7% of our employees. We also value gender equality with female employees accounting for 51.4% of our employees as of December 31, 2025. In addition, we place great emphasis on the protection of employees' rights and interests. We care about the demands of employees. We regularly hold face-to-face meetings for our employees to meet with our senior management, such as our CEO. We have also developed a comprehensive training system for our employees and consultants. In 2025, we invested over RMB6.11 million in staff training.

***Awards***

We have been honored to have our corporate social responsibility efforts acknowledged throughout 2025. Some of these acknowledgments are highlighted below.

● "2025 Top 500 Chinese Enterprises for Philanthropy and Public Welfare" by the Center for Shared Prosperity and Human Resources Development Research, Beijing Institute of Technology ;

● "Pioneering Award for ESG Disclosure Contribution(Mainland)" by Hong Kong Quality Assurance Agency ("HKQAA") in 2025 ;

● "2025 Cailian Press Zhiyuan Award" by Cailian Press ;

● "Annual Compliance Governance Benchmark Enterprise" by Southern Metropolis Daily ("SMD") in 2025.

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**Competition**

The life and health commercial insurance market in China is intensely competitive. Our insurance business's current or potential competitors include affiliated agents, bancassurance, direct sales, and third-party insurance brokers and agents. We compete primarily on the basis of user acquisition, wide selection of products tailored to user needs, innovation in technology and business model, proximity to users and data insights, risk management, and operational efficiency.

As we expand our healthcare business, we may face competition from a large number of domestic as well as multinational CROs and other industry players, many of which have extensive experience and well-established business operations.

**Intellectual Property**

We regard our trademarks, copyrights, patents, domain names, technological know-how, proprietary technologies and other intellectual properties as critical to our success and competitiveness. We rely on a combination of copyright and trademark law, trade secret protection, confidentiality agreements with employees and contractual restrictions on intellectual property and confidentiality clauses in our agreements with third parties to protect our intellectual property rights. In addition, under the employment agreements we enter into with our employees and consultants, they acknowledge that the intellectual properties made by them in connection with their employment with us are our property. We also regularly monitor any infringement or misappropriation of our intellectual property rights.

As of December 31, 2025, we owned 247 computer software copyrights, 42 other copyrights and 160 patents in mainland China for various aspects of our operations and maintained 1,362 trademark registrations inside mainland China. As of December 31, 2025, we had registered or acquired 435 domain names, including *sdbao.com*, *shuidichou.com* and *waterdrop-inc.com*, among others.

**Insurance**

We maintain certain insurance policies to safeguard us against risks and unexpected events. We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance to our employees in compliance with applicable laws in mainland China. We do not maintain insurance policies covering damage to our network infrastructures or information technology systems. We also do not maintain business interruption insurance. We consider our insurance coverage to be in line with that of other companies of similar size and business nature in China.

**Regulation**

***Regulations on Foreign Investment in Mainland China***

The establishment, operation and management of companies in mainland China are governed by the PRC Company Law, as amended in 2005, 2013, 2018 and 2023, and the latest amendment took effect on July 1, 2024. The PRC Company Law applies to both domestic companies and foreign-invested companies in mainland China. The direct or indirect investment activities of a foreign investor shall be governed by the PRC Foreign Investment Law and its implementation rules. The PRC Foreign Investment Law is promulgated by the National People's Congress on March 15, 2019, and has taken effect since January 1, 2020. The PRC Foreign Investment Law adopts the administrative system of pre-entry national treatment along with a negative list for foreign investments, establishing the basic framework for the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition.

Pursuant to the PRC Foreign Investment Law, "foreign investment" refers to any direct or indirect investment activities conducted by any foreign individual, enterprise, or organization, collectively referred to as "foreign investors," in mainland China, which includes any of the following circumstances: (i) foreign investors establishing foreign-invested enterprises in mainland China solely or jointly with other investors; (ii) foreign investors acquiring shares, equity interests, property portions or other similar rights and interests thereof within mainland China; (iii) foreign investors investing in new projects in mainland China solely or jointly with other investors; and (iv) other forms of investments as defined by laws, regulations, or as otherwise stipulated by the PRC State Council. According to the PRC Foreign Investment Law, the PRC State Council shall promulgate or approve a list of special administrative measures for market access of foreign investments, or the negative list. The PRC Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries deemed to be either "restricted" or "prohibited" in the negative List. The PRC Foreign Investment Law provides that foreign investors shall not invest in the "prohibited" industries, and shall satisfy certain requirements as stipulated under the negative list for investing in "restricted" industries.

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On December 26, 2019, the PRC State Council further issued the Implementation Rules of PRC Foreign Investment Law, which came into effect on January 1, 2020. These rules restate certain principles of the PRC Foreign Investment Law and further provide that, among others, (i) if a foreign-invested enterprise established prior to the effective date of the PRC Foreign Investment Law fails to adjust its legal form or governance structure to comply with the provisions of the PRC Companies Law or the PRC Partnership Enterprises Law, as applicable, and complete amendment registration before January 1, 2025, the enterprise registration authority will not process other registration matters of the foreign-invested enterprise and may public such non-compliance thereafter; and (ii) the provisions regarding equity interest transfer and distribution of profits and remaining assets as stipulated in the contracts among the joint venture parties of a foreign-invested enterprise established before the effective date of the PRC Foreign Investment Law may, after adjustment of the legal form and governing structure of such foreign-invested enterprise, remain binding upon the parties during the joint venture term of the enterprise.

On September 6, 2024, the National Development and Reform Commission, and the Ministry of Commerce promulgated the Special Administrative Measures for Access of Foreign Investment (Negative List) (2024 Edition), which came into effect on November 1, 2024. In addition, the National Development and Reform Commission and the Ministry of Commerce promulgated the Encouraged Industry Catalogue for Foreign Investment (2025 Edition) on December 15, 2022, which came into effect on February 1, 2026. Industries not listed in the 2024 edition of negative list and 2025 edition of encouraged industry catalogue are generally open for foreign investments unless specifically restricted by other laws in mainland China. The establishment of wholly foreign-owned enterprises is generally allowed in encouraged and permitted industries. Some restricted industries are limited to equity or contractual joint ventures, while in some cases Chinese partners are required to hold the majority equity interests in such joint ventures. In addition, foreign investment in projects in a restricted category is subject to government approvals. Foreign investors are not allowed to invest in industries in the prohibited category.

The Ministry of Commerce and the State Administration for Market Regulation, jointly approved the Foreign Investment Information Report Measures on December 19, 2019, which has been in effect since January 1, 2020. According to the Foreign Investment Information Report Measures, foreign investors or foreign-invested enterprises shall report their investment-related information to the competent local counterparts of the Ministry of Commerce through Enterprise Registration System and National Enterprise Credit Information Notification System.

**Regulations on Value-Added Telecommunications Services**

***Regulations on Value-Added Telecommunications Services***

The PRC Telecommunications Regulations, promulgated on September 25, 2000 by the PRC State Council and most recently amended in February 2016, are the primary regulations governing telecommunications services. Under the PRC Telecommunications Regulations, a telecommunications service provider is required to procure operating licenses from the Ministry of Industry and Information Technology, or its provincial counterparts, prior to the commencement of its operations, otherwise, such operator might be subject to sanctions including corrective orders and warnings from the competent administrative authority, fines and confiscation of illegal gains. In the case of serious violations, the operator's websites may be ordered to be closed.

The PRC Telecommunications Regulations categorize telecommunication services in China as either basic telecommunications services or value-added telecommunications services, and value-added telecommunications services are defined as telecommunications and information services provided through public network infrastructures. The Administrative Measures for Telecommunications Business Operating License promulgated by the Ministry of Industry and Information Technology in June 2017 sets forth more specific provisions regarding the types of licenses required to operate value-added telecommunications services, the qualifications and procedures for obtaining the licenses, and the administration and supervision of these licenses. Pursuant to these administrative measures, a commercial operator of value-added telecommunication services must first obtain an operating license for value-added telecommunication business. These administrative measures also provide that an operator providing value-added services in multiple provinces is required to obtain a cross-region operating license for value-added telecommunication business, whereas an operator providing value-added services in one province is required to obtain an intra-provincial operating license for value-added telecommunication business. Pursuant to these administrative measures, any telecommunication services operator must conduct telecommunication business pursuant to the type and within the scope of business as specified in its operating license for value-added telecommunication business.

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Pursuant to the Catalog of Telecommunications Services promulgated by the PRC Ministry of Information Industry (the predecessor of the Ministry of Industry and Information Technology) on February 21, 2003 and last amended by the Ministry of Industry and Information Technology on June 6, 2019, internet information services fall within Class 2 value-added telecommunication services. The "information services" refer to the information services provided for users via the public communication network or the internet and by the information collection, development, processing and construction of information platforms. The Administrative Measures on Internet Information Services, which was promulgated by the PRC State Council on September 25, 2000, and amended in 2011 and 2025, sets out guidelines on the provision of internet information services. The Administrative Measures on Internet Information Services classifies internet information services into commercial internet information services and non-commercial internet information services. Pursuant to the Administrative Measures on Internet Information Services, commercial internet information services refer to the provision with paid information or website production or other service activities to online users via the internet, and non-commercial internet information services refer to the provision with free information that is in the public domain and openly accessible to online users via the internet. The Administrative Measures on Internet Information Services requires that a provider of commercial internet information services shall obtain an operating license for value-added telecommunication business for internet information services. It further requires that a provider of non-commercial internet information services shall carry out record-filing procedures with the provincial level counterparts of the Ministry of Industry and Information Technology.

On June 14, 2022, the Cyberspace Administration of China promulgated the Provisions on the Administration of Information Services of Mobile Internet Apps (2022 Revision), which came into effect on August 1, 2022. Pursuant to the provisions, application providers shall perform their duties as information content administrators, establish sound management systems such as information content security management, information content ecological governance, data security and personal information protection. Application providers shall obtain the approval of the competent departments or the required licenses before they provide such services.

Waterdrop Technology, Zongqing Xiangqian and certain other subsidiaries have obtained the ICP License, a type of operating license for value-added telecommunication business to provide internet information service.

***Regulations on Foreign Investment Restriction on Value-Added Telecommunications Services***

Pursuant to the Special Administrative Measures for Access of Foreign Investment (Negative List) (2024 Edition), the equity ratio of foreign investment in the value-added telecommunications enterprises is subject to the cap of 50% except for the investment in e-commerce operation businesses, domestic multi-party communication businesses, information storage and re-transmission businesses, and call center businesses.

Specifically, foreign direct investment in telecommunications companies in mainland China is governed by the Administrative Regulations on Foreign-Invested Telecommunications Enterprises, which was promulgated by the PRC State Council on December 11, 2001 and amended on September 10, 2008 and February 6, 2016. The regulations require that foreign-invested value-added telecommunications enterprises must be in the form of a Sino-foreign equity joint venture, and the ultimate capital contribution percentage by foreign investor(s) in a foreign-invested value-added telecommunications enterprise must not exceed 50%, other than certain exceptions. In addition, the main foreign investor who invests in a foreign-invested value-added telecommunications enterprise in mainland China must satisfy a number of stringent performance and operational experience requirements, including demonstrating a good track record and experience in operating value-added telecommunication business overseas. Foreign investors that meet these requirements shall obtain approvals from the Ministry of Industry and Information Technology, which retain considerable discretion in granting such approvals. On March 29, 2022, the PRC State Council issued the Decisions to Amend and Abolish Certain Administrative Regulations, which makes amendments to the Administrative Regulations on Foreign-Invested Telecommunications Enterprises. The amendments include, among others, removing the performance and operational experience requirements for major foreign investors that hold equity interest in mainland China companies conducting value-added telecommunication business as set out in the Administrative Regulations on Foreign-Invested Telecommunications Enterprises. The amended Administrative Regulations on Foreign-Invested Telecommunications Enterprises took effect on May 1, 2022.

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In 2006, the predecessor of the Ministry of Industry and Information Technology issued the Circular of the Ministry of Information Industry on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Business, according to which a foreign investor in the telecommunications services industry of China must establish a foreign-invested enterprise and apply for a telecommunications businesses operation license. This circular further requires that: (i) domestic telecommunications business enterprises in mainland China must not lease, transfer or sell a telecommunications businesses operation license to a foreign investor through any form of transaction or provide resources, offices and working places, facilities or other assistance to support the illegal telecommunications services operations of a foreign investor; (ii) value-added telecommunications enterprises or their shareholders must directly own the domain names and trademarks used by such enterprises in their daily operations; (iii) each value-added telecommunications enterprise must have the necessary facilities for its approved business operations and maintain such facilities in the regions covered by its license; and (iv) all providers of value-added telecommunications services are required to maintain network and internet security in accordance with the standards set forth in the regulations in mainland China. If a license holder fails to comply with the requirements in the circular and cause such non-compliance, the Ministry of Industry and Information Technology or its local counterparts have the discretion to take measures against such license holder, including revoking its license for value-added telecommunications business.

On April 8, 2024, the Ministry of Industry and Information Technology issued the Circular on Implementing the Pilot Programs Work to Expand the Opening-up of the Value-Added Telecommunications Services. The circular states that the Ministry of Industry and Information Technology will launch pilot programs to expand the opening-up of value-added telecommunications services and the pilot programs will be initially launched in several regions, including Beijing, Shanghai, Hainan, and Shenzhen. In the regions approved to launch pilot programs, foreign ownership restrictions in certain value-added telecommunications business will be removed, including internet data centers services, content delivery networks services, internet access services, online data processing and transaction processing services, information publishing platforms and delivery services (excluding internet news information, online publishing, online audiovisual, and internet cultural operations) and information protection and processing services. Foreign invested enterprises conducting these services in approved pilot regions are required to obtain approval from the Ministry of Industry and Information Technology in accordance with applicable law and regulations. The circular also indicates that based on the implementation of the pilot programs, the scope of the pilot regions may be expanded.

**Regulations on Insurance Industry**

The insurance industry in mainland China is highly regulated. Between 1998 and 2018, the China Insurance Regulatory Commission was the regulatory authority responsible for the supervision of the Chinese insurance industry. In March 2018, the China Banking and Insurance Regulatory Commission, was established as the result of the merger between the China Insurance Regulatory Committee and the China Banking Regulatory Commission, replacing the China Insurance Regulatory Commission as the regulatory authority for the supervision of the Chinese insurance industry. In accordance with the Reform Plan for the Party and State Institutions promulgated by the Central Committee of the Communist Party of China and the State Council on March 16, 2023, the National Administration of Financial Regulation was established in place of the China Banking and Insurance Regulatory Commission, and the China Banking and Insurance Regulatory Commission will no longer be retained. Insurance activities undertaken within mainland China are primarily governed by the PRC Insurance Law and the related rules and regulations.

Insurance activities undertaken within mainland China are primarily governed by the PRC Insurance Law, which was promulgated by the Standing Committee of the National People's Congress on June 30, 1995 and amended in 2015, and the related rules and regulations. The PRC Insurance Law, comprising general principles, insurance contracts, insurance institutions, insurance operational standards, supervision and regulation of the insurance industry, insurance agencies and insurance brokerage companies, legal liabilities and supplementary provisions, sets out the legal framework for regulating the insurance companies.

**Regulations on Insurance Brokerage Business**

Pursuant to the PRC Insurance Law, an insurance broker is an entity that, in the interest of the insurance applicants, provides intermediary services between the insurance applicants and the insurance companies for the conclusion of insurance contracts, and collects commissions for such services in accordance with the laws.

On May 1, 2018, the China Insurance Regulatory Commission promulgated the Provisions on the Supervision and Administration of Insurance Brokers, which specifies the provisions regarding market access and exit, operating rules, industry self-discipline, monitor and inspection and legal obligations for insurance brokers.

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***Market Access***

Pursuant to the Provisions on the Supervision and Administration of Insurance Brokers, to operate insurance brokerage businesses within mainland China, an insurance brokerage company shall satisfy the requirements stipulated by the China Insurance Regulatory Commission and obtain an Insurance Brokerage License. The minimum registered capital of an insurance brokerage company that conducts business in regions not limited to the provincial level is RMB50 million. The minimum registered capital of an insurance brokerage company that conducts business within the provincial level is RMB10 million. An insurance brokerage company shall not operate insurance brokerage business until it obtains the license, and it shall register relevant information in a regulatory information system as prescribed by the China Insurance Regulatory Commission in time.

The Provisions on the Supervision and Administration of Insurance Brokers also requires an insurance brokerage company to procure professional liability insurance or pay a deposit within twenty days upon obtaining an Insurance Brokerage License. If an insurance brokerage company intends to procure professional liability insurance, it shall ensure that the insurance remains valid. The maximum compensation for each accident under the professional liability insurance procured by an insurance brokerage company shall be no less than RMB1 million. One-year accumulated maximum compensation shall be no less than RMB10 million and no less than the insurance brokerage company's income from principal business in the previous year. If an insurance brokerage company intends to pay a deposit, the deposit shall be paid at 5% of its registered capital; if an insurance brokerage company increases its registered capital, the amount of the deposit shall be increased proportionately. The deposit shall be stored in a designated account in the form of a bank deposit in a commercial bank or in any other form approved by the China Insurance Regulatory Commission. Under any of the following circumstances, an insurance brokerage company may use the deposit: (i) decrease of registered capital; (ii) cancellation of license; (iii) taking out of professional liability insurance in conformity with the conditions; or (iv) other circumstances provided by the China Insurance Regulatory Commission. An insurance brokerage company shall report in written form to the local branch of the China Insurance Regulatory Commission within five days from the day when it uses the deposit.

***Operation Rules***

Pursuant to the Provisions on the Supervision and Administration of Insurance Brokers, an insurance broker may operate all or part of the following businesses: (i) draft insurance plans for policyholders, select insurance companies and process insurance application formalities; (ii) assist insured parties or beneficiaries in making claims; (iii) carry out reinsurance brokerage businesses; (iv) provide advisory services on disaster prevention, loss prevention or risk evaluation and risk management to entrusting parties; and (v) any other insurance brokerage-related businesses stipulated by the China Insurance Regulatory Commission.

An insurance broker is required to conduct insurance brokerage business within the business scope and business area of the underwriter. An insurance broker and its practitioners may not sell non-insurance financial products, except for non-insurance financial products that have been approved by the financial regulatory authorities. An insurance broker and its practitioners shall have the necessary qualifications before selling non-insurance financial products.

The Provisions on the Supervision and Administration of Insurance Brokers also requires an insurance broker to set up a designated account book to record the income and expenditure of the insurance brokerage business. An insurance broker shall open an independent designated account for client funds. The following funds shall only be deposited in the designated account for client funds: (i) insurance premiums paid by policyholders to an insurance company; and (ii) surrender value and pay-outs collected on behalf of policyholders, insured parties and beneficiaries. An insurance broker shall open an independent account for the commissions it collects.

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***Services Provided by Insurance Brokers and Their Practitioners***

Pursuant to the Provisions on the Supervision and Administration of Insurance Brokers, an insurance broker and its practitioners shall not engage in the following acts or behaviors: (i) deceive or mislead the insurer, the applicant, the insured or the beneficiary; (ii) conceal any important circumstances relating to the insurance contract; (iii) obstruct the applicant from fulfilling his or her obligation to tell the truth, or induce the applicant not to fulfill the same; (iv) grant or commit to grant to the applicant, the insured or the beneficiary any interest other than that provided in the insurance contract; (v) compel or induce the applicant to enter or restrict the applicant from entry into an insurance contract by using their administrative power, position or the advantage of their profession and other improper means; (vi) forge or alter the insurance contract without authorization or providing false evidence for parties to the insurance contract; (vii) misappropriate, retain or embezzle the premiums or insurance benefits; (viii) make use of the advantages of the business to obtain improper benefits for other institutions or individuals; (ix) defraud insurance benefits in collusion with the applicant, the insured or the beneficiary; or (x) disclose trade secrets of the insurer, the applicant or the insured known during the business activities. An insurance broker and its practitioners shall not solicit or accept any remuneration or other property other than those as agreed upon in the contract and granted by any insurance company or its staff or take advantage of executing the insurance brokerage business to obtain other illegal benefits during the course of carrying out the insurance brokerage business.

***Qualification for Insurance Brokerage Management Personnel and Practitioners***

The Provisions on the Supervision and Administration of Insurance Brokers sets out the requirements for senior officers of an insurance broker, such as education, work experience and good character. It also provides that senior officers of an insurance broker shall obtain the employment qualification approved by the local branches of the China Insurance Regulatory Commission prior to the assumption of duty.

Pursuant to the PRC Insurance Law, the examination and approval of the qualification of insurance brokerage practitioners have been cancelled. Pursuant to the Provisions on the Supervision and Administration of Insurance Brokers and the Notice on Relevant Issues on the Administration of Practitioners of Insurance Intermediaries, which was promulgated by the China Insurance Regulatory Commission on August 5, 2015; before an insurance intermediary practitioner begins to practice, his/her employer shall complete the practicing registration in the insurance intermediary regulatory information system of the China Insurance Regulatory Commission for him/her, and the qualification certificate shall not be served as a necessary condition for the administration of practicing registration.

***Reward and Incentive***

Pursuant to the Provisions on the Supervision and Administration of Insurance Brokers, an insurance broker may not set payment of fees or purchase of insurance products as a condition of employment, may not promise unreasonably high return, or take the number of persons introduced directly or indirectly or sales performance as the main basis of payroll calculation.

Pursuant to the Notice on Strictly Regulating Incentive Measures of Insurance Intermediaries promulgated by the China Insurance Regulatory Commission on November 15, 2010, professional insurance intermediaries may only implement equity incentive measures for sales personnel of more than two consecutive years of practice experience within such intermediaries, and may not arbitrarily expand the scope of equity incentives for rapid business growth. In implementing incentives, professional insurance intermediaries may not: (i) conduct deceptive or misleading promotion for the incentive program, including exaggeration or arbitrarily promising uncertain earning from the future listing; (ii) induce sales personnel to purchase self-insurance or purchase insurance with borrowings for incentives; or (iii) offer client equity in the name of incentive as consideration for illicit interests. According to the Circular on Further Regulating the Incentive Plans of Professional Insurance Intermediary Institutions, promulgated on February 28, 2012, by the China Insurance Regulatory Commission, all professional insurance intermediary institutions shall not, by way of connecting the equity incentive plan with their listing and exaggerating proceeds brought by their listing and other means, induce any of the general public to become a salesperson, or induce salespersons or clients to buy insurance products which are inconsistent with their actual insurance needs.

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**Regulations on Foreign Restriction on Insurance Brokerage**

According to the Announcement of the China Insurance Regulatory Commission on Permitting the Establishment of Wholly Foreign-invested Insurance Brokerage Companies by Foreign Insurance Brokerage Companies, which was promulgated by the China Insurance Regulatory Commission on December 11, 2006, and became effective on the same day, in five years following China's accession into the WTO, the establishment of a wholly foreign owned enterprise to engage in insurance brokerage services shall be permitted. There shall be no other restrictions except those on the establishment conditions and business scopes. On April 27, 2018, the China Banking and Insurance Regulatory Commission promulgated the Notice on Relaxing Restrictions on the Business Scope of Foreign-Funded Insurance Brokerage Companies, which became effective on April 27, 2018. Pursuant to this notice, the foreign-funded insurance brokerage institutions that obtain insurance brokerage business permits upon approval by the insurance regulatory authority of the PRC State Council may engage in the following insurance brokerage businesses within mainland China: (i) drafting insurance application proposals, selecting insurers, and undergoing the insurance application formalities for insurance applicants; (ii) assisting the insured parties or beneficiaries in claiming compensation; (iii) reinsurance brokerage business; (iv) providing disaster or loss prevention or risk evaluation and management advisory services; and (v) other businesses approved by the China Banking and Insurance Regulatory Commission.

On December 3, 2021, the General Office of the China Banking and Insurance Regulatory Commission issued the Circular on Clarifying Relevant Measures on Open up of Insurance Agency Markets, which provides that qualified foreign insurance brokerage companies with actual operation experience are allowed to set up insurance brokerage companies in China to conduct insurance brokerage business, and the following qualification requirements for the foreign investor of an insurance brokerage company are abolished (i) the foreign investor shall have engaged in insurance brokerage business for more than thirty years within the territories of World Trade Organization members; (ii) the foreign investor shall have established its representative office in China for two consecutive years; and (iii) the total assets of the foreign investor shall be no less than US$200 million as of the end of the year prior to its application.

Each of Shuidi Insurance Brokerage, Zhuanxin Insurance Brokerage Co., Ltd., and Haike (Tianjin) Insurance Brokerage Co., Ltd., subsidiaries of the VIEs, has obtained licenses for conducting insurance brokerage business.

**Regulations on Insurance Agency Business**

Pursuant to the PRC Insurance Law and the Provisions on the Supervision and Administration of Insurance Agencies, which was promulgated on November 12, 2020 and came into effect on January 1, 2021, an insurance agency is an entity, which has been authorized by an insurer to transact insurance business on its behalf within the scope of authorization and gets in return agency's commissions to be collected from the insurer.

Pursuant to the Provisions on the Supervision and Administration of Insurance Agencies, a professional insurance agency engaging in insurance agency business within mainland China shall satisfy the qualification requirements specified by the insurance regulatory authority under the PRC State Council and obtain the Insurance Agency License. The minimum registered capital of a professional insurance agency that conducts business in regions not limited to the provincial level is RMB50 million, while the minimum registered capital of a professional insurance agency that conducts business within the provincial level is RMB20 million. The registered capital of a professional insurance agency shall be paid up in full. The Provisions on the Supervision and Administration of Insurance Agencies also stipulates the rules of market access, management qualifications, supervision and other matters of insurance agency.

According to the Provisions on the Supervision and Administration of Insurance Agencies, an insurance agency may engage in the following insurance agency businesses: (i) sale of insurance products on behalf of the insurance companies; (ii) collection of insurance premium on behalf of the insurance companies; (iii) conducting loss surveys and handling claims of insurance businesses on behalf of the insurer principal; and (iv) other business activities approved by the insurance regulatory authority under the PRC State Council. If a professional insurance agency engages in insurance agency businesses in other provinces other than that the province in which it is registered, it shall establish branches, and the business scope of such branches shall not go beyond the province where it locates.

Tairui Insurance Agency Co., Ltd., one of the subsidiaries of the VIEs, has obtained the license for conducting insurance agency business.

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**Regulations on Insurance Claims Adjusting Business**

The principal regulation governing insurance adjusting firms is the Provisions on the Supervision and Administration of Insurance Adjustors, which was promulgated by the China Insurance Regulatory Commission on February 1, 2018, and became effective on May 1, 2018. Pursuant to the Provisions on the Supervision and Administration of Insurance Adjustors, the term "insurance adjustment" refers to the assessment, survey, authentication, loss estimation and risk assessment of the insured subject matters or the insurance incidents conducted by an appraisal firm and its professional appraisers upon the entrustment of the parties concerned. The term "insurance adjusting firm" refers to an entity and any of its branches which engages in the aforementioned businesses. To operate the insurance adjustment business, an insurance adjusting firm shall, within thirty days after the date of obtaining its business license, complete the filing with the China Insurance Regulatory Commission and its local branches. In addition, an insurance adjusting firm shall have professional risk fund or procure professional liability insurance within twenty days upon completion of the filing.

According to the Provisions on the Supervision and Administration of Insurance Adjustors, an insurance adjusting firm should take the form of a company or a partnership in accordance with applicable law and retains claims adjustment practitioners to engage in insurance claims adjusting businesses. A claim adjusting firm in the form of a partnership must have at least two claims adjustors and two-thirds of its partners should be claims adjustors, who have least three years' working experience in claims adjustment and have no record of administrative penalties in relation to claims adjustment activities in the past three years. An insurance adjusting firm in the form of a company must have at least eight insurance assessors and two shareholders of which two-thirds are insurance assessors who have least three years' working experience in claims adjustment and have no record of administrative penalties in relation to claims adjustment activities in the past three years.

An insurance claims adjusting firm must meet certain requirements in order to engage in claims adjustment business, including, but not limited to, (i) its shareholders or its partners must meet the requirements mentioned above and its capital contribution must be owned by itself, actual and lawful, and must not be the capital not owned by itself in various forms such as a bank loan; and (ii) it must have adequate working capital to support its day-to-day operation and risk undertaking in accordance with its business development plan. Pursuant to the Circular on the Filing and Regulation of Business Conducted by Insurance Adjusting Firms, promulgated by the China Insurance Regulatory Commission on June 30, 2017, the working capital of an insurance adjusting firm with national business scope shall be no less than RMB2 million, and an insurance adjusting firm with regional business scope shall be no less than RMB1 million. The insurance adjusting firm shall enter into an escrow agreement with commercial banks regarding the working capital.

According to the Provisions on the Supervision and Administration of Insurance Adjustors, an insurance adjusting firm may engage in the following businesses: (i) inspecting and appraising the value of and assessing the risks of the subject matter before and after it is insured; (ii) surveying, inspecting, estimating the loss of, adjusting and disposing of the insured's subject matter after loss has been incurred; (iii) risk management consulting; and (iv) other business activities approved by the China Insurance Regulatory Commission. In addition, the insurance adjusting firms shall not engage in the following acts while working in the insurance adjusting business: (i) seeking illegitimate interests in the course of business; (ii) allowing other organizations to carry out insurance adjusting business in its name or carrying out insurance adjusting business in the name of other organizations; (iii) soliciting business by improper means, such as malicious price-cutting, payment of kickbacks, false advertising, or derogation or defamation of other insurance adjusting firms; (iv) accepting any businesses with conflicting interests; (v) accepting the commissions from two parties who have conflicts of interest when assessing the same subject matter; (vi) issuing false assessment reports or assessment reports with any material omission; (vii) employing or designating any individual who does not meet the requirements to engage in the insurance adjusting business; or (viii) any other act in violation of laws or administrative regulations.

An insurance claims adjustment practitioner must join an insurance claim adjusting firm to conduct insurance claims adjustment activities. The insurance claims adjusting firm to which he or she belongs must register his or her information with the China Insurance Regulatory Commission's Insurance Intermediary Supervision Information System. An adjustor can only conduct insurance adjustment activities for one insurance claims adjusting firm and can only be registered with the system through one insurance claims adjusting firm. At least two insurance claims adjustment practitioners must be appointed to undertake each case of insurance claims adjustment businesses and the claims adjustment report shall be signed by at least two insurance claims adjustment practitioners engaged in the claim adjustment activities and the seal of the claims adjusting firm to which he or she belongs shall be affixed thereto.

Chongqing Hecheng Insurance Adjusting Co., Ltd., one of the subsidiaries of the VIEs, has completed the filing with the local branch of the governmental authorities.

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**Regulations on Internet Insurance Business**

On December 7, 2020, the China Banking and Insurance Regulatory Commission promulgated the Regulatory Measures for Online Insurance Business, which became effective on February 1, 2021 and supersedes the Interim Regulatory Measures for Internet Insurance Business promulgated by the China Insurance Regulatory Commission on July 22, 2015. Shuidi Insurance Brokerage conducts online insurance brokerage business and is subject to the such measures.

Pursuant to the Regulatory Measures for Online Insurance Business, "Internet insurance business" refers to insurance operating activities such as conclusion of insurance contracts and provision of insurance services that are conducted by insurance institutions based on internet. Any entity which is not a qualified insurance institution (including the insurance company and insurance intermediary service providers, such as the insurance brokerage company and insurance agency company) is not allowed to conduct online insurance business, including without limitation consultation of insurance products, comparison of insurance products, trial calculation of insurance premiums, quotation and comparison of quotations, drafting insurance plans for policyholders, processing insurance application formalities and premium collection.

According to the Regulatory Measures for Online Insurance Business, "online platform operated by itself" refers to the online platform which is established and operated independently by an insurance institution for the purpose of engaging in internet insurance business. These measures require that insurance institutions conducting online insurance business via the online platforms operated by themselves in the form of websites or mobile applications shall complete the filing with the competent authority for the operation of their websites and mobile applications. An insurance institution shall sell internet insurance products or provide insurance brokerage or insurance adjustment services via the online platform operated by itself or the online platform operated by other insurance institutions, and the online insurance transactions being conducted through online interfaces shall be operated by insurance institutions only. In addition, these measures impose technical IT requirements for insurance institutions engaged in online insurance business. For example, these online platforms with online insurance products sales or insuring functions and the information management systems and core business systems that support the operation of such online platforms shall be certified as Safety Level III Computer Information Systems or above level. As for those without online insurance products sales or insuring functions and the information management systems and core business systems that support the operation of such online platforms shall be certified as Safety Level II Computer Information Systems or above level.

The Regulatory Measures for Online Insurance Business also set out specific requirements in relation to marketing activities conducted by insurance institutions for the marketing and promotion of insurance products or insurance services via internet media, such as websites, websites and applications, in the form of text, pictures, audio, video or otherwise. An insurance institution shall comply with the PRC Advertising Law, laws and regulations on marketing of financial products and other relevant rules promulgated by the China Banking and Insurance Regulatory Commission when carrying out marketing activities to promote their insurance products and services. In addition, such measures also require insurance institutions to regulate their marketing and sales activities for internet insurances products, including, among others, implementing management protocols on the qualification, training, and behavior of online insurance practitioners and protocols on approval of content on marketing and sales of online insurance products. The online insurance practitioners shall conduct marketing activities of online insurance products within the scope authorized by insurance institutions and disclose relevant information on their marketing web page, such as their personal information and insurance institution's names. The marketing content published by the practitioners shall be uniformly made by insurance institutions. An insurance institution shall assume the primary responsibility for the internet insurance marketing activities conducted by itself and its practitioners.

The Regulatory Measures for Online Insurance Business also set forth specific operation and management requirements in relation to an insurance institution, including, among others, (i) an insurance institution shall adopt effective technical methods to verify the authenticity of each policyholder's identity information, and completely record and keep the main internet insurance business process; (ii) an insurance institution shall complete practice registration for their personnel, and shall identify their qualification to engage in internet insurance business for public inquiry; (iii) the fees paid by insurance companies to insurance intermediary service providers shall not be settled in cash; (iv) an insurance institution shall assume the primary responsibility for the protection of customer information, and shall collect, process and use personal information following the principles of legality, legitimacy and necessity, and ensure the security and legality of the collection, processing and use of information; and (v) an insurance institution shall make several internal operation plans and protocols, for example, an emergency response plan for the interruption of internet insurance business operation, an internal control protocol for anti-money laundering, a customer due diligence protocol, a protocol for keeping customer identity data and transaction records, a protocol for the reporting of large-value transactions and suspicious transactions and an anti-fraud protocol.

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The Regulatory Measures for Online Insurance Business set out a ramp-up process allowing the insurance institutions to achieve full compliance in phases until February 1, 2022. Pursuant to these measures, the insurance institutions shall (i) complete the rectification of the issues on internal protocols, marketing activities, sales management and information disclosure within three months from the effective date of the Regulatory Measure; (ii) complete the rectification of other issues on business and operation within six months from the effective date hereof; and (iii) complete the authentication of classified cybersecurity protection of the online platform operated by itself within twelve months from the effective date of the Regulatory Measure.

On April 14, 2016, the China Insurance Regulatory Commission together with 14 authorities issued the Implementation Plan for the Special Campaign on Internet Insurance Risks, which sets out the overall framework for the rectification initiative dedicated to mitigation of online insurance risks, specifying that the special rectification initiative shall focus on regulating business operation model optimizing market environment and improving regulatory rules, to achieve the objective of parallel promotion of innovation and risk mitigation, and the healthy and sustainable development of online insurance.

On April 2, 2019, the China Banking and Insurance Regulatory Commission promulgated the Circular of the General Office of the China Banking and Insurance Regulatory Commission on Issuing the 2019 Plan for the Rectification of Chaos in the Insurance Intermediary Market, aiming to further curb the chaos of violations of laws and regulations in the insurance intermediary market. The rectification plan mainly includes three key tasks: (i) to ascertain insurance companies' responsibility for management and control of various intermediary channels; (ii) to carefully investigate business compliance of insurance intermediaries; and (iii) to strengthen the rectification of insurance business of the third-party online platforms in cooperation with insurance institutions. Pursuant to the rectification plan, all insurance institutions (including insurance companies and insurance intermediaries) shall conduct internet insurance business, regulate the business cooperation with third-party online platforms, prohibit third-party platforms from illegally engaging in insurance intermediary business in accordance with the Interim Regulatory Measures for Internet Insurance Business and other regulations, and focus their rectification on the following: (i) whether the activities of any cooperative third-party online platform of the insurance institution and its employees are limited to providing sales support services such as insurance product display and description and web links, and whether it illegally engages in insurance sales, underwriting, settlement of claims, and surrender or other insurance business links; (ii) whether there is a cooperation between the insurance institution and any third-party online platform engaging in internet finance involving wealth management, peer-to-peer lending and finance lease, etc.; (iii) whether the insurance institution performs the primary responsibility for supervising and managing its cooperative third-party platforms as required; (iv) whether all cooperative third-party online platforms of the insurance institution conform to the Interim Regulatory Measures for Internet Insurance Business; (v) whether the insurance institution owns the interfaces where customers purchase insurance policies on its cooperative third-party online platforms and bears the compliance responsibility, and whether any of its third-party platforms engages in the collection of insurance premiums on its behalf and transfer of payments; (vi) whether each cooperative third-party online platform of the insurance institution discloses the information of all its cooperative insurance institutions at an eye-catching position, and that of such third-party online platform disclosed on the information disclosure platform of the Insurance Association of China at an eye-catching position, and indicates that the insurance business is provided by insurance institutions; and (vii) whether any cooperative third-party online platform of the insurance institution restricts such insurance institutions from accessing customers' information in a truthful, complete and timely manner.

On June 22, 2020, the China Banking and Insurance Regulatory Commission promulgated the Circular on Regulating the Retrospective Management of Internet Insurance Sales Practices, which took effect on October 1, 2020, setting out requirements on various aspects of online sales by insurance institutions (including insurance companies and insurance intermediaries), including sales practices, record-keeping for backtracking sales, and disclosure requirements. The Circular on Regulating the Retrospective Management of Internet Insurance Sales Practices provides that, (i) online sales pages should be displayed only on insurance institutions' online platforms operated by themselves and should be separated from non-sales pages; (ii) important insurance clauses should be presented on a separate page and be confirmed by policyholders or insureds; and (iii) insurance institutions should keep records for five years after the expiry of the policy for policies with a term of one year or less and for ten years for policies with a term longer than one year for purposes of backtracking sales.

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On August 5, 2021, the China Banking and Insurance Regulatory Commission published the Notice on Carrying Out Special Rectification of Internet Insurance Chaos, which lays out a plan to identify and rectify key issues in the Internet insurance industry, including among others, hosting misleading sales, imposing excessively high service fees, and misuse of users' information. The notice provides, among others, the insurance companies shall (i) conduct comprehensive investigations on their Internet insurance business since 2020, and find out the weak links and violations in the Internet insurance business; (ii) clarify responsibility of business department and management and strictly implement rules on accountability for responsible personnel; and (iii) strengthen internal control and compliance management, including without limitation, establish and improve the Internet insurance operation mechanism and compliance management system, regularly assess the security and effectiveness of the information system, and ensure compliance throughout the process of the Internet insurance business operation. In addition, the notice requires the China Banking and Insurance Regulatory Commission and local counterparts of the China Banking and Insurance Regulatory Commission to conduct on-site inspections in insurance institutions and require the insurance institutions and regulatory authorities to report material risks and material issues to the China Banking and Insurance Regulatory Commission in a timely manner during the rectification.

On August 24, 2021, Beijing counterpart of the China Banking and Insurance Regulatory Commission issued the Notice on the Special Rectification of Issues Related to Internet Insurance Marketing and Publicity in Beijing, pursuant to which, the insurances companies and insurance professional intermediary agencies shall (i) immediately cease publishing Internet insurance marketing advertisements with excessive marketing and inducing consumption in the Beijing; (ii) establish management system related to the production, review, release, and effect evaluation of marketing and publicity content and prepare an Internet insurance marketing publicity management ledger in Beijing, and (iii) comprehensively evaluate the compliance of Internet insurance marketing advertisements published in Beijing, clarify the rectification measures, register them in the management ledger one by one, and report the management ledger to the Beijing counterpart of the China Banking and Insurance Regulatory Commission within the first 10 days of each quarter since the first quarter of 2022.

On October 12, 2021, the General Offices of the China Banking and Insurance Regulatory Commission issued the Circular on Further Regulating Certain Issues on Internet Life Insurance Business, or the Circular 108, to regulate the Internet life insurance business. The Circular 108 provides, among others, that (i) the scope of Internet personal insurance products should be limited to accident insurance, health insurance (except care insurance), term life insurance, ordinary life insurance (except term life insurance) with an insurance period of more than 10 years and ordinary annuity insurance with an insurance period of more than 10 years, as well as other personal insurance products specified by the China Banking and Insurance Regulatory Commission; (ii) Internet personal insurance products that do not comply with the requirements under the Circular 108 shall not be offered online; and (iii) each installment of premium of certain insurance products less than one year term, such as accident insurance and health insurance, shall be equal. In addition, the Circular 108 provides the upper limit for the predetermined fee rate and average supplemental fee rate for certain insurance products. It further requires insurance intermediary institutions that conduct the sales of ordinary life insurance products (excluding fixed term life insurance) and annuity insurance products longer than ten-year term to meet certain conditions, including, among others, meeting the operation and service abilities for insurance companies, having not received any material administrative penalty or regulatory actions imposed or taken by any governmental authorities over the last twelve months. Furthermore, customer service personnel of an insurance intermediary institution shall not actively promote internet insurance products and their salaries shall not be associated with the sales assessment indicators of internet personal insurance business.

**Regulations on Publicity and Sales of Insurance Products**

On November 11, 2022, the China Banking and Insurance Regulatory Commission issued the Administrative Measures for the Disclosure of Information on Personal Insurance Products, which became effective on June 30, 2023. The administrative measures aim to regulate the disclosure of personal life insurance product information. Pursuant to the administrative measures, insurance companies are required to disclose the information on their insurance products and insurance intermediaries, insurance sales personnel and insurance practitioners shall provide the information on insurance products to the public based on the information and materials on insurance products provided by insurance companies. Insurance companies, insurance intermediaries and insurance sales personnel and practitioners are required to disclose the information on insurance products to the policyholders, the insured, and the beneficiaries throughout the sales process to protect the rights of customers.

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On September 20, 2023, the National Administration of Financial Regulation issued the Administrative Measures for Insurance Sales Conduct, which took effect on March 1, 2024. Pursuant to such measures, insurance sales conducts consist of pre-sales, during-sales and after-sales conducts. Insurance companies and insurance intermediaries are required to conduct insurance sales business within the scope of business and regional scope approved by the law and regulatory system as well as regulatory authorities. Insurance sales personnel shall not engage in insurance sales practices beyond the scope of authorization of their respective institutions. Insurance companies shall establish management systems for grading insurance products. Insurance companies and insurance intermediaries should also grade their insurance sales personnel, and such grading systems for insurance sales personnel should be coordinated with insurance companies' management systems for grading insurance products. Insurance companies and insurance intermediaries shall strengthen the management of insurance sales channel business, implement the responsibility for insurance sales channel business compliance, and enhance the supervision of insurance sales channel compliance, and shall not use the insurance sales channel to carry out activities in violation of laws and regulations.

On July 11, 2025, the National Administration of Financial Regulation issued the Measures for the Suitability Management of Financial Institution Products, which took effect on February 1, 2026. Pursuant to such measures, where financial institutions sell or trade products through the Internet or other online means, they shall embed suitability management into the process, fully perform suitability obligations, and protect customers' rights to information, independent choice, and other legitimate rights and interests. In addition, where financial institutions cooperate with third-party institutions to carry out marketing, they shall strictly perform the primary responsibility for marketing management, strengthen supervision and management of third-party institutions, and ensure that marketing content and methods are legal and compliant.

**Regulations on Critical Illness Crowdfunding**

***Regulations on Donation Contract***

The PRC Contract Law promulgated by the PRC National People's Congress, in March 1999, governs the formation, validity, performance, enforcement and assignment of contracts. The PRC Civil Code, which was promulgated by the PRC National People's Congress in May 2020 and came into effect on January 1, 2021, incorporates the content of the PRC Contract Law and other civil laws in mainland China. The PRC Civil Code confirms the validity of donation contract between individuals and defines the donation contract as a contract under which the donor agrees to donate his or her property to the beneficiary, and the beneficiary agrees to accept such donation. Under the PRC Civil Code, a donation contract may be subject to obligations and if the beneficiary fails to perform such obligations, the donor may rescind the donation and require the beneficiary to return the donated property.

***Regulations on Critical Illness Crowdfunding***

On August 30, 2016, the Ministry of Civil Affairs, the Ministry of Industry and Information Technology, the State Administration of Press, Publication, Radio, Film and Television and the Cyberspace Administration of the PRC, the predecessor of the National Radio and Television Administration of the PRC, issued the Administrative Measures for the Services of Public Crowdfunding Platform, which came into effect on September 1, 2016. According to the Administrative Measures for the Services of Public Crowdfunding Platform, when the individuals call for help to resolve their own or their families' difficulties through radio, television, newspapers, network service providers or telecommunications operators, such service providers or operators shall appropriately indicate a risk reminder to the public, informing that the information published by such individual is not charitable public crowdfunding information and that the publisher is responsible for the veracity of such information.

On October 17, 2019, the Beijing Municipal People's Government issued the Regulations on the Promotion of Charity in Beijing, which came into effect on January 1, 2020. The regulations provide that network service providers, when providing service to individuals who seek for help, shall be entitled to require such help seeker to provide evidence, post risk reminders in a way easily identifiable by the public, and inform the public that such information is not charitable public crowdfunding information. It also requires that when receiving complaints and reports regarding untruthful help-seeking information, network service providers should promptly take the necessary measures to eliminate and reduce the impact.

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***Regulations on Online Public Crowdfunding Information Platform***

On March 16, 2016, the PRC National People's Congress published the PRC Charity Law, which came into effect on September 1, 2016. The PRC Charity Law defines the charity organization as a non-profit organization duly established under the PRC Charity Law which aims to carry out charity activities. The PRC Charity Law defines charitable crowdfunding as the donations of property raised by charity organizations for charitable purposes. Pursuant to the PRC Charity Law, only charity organizations with permits from the Ministry of Civil Affairs can carry out public charity crowdfunding.

On December 29, 2023, the Standing Committee of the National People's Congress published the Decision to Amend the PRC Charity Law, which took effect on September 5, 2024, pursuant to which (i) the individuals may post help-seeking information to resolve their own or their families' difficulties, and the individuals shall be responsible for the authenticity of such information and shall not defraud any donation by fabricating facts or other means, and (ii) internet platforms that provide services to facilitate individual help-seeking activities shall be designated by the Ministry of Civil Affairs, and verify the authenticity of such help-seeking information and disclose relevant information to the public in a timely and comprehensive manner. This decision further provides that the Ministry of Civil Affairs, along with other government authorities, will formulate the administrative rules for internet platform services providers providing services for individual help-seekers.

Pursuant to the Administrative Measures for the Services of Public Crowdfunding Platform, public charity crowdfunding platform services refer to platform services provided by radio, television, newspapers, network service providers or telecom operators for charity organizations to carry out public charity crowdfunding or publish public charity crowdfunding information; online public charity crowdfunding platform service providers shall be designated by Ministry of Civil Affairs. The Administrative Measures for the Services of Public Crowdfunding Platform also provides certain requirements for public charity crowdfunding platform service providers, including: (i) public charity crowdfunding platform service providers shall inspect the charity organizations' registration certificates and public charity crowdfunding permits; (ii) public charity crowdfunding platform service providers shall not accept donations on behalf of charity organizations; (iii) an agreement shall be entered into by and between parties involved in the public charity crowdfunding platform service to clarify each party's rights and obligations regarding the truthfulness and other aspects of the public charity crowdfunding; (iv) public charity crowdfunding platform service providers shall promptly report to the Ministry of Civil Affairs if violation of laws or regulations by charity organizations is discovered; and (v) public charity crowdfunding platform service providers shall record and preserve copies of charity organizations' registration certificates and public charity crowdfunding permits, as well as relevant information published by charity organizations on the platform.

On September 5, 2024, the Ministry of Civil Affairs, along with other government authorities, jointly published the Administrative Measures for Online Personal Help-seeking Service Platforms. These regulations require that online personal help-seeking service platforms be officially designated by the Ministry of Civil Affairs. According to the measures, online personal help-seeking service platforms are defined as online networks specifically established to facilitate the release of help-seeking information, fund collection, management, disbursement, and other services for individuals whose families face economic hardship due to illness or other factors. The Administrative Measures for Online Personal Help-seeking Service Platforms also provides certain requirements for online personal help-seeking service platforms, including: (i) online personal help-seeking service platforms shall establish information security management systems, and improve their management systems of user registration, account management, content review, and real-time information inspection; (ii) online personal help-seeking service platforms shall disclose their platform rules in a prominent manner, and report any material changes to these rules to the Ministry of Civil Affairs in advance; and (iii) online personal help-seeking service platforms shall set up independent deposit accounts to manage and utilize the funds they collects for their designated purposes.

In December 2024, our Waterdrop Medical Crowdfunding platform has been designated by the Ministry of Civil Affairs as one of the government-recognized online personal help-seeking service platforms in mainland China.

**Regulations on Internet Security**

The Decision in Relation to Protection of Internet Security enacted by the Standing Committee of the National People's Congress on December 28, 2000, as amended in August 2009, provides that, among other things, the following activities conducted through the internet, if constituted a crime under criminal laws in mainland China, are subject to criminal punishment: (i) hacking into a computer or system of strategic importance; (ii) intentionally inventing and spreading destructive programs such as computer viruses to attack computer systems and communications networks, thus damaging computer systems and the communications networks; (iii) in violation of national regulations, discontinuing computer networks or the communications services without authorization; (iv) leaking state secrets; (v) spreading false commercial information; or (vi) infringing intellectual property rights through internet.

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The Provisions on Technological Measures for Internet Security Protection, which was promulgated on December 13, 2005 by the Ministry of Public Security and came into effect on March 1, 2006, requires internet service providers and organizations that use interconnection implementing technical measures for internet security protection, like technical measures for preventing any matter or act that may endanger network security, for example, computer viruses, invasion or attacks to or destruction of the network. All internet access service providers are required to take measures to keep a record of and preserve user registration information. Under these measures, value-added telecommunications services license holders must regularly update information security and content control systems for their websites and must also report any public dissemination of prohibited content to local public security authorities. If a value-added telecommunications services license holder violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and shut down its websites.

On July 1, 2015, the Standing Committee of the National People's Congress issued the PRC National Security Law, which came into effect on the same day. The National Security Law provides that the state shall safeguard the sovereignty, security and cyber security development interests of the state, and that the state shall establish a national security review and supervision system to review, among other things, foreign investment, key technologies, internet and information technology products and services, and other important activities that are likely to impact national security of China.

On November 7, 2016, the Standing Committee of the National People's Congress promulgated the PRC Cybersecurity Law, which came into effect on June 1, 2017 and was subsequently amended on October 28, 2025 and became effective on January 1, 2026. The PRC Cybersecurity Law applies to the construction, operation, maintenance and use of networks as well as the supervision and administration of cybersecurity in China. The PRC Cybersecurity Law defines "networks" as systems that are composed of computers or other information terminals and facilities used for the purpose of collecting, storing, transmitting, exchanging and processing information in accordance with certain rules and procedures. "Network operators," who are broadly defined as owners and administrators of networks and network service providers, are subject to various security protection-related obligations, including: (i) complying with security protection obligations in accordance with tiered cybersecurity system's protection requirements, which include formulating internal security management rules and manual, appointing cybersecurity responsible personnel, adopting technical measures to prevent computer viruses and cybersecurity endangering activities, adopting technical measures to monitor and record network operation status and cybersecurity events; (ii) formulating cybersecurity emergency response plans, timely handling security risks, initiating emergency response plans, taking appropriate remedial measures and reporting to regulatory authorities; and (iii) providing technical assistance and support for public security and national security authorities for protection of national security and criminal investigations in accordance with the law. Network service providers who do not comply with the PRC Cybersecurity Law may be subject to fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses.

On June 10, 2021, the Standing Committee of the National People's Congress promulgated the Data Security Law, which took effect in September 2021. The Data Security Law introduces a data classification and hierarchical protection system based on the materiality of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of persons or entities when such data is tampered with, destroyed, divulged, or illegally acquired or used. It also provides for a security review procedure for the data activities which may affect national security. In addition, the PRC Data Security Law provides that the PRC relevant authorities shall, in accordance with relevant laws and international treaties and agreements concluded or participated in by the PRC, or in accordance with the principle of equality and reciprocity, handle requests from foreign judicial or law enforcement agencies for the provision of data and any organization or individual within the territory of the PRC shall not provide any foreign judicial or law enforcement agencies with any data without the approval of the competent PRC government authorities. Violation of PRC Data Security Law may subject the entities or individuals to warning, fines, and business suspension, revocation of permits or business licenses, or even criminal liabilities.

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On December 28, 2021, the Cyberspace Administration of China published the Cybersecurity Review Measures, which became effective on February 15, 2022. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that purchase network products and services and network platform operators engaging in data processing activities that affect or may affect national security must be subject to the cybersecurity review. According to the Cybersecurity Review Measures, before purchasing any network products or services, a critical information infrastructure operator shall assess potential national security risks that may arise from the launch or use of such products or services, and apply for a cybersecurity review with the cybersecurity review office of the Cyberspace Administration of China if national security will or may be affected. In addition, network platform operators who possess personal information of more than one million users, and intend to be listed at a foreign stock exchange are subject to the cybersecurity review. The Cybersecurity Review Measures further elaborate on the factors to be considered when assessing the national security risks of relevant activities, including, among others: (i) the risk of any critical information infrastructure being illegally controlled, interfered, or sabotaged; (ii) the harm to the business continuity of any critical information infrastructure caused by the disruption of supply of these products and services; (iii) the security, openness, transparency and variety of sources of these products or services, the reliability of supply channels, as well as risks of supply interruptions due to factors such as politics, diplomacy and trade; (iv) the level of compliance with laws and regulations in mainland China of the product and service providers; (v) the risk of core data, important data, or a large amount of personal information being stolen, leaked, destroyed, and illegally used or cross-border transferred, (vi) the risk of critical information infrastructure, core data, important data, or a large amount of personal information being affected, controlled, or maliciously used by foreign governments and the cyber information security risk in connection with public offering, and (vii) other factors that may adversely affect the security of critical information infrastructures, cyber security or data security. If the cybersecurity review office of the Cyberspace Administration of China deems it necessary to conduct a cybersecurity review, it should complete a preliminary review (including reaching a review conclusion suggestion and sending the review conclusion suggestion to the implementing body for the cybersecurity review mechanism and other authorities for their comments) within 30 business days from the issuance of a written notice to the operator, or 45 business days for complicated cases. Upon the receipt of a review conclusion suggestion, these authorities shall issue a written reply within 15 business days. If the cybersecurity review office of the Cyberspace Administration of China and these authorities reach a consensus, then the cybersecurity review office of the Cyberspace Administration of China shall inform the operator in writing, otherwise, the case will go through a special review procedure. The special review procedure should be completed within 90 business days, or longer for complicated cases.

On July 30, 2021, the PRC State Council published the Regulations on Protection of Security of Critical Information Infrastructure, which took effect on September 1, 2021, and pursuant to which, "critical information infrastructures" refer to critical network facilities and information systems involved in important industries and sectors, such as public communication and information services, energy, transportation, water conservancy, finance, public services, governmental digital services, science and technology related to national defense industry, as well as those which may seriously endanger national security, national economy and citizen's livelihood or public interests if damaged or malfunctioned, or if any leakage of data in relation thereto occurs. Pursuant to these regulations, critical information infrastructure operators shall establish a cybersecurity protection system and accountability system, and that the main responsible person of a critical information infrastructure operator shall take full responsibility for the security protection of the critical information infrastructures operated by it. In addition, the governmental authorities are responsible for stipulating rules for the identification of critical information infrastructures with reference to several factors set forth in the regulations, and further identify the critical information infrastructure operators in the related industries in accordance with such rules. The competent authorities shall also notify operators identified as the critical information infrastructure operators.

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On December 8, 2022, the Ministry of Industry and Information Technology issued the Measures for the Administration of Data Security in the Field of Industry and Information Technology (for Trial Implementation), which became effective on January 1, 2023. The measures are aimed to regulate the processing activities of data in the field of industry and information technology field conducted by data processors in China. The measures apply to industrial enterprises, software and information technology service companies, and companies holding licenses for operation of telecommunication services that independently determine the purposes and methods of data processing during the course of data processing activities. Data processing activities include, among others, the collection, storage, use, processing, transmission, provision, and disclosure of data. Pursuant to the measures, data in the field of industry and information technology includes industrial data, telecommunication data, and radio data generated and collected during the service operation. The measures provide for the classification of data in the field of industry and information technology as general, important, or core data, and provide specific requirements for the management of data classifications and data protection measures, including, among other things, data collection, storage, processing, transmission, disclosure, and destruction for data processors in the field of industry and information technology. In particular, data processors processing important data and core data are required to complete filing with the authorities for the catalogue of important data and core data. The filing information includes basic information on the data, such as category, classification, quantity, processing purposes and methods of data processing, scope of use, liable entities, data sharing, cross-border transfer of data, and data security protection measures. If over 30% of the quantity (i.e., number of data items or amount of data stored) of important and core data changes or there is any material change to other filing information, data processors must update the filing information with the authorities within three months after such change. Furthermore, the measures provide data security requirements for cross-border and data transfers for data processors. If a data processor needs to transfer data in cases of merger, restructuring, or bankruptcy, it shall make data transfer plan and notify users affected. In addition, the measures indicate that the legal representative or principal of the data processor should be the primary person held accountable for data security and the person in charge of data security should take direct responsibility for the security of data processing activities.

On September 24, 2024, the Cyberspace Administration of China published the Administration Regulations on Network Data Security, which provide that network data processors conduct network data processing activities that affects or may possibly affect national security must conduct national security review in accordance with relevant laws and regulations. In addition, network data processors processing personal information of over 10 million individuals shall fulfill certain requirements for processing important data and require network data processors to take certain precautionary measures, such as identifying important data and conducting annual risk assessment. Furthermore, these regulations allow network data processors to provide personal information overseas only if it is strictly necessary for fulfilling statutory obligations. These regulations also establish certain obligations of online platform service providers, including offering users an option to turn off personalized recommendations.

On July 7, 2022, the Cyberspace Administration of China issued the Measures for the Security Assessment of Cross-border Transfer of Data, which became effective on September 1, 2022. These measures require the data processor providing data overseas to apply for the security assessment of cross-border transfer of data with the local provincial-level counterparts of the national cybersecurity authority under any of the following circumstances: (i) where the data processor intends to provide important data overseas; (ii) where a critical information infrastructure operator and a data processor who has processed personal information of more than 1,000,000 individuals intends to provide personal information overseas; (iii) where a data processor who has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals to overseas recipients, in each case as calculated cumulatively, since January 1 of the last year intends to provide personal information overseas; or (iv) other circumstances where the security assessment of data cross-border transfer is required as prescribed by the Cyberspace Administration of China. Furthermore, the data processor shall conduct an assessment on the risk of data cross-border transfer prior to applying for the foregoing security assessment, under which the data processor shall consider certain factors including, among other things, (i) the purpose, scope and manner of the cross-border data transfer and the overseas data recipient processing data and the legality, legitimacy and necessity thereof, (ii) the scale, scope, type and sensitivity of the transferred data, the risks to national security, public interests and the legitimate rights and interests of individuals or organizations arising from the cross-border data transfer, (iii) the overseas data recipient's commitment to assume responsibility and obligations, the management and technical measures to fulfill the responsibilities and obligations, and the ability to ensure the security of the transferred data, (iv) the risk of data being tampered with, destroyed, leaked, lost, transferred, or illegally obtained or illegally used during and after the cross-border transfer, and the existence of channels for safeguarding the rights and interests of personal information, and (v) adequate compliance of data transfer-related contracts or other legally binding documents between the data processor and the overseas recipient with the data security protection responsibilities and obligations. The data processors in violation of such measures are required to rectify such non-compliance within six months of the effectiveness date thereof.

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On March 22, 2024, the Cyberspace Administration of China issued the Provisions on Regulating and Promoting Cross-border Data Transfer, or the Cross-border Data Transfer Provisions. The Cross-border Data Transfer Provisions provide certain exemptions from obligations under the circumstances of cross-border data transfer, including, among others, the obligations for data security assessment, concluding a standard contract for provision of personal information abroad or passing the certification for personal information protection.

**Regulations on Privacy Protection**

Pursuant to the Decision on Strengthening the Protection of Online Information issued by the Standing Committee of the National People's Congress in 2012, the Order for the Protection of Telecommunication and Internet User Personal Information issued by the Ministry of Industry and Information Technology in 2013, and the PRC Cybersecurity Law, any collection and use of a user's personal information must be subject to the consent of the user, be legal, reasonable and necessary and be limited to specified purposes, methods and scopes. An internet information service provider must also keep such information strictly confidential, and is further prohibited from divulging, tampering with or destroying any such information, or selling or providing such information to other parties. An internet information service provider is required to take technical and other measures to prevent the collected personal information from any unauthorized disclosure, damage or loss. In case of any actual or potential leakage of the user personal information, internet information service providers must take immediate remedial measures and make timely report to the regulatory authorities and inform users in accordance with the regulations. Any violation of these laws and regulations may subject the internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancelation of filings, closedown of websites or even criminal liabilities.

With respect to the security of information collected and used by mobile applications, pursuant to the Announcement of Conducting Special Supervision against the Illegal Collection and Use of Personal Information by Applications, which was issued on January 23, 2019, application operators should collect and use personal information in compliance with the PRC Cybersecurity Law and should be responsible for the security of personal information obtained from users and take effective measures to strengthen the protection of personal information. Furthermore, application operators must not force their users to make authorization by means of bundling, suspending installation or in other default forms and should not collect personal information in (i) violation of laws or regulations, or (ii) breach of user agreements. Such regulatory requirements were emphasized by the Notice on the Special Rectification of Apps Infringing upon User's Personal Rights and Interests, which was issued by the Ministry of Industry and Information Technology on October 31, 2019. On November 28, 2019, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration for Market Regulation jointly issued the Methods of Identifying Illegal Acts of Applications to Collect and Use Personal Information. This regulation further illustrates certain commonly seen illegal practices of application operators in terms of the protection of personal information, including: "failure to publicize rules for collecting and using personal information"; "failure to expressly state the purpose, manner and scope of collecting and using personal information"; "collection and use of personal information without consent of application users"; "collecting personal information irrelevant to the services provided by the application in violation of the principle of necessity," "provision of personal information to others without users' consent"; "failure to provide the function of deleting or correcting personal information as required by laws"; and "failure to publish information such as methods for complaints and reporting." Any of the following acts, among others, of an application operator will constitute "collection and use of personal information without consent of users:" (i) collecting any user's personal information or activating the permission for collecting any user's personal information without obtaining such user's consent; (ii) collecting personal information or activating the permission for collecting the personal information of any user who explicitly refuses such collection, or repeatedly seeking any user's consent such that the user's normal use of such application is disturbed; (iii) collecting any user's personal information which has been actually collected by the application operator or activating the permission for collecting any user's personal information by the application operator that is beyond the scope of personal information which the user authorizes the application operator to collect; (iv) seeking any user's consent in a non-explicit manner; (v) modifying any user's settings for activating the permission for collecting any personal information without such user's consent; (vi) using users' personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing of such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting the users' personal information by improper methods, such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission for collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by the application operator.

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Pursuant to the Notice of the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen's personal information: (i) providing a citizen's personal information to specified persons or releasing a citizen's personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen's consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen's personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen's personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.

Pursuant to the PRC Civil Code, which came into effect on January 1, 2021, the information processor shall take technical measures and other necessary measures to protect the personal information collected and stored by it and to prevent any information from being leaked, falsified and lost. In the event that any personal information is or may be leaked, falsified or lost, the information processor shall take immediate remedial measures, inform the natural person concerned and escalate such situation to the competent department as required.

On August 20, 2021, the Standing Committee of the National Peoples' Congress issued the PRC Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection. The PRC Personal Information Protection Law aims at protecting the personal information rights and interests, regulating the processing of personal information, ensuring the orderly and free flow of personal information in accordance with the law, and promoting the reasonable use of personal information. Personal information, as defined in the PRC Personal Information Protection Law, refers to information related to identified or identifiable natural persons and recorded by electronic or other means, but excluding anonymized information. The PRC Personal Information Protection Law provides the circumstances under which a personal information processor could process personal information, which include but not limited to, where the consent of the individual concerned is obtained and where it is necessary for the conclusion or performance of a contract to which the individual is a contractual party. It also stipulates certain specific rules with respect to the obligations of a personal information processor, such as to inform the purpose and method of processing to the individuals, and the obligation of the third party who has access to the personal information by way of co-processing or delegation.

According to the Provisions on the Supervision and Administration of Insurance Brokers, the Provisions on the Supervision and Administration of Insurance Agencies and the Provisions on the Supervision and Administration of Insurance Adjustors, the insurance brokers, insurance agencies, insurance adjusting firms and their practitioners shall not disclose trade secrets of the insurer, the applicant and the insured known during business activities.

On September 17, 2021, the Cyberspace Administration of China, and eight other authorities jointly promulgated the Notice on Promulgation of the Guiding Opinions on Strengthening the Comprehensive Governance of Algorithm-Related Internet Information Services, which provides that, among others, enterprises shall establish an algorithmic security responsibility system and a technology ethics vetting system, improve the algorithmic security management organization, strengthen risk prevention and control, and improve the capacity to respond to algorithmic security emergencies.

On December 31, 2021, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration for Market Regulation jointly issued the Administration Provisions on Algorithmic Recommendation of Internet Information Services, which became effective on March 1, 2022. These provisions stipulate that algorithmic recommendation service providers must (i) fulfill their responsibilities for algorithm security, (ii) establish and strengthen management systems for algorithm mechanism examination, ethical review in technology, user registration, information release examination, protection of data security and personal information, anti-telecom and network fraud, security assessment and monitoring, emergency response to security incidents, etc., and (iii) formulate and publish rules governing algorithmic recommendation related service. Providers of algorithmic recommendation services should not use the services to (i) carry out any illegal activity which may endanger national security and social public interest, disturb economic order and social order, or infringe third parties' legal interest, or (ii) spread any information prohibited by laws or regulations. In addition, they should not take advantage of algorithms to impose unreasonable restrictions on other information service providers, or hinder or obstruct the normal operation of their legal services. Providers of algorithmic recommendation services with the characteristics of public opinion or capacity of social mobilization must complete the filing with the system of the Cyberspace Administration of China within ten business days after the launch of their service.

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On November 18, 2024, the Ministry of Civil Affairs, along with other government authorities, jointly issued the Circular on Issuing the Measures for the Protection of the Personal Information of Children in Difficult Situations, which took effect immediately. According to these measures, any entity or individual intending to publish communications or news involving the specific identity of children in difficult situations must inform the children in advance about the necessity and potential impact on their personal rights and interests. Such communications may only be published after obtaining the consent of the children and their parents or other guardians, with proper technical safeguards in place. Furthermore, the measures prohibit any entity or individual from labeling children in difficult situations, using their personal information to attract attention, or exploiting their personal information for purposes such as fundraising or live streaming.

On February 12, 2025, the Cyberspace Administration of China issued the Administrative Measures for Personal Information Protection Compliance Audits, which took effect on May 1, 2025. Personal information processors handling the data of more than 10 million individuals are required to conduct a compliance audit of personal information protection at least once every two years. In addition, the Cyberspace Administration of China and other relevant authorities responsible for personal information protection may require personal information processors to engage external professional organizations to conduct compliance audits of their personal information processing activities in the following circumstances: (i) where material risks are identified in personal information processing activities that may seriously affect individuals' rights and interests or reveal serious deficiencies in security measures; (ii) where the processing activities may infringe upon the rights and interests of a large number of individuals; or (iii) where a personal information security incident results in the leakage, tampering with, loss, or destruction of the personal information of more than one million individuals or the sensitive personal information of more than 100,000 individuals.

On October 14, 2025, the Cyberspace Administration of China promulgated the Measures for the Certification of Cross-Border Provision of Personal Information, which became effective on January 1, 2026. Pursuant to these measures, prior to applying for certification for the cross-border provision of personal information, personal information processors are required to fulfill statutory obligations, including providing notice to individuals, obtaining their separate consent and conducting personal information protection impact assessments in accordance with applicable laws and administrative regulations.

**Regulations on Artificial Intelligence**

On December 31, 2021, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of State Security promulgated the Administration Provisions on Algorithmic Recommendation of Internet Information Services, which became effective on March 1, 2022. These provisions implement classification and hierarchical management for algorithm recommendation service providers based on varies criteria. Moreover, the provisions require algorithmic recommendation service providers to provide users with options that are not specific to their personal characteristics, or provide users with convenient options to cancel algorithmic recommendation services. If the users choose to cancel the algorithm recommendation service, the algorithm recommendation service provider shall immediately stop providing relevant services. Algorithmic recommendation service providers shall also provide users with the function to select, modify or delete user labels which are used for algorithmic recommendation services.

On November 25, 2022, the Cyberspace Administration of China, the Ministry of Industry and Information Technology and the Ministry of Public Security jointly issued the Administrative Provisions on Deep Synthesis of Internet Information Services, which took effect on January 10, 2023. According to these provisions, deep synthesis technology refers to any technology that utilizes deep learning, virtual reality or any other generative or synthetic algorithm to produce text, images, audio, video, virtual scenes or other network information. These provisions emphasize that the providers of deep synthesis services, as the primary entities responsible for the information security, should not use deep synthesis services to engage in activities prohibited by laws and regulations. If the Cyberspace Administration of China and other competent government authorities find that the deep synthesis service has a serious information security risk, they can require the deep synthesis service providers and technical supporters to suspend information update, user account registration or other related services in accordance with their duties and applicable laws. Deep synthesis service providers and technical supporters must take measures to rectify and eliminate hidden dangers. Violation of these provisions shall subject them to punishment in accordance with the laws and regulations. If the actions of providers and/or technical supporters of deep synthesis services constitute a violation of public security administration, they shall be punished according to relevant laws. If the actions constitute a crime, such providers and/or technical supporters shall be prosecuted for criminal responsibility.

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On March 7, 2025, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security and other PRC government authorities jointly issued the Notice on Promulgation of the Measures for Labeling AI-Generated or Composed Content, which became effective on September 1, 2025. According to the notice, where the generation or synthesis services provided by a service provider fall under the circumstances stipulated in the first paragraph of Article 17 of the Administrative Provisions on Deep Synthesis of Internet Information Services, the service provider shall add explicit labels to the generated or composed content. In addition, the service providers that provide online information content dissemination services shall take measures to regulate the dissemination of generated or composed content.

On July 10, 2023, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Public Security and other PRC government authorities jointly issued the Interim Measures on the Management of Generative AI Services, which became effective on August 15, 2023. According to these measures, "generative AI technology" refers to models and related technology with the ability to generate text, images, audios, videos, or other content, and "generative AI service provider" refers to any organization or individual that utilizes generative AI technology to provide generative AI services (including the organizations or individuals providing such services through the provision of a programmable interface or other means). Generative AI service providers shall carry out pre-training, optimization training, and other training data processing activities in accordance with applicable laws and regulations, including, among others, (i) using data and basic models with lawful sources, (ii) not infringing on the intellectual property rights owned by others, (iii) obtaining prior consent from individuals in accordance with applicable laws and regulations if the training data contains any personal information, and (iv) taking effective measures to improve the quality of training data and to enhance the authenticity, accuracy, objectivity, and diversity of training data. Generative AI service providers shall also assume the responsibility as a producer of online information content and personal information processor in accordance with applicable laws, fulfill online information security obligations, enter into service agreements with users, and label images, videos, and other contents generated by the use of generative AI technology pursuant to the Administration Provisions on Algorithmic Recommendation of Internet Information Services. Any generative AI service provider with the characteristics of public opinion or capacity of social mobilization shall conduct a security assessment and complete the formalities for algorithm filing, change, or deregistration in accordance with the Administration Provisions on Algorithmic Recommendation of Internet Information Services. Generative AI service providers who violate such measures will be punished in accordance with applicable laws and regulations. If there is no provision in laws or regulations, the competent government authority shall, in accordance with its functions and duties, issue a warning to such generative AI service providers, circulate a notice of criticism, and order such generative AI service providers to correct within a time limit. Those who refuse to make corrections or whose circumstances are serious shall be ordered to suspend the provision of relevant services. If the violation of such measures by such generative AI service providers constitutes an act violating the administration of public security, they shall be punished according to the laws related to the administration of public security. If the violation constitutes a crime, such generative AI service provider shall be prosecuted for criminal responsibility.

**Regulations on Intellectual Property Rights**

***Patent Law***

According to the PRC Patent Law (2020 Revision), the State Intellectual Property Office is responsible for administering patent law in China. The patent administration departments of the provincial, autonomous region and municipal governments are responsible for administering patent law within their respective jurisdictions. The patent system in mainland China adopts a "first-to-file" principle, which means that when more than one person files different patent applications for the same invention, only the person who files the application first is entitled to obtain a patent of the invention. To be patentable, an invention or a utility model must meet three criteria: novelty, inventiveness, and practicability. A patent is valid for twenty years in the case of an invention, ten years in the case of utility models and fifteen years in the case of designs.

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**Regulations on Copyright**

The PRC Copyright Law, which became effective on June 1, 1991 and was amended in 2001, 2010 and 2020, provides that Chinese citizens, legal persons, or other organizations own copyright in their copyrightable works, whether published or not, which include, works of literature, art, natural science, social science, engineering technology, and computer software. Copyright owners enjoy certain legal rights, including rights of publication, right of authorship, and right of reproduction. The Copyright Law as revised in 2010 extends copyright protection to internet activities, products disseminated over the internet, and software products. In addition, the Copyright Law provides for a voluntary registration system administered by the China Copyright Protection Center. Pursuant to the Copyright Law, an infringer of copyrights is subject to various civil liabilities, which include ceasing infringement activities, apologizing to the copyright owners, and compensating the loss of the copyright owners. Infringers of copyrights may also be subject to fines and/or administrative or criminal liabilities in severe situations.

Pursuant to the Computer Software Copyright Protection Regulations promulgated by the PRC State Council on December 20, 2001 and amended in 2013, the software copyright owner may go through the registration formalities with a software registration authority recognized by the PRC State Council's copyright administrative department. The software copyright owner may authorize others to exercise that copyright and is entitled to receive remuneration.

**Trademark Law**

Trademarks are protected under the PRC Trademark Law, which was adopted on August 23, 1982 and subsequently amended in 1993, 2001, 2013, and 2019, and the Implementation Regulations of the PRC Trademark Law adopted by the PRC State Council in 2002 and most recently amended in 2014. The PRC Trademark Law (Draft Amendment) was released on December 27, 2025 for public consultation and remains under consultation as of the date of this annual report. The Trademark Office under the National Intellectual Property Administration handles trademark registrations. The Trademark Office grants a ten-year term to registered trademarks and the term may be renewed for another ten-year period upon request by the trademark owner. A trademark registrant may license its registered trademarks to another party by entering into trademark license agreements, which must be filed with the Trademark Office for the record. As with patents, the Trademark Law has adopted a first-to-file principle with respect to trademark registration. If a trademark applied for is identical or similar to another trademark which has already been registered or subject to a preliminary examination and approval for use on the same or similar kinds of products or services, such a trademark application may be rejected. Any person applying for the registration of a trademark may not injure existing trademark rights first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a "sufficient degree of reputation" through such other party's use.

**Regulations on Domain Names**

The Ministry of Industry and Information Technology promulgated the Measures on Administration of Internet Domain Names on August 24, 2017, which became effective on November 1, 2017. Pursuant to these measures, the Ministry of Industry and Information Technology oversees the administration of Internet domain names in mainland China. The domain name registration follows a first-to-file principle. Applicants for registration of domain names must provide the true, accurate, and complete information of their identities to domain name registration service institutions. The applicants will become the holder of such domain names upon the completion of the registration procedure.

**Regulations on Foreign Exchange**

***General Administration of Foreign Exchange***

Under the PRC Foreign Currency Administration Rules promulgated on January 29, 1996 and most recently amended in 2008 and various regulations issued by the State Administration of Foreign Exchange, or SAFE, and other PRC governmental authorities, Renminbi is convertible into other currencies for current account items, such as trade-related receipts and payments and payment of interest and dividends. The conversion of Renminbi into other currencies and remittance of the converted foreign currency outside China for capital account items, such as direct equity investments, loans, and repatriation of investment, requires the prior approval from SAFE or its local branch.

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Payments for transactions that take place in China must be made in Renminbi. Unless otherwise approved, companies in mainland China may not repatriate foreign currency payments received from abroad or retain the same abroad. Foreign-invested enterprises may retain foreign exchange proceeds in accounts with designated foreign exchange banks under the current account items subject to a cap set by SAFE or its local branch. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaged in settlement and sale of foreign exchange pursuant to the SAFE rules and regulations. For foreign exchange proceeds under the capital accounts, approval from SAFE is generally required for the retention or sale of such proceeds to a financial institution engaged in settlement and sale of foreign exchange.

Pursuant to the Circular of SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, which was promulgated on November 19, 2012, became effective on December 17, 2012, and was further amended in 2015, 2018 and 2019, approval of SAFE is not required for opening a foreign exchange account and depositing foreign exchange proceeds into the accounts relating to the direct investments. This circular also simplifies foreign exchange-related registration required for foreign investors to acquire equity interests of companies in mainland China and further improves the administration on foreign exchange settlement for foreign-invested enterprises.

The Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or the SAFE Circular 13, which became effective on June 1, 2015 and was amended in 2019, cancels the administrative approvals of foreign exchange registration of direct domestic investment and direct overseas investment and simplifies the procedure of foreign exchange-related registration. Pursuant to the SAFE Circular 13, when setting up a new foreign-invested enterprise, investors should register with banks for direct domestic investment and direct overseas investment.

The Circular on Reforming the Management Approach Regarding the Settlement of Foreign Capital of Foreign-Invested Enterprise, which was promulgated on March 30, 2015, became effective on June 1, 2015, and was last amended on March 23, 2023, provides that a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the foreign exchange administration has confirmed monetary capital contribution rights and interests (or for which the bank has registered the injection of the monetary capital contribution into the account). Pursuant to this circular: Foreign-invested enterprises are allowed to settle 100% of their foreign exchange capital on a discretionary basis; a foreign-invested enterprise should truthfully use its capital for its own operational purposes within the scope of its business; and where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the foreign-invested enterprise must first go through domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered.

The Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, which was promulgated and became effective on June 9, 2016 and was amended on December 4, 2023, provides that enterprises registered in China may also convert their foreign debts from foreign currency into Renminbi on a discretionary basis. This circular also provides an integrated standard for conversion of foreign exchange under capital account items (including, but not limited to, foreign currency capital and foreign debts) on a discretionary basis, which applies to all enterprises registered in China.

On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including: (i) banks should check board resolutions regarding profit distribution, the original version of tax filing records, and audited financial statements pursuant to the principle of genuine transactions; and (ii) domestic entities should hold income to account for previous years' losses before remitting the profits. Moreover, pursuant to this circular, domestic entities should make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts, and other proof when completing the registration procedures in connection with an outbound investment.

Pursuant to the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, which was promulgated and took effect on October 23, 2019 and was amended on December 4, 2023, all foreign-invested enterprises to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment. However, since this circular is newly promulgated, it is unclear how SAFE and competent banks will carry it out in practice.

Based on the foregoing, if we intend to provide funding to our wholly foreign-owned subsidiaries through capital injection at or after their establishment, we must register the establishment of and any follow-on capital increase in our wholly foreign-owned subsidiaries with the State Administration for Market Regulation or its local counterparts, file such via the enterprise registration system, and register such with the local banks for the foreign exchange-related matters.

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***Loans by the Foreign Companies to Their Subsidiaries in Mainland China***

A loan made by foreign investors as shareholders in a foreign-invested enterprise is considered foreign debt in China and is regulated by various laws and regulations, including the PRC Foreign Currency Administration Rules, the Interim Provisions on the Management of Foreign Debts, the Provisional Regulations on the Statistical Monitoring of Foreign Debt (Revised in 2020), and the Administrative Measures for Registration of Foreign Debt. Under these rules and regulations, a shareholder loan in the form of foreign debt made to a mainland China entity does not require the prior approval of SAFE. However, such foreign debt must be registered with and recorded by SAFE or its local branches within fifteen business days after entering into the foreign debt contract. Pursuant to these rules and regulations, the balance of the foreign debts of a foreign-invested enterprise cannot exceed the difference between the total investment and the registered capital of the foreign-invested enterprise.

On January 12, 2017, the People's Bank of China promulgated the Notice of the People's Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing. Pursuant to the notice, within a transition period of one year from January 12, 2017, foreign-invested enterprises may adopt the currently valid foreign debt management mechanism, or the mechanism as provided in PBOC Notice No. 9, at their own discretions. The notice provides that enterprises may conduct independent cross-border financing in Renminbi or foreign currencies as required. Pursuant to the notice, the outstanding cross-border financing of an enterprise (the outstanding balance drawn, here and below) will be calculated using a risk-weighted approach and cannot exceed certain specified upper limits. The notice further provides that the upper limit of risk-weighted outstanding cross-border financing for an enterprise is 200% of its net assets. Enterprises must file with SAFE in its capital item information system after entering into cross-border financing contracts and prior to three business days before drawing any money from the foreign debts.

Based on the foregoing, if we provide funding to our wholly foreign-owned subsidiaries through shareholder loans, the balance of such loans (i) cannot exceed the difference between the total investment and the registered capital of the subsidiaries and we will need to register such loans with SAFE or its local branches in the event that the currently valid foreign debt management mechanism applies, or (ii) will be subject to the risk-weighted approach and 200% of its net assets, which is the upper limit of risk-weighted outstanding cross-border financing for an enterprise, and we will need to file the loans with SAFE in its information system in the event that the mechanism as provided in the Notice of the People's Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing applies.

On December 4, 2023, SAFE issued the Notice on Further Deepening the Reform to Facilitate Cross-border Trade and Investment, pursuant to which qualified enterprises may independently borrow foreign debts within the limit of the equivalent of US$5 million or US$10 million, depending on their areas of incorporation. On September 12, 2025, SAFE issued the Notice of the State Administration of Foreign Exchange on Matters Concerning the Deepening of Reform in the Administration of Foreign Exchange for Cross-border Investment and Financing, pursuant to which High-tech enterprises, "specialized, refined, distinctive, and innovative" enterprises, and technology-based small and medium-sized enterprises that meet the relevant conditions nationwide may borrow foreign debt within a limit not exceeding the equivalent of US$10 million. Among them, enterprises selected by relevant departments based on the "innovation points system" and meeting the relevant conditions may borrow foreign debt within a limit not exceeding the equivalent of US$20 million.

***Offshore Investment***

Under the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or the SAFE Circular 37, effective on July 4, 2014, mainland China residents are required to register with the local SAFE branch prior to the establishment or control of an offshore special purpose vehicle, which is defined as an offshore enterprise directly established or indirectly controlled by mainland China residents for investment and financing purposes, with the enterprise assets or interests mainland China residents hold in mainland China or overseas. The term "control" means to obtain the operation rights, right to proceeds, or decision-making power of a special purpose vehicle through acquisition, trust, holding shares on behalf of others, voting rights, repurchase, convertible bonds, or other means. An amendment to registration or subsequent filing with the local SAFE branch by such mainland China residents is also required if there is any change in the basic information of the offshore company or any material change with respect to the capital of the offshore company. At the same time, SAFE has issued the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-Trip Investment regarding the procedures for SAFE registration under SAFE Circular 37, which became effective on July 4, 2014, as an attachment of SAFE Circular 37.

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Under relevant rules, failure to comply with the registration procedures set forth in SAFE Circular 37 may result in bans on the foreign exchange activities of the onshore company, including the payment of dividends and other distributions to its offshore parent or affiliates, and may also subject relevant mainland China residents to penalties under the foreign exchange administration regulations in mainland China.

**Regulations on Dividend Distribution**

The principal laws and regulations regulating the distribution of dividends by foreign-invested enterprises in China include the PRC Company Law, as amended in 2004, 2005, 2013, 2018 and 2023, of which the last amendment took effect on July 1, 2024, and the 2019 PRC Foreign Investment Law and its implementation rules. Under the current regulatory regime in China, foreign-invested enterprises in China may pay dividends only out of their retained earnings, if any, determined in accordance with the accounting standards and regulations in mainland China. A mainland China company is required to set aside as statutory reserve funds at least 10% of its after-tax profit, until the cumulative amount of such reserve funds reaches 50% of its registered capital, unless laws regarding foreign investment provide otherwise. A mainland China company cannot distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.

**Regulations on Taxation**

***Enterprise Income Tax***

On March 16, 2007, the National People's Congress promulgated the PRC Enterprise Income Tax Law, which was amended on February 24, 2017 and December 29, 2018. On December 6, 2007, the PRC State Council enacted the Regulations for the Implementation of the Enterprise Income Tax Law, which became effective on January 1, 2008 and was last amended on January 20, 2025. Under the PRC Enterprise Income Tax Law and its implementing regulations, both resident enterprises and non-resident enterprises are subject to tax in China. Resident enterprises are defined as enterprises that are established in mainland China in accordance with the laws in mainland China, or that are established in accordance with the laws of foreign countries but are actually or in effect controlled from within China. Non-resident enterprises are defined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside mainland China, but have established institutions or premises in mainland China, or have no such established institutions or premises but have income generated from inside mainland China. Under the PRC Enterprise Income Tax Law and its implementing regulations, a uniform corporate income tax rate of 25% is applied. However, if non-resident enterprises have not formed permanent establishments or premises in mainland China, or if they have formed permanent establishments or premises in mainland China but there is no actual relationship between their relevant income derived in mainland China and the established institutions or premises set up by them, withholding income tax is set at the rate of 10% with respect to their income sourced from inside mainland China.

***Value-Added Tax***

On December 25, 2024, the Standing Committee of the National People's Congress published the PRC Value-Added Tax Law, which came into effect on January 1, 2026. On December 25, 2025, the State Council issued the Regulations for the Implementation of the Value-Added Tax Law of the PRC, which became effective on January 1, 2026. Pursuant to the PRC Value-added Tax Law, value-added tax rates are generally set at 13% for the sale of goods and certain services, 9% for transportation, construction, real estate and certain specified goods, and 6% for services and intangible assets, with a zero rate applicable to exports of goods and certain cross-border services and intangible assets, subject to applicable regulations. Small-scale taxpayers are taxable persons whose annual taxable VAT sales amount does not exceed RMB5 million. The value-added tax rate shall be 3% for small-scale taxpayers, unless otherwise stipulated by the State Council.

**Dividend Withholding Tax**

The PRC Enterprise Income Tax Law and its implementation rules provide that since January 1, 2008, an income tax rate of 10% will normally apply to dividends declared to non-PRC resident investors that do not have an establishment or place of business in China, or that have such establishment or place of business but the non-PRC resident investors' relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within China.

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Pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, and other applicable laws in mainland China, if a Hong Kong resident enterprise is determined by the competent tax authority in mainland China to have met the conditions and requirements under this arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a mainland China resident enterprise may be reduced to 5%. However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties issued on February 20, 2009, if the tax authorities in mainland China determine, in their discretions, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such tax authorities in mainland China may adjust the preferential tax treatment. Pursuant to the Circular on Several Questions regarding the "Beneficial Owner" in Tax Treaties, which was issued on February 3, 2018 by the State Administration of Taxation and became effective on April 1, 2018, when determining the applicant's status as the "beneficial owner" regarding tax treatment in connection with dividends, interests, or royalties in the tax treaties, several factors, including, without limitation, whether the applicant is obligated to pay more than 50% of his or her income in twelve months to residents in a third country or region, whether the business operated by the applicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax or grant any tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and such factors will be analyzed according to the actual circumstances of the specific cases.

**Tax on Indirect Transfer**

On February 3, 2015, the State Administration of Taxation issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7. Pursuant to Bulletin 7, an "indirect transfer" of assets, including equity interests in a mainland China resident enterprise, by non-PRC resident enterprises, may be recharacterized and treated as a direct transfer of taxable assets in mainland China, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of enterprise income tax in mainland China. As a result, gains derived from such indirect transfer may be subject to enterprise income tax in mainland China. When determining whether there is a "reasonable commercial purpose" in the transaction arrangement, features to be taken into consideration include whether the main value of the equity interest of the offshore enterprise derives directly or indirectly from taxable assets in mainland China; whether the assets of the offshore enterprise mainly consists of direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding taxable assets in mainland China have a real commercial nature which is evidenced by their actual function and risk exposure. Bulletin 7 does not apply to sale of shares by investors through a public stock exchange where such shares are acquired on a public stock exchange. On October 17, 2017, the State Administration of Taxation issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non- resident Enterprise Income Tax at Source, or Bulletin 37, which was amended by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents issued on June 15, 2018 by the State Administration of Taxation. Bulletin 37 further elaborates on the implemental rules regarding the calculation, reporting, and payment obligations of the withholding tax by the non-resident enterprises. Nonetheless, there remain uncertainties as to the interpretation and application of Bulletin 7. Bulletin 7 may be determined by the tax authorities to be applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, are involved.

**Regulations on Employment**

***Labor Contract Law***

The PRC Labor Contract Law, which became effective on January 1, 2008 and amended in 2012, primarily aims at regulating rights and obligations of employment relationships, including the establishment, performance, and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts must be executed in writing if labor relationships are to be or have been established between employers and employees. Employers are prohibited from forcing employees to work above certain time limits and employers must pay employees for overtime work in accordance with national regulations. In addition, employees' wages must not be lower than local standards on minimum wages and must be paid to employees in a timely manner.

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***Social Insurance***

As required under the Regulation of Insurance for Labor Injury implemented on January 1, 2004 and amended in 2010, the Provisional Measures for Maternity Insurance of Employees of Corporations implemented on January 1, 1995, the Decisions on the Establishment of a Unified Program for Old-Aged Pension Insurance of the PRC State Council issued on July 16, 1997, the Decisions on the Establishment of the Medical Insurance Program for Urban Workers of the PRC State Council promulgated on December 14, 1998, the Unemployment Insurance Measures promulgated on January 22, 1999, and the PRC Social Insurance Law implemented on July 1, 2011 and amended on December 29, 2018, employers are required to provide their employees in China with welfare benefits covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, and medical insurance. These payments are made to local administrative authorities. Any employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a prescribed time limit and be subject to a late fee. If the employer still fails to rectify the failure to make the contributions within the prescribed time, it may be subject to a fine ranging from one to three times the amount overdue. On July 20, 2018, the General Office of the PRC State Council issued the Plan for Reforming the State and Local Tax Collection and Administration Systems, which stipulated that the State Administration of Taxation shall become solely responsible for collecting social insurance premiums.

***Housing Fund***

In accordance with the Regulations on the Administration of Housing Funds, which was promulgated by the PRC State Council in 1999 and amended in 2002 and 2019, employers must register at the designated administrative centers and open bank accounts for depositing employees' housing funds. Employers and employees are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary of the employee in the preceding year in full and on time.

**Regulations on Share Incentive Plans**

Pursuant to the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, which was issued by SAFE on February 15, 2012, employees, directors, supervisors, and other senior management who participate in any stock incentive plan of a publicly listed overseas company and who are mainland China citizens or non-mainland China citizens residing in mainland China for a continual period of no less than one year, subject to a few exceptions, are required to register with SAFE through a qualified domestic agent, which may be a mainland China subsidiary of such overseas listed company, and complete certain other procedures.

In addition, the State Administration of Taxation has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, employees working in mainland China who exercise stock options or are granted restricted shares will be subject to individual income tax in mainland China. The mainland China subsidiaries of an overseas listed company are required to file documents related to employee stock options and restricted shares with the tax authorities and to withhold individual income taxes of employees who exercise their stock options or purchase restricted shares. If the employees fail to pay or the mainland China subsidiaries fail to withhold income tax in accordance with the laws and regulations, the mainland China subsidiaries may be subject to sanctions imposed by the tax authorities or other PRC governmental authorities.

**M&A Rules and Overseas Listing**

On August 8, 2006, six PRC governmental and regulatory agencies, including the Ministry of Commerce and the CSRC, promulgated the M&A Rules governing the mergers and acquisitions of domestic enterprises by foreign investors, which became effective on September 8 2006 and was revised on June 22, 2009. The M&A Rules, among other things, require that if an overseas company established or controlled by mainland China companies or mainland China citizens intends to acquire equity interests or assets of any other mainland China domestic company affiliated with the mainland China citizens, such acquisition must be submitted to the Ministry of Commerce for approval. The M&A Rules also require that an offshore special purpose vehicle, or a special purpose vehicle formed for overseas listing purposes and controlled directly or indirectly by mainland China companies or individuals, shall obtain the approval of the CSRC prior to overseas listing and trading of such special purpose vehicle's securities on an overseas stock exchange.

On July 6, 2021, the General Office of the PRC State Council and General Office of the Central Committee of the Communist Party of China issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. The opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.

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On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which became effective on March 31, 2023. Pursuant to these regulations, companies in China that directly or indirectly offer or list their securities in an overseas market, including a company in China limited by shares and an offshore company whose main business operations are in China and intends to offer shares or be listed in an overseas market based on its equities, assets or similar interests in China are required to file with the China Securities Regulatory Commission within three business days after submitting their listing application documents to the regulator in the place of intended listing. If the company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, it may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. These regulations also provide that a company in China must file with the CSRC within three business days for its follow on offering of securities after it is listed in an overseas market. On February 17, 2023, the CSRC also issued the Notice on Administration of the Filing of Overseas Offering and Listing by Domestic Companies and held a press conference for the release of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, which, among others, clarified that the companies in China that have been listed overseas before March 31, 2023 are not required to file with the CSRC immediately, but these companies should complete filing with the CSRC for their refinancing activities in accordance with these regulations. Based on the foregoing, we are not required to complete filing with the CSRC for our prior offshore offerings at this stage, but we may be subject to the filing requirements for our refinancing activities under these regulations.

On February 24, 2023, the CSRC, jointly with other governmental authorities, published the Provisions on Strengthening Confidentiality and Archives Management of Overseas Securities Issuance and Listing by Domestic Enterprises, which became effective on March 31, 2023. Pursuant to these provisions, China-based companies that offer and list securities in overseas markets shall establish confidentiality and archives system. The "China-based companies" refer to companies in China limited by shares which are directly listed on a foreign stock exchange and the domestic operating entities of an offshore company being indirectly listed on a foreign stock exchange. These China-based companies shall obtain the approvals from competent authorities and file with the competent confidential administration authorities when providing or publicly filing documents and materials related to state secrets or secrets of the governmental authorities to relevant securities companies, securities service agencies or the offshore regulatory authorities, or providing or publicly filing such documents and materials through its offshore listing entity. In addition, the China-based companies shall complete corresponding procedures when (i) providing or publicly filing documents and materials which may adversely affect national security and public interests to relevant securities companies, securities service agencies or the offshore regulatory authorities, (ii) providing or publicly filing such documents and materials through its offshore listing entity, or (iii) providing accounting files or copies to relevant securities companies, securities service institutions, overseas regulators and individuals. These China-based companies are also required to provide written statements as to whether they have completed the approval or filing procedures as above when providing documents and materials to securities companies and securities service providers, and the securities companies and securities service providers should properly retain such written statements for inspection. If a China-based company finds that the documents and materials related to state secrets or secrets of the governmental authorities or other materials, which may adversely affect national security and public interests, have been leaked or have leakage risks, it should take remedial measures immediately and report to the authorities.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Organizational Structure** 

For the chart illustrating our company's organizational structure, see the outset of "Item 3. Key Information."

**Contractual Arrangements with the Variable Interest Entities and Their Shareholders**

Current laws and regulations in mainland China impose certain restrictions or prohibitions on foreign ownership and investment in internet-based businesses such as the value-added telecommunication services. We are an exempted company incorporated in the Cayman Islands. Waterdrop Technology is one of our subsidiaries in mainland China and a foreign-invested enterprise under the laws in mainland China.

To comply with laws and regulations in mainland China, we conduct certain of our business in China through Zhuiqiu Jizhi, Shuidi Hubao, Shuidi Hulian, Zongqing Xiangqian and Guangmu Weichen, the variable interest entities in mainland China, based on a series of contractual arrangements by and among Waterdrop Technology, the VIEs and their shareholders. We refer to Waterdrop Technology as our WFOE, and Zhuiqiu Jizhi, Shuidi Hubao, Shuidi Hulian, Zongqing Xiangqian and Guangmu Weichen as the VIEs in this annual report.

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Our contractual arrangements with the VIEs and their respective shareholders allow us to (i) direct the activities of the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive option to purchase all or part of the equity interests in the VIEs when and to the extent permitted by the law in mainland China.

As a result of our direct ownership in our WFOE and the contractual arrangements with the VIEs, we are regarded as the primary beneficiary of the VIEs for accounting purposes, and have satisfied the conditions to consolidate the financial results of the VIEs and their subsidiaries into our consolidated financial statements in accordance with U.S. GAAP.

***Agreements that allow us to direct the activities of the VIEs***

*Powers of Attorney.* Pursuant to the powers of attorney, between our WFOE and the shareholders of the VIEs, each of the shareholders of the VIEs has executed a power of attorney to irrevocably authorize our WFOE, or any person designated by our WFOE, to act as his attorney-in-fact to exercise all of his rights as a shareholder of the VIE, including, but not limited to, the right to (i) propose, convene and attend shareholders' meetings, (ii) vote on any resolution on behalf of the shareholders that require the shareholders to vote under law in mainland China and the VIE's articles of association, such as the sale, transfer, pledge and disposal of all or part of a shareholder's equity interest in the VIE, and (iii) designate and appoint the VIE's legal representative, director, supervisor, manager and other senior management members on behalf of the shareholders. The powers of attorney remain effective until such shareholder ceases to be a shareholder of the VIE.

*Loan Agreements.* Pursuant to the loan agreement between our WFOE and each of the shareholders of Zongqing Xiangqian, our WFOE extended loans to the shareholders of Zongqing Xiangqian, who had contributed the loan principals to Zongqing Xiangqian mainly as registered capital. The shareholders of Zongqing Xiangqian may repay the loans only by transferring their respective equity interests in Zongqing Xiangqian to WFOE or its designated person(s) pursuant to the exclusive option agreements. Each loan shall be interest-free unless, in the event of a transfer of equity interests by a shareholder of Zongqing Xiangqian to our WFOE or its designated person(s) pursuant to the exclusive option agreement, the transfer price exceeds the loan principal. The excess over the loan principal shall be deemed the interest of the loan to the extent permitted under the law in mainland China. These loan agreements remain effective until the date of full performance by the parties of their respective obligations thereunder. The loan agreement among our WFOE, Zhuiqiu Jizhi, Shuidi Hubao and their respective shareholders are substantially the same.

*Equity Interest Pledge Agreements.* Pursuant to the equity interest pledge agreements, among our WFOE, the VIEs and the shareholders of the VIEs, the shareholders of the VIEs have pledged all of their respective equity interests in the VIEs to our WFOE to guarantee performance of the obligations of the VIEs and their shareholders under the exclusive business cooperation agreements, the powers of attorney, the exclusive option agreements and loan agreements (as applicable). In the event of a breach by the VIEs or any of their shareholders of contractual obligations under these contractual arrangements, our WFOE, as pledgee, will have the right to request for enforcement of the pledge and dispose of the pledged equity interests in the VIEs and will have priority in receiving the proceeds from such disposal. The VIEs and the shareholders of the VIEs also covenant that, without the prior written consent of our WFOE, they shall not transfer the pledged equity interests, create or allow any new pledge or any other encumbrance on the pledged equity interests. The equity interest pledge agreements remain effective until the contractual obligations are fully fulfilled.

We have completed the registration of the equity interest pledge under the equity interest pledge agreements in relation to the VIEs with relevant offices of the State Administration of Market Regulation in accordance with the PRC Civil Code.

***Agreements that allow us to receive economic benefits from the VIEs***

*Exclusive Business Cooperation Agreements.* Pursuant to the exclusive business cooperation agreements, between our WFOE and the VIEs, our WFOE has the exclusive right to provide the VIEs with consulting, technical services and other services required by the VIEs' business. Without our WFOE's prior written consent, the VIEs may not accept the same or similar consulting, technical services and other services provided by any third party during the term of the agreement. The VIEs agree to pay our WFOE service fees based on the operating profit generated by the VIEs on an annual basis. Our WFOE has the exclusive ownership of all the intellectual property rights created as a result of the performance of the exclusive business cooperation agreement. To guarantee the VIEs' performance of their obligations thereunder, the shareholders of the VIEs have pledged all of their equity interests in the VIEs to our WFOE pursuant to the equity interest pledge agreement. The exclusive business cooperation agreements remain effective, unless otherwise terminated by our WFOE in writing or based on conditions expressly stipulated in the exclusive business cooperation agreements.

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***Agreements that provide us with the option to purchase the equity interests in the VIEs***

*Exclusive Option Agreements.* Pursuant to the exclusive option agreements, among our WFOE, the VIEs and the shareholders of the VIEs, each of the shareholders has irrevocably granted our WFOE, or any person or persons designated by our WFOE, an exclusive option to purchase all or part of his equity interests in the VIE, and the VIE has agreed to such grant of options. Our WFOE may exercise such options at a price equal to the higher of RMB1 or the lowest price as permitted by applicable laws in mainland China at the time of transfer of equity or an amount equal to the registered capital contributed by the relevant shareholder. The VIEs and the shareholders of the VIEs covenant that, without our WFOE's prior written consent, they will not, among other things, (i) supplement, change or amend the VIEs' articles of association and bylaws, (ii) increase or decrease the VIEs' registered capital or change the structure of registered capital, (iii) create any pledge or encumbrance on their equity interests in the VIEs, other than those created under the equity interest pledge agreements, (iv) sell, transfer, mortgage, or dispose of their equity interests in and any material assets of the VIEs and any legal or beneficial interests in the business or revenue of the VIEs, (v) enter into any material contracts by the VIEs, except in the ordinary course of business, or (vi) merge or consolidate the VIEs with any other entity. These agreements remain effective until all of the equity interests of the VIEs are transferred to our WFOE and/or its designated person.

*Spousal Consent Letters.* The spouses of the individual shareholders of the VIEs have each signed a spousal consent letter agreeing that the equity interests in the VIEs held by and registered under the name of the respective individual shareholders will be disposed of pursuant to the contractual agreements with our WFOE, without seeking further authorization or consent of such spouses. Each spouse agreed not to assert any rights over the equity interests in the VIEs held by the respective individual shareholders.

In the opinion of Han Kun Law Offices, our PRC legal counsel:

● the ownership structures of the VIEs in China and our WFOE currently do not and will not result in violation of any explicit provisions of laws, rules or regulations currently in effect in mainland China; and

● each of the agreements under the contractual arrangements among our WFOE, the VIEs and their respective shareholders governed by laws, rules and regulations in mainland China currently is valid, binding and enforceable, and will not result in violation of any explicit provisions of laws, rules or regulations currently in effect in mainland China.

However, our PRC legal counsel has also advised us that there are uncertainties regarding the interpretation and application of current and future laws, regulations and rules in mainland China. Accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new laws or regulations in mainland China relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or the VIEs are found to be in violation of any existing or future laws or regulations in mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have the discretion to take actions in dealing with such violations or failures in accordance with applicable laws. See "Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with the regulations in mainland China relating to relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations" and "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us."

&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Property, Plant and Equipment** 

We own a commercial real estate property in Beijing, with a combined gross floor area of 16,113 square meters as of the date of this annual report, which we use for business operations. We also leased offices in various other cities, with an aggregate gross floor area of approximately 20,900 square meters as of December 31, 2025. These leases vary in duration from one to three years.

#### Item 4A. Unresolved Staff Comments
None.

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#### Item 5. Operating and Financial Review and Prospects
*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we describe under "Item 3. Key Information—D. Risk Factors" and elsewhere in this annual report.*

&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Operating Results** 

#### Key Factors Affecting Our Results of Operations
We benefit from the rapid development of healthcare and insurance industries, in particular health and life insurance industry, in China. Meanwhile, we operate in a highly regulated industry in China, and the regulatory regime continues to evolve. Regulatory changes may affect our growth potential as well as the competitive landscape of the market.

While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by company-specific factors, including the following major ones:

#### Expansion and retention of consumer base
Brokerage income earned from insurance carriers through our insurance marketplace is the main source of our revenue, which is significantly affected by the number of insurance consumers.

Our insurance consumer base is primarily derived from three distinct channels: third-party traffic channels, traffic directed from our medical crowdfunding operation, and private domain contacts.

In 2025, we strategically increased our investment in third-party user acquisition, supported by enhanced investments in our user profiling capabilities, targeting models and underlying technology infrastructure. These technological advancements facilitated greater precision in user acquisition, which resulted in a progressive improvement in our return on investment ("ROI") in third-party traffic channels and established a quantitative framework for the further scaling of our marketing initiatives.

These efforts have driven meaningful growth in our user base. As of December 31, 2024 and 2025, the cumulative number of paying insurance consumers was approximately 33.6 million and 38.9 million, respectively.

#### First year premium per consumer
We believe that consumers choose our platform and repeat their purchases on our platform mainly because of the abundant product offerings, the convenience of online platform and the professional service of our team. As of December 31, 2025, we cumulatively offered 2,379 insurance products, as compared with 1,967 as of December 31, 2024.

In China, consumer awareness of health protection and insurance products remains significantly lower than in developed markets. Many users on our platform begin with a short-term product purchase before progressing to long-term coverage. As we serve a growing number of consumers, we gain valuable insights that allow us to collaborate with insurers to co-create more targeted products. We are at the forefront of developing innovative solutions tailored to underserved user segments, including those with pre-existing medical conditions who may not qualify for traditional health insurance products. As a result of increasing product and user diversity, the FYP per policy for short-term health insurance products rose from RMB759 in 2024 to RMB1,563 in 2025.

Since introducing long-term health and life insurance products in 2018, we have continuously worked to raise consumer awareness and demonstrate the value of these products through our platform and service. The acquisition of Shenlanbao in 2023 further expanded our product offerings and enhanced our service capabilities. The FYP per policy for long-term health and life insurance products increased from RMB7,969 in 2024 to RMB8,602 in 2025.

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Overall, the FYP per policy rose from RMB1,047 in 2024 to RMB1,751 in 2025. In addition to this growth, the number of policies per consumer remained stable at 1.5 in 2024 and 1.6 in 2025. Consequently, the FYP per consumer increased from RMB1,594 in 2024 to RMB2,870 in 2025.

#### Cooperation with insurance carriers
We cooperate with insurance carriers to offer their standard insurance products or to design and develop tailor-made insurance products, and our relationship with insurance carriers is crucial to our success. As of December 31, 2025, we had established business cooperation with 103 insurance carriers. Our large consumer base and strong business development capabilities allow us to negotiate favorable terms in our business cooperation with insurance carriers. In addition, we provide technical services including analytics and intelligent recommendation service, risk assessment technical service, CRM system-based technical services and marketing services to insurance companies, insurance brokers, and agency companies. We need to sustain the growth of our business, brand influence, value-added technology service capabilities and risk management capabilities so as to strengthen and deepen our cooperation with existing insurance carrier partners.

#### Operating efficiency and leverage
We have built a highly scalable business model that balances robust growth with disciplined cost management. By leveraging our "Waterdrop Sea.AI" infrastructure and "Waterdrop Guardian" AI suite, we have integrated large language models with proprietary data to automate high-frequency workflows 24/7. This AI-driven framework has enabled us to successfully decouple business expansion from headcount growth, resulting in a 45.4% increase in per-capita productivity.

#### Key Components of Results of Operations

#### Operating revenue, net
We generate net operating revenue primarily from (i) providing insurance brokerage services to insurance carriers, (ii) providing technical services to insurance carriers and other insurance brokerage or agency companies through our platforms, (iii) crowdfunding service fees from operating Waterdrop Medical Crowdfunding, and (iv) digital clinical trial solution income, mainly deriving from matching qualified and suitable patients for enrollment in clinical trials for biopharmaceutical companies and leading biotechnology companies. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure. We currently organize and report our business in the following segments: (i) insurance, which mainly includes Waterdrop Insurance Marketplace, Shenlanbao Insurance Marketplace and technical support service; (ii) crowdfunding, which mainly includes Waterdrop Medical Crowdfunding, and (iii) others, which do not individually or in the aggregate meet the quantitative and qualitative thresholds to be individually reportable and are aggregated. The following table sets forth the breakdown of our operating revenue, in amounts and as percentages of operating revenue by segment for the years presented:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  |
|  | **2023** | **2023** | **2024** | **2024** | **2025** | **2025** | **2025** |
|  | **RMB** | **(%)** | **RMB** | **(%)** | **RMB** | **US$** | **(%)** |
|  | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** |
| **Segment revenue:** |  |  |  |  |  |  |  |
| Insurance<sup>(1)</sup> |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Brokerage income |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-Short-term insurance brokerage income | 1381855 | 52.5 | 1309432 | 47.2 | 1178939 | 168586 | 29.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;-Long-term insurance brokerage income | 823305 | 31.3 | 1013406 | 36.6 | 1391349 | 198960 | 35.0 |
| &nbsp;&nbsp;Brokerage income subtotal | 2205160 | 83.8 | 2322838 | 83.8 | 2570288 | 367546 | 64.6 |
| &nbsp;&nbsp;Technical service income | 135755 | 5.2 | 40939 | 1.5 | 1006278 | 143896 | 25.3 |
| Insurance total | 2340915 | 89.0 | 2363777 | 85.3 | 3576566 | 511442 | 89.9 |
| Crowdfunding | 162683 | 6.2 | 267650 | 9.6 | 261636 | 37413 | 6.6 |
| Others | 127109 | 4.8 | 140394 | 5.1 | 139559 | 19957 | 3.5 |
| **Total** | **2630707** | **100.0** | **2771821** | **100.0** | **3977761** | **568812** | **100.0** |

---

Note:

&nbsp;&nbsp;&nbsp;&nbsp;(1) We started to consolidate the financial results of Shenlanbao since July 4, 2023 and reported the results of Shenlanbao under the Insurance segment.

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*Insurance.* We derive insurance income primarily from commission fees generated from distributing insurance products underwritten by insurance carriers through our insurance business platforms and the technical support service we provide. On one hand, the commission fees we are entitled to receive are based on a percentage of the premiums our insurance consumers pay insurance carriers. Commission fee rates generally depend on the type of insurance products and the particular insurance carriers. Commission fees for each insurance policy, taking into account the estimated premium retention rate data, are recognized as our revenue upon policy effective dates. We believe FYP is a strong indicator of brokerage income because it better demonstrates the brokerage income we may generate for an insurance policy. For certain long-term insurance policies sold, we are also entitled to a performance bonus from insurance companies if the retention rate for a certain period exceeds a predetermined percentage, or if its FYP exceeds a predetermined amount. We may also be asked to refund some commission to insurance companies if the retention rate for a certain period falls below a predetermined percentage. The bonus or the refund is contingent on the occurrence (or non-occurrence) of a future event. In addition, we provide technical services including analytics and intelligent recommendation service, risk assessment technical service, CRM system-based technical services and marketing services to insurance companies, insurance brokers, and agency companies. Reinforced by cumulative big data, we provide risk assessment technical services through algorithm-driven verification system assessing risk by analyzing user profiles and medical history, tagging risk levels for hierarchical management that help insurers refine their risk analysis capabilities. We leverage multi-dimensional consumer insights to deliver analytics and intelligent recommendation services, enabling policyholders to be matched with more suitable products and improving sales efficiency. Recvenue is recognized when the performance obligation to provide those services is satisfied (such as when effective usage of risk assessment over insureds' information or when effective match on insurance product display).

*Crowdfunding.* Crowdfunding services primarily consist of providing technical and internet support, managing and reviewing the crowdfunding campaigns, and facilitating the collection and transfer of funds to the patients. The platform service fee is charged at a certain percentage of the withdrawal amount for a single crowdfunding campaign, subject to a capped maximum amount for a single crowdfunding campaign. The service fee is payable to us only upon the successful withdrawal of the funds by the patient.

*Others.* Other revenues mainly include income generated from digital clinical trial solution and other new initiatives. We derive digital clinical trial solution income primarily from matching qualified and suitable patients for enrollment in clinical trials for our customers that mainly include biopharmaceutical companies and leading biotechnology companies. We enter into patient recruitment contracts with these customers to match qualified patients with optimal suitability for enrollment in clinical trials. We typically charge a fixed unit price per successful match. Other new initiatives are those early-stage businesses. Revenues generated from the other new initiatives are not material, either individually or in aggregate.

For details of the segment information, see Note 12 "Segment Information" to our audited consolidated financial statements included elsewhere in this annual report.

#### Operating costs and expenses
Our operating costs and expenses consist of operating costs, sales and marketing expenses, general and administrative expenses, research and development expenses. The following table sets forth the breakdown of our total operating costs and expenses, in amounts and as percentages of net operating revenue for each of the years presented:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  |
|  | **2023** | **2023** | **2024** | **2024** | **2025** | **2025** | **2025** |
|  | **RMB** | **(%)** | **RMB** | **(%)** | **RMB** | **US$** | **(%)** |
|  | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** |
| **Operating costs and expenses:** |  |  |  |  |  |  |  |
| Operating costs | 1195544 | 45.5 | 1314740 | 47.4 | 1943162 | 277868 | 48.9 |
| Sales and marketing expenses | 740451 | 28.1 | 694769 | 25.1 | 1120929 | 160291 | 28.2 |
| General and administrative expenses | 402395 | 15.3 | 367652 | 13.3 | 310129 | 44348 | 7.8 |
| Research and development expenses | 299060 | 11.4 | 216502 | 7.8 | 232683 | 33273 | 5.8 |
| **Total operating costs and expenses:** | **2637450** | **100.3** | **2593663** | **93.6** | **3606903** | **515780** | **90.7** |

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*Operating costs.* Operating costs primarily consists of (i) payroll and related expenses for insurance agents and customer service personnel, (ii) transaction fees charged by third-party payment platforms relating to insurance brokerage services, (iii) costs of referral and service fees, (iv) charges for the usage of the server and cloud service incurred for operational support of the platforms, and the expenses of facilities and equipment, such as depreciation expenses, rental and others, attributed to our principal operations, (v) costs for digital clinical trial solution consultants team, (vi) costs for the crowdfunding consultants team and cost related to the information review and investigation of medical crowdfunding campaigns, and (vii) costs for short message service (SMS) costs for new user onboarding and authentication processes.

*Sales and marketing expenses.* Our sales and marketing expenses primarily consist of (i) marketing expenses for user acquisition and brand building, (ii) payroll and related expenses for employees involved in sales and marketing functions, (iii) outsourced sales and marketing service fees to third parties, and (iv) the associated expenses of facilities and equipment, such as depreciation expenses, rental and others.

*General and administrative expenses.* Our general and administrative expenses mainly consist of (i) payroll and related expenses for employees engaging in general corporate functions, including the share-based compensation expenses, (ii) professional service fees and other general corporate expenses, (iii) impairment loss of intangible assets and allowance for credit losses, and (iv) expenses associated with the use by these functions of facilities and equipment, such as rental and depreciation expenses.

*Research and development expenses.* Our research and development expenses mainly consist of (i) payroll and related expenses for employees involved in platform and new function development and significant improvement, and (ii) charges for the usage of the server and cloud service incurred to support research, design, and development activities by research and development personnel, as well as (iii) expenses of facilities and equipment, such as depreciation expenses, rental and others.

#### Taxation
***Cayman Islands***

The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciations. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands.

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***Hong Kong***

According to the Hong Kong regulations, Hong Kong entities are subject to a two-tiered income tax rate for taxable income earned in Hong Kong with effect from April 1, 2018. The first HK$2 million of profits earned by HK entity is be taxed at 8.25%, while the remaining profits continue to be subject to the existing 16.5% tax rate. In addition, to avoid abuse of the two-tiered tax regime, each group of connected entities can nominate only one entity to benefit from the two-tiered tax rate. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. Under the Hong Kong tax laws, we are exempted from the Hong Kong income tax on our foreign-derived income.

#### Mainland China
Our subsidiaries, the consolidated VIEs and subsidiaries of the VIEs established in mainland China are mainly subject to statutory income tax at a rate of 25%. Certain enterprises benefit from a preferential tax rate of 15% under the PRC Enterprise Income Tax Law if they qualify as high and new technology enterprises, or engaged in encouraged industries and located in specific tax-advantaged areas. Besides, from January 1, 2023 to December 31, 2027, subject to certain criteria, the portion of annual taxable income amount of a small profit enterprise shall be computed at a reduced rate of 25% as taxable income amount, and be subject to enterprise income tax at 20% tax rate.

The PRC Enterprise Income Tax Law includes a provision specifying that legal entities organized outside of mainland China will be considered resident enterprises for the mainland China income tax purposes if the place of effective management or control is within mainland China. The implementation rules to the PRC Enterprise Income Tax Law provide that non-resident legal entities will be considered as mainland China resident enterprises if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within mainland China. Despite the present uncertainties resulting from the limited tax guidance on the issue in mainland China, we do not believe that our entities organized outside of the mainland China should be treated as resident enterprises for the mainland China income tax purposes. If the tax authorities in mainland China subsequently determine that our company and our subsidiaries registered outside mainland China should be deemed resident enterprises, our company and our subsidiaries registered outside mainland China will be subject to the mainland China income tax, at a rate of 25%. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a mainland China resident enterprise for mainland China income tax purposes, such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders and ADS holders."

The PRC Enterprise Income Tax Law also imposes a withholding income tax of 10% on dividends distributed by a foreign-invested enterprise to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company's jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. The Cayman Islands, where the Company incorporated, does not have such tax treaty with China. According to the arrangement between the mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a foreign-invested enterprise in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the foreign-invested enterprise). In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to the parent company thereby resulting in deferred tax liabilities to account for future withholding taxes. All foreign-invested enterprises are subject to the withholding tax from January 1, 2008. The presumption may be overcome if we have sufficient evidence to demonstrate that the undistributed dividends will be re-invested and the remittance of the dividends will be postponed indefinitely. We did not record any deferred tax liabilities for dividend withholding tax, as we have no retained earnings for the years ended December 31, 2023, 2024 and 2025. See "Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements in relation to the VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment."

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#### Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our net operating revenue for the periods presented.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  |
|  | **2023** | **2023** | **2024** | **2024** | **2025** | **2025** | **2025** |
|  | **RMB** | **(%)** | **RMB** | **(%)** | **RMB** | **US$** | **(%)** |
|  | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** | **(in thousands, except for percentage data)** |
| **Operating revenue, net** | **2630707** | **100.0** | **2771821** | **100.0** | **3977761** | **568812** | **100.0** |
| **Operating costs and expenses** |  |  |  |  |  |  |  |
| Operating costs | (1195544) | (45.5) | (1314740) | (47.4) | (1943162) | (277868) | (48.9) |
| Sales and marketing expenses<sup>(1)</sup> | (740451) | (28.1) | (694769) | (25.1) | (1120929) | (160291) | (28.2) |
| General and administrative expenses | (402395) | (15.3) | (367652) | (13.3) | (310129) | (44348) | (7.8) |
| Research and development expenses | (299060) | (11.4) | (216502) | (7.8) | (232683) | (33273) | (5.8) |
| **Total operating costs and expenses:** | **(2637450)** | **(100.3)** | **(2593663)** | **(93.6)** | **(3606903)** | **(515780)** | **(90.7)** |
| **Operating (loss)/ profit** | **(6743)** | **(0.3)** | **178158** | **6.4** | **370858** | **53032** | **9.3** |
| **Other income** |  |  |  |  |  |  |  |
| Interest income | 136043 | 5.2 | 149121 | 5.4 | 135697 | 19404 | 3.4 |
| Foreign currency exchange gain | 4342 | 0.2 | 8016 | 0.3 | 276 | 39 | 0.0 |
| Others, net | 30598 | 1.1 | 25295 | 0.9 | 36618 | 5236 | 1.0 |
| **Profit before income tax** | **164240** | **6.2** | **360590** | **13.0** | **543449** | **77711** | **13.7** |
| Income tax (expense)/benefit | (555) | (0.0) | (9707) | (0.3) | 21608 | 3090 | 0.5 |
| **Net profit** | **163685** | **6.2** | **350883** | **12.7** | **565057** | **80801** | **14.2** |

---

Note:

&nbsp;&nbsp;&nbsp;&nbsp;(1) The breakdown of sales and marketing expenses is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Marketing expenses for user acquisition and brand building | 240351 | 280906 | 733220 | 104849 |
| Payroll and related expenses for employees | 390534 | 297451 | 286037 | 40903 |
| Expenses of facilities and equipment | 21627 | 20293 | 16631 | 2378 |
| Outsourced sales and marketing service fee to third parties | 63512 | 75994 | 67075 | 9592 |
| Others | 24427 | 20125 | 17966 | 2569 |
| **Total sales and marketing expenses** | **740451** | **694769** | **1120929** | **160291** |

---

#### Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
*Operating revenue, net*

Our net operating revenue increased by 43.5% from RMB2,771.8 million in 2024 to RMB3,977.8 million (US$568.8 million) in 2025. The increase was primarily due to the increase in revenue generated from insurance-related business.

The net operating revenue from insurance-related businesses increased by 51.3% year-over-year, from RMB2,363.8 million in 2024 to RMB3,576.6 million (US$511.4 million) in 2025. This growth was primarily driven by the increase in technical service income, attributable to the strengthened ability to provide risk assessment technical services to insurance companies.

The net operating revenue from crowdfunding business slightly decreased by 2.2% from RMB267.7 million in 2024 to RMB261.6 million (US$37.4 million) in 2025, which was mainly due to the decrease in funds raised through crowdfunding campaigns.

The net operating revenue from other business slightly decreased by 0.6% from RMB140.4 million in 2024 to RMB139.6 million (US$20.0 million) in 2025.

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*Operating costs and expenses*

Our total operating costs and expenses increased by RMB1,013.2 million, or 39.1%, from RMB2,593.7 million in 2024 to RMB3,606.9 million (US$515.8 million) in 2025, which was mainly due to the business expansion.

*Operating costs*

Our operating costs increased by 47.8% from RMB1,314.7 million in 2024 to RMB1, 943.2 million (US$277.9 million) in 2025, which was primarily driven by (i) an increase of RMB461.7 million in costs of referral and service fees, driven by the expansion of the insurance business and the growth of insurance users, (ii) an increase of RMB52.6 million in personnel costs, (iii) an increase of RMB42.2 million in SMS cost; (iv) an increase of RMB39.7 million in the costs for crowdfunding consultants team, and (v) an increase of RMB12.2 million in the costs for digital clinical trial solution consultants team.

*Sales and marketing expenses*

Our sales and marketing expenses increased by 61.3% from RMB694.8 million in 2024 to RMB1,120.9 million (US$160.3 million) in 2025, which was primarily due to (i) an increase of RMB452.3 million in marketing expenses to third-party traffic channel, partially offset by (ii) a decrease of RMB11.4 million in sales and marketing personnel costs and share-based compensation expenses, and (iii) a decrease of RMB8.9 million in outsourced sales and marketing service fees to third parties.

*General and administrative expenses*

Our general and administrative expenses decreased by 15.6% from RMB367.7 million in 2024 to RMB310.1 million (US$44.3 million) in 2025, which was mainly due to (i) a decrease of RMB23.2 million in general and administrative personnel costs and share-based compensation expenses, (ii) a decrease of RMB9.5 million in the professional service fee, (iii) a RMB20.6 million impairment of intangible assets related to Shenlanbao recorded in the year of 2024, with no corresponding item in the year of 2025, and (iv) a decrease of RMB1.9 million in allowance for credit losses.

*Research and development expenses*

Our research and development expenses increased by 7.5% from RMB216.5 million in 2024 to RMB232.7 million (US$33.3 million) in 2025. The increase was primarily due to (i) an increase of RMB9.0 million in cloud server fees and other IT support expenses and (ii) an increase of RMB8.3 million in research and development personnel costs and share-based compensation expenses.

*Operating profit/(loss)*

Our operating profit increased from RMB178.2 million in 2024 to RMB370.9 million (US$53.0 million) in 2025, which was mainly due to the net impact of: (i) Insurance: operating profit increased from RMB477.2 million in 2024 to RMB644.9 million in 2025, primarily driven by the increase in FYP generated through our platform and the increase in revenue from technical service income; (ii) Crowdfunding: operating loss increased from RMB95.1 million in 2024 to RMB130.7 million in 2025 mainly due to the increase in cost of crowdfunding consultants team; (iii) Others: operating loss decreased from RMB96.5 million in 2024 to RMB91.6 million in 2025, primarily because of continuous implementation of company-wide cost optimization measures.

*Interest income*

Our interest income decreased by 9.0% from RMB149.1 million in 2024 to RMB135.7 million (US$19.4 million) in 2025, due to the decrease in market interest rates.

*Net profit*

As a result of the foregoing, our net profit for the year of 2025 was RMB565.1 million (US$80.8 million), compared to RMB350.9 million for the year of 2024.

*Income tax benefit/(expense)*

Income tax benefit in 2025 was RMB21.6 million (US$3.1 million), compared with income tax expense of RMB9.7 million in 2024, which was primarily due to an increase in net operating losses that can be carried forward to future years.

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#### Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
*Operating revenue, net*

Our net operating revenue increased by 5.4% from RMB2,630.7 million in 2023 to RMB2,771.8 million in 2024. The increase was primarily due to the increase of crowdfunding service fees and insurance related income.

The net operating revenue from insurance-related businesses increased by 1.0% year-over-year, from RMB2,340.9 million in 2023 to RMB2,363.8 million in 2024. This growth was primarily driven by higher insurance brokerage income, which stemmed from an increase in FYP generated through our platform. The FYP rose from RMB7,109 million in 2023 to RMB7,473 million in 2024, attributable to both the optimization and expansion of long-term insurance product offerings and the acquisition of Shenlanbao in July 2023. Notably, the FYP per policy for long-term insurance products increased from RMB7,180 in 2023 to RMB7,969 in 2024.

The net operating revenue from crowdfunding business increased by 64.5% from RMB162.7 million in 2023 to RMB267.7 million in 2024, which was mainly due to an increase in service fee rate.

The net operating revenue from other business increased by 10.5% from RMB127.1 million in 2023 to RMB140.4 million in 2024, which was mainly due to business expansion.

*Operating costs and expenses*

Our total operating costs and expenses decreased by RMB43.8 million, or 1.7%, from RMB2,637.5 million in 2023 to RMB2,593.7 million in 2024, which was mainly due to the effective cost control measures.

*Operating costs*

Our operating costs increased by 10.0% from RMB1,195.5 million in 2023 to RMB1,314.7 million in 2024, which was primarily driven by (i) an increase of RMB138.8 million in costs of referral and service fees driven by the expansion of business, partially offset by (ii) a decrease of RMB12.3 million in the costs for crowdfunding consultants team, and (iii) a decrease of RMB10.3 million in the costs for digital clinical trial solution consultants team.

*Sales and marketing expenses*

Our sales and marketing expenses decreased by 6.2% from RMB740.5 million in 2023 to RMB694.8 million in 2024, which was primarily due to (i) a decrease of RMB93.1 million in personnel costs and share based compensation costs, partially offset by (ii) an increase of RMB40.6 million in marketing expenses to third-party traffic channel, and (iii) an increase of RMB12.5 million in outsourced sales and marketing service fees to third parties.

*General and administrative expenses*

Our general and administrative expenses decreased by 8.6% from RMB402.4 million in 2023 to RMB367.7 million in 2024, which was mainly due to (i) a decrease of RMB32.5 million in the professional service fee, (ii) a decrease of RMB18.3 million in general and administrative personnel costs and share-based compensation expenses, (iii) a decrease of RMB5.9 million in office rental and office administrative expenses, partially offset by (iv) a non-cash impairment of intangible assets related to Shenlanbao of RMB20.6 million recorded in 2024, and (v) an increase of RMB9.6 million in allowance for credit losses.

*Research and development expenses*

Our research and development expenses decreased by 27.6% from RMB299.1 million in 2023 to RMB216.5 million in 2024. The decrease was primarily due to a decrease of RMB79.9 million in research and development personnel costs and share-based compensation expenses.

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*Operating profit/(loss)*

Our operating profit/(loss) increased from operating loss of RMB6.7 million in 2023 to operating profit of RMB178.2 million in 2024, which was mainly due to the net impact of: (i) Insurance: operating profit fell from RMB528.1 million in 2023 to RMB477.2 million in 2024, primarily driven by the increase in user acquisition and brand building expenditures; (ii) Crowdfunding: operating loss decreased significantly from RMB245.8 million in 2023 to RMB95.1 million in 2024 largely due to the revenue growth; (iii) Others: operating loss decreased from RMB155.2 million in 2023 to RMB96.5 million in 2024, primarily because of effective implementation of company-wide cost optimization measures.

*Interest income*

Our interest income increased by 9.6% from RMB136.0 million in 2023 to RMB149.1 million in 2024 due to the increased proportion of long-term debt investments.

*Net profit*

As a result of the foregoing, our net profit for the year of 2024 was RMB350.9 million, compared to RMB163.7 million for the year of 2023.

*Income tax expense*

Income tax expense in 2024 was RMB9.7 million, compared with RMB0.6 million in 2023. The increase was primarily due to the increase of profit before tax.

#### Critical Accounting Estimates
We prepare our financial statements in accordance with U.S. GAAP, which requires our management to make judgments, estimates and assumptions. We continually evaluate these judgments, estimates and assumptions based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and various assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. You should read the following description of critical accounting estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report.

#### Revenue Recognition
For insurance brokerage service, our performance obligation to the insurance carrier is satisfied and commission revenue is recognized at the point in time when an insurance policy becomes effective. We determine the transaction price of our contracts by estimating commissions that we expect to be entitled to over the premium collection term of the policy based on historical experience regarding premium retention and assumptions about future policyholder behavior and market conditions. Such estimates are 'constrained' in accordance with ASC 606. That is, we use the expected value method and only include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transactions will not occur.

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For certain long-term insurance products sold, we are also entitled to a performance bonus from insurance carriers if the retention rate for certain periods exceeds a predetermined percentage, or if its FYP exceeds a predetermined amount. We may also be asked to refund some commission to insurance companies if the retention rate for a certain period falls below a predetermined percentage. As the consideration for the bonus or the refund is contingent on the occurrence (or nonoccurrence) of a future event, the bonus or the refund represents variable consideration. Consistent with the policy described above, we use the expected value method to estimate the variable consideration and may constrain the estimate to the extent that it is probable that a significant reversal of revenue in the future will not occur.

Our significant estimates include estimating commissions to which we are entitled over the premium collection term, policyholder behavior and market conditions. They require subjective management judgment and any changes in those estimates may cause us to realize different amounts of revenues in the future periods.

#### Income Taxes
Current income taxes are provided for in accordance with the laws of the tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized, which can require the use of accounting estimation and the exercise of judgement. The impact of an uncertain income tax position is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes.

Significant judgment is required in determining the valuation allowance. In assessing the need for a valuation allowance, we consider all sources of taxable income, including projected future taxable income, reversing taxable temporary differences and ongoing tax planning strategies. If it is determined that we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding decrease to earnings.

#### Recent Accounting Pronouncements
A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 "Recent accounting pronouncements" to our audited consolidated financial statements included elsewhere in this annual report.

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Liquidity and Capital Resources** 

We had net cash provided by operating activities of RMB406.5 million in 2023, RMB437.3 million in 2024 and RMB243.9 million (US$34.9 million) in 2025. Our primary sources of liquidity have been proceeds from operating activities and equity and debt financing. As of December 31, 2025, we had an aggregate of RMB3.9 billion (US$557.3 million) in cash and cash equivalents, restricted cash, short-term investments and long-term debt investments included in long-term investments, of which approximately 37.1% were held in Renminbi and the remainder was mainly held in U.S. dollars.

In March 2024, our board of directors approved a special cash dividend of US$0.04 per ADS or US$0.004 per ordinary share to shareholders of record as of the close of business on April 19, 2024. The aggregate payment amounted to approximately US$14.8 million. In September 2024, our board of directors approved another special cash dividend of US$0.02 per ADS or US$0.002 per ordinary share to shareholders of record as of the close of business on November 5, 2024. The aggregate payment amounted to approximately US$7.3 million. In March 2025, our board of directors approved another cash dividend of US$0.02 per ADS or US$0.002 per ordinary share to shareholders of record as of the close of business on April 11, 2025. The aggregate payment amounted to approximately US$7.3 million. In September 2025, our board of directors approved another cash dividend of US$0.03 per ADS or US$0.003 per ordinary share to shareholders of record as of the close of business on October 10, 2025. The aggregate payment amounted to approximately US$10.9 million. In March 2026, our board of directors approved another cash dividend of US$0.003 per ordinary share, or US$0.03 per ADS, for a total amount of approximately US$10.8 million, to shareholders of record as of the close of business on April 24, 2026. The payment date is expected to be on or around May 13, 2026 for holders of ordinary shares and on or around May 20, 2026 for holders of ADSs.

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We believe our cash on hand will be sufficient to meet our current and anticipated needs for working capital and capital expenditure requirement for at least the next 12 months.

Our restricted cash was RMB577.1 million, RMB520.6 million and RMB648.5 million (US$92.7 million) as of December 31, 2023, 2024 and 2025, respectively. Our restricted cash primarily consists of premiums collected by us from the insurance consumers in a fiduciary capacity until disbursed to the insurance carriers. Restricted cash also includes guarantee deposits. We pay guarantee deposits required by National Financial Regulatory Administration in order to protect insurance premium appropriation by insurance broker and agency.

Our accounts receivable represents primarily brokerage commission fee receivable from insurance carriers and technical service fees receivable from insurance carriers. As of December 31, 2023, 2024 and 2025, our accounts receivable was RMB693.1 million, RMB716.2 million and RMB1,260.5 million (US$180.2 million), respectively.

Our contract assets are recorded for arrangements when we have provided the insurance brokerage services but for which the related commission payments are not yet due. Contract assets represent primarily the brokerage commission fee that is contingent upon the future premium payment of the insurance policy holders and retention-based bonus. As of December 31, 2023, 2024 and 2025, our contract assets were RMB707.3 million, RMB773.2 million and RMB1,102.4 million (US$157.6 million), respectively.

Our prepaid expense and other assets represent primarily (i) prepayments and deposits, (ii) the fund receivable from external payment service providers through which we collect and transfer insurance premiums to insurance carriers, and donors' donation received by our external payment service provider prior to those being transferred to custodian bank, and (iii) the advances to suppliers, such as the prepayments to third-party traffic channels. As of December 31, 2023, 2024 and 2025, our prepaid expense and other assets were RMB189.8 million, RMB182.6 million and RMB251.1 million (US$35.9 million), respectively.

Insurance premium payables represent insurance premiums we collected on behalf of insurance carriers from the insurance consumers but have not yet been remitted to insurance carriers as of the balance sheet dates. As of December 31, 2023, 2024 and 2025, our insurance premium payables were RMB592.0 million, RMB537.3 million and RMB684.8 million (US$97.9 million), respectively.

Our accrued expenses and other current liabilities represent primarily (i) accrued marketing and customer service expenses, (ii) payroll and welfare payable, and (iii) payable related to medical crowdfunding business, which mainly represents the funds we collected through the third-party payment platforms that has not been transferred to custodian bank. Our accrued expenses and other current liabilities were RMB597.7 million, RMB704.0 million and RMB1,140.4 million (US$163.1 million) as of December 31, 2023, 2024 and 2025, respectively.

Although we consolidate the results of the VIEs, we only have access to the assets or earnings of the VIEs through our contractual arrangements with the VIEs and their shareholders. See "Item 4. Information on the Company—C. Organizational Structure." For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see "—Holding Company Structure."

The majority of our operating revenue has been, and we expect that it is likely to continue to be, in the form of Renminbi. Under existing foreign exchange regulations in mainland China, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our subsidiaries in mainland China are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current regulations in mainland China permit our subsidiaries in mainland China to pay dividends to us only out of its accumulated profits, if any, determined in accordance with accounting standards and regulations in mainland China. Our subsidiaries in mainland China are required to set aside at least 10% of its after-tax profits after making up previous years' accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cash dividends. Historically, our subsidiaries in mainland China have not paid dividends to us, and they will not be able to pay dividends until they generate accumulated profits. Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE, its local branches and certain local banks.

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As a Cayman Islands exempted company and offshore holding company, we are permitted under laws and regulations in mainland China to provide funding to our subsidiaries in mainland China only through loans or capital contributions, subject to the approval of governmental authorities and limits on the amount of capital contributions and loans. This may delay us from using the proceeds from financing activities to make loans or capital contributions to our subsidiaries in mainland China. We expect to invest substantially all of the proceeds from financing activities into our operations in China for general corporate purposes within the business scopes of our subsidiaries in mainland China and the VIEs. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Regulation in mainland China of loans to and direct investment in the entities in mainland China by offshore holding companies may delay us from using the proceeds of financing activities to make loans or additional capital contributions to our subsidiaries in mainland China and to make loans to the VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business."

The following table sets forth the movements of our cash flows for the periods presented:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| **Selected Consolidated Cash Flow Data:** |  |  |  |  |
| Net cash provided by operating activities | 406516 | 437250 | 243921 | 34881 |
| Net cash (used in)/provided by investing activities | (1172960) | 291637 | (224740) | (32138) |
| Net cash used in financing activities | (377238) | (198579) | (373934) | (53471) |
| Effect of exchange rate changes on cash and cash equivalents | 26173 | 2577 | (20705) | (2961) |
| Net (decrease)/increase in cash and cash equivalents and restricted cash | (1117509) | 532885 | (375458) | (53689) |
| Total cash and cash equivalents and restricted cash at beginning of year | 2091535 | 974026 | 1506911 | 215485 |
| Total cash and cash equivalents and restricted cash at end of year | 974026 | 1506911 | 1131453 | 161796 |

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#### Operating activities
Net cash provided by operating activities in 2025 was RMB243.9 million (US$34.9 million). The difference between the net profit of RMB565.1 million (US$80.8 million) and positive operating cash flow of RMB243.9 million was non-cash expenses items such as share-based compensation expense of RMB51.8 million, depreciation of property, equipment and software of RMB13.8 million, and allowance for doubtful debts of RMB18.0 million, and changes in working capital accounts, which mainly include (i) RMB329.4 million increase in contract assets, and (ii) RMB562.1 million increase in accounts receivable, partially offset by RMB147.5 million increase in insurance premium payables and RMB438.8 million increase in accrued expenses and other current liabilities.

Specifically, the increase in contract assets and the increase in accounts receivable were primarily due to the increase in insurance-related income. The increase in insurance premium payables were primarily due to the increase in the FYP generated through our platform. The increase in accrued expenses and other current liabilities was primarily due to (i) the increase in accrued marketing and customer service expenses, and (ii) the increase in payroll and welfare payable.

Net cash provided by operating activities in 2024 was RMB437.3 million. The difference between the net profit of RMB350.9 million and positive operating cash flow of RMB437.3 million was non-cash expenses items such as share-based compensation expense of RMB86.9 million, and depreciation of property, equipment and software of RMB11.4 million, and changes in working capital accounts, which mainly include (i) RMB66.2 million increase in contract assets, (ii) RMB54.6 million decrease in insurance premium payables, and (iii) RMB35.1 million increase in accounts receivable, partially offset by RMB107.9 million increase in accrued expenses and other current liabilities.

Specifically, the decrease in insurance premium payables was primarily due to the decrease of turnover days. The increase in contract assets and the increase in accounts receivable were primarily due to the increase in the FYP generated through our platform. The increase in accrued expenses and other current liabilities was primarily due to (i) the increase in accrued marketing and customer service expenses, and (ii) the increase in payroll and welfare payable.

Net cash provided by operating activities in 2023 was RMB406.5 million. The difference between the net profit of RMB163.7 million and positive operating cash flow of RMB406.5 million was certain adjustment of non-cash expenses items, such as share-based compensation expense of RMB133.9 million and depreciation of property, equipment and software of RMB13.4 million, and changes in working capital accounts, which mainly include (i) RMB149.9 million decrease in prepaid expense and other assets, and (ii) RMB75.3 million increase in insurance premium payables, partially offset by (i) RMB43.5 million decrease in accrued expenses and other current liabilities, and (ii) RMB99.9 million increase in contract assets, and (iii) RMB36.7 million increase in right of use assets, net.

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Specifically, the decrease in prepaid expense and other assets was primarily due to the decrease in the advances to suppliers as a result of decrease in the prepayments to third-party traffic channels. The increase in insurance premium payables was primarily due to the increase in the FYP generated through our platform from RMB6,890 million in 2022 to RMB7,109 million in 2023. The increase in contract assets was primarily due to the increase in the FYP generated through our platform in 2023. The decrease in accrued expenses and other current liabilities was primarily due to (i) the decrease in payable related to mutual aid plans and medical crowdfunding, and (ii) the decrease in accrued marketing and customer service expenses. The increase of right of use assets, net was primarily due to the renewal of certain leases.

#### Investing activities
Net cash used in investing activities in 2025 was RMB224.7 million (US$32.1 million), consisting primarily of net cash used in purchase of short-term and long-term investment products, net cash used in purchase of property, equipment and software, and net cash used in purchase of intangible assets.

Net cash provided by investing activities in 2024 was RMB291.6 million, consisting primarily of net cash provided by redemption of short-term and long-term investment products, partially offset by net cash used in purchase of property, equipment and software.

Net cash used in investing activities in 2023 was RMB1,173.0 million, consisting primarily of net cash paid for acquisitions of subsidiaries, and net cash used in purchase of short-term and long-term investment products.

#### Financing activities
Net cash used in financing activities in 2025 was RMB373.9 million (US$53.5 million), consisting primarily of payment in connection with the share repurchase program, and payment of dividend to shareholders, and repayment of short-term loans.

Net cash used in financing activities in 2024 was RMB198.6 million, consisting primarily of payment in connection with the share repurchase program, and payment of dividend to shareholders, partially offset by the net proceeds from short-term loans.

Net cash used in financing activities in 2023 was RMB377.2 million, consisting primarily of payment in connection with the share repurchase program, partially offset by the proceeds from short-term loans.

#### Material cash requirements
Our material cash requirements as of December 31, 2025 and any subsequent interim period primarily include our capital expenditures and operating lease commitments.

Our capital expenditures primarily represent cash paid for purchase of property, equipment and software. We made capital expenditures of RMB13.5 million, RMB218.4 million and RMB29.6 million (US$4.2 million) in 2023, 2024 and 2025, respectively. We will continue to make capital expenditures to meet our business growth.

Our operating lease commitments consist of the commitments under the lease agreements for our office premises. Contractual obligation as of December 31, 2025 for our operating lease commitments amounted to RMB23.5 million (US$3.4 million).

We intend to fund our existing and future material cash requirements with our existing cash balance and other financing alternatives. We will continue to make cash commitments, including capital expenditures, to support the growth of our business.

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We do not have retained or contingent interests in assets transferred. We have not entered into contractual arrangements that support the credit, liquidity or market risk for transferred assets. We do not have obligations that arise or could arise from variable interests held in an unconsolidated entity, or obligations related to derivative instruments that are both indexed to and classified in our own equity, or not reflected in the statement of financial position.

Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2025.

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#### Holding Company Structure
Waterdrop Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our WFOE and the VIEs. As a result, the ability of Waterdrop Inc. to pay dividends depends upon dividends paid by our WFOE.

If our WFOE or any newly formed subsidiaries in mainland China incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our WFOE is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with the accounting standards and regulations in mainland China. Under the law in mainland China, each of our WFOE and the VIEs is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, our WFOE may allocate a portion of its after-tax profits based on the accounting standards in mainland China to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the VIEs may allocate a portion of their after-tax profits based on the accounting standards in mainland China to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. As of December 31, 2025, as our WFOE, almost all other subsidiaries in mainland China, the VIEs and the subsidiaries of the VIEs are in an accumulated loss position, no statutory reserve was appropriated. Our WFOE has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meets the requirements for statutory reserve fund.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Research and Development** 

See "Item 4. Information on the Company—B. Business Overview— Technology and Infrastructure" and "Item 4. Information on the Company—B. Business Overview—Intellectual Property."

&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Trend Information** 

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period since January 1, 2026 that are reasonably likely to have a material effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Critical Accounting Estimates** 

For our critical accounting estimates, see "Item 5. Operating and Financial Review and Prospects—Critical Accounting Estimates."

&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Safe Harbor** 

See "Forward-Looking Information" on page 2 of this annual report.

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#### Item 6. Directors, Senior Management and Employees
&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Directors and Senior Management** 

The following table sets forth information regarding our executive officers and directors.

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| | | |
|:---|:---|:---|
| **Directors and Executive Officers** | **Age** | **Position/Title** |
| Peng Shen | 38 | Chairman of the Board of Directors and Chief Executive Officer |
| Wei Ran | 39 | Director and General Manager of Insurance Technology Business |
| Xiaolei Sun | 39 | Director, Vice President of Human Resources and Organization Development |
| Wenjie Guan | 41 | Director |
| Kai Huang | 39 | Director |
| Haiyang Yu | 43 | Director |
| Heping Feng | 66 | Independent Director |
| Chen Lin | 48 | Independent Director |
| Chenyang Wei | 53 | Independent Director |
| Jieru Li | 37 | Vice President of Finance, Board Secretary and Head of Strategy and Capital Markets |
| Nian Liu | 38 | Head of Legal |
| Xiaoying Xu | 46 | Vice President of Finance, Head of Finance |
| Xiaobo Zhou | 45 | Head of Research and Development |

---

*Mr. Peng Shen* is our founder and has served as the chairman of our board of directors and chief executive officer since our inception, and is responsible for overseeing the overall strategy and business operations of Waterdrop. Prior to founding Waterdrop in 2016, Mr. Shen joined Meituan (HKSE: 03690) in January 2010 as one of its earliest management members. From July 2013 to April 2016, he was one of the founding team members of Meituan Waimai, where he was responsible for the early design of internet R&D, formulating operational rules, and establishing and managing the business system, helping Meituan Waimai develop into a leading on-demand delivery service application in China. In honor of Waterdrop's contributions to China's insurtech industry, digitally empowering innovative pharmaceutical development and other fields, Mr. Shen was awarded the Zhongguancun High-end Leading Entrepreneurial Talent Certificate by the Beijing Municipal Science and Technology Commission in 2019, named to Fortune China's "2021 40 Under 40 in China", the World Economic Forum's "2022 Young Global Leaders", and Forbes China's 2024 "New Era Influential Founders", received the "2024 Outstanding Alumni Award" from Hong Kong Polytechnic University, and "2025 Peking University Education Contribution Award". Mr. Shen currently serves as Director of the 6th Council of the Central University of Finance and Economics Education Foundation, Executive President of the Beijing Chaoyang District High-tech Enterprise Association, President of the Beijing Alumni Association of The Hong Kong Polytechnic University, Vice President of the Hong Kong New Quality Entrepreneurs Association, the Industry Mentor at the School of Finance, Central University of Finance and Economics, and the Industry Mentor at Institute of Future Technology, Peking University. Mr. Shen has served as an Independent Non-Executive Director of J&T Express (HKSE: 01519) since October 2023, and also served as an Independent Non-Executive Director of Nanjing Silicon Intelligence Technology Group Co., Ltd. since October 2025. Mr. Shen received an EMBA from Tsinghua University School of Economics and Management, studied Hotel and Tourism Management in a program jointly offered by Zhejiang University and The Hong Kong Polytechnic University and obtained Doctoral degree in Hotel and Tourism Management, and received the Graduation Certificate of the First Cohort of the Tsinghua-Tencent Future-Tech Entrepreneur Program, jointly organized by Tsinghua University and Tencent.

*Mr. Wei Ran* has served as our director and general manager of the insurance technology business since March 2023. He joined us in June 2016 as head of strategy and business analysis and was responsible for establishing our strategy and business analysis system and exploring new business initiatives since then. Before joining us, he worked as senior strategy analyst at Meituan Waimai, the food and grocery delivery business of Meituan (HKSE: 03690), from July 2015 to June 2016, where he was responsible for strategy and business analysis. Prior to that, he worked at Accenture Consulting, which provides consulting services to various enterprise clients, as a strategic consultant from July 2013 to June 2015, and participated in a number of digitalization projects for large and medium-sized enterprises in the energy and financial industries. Mr. Ran obtained a bachelor's degree in Economics from Shanghai Jiaotong University in June 2009, and a master's degree in Software Engineering from Peking University in June 2013.

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*Ms. Xiaolei Sun* has served as the head of human resources and organization development since January 2021 and is in charge of the human resources and organizational development of our company. She has served as our director since December 2025. Ms. Sun has more than ten years of experience in entrepreneurship and business management for companies in Internet-related industry. Before joining the Company in July 2019, Ms. Sun served as product director at Meituan Waimai, which provides food delivery services, and she was in charge of the Internet-related products, such as products for user and merchant management from March 2014 to July 2019. Prior to that, she worked as a senior product manager at Sohu.com Limited (NASDAQ: SOHU), China's leading online media, video, and game business group, from June 2010 to February 2014, where she was deeply involved in the incubation and promotion of Sohu News app. She received a bachelor of arts degree and a bachelor of laws degree from Xiamen University in 2008.

*Ms. Wenjie Guan* has served as our director since September 2022. Ms. Guan currently serves as Head of Corporate Development APAC at Swiss Re, one of the world's leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, a non-executive director of Alltrust Insurance Company, and a director of the Board of Swiss Re Principal Investments Company Asia Pte. Ltd. Prior to joining Swiss Re in May 2016, Ms. Guan had eight years of experience in investment banking and served at Macquarie, UBS and Jefferies. Ms. Guan received a master's degree in Engineering with first class honors from the University of Oxford and is a CFA charterholder.

*Mr. Kai Huang* has served as our director since March 2019. Mr. Huang currently serves as an executive director of Boyu Capital. Prior to joining Boyu Capital in June 2011, Mr. Huang worked as a senior accountant at Ernst & Young Consulting (China) from September 2010 to June 2011, and an accountant at Ernst & Young Huaming Accounting Firm from September 2008 to September 2010. Mr. Huang received a bachelor's degree in accounting from Shanghai Jiao Tong University.

*Mr. Haiyang Yu* has served as our director since October 2019. Mr. Yu has also served as a director of DouYu International Holdings Ltd (Nasdaq: DOYU) since May 2018 and a director of Kanzhun Ltd (NASDAQ: BZ; HKSE: 02076) since July 2019. Mr. Yu currently serves as the vice general manager of Tencent Investment. Prior to joining Tencent (HKSE: 00700) in August 2011, Mr. Yu worked as a senior associate at WI Harper Group from March 2010 to August 2011. Prior to that, Mr. Yu worked as an associate at China Growth Capital from April 2007 to February 2010. Mr. Yu obtained a bachelor's degree in civil engineering from Tsinghua University in 2005.

*Mr. Heping Feng* has served as our independent director since May 2021. Mr. Feng currently serves as an independent director of Tahoe Life Insurance Company Limited, Tahoe Life Insurance Company (Macau) Limited, Yinhua Fund Management Co., Ltd and China United SME Guarantee Corporation. From September 2014 to March 2017, Mr. Feng served as a senior advisor in PricewaterhouseCoopers. From April 2011 to August 2014, Mr. Feng served as the vice chairman of Morgan Stanley (China). Prior to joining Morgan Stanley (China), Mr. Feng was an audit partner in PricewaterhouseCoopers from 1997 to 2011. From 1993 to 1997, Mr. Feng served as an audit manager in Arthur Andersen LLP. From 1985 to 1993, Mr. Feng served as an auditor in China Accounting and Financial Management Consulting Company. Mr. Feng received a bachelor's degree in accounting from Shanxi University of Finance and Economics in 1982 and a master's degree in western accounting from the Institute of Fiscal Science, Ministry of Finance of the PRC in 1985. He is a Certified Public Accountant in China.

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*Mr. Chen Lin* has served as our independent director since March 2025. Mr. Lin has served at various positions at The University of Hong Kong, including as the Chair of Finance and Stelux Professor in Finance since August 2013, and Vice President since June 2025. In addition, Mr. Lin has served as an independent non-executive director for several companies, including CITIC Resources Holdings Limited (HKEX: 1205) since December 2025, Smart-Core Holdings Limited (HKEX: 2166) since June 2025, Artificial Intelligent Interconnection Technology Co., Ltd. since December 2024, Beijing 51WORLD Digital Twin Technology Co., Ltd. (HKEX: 6651) since September 2024, Shiyue Daotian Group Co., Limited (HKEX: 09676) since October 2023, Allianz Global Investors Fund Management Co., Ltd. since September 2023, CNCB (Hong Kong) Investment Limited since January 2022, and China Merchants Land Asset Management Co., Limited (the manager of China Merchants Commercial REIT (HKEX: 01503)) since December 2019. Mr. Lin is a non-official member of the Task Force on Promoting Web3 Development of the Government of Hong Kong since July 2023, a Fellow of the Academy of Social Sciences, UK since March 2023, a Member of the Academia Europaea since June 2022, a member of the Hang Seng Index Advisory Committee since August 2021, a member of the Fintech Advisory Group of the Securities and Futures Commission since March 2021 and an advisory member of the Hong Kong Institute for Monetary and Financial Research of the Hong Kong Monetary Authority since June 2019. Mr. Lin also served as a member of the Currency Board Sub-Committee of the Exchange Fund Advisory Committee of Hong Kong from January 2017 to December 2022. Mr. Lin obtained his PhD degree in economics in August 2006, master of arts degree in economics in August 2005 and master of business administration degree (MBA) in May 2004 from University of Florida in the United States. He received his bachelor's degree in engineering from South China University of Technology in July 2000.

*Mr. Chenyang Wei* has served as our independent director since May 2021. Mr. Wei has served as the Associate Dean of Institute for Fintech Research, Tsinghua University and Director of China Insurance and Pension Research Center, the National Institute of Financial Research, Tsinghua University PBC School of Finance since April 2019. He has also been Director of Tsinghua-Cornell Dual-degree Finance MBA Program at Tsinghua PBC School of Finance since April 2024. From December 2016 to March 2019, Mr. Wei served as a senior managing director and chief U.S. economist in Zenity Asset Management Inc., a Silicon Valley based asset management firm focusing on multi-sector asset allocation in the U.S. financial market. Prior to joining Zenity, Mr. Wei served as a director and head of credit research at AIG from August 2012 to December 2016. From June 2011 to August 2012, Mr. Wei was a senior economist with Federal Reserve Bank of Philadelphia. From 2006 to 2011, Mr. Wei was an economist with Federal Reserve Bank of New York. Mr. Wei is also an independent director of PICC Property and Casualty Company Limited (HKSE: 02328) and HSBC Life Insurance Company Limited. Mr. Wei received a bachelor's degree in finance from Tsinghua University in 1996, a master's degree in economics from McCombs School of Business, University of Texas at Austin in 2000, and a Ph.D. in finance from Leonard N. Stern School of Business, New York University in 2006.

*Ms. Jieru Li* has served as our vice president of finance since December 2025. Ms. Li joined Waterdrop in 2021 as strategy director and has served as the board secretary and head of strategy and capital markets since February 2024. Before joining us, Ms. Li served as investment associate director at China Life Private Equity from July 2019 to March 2021 and served as strategic investment director at KE Holdings Inc. (NYSE: BEKE and HKEX: 02423) from April 2017 to June 2019. Prior to that, Ms. Li worked at Bain & Company from September 2010 to December 2013 and from October 2015 to April 2017. Ms. Li obtained her bachelor's degree in finance from School of Economics and Management in Tsinghua University in July 2010 and MBA degree from Columbia Business School in May 2015.

*Ms. Nian Liu* has served as the head of legal since March 2021. Before joining our company, Ms. Liu served as legal director at Legend Holdings Corporation (HKSE: 03396) from September 2017 to February 2021. Prior to that, Ms. Liu worked at Davis Polk & Wardwell LLP from August 2009 to June 2012 and from October 2013 to January 2017 and at Wilson Sonsini Goodrich & Rosati from February 2017 to July 2017. Ms. Liu obtained her bachelor's degree of law from Tsinghua University in July 2009 and master's degree of law from Harvard University in May 2013.

*Ms. Xiaoying Xu* has served as the head of the finance since December 2022. Prior to joining us, Ms. Xu worked at Meituan (HKSE: 03690) from January 2011 to December 2022. She was in charge of the establishment of the financial department of Meituan, and participated in the development of Meituan from its early stages to the comprehensive development stages, by successively serving as the head of the finance department, the head of the finance department of the Meituan's financial platform and the head of the finance department of the Meituan's catering SaaS services. Prior to that, she worked in a foreign-invested company and an A-share listed company. Ms. Xu received a bachelor's degree from Renmin University of China and an EMBA from China Europe International Business School. Ms. Xu also holds ACCA and CMA certificates.

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*Mr. Xiaobo Zhou* has served as the head of research and development since October 2020 and is responsible for the operation of research and development department. Prior to joining Waterdrop, Mr. Zhou served as the chief information officer at Beijing Zhongguancun Ronghui Financial Information Service Co., Ltd. from July 2017 to October 2020. Prior to that, Mr. Zhou served as a technology director at X Financial (NYSE: XYF) from June 2015 to May 2017, where he led the research and development team. Previously, Mr. Zhou worked at Baidu Inc. (NASDAQ: BIDU and HKEX: 09888), where he was responsible for the backend development in Baidu's system security department. Prior to that, Mr. Zhou worked at Tencent (HKEX: 00700) from July 2008 to October 2012. Mr. Zhou received a PhD in communication and information systems from University of Science and Technology of China.

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Compensation** 

**Compensation of Directors and Executive Officers**

In 2025, we paid an aggregate of RMB4.8 million (US$0.7 million) in cash to our executive officers (including the executive officer who resigned in 2025), and we paid cash compensation to our non-executive directors of RMB0.7 million (US$0.1 million). We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our subsidiaries in mainland China and the VIEs are required by law to make contributions equal to certain percentages of each employee's salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.

**Employment Agreements and Indemnification Agreements**

We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate employment for cause, at any time, for certain acts of the executive officer, such as continued failure to satisfactorily perform, willful misconduct or gross negligence in the performance of agreed duties, conviction or entry of a guilty or nolo contendere plea of any felony or any misdemeanor involving moral turpitude, or dishonest act that results in material to our detriment or material of the employment agreement. We may also terminate an executive officer's employment without cause upon 60-day advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as may be agreed between the executive officer and us. The executive officer may resign at any time with a 60-day advance written notice.

Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer's employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) solicit from any customer doing business with us during the effective term of the employment agreement business of the same or of a similar nature to our business; (ii) solicit from any of our known potential customer business of the same or of a similar nature to that which has been the subject of our known written or oral bid, offer or proposal, or of substantial preparation with a view to making such a bid, proposal or offer; (iii) solicit the employment or services of, or hire or engage, any person who is known to be employed or engaged by us; or (iv) otherwise interfere with our business or accounts, including, but not limited to, with respect to any relationship or agreement between any vendor or supplier and us.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

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**Share Incentive Plans**

***2018 Share Incentive Plan***

In March 2019, our shareholders and board of directors approved the 2018 Share Incentive Plan, as amended and restated, which we refer to as the 2018 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to directors, employees and consultants, and promote the success of our business. The maximum aggregate number of Class A ordinary shares that may be issued under the 2018 Plan is 384,159,746 Class A ordinary shares. As of March 31, 2026, options to purchase a total of 63,818,050 Class A ordinary shares and 35,721,640 restricted share units were outstanding under the 2018 Plan.

The following paragraphs summarize the principal terms of the 2018 Plan.

*Type of Awards.* The 2018 Plan permits the awards of options, restricted shares, restricted share units or any other types of awards approved by the plan administrator or the board of directors.

*Plan Administration.* A committee appointed by the board of directors administers the 2018 Plan. The plan administrator determines the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award.

*Award Agreement.* Awards granted under the 2018 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each award, the provisions applicable in the event that the grantee's employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.

*Eligibility. We* may grant awards to our directors, employees and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies or subsidiaries.

*Vesting Schedule.* In general, the plan administrator determines the vesting schedule, which is specified in the award agreement. *Exercise Price.* The plan administrator determines the exercise price for each award, which is stated in the award agreement.

*Term of the Awards.* Options that are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator determines at the time of grant. However, the maximum exercisable term is ten years from the date of a grant.

*Transfer Restrictions.* Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2018 Plan or the award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution.

*Termination and Amendment.* Unless terminated earlier, the 2018 Plan has a term of ten years from its date of effectiveness. Our board of directors and the plan administrator have the authority to terminate, amend or modify the plan. However, no such action may adversely affect in any material way any awards previously granted without the written consent of the participant.

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***2021 Share Incentive Plan***

In April 2021, our shareholders and board of directors approved the 2021 Share Incentive Plan, as amended and restated, which we refer to as the 2021 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to directors, employees and consultants, and promote the success of our business. The maximum aggregate number of Class A ordinary shares that may be issued pursuant to all awards under the 2021 Plan is initially 80,508,501 Class A ordinary shares, plus an annual increase on the first day of each year during the ten-year term of the plan commencing with the year beginning January 1, 2022, by an amount equal to 2% of the total number of shares issued and outstanding on an as-converted fully diluted basis on the last day of the immediately preceding year, or a lesser amount as may be determined by the board of directors. As of March 31, 2026, 65,949,170 restricted share units were outstanding under the 2021 Plan.

The following paragraphs summarize the principal terms of the 2021 Plan.

*Types of Awards.* The 2021 Plan permits the awards of options, restricted shares, restricted share units or any other type of awards approved by the plan administrator or the board of directors.

*Plan Administration.* Our board of directors or a committee of one or more members of the board of directors will administer the 2021 Plan. The committee or the full board of directors, as applicable, determines the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award.

*Award Agreement.* Awards granted under the 2021 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each award, the provisions applicable in the event that the grantee's employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.

*Eligibility. We* may grant awards to our employees, directors and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our subsidiaries.

*Vesting Schedule.* In general, the plan administrator determines the vesting schedule, which is specified in the award agreement. *Exercise Price.* The plan administrator determines the exercise price for each award, which is stated in the award agreement.

*Term of the Awards.* Options that are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator determines at the time of grant. However, the maximum exercisable term is ten years from the date of a grant.

*Transfer Restrictions.* Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2021 Plan or the award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution.

*Termination and Amendment.* Unless terminated earlier, the 2021 Plan has a term of ten years from its date of effectiveness. Our board of directors has the authority to amend or terminate the plan. However, no such action may adversely affect in any material way any awards previously granted without the written consent of the participant.

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The following table summarizes, as of March 31, 2026, the number of ordinary shares underlying outstanding options and Restricted Share Units that we granted to our directors and executive officers.

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| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Name** | **Ordinary**<br>**Shares**<br>**Underlying**<br>**Options and**<br>**Restricted**<br>**Share Units** | <br>**Exercise Price**<br>**(US$/Share)** | <br>**Date of Grant** | <br>**Date of Expiration** |
| Wei Ran | 200000 | 0.08 | March 25, 2021 | March 25, 2031 |
|  | 14090<sup>(1)</sup> | N/A | June 25, 2023 |  |
|  | 300000<sup>(1)</sup> | N/A | April 1, 2024 |  |
|  | 1200000<sup>(1)</sup> | N/A | February 24, 2026 |  |
| Xiaolei Sun | 800000 | 0.08 | March 25, 2021 | March 25, 2031 |
|  | 18440<sup>(1)</sup> | N/A | June 25, 2023 |  |
|  | 600000<sup>(1)</sup> | N/A | April 1, 2024 |  |
|  | 900000<sup>(1)</sup> | N/A | February 24, 2026 |  |
| Heping Feng | 150000 | 0.08 | June 25, 2021 | June 25, 2031 |
| Chenyang Wei | 150000 | 0.08 | June 25, 2021 | June 25, 2031 |
| Jieru Li | 375000 | 0.08 | March 25, 2021 | March 25, 2031 |
|  | 275000 | 0.08 | March 25, 2021 | March 25, 2031 |
|  | 140000<sup>(1)</sup> | N/A | October 1, 2022 |  |
|  | 1080000<sup>(1)</sup> | N/A | April 1, 2024 |  |
|  | 646410<sup>(1)</sup> | N/A | March 1, 2025 |  |
|  | 500000<sup>(1)</sup> | N/A | February 24, 2026 |  |
| Nian Liu | 500000 | 0.08 | March 25, 2021 | March 25, 2031 |
|  | 200000 | 0.08 | March 25, 2021 | March 25, 2031 |
|  | 245000<sup>(1)</sup> | N/A | October 1, 2022 |  |
|  | 540000<sup>(1)</sup> | N/A | April 1, 2024 |  |
|  | 552610<sup>(1)</sup> | N/A | March 1, 2025 |  |
|  | 700000<sup>(1)</sup> | N/A | February 24, 2026 |  |
| Xiaoying Xu | 1350000<sup>(1)</sup> | N/A | March 25, 2023 |  |
|  | 600000<sup>(1)</sup> | N/A | April 1, 2024 |  |
|  | 553820<sup>(1)</sup> | N/A | March 1, 2025 |  |
|  | 700000<sup>(1)</sup> | N/A | February 24, 2026 |  |
| Xiaobo Zhou | 600000 | 0.08 | March 25, 2021 | March 25, 2031 |
|  | 280000<sup>(1)</sup> | N/A | October 1, 2022 |  |
|  | 750000<sup>(1)</sup> | N/A | December 25, 2023 |  |
|  | 360000<sup>(1)</sup> | N/A | April 1, 2024 |  |
|  | 537180<sup>(1)</sup> | N/A | March 1, 2025 |  |
|  | 600000<sup>(1)</sup> | N/A | February 24, 2026 |  |
| **All directors and executive officers as a group** | **17542550** |  |  |  |

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*Note:*

&nbsp;&nbsp;&nbsp;&nbsp;(1) Represents restricted share units.

As of March 31, 2026, our employees other than our directors and officers as a group held options to purchase 62,973,050 Class A ordinary shares, with exercise prices ranging from US$0.003 per share to US$0.08 per share, and 77,074,040 restricted share units.

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&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Board Practices** 

**Board of Directors**

Our board of directors consists of nine directors. A director is not required to hold any shares in our company by way of qualification. A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company is required to declare the nature of his interest at a meeting of our directors. Subject to the New York Stock Exchange rules and disqualification by the chairman of the board meeting, a director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he shall be counted in the quorum at any meeting of our directors at which any such contract or transaction or proposed contract or transaction is considered, provided (i) such director, if his or her interest in such contract or arrangement is material, has declared the nature of his or her interest at the earliest meeting of the board at which it is practicable for him or her to do so, either specifically or by way of a general notice and (ii) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee. Our directors may exercise all the powers of our company to raise or borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof, to issue debentures, debenture stock, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of our company or of any third party.

**Committees of the Board of Directors**

We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee's members and functions are described below.

*Audit Committee.* Our audit committee consists of Heping Feng, Chen Lin and Chenyang Wei. Heping Feng is the chairman of our audit committee. We have determined that Heping Feng, Chen Lin and Chenyang Wei satisfy the "independence" requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Exchange Act. We have determined that Heping Feng qualifies as an "audit committee financial expert." The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

● reviewing with the independent auditors any audit problems or difficulties and management's response;

● discussing the annual audited financial statements with management and the independent auditors;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

● reviewing and approving all proposed related party transactions;

● meeting separately and periodically with management and the independent auditors; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

*Compensation Committee.* Our compensation committee consists of Peng Shen, Heping Feng and Chenyang Wei. Chenyang Wei is the chairman of our compensation committee. We have determined that Heping Feng and Chenyang Wei satisfy the "independence" requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:

● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

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● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person's independence from management.

*Nominating and Corporate Governance Committee.* Our nominating and corporate governance committee consists of Peng Shen, Heping Feng and Chenyang Wei. Peng Shen is the chairperson of our nominating and corporate governance committee. Heping Feng and Chenyang Wei satisfy the "independence" requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

● selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;

● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.

**Duties of Directors**

Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth Courts have moved toward an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares. In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.

Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

● convening shareholders' annual and extraordinary general meetings and reporting its work to shareholders at such meetings;

● declaring dividends and distributions;

● appointing officers and determining the term of office of the officers;

● exercising the borrowing powers of our company and mortgaging the property of our company; and

● approving the transfer of shares in our company, including the registration of such shares in our share register.

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**Terms of Directors and Officers**

Our directors may be elected by an ordinary resolution of our shareholders. Alternatively, our board of directors may, by the affirmative vote of a simple majority of the directors present and voting at a board meeting appoint any person as a director to fill a casual vacancy on our board or as an addition to the existing board. Our directors are not automatically subject to a term of office and hold office until such time as they are removed from office by an ordinary resolution of our shareholders. In addition, a director will cease to be a director if he (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns his office by notice in writing; (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated; or (v) is removed from office pursuant to any other provision of our articles of association.

Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of directors.

&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Employees** 

We had 2,960, 3,057 and 3,018 full-time employees as of December 31, 2023, 2024 and 2025, respectively. Substantially all of our full-time employees are located in China. The following table sets forth the number of our full-time employees as of December 31, 2025:

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| | |
|:---|:---|
| <br>**Function** | **Number of**<br>**Employees** |
| Operating | 1832 |
| Sales and marketing | 562 |
| General and administrative | 289 |
| Research and development | 335 |
| **Total** | **3018** |

---

Our success depends on our ability to attract, motivate, train and retain qualified personnel. We believe we offer our employees competitive compensation packages and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified employees. We have established comprehensive training programs covering new employee training, customized training as well as leadership training. Depending on the position, employee reviews are conducted either quarterly or annually.

As required by laws and regulations in mainland China, we participate in various employee social security plans that are organized by municipal and provincial governments including, among other things, pension, medical insurance, unemployment insurance, maternity insurance, work-related injury insurance and housing fund plans through a benefit contribution plan mandated by the PRC government. We are required under the law in mainland China to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.

We enter into standard employment agreements, as well as confidentiality and non-compete agreements with our employees in accordance with market practice.

We believe that we maintain a good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees are represented by collective bargaining agreements. Working together, our employees build our corporate culture that cares for individuals, fosters innovation, pursues credibility and integrity, and embraces changes, and has significantly contributed to our achievements.

&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Share Ownership** 

Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares on an as-converted basis as of March 31, 2026 by:

● each of our directors and executive officers; and

● each of our principal shareholders who beneficially own more than 5% of our total issued and outstanding shares.

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The calculations in the table below are based on 2,791,114,551 Class A ordinary shares (excluding 491,141,970 Class A ordinary shares, comprising of Class A ordinary shares issued to the depositary for bulk issuance of ADSs and reserved for future issuances upon the exercise or vesting of awards granted under share incentive plans, and Class A ordinary shares in the form of ADSs held in treasury) and 801,904,979 Class B ordinary shares, issued and outstanding as of March 31, 2026.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** |
|  | <br>**Class A**<br>**Ordinary**<br>**Shares** | <br>**Class B**<br>**Ordinary**<br>**Shares** | **Total Ordinary**<br>**Shares on**<br>**an As-converted**<br>**Basis** | **% of Total**<br>**Ordinary**<br>**Shares on an As-**<br>**Converted Basis** | <br>**% of Aggregate**<br>**Voting Power** |
| **Directors and Executive Officers\*†:** |  |  |  |  |  |
| Peng Shen<sup>(1)</sup> | 4000 | 801904979 | 801908979 | 22.3 | 72.1 |
| Wei Ran<sup>(2)</sup> | 15653220 |  | 15653220 | 0.4 | 0.2 |
| Xiaolei Sun<sup>(3)</sup> | 8078260 |  | 8078260 | 0.2 | 0.1 |
| Wenjie Guan |  |  |  |  |  |
| Kai Huang |  |  |  |  |  |
| Haiyang Yu |  |  |  |  |  |
| Heping Feng<sup>(4)</sup> | 449820 |  | 449820 | 0.0 | 0.0 |
| Chen Lin<sup>(5)</sup> | 220000 |  | 220000 | 0.0 | 0.0 |
| Chenyang Wei<sup>(6)</sup> | 449820 |  | 449820 | 0.0 | 0.0 |
| Jieru Li<sup>(7)</sup> | 771960 |  | 771960 | 0.0 | 0.0 |
| Nian Liu<sup>(8)</sup> | 897890 |  | 897890 | 0.0 | 0.0 |
| Xiaoying Xu<sup>(9)</sup> | 4233070 |  | 4233070 | 0.1 | 0.0 |
| Xiaobo Zhou<sup>(10)</sup> | 2593140 |  | 2593140 | 0.1 | 0.0 |
| All Directors and Executive Officers as a Group | 33351180 | 801904979 | 835256159 | 23.2 | 72.4 |
| **Principal Shareholders:** |  |  |  |  |  |
| Neptune Max Holdings Limited<sup>(1)</sup> |  | 801904979 | 801904979 | 22.3 | 72.1 |
| Entities affiliated with Tencent<sup>(11)</sup> | 830085007 |  | 830085007 | 23.1 | 8.3 |
| Investment funds affiliated with Boyu Capital<sup>(12)</sup> | 470735258 |  | 470735258 | 13.1 | 4.7 |
| Swiss Re Principal Investments Company Asia Pte. Ltd.<sup>(13)</sup> | 206362384 |  | 206362384 | 5.7 | 2.1 |

---

*Notes:*

\* Except as indicated otherwise below, the business address of our directors and executive officers is Room B802, 8th Floor, No. 203 Wangjing Lize Zhongyuan Zone 2, Chaoyang District, Beijing, China. The business address of Mr. Haiyang Yu is 29/F, Three Pacific Place, No. 1 Queen's Road East, Wanchai, Hong Kong. The business address of Mr. Kai Huang is 28/F, Tower 2, Jing An Kerry Centre, 1539 Nanjing West Road, Jing An District, Shanghai, China. The business address of Ms. Wenjie Guan is 61/F, Central Plaza, No. 18 Harbour Road, Wanchai, Hong Kong. The business address of Mr. Heping Feng is Room 1401, Beijing Mansion, 58 Dong Si Huan Zhong Road, Chaoyang District, Beijing, China. The business address of Mr. Chenyang Wei is PBC School of Finance, 43 Chengfu Road, Haidian District, Beijing, China. The business address of Mr. Chen Lin is The University of Hong Kong, Hong Kong.

&nbsp;&nbsp;&nbsp;&nbsp;† For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class. Each holder of our Class A ordinary shares is entitled to one vote per share. Each holder of our Class B ordinary shares is entitled to nine votes per share. Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on a one-for-one basis, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. In addition, the Class B ordinary shares held by Mr. Peng Shen or his affiliated entities shall be automatically immediately converted into the same number of Class A ordinary shares in the event that Mr. Shen ceases to be employed by and ceases to act as a director of our company.

&nbsp;&nbsp;&nbsp;&nbsp;(1) Represents (i) 801,904,979 Class B ordinary shares held of record by Neptune Max Holdings Limited, a British Virgin Islands company. Neptune Max Holdings Limited is 99% owned by a family trust set up by Mr. Shen and 1% owned by Mr. Shen. Mr. Shen acts as the sole director of Neptune Max Holdings Limited, and possesses the sole voting power over the shares held by Neptune Max Holdings Limited; and (ii) 4,000 Class A ordinary shares directly held by First Principles Z Holdings Limited, a British Virgin Islands company. Mr. Shen acts as the sole director of First Principles Z Holdings Limited.

The registered address of Neptune Max Holdings Limited and First Principles Z Holdings Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, P.O. Box 2221, Road Town, Tortola, British Virgin Islands.

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&nbsp;&nbsp;&nbsp;&nbsp;(2) Represents (i) 11,088,000 Class A ordinary shares held of record by Christmastrees Holdings Limited, a British Virgin Islands company, (ii) 1,000,000 Class A ordinary shares held of record by Ark Trust (Hong Kong) Limited, a Hong Kong company, (iii) 3,365,220 Class A ordinary shares held by Mr. Ran as of March 17, 2026, and (iv) 200,000 Class A ordinary shares Mr. Ran has the right to acquire within 60 days of March 17, 2026. Mr. Ran is the sole director of Christmastrees Holdings Limited and has the sole power to vote and dispose of the securities held by such entity. Mr. Ran disclaims beneficial ownership of the shares held by Ark Trust (Hong Kong) Limited except to the extent of any indirect pecuniary interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Represents (i) 4,200,000 Class A ordinary shares held of record by Ark Trust (Hong Kong) Limited, a Hong Kong company, (ii) 3,078,260 Class A ordinary shares held by Ms. Sun as of March 17, 2026, and (iii) 800,000 Class A ordinary shares Ms. Sun has the right to acquire within 60 days of March 17, 2026. Ms. Sun disclaims beneficial ownership of the shares held by Ark Trust (Hong Kong) Limited except to the extent of any indirect pecuniary interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Represents 299,820 Class A ordinary shares held by Mr. Feng as of March 30, 2026 and 150,000 Class A ordinary shares Mr. Feng has the right to acquire within 60 days of March 30, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Represents 220,000 Class A ordinary shares held by Mr. Lin as of March 16, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(6) Represents 299,820 Class A ordinary shares held by Mr. Wei as of March 17, 2026 and 150,000 Class A ordinary shares Mr. Wei has the right to acquire within 60 days of March 17, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(7) Represents 550,000 Class A ordinary shares held by Mr. Li as of March 17, 2026 and 221,960 Class A ordinary shares Mr. Li has the right to acquire within 60 days of March 17, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(8) Represents 815,000 Class A ordinary shares held by Ms. Liu as of March 17, 2026 and 82,890 Class A ordinary shares Ms. Liu has the right to acquire within 60 days of March 17, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(9) Represents 3,025,000 Class A ordinary shares directly held by Ms. Xu as of March 17, 2026 and 138,455 Class A ordinary shares Ms. Xu has the right to acquire within 60 days of March 17, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(10) Represents 2,512,570 Class A ordinary shares directly held by Mr. Zhou as of March 17, 2026 and 80,570 Class A ordinary shares Mr. Zhou has the right to acquire within 60 days of March 17, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;(11) Represents (i) 805,085,007 Class A ordinary shares directly held by Image Frame Investment (HK) Limited, a company incorporated in Hong Kong, and (ii) 25,000,000 Class A ordinary shares represented by 2,500,000 ADSs, directly held by Tencent Mobility Limited, a company incorporated in Hong Kong. Information regarding beneficial ownership is reported as of May 6, 2021, based on the information contained in the Schedule 13D jointly filed by Tencent Holdings Limited and others with the SEC on May 17, 2021. Image Frame Investment (HK) Limited and Tencent Mobility Limited are investing entities wholly owned by Tencent Holdings Limited. Tencent Holdings Limited is a limited liability company incorporated in the Cayman Islands and is listed on the Hong Kong Stock Exchange. The registered address of Image Frame Investment (HK) Limited, Tencent Mobility Limited and Tencent Holdings Limited is 29/F, Three Pacific Place, No. 1 Queen's Road East, Wanchai, Hong Kong.

&nbsp;&nbsp;&nbsp;&nbsp;(12) To our best knowledge, represents (i) 434,235,258 Class A ordinary shares directly held by Harmonious Ocean Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands, and (ii) 36,500,000 Class A ordinary shares represented by 3,650,000 ADSs, directly held by Boyu Capital Opportunities Master Fund. Boyu Capital Fund IV, L.P., a limited partnership organized under the laws of the Cayman Islands, holds 100% of the outstanding shares of Harmonious Ocean Limited. Boyu Capital General Partner IV, Ltd., an exempted company incorporated under the laws of the Cayman Islands, is the general partner of Boyu Capital Fund IV, L.P. Boyu Capital Group Holdings Ltd., an exempted company incorporated under the laws of the Cayman Islands, holds 100% of the outstanding shares of Boyu Capital General Partner IV, Ltd. XYXY Holdings Ltd., a company incorporated in the British Virgin Islands, is the controlling shareholder of Boyu Capital Group Holdings Ltd. Mr. Xiaomeng Tong holds 100% of the outstanding shares in XYXY Holdings Ltd. The registered office of Harmonious Ocean Limited is c/o Maples Corporate Services Limited, PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

&nbsp;&nbsp;&nbsp;&nbsp;(13) Represents 206,362,384 Class A ordinary shares directly held by Swiss Re Principal Investments Company Asia Pte. Ltd., a corporation incorporated under the laws of Singapore. Information regarding beneficial ownership is reported as of December 31, 2023, based on the information contained in the Schedule 13G/A jointly filed by Swiss Re Ltd and others with the SEC on February 9, 2024. Swiss Re Principal Investments Company Asia Pte. Ltd. is an investment entity indirectly wholly owned by Swiss Re Ltd, a company limited by shares with its registered office in Zurich, Switzerland, with its shares listed on the SIX Swiss Exchange and trading under the symbol "SREN."

To our knowledge and with reference to the addresses in our shareholder register, as of March 31, 2026, none of our ordinary shares are held by record holders in the United States. There may be beneficial owners of our ADSs in the United States.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

F. **Disclosure of Registrant's Action to Recover Erroneously Awarded Compensation**

Not applicable.

#### Item 7. Major Shareholders and Related Party Transactions
&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Major Shareholders** 

Please refer to "Item 6. Directors, Senior Management and Employees—E. Share Ownership."

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Related Party Transactions** 

#### Contractual Arrangements with the Variable Interest Entities and Their Respective Shareholders
See "Item 4. Information on the Company—C. Organizational Structure."

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#### Employment Agreements and Indemnification Agreements
See "Item 6. Directors, Senior Management and Employees—B. Compensation."

#### Share Incentive Plans
See "Item 6. Directors, Senior Management and Employees—B. Compensation."

#### Other Related Party Transactions
*Transactions with Tencent Group.* Tencent Group is one of our investors. We engage Weixin Pay as one of our payment processing platforms to collect payment from our insurance consumers and users on our crowdfunding platform, where Tencent Group charges service fee for each transaction occurred. For the years ended December 31, 2023, 2024 and 2025, we paid payment processing fee to Tencent Group of RMB23.8 million, RMB22.0 million and RMB22.1 million (US$3.2 million), respectively. Tencent Group also provides marketing service to us, which amounted to RMB79.5 million, RMB5.3 million and RMB2.0 thousand (US$0.3 thousand) in 2023, 2024 and 2025, respectively. In addition, Tencent Group provides cloud technology services to us, which amounted to RMB31.4 million, RMB30.7 million and RMB31.5 million (US$4.5 million) for the years ended December 31, 2023, 2024 and 2025, respectively. As of December 31, 2023, 2024 and 2025, we had amount due to Tencent Group of RMB9.5 million, RMB10.6 million and RMB9.3 million (US$1.3 million), respectively.

We provide advertising services to Tencent Group, which amounted to RMB0.6 million, RMB1.1 million and RMB0.3 million (US$44.8 thousand) in 2023, 2024 and 2025, respectively. We had amount due from Tencent Group of RMB64.7 thousand, RMB257.4 thousand and RMB208.6 thousand (US$29.8 thousand) as of December 31, 2023, 2024 and 2025, respectively.

**Shareholders Agreement**

We entered into our fifth amended and restated shareholders agreement on November 20, 2020, with our shareholders, which consist of holders of ordinary shares and preferred shares. The fifth amended and restated shareholders agreement provides for certain shareholders' rights, including information rights, preemptive rights, right of first refusal and co-sale rights, drag along rights and contains provisions governing our board of directors and other corporate governance matters. The special rights other than registration rights, as well as the corporate governance provisions, automatically terminated upon the completion of our IPO.

***Registration Rights***

We have granted certain registration rights to our shareholders. Set forth below is a description of the registration rights granted under the shareholders agreement.

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*Demand Registration Rights.* Holders of at least 25% of the voting power of the then outstanding registrable securities held by all such holders may request in writing that we effect a registration of at least 20%, or any less percentage if the anticipated gross proceeds would exceed US$5,000,000, of the registrable securities. Upon such a request, we shall promptly give notice of such requested registration to the other shareholders and thereupon shall use reasonable best efforts to effect, as soon as practicable, the registration under the Securities Act of all registrable securities that the holders request to be registered and included in such registration by written notice given by such holders to us within twenty days after receipt of our notice of the demand registration. However, we are not obliged to effect any such registration if we have, within the six month period preceding the date of such request, already effected a registration under the Securities Act in which the Holders had an opportunity to participate. We are obligated to effect no more than two demand registrations that have been declared effective. Further, if the registrable securities are offered by means of an underwritten offering and the underwriters advise us that marketing factors require a limitation of the number of securities to be underwritten, the number of registrable securities that may be included in the underwriting shall be reduced as required by the underwriters and allocated among the holders of registrable securities on a pro rata basis according to the number of registrable securities then outstanding held by each holder requesting registration; provided that at least 20%, or any lesser percentage if the anticipated gross proceeds would exceed US$5,000,000, of registrable securities requested to be registered shall be so included, but only after first excluding all other securities from the registration and underwritten offering.

*Piggyback Registration Rights.* If we propose to file a registration statement for a public offering of our securities, we shall offer shareholders an opportunity to include in the registration all or any part of the registrable securities held by such holders. If the managing underwriters of any underwritten offering determine that marketing factors require a limitation of the number of shares to be underwritten, and the number of shares that may be included in the registration and the underwriting shall be allocated (i) first, to us, (ii) second, to each holder requesting inclusion of its registrable securities in such registration statement on a pro rata basis based on the total number of registrable securities then held by each such holder; provided that at least 25% of the registrable securities requested by the holders to be included in the underwriting and registration shall be so included and all shares that are not registrable securities shall first be excluded from such registration and underwriting before any registrable securities are so excluded.

*Form F-3 Registration Rights.* Our shareholders may request us in writing to file an unlimited number of registration statements on Form F-3 if we qualify for registration on Form F-3. We have a right to defer filing of a registration statement for the period during which such filing would be materially detrimental to us or our members on the condition that we furnish to the holders requesting registration a certificate signed by our chief executive officer stating that in the good faith judgment of our board of directors, it would be materially detrimental to us and our shareholders for such registration statement to be filed in the near future. However, we cannot exercise the deferral right more than once during any 12-month period for a period of not more than 60 days and cannot register any other securities during such 60-day period. We are obligated to effect no more than two demand registrations that have been declared effective within any 12-month period.

*Expenses of Registration.* We will bear all registration expenses, other than underwriting discounts and selling commissions applicable to sale of registrable securities. However, expenses in excess of US$25,000 of any special audit required in connection with a demand registration shall be borne pro rata by the holders participating in such registration.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Interests of Experts and Counsel** 

Not applicable.

#### Item 8. Financial Information
&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Consolidated Statements and Other Financial Information** 

We have appended consolidated financial statements filed as part of this annual report.

**Legal Proceedings**

We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management's time and attention.

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**Dividend Policy**

Our board of directors has discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that, in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Even if we decide to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

In March 2024, our board of directors approved a special cash dividend of US$0.04 per ADS or US$0.004 per ordinary share to shareholders of record as of the close of business on April 19, 2024. The aggregate payment amounted to approximately US$14.8 million. In September 2024, our board of directors approved another cash dividend of US$0.02 per ADS or US$0.002 per ordinary share to shareholders of record as of the close of business on November 5, 2024. The aggregate payment amounted to approximately US$7.3 million. In March 2025, our board of directors approved another cash dividend of US$0.02 per ADS or US$0.002 per ordinary share to shareholders of record as of the close of business on April 11, 2025. The aggregate payment amounted to approximately US$7.3 million. In September 2025, our board of directors approved another cash dividend of US$0.03 per ADS or US$0.003 per ordinary share to shareholders of record as of the close of business on October 10, 2025. The aggregate payment amounted to approximately US$10.9 million. In March, 2026, our board of directors approved another cash dividend of US$0.003 per ordinary share, or US$0.03 per ADS, for a total amount of approximately US$10.8 million, to shareholders of record as of the close of business on April 24, 2026. The payment date is expected to be on or around May 13, 2026 for holders of ordinary shares and on or around May 20, 2026 for holders of ADSs.

We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in mainland China for our cash requirements, including any payment of dividends to our shareholders. Regulations in mainland China may restrict the ability of our subsidiaries in mainland China to pay dividends to us. See "Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Dividend Distribution."

If we pay any dividends on our Class A ordinary shares, we will pay those dividends which are payable in respect of the Class A ordinary shares underlying the ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to the ADS holders in proportion to the Class A ordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our Class A ordinary shares, if any, will be paid in U.S. dollars.

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Significant Changes** 

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

#### Item 9. The Offer and Listing
&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Offering and Listing Details** 

Our ADSs have been listed on the New York Stock Exchange since May 7, 2021. Our ADSs trade under the symbol "WDH." Each ADS represents ten of our Class A ordinary shares.

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Plan of Distribution** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Markets** 

Our ADSs have been listed on the New York Stock Exchange since May 7, 2021 under the symbol "WDH."

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&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Selling Shareholders** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Dilution** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Expenses of the Issue** 

Not applicable.

**Item 10.** **Additional Information**

&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Share Capital** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Memorandum and Articles of Association** 

The following are summaries of material provisions of our currently effective memorandum and articles of association and of the Companies Act, insofar as they relate to the material terms of our ordinary shares.

*Objects of Our Company.* Under our current memorandum and articles of association, the objects of our company are unrestricted and we have the full power and authority to carry out any object not prohibited by the laws of the Cayman Islands.

*Ordinary Shares.* Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share shall entitle the holder thereof to one vote on all matters subject to vote at our general meetings, and each Class B ordinary share shall entitle the holder thereof to nine votes on all matters subject to vote at our general meetings. Our ordinary shares are issued in registered form and are issued when registered in our register of members. We may not issue shares to bearer. Our shareholders who are nonresidents of the Cayman Islands may freely hold and vote their shares.

*Conversion.* Class B ordinary shares may be converted into the same number of Class A ordinary shares at the option of the holders thereof at any time, while Class A ordinary shares cannot be converted into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment or disposition of Class B ordinary shares by a holder thereof to any person other than our founder, chairman and chief executive officer, Mr. Peng Shen, one of his affiliates or any other "Founder Affiliate" as defined in our current memorandum and articles of association, or upon a change of control of the ultimate beneficial ownership of any Class B ordinary share to any person other than Mr. Shen, one of his affiliates or any other "Founder Affiliate" as defined in our current memorandum and articles of association, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares.

*Dividends.* The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors or declared by our shareholders by ordinary resolution (provided that no dividend may be declared by our shareholders which exceeds the amount recommended by our directors). Our current memorandum and articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside from profits which our board of directors determine is no longer needed. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.

*Voting Rights.* Holders of Class A ordinary shares and Class B ordinary shares shall, at all times, vote together as one class on all matters submitted to a vote by the members at any general meeting of the Company. Each Class A ordinary share shall be entitled to one vote on all matters subject to the vote at general meetings of our Company, and each Class B ordinary share shall be entitled to nine votes on all matters subject to the vote at general meetings of our Company. Voting at any meeting of shareholders is by show of hands unless a poll (before or on the declaration of the result of the show of hands) is demanded. A poll may be demanded by the chairperson of such meeting or any one shareholder present in person or by proxy.

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An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the outstanding and issued ordinary shares cast at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our current memorandum and articles of association. Our shareholders may, among other things, divide or combine their shares by ordinary resolution.

*General Meetings of Shareholders.* As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders' annual general meetings. Our current memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors.

Shareholders' general meetings may be convened by a majority of our board of directors. Advance notice of at least seven days is required for the convening of our annual general shareholders' meeting (if any) and any other general meeting of our shareholders. A quorum required for any general meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of all votes attaching to the issued and outstanding shares in our company entitled to vote at the general meeting.

The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our current memorandum and articles of association provide that upon the requisition of any one or more of our shareholders who together hold shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding shares of our company entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our current memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.

*Transfer of Ordinary Shares.* Subject to the restrictions set out in our current memorandum and articles of association as set out below, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.

Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:

● the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other;

● evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;

● the instrument of transfer is in respect of only one class of ordinary shares;

● the instrument of transfer is properly stamped, if required;

● in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and

● a fee of such maximum sum as the New York Stock Exchange may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may, after compliance with any notice required of NYSE, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our board may determine.

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*Liquidation.* On the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them.

*Calls on Shares and Forfeiture of Shares.* Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

*Redemption, Repurchase and Surrender of Shares. We* may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner as may be determined by our board of directors. Our company may also repurchase any of our shares on such terms and in such manner as have been approved by our board of directors or by an ordinary resolution of our shareholders. Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company's profits or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares issued and outstanding or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.

*Variations of Rights of Shares.* If at any time, our share capital is divided into different classes of shares, the rights attached to any class may be materially adversely varied with the consent in writing of the holders of at least two-thirds (2/3) of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued shall not, be deemed to be materially adversely varied by the creation, allotment or issue of further shares ranking *pari passu* with or subsequent to them or the redemption or purchase of any shares of any class by the Company. The rights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.

*Issuance of Additional Shares.* Our current memorandum and articles of association authorize our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent out of available authorized but unissued ordinary shares.

Our current memorandum and articles of association also authorize our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:

● the designation of the series;

● the number of shares of the series;

● the dividend rights, dividend rates, conversion rights, voting rights; and

● the rights and terms of redemption and liquidation preferences.

Our board of directors may issue preferred shares without action by our shareholders to the extent out of authorized but unissued preferred shares. Issuance of these shares may dilute the voting power of holders of ordinary shares.

*Inspection of Books and Records.* Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our register of members or our corporate records (other than our memorandum and articles of association, our register of mortgages and charges, and special resolutions passed by our shareholders). However, we will provide our shareholders with annual audited financial statements. See "Where You Can Find Additional Information."

*Anti-Takeover Provisions.* Some provisions of our current memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:

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● authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders; and

● limit the ability of shareholders to requisition and convene general meetings of shareholders.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our current memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company.

*Exempted Company.* We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

● does not have to file an annual return of its shareholders with the Registrar of Companies;

● is not required to open its register of members for inspection;

● does not have to hold an annual general meeting;

● may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 30 years in the first instance);

● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● may register as a limited duration company; and

● may register as a segregated portfolio company.

"Limited liability" means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

*Exclusive Forum.* Unless we consent in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) shall be the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether such legal suit, action, or proceeding also involves parties other than us. Any person or entity purchasing or otherwise acquiring any share or other securities in our company, or purchasing or otherwise acquiring American depositary shares issued pursuant to deposit agreements, shall be deemed to have notice of and consented to the provisions of this article. Without prejudice to the foregoing, if the provision in this article is held to be illegal, invalid or unenforceable under applicable law, the legality, validity or enforceability of the rest of articles of association shall not be affected and this article shall be interpreted and construed to the maximum extent possible to apply in the jurisdiction with whatever modification or deletion may be necessary so as best to give effect to our intention.

**Differences in Corporate Law**

The Companies Act is derived, to a large extent, from the older Companies Acts of England but does not follow recent English statutory enactments and accordingly there are significant differences between the Companies Act and the current Companies Act of England. In addition, the Companies Act differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.

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*Mergers and Similar Arrangements.* The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (i) "merger" means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (ii) a "consolidation" means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company's articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a company is a "parent" of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.

The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provided that the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement between the company and its creditors (or any class of them) or its members (or any class of them), provided that (i) any such arrangement with creditors is approved by a majority in number of the creditors (or class of creditors) with whom the arrangement is to be made, who must in addition represent 75% in value of such creditors (or class of creditors), and (ii) any such arrangement with members is approved by 75% in value of the members (or class of members) with whom the arrangement is to be made, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. Any such arrangement which is approved by such requisite majorities as aforesaid, and which is sanctioned by the Grand Court, will be binding on all the creditors (or class of creditors) or members (or class of members), as the case may be, and also on the company. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

● the statutory provisions as to the required majority vote have been met;

● the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;

● the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and

● the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.

The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the "squeeze out" of dissentient minority shareholders upon a tender offer. When a tender offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

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If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

*Shareholders' Suits.* In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge actions where:

● a company acts or proposes to act illegally or ultra vires (and is therefore incapable of ratification by the shareholder);

● the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and

● those who control the company are perpetrating a "fraud on the minority."

*Indemnification of Directors and Executive Officers and Limitation of Liability.* Cayman Islands law does not limit the extent to which a company's memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our current memorandum and articles of association provide that that we shall indemnify our officers and directors against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such directors or officer, other than by reason of such person's dishonesty, willful default or fraud, in or about the conduct of our company's business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including, without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.

In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our current memorandum and articles of association.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

*Directors' Fiduciary Duties.* Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

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As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company — a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party, and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.

*Shareholder Action by Written Consent.* Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our current memorandum and articles of association provide that our shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.

*Shareholder Proposals.* Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders; provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our current memorandum and articles of association allow any one or more of our shareholders holding shares which carry in aggregate not less than one-third of the total number of votes attaching to all issued and the outstanding shares of our company entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders' meeting, our current memorandum and articles of association do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obliged by law to call shareholders' annual general meetings.

*Cumulative Voting.* Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation's certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder's voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our current memorandum and articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

*Removal of Directors.* Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the issued and outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our current memorandum and articles of association, directors may be removed with or without cause, by an ordinary resolution of our shareholders. A director will also cease to be a director if he (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns his office by notice in writing; (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated; or (v) is removed from office pursuant to any other provision of our articles of association.

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*Transactions with Interested Shareholders.* The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an "interested shareholder" for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target's outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target's board of directors.

Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.

*Restructuring*.*** A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that the company:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) is or is likely to become unable to pay its debts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of a foreign country or by way of a consensual restructuring.

The Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, and any restructuring officer so appointed shall have such powers and carry out such functions as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment of a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be proceeded with or commenced against the company, no resolution to wind up the company shall be passed, and no winding up petition may be presented against the company, except with the leave of the court and subject to such terms as the court may impose. However, notwithstanding the presentation of a petition for the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole or part of the assets of the company is entitled to enforce the security without the leave of the court and without reference to the restructuring officer appointed.

*Dissolution; Winding up.* Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by either an order of the courts of the Cayman Islands or by the board of directors.

Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

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*Variation of Rights of Shares.* Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our current memorandum and articles of association, if our share capital is divided into more than one class of shares, the rights attached to any such class may, subject to any rights or restrictions for the time being attached to any class, only be materially adversely varied with the consent in writing of the holders of at least two-thirds (2/3) of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the shares of that class, be deemed to be materially adversely varied by the creation, allotment or issue of further shares ranking pad passu with or subsequent to them or the redemption or purchase of any shares of any class by our company. The rights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.

*Amendment of Governing Documents.* Under the Delaware General Corporation Law, a corporation's governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under the Companies Act and our current memorandum and articles of association, our memorandum and articles of association may only be amended by a special resolution of our shareholders.

*Rights of Non-resident or Foreign Shareholders.* There are no limitations imposed by our current memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our current memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Material Contracts** 

Other than in the ordinary course of business and other than those described in "Item 4. Information on the Company" or "Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions" or elsewhere in this annual report, we have not entered into any material contract during the two years immediately preceding the date of this annual report.

&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Exchange Controls** 

See "Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Foreign Exchange."

&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Taxation** 

The following summary of the material Cayman Islands, mainland China and U.S. federal income tax consequences of an investment in our ADSs or ordinary shares is based upon the laws and interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, mainland China and the United States.

**Cayman Islands Taxation**

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to holders of our ADSs or ordinary shares levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our ordinary shares and ADSs will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares or the ADSs, nor will gains derived from the disposal of our ordinary shares or the ADSs be subject to Cayman Islands income or corporate tax.

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**Mainland China Taxation**

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of mainland China with a "de facto management body" within mainland China is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. The implementation rules define the term "de facto management body" as the body that exercises full and substantial control over and overall management of the business, production, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued a circular, which provides certain specific criteria for determining whether the "de facto management body" of a mainland China-controlled enterprise that is incorporated offshore is located in mainland China. Although this circular only applies to offshore enterprises controlled by mainland China enterprises or mainland China enterprise groups, not those controlled by mainland China individuals or foreigners, the criteria set forth in the circular may reflect the State Administration of Taxation's general position on how the "de facto management body" test should be applied in determining the tax resident status of all offshore enterprises. According to the circular, an offshore incorporated enterprise controlled by a mainland China enterprise or a mainland China enterprise group will be regarded as a mainland China tax resident by virtue of having its "de facto management body" in mainland China only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in mainland China; (ii) decisions relating to the enterprise's financial and human resource matters are made or are subject to approval by organizations or personnel in mainland China; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in mainland China; and (iv) at least 50% of voting board members or senior executives habitually reside in mainland China.

We believe that Waterdrop Inc. is not a mainland China resident enterprise for mainland China tax purposes. Waterdrop Inc. is not controlled by a mainland China enterprise or mainland China enterprise group and we do not believe that Waterdrop Inc. meets all of the conditions above. Waterdrop Inc. is a company incorporated outside mainland China. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside mainland China. For the same reasons, we believe our other entities outside of mainland China are not mainland China resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the tax authorities in mainland China and uncertainties remain with respect to the interpretation of the term "de facto management body." There can be no assurance that the PRC government will ultimately take a view that is consistent with ours.

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If the PRC tax authorities determine that Waterdrop Inc. is a mainland China resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of the ADSs. In addition, non-resident enterprise shareholders (including the ADS holders) may be subject to a 10% mainland China tax on gains realized on the sale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from within mainland China. It is unclear whether our non-mainland China individual shareholders (including the ADS holders) would be subject to any mainland China tax on dividends or gains obtained by such non-mainland China individual shareholders in the event we are determined to be a mainland China resident enterprise. If any mainland China tax were to apply to such dividends or gains, it would generally apply at a rate of 20% (and such mainland China tax may be withheld at source in the case of dividends). Any mainland China income tax liability may be reduced under applicable tax treaties. However, it is unclear whether non-mainland China shareholders of Waterdrop Inc. would in practice be able to obtain the benefits of any tax treaties between their country of tax residence and mainland China in the event that Waterdrop Inc. is treated as a mainland China resident enterprise.

Provided that our Cayman Islands holding company, Waterdrop Inc., is not deemed to be a mainland China resident enterprise, holders of the ADSs and ordinary shares who are not mainland China residents will not be subject to mainland China income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares or ADSs. However, under Bulletin 7 and Bulletin 37, where a non-resident enterprise conducts an "indirect transfer" by transferring taxable assets, including, in particular, equity interests in a mainland China resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee, or the mainland China entity which directly owns such taxable assets may report to the tax authority such indirect transfer. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring mainland China tax. As a result, gains derived from such indirect transfer may be subject to mainland China enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a mainland China resident enterprise. However, sales of shares and ADSs by investors through a public stock exchange where such shares or ADSs are acquired on a public stock exchange are currently exempt from these indirect transfer rules under Bulletin 7 and Bulletin 37. We and our non-mainland China resident investors may be at risk of being required to file a return and being taxed under Bulletin 7 and Bulletin 37, and we may be required to expend valuable resources to comply with Bulletin 7 and Bulletin 37, or to establish that we should not be taxed under these circulars. See "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We face uncertainties with respect to indirect transfers of equity interests in mainland China resident enterprises by their non-mainland China holding companies."

**United States Federal Income Tax Considerations**

The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of the ADSs or ordinary shares by a U.S. Holder (as defined below). This summary applies only to U.S. Holders that hold the ADSs or ordinary shares as "capital assets" (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended (the "Code"). This discussion is based upon applicable provisions of the Code, Treasury regulations promulgated thereunder (the "Treasury Regulations"), and pertinent judicial decisions and interpretive rulings of the Internal Revenue Service (the "IRS"), all of which are subject to differing interpretations or change, possibly with retroactive effect. There can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address any considerations relating to U.S. federal estate or gift tax, the Medicare tax on certain net investment income, any alternative minimum tax, or any state, local and non-U.S. tax. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular U.S. Holders in light of their individual circumstances or to persons in special tax situations such as:

● banks and other financial institutions;

● insurance companies;

● pension plans;

● cooperatives;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● traders that elect to use a mark-to-market method of accounting;

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● certain former U.S. citizens or long-term residents;

● tax-exempt entities (including private foundations);

● holders who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation;

● investors that hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes;

● investors that have a functional currency other than the U.S. dollar;

● persons holding their ADSs or ordinary shares in connection with a trade or business conducted outside the United States;

● persons that directly, indirectly or constructively own 10% or more of our stock (by vote or value); or

● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding the ADSs or ordinary shares through such entities, all of whom may be subject to tax rules that differ significantly from those discussed below.

Each U.S. Holder should consult its tax advisor regarding the U.S. federal, state, local, and non-U.S. and other tax considerations of the ownership and disposition of the ADSs or ordinary shares.

***General***

For purposes of this discussion, a "U.S. Holder" is a beneficial owner (as determined for U.S. federal income tax purposes) of the ADSs or ordinary shares that is, for U.S. federal income tax purposes:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in or organized under the law of the United States or any state thereof or the District of Columbia;

● an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

● a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a United States person under the Code.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of the ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding the ADSs or ordinary shares and their partners should consult their tax advisors regarding an investment in the ADSs or ordinary shares.

For U.S. federal income tax purposes, a U.S. Holder of ADSs will generally be treated as the beneficial owner of the underlying shares represented by the ADSs. The remainder of this discussion assumes that a U.S. Holder of the ADSs will be treated in this manner. Accordingly, deposits or withdrawals of ordinary shares for ADSs will generally not be subject to U.S. federal income tax.

***Passive Foreign Investment Company Considerations***

A non-U.S. corporation, such as our company, will be a PFIC for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are generally categorized as a passive asset and the company's goodwill and other unbooked intangibles are taken into account. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.

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Although the law in this regard is not entirely clear, we treat the VIEs and their subsidiaries as being owned by us for U.S. federal income tax purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated with them. As a result, we consolidate their result of operations in our consolidated U.S. GAAP financial statements.

Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash and investments), and the market price of our ADSs, we believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended December 31, 2025, and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.

If we are a PFIC for any year during which a U.S. Holder holds the ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds the ADSs or ordinary shares. However, if we cease to be a PFIC, provided that a U.S. Holder has not made a mark-to-market election, as described below, such U.S. Holder may avoid some of the adverse effects of the PFIC regime by making a "deemed sale" election with respect to the ADSs or ordinary shares, as applicable. If such election is made, such U.S. Holder will be deemed to have sold our ADSs or ordinary shares such U.S. Holder holds at their fair market value and any gain from such deemed sale would be subject to the rules described below under "Passive Foreign Investment Company Rules." After the deemed sale election, so long as we do not become a PFIC in a subsequent taxable year, the ADSs or ordinary shares with respect to which such election was made will not be treated as shares in a PFIC and such U.S. Holder will not be subject to the rules described below with respect to any "excess distribution" such U.S. Holder receives from us or any gain from an actual sale or other disposition of the ADSs or ordinary shares. The rules dealing with deemed sale elections are very complex. Each U.S. Holder should consult its tax advisors regarding the possibility and considerations of making a deemed sale election.

***Dividends***

Subject to the discussion below under "Passive Foreign Investment Company Rules," the gross amount of any distributions paid on the ADSs or ordinary shares (including the amount of any mainland China tax withheld) out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary, in the case of ADSs. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a "dividend" for U.S. federal income tax purposes. Dividends received on the ADSs or ordinary shares will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from U.S. corporations.

Individuals and other non-corporate U.S. Holders will be subject to tax at the lower capital gain tax rate applicable to "qualified dividend income"; provided that certain conditions are satisfied, including that (1) the ADSs or ordinary shares on which the dividends are paid are readily tradable on an established securities market in the United States, or, in the event that we are deemed to be a mainland China resident enterprise under the tax law in mainland China, we are eligible for the benefit of the United States-China income tax treaty, or the Treaty, (2) we are neither a PFIC nor treated as such with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend is paid and the preceding taxable year, and (3) certain holding period and other requirements are met. Our ADSs are currently listed on the New York Stock Exchange. We believe that the ADSs will be readily tradable on an established securities market in the United States for so long as our ADSs continue to be listed on the New York Stock Exchange. There can be no assurance that the ADSs will continue to be considered readily tradable on an established securities market in later years. Because the ordinary shares will not be listed on a U.S. exchange, we do not believe that dividends received with respect to ordinary shares that are not represented by ADSs will be treated as qualified dividends. Non-corporate U.S. Holders should consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to the ADSs or ordinary shares.

In the event that we are deemed to be a mainland China resident enterprise under the PRC Enterprise Income Tax Law (see "Item 10. Additional Information—E. Taxation—Mainland China Taxation"), we may be eligible for the benefits of the Treaty. If we are eligible for such benefits, dividends we pay on our ordinary shares, regardless of whether such shares are represented by the ADSs, and regardless of whether the ADSs are readily tradable on an established securities market in the United States, would be eligible for the reduced rates of taxation described in the preceding paragraph, provided that certain holding period and other requirements are met and that we are neither a PFIC nor treated as such with respect to a U.S. Holder for the taxable year in which the dividend is paid and the preceding taxable year.

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For U.S. foreign tax credit purposes, dividends paid on the ADSs or ordinary shares generally will be treated as income from foreign sources and generally will constitute passive category income. In the event that we are deemed to be a mainland China resident enterprise under the PRC Enterprise Income Tax Law, a U.S. Holder may be subject to mainland China withholding taxes on dividends paid on the ADSs or ordinary shares (see "Item 10. Additional Information—E. Taxation—Mainland China Taxation"). Depending on the U.S. Holder's particular facts and circumstances and subject to a number of complex conditions and limitations, mainland China withholding taxes on dividends that are non-refundable under the Treaty may be treated as foreign taxes eligible for credit against a U.S. Holder's U.S. federal income tax liability. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and U.S. Holders should consult their tax advisors regarding the availability of the foreign tax credit or deduction in lieu thereof under their particular circumstances.

As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2025, and we will likely be classified as a PFIC for our current taxable year ending December 31, 2026. U.S. Holders should consult their tax advisors regarding the availability of the reduced rate of taxation on dividends with respect to our ADSs or ordinary shares under their particular circumstances.

***Sale or Other Disposition***

Subject to the discussion below under "Passive Foreign Investment Company Rules," a U.S. Holder will generally recognize gain or loss upon the sale or other disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the holder's adjusted tax basis in such ADSs or ordinary shares. The gain or loss will generally be capital gain or loss. Any capital gain or loss will be long term if the ADSs or ordinary shares have been held for more than one year. The deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes, which may limit the availability of foreign tax credits.

As described in "Item 10. Additional Information—E. Taxation—Mainland China Taxation," if we are deemed to be a mainland China resident enterprise under the PRC Enterprise Income Tax Law, gains from the disposition of the ADSs or ordinary shares may be subject to mainland China income tax and will generally be U.S. source, which may limit the ability to receive a foreign tax credit. If a U.S. Holder is eligible for the benefits of the Treaty, such holder may be able to elect to treat such gain as mainland China source income under the Treaty. If a U.S. Holder is not eligible for the benefits of the Treaty or does not elect to apply the Treaty, then such holder may not be able to claim a foreign tax credit arising from any mainland China tax imposed on the disposition of the ADSs or ordinary shares. The rules regarding foreign tax credits and deduction of foreign taxes are complex. U.S. Holders should consult their tax advisors regarding the availability of a foreign tax credit or deduction in light of their particular circumstances, including their eligibility for benefits under the Treaty, and the potential impact of the Treasury Regulations.

As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2025, and we will likely be classified as a PFIC for our current taxable year ending December 31, 2026. U.S. Holders should consult their tax advisors regarding the tax considerations of the sale or other disposition of our ADSs or ordinary shares under their particular circumstances.

***Passive Foreign Investment Company Rules***

If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or ordinary shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any "excess distribution" that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder's holding period for the ADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition including, under certain circumstances, a pledge, of ADSs or ordinary shares. Under the PFIC rules:

● the excess distribution or gain will be allocated ratably over the U.S. Holder's holding period for the ADSs or ordinary shares;

● the amount allocated to the current taxable year and any taxable years in the U.S. Holder's holding period prior to the first taxable year in which we are a PFIC, each, a "pre-PFIC year," will be taxable as ordinary income; and

● the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such taxable year.

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If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or ordinary shares, and any of our subsidiaries, the VIEs or any of the subsidiaries of the VIEs is also a PFIC, which is a "lower-tier PFIC," such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries, the VIEs or any of the subsidiaries of the VIEs.

As an alternative to the foregoing rules, a U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election with respect to such stock. If a U.S. Holder makes a mark-to-market election with respect to the ADSs, the holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as a result of the mark-to-market election. The U.S. Holder's adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of the ADSs and we cease to be a PFIC, the holder will not be required to take into account the gain or loss described above during any period that we are not a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of the ADSs in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.

The mark-to-market election is available only for "marketable stock," which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market, as defined in applicable Treasury Regulations. For this purpose, our ADSs, but not our ordinary shares, are listed on the New York Stock Exchange, which is a qualified exchange. Our ADSs should qualify as being regularly traded, but no assurances may be given in this regard.

Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder's indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.

If a U.S. Holder owns the ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. U.S. Holders should consult their tax advisors regarding the reporting requirements that may apply and U.S. federal income tax consequences of owning and disposing of the ADSs or ordinary shares if we are or become a PFIC, including the possibility of making a mark-to-market election and the inability to make a qualified electing fund election.

&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Dividends and Paying Agents** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**G.** **Statement by Experts** 

Not applicable.

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&nbsp;&nbsp;&nbsp;&nbsp;**H.** **Documents on Display** 

We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers, and are required to file reports and other information with the SEC. Specifically, we are required to file annually an annual report on Form 20-F within four months after the end of each fiscal year, which is December 31. All information filed with the SEC can be obtained over the internet at the SEC's website at *www.sec.gov*. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, our officers and directors are exempt from the short-swing rules contained in Section 16 of the Exchange Act, and our principal shareholders are exempt from the reporting and short-swing rules contained in Section 16 of the Exchange Act.

We will furnish Citibank, N.A., the depositary of the ADSs, with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders' meetings and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders' meeting received by the depositary from us.

&nbsp;&nbsp;&nbsp;&nbsp;**I.** **Subsidiary Information** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**J.** **Annual Report to Security Holders** 

Not applicable.

#### Item 11. Quantitative and Qualitative Disclosures about Market Risk
***Foreign exchange risk***

Substantially all of our net revenues and expenses are denominated in Renminbi. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Although our exposure to foreign exchange risks should be limited in general, the value of your investment in our ADSs will be affected by the exchange rate between U.S. dollar and Renminbi because the value of our business is effectively denominated in Renminbi, while our ADSs are traded in U.S. dollars.

The conversion of Renminbi into other currencies, including U.S. dollars, is based on rates set by the People's Bank of China. The Renminbi has fluctuated against other currencies, at times significantly and unpredictably. The value of Renminbi against other currencies is affected by changes in China's political and economic conditions and by China's foreign exchange policies, among other things. It is difficult to predict how market forces or government policies may impact the exchange rate between Renminbi and other currencies in the future.

To the extent that we need to convert the U.S. dollars for our operations, acquisitions, or for other uses within China, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we receive from the conversion. On the other hand, a decline in the value of the Renminbi against the U.S. dollar could reduce the U.S. dollar equivalent of our financial results, the value of your investment in the company and the dividends that we may pay in the future, if any, all of which may materially and adversely affect the prices of our ADS.

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As of December 31, 2025, we had RMB-denominated cash and cash equivalents, restricted cash, short-term investments and long-term debt investments included in long-term investments of RMB1,444.9 million and U.S. dollar-denominated cash and cash equivalents, restricted cash, short-term investments and long-term debt investments included in long-term investments of US$335.1 million. Assuming we had converted RMB1,444.9 million into U.S. dollars at the exchange rate of RMB6.9931 for US$1.00 as of December 31, 2025, our U.S. dollar cash balance would have been US$541.8 million. If the Renminbi had depreciated by 10% against the U.S. dollar, our U.S. dollar-denominated cash balance would have been US$523.0 million instead. Assuming we had converted US$335.1 million into Renminbi at the exchange rate of RMB6.9931 for US$1.00 as of December 31, 2025, our RMB-denominated cash balance would have been RMB3,788.6 million. If the Renminbi had depreciated by 10% against the U.S. dollar, our RMB-denominated cash balance would have been RMB4,023.0 million instead.

***Concentration of credit risk***

Details of the customers accounting for 10% or more of net operating revenue are as follows, including the amount of net operating revenue and as percentages of total net operating revenue for the periods presented:

---

| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,**  | **For the Year Ended December 31,**  |
| | **2025** | **2025** |
| <br>**%%** | **RMB in**<br>**thousands** | <br>**%** |
| Customer A<br> \* | 415677 | 10.5 |

---

Details of the customers which accounted for 10% or more of accounts receivable and contract assets are as follows, including the amount of accounts receivable and contract assets and as percentages of total accounts receivable and contract assets for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2024** | **2025** | **2025** |
|  | **RMB in**<br>**thousands** | <br>**%** | **RMB in**<br>**thousands** | <br>**%** |
| Customer A | 234744 | 15.8 | 394607 | 16.7 |
| Customer B | \* | \* | 312808 | 13.2 |
| Customer C | \* | \* | 246830 | 10.5 |

---

We perform ongoing credit evaluations of our customers and generally do not require collateral on accounts receivable.

#### Item 12. Description of Securities Other than Equity Securities
&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Debt Securities** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Warrants and Rights** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Other Securities** 

Not applicable.

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&nbsp;&nbsp;&nbsp;&nbsp;**D.** **American Depositary Shares** 

#### Fees and Charges Our ADS holders May Have to Pay
As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:

---

| | |
|:---|:---|
| **Service** | **Fees** |
| Issuance of ADSs (e.g., an issuance of ADS upon a deposit of Class A ordinary shares, upon a change in the ADS(s)-to-Class A ordinary share ratio, or for any other reason), excluding ADS issuances as a result of distributions of Class A ordinary shares | Up to US$0.05 per ADS issued |
| Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited property, upon a change in the ADS(s)-to-Class A ordinary share ratio, or for any other reason) | Up to US$0.05 per ADS cancelled |
| Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements) | Up to US$0.05 per ADS held |
| Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs | Up to US$0.05 per ADS held |
| Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off) | Up to US$0.05 per ADS held |
| ADS Services | Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary |
| Registration of ADS transfers (e.g., upon a registration of the transfer of registered ownership of ADSs, upon a transfer of ADSs into DTC and *vice versa,* or for any other reason) | Up to US$0.05 per ADS (or fraction thereof) transferred |
| Conversion of ADSs of one series for ADSs of another series (e.g., upon conversion of Partial Entitlement ADSs for Full Entitlement ADSs, or upon conversion of Restricted ADSs (each as defined in the Deposit Agreement) into freely transferable ADSs, and vice versa). | Up to US$0.05 per ADS (or fraction thereof) converted |

---

As an ADS holder, you are also responsible to pay certain charges, such as:

● taxes (including applicable interest and penalties) and other governmental charges;

● the registration fees as may from time to time be in effect for the registration of Class A ordinary shares on the share register and applicable to transfers of Class A ordinary shares to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;

● certain cable, telex and facsimile transmission and delivery expenses;

● the fees, expenses, spreads, taxes and other charges of the depositary and/or service providers (which may be a division, branch or affiliate of the depositary) in the conversion of foreign currency;

● the reasonable and customary out-of-pocket expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Class A ordinary shares, ADSs and ADRs; and

● the fees, charges, costs and expenses incurred by the depositary, the custodian, or any nominee in connection with the ADR program .

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ADS fees and charges for (i) the issuance of ADSs, and (ii) the cancellation of ADSs are charged to the person for whom the ADSs are issued (in the case of ADS issuances) and to the person for whom ADSs are cancelled (in the case of ADS cancellations). In the case of ADSs issued by the depositary into DTC, the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and may be charged to the DTC participant(s) receiving the ADSs being issued or the DTC participant(s) holding the ADSs being cancelled, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account of the applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participants as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee may be deducted from distributions made through DTC, and may be charged to the DTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs. In the case of (i) registration of ADS transfers, the ADS transfer fee will be payable by the ADS holder whose ADSs are being transferred or by the person to whom the ADSs are transferred, and (ii) conversion of ADSs of one series for ADSs of another series, the ADS conversion fee will be payable by the holder whose ADSs are converted or by the person to whom the converted ADSs are delivered.

In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder. Certain depositary fees and charges (such as the ADS services fee) may become payable shortly after the closing of the ADS offering. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes.

#### Fees and Other Payments Made by the Depositary to Us
The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary agree from time to time. Responsibility for payment of such fees, charges and reimbursements may from time to time be changed by agreement between us and the depositary. In the year ended December 31, 2025, we received payment of US$0.9 million from the depositary for our expenses incurred in connection with the establishment and maintenance of the ADR program.

#### Taxes
You will be responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by the ADSs. We, the depositary and the custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.

The depositary may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities on deposit until all taxes and charges are paid by the applicable holder. The depositary and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the depositary and to the custodian proof of taxpayer status and residence and such other information as the depositary and the custodian may require to fulfill legal obligations. You are required to indemnify us, the depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained for you.

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#### PART II

#### Item 13. Defaults, Dividend Arrearages and Delinquencies
None.

#### Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

#### Material Modifications to the Rights of Security Holders
None.

#### Use of Proceeds
Not applicable.

#### Item 15. Controls and Procedures

#### Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our chief executive officer and head of finance, carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act, as of December 31, 2025. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rule and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

Based upon that evaluation, our management, with the participation of our chief executive officer and vice president of finance, has concluded that our disclosure controls and procedures were effective as of December 31, 2025.

#### Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, it used the criteria established within the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework). Based on this assessment, our management has concluded that, as of December 31, 2025, our internal control over financial reporting was effective.

#### Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. As a company with less than US$1.235 billion in revenues for fiscal year of 2025, we qualify as an "emerging growth company" pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting.

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#### Changes in Internal Control over Financial Reporting
Other than as described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

#### Item 16A. Audit Committee Financial Expert
Our board of directors has determined that Mr. Heping Feng, an independent director (under the standards set forth in Section 303A of the Corporate Governance Rules of the NYSE and Rule 10A-3 under the Exchange Act) and member of our audit committee, is an audit committee financial expert.

#### Item 16B. Code of Ethics
Our board of directors adopted a code of business conduct and ethics that applies to our directors, officers and employees in April 2021. We have posted a copy of our code of business conduct and ethics on our website at *ir.waterdrop-inc.com.*

#### Item 16C. Principal Accountant Fees and Services
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Deloitte Touche Tohmatsu Certified Public Accountants LLP, our principal external auditors, for the periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2024** | **2024** | **2025** | **2025** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Audit fees<sup>(1)</sup> | US$ | 1494 | US$ | 1357 |
| All other fees<sup>(2)</sup> | US$ |  | US$ |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) "Audit fees" means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit of our annual financial statements and assistance with and review of documents filed with the SEC. In 2024 and 2025, the audit refers to financial audit.

&nbsp;&nbsp;&nbsp;&nbsp;(2) "All other fees" means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors associated with certain permitted tax services.

The policy of our audit committee is to pre-approve all audit and non-audit services provided by Deloitte Touche Tohmatsu Certified Public Accountants LLP, including audit services, audit-related services, tax services and other services as described above, other than those for *de minimis* services which are approved by the audit committee prior to the completion of the audit.

#### Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.

#### Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On September 4, 2024, we announced a new share repurchase program, pursuant to which we were authorized to repurchase our own ordinary shares, in the form of ADSs, with an aggregate value of up to US$50 million during the 12-month period through September 9, 2025. By the completion of this share repurchase program in September 2025, we had purchased an aggregate of 6,729,201 ADSs at an aggregate consideration of US$9.2 million on the open market under this share repurchase program. On September 4, 2025, we announced a new share repurchase program, pursuant to which we were authorized to repurchase our own ordinary shares, in the form of ADSs, with an aggregate value of up to US$50 million during the 12-month period through September 9, 2026. As of March 31, 2026, we had purchased an aggregate of 5,278,431 ADSs at an aggregate consideration of US$9.5 million on the open market under this share repurchase program.

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The following table sets forth information about our repurchases made in the year 2025 and the first three months of 2026 under the share repurchase programs described above.

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Period** | <br>**(a) Total**<br>**Number of ADSs**<br>**Purchased** | <br>**(b) Average**<br>**Price Paid per**<br>**ADS (US$)** | <br>**(c) Total**<br>**Number of ADSs**<br>**Purchased as**<br>**Part of Publicly**<br>**Announced**<br>**Share Repurchase**<br>**Programs**<sup>(1)</sup> | **(d) Maximum**<br>**Dollar Value of**<br>**ADSs that May**<br>**Yet be**<br>**Purchased**<br>**Under the Share**<br>**Repurchase**<br>**Programs (US$ in**<br>**thousands))**<sup>(2)</sup> |
| January 1 – January 31, 2025 | 551908 | 1.18 | 51667587 | 47241 |
| February 1 – February 28, 2025 | 402125 | 1.3 | 52069712 | 46720 |
| March 1 – March 31, 2025 | 937559 | 1.41 | 53007271 | 45402 |
| April 1 – April 30, 2025 | 727025 | 1.28 | 53734296 | 44472 |
| May 1 – May 31, 2025 | 461119 | 1.39 | 54195415 | 43829 |
| June 1 – June 30, 2025 | 583861 | 1.4 | 54779276 | 43013 |
| July 1 – July 31, 2025 | 607449 | 1.73 | 55386725 | 41961 |
| August 1 – August 31, 2025 | 314595 | 1.78 | 55701320 | 41402 |
| September 1 – September 9, 2025 | 334900 | 1.87 | 56036220 | 40776 |
| September 10 – September 30, 2025 | 728936 | 1.9 | 56765156 | 48616 |
| October 1 – October 31, 2025 | 894246 | 1.85 | 57659402 | 46717 |
| November 1 – November 30, 2025 | 417942 | 1.66 | 58077344 | 46023 |
| December 1 – December 31, 2025 | 1020258 | 1.84 | 59097602 | 44144 |
| January 1 – January 31, 2026 | 793623 | 1.79 | 59891225 | 42724 |
| February 1 – February 28, 2026 | 770509 | 1.81 | 60661734 | 41332 |
| March 1 – March 31, 2026 | 652917 | 1.7 | 61314651 | 40223 |
| **Total** | **10198972** | **1.63** | **61314651** | **N/A** |

---

*Notes:*

&nbsp;&nbsp;&nbsp;&nbsp;(1) The total number of ADSs purchased as part of the publicly announced plans presented under this column represents the cumulative total number of ADSs repurchased pursuant to the share repurchase programs adopted on September 4, 2024 and September 4, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;(2) The approximate dollar value of ADSs that may yet be purchased under the plans presented under this column for January 2025 to September 2025 refers to the approximate dollar value of ADSs that may yet be purchased under the share repurchase program announced on September 4, 2024, and the approximate dollar value of ADSs that may yet be purchased under the plans presented under this column for the other months in 2025 and for the first three months in 2026 refers to the approximate dollar value of ADSs that may yet be purchased under the share repurchase programs announced on September 4, 2025.

#### Item 16F. Change in Registrant's Certifying Accountant
Not applicable.

#### Item 16G. Corporate Governance
As a Cayman Islands company listed on the NYSE, we are subject to the listing standards of the NYSE. However, NYSE rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NYSE listing standards. To the extent that we choose to follow home country practice, our shareholders may be afforded less protection than they otherwise would under the NYSE listing standards applicable to U.S. domestic issuers. See "Item 3. Key Information—D. Risk Factors—Risks Related to Our ADSs—As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE listing standards." We opt to follow home country practice with respect to the frequency of holding annual general meeting of shareholders. Section 302.00 of NYSE Listed Company Manual requires that companies listing common stock or voting preferred stock and their equivalents are required to hold an annual shareholders' meeting for the holders of such securities during each fiscal year. Maples and Calder (Hong Kong) LLP, our Cayman Islands legal counsel, provided a letter to the NYSE certifying that under Cayman Islands law, we are not required to hold annual shareholders meetings every year. We followed home country practice and did not hold an annual meeting of shareholders in 2025. We may, however, hold annual shareholders' meetings in the future.

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We are a "controlled company" as defined under the NYSE's corporate governance rules because Mr. Peng Shen, our chairman of the board of directors and chief executive officer, owns more than 50% of our total voting power. For so long as we remain a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including an exemption from the rule that a majority of our board of directors must be independent directors or that we have to establish a nominating committee and a compensation committee composed entirely of independent directors. Currently, we rely on the exemption with respect to the requirements that (i) a majority of our board of directors be independent directors, (ii) our nominating committee be composed entirely of independent directors, and (iii) our compensation committee be composed entirely of independent directors. We may choose to rely on additional exemptions in the future. To the extent that we choose to rely on exemptions to the NYSE's corporate governance rules, our shareholders may not be afforded the same protection that they would otherwise enjoy under these exempted NYSE corporate governance listing standards.

#### Item 16H. Mine Safety Disclosure
Not applicable.

#### Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.

**Item 16J.** **Insider Trading Policies**

Our board of directors has established insider trading policies and procedures to provide guidance on the purchases, sales, and other dispositions of our securities by our directors, officers, employees and other relevant persons, with the goal of promoting compliance with applicable laws, rules, regulations and the listing standards of the NYSE relating to insider trading.

The Amended and Restated Statement of Policies Governing Material, Non-Public Information and the Prevention of Insider Trading is filed as Exhibit 11.2 to this annual report on Form 20-F.

#### Item 16K. Cybersecurity

#### Risk Management and Strategy
We have implemented robust processes for assessing, identifying and managing material risks from cybersecurity threats and monitoring the prevention, detection, mitigation and remediation of material cybersecurity incidents. We have also integrated cybersecurity risk management into our overall enterprise risk management system.

We have developed a comprehensive cybersecurity threat defense system to address both internal and external threats. This system encompasses various levels, including network, host and application security and incorporates systematic security capabilities for threat defense, monitoring, analysis, response, deception and countermeasures. We strive to manage cybersecurity risks and protect sensitive information through various means, such as technical safeguards, procedural requirements, an intensive program of monitoring on our corporate network, continual testing of aspects of our security posture internally, and with outside vendors, a robust incident response program and regular cybersecurity awareness training for employees. We collaborate with a leading third-party cloud service provider to store our material operational data and business system, following the industry-recognized or national cybersecurity standards. We have implemented a set of procedures to ensure effective management of the cybersecurity risks associated with the use of third-party service providers. These procedures include, but are not limited to, conducting cybersecurity assessments and tracking the capabilities and qualifications of third-party security service providers through our supplier assessment process. Our IT department regularly monitors the performance of our app, platform and infrastructure to enable us to respond quickly to potential problems, including potential cybersecurity threats.

As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.

[**Table of Contents**](#TOC)

**Governance**

Our nominating and corporate governance committee is responsible for overseeing our cybersecurity risk management. Our nominating and corporate governance committee shall (i) maintain oversight of the disclosure related to cybersecurity matters in periodic reports of our company, (ii) review updates to the status of any material cybersecurity incidents or material risks from cybersecurity threats to our company, and relevant disclosure issues, if any, presented by our chief executive officer, head of finance and the head of research and development who has over 15 years of experience as cybersecurity officer in large technology companies and extensive knowledge and skills in security product development, security risk management and security compliance, or together, the Cybersecurity Risk Management Officers, on a quarterly basis, and (iii) review disclosure concerning cybersecurity matters in our annual report on Form 20-F presented by our Cybersecurity Risk Management Officers.

At management level, our Cybersecurity Risk Management Officers are responsible for assessing, identifying and managing material risks from cybersecurity threats to our company and monitoring the prevention, detection, mitigation and remediation of material cybersecurity incidents. Our Cybersecurity Risk Management Officers shall maintain oversight of the disclosure related to cybersecurity matters in current reports of our company. Our Cybersecurity Risk Management Officers report to our nominating and corporate governance committee (i) on a quarterly basis on updates to the status of any material cybersecurity incidents or material risks from cybersecurity threats to our company, and relevant disclosure issues, if any, and (ii) on disclosure concerning cybersecurity matters in our annual report on Form 20-F.

If a cybersecurity incident occurs, our Cybersecurity Risk Management Officers will promptly organize personnel for internal assessment and if it is determined that the incident could potentially be a material cybersecurity event, our Cybersecurity Risk Management Officers will promptly report the incident and assessment results to our disclosure committee, our nominating and corporate governance committee, and other members of senior management and external legal counsel, to the extent appropriate. Our Cybersecurity Risk Management Officers shall prepare disclosure material on the cybersecurity incident for review and approval by the disclosure committee and our nominating and corporate governance committee, and other members of senior management (if necessary), before it is disseminated to the public.

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#### PART III

#### Item 17. Financial Statements
We have elected to provide financial statements pursuant to Item 18.

**Item 18.** **Financial Statements**

The consolidated financial statements of Waterdrop Inc., its subsidiaries and its consolidated variable interest entities are included at the end of this annual report.

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**Item 19.** **Exhibits**

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| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description of Document** |
| 1.1 | [Seventh Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated hereby reference to Exhibit 4.1 to the registration statement on Form S-8 (File No. 333-261408) filed with the Securities and Exchange Commission on November 30, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521343070/d177969dex41.htm) |
| 2.1 | [Registrant's Specimen American Depositary Receipt (included in Exhibit 2.3)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521343070/d177969dex43.htm) |
| 2.2 | [Registrant's Specimen Certificate for Class A Ordinary Shares (incorporated hereby reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-255298), as amended initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521145505/d95574dex42.htm) |
| 2.3 | [Deposit Agreement, dated May 6, 2021, among the Registrant, the depositary and the holders and beneficial owners of American Depositary Shares issued thereunder (incorporated hereby reference to Exhibit 4.3 to the registration statement on Form S-8 (File No. 333-261408) filed with the Securities and Exchange Commission on November 30, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521343070/d177969dex43.htm) |
| 2.4 | [Fifth Amended and Restated Shareholders Agreement between the Registrant and other parties thereto dated November 20, 2020 (incorporated hereby reference to Exhibit 2.4 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 25, 2024)](https://www.sec.gov/Archives/edgar/data/1823986/000110465924051464/wdh-20231231xex2d4.htm)  |
| 2.5 | [Description of Securities (incorporated hereby reference to Exhibit 2.5 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 28, 2022)](https://www.sec.gov/Archives/edgar/data/1823986/000119312522127542/d215521dex25.htm) |
| 4.1 | [2018 Share Incentive Plan (incorporated hereby reference to Exhibit 10.1 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex101.htm) |
| 4.2 | [2021 Share Incentive Plan (incorporated hereby reference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex102.htm) |
| 4.3 | [Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated hereby reference to Exhibit 10.3 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex103.htm) |
| 4.4 | [Form of Employment Agreement between the Registrant and its executive officers (incorporated hereby reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex104.htm) |

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| | |
|:---|:---|
| **ExhibitNumber** | **Description of Document** |
| 4.5 | [English translation of the executed form of the Powers of Attorney granted by shareholders of Zongqing Xiangqian, as currently in effect, and a schedule of all executed Powers of Attorney adopting the same form (incorporated hereby reference to Exhibit 10.5 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex105.htm) |
| 4.6 | [English translation of the Loan Agreement among Waterdrop Technology and shareholders of Zongqing Xiangqian dated November 27, 2019 (incorporated hereby reference to Exhibit 10.6 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex106.htm) |
| 4.7 | [English translation of the Equity Interest Pledge Agreement among Waterdrop Technology, Zongqing Xiangqian and shareholders of Zongqing Xiangqian dated November 27, 2019 (incorporated hereby reference to Exhibit 10.7 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex107.htm) |
| 4.8 | [English translation of the Exclusive Business Cooperation Agreement between Waterdrop Technology and Zongqing Xiangqian dated November 2, 2018 (incorporated hereby reference to Exhibit 10.8 to the registration statement on Form F-1 (File No. 333-255298), as amended initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex108.htm) |
| 4.9 | [English translation of the Exclusive Option Agreement among Waterdrop Technology, Zongqing Xiangqian and shareholders of Zongqing Xiangqian dated November 27, 2019 (incorporated hereby reference to Exhibit 10.9 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex109.htm) |
| 4.10 | [English translation of the executed form of the Spousal Consent Letter granted by the spouse of each shareholder of Zongqing Xiangqian, as currently in effect, and a schedule of all executed Spousal Consent Letters adopting the same form (incorporated hereby reference to Exhibit 10.10 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1010.htm) |
| 4.11 | [English translation of the Powers of Attorney granted by the shareholder of Shuidi Hubao dated November 2, 2018 (incorporated hereby reference to Exhibit 10.11 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1011.htm) |
| 4.12 | [English translation of the Equity Interest Pledge Agreement among Waterdrop Technology, Shuidi Hubao and the shareholder of Shuidi Hubao dated November 2, 2018 (incorporated hereby reference to Exhibit 10.12 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1012.htm) |
| 4.13 | [English translation of the Exclusive Business Cooperation Agreement between Waterdrop Technology and Shuidi Hubao dated November 2, 2018 (incorporated hereby reference to Exhibit 10.13 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1013.htm) |
| 4.14 | [English translation of the Exclusive Option Agreement among Waterdrop Technology, Shuidi Hubao and the shareholder of Shuidi Hubao dated November 2, 2018 (incorporated hereby reference to Exhibit 10.14 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1014.htm) |
| 4.15 | [English translation of the Spousal Consent Letter granted by the spouse of the shareholder of Shuidi Hubao dated November 2, 2018 (incorporated hereby reference to Exhibit 10.15 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1015.htm) |

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| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description of Document** |
| 4.16 | [English translation of the executed form of the Powers of Attorney granted by shareholders of Shuidi Hulian, as currently in effect, and a schedule of all executed Powers of Attorney adopting the same form (incorporated hereby reference to Exhibit 10.16 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1016.htm) |
| 4.17 | [English translation of the Equity Interest Pledge Agreement among Waterdrop Technology, Shuidi Hulian and shareholders of Shuidi Hulian dated July 31, 2019 (incorporated hereby reference to Exhibit 10.17 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1017.htm) |
| 4.18 | [English translation of the Exclusive Business Cooperation Agreement between Waterdrop Technology and Shuidi Hulian dated July 31, 2019 (incorporated hereby reference to Exhibit 10.18 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1018.htm) |
| 4.19 | [English translation of the Exclusive Option Agreement among Waterdrop Technology, Shuidi Hulian and shareholders of Shuidi Hulian dated July 31 2019 (incorporated hereby reference to Exhibit 10.19 to the registration statement on Form F-1 (File No. 333-255298) as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1019.htm) |
| 4.20 | [English translation of the executed form of the Spousal Consent Letter granted by the spouse of each shareholder of Shuidi Hulian, as currently in effect, and a schedule of all executed Spousal Consent Letters adopting the same form (incorporated hereby reference to Exhibit 10.20 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1020.htm) |
| 4.21\* | [English translation of the Amended and Restated Equity Interest Pledge Agreement among Waterdrop Technology, Zhuiqiu Jizhi and the shareholder of Zhuiqiu Jizhi dated March 11, 2026](wdh-20251231xex4d21.htm) |
| 4.22\* | [English translation of the Amended and Restated Exclusive Option Agreement among Waterdrop Technology, Zhuiqiu Jizhi and the shareholder of Zhuiqiu Jizhi dated March 11, 2026](wdh-20251231xex4d22.htm) |
| 4.23\* | [English translation of the Amended and Restated Power of Attorney granted by the shareholder of Zhuiqiu Jizhi dated March 11, 2026](wdh-20251231xex4d23.htm) |
| 4.24 | [English translation of the Exclusive Business Cooperation Agreement between Waterdrop Technology and Zhuiqiu Jizhi dated October 25, 2019 (incorporated hereby reference to Exhibit 10.24 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1024.htm) |

---

[**Table of Contents**](#TOC)

---

| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description of Document** |
| 4.25 | [English translation of the executed form of the Spousal Consent Letter granted by the spouse of each shareholder of Zhuiqiu Jizhi, as currently in effect, and a schedule of all executed Spousal Consent Letters adopting the same form (incorporated hereby reference to Exhibit 10.26 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex1026.htm) |
| 4.26 | [English translation of the Exclusive Business Cooperation Agreement between Waterdrop Technology and Guangmu Weichen dated December 8, 2021 (incorporated hereby reference to Exhibit 4.27 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 28, 2022)](https://www.sec.gov/Archives/edgar/data/1823986/000119312522127542/d215521dex427.htm) |
| 4.27 | [English translation of the Exclusive Option Agreement among Waterdrop Technology, Guangmu Weichen and shareholders of Guangmu Weichen dated December 8, 2021 (incorporated hereby reference to Exhibit 4.28 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 28, 2022)](https://www.sec.gov/Archives/edgar/data/1823986/000119312522127542/d215521dex428.htm) |
| 4.28 | [English translation of the Equity Interest Pledge Agreement among Waterdrop Technology, Guangmu Weichen and shareholders of Guangmu Weichen dated December 8, 2021 (incorporated hereby reference to Exhibit 4.29 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 28, 2022)](https://www.sec.gov/Archives/edgar/data/1823986/000119312522127542/d215521dex429.htm) |
| 4.29 | [English translation of the Powers of Attorney granted by Ms. Xiaolei Sun dated December 8, 2021 (incorporated hereby reference to Exhibit 4.30 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 28, 2022)](https://www.sec.gov/Archives/edgar/data/1823986/000119312522127542/d215521dex430.htm) |
| 4.30 | [English translation of the Powers of Attorney granted by Ms. Nian Liu dated December 8, 2021 (incorporated hereby reference to Exhibit 4.31 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 28, 2022)](https://www.sec.gov/Archives/edgar/data/1823986/000119312522127542/d215521dex431.htm) |
| 4.31 | [English translation of the Spousal Consent Letter granted by the spouse of Ms. Nian Liu dated December 8, 2021 (incorporated hereby reference to Exhibit 4.32 to the Form 20-F (File No. 001-40376) filed with the Securities and Exchange Commission on April 28, 2022)](https://www.sec.gov/Archives/edgar/data/1823986/000119312522127542/d215521dex432.htm) |
| 4.32 | [English translation of the Loan Agreement among Waterdrop Technology and the shareholder of Shuidi Hubao dated June 3, 2024 (incorporated hereby reference to Exhibit 4.34 to the annual report on Form 20-F filed by the Registrant with the Securities and Exchange Commission on April 25, 2025)](https://www.sec.gov/Archives/edgar/data/1823986/000141057825000891/wdh-20241231xex4d34.htm) |
| 8.1<sup>\*</sup> | [List of Significant Subsidiaries of the Registrant and VIEs](wdh-20251231xex8d1.htm) |
| 11.1 | [Code of Business Conduct and Ethics of the Registrant (incorporated hereby reference to Exhibit 99.1 to the registration statement on Form F-1 (File No. 333-255298), as amended, initially filed with the Securities and Exchange Commission on April 16, 2021)](https://www.sec.gov/Archives/edgar/data/1823986/000119312521119328/d95574dex991.htm) |
| 11.2 | [Amended and Restated Statement of Policies Governing Material Non-Public Information and the Prevention of Insider Trading of the Registrant (incorporated hereby reference to Exhibit 11.2 to the annual report on Form 20-F filed by the Registrant with the Securities and Exchange Commission on April 25, 2025)](https://www.sec.gov/Archives/edgar/data/1823986/000141057825000891/wdh-20241231xex11d2.htm) |
| 12.1<sup>\*</sup> | [Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](wdh-20251231xex12d1.htm) |
| 12.2<sup>\*</sup> | [Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](wdh-20251231xex12d2.htm) |
| 13.1<sup>\*\*</sup> | [Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](wdh-20251231xex13d1.htm) |
| 13.2<sup>\*\*</sup> | [Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](wdh-20251231xex13d2.htm) |
| 15.1<sup>\*</sup> | [Consent of Deloitte Touche Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm](wdh-20251231xex15d1.htm) |
| 15.2<sup>\*</sup> | [Consent of Han Kun Law Offices](wdh-20251231xex15d2.htm) |

---

[**Table of Contents**](#TOC)

---

| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description of Document** |
| 97.1 | [Clawback Policy of the Registrant (incorporated hereby reference to Exhibit 97.1 to the annual report on Form 20-F filed by the Registrant with the Securities and Exchange Commission on April 25, 2024)](https://www.sec.gov/Archives/edgar/data/1823986/000110465924051464/wdh-20231231xex97d1.htm) |
| 101.INS<sup>\*</sup> | Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH<sup>\*</sup> | Inline XBRL Taxonomy Extension Scheme Document |
| 101.CAL<sup>\*</sup> | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF<sup>\*</sup> | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB<sup>\*</sup> | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE<sup>\*</sup> | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104<sup>\*</sup> | Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set |

---

\* Filed with this Annual Report on Form 20-F.

\*\* Furnished with this Annual Report on Form 20-F.

[**Table of Contents**](#TOC)

#### SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

---

| | | |
|:---|:---|:---|
| **Waterdrop Inc.** | **Waterdrop Inc.** | **Waterdrop Inc.** |
| By: | /s/ Peng Shen | /s/ Peng Shen |
|  | Name: | Peng Shen |
|  | Title: | Chairman of the Board of Directors |
|  |  | and Chief Executive Officer |

---

Date: April 28, 2026

[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

---

| | |
|:---|:---|
|  | Page |
| [Report of Independent Registered Public Accounting Firm](#REPORTOFINDEPENDENTREGISTEREDPUBLICACCOU) (PCAOB ID: 1113) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2024 and 2025](#CONSOLIDATEDBALANCESHEETS_406220) | F-3 |
| [Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2024 and 2025](#CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVELOS) | F-5 |
| [Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2023, 2024 and 2025](#CONSOLIDATEDSTATEMENTSOFCHANGESINSHAREHO) | F-6 |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2024 and 2025](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_286879) | F-7 |
| [Notes to the Consolidated Financial Statements](#NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENT) | F-9 |
| [Schedule 1-Condensed Financial Statements of Waterdrop Inc.](#SCHEDULE1_CONDENSED_BALANCE_SHEETS) | F-55 |

---

[**Table of Contents**](#TOC)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF WATERDROP INC.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Waterdrop Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2025, the related consolidated statements of comprehensive income, changes in shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the financial statement schedule (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Convenience Translation**

Our audits also comprehended the translation of Renminbi amounts into United States dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2 to the financial statements. Such United States dollar amounts are presented solely for the convenience of readers outside the People's Republic of China.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**/s/Deloitte Touche Tohmatsu Certified Public Accountants LLP**

Beijing, the People's Republic of China

April 28, 2026

We have served as the Company's auditor since 2020.

[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### CONSOLIDATED BALANCE SHEETS
**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
|  |  |  | **(Note 2)** |
| **Assets** |  |  |  |
| **Current assets** |  |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | 986323 | 483003 | 69069 |
| &nbsp;&nbsp;Restricted cash | 520588 | 648450 | 92727 |
| &nbsp;&nbsp;Short-term investments | 1612619 | 530668 | 75885 |
| &nbsp;&nbsp;Accounts receivable, net of allowance of RMB28,772 and RMB46,616 (US$6,666) as of December 31, 2024 and 2025, respectively | 716206 | 1260464 | 180244 |
| &nbsp;&nbsp;Current contract assets | 619436 | 806916 | 115387 |
| &nbsp;&nbsp;Amount due from related parties | 257 | 209 | 30 |
| &nbsp;&nbsp;Prepaid expense and other assets | 182641 | 251084 | 35905 |
| **Total current assets** | **4638070** | **3980794** | **569247** |
| **Non-current assets** |  |  |  |
| &nbsp;&nbsp;Non-current contract assets | 153749 | 295516 | 42258 |
| &nbsp;&nbsp;Property, equipment and software, net | 240024 | 255698 | 36564 |
| &nbsp;&nbsp;Intangible assets, net | 153011 | 177140 | 25331 |
| &nbsp;&nbsp;Long-term investments | 1114160 | 2284102 | 326622 |
| &nbsp;&nbsp;Right of use assets, net | 46872 | 23955 | 3426 |
| &nbsp;&nbsp;Deferred tax assets | 27028 | 2870 | 410 |
| &nbsp;&nbsp;Goodwill | 80751 | 80751 | 11547 |
| **Total non-current assets** | **1815595** | **3120032** | **446158** |
| **Total assets** | **6453665** | **7100826** | **1015405** |

---

The accompanying notes are an integral part of these consolidated financial statements.

[**Table of Contents**](#TOC)

#### WATERDROP INC.
**CONSOLIDATED BALANCE SHEETS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
|  |  |  | **(Note 2)** |
| **Liabilities and Shareholders' Equity** |  |  |  |
| **Current liabilities** |  |  |  |
| &nbsp;&nbsp;Amount due to related parties (including amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to the Company of RMB253 and RMB1 as of December 31, 2024 and 2025, respectively) | 10616 | 9324 | 1333 |
| &nbsp;&nbsp;Insurance premium payables (including amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to the Company of RMB537,344 and RMB684,800 as of December 31, 2024 and 2025, respectively) | 537344 | 684800 | 97925 |
| &nbsp;&nbsp;Accrued expenses and other current liabilities (including amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to the Company of RMB534,932 and RMB729,682 as of December 31, 2024 and 2025, respectively) | 704035 | 1140448 | 163082 |
| &nbsp;&nbsp;Short-term loans | 198373 | 47000 | 6721 |
| &nbsp;&nbsp;Current lease liabilities (including amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to the Company of RMB13,232 and RMB8,751 as of December 31, 2024 and 2025, respectively) | 34573 | 10888 | 1557 |
| **Total current liabilities** | **1484941** | **1892460** | **270618** |
| **Non-current liabilities** |  |  |  |
| &nbsp;&nbsp;Non-current lease liabilities (including amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to the Company of RMB6,247 and RMB12,053 as of December 31, 2024 and 2025, respectively) | 10971 | 12640 | 1807 |
| &nbsp;&nbsp;Deferred tax liabilities (including amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to the Company of RMB83,760 and RMB43,374 as of December 31, 2024 and 2025, respectively) | 84185 | 43798 | 6263 |
| **Total non-current liabilities** | **95156** | **56438** | **8070** |
| **Total liabilities** | **1580097** | **1948898** | **278688** |
| **Commitments and contingencies (Note 21)** |  |  |  |
| **Mezzanine Equity** |  |  |  |
| &nbsp;&nbsp;Redeemable non-controlling interests | 76133 |  |  |
| **Shareholders' equity** |  |  |  |
| &nbsp;&nbsp;Ordinary shares (US$0.000005 par value; 10,000,000,000 shares authorized, 8,900,000,000 Class A ordinary shares authorized, 3,282,256,521 Class A ordinary shares issued, 2,822,868,761 and 2,806,929,941 Class A ordinary shares outstanding as of December 31, 2024 and 2025, respectively; 1,000,000,000 Class B ordinary shares authorized, 801,904,979 Class B ordinary shares issued and outstanding as of December 31, 2024 and 2025) | 139 | 143 | 21 |
| &nbsp;&nbsp;Treasury stock | (15) | (16) | (2) |
| &nbsp;&nbsp;Additional paid-in capital | 6832214 | 6733696 | 962906 |
| &nbsp;&nbsp;Accumulated other comprehensive income | 159550 | 43622 | 6238 |
| &nbsp;&nbsp;Accumulated deficit | (2194453) | (1625517) | (232446) |
| **Total shareholders' equity** | **4797435** | **5151928** | **736717** |
| **Total liabilities, mezzanine equity and shareholders' equity** | **6453665** | **7100826** | **1015405** |

---

The accompanying notes are an integral part of these consolidated financial statements.

[**Table of Contents**](#TOC)

#### CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
|  |  |  |  | **(Note 2)** |
| **Operating revenue, net** | **2630707** | **2771821** | **3977761** | **568812** |
| **Operating costs and expenses** |  |  |  |  |
| &nbsp;&nbsp;Operating costs | (1195544) | (1314740) | (1943162) | (277868) |
| &nbsp;&nbsp;Sales and marketing expenses | (740451) | (694769) | (1120929) | (160291) |
| &nbsp;&nbsp;General and administrative expenses | (402395) | (367652) | (310129) | (44348) |
| &nbsp;&nbsp;Research and development expenses | (299060) | (216502) | (232683) | (33273) |
| **Total operating costs and expenses** | **(2637450)** | **(2593663)** | **(3606903)** | **(515780)** |
| **Operating (loss)/profit** | **(6743)** | **178158** | **370858** | **53032** |
| **Other income** |  |  |  |  |
| &nbsp;&nbsp;Interest income | 136043 | 149121 | 135697 | 19404 |
| &nbsp;&nbsp;Foreign currency exchange gain | 4342 | 8016 | 276 | 39 |
| &nbsp;&nbsp;Others, net | 30598 | 25295 | 36618 | 5236 |
| **Profit before income tax** | **164240** | **360590** | **543449** | **77711** |
| &nbsp;&nbsp;Income tax (expense)/benefit | (555) | (9707) | 21608 | 3090 |
| **Net profit**  | **163685** | **350883** | **565057** | **80801** |
| &nbsp;&nbsp;Net loss attributable to mezzanine equity classified as non-controlling interests shareholders | (3536) | (16627) | (3879) | (555) |
| **Net profit attributable to ordinary shareholders** | **167221** | **367510** | **568936** | **81356** |
| **Other comprehensive income** |  |  |  |  |
| &nbsp;&nbsp;Foreign currency translation adjustment | 37413 | 44773 | (106666) | (15253) |
| &nbsp;&nbsp;Unrealized loss on available for sale investments, net of tax | (1551) | (29330) | (9262) | (1324) |
| **Total comprehensive income** | **199547** | **366326** | **449129** | **64224** |
| &nbsp;&nbsp;Total comprehensive loss attributable to mezzanine equity classified as non-controlling interests shareholders | (3536) | (16627) | (3879) | (555) |
| **Total comprehensive income attributable to ordinary shareholders** | **203083** | **382953** | **453008** | **64779** |
| **Weighted average number of ordinary shares used in computing net profit per share** |  |  |  |  |
| &nbsp;&nbsp;Basic | 3769679736 | 3650504339 | 3615328154 | 3615328154 |
| &nbsp;&nbsp;Diluted | 3880861496 | 3719776955 | 3713518076 | 3713518076 |
| **Net profit per share attributable to ordinary shareholders** |  |  |  |  |
| &nbsp;&nbsp;Basic | 0.04 | 0.10 | 0.16 | 0.02 |
| &nbsp;&nbsp;Diluted | 0.04 | 0.10 | 0.15 | 0.02 |

---

The accompanying notes are an integral part of these consolidated financial statements.

[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary shares** | **Ordinary shares** | **Treasury stock** | **Treasury stock** | | | | |
|  | **Number** | **Amount** | **Number** | **Amount** | <br>**Additional**<br>**paid-in**<br>**capital** | **Accumulated**<br>**other**<br>**comprehensive**<br>**income/(loss)** | <br>**Accumulated**<br>**deficit** | <br>**Total**<br>**shareholders'**<br>**equity** |
|  |  | **RMB** |  | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
| **Balance at January 1, 2023** | **3994300230** | **135** | **(84354570)** | **(3)** | **7384670** | **108245** | **(2726919)** | **4766128** |
| Cumulative effect of change in accounting principle |  |  |  |  |  |  | (2265) | (2265) |
| &nbsp;&nbsp;Share-based payment compensation |  |  |  |  | 133869 |  |  | 133869 |
| &nbsp;&nbsp;Share repurchase |  |  | (303236220) | (10) | (526015) |  |  | (526025) |
| &nbsp;&nbsp;Exercise of share options and restricted share units vested (Note 17) | 66877290 | 4 | 28035280 | 1 | 10899 |  |  | 10904 |
| &nbsp;&nbsp;Net profit attributable to ordinary shareholders |  |  |  |  |  |  | 167221 | 167221 |
| &nbsp;&nbsp;Other comprehensive income |  |  |  |  |  | 35862 |  | 35862 |
| **Balance at December 31, 2023** | **4061177520** | **139** | **(359555510)** | **(12)** | **7003423** | **144107** | **(2561963)** | **4585694** |
| &nbsp;&nbsp;Share-based payment compensation |  |  |  |  | 86872 |  |  | 86872 |
| &nbsp;&nbsp;Share repurchase |  |  | (123566000) | (4) | (106975) |  |  | (106979) |
| &nbsp;&nbsp;Dividends (Note 18) |  |  |  |  | (158671) |  |  | (158671) |
| &nbsp;&nbsp;Exercise of share options and restricted share units vested (Note 17) | 262500 | —<br> \* | 46455230 | 1 | 7565 |  |  | 7566 |
| &nbsp;&nbsp;Net profit attributable to ordinary shareholders |  |  |  |  |  |  | 367510 | 367510 |
| &nbsp;&nbsp;Other comprehensive income |  |  |  |  |  | 15443 |  | 15443 |
| **Balance at December 31, 2024** | **4061440020** | **139** | **(436666280)** | **(15)** | **6832214** | **159550** | **(2194453)** | **4797435** |
| &nbsp;&nbsp;Acquisition of noncontrolling interests |  |  |  |  | 65085 |  |  | 65085 |
| &nbsp;&nbsp;Share-based payment compensation |  |  |  |  | 51767 |  |  | 51767 |
| &nbsp;&nbsp;Share repurchase |  |  | (79819230) | (2) | (91232) |  |  | (91234) |
| &nbsp;&nbsp;Dividends (Note 18) |  |  |  |  | (130413) |  |  | (130413) |
| &nbsp;&nbsp;Exercise of share options and restricted share units vested (Note 17) | 8740000 | 4 | 55140410 | 1 | 6275 |  |  | 6280 |
| &nbsp;&nbsp;Net profit attributable to ordinary shareholders |  |  |  |  |  |  | 568936 | 568936 |
| &nbsp;&nbsp;Other comprehensive loss |  |  |  |  |  | (115928) |  | (115928) |
| **Balance at December 31, 2025** | **4070180020** | **143** | **(461345100)** | **(16)** | **6733696** | **43622** | **(1625517)** | **5151928** |

---

\* Absolute amount is less than RMB1 thousand.

The accompanying notes form an integral part of these consolidated financial statements.

[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### CONSOLIDATED STATEMENTS OF CASH FLOWS
**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
|  |  |  |  | **(Note 2)** |
| **Cash flows from operating activities:** |  |  |  |  |
| &nbsp;&nbsp;Net profit | 163685 | 350883 | 565057 | 80801 |
| &nbsp;&nbsp;**Adjustments to reconcile net profit to net cash used in operating activities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation of property, equipment and software | 13417 | 11442 | 13784 | 1971 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible assets | 138 | 128 | 129 | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation expense | 133869 | 86872 | 51767 | 7403 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss from disposal of property and equipment | 1560 | 662 | 58 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss from disposals of subsidiaries | 2169 |  | 322 | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss/(gain) from early termination of lease |  | 384 | (378) | (54) |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful debts | 9635 | 12623 | 18036 | 2579 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment loss  | 3124 | 24268 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | (19842) | (17029) | (8640) | (1236) |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange gain | (4342) | (8016) | (276) | (39) |
| &nbsp;&nbsp;**Changes in operating assets and liabilities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 20254 | (35131) | (562122) | (80382) |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract assets | (99881) | (66155) | (329401) | (47104) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expense and other assets | 149944 | 16164 | (68392) | (9778) |
| &nbsp;&nbsp;&nbsp;&nbsp;Amount due from/to related parties | (1751) | 915 | (1244) | (178) |
| &nbsp;&nbsp;&nbsp;&nbsp;Insurance premium payables | 75292 | (54609) | 147456 | 21086 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets | (15495) | (2838) | 24158 | 3455 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liabilities | 13352 | 10880 | (46451) | (6642) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | (43542) | 107867 | 438781 | 62745 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets, net | (36716) | 3461 | 2751 | 393 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | 41646 | (5521) | (1474) | (211) |
| **Net cash provided by operating activities** | **406516** | **437250** | **243921** | **34881** |
| **Cash flows from investing activities:** |  |  |  |  |
| &nbsp;&nbsp;Purchase of property, equipment and software | (13522) | (218415) | (29629) | (4237) |
| &nbsp;&nbsp;Disposal of property, equipment and software | 227 | 164 | 112 | 16 |
| &nbsp;&nbsp;Cash paid for asset acquisitions, net of cash acquired |  |  | (17000) | (2431) |
| &nbsp;&nbsp;Purchase of short-term investments | (11445715) | (6441705) | (6178737) | (883548) |
| &nbsp;&nbsp;Proceeds from maturity of short-term investments | 10683916 | 7891955 | 7224779 | 1033130 |
| &nbsp;&nbsp;Purchase of long-term investments | (200668) | (1012319) | (1296927) | (185458) |
| &nbsp;&nbsp;Proceeds from early redemption of long-term investments |  | 71957 | 72541 | 10373 |
| &nbsp;&nbsp;Acquisitions of subsidiaries, net of cash acquired | (195905) |  |  |  |
| &nbsp;&nbsp;Disposal of subsidiaries, net of cash disposed | (1293) |  | 121 | 17 |
| **Net cash (used in)/provided by investing activities** | **(1172960)** | **291637** | **(224740)** | **(32138)** |

---

The accompanying notes form an integral part of these consolidated financial statements.

[**Table of Contents**](#TOC)

#### WATERDROP INC.
**CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
|  |  |  |  | **(Note 2)** |
| **Cash flows from financing activities:** |  |  |  |  |
| &nbsp;&nbsp;Dividend to shareholders |  | (158671) | (130413) | (18649) |
| &nbsp;&nbsp;Proceeds from short-term loans | 167196 | 246942 | 110000 | 15730 |
| &nbsp;&nbsp;Repayment of short-term loans | (30100) | (187096) | (261548) | (37401) |
| &nbsp;&nbsp;Payments to acquire noncontrolling interest |  |  | (7169) | (1025) |
| &nbsp;&nbsp;Proceeds from exercise of share option | 11710 | 7225 | 6430 | 920 |
| &nbsp;&nbsp;Payment for share repurchase | (526025) | (106979) | (91234) | (13046) |
| &nbsp;&nbsp;Principal payments under finance lease obligation | (19) |  |  |  |
| **Net cash used in financing activities** | **(377238)** | **(198579)** | **(373934)** | **(53471)** |
| &nbsp;&nbsp;Effect of exchange rate changes on cash and cash equivalents | 26173 | 2577 | (20705) | (2961) |
| **Net (decrease)/increase in cash and cash equivalents and restricted cash** | **(1117509)** | **532885** | **(375458)** | **(53689)** |
| **Total cash and cash equivalents and restricted cash at beginning of year** | **2091535** | **974026** | **1506911** | **215485** |
| **Total cash and cash equivalents and restricted cash at end of year** | **974026** | **1506911** | **1131453** | **161796** |
| **Reconciliation to amounts on consolidated balance sheets:** |  |  |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | 396905 | 986323 | 483003 | 69069 |
| &nbsp;&nbsp;Restricted cash | 577121 | 520588 | 648450 | 92727 |
| **Total cash and cash equivalents and restricted cash at end of year** | **974026** | **1506911** | **1131453** | **161796** |
| **Supplemental disclosure of cash flow information** |  |  |  |  |
| &nbsp;&nbsp;Cash paid for income tax\* | 1281 | 1993 | 362 | 52 |
| &nbsp;&nbsp;Cash paid for interest | 236 | 1882 | 283 | 40 |

---

\* For the year ended December 31, 2025, all the income taxes paid are in Chinese mainland.

The accompanying notes form an integral part of these consolidated financial statements.

[**Table of Contents**](#TOC)

#### NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Principal activities and reorganization** 

**(a)** **History and Reorganization**

Waterdrop Inc. ("Waterdrop" or the "Company") was incorporated in May 2018 under the laws of the Cayman Islands. The Company, its subsidiaries, its consolidated variable interest entities ("VIEs") and VIEs' subsidiaries (collectively referred to as the "Group") primarily provide online insurance brokerage services to match and connect users with relevant insurance products underwritten by insurance companies in the People's Republic of China ("PRC"). The Group also operates a medical crowdfunding platform and a clinical trial patient recruitment platform.

Prior to the incorporation of the Company, the Group commenced its operation in 2016 and mainly carried out its business operation through Beijing Zongqing Xiangqian Technology Co., Ltd ("Zongqing Xiangqian") and its wholly-owned subsidiaries Beijing Shuidi Hubao Technology Co., Ltd. ("Shuidi Hubao") and Beijing Shuidi Hulian Technology Co., Ltd. ("Shuidi Hulian"). Zongqing Xiangqian is a limited liability company founded in 2016 by Mr. Shen Peng, the founder and the Chief Executive Officer (the "CEO" or the "Founder") of the Company.

On May 7, 2021, the Company completed its initial public offering on the New York Stock Exchange under the code "WDH". The Company issued 30,000,000 ADS, representing 300,000,000 Class A ordinary shares, at US Dollar (US$") 12.0 per ADS. Net proceeds from the global offering after deducting underwriting commissions, share issuance costs and offering expenses approximately amounted to RMB2.1 billion.

As PRC laws and regulations prohibit and restrict foreign ownership of value-added telecommunication businesses, the Company established, through a Hong Kong intermediary company, a wholly-owned foreign invested subsidiary in the PRC, Waterdrop Technology Group Co., Ltd. ("Waterdrop Technology", formerly known as Beijing Absolute Health Ltd. or the "WFOE") in October 2018.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**1.**Principal activities and reorganization (continued)

**(a)** **History and Reorganization (continued)**

The WFOE entered into a series of contractual arrangements (see Note 2(c)) in November 2018 with Zongqing Xiangqian and Shuidi Hubao and their respective shareholders. In July 2019, the WFOE further entered into a series of contractual arrangements (see Note 2(c)) with Shuidi Hulian and their respective shareholders. The series of contractual agreements include a power of attorney, an exclusive call option agreement, an equity pledge agreement, an exclusive business cooperation agreement, and a spouse consent agreement. The Group believes that these contractual agreements would enable the WFOE to (1) have power to direct the activities that most significantly affects the economic performance of the VIE and its subsidiaries and (2) receive the economic benefits of the VIE and its subsidiaries that could be significant to them. Accordingly, the Group believes that the WFOE is the primary beneficiary of the VIE and its subsidiaries.

As of December 31, 2025, the Company's major subsidiaries, consolidated VIEs and principal subsidiary of VIEs are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Name of Company** | <br>**Date of**<br>**Incorporation/**<br>**Establishment** | <br>**Date of**<br>**Incorporation/**<br>**Establishment** | **Percentage**<br>**Of Direct**<br>**or Indirect**<br>**Economic**<br>**Interest** | <br>**Principal Activities** |
| **Principal Subsidiaries** |  |  |  |  |
| Waterdrop Group HK Limited ("Waterdrop HK") | May 31, 2018 | Hong Kong | 100% | Investment holding |
| Waterdrop Technology | October 17, 2018 | PRC | 100% | Research and development service for the Group, technical service |
| **VIEs and their principal subsidiaries** |  |  |  |  |
| Zongqing Xiangqian | August 2, 2013 | PRC | 100% | Operating management service for the Group |
| Shuidi Hubao | December 12, 2016 | PRC | 100% | Medical crowdfunding platform services |
| Shuidi Hulian | December 12, 2016 | PRC | 100% | Technical service |
| Shuidi Insurance Brokerage Co., Ltd | October 19, 2012 | PRC | 100% | Insurance brokerage services |
| Beijing Yifan Fengshun Medical Technology Co., Ltd | December 18, 2020 | PRC | 100% | Digital clinical trial solution |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.**Summary of Significant Accounting Policies

**(a)**Basis of Presentation

The Group's consolidated financial statements as of December 31, 2024 and 2025 and during the years ended December 31, 2023, 2024 and 2025 are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and related disclosures. Actual results may differ from those estimates. Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below.

**(b)**Basis of Consolidation

The consolidated financial statements include the financial information of the Company, its wholly-owned subsidiaries and its VIEs and VIEs' subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

*Consolidation through contractual agreements:*

Applicable PRC laws and regulations currently limit foreign ownership of companies that provide value-added telecommunication businesses. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are not eligible to engage in the provisions of value-added telecommunication services. The Group therefore operates its business, primarily through the VIEs and the subsidiaries of the VIEs.

The Company, through its WFOE, entered into a series of contractual arrangements (the "VIE agreements") with the VIEs and their respective shareholders that enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the VIEs, and (2) receive the economic benefits of the VIEs that could be significant to the VIEs.

Agreements that provide the Group effective control over the VIEs include:

*Power of Attorney:*

Pursuant to the power of attorney signed between each of the shareholders of the VIEs and the WFOE, each shareholder irrevocably appointed the WFOE as its attorney-in-fact to exercise on each shareholder's behalf all rights that each shareholder has in respect of its equity interest in the VIEs (including but not limited to executing the exclusive right to the voting rights and the right to appoint directors and executive officers of the VIEs). The shareholders cannot revoke the authorization and entrustment as long as the shareholders remain a shareholder of the VIEs. The power of attorney will remain in force as long as the shareholders remain shareholders of the VIEs.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.**Summary of Significant Accounting Policies (continued)

**(b)**Basis of Consolidation (continued)

*Executive Call Option Agreements:*

Pursuant to the exclusive call option agreement entered into between each of the shareholders of the VIEs and the WFOE, the shareholders irrevocably granted the WFOE a call option to request the shareholders to transfer or sell any part or all of its equity interests in the VIEs, to the WFOE, or their designees. The purchase price of the equity interests in the VIEs shall be equal to the higher of Renminbi 1 or the minimum price required by PRC law or an amount equal to the registered capital contributed by the relevant shareholder. Without the WFOE's prior written consent, the VIEs and their shareholders shall not amend its articles of association, increase or decrease the registered capital, sell or otherwise dispose of its assets or beneficial interest, issue any additional equity or right to receive equity, provide any loans, distribute dividends in any form.

*Loan Agreements:*

Pursuant to the loan agreements entered into between the WFOE and each of the shareholders of three VIEs (including Zongqing Xiangqian, Shuidi Hubao and Beijing Zhuiqiu Jizhi Technology Co., Ltd.), the WFOE extended loans to the shareholders of the three VIEs who had contributed the loan principals to the relevant VIEs mainly as registered capital. The shareholders of the three VIEs may repay the loans only by transferring their respective equity interests in the VIEs to WFOE or its designated person(s) pursuant to the exclusive option agreements. These loan agreements will remain effective until the date of full performance by the parties of their respective obligations thereunder.

*Equity Interest Pledge Agreements:*

Each shareholder of the VIEs has also entered into an equity pledge agreement with the WFOE, pursuant to which each shareholder pledged his/her interest in the WFOE to guarantee the performance of obligations of the WFOE and its shareholders under the exclusive business cooperation agreement, exclusive call option agreement, and power of attorney. If the VIEs or any of the shareholders breach their contractual obligations, the WFOE will be entitled to certain rights and interests regarding the pledged equity interests including the right to dispose the pledged equity interests. None of the shareholders shall, without the prior written consent of the WFOE, assign or transfer to any third party, create or cause any security interest and any liability in whatsoever form to be created on, all or any part of the equity interests it holds in the VIEs. This agreement is not terminated until all of the agreements under the power of attorney, exclusive call option agreement and the exclusive business cooperation agreement are fully performed.

*Exclusive Business Cooperation Agreements:*

Pursuant to the exclusive business cooperation agreement entered into by the WFOE and the VIEs, the WFOE provides exclusive technical support and consulting services in return for fees based on 100% of the VIE's total consolidated profit, which is adjustable at the sole discretion of the WFOE.

Without the WFOE's consent, the VIEs cannot procure services from any third party or enter into similar service arrangements with any other third party, except for those from the WFOE.

*Spouse Consent letters:*

The spouse of each shareholder of the VIEs has entered into a spouse consent letter to acknowledge that he or she consents to the disposition of the equity interests held by his or her spouse in the VIEs in accordance with the exclusive option agreement, the power of attorney and the equity pledge agreement regarding the VIE structure described above, and any other supplemental agreement(s) may be consented by his or her spouse from time to time. Each such spouse further agrees that he or she will not take any action or raise any claim to interfere with the arrangements contemplated under the above mentioned agreements. In addition, each such spouse further acknowledges that any right or interest in the equity interests held by his or her spouse in the VIEs do not constitute property jointly owned with his or her spouse and each such spouse unconditionally and irrevocably waives any right or interest in such equity interests.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.** **Summary of Significant Accounting Policies (continued)**

**(b)** **Basis of Consolidation (continued)**

These contractual arrangements allow the Company, through its WFOE, to effectively control the VIEs, and to derive substantially all of the economic benefits from them. Accordingly, the Company has consolidated the VIEs.

The Group believes that the contractual arrangements with the VIEs are in compliance with PRC laws and are legally enforceable. However, uncertainties in the PRC legal system could limit the Group's ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:

● revoke or refuse to grant or renew the Group's business and operating licenses;

● restrict or prohibit related party transactions between the wholly-owned subsidiaries of the Group and the VIEs;

● impose fines, confiscate income or other requirements which the Group may find difficult or impossible to comply with;

● require the Group to alter, discontinue or restrict its operations;

● restrict or prohibit the Group's ability to finance its operations;

● place restrictions on the Group's right to collect revenues;

● shut down the Group's servers or blocking the Group's app/websites; or

● take other regulatory or enforcement actions against the Group that could be harmful to the Group's business.

The imposition of any of these restrictions or actions could result in a material adverse effect on the Group's ability to conduct its business. In such case, the Group may not be able to operate or control the VIEs, which may result in the deconsolidation of the VIEs in the Group's consolidated financial statements. In the opinion of management, the likelihood for the Group to lose such ability is remote based on current facts and circumstances. The Group's operations depend on the VIEs to honor their contractual arrangements with the Group. These contractual arrangements are governed by PRC laws and disputes arising out of these agreements are expected to be decided by arbitration in the PRC. The management believes that each of the contractual arrangements constitutes valid and legally binding obligations of each party to such contractual arrangements under PRC laws. However, the interpretation and implementation of the laws and regulations in the PRC and their application to an effect on the legality, binding effect and enforceability of contracts are subject to the discretion of competent PRC authorities, and therefore there is no assurance that relevant PRC authorities will take the same position as the Group herein in respect of the legality, binding effect and enforceability of each of the contractual arrangements. Meanwhile, since the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to the Group to enforce the contractual arrangements should the VIEs or the nominee shareholders of the VIEs fail to perform their obligations under those arrangements.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.** **Summary of Significant Accounting Policies (continued)**

**(b)** **Basis of Consolidation (continued)**

The following table sets forth the assets, liabilities, results of operations and cash flows of the VIEs and their subsidiaries, which are included in the Group's consolidated financial statements. Transactions between the VIEs and their subsidiaries are eliminated in the balances presented below:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| **ASSETS** |  |  |
| **Current assets** |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | 210351 | 193584 |
| &nbsp;&nbsp;Restricted cash | 520588 | 648450 |
| &nbsp;&nbsp;Short-term investments | 170339 | 115906 |
| &nbsp;&nbsp;Accounts receivable, net of allowance of RMB28,404 and RMB26,875 (US$3,843) as of December 31, 2024 and 2025, respectively | 537848 | 460937 |
| &nbsp;&nbsp;Current contract assets | 614036 | 801780 |
| &nbsp;&nbsp;Other current assets | 129909 | 199856 |
| **Total current assets** | **2183071** | **2420513** |
| **Non-current assets** |  |  |
| &nbsp;&nbsp;Non-current contract assets | 149855 | 289007 |
| &nbsp;&nbsp;Intangible assets, net | 149846 | 174103 |
| &nbsp;&nbsp;Deferred tax assets | 27028 | 2870 |
| &nbsp;&nbsp;Goodwill | 80751 | 80751 |
| &nbsp;&nbsp;Other non-current assets | 39426 | 43259 |
| **Total non-current assets** | **446906** | **589990** |
| **Total assets** | **2629977** | **3010503** |
| **LIABILITIES** |  |  |
| **Current liabilities** |  |  |
| &nbsp;&nbsp;Insurance premium payables | 537344 | 684800 |
| &nbsp;&nbsp;Accrued expenses and other current liabilities | 534932 | 729682 |
| &nbsp;&nbsp;Amount due to related parties | 253 | 1 |
| &nbsp;&nbsp;Current lease liabilities | 13232 | 8751 |
| **Total current liabilities** | **1085761** | **1423234** |
| **Total non-current liabilities** | **90007** | **55427** |
| **Total liabilities** | **1175768** | **1478661** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Operating revenue, net | 2331678 | 2312629 | 2579851 |
| Net income  | 697935 | 676950 | 414630 |
| Net cash provided by operating activities | 804351 | 682317 | 419966 |
| Net cash (used in)/provided by investing activities | (681995) | 380895 | 30578 |
| Net cash used in financing activities |  |  | (7169) |

---

There are no consolidated VIEs' assets that are collateral for the VIEs' obligations and which can only be used to settle the VIEs' obligations. No creditors (or beneficial interest holders) of the VIEs have recourse to the general credit of the Company or any of its consolidated subsidiaries. No terms in any arrangements, considering both explicit arrangements and implicit variable interests, require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs ever need financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to the VIEs through loans to the shareholders of the VIEs or entrustment loans to the VIEs.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.** **Summary of Significant Accounting Policies (continued)**

**(b)** **Basis of Consolidation (continued)**

*Mutual Aid Platform*

*The Group terminated its Waterdrop Mutual Aid business at the end of March 2021. Contributions from patients were not recorded in the Group's consolidated balance sheets as they were maintained in a custodian account, separated from the Group's own bank accounts and could not be used for any other purpose other than to reimburse the related medical expenses of the participants.*

*Medical Crowdfunding Platform*

The Group operates a medical crowdfunding platform to provide crowdfunding related services by bringing together those who are seeking help and who are willing to help through social network.

The Group acts as an administrator of the crowdfunding campaigns and is not a party to the gift relationship between the beneficiaries and the donors. The fundraising amount were not recorded in the Group's consolidated balance sheets as they were maintained in a custodian account, separated from the Group's own bank accounts and could not be used for any other purposes other than to reimburse the validated medical expenses of the patients.

**(c)**Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Group's financial statements are estimates and judgments applied in the revenue recognition, determination of the stand-alone selling price of performance obligations, realization of deferred tax assets, allowance for doubtful account including expected credit losses, assessment for impairment of intangible assets, goodwill, and other long-lived assets, valuation of acquired identifiable assets, and valuation of share-based compensation arrangements. Actual results could differ from such estimates.

**(d)**Comprehensive Income and Foreign Currency Translation

The Group's operating results are reported in the consolidated statements of comprehensive income and consist of two components: net profit and other comprehensive income ("OCI"). The Group's OCI is comprised of gains and losses resulting from translating foreign currency financial statements of entities, of which the functional currency is other than the RMB which is the reporting currency of the Group, and unrealized gains and losses from available for sale investments, net of related income taxes, where applicable. Such subsidiaries' assets and liabilities are translated into RMB at period-end exchange rates, and revenues and expenses are translated at the average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary's functional currency to the RMB (as described above) are reported net of tax, where applicable, in accumulated OCI in the consolidated balance sheets.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.** **Summary of Significant Accounting Policies (continued)**

**(e)**Convenience Translation

The Group's business is primarily conducted in China and all of the revenues are denominated in RMB. However, periodic reports made to shareholders will include current period amounts translated into US dollars ("US$" or "USD") using the exchange rate as of balance sheet date, for the convenience of the readers. Translations of balances in the consolidated balance sheets and the related consolidated statements of operations, comprehensive loss, change in shareholders' deficit and cash flows from RMB into USD as of and for the year ended December 31, 2025 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB6.9931, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2025. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2025, or at any other rate.

**(f)**Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand, demand deposits and highly liquid investments placed with banks or other financial institutions, which have original maturities less than three months. The Group considers all highly liquid investments with stated maturity dates of three months or less from the date of purchase to be cash equivalents.

**(g)**Restricted Cash

Restricted cash mostly include premiums received from certain insured collected by the Group in a fiduciary capacity until disbursed to the appropriate insurance companies and amounted to RMB491,828 and RMB580,972 as of December 31, 2024 and 2025. Restricted cash also included guarantee deposits required by China Banking and Insurance Regulatory Commission in order to protect from insurance premium appropriation by the insurance broker and guarantee deposit related to foreign exchange settlement contracts.

**(h)**Short-term Investments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.Investment – Debt Securities

Short-term investments mainly include structured deposits, time deposits and other wealth management products.

Structured deposits are certain deposits with variable interest rates indexed to performance of underlying assets, which contain an embedded derivatives component. The Group elects the fair value option to record wealth management products with variable interest rates and deposits indexed to foreign exchange or gold price with maturities less than one year at fair value in accordance with ASC 825 Financial Instruments. Changes in the fair value is recorded under "Interest income" in the consolidated statements of comprehensive income.

Time deposits are deposits with fixed interest rates placed with financial institutions and are restricted as to withdrawal and use before maturity. Investments are classified as held-to-maturity when the Group has the positive intent and ability to hold the securities to maturity, and are recorded at amortized cost. The original maturities of the short-term investments are less than one year. The Group considers the carrying value of investments classified as held-to-maturity approximate to their fair value.

Investment products not classified as trading securities or as held-to-maturity are classified as available-for-sale debt securities, which are reported at fair value, with unrealized gains and losses recorded in "accumulated other comprehensive income". Realized gains or losses are recorded under "Interest income" in the consolidated statements of comprehensive income during the period in which the gains or losses are realized.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.** **Summary of Significant Accounting Policies (continued)**

**(h)**Short-term Investments (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.Investment - Equity Securities

The Group bought and held equity investment in dollar funds principally for the purpose of selling them in the near term. These equity securities are accounted for under the existing practical expedient in ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820") to estimate fair value using the net asset value per share (or its equivalent) of the investment. The change in fair value is recorded under "Others, net" in the consolidated statements of comprehensive income.

**(i)**Accounts Receivable and Contract Assets, net

Accounts receivable mainly represent brokerage commission fees and technical service fees receivable from insurance companies. Contract assets are recorded for arrangements when the Group has provided the insurance brokerage services but for which the related payments are not yet due. Contract assets are attributable to the brokerage commission that is contingent upon the future premium payment of the policy holders and retention based bonus.

Accounts receivable are recognized and carried at the original invoiced amount less an allowance for credit losses. The Group maintains an allowance for credit losses in accordance with ASC Topic 326, Credit Losses ("ASC 326") and records the allowance for credit losses as an offset to accounts receivable and contract assets, and the estimated credit losses charged to the allowance is recorded under "General and administrative expense" in the consolidated statements of comprehensive income. The Group assesses collectability by reviewing accounts receivable and contract assets on a collective basis where similar characteristics exist, primarily based on similar business lines, services offerings and on an individual basis when the Group identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Group considers historical collectability based on past due status, the age of the accounts receivable balances and contract assets balances, credit quality of the Group's customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Group's ability to collect from customers.

**(j)**Fair Value Measurement

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:

● Level 1—inputs are based upon unadjusted quoted prices for identical assets or liabilities traded in active markets.

● Level 2—inputs are based upon quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

● Level 3—inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair value are therefore determined using model based valuation techniques that include option pricing models, discounted cash flow models, and similar techniques.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**2.** **Summary of Significant Accounting Policies (continued)**

&nbsp;&nbsp;&nbsp;&nbsp;**(k)** **Financial Instruments** 

The Group's financial instruments consist primarily of cash and cash equivalents, restricted cash, available for sale investments, held-to-maturity investments, fair value option investments, accounts receivable, other receivables, insurance premium payables, other current liabilities and amounts due from/to related parties. As of December 31, 2024 and 2025, the carrying values of cash and cash equivalents, restricted cash, held-to-maturity investments classified as short-term investments, accounts receivable, other receivable, insurance premium payables, other current liabilities, short-term loans and amount due from/to related parties approximated their fair values due to the short term maturities of those instruments. Available-for-sale investments and fair value option investments are recorded at fair value in the consolidated financial statements. The fair values of the Group's held-to-maturity investments classified as long-term investments are determined based on the discounted cash flow model using the discount curve of market interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;(l) **Property, Equipment and Software, Net** 

Property, equipment and software are stated at cost. Depreciation is calculated using the straight line method over the following estimated useful lives, taking into account the residual value, if any. The table below sets forth the estimated useful life and residual value:

---

| | | |
|:---|:---|:---|
| **Category** | **Estimated useful life** | **Residual value** |
| Office furniture and equipment | 5 years | 5% |
| Computer and electronic equipment | 3 years | 5% |
| Leasehold improvements | shorter of remaining lease period and estimated useful life | Nil |
| Software | 10 years | Nil |
| Office buildings | 25 years | 5% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(m) **Intangible Assets, Net** 

Intangible assets with an indefinite useful life represent the insurance brokerage license, insurance adjusting license, insurance agency license, medical institution license and the trademark acquired from the acquisition of Shenzhen Cunzhen Qiushi Technology Co., Ltd. ("Shenlanbao" or "SLB"). Intangible assets with an indefinite life are not amortized and are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired.

Intangible assets with finite lives represent purchased trademark and software copyright. These intangible assets are amortized on a straight line basis over their estimated useful lives of the respective assets, which is 10 years. The Group compares the carrying amount of intangible assets with finite lives against the estimated undiscounted future cash flows associated with it. Impairment exists when the estimated undiscounted future cash flows are less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value.

Impairment loss for intangible assets were RMB nil, RMB24,268 and RMB nil for the years ended December 31, 2023, 2024 and 2025, respectively.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(n) **Goodwill** 

**Goodwill represents the excess of the purchase consideration over the acquisition date amounts of the identifiable tangible and intangible assets acquired and liabilities assumed from the acquired entity as a result of the Group's acquisitions of interests in its subsidiaries. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. In accordance with ASC Topic 350, Intangibles-Goodwill and Other, the Group may first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. In the qualitative assessment, the Group considers factors such as macroeconomic conditions, industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations, business plans and strategies of the reporting unit. Based on the qualitative assessment, if it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the quantitative impairment test is performed. The Group may also bypass the qualitative assessment and proceed directly to perform the quantitative impairment test.** 

**The Group performs the quantitative impairment test by comparing the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, the amount by which the carrying amount exceeds the reporting unit's fair value is recognized as impairment. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, allocation of assets, liabilities and goodwill to reporting units, and determination of the fair value of each reporting unit. No impairment loss of goodwill was recorded for the years ended December 31, 2023, 2024 and 2025.**

For the years ended December 31, 2023, 2024 and 2025, the changes in the carrying amount of goodwill by segment are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Insurance** | **Others** | **Total** |
|  | **RMB** | **RMB** | **RMB** |
| **Balances at January 1, 2023** | **1248** | **2172** | **3420** |
| Additions | 77331 |  | 77331 |
| **Balances at December 31, 2023** | **78579** | **2172** | **80751** |
| Additions |  |  |  |
| **Balances at December 31, 2024** | **78579** | **2172** | **80751** |
| Additions |  |  |  |
| **Balances at December 31, 2025** | **78579** | **2172** | **80751** |

---

**(o)** **Business combinations and non-controlling interests**

In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs. The Group has an option to apply a 'concentration test' that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

**(o)** **Business combinations and non-controlling interests (continued)**

The Group accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 "Business Combinations." The cost of an acquisition is measured as the aggregate of the acquisition date fair value of the assets transferred to the sellers, liabilities incurred by the Group and equity instruments issued by the Group. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the acquisition date amounts of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the acquisition date amounts of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statement of comprehensive income. During the measurement period, which can be up to one year from the acquisition date, the Group may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Subsequent to the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any further adjustments are recorded in the consolidated statement of comprehensive (loss)/income.

The valuations used in the purchase price allocation were determined by the Group with the assistance of independent third-party valuation firm. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches. As the acquirees are private companies, the fair value estimates of acquirees are based on significant unobservable inputs (level 3) considered by market participants which mainly include discount rate, projected terminal value based on future cash flow, financial multiple of companies in the same industry and discount for lack of marketability.

When there is a change in ownership interests or a change in contractual arrangements that results in a loss of control of a subsidiary, the Group deconsolidates the subsidiary from the date control is lost. Any retained non-controlling investment in the former subsidiary is measured at fair value and is included in the calculation of the gain or loss upon deconsolidation of the subsidiary.

For the Group's non-wholly owned subsidiaries, a non-controlling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Group. When the non-controlling interest is contingently redeemable upon the occurrence of a conditional event, which is not solely within the control of the Group, the non-controlling interest is classified as mezzanine equity. The redeemable noncontrolling interest is initially recorded at the acquisition date fair value. Subsequently, if it is probable that redeemable noncontrolling interest will become redeemable, they are recorded at the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 (i.e., initial carrying amount, increased or decreased for the noncontrolling interest's share of net income or loss, OCI or other comprehensive loss, and dividends) or (2) the redemption price. If it is not probable that redeemable noncontrolling interest will become redeemable, they are recorded at the amount based on step (1) and when the redemption becomes probable, the Group recognizes changes in the redemption price immediately.

Net loss attributable to mezzanine equity holders is excluded from the consolidated statements of changes in shareholders' equity. During the years ended December 31, 2023, 2024 and 2025, net loss attributable to mezzanine equity holders amounted to RMB3,536, RMB16,627 and RMB3,879, respectively. The cumulative results of operations attributable to noncontrolling interests, along with adjustments for impairment loss for intangible assets acquired, are also recorded as mezzanine equity on the Company's consolidated balance sheets.

The following table provides details of the redeemable non-controlling interest activity for the year ended December 31, 2024 and 2025:

---

| | | |
|:---|:---|:---|
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Balance as of January 1 | 92760 | 76133 |
| &nbsp;&nbsp;Net loss attributable to mezzanine equity classified as non-controlling interest | (16627) | (3879) |
| &nbsp;&nbsp;Acquisition of non-controlling interest |  | (72254) |
| Balance as of December 31 | 76133 |  |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(o) **Business combinations and non-controlling interests (continued)** 

**Acquisition of NCI**

Acquisition of noncontrolling interests is accounted for as an equity transaction. The difference between the fair value of the consideration paid and the carrying amount of the noncontrolling interests acquired is recognized directly in equity attributable to the equity holders of the Company.

**(p)** **Asset Acquisition**

When the Group acquires other entities, if the assets acquired and liabilities assumed do not constitute a business, the transaction is accounted for as an asset acquisition. Assets are recognized based on the cost, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of noncash assets given as consideration differs from the assets' carrying amounts on the Group's financial statements. The cost of a group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair value and does not give rise to goodwill.

&nbsp;&nbsp;&nbsp;&nbsp;(q) **Long-Term Investments** 

The Group's long-term investments consist of equity securities without readily determinable fair value, long-term held-to-maturity investments available-for-sale investments, and fair value option investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Equity securities without readily determinable fair value

The Group accounts for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Update ("ASU")2016-01,Recognition and Measurement of Financial Assets and Financial Liabilities, to the extent such investments are not subject to consolidation or the equity method. Under the measurement alternative, these financial instruments are carried at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. In addition, income is recognized when dividends are received only to the extent they are distributed from net accumulated earnings of the investee. Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost of the investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Long-term held-to-maturity investments

Long-term held-to-maturity investments are mainly callable fixed rate notes. Investments are classified as held-to-maturity when the Group has the positive intent and ability to hold the securities to maturity, and are recorded at amortized cost less an allowance for credit losses. The original maturities of the long-term investments are more than one year but within five years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Available-for-sale investments

The Group holds marketable U.S. government treasury bonds with fixed rate and original maturities up to 20 years, which are classified as available-for-sale investment as the Group doesn't have the positive intent to hold the securities to maturity. The available-for-sale investments are reported at fair value with unrealized gains and losses included in "accumulated other comprehensive income".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.Fair value option investments

The Group holds issuer callable range accrual notes indexed to U.S. Dollar Constant Maturity Treasury Rate or Secured Overnight Financing Rate with maturities longer than one year at fair value in accordance with ASC 825 Financial Instruments. The fair value option investments are reported at the fair value with unrealized gains and losses recorded under "Others, net" in the consolidated statements of comprehensive income.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(r) **Insurance Premium Payables** 

Insurance premium payables are insurance premiums collected from insurance policyholder on behalf of insurance companies but not yet remitted to the insurance companies as of the balance sheet dates.

&nbsp;&nbsp;&nbsp;&nbsp;(s) **Share-Based Compensation** 

***Equity classified share option awards***

Share-based payment transactions with employees (including management), such as restricted share units and share options, are measured based on the grant date fair value of the equity instrument. The Group has elected to recognize compensation expenses over the requisite service period of the award using the straight line method for all employee equity awards granted with graded vesting provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date fair value of the options that are vested at that date. The Group elects to recognize forfeitures when they occur.

&nbsp;&nbsp;&nbsp;&nbsp;(t) **Revenue recognition** 

Consistent with the criteria of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), revenue represents the amount of consideration the Group is entitled to upon the transfer of promised goods or services in the ordinary course of the Group's activities. The Group recognizes revenues when performance obligations are satisfied by transferring control of a promised good or service to a customer.

The Group recognizes revenue through the application of a five-step model, which includes: identification of the contract; identification of the performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. At times, the Group may enter into multiple contracts with a customer, and these contracts may be combined and accounted for as a single contract with different performance obligations when they are entered into at or near the same time with the same customer and negotiated as a package with a single commercial objective. The total transaction price is allocated to each performance obligation in an amount based on the estimated relative stand-alone selling prices of the promised goods or services underlying each performance obligation consistent with the guidance in ASC 606. For determination of the stand-alone selling price of performance obligations, in cases the Group sells products or services with observable selling prices, these selling prices are used to determine the relative stand-alone selling prices. In cases the Group sells customized products or services for which observable selling prices do not exist, the Group uses the expected cost plus margin approach to estimate the stand-alone selling price of each performance obligation.

The Group's revenue is principally comprised of insurance brokerage income, technical service income, crowdfunding service fees, digital clinical trial solution income, management fee income and other revenues. The following is a description of the accounting policy for the principal revenue streams of the Group.

#### Insurance Brokerage Services
The Group provides insurance brokerage services distributing various health and life insurance policies on behalf of insurance companies (its customers). As an agent of the insurance company, the Group sells insurance policies on behalf of the insurance company and earns brokerage commissions determined as a percentage of premiums paid by the policyholder. The Group has identified its promise to sell insurance policies on behalf of an insurance company as the performance obligation in its contracts with the insurance companies. The Group's performance obligation to the insurance company is satisfied and commission revenue is recognized at the point in time when an insurance policy becomes effective. The Group also provides policyholder inquiry (call center) services which is considered administrative in nature that transfers minimal benefit to the customer. Additionally, certain contracts with insurance companies include a promise to provide certain services to the insurance company such as information gathering and payment collection. The Group has concluded that such services are immaterial in the context of the contract. The Group accrues the costs of providing such services when the related revenue is recognized (i.e., when an insurance policy becomes effective).

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(t) **Revenue recognition (continued)** 

#### Insurance Brokerage Services (continued)
The term for short-term health insurance policies sold by the Group is typically 12 months, while the term for long-term health and life insurance policies sold by the Group typically ranges from 6 to 30 years. The insurance company pays the Group a commission either upfront or in monthly or annual instalments based on the underlying cash flows of the insurance policy (i.e., payments of the related premiums for the insurance policy purchased). The Group's contract terms can give rise to variable consideration due to the nature of its commission structure (e.g., policy changes or cancellations).

The Group determines the transaction price of its contracts by estimating commissions that the entity expects to be entitled to over the premium collection term of the policy based on historical experience regarding premium retention and assumptions about future policyholder behaviour and market conditions. Such estimates are 'constrained' in accordance with ASC 606, that is, the Group uses the expected value method and only includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transactions will not occur.

For certain long-term insurance policies sold, the Group is also entitled to a performance bonus from insurance companies if the retention rate for a certain period exceeds a predetermined percentage, or if its first year premiums exceed a predetermined amount. The Group may also be asked to refund some commission to insurance companies if the retention rate for a certain period falls below a predetermined percentage. As the consideration for the bonus or the refund is contingent on the occurrence (or non-occurrence) of a future event, the bonus or the refund represents variable consideration. Consistent with the policy described above, the Group uses the expected value method to estimate the variable consideration and may constrain the estimate to the extent that it is probable that a significant reversal of revenue in the future will not occur.

#### Technical Services
Technical service income primarily consists of revenues derived from providing analytics and intelligent recommendation service, risk assessment technical service, customer relationship management ("CRM") system-based technical services and marketing services to insurance companies, insurance brokers, and agency companies.

Reinforced by cumulative big data, the Group provides risk assessment technical services through algorithm-driven verification system assessing risk by analyzing user profiles and medical history, tagging risk levels for hierarchical management that help insurers refine their risk analysis capabilities since 2025. The Group leverages multi-dimensional consumer insights to deliver analytics and intelligent recommendation services, enabling policyholders to be matched with more suitable products and improving sales efficiency. Revenue is recognized when the performance obligation to provide those services is satisfied (such as when effective usage of risk assessment over insureds' information or when effective match on insurance product display). Payment terms and conditions vary by customer and are based on the billing schedule established in the contracts with customers, which generally include a requirement of payment within one year. The Group assesses the collectability of accounts receivable and records an allowance for expected credit losses. The Group believes that the impact from significant financing component is not material.

The Group provides technical services to selected insurance brokerage or agency companies to use its CRM system and earns monthly system usage revenue recognized overtime over the contract term. In addition, the Group also earns referral revenue, which is based on a percentage of the first two-year's policy premiums, recognized at a point in time when the insurance policy becomes effective. The Group estimates the services fee that it expects to be entitled to over the first two-year of the long-term insurance policy and such estimates are 'constrained' in accordance with ASC 606.

The Group displays advertisements for certain companies on its various website channels and mobile apps and earns marketing service revenue mainly based on the number of articles published and the number of advertisements disclosed. The marketing service revenue is recorded at a point in time when the advertisement has been displayed.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(t) **Revenue recognition (continued)** 

#### Crowdfunding service fees
The Group's crowdfunding services primarily consist of providing technical and internet support, managing and reviewing the crowdfunding campaigns and facilitating the collection and transfer of funds to the patients. The Group charged a crowdfunding service fee calculated as a fixed percentage of the funds raised for a single campaign and which is payable to the Group only upon the successful withdrawal of the funds by the patient. The Group determined that the transaction price represented variable consideration in its entirety and related specifically to the Group's efforts to perform and transfer the funds to the patients. Therefore, the Group recognizes the related revenues when the funds are successfully withdrawn.

#### Digital clinical trial solution
The Group provides digital clinical trial solution services to customers that mainly include biopharmaceutical companies and leading biotechnology companies. The Group enters into patient recruitment contracts with customers to match qualified patients with optimal suitability for enrollment in clinical trials. The Group earns digital clinical trial solution revenue for a fixed unit price per successful match under the patient recruitment contract. The Group's performance obligation is to provide a successful match. The Group recognizes revenues for the services at the point in time when the individual patient enrollment for the clinical trials is confirmed by the customers.

#### Other Revenues
Other revenues mainly include digital multichannel marketing solution income and commission revenue from online sale of health products and membership fee from Waterdrop Medicine. The Group provides comprehensive digital marketing solutions around the whole life cycle of products through integrated services such as patient screening, medication management, doctor-patient services, innovative payment methods, and channel marketing to customers that mainly include life science and healthcare companies. Revenue related to digital multichannel marketing solution is recognized over the contract period. The Group's performance obligation under online sale of health products and membership fee from Waterdrop Medicine is to arrange for the provision of the specified goods or services by those third-party merchants. Revenue is recognized for the net amount of consideration the Group is entitled to retain in exchange for its services at a point in time upon successful sales. The Group recognized the membership fee ratably over the membership period.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(t) **Revenue recognition (continued)** 

#### Disaggregation of revenues
The following table provides further disaggregation by types and timing of revenues recognized:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| **Operating revenue** |  |  |  |
| &nbsp;&nbsp;Insurance brokerage income |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term insurance brokerage income | 1381855 | 1309432 | 1178939 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term insurance brokerage income | 823305 | 1013406 | 1391349 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 2205160 | 2322838 | 2570288 |
| &nbsp;&nbsp;Technical service income | 135755 | 40939 | 1006278 |
| &nbsp;&nbsp;Crowdfunding service fees | 162683 | 267650 | 261636 |
| &nbsp;&nbsp;Digital clinical trial solution income | 100496 | 91066 | 118297 |
| &nbsp;&nbsp;Other revenues | 26613 | 49328 | 21262 |
| **Total** | **2630707** | **2771821** | **3977761** |

---

#### Refund liabilities
Refund liabilities are recognized for the estimated amounts of insurance brokerage service fees and technical service fees which are received but are expected to be refunded. The consideration received but not expect to be entitled to earn is not included in the transaction price, because it will be refunded to customers. The refund liabilities are remeasured at each reporting date to reflect changes in the estimate, with a corresponding adjustment to revenue. The Group is expected to refund back to its customers if the retention rate for a certain period does not reach a predetermined percentage.

#### Value Added Tax
The Group is subject to Value Added Taxes ("VAT") at the rate of 3% or 6%, depending on whether the entity is a general tax payer or small scale tax payer, and the related surcharges on revenue generated from providing services. VAT are reported as a deduction to revenue when incurred and amounted to RMB187,863, RMB193,377 and RMB234,188 for the years ended December 31, 2023, 2024 and 2025, respectively. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in accrued expenses and other current liabilities on the consolidated balance sheets.

Value added tax recoverable represents amounts paid by the Group for purchases. The amounts were recorded as current assets considering they are expected to be deducted from future value added tax payables arising on the Group's revenues which it expects to generate in the future.

#### Contract assets
The contract asset balance as of December 31, 2024 and 2025 includes immaterial adjustment to the estimate of the transaction price for performance obligation satisfied during the years ended December 31, 2023 and 2024.

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**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(t) **Revenue recognition (continued)** 

#### Contract assets (continued)
Contract assets as of December 31, 2024 and 2025 are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2024** | **December 31,** <br>**2025** |
|  | **RMB** | **RMB** |
| Contract assets | 773790 | 1103191 |
| Less: Allowance for uncollectible accounts | (605) | (759) |
| **Total** | **773185** | **1102432** |

---

#### The movements in the allowance for uncollectible accounts are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| **Balance at beginning of year** | **(382)** | **(605)** |
| Addition | (223) | (154) |
| **Balance at end of the year** | **(605)** | **(759)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(u) **Operating cost** 

Operating costs primarily consist of (i) payroll and related expenses for insurance agents, consultants and customer service personnel, (ii) transaction fees charged by third-party payment platforms related to insurance brokerage service, (iii) costs of referral and service fees, (iv) charges for the usage of the server and cloud service incurred for operational support of the platforms, and the associated expenses of facilities and equipment, such as depreciation expenses, rental and others attributed to the Group's principal operations, (v) cost for patient recruitment consultants team and (vi) cost for the crowdfunding consultants team and cost related to the information review and investigation of medical crowdfunding campaigns (vii) cost of medical expenses and cost of one-year health insurance coverage related to the termination of the mutual aid plans, and (viii) costs for short message service (SMS) costs for new user on boarding and authentication processes.

&nbsp;&nbsp;&nbsp;&nbsp;(v) **Sales and Marketing Expenses** 

Sales and marketing expenses primarily consist of (i) marketing expenses for user acquisition and brand building, (ii) payroll and related expenses for employees involved in selling and marketing functions, and (iii) outsourced sales and marketing service fees to third parties, as well as the associated expenses of facilities and equipment, such as depreciation expenses, rental and others.

&nbsp;&nbsp;&nbsp;&nbsp;(w) **Research and Development Expenses** 

Research and development expenses primarily consist of (i) payroll and related expenses for employees involved in platform and new function development and significant improvement, (ii) charges for the usage of the server and cloud service incurred to support research, design and development activities by research and development personnel, as well as the associated expenses of facilities and equipment, such as depreciation expenses, rental and others. The Group has expensed all research and development expenses when incurred.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(x) **Taxation** 

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized.

The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes.

&nbsp;&nbsp;&nbsp;&nbsp;(y) **Net Profit Per Share** 

Basic net profit per ordinary share is computed by dividing net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

For the calculation of diluted net profit per share, the weighted average number of ordinary shares is adjusted by the effect of dilutive potential ordinary shares, including unvested RSUs and ordinary shares issuable upon the exercise of outstanding share options using the treasury stock method. The effect mentioned above is not included in the calculation of the diluted profit per share when inclusion of such effect would be anti-dilutive.

&nbsp;&nbsp;&nbsp;&nbsp;(z) **Leases** 

The Group leases offices in different cities in the PRC under operating leases. The Group determines whether an arrangement constitutes a lease at inception and records lease liabilities and right-of-use assets ("ROU") on its consolidated balance sheets at the lease commencement. The Group measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on its incremental borrowing rate, as the rates implicit in its leases are not determinable. The Group's incremental borrowing rate is the estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Group estimates its incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to its own. The Group measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing rent expense when the lessor makes the underlying asset available to the Group. The Group's leases have remaining lease terms of up to three years, some of which include options to extend the leases for an additional period which has to be agreed with the lessors based on mutual negotiation. After considering the factors that create an economic incentive, the Group did not include renewal option periods in the lease term for which it is not reasonably certain to exercise. When a lease is terminated before the expiration of the lease term, the Group derecognizes the right of use asset and corresponding lease liability, any difference is recognized as a gain or loss related to the termination of the lease.

The Group has made an accounting policy election to exempt leases with an initial term of 12 months or less without a purchase option that is likely to be exercised from being recognized on the balance sheets. Payments related to those leases continue to be recognized in the consolidated statements of comprehensive on a straight-line basis over the lease term.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

**(aa) Short-term loans**

Short-term loans represent the Group's borrowings from commercial banks for the Group's working capital. Short-term loans include borrowings with maturity terms shorter than one year.

**(bb) Segment reporting**

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. The Group's CODM is the Chief Executive Officer. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure. The Group organized and reported its business in the following reportable segments:(1) Insurance, which mainly includes insurance brokerage service and technical service; and (2) Crowdfunding, which mainly includes crowdfunding service. The remaining operating segments are combined into the "Others" category, which do not individually or in the aggregate meet the quantitative and qualitative thresholds to be individually reportable and are aggregated.

(cc) Significant Risk and Uncertainties

#### Currency Risk
The RMB is not a freely convertible currency. The value of RMB is subject to changes in central government policies and international economic and political developments that affect supply and demand in the China Foreign Exchange Trading System market. The State Administration for Foreign Exchange, under the authority of the People's Bank of China, controls the conversion of RMB into foreign currencies. The Group's cash and cash equivalents, restricted cash, short-term investments and long-term debt investments included in long-term investments denominated in RMB that are subject to such government policies amounted to RMB1,923.9 million, and RMB1,444.9 million, representing 45.91% and 37.07% of total corresponding assets as of December 31, 2024 and 2025, respectively.

#### Concentration of Credit Risk
Details of the customers accounting for 10% or more of operating revenue, net are as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2025** | **2025** |
| **%%** | **RMB** | **%** |
| Customer A<br> \* | 415677 | 10.45% |

---

Details of the customers which accounted for 10% or more of accounts receivable and contract assets are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2024** | **2025** | **2025** |
|  | **RMB** | **%** | **RMB** | **%** |
| Customer A | 234744 | 15.76% | 394607 | 16.70% |
| Customer B | \* | \* | 312808 | 13.24% |
| Customer C | \* | \* | 246830 | 10.45% |

---

The Group performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable.

The Group places its cash and cash equivalents with financial institutions with high-credit ratings and quality.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;2. **Summary of Significant Accounting Policies (continued)** 

(dd) Recent Accounting Pronouncements adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which improves income tax disclosures. The amendments require the disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendments also require disaggregated information about the amount of income taxes paid (net of refunds received), Income (or loss) from continuing operations before income tax expense (or benefit) and Income tax expense (or benefit) from continuing operations. The new guidance is required to be applied either prospectively or retrospectively. This guidance is effective for the Group's fiscal years beginning after December 15, 2024. Early adoption is permitted.

Beginning on January 1, 2025, the Group adopted ASU 2023-09 prospectively. The adoption did not have a material impact on the consolidated financial statements, and the required disclosures are included in Note 15.

**(ee) Recent Accounting Pronouncements not yet adopted**

In November 2024, the FASB issued ASU 2024-03, *Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)* amending existing income statement disclosure guidance, primarily requiring more detailed disclosure for expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments can be applied on either a prospective or retroactive basis. We are currently evaluating the ASU to determine its impact on our disclosures.

In July 2025, the FASB issued ASU 2025-05, *Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets* ("ASU 2025-05"), which provide (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. An entity can elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the assets when estimating expected credit losses. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years. Early adoption is permitted. This ASU should be applied prospectively. We are currently evaluating the ASU to determine its impact on our disclosures.

In September 2025, the FASB issued ASU 2025-06, *Intangibles: Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software* (ASU 2025-06). The guidance modernizes the accounting for software costs and enhances the transparency about an entity's software costs. The guidance is effective for the fiscal years beginning after December 15, 2027 and for interim periods within those fiscal years. This ASU can be applied prospectively, retrospectively, or under a modified transition approach. We are currently evaluating the ASU to determine its impact on our disclosures.

In December 2025, the FASB issued ASU 2025-10, *Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities* ("ASU 2025-10"), to improve generally accepted accounting principles by establishing authoritative guidance on the accounting for government grants received by business entities. The amendments establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The guidance is effective for fiscal years beginning after December 15, 2028, with early adoption permitted, and it can be applied using one of the following approaches: (1) a modified prospective approach; (2) a modified retrospective approach and (3) a retrospective approach to all government grants. We are currently evaluating the ASU to determine its impact on our disclosures.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;3. **Acquisitions and disposals** 

#### Business acquisition
Acquisition of Shenlanbao

In June 2023, the Group entered into purchase agreements with shareholders of Shenlanbao to acquire up to 100% of Shenlanbao's equity ownership in different batches. The Group completed the first batch of 60% equity interest of Shenlanbao in July 2023 with cash consideration of RMB216.0 million. The acquisition of the remaining 40% equity interest of Shenlanbao is subject to certain performance targets and closing conditions in the following three years.

Given the Group obtained majority voting interest of Shenlanbao, the transaction was considered a business combination and therefore was recorded using the acquisition method of accounting. The allocation of the purchase price based on the fair values of the acquired assets and liabilities assumed as of the date of acquisition is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **Amounts** | **Estimated useful lives** |
| Net assets acquired | 144215 |  |
| Newly identified and appreciation of intangible assets |  |  |
| &nbsp;&nbsp;-Trademark | 75000 | Indefinite |
| &nbsp;&nbsp;-Insurance brokerage license | 46000 | Indefinite |
| Goodwill | 77331 |  |
| Deferred tax liabilities | (30250) |  |
| Mezzanine Equity: Redeemable non-controlling interests | (96296) |  |
| **Total** | **216000** |  |

---

Net assets acquired primarily consisted of cash and cash equivalents and restricted cash of RMB20,095, short-term investments of RMB72,631, accounts receivable of RMB46,582, contract assets of RMB54,077 and accrued expenses and other current liabilities of RMB59,226 as of the date of acquisition.

Goodwill arising from the acquisition of Shenlanbao was attributable to the benefit of expected synergies, the assembled workforce, revenue growth and future market development as of the date of acquisition. Goodwill arising from the acquisition is not expected to be deductible for tax purposes.

Results of operations attributable to the acquisition of Shenlanbao and pro forma results of operations for the acquisition of Shenlanbao have not been presented because they are not material to the consolidated statements of comprehensive income for the years ended December 31, 2022 and 2023.

On March 24, 2025, in order to strengthen synergies between the Group and Shenlanbao, the Group entered into a separate and new share purchase agreement with all non-controlling shareholders of Shenlanbao to acquire all the remaining equity interests in Shenlanbao at a total consideration of RMB7,169, despite that the specified financial targets in the original share purchase agreement for financial year 2023 and 2024 were not met. All of the closing conditions included in the new agreement had been met as of June 30, 2025, and since then, Shenlanbao has been 100% owned by the Group. The acquisition of noncontrolling interests resulted in a decrease in noncontrolling interests of RMB72,254 and an increase in additional paid-in capital of RMB65,085.

***Asset acquisition***

Acquisition of Tianjin Haike

In December 2025, the Group entered into purchase agreements with shareholders of Tianjin Haike to acquire up to 100% of Tianjin Haike's equity ownership for a gross consideration or RMB60,516, of which RMB43,516 was related to the effective settlement of the selling shareholder's loan payable to Tianjin Haike upon closing. This resulted in a net cash consideration of RMB17,000. Tianjin Haike holds an insurance agency license.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;3. **Acquisitions and disposals (continued)** 

***Asset acquisition (continued)***

Acquisition of Tianjin Haike (continued)

The Company evaluated the acquisition of the purchased assets under ASC 805-Business Combination (ASC 805), and concluded that as substantially all of the fair value of the gross assets acquired is concentrated in an identifiable group of similar assets, the transaction did not meet the requirements to be accounted for as a business combination and therefore was accounted for as an asset acquisition.

The purchase price of the assets are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | |
|  | **2025** | **Estimated**<br>**useful lives** |
|  | **RMB** |  |
| &nbsp;&nbsp;Value-added tax recoverable | 109 |  |
| &nbsp;&nbsp;Intangible assets — Insurance Brokerage license | 24258 | Indefinite |
| **Total assets acquired** | **24367** |  |
| &nbsp;&nbsp;Deferred tax liabilities | (6064) |  |
| &nbsp;&nbsp;Other payables | (1303) |  |
| **Total liabilities assumed** | **(7367)** |  |
| **Net assets acquired** | **17000** |  |

---

The Company recognized any excess consideration transferred over the fair value of the net assets acquired on a relative fair value basis to the identifiable net assets. The Company determined the estimated fair values using Level 3 inputs after review and consideration of relevant quoted market prices of comparable companies and relevant information.

#### Disposal of subsidiaries
In October 2023, pursuant to a share purchase agreement, the Group transferred 100% ownership interest in Supervalley Inc. ("Supervally"), a subsidiary of the Group, to third parties in return for cash consideration of USD 1 dollar. As a result, the Group lost control over Supervally. A disposal loss of RMB2,169 was recognized under line-item "others, net" in the consolidated statement of comprehensive income, which is the difference between the disposal consideration of USD 1 dollar and the carrying value in Supervally, amounted to net assets of RMB2,169.

&nbsp;&nbsp;&nbsp;&nbsp;4. **Short-term Investments** 

Short-term Investments consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Held-to-maturity investments | 1027846 | 23032 |
| Investments under fair value option | 584773 | 507636 |
| **Total** | **1612619** | **530668** |

---

As of December 31, 2024 and 2025, the maturity dates for the held-to-maturity investments and investments under fair value option were within one year. Held-to-maturity investments were mainly deposits in commercial banks with maturities less than one year and wealth management products issued by commercial banks and other financial institutions for which the Group has the positive intent and ability to hold those securities to maturity. For the years ended December 31, 2023, 2024 and 2025, the unrealized gains on investments under fair value option were RMB 12,029, RMB2,223 and RMB2,034, respectively.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;5. **Accounts receivable, net** 

Accounts receivable, net consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Accounts receivable | 744978 | 1307080 |
| Allowance for doubtful accounts | (28772) | (46616) |
| **Accounts receivable, net** | **716206** | **1260464** |

---

The movements in the allowance for doubtful accounts are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| **Balance at beginning of the year** | **(19263)** | **(28772)** |
| Additions | (22373) | (20121) |
| Reversals | 10328 | 2257 |
| Write-offs | 2536 | 20 |
| **Balance at end of the year** | **(28772)** | **(46616)** |

---

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**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;6. **Prepaid Expense and Other Assets** 

Prepaid expense and other assets consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Fund receivable from external payment network providers<sup>(1)</sup> | 50781 | 90614 |
| Prepayments and deposits | 86043 | 73885 |
| Advances to suppliers | 30897 | 53987 |
| Value-added tax recoverable | 20507 | 36071 |
| Option exercise proceeds receivable and withholding IIT | 9926 | 10232 |
| Others | 39141 | 39728 |
| **Total** | **237295** | **304517** |
| Less: impairment provision<sup>(2)</sup> | (40000) | (39000) |
| Less: allowance for doubtful accounts<sup>(3)</sup> | (14654) | (14433) |
| **Prepaid expense and other assets, net** | **182641** | **251084** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The Group opened accounts with external online payment service providers to collect and transfer insurance premiums to insurance companies, as well as to collect donor's donation and mutual aid funds prior to transferring them to custodian bank. The balance of funds receivable from external payment network providers mainly includes accumulated amounts of donation, mutual aid fund received at the balance sheet date, which were subsequently transferred to the Group's bank accounts or custodian accounts if they related to donor's donations. The balance also includes insurance premium collected by the Group on behalf of insurance companies but not yet transferred to the insurance companies deposited in accounts of external online payment service providers. The amount was settled shortly after year end.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Impairment provision for prepayment for the years ended December 31, 2023, 2024 and 2025 were RMB1,000, RMB nil and RMB nil respectively.

The movements in the impairment provision are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| **Balance at beginning of the year** | **(40000)** | **(40000)** |
| Write-off |  | 1000 |
| **Balance at end of the year** | **(40000)** | **(39000)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(3) Allowance for doubtful accounts on deposits and other receivables were RMB923 and RMB124 respectively, which were recorded in general and administrative expenses for the years ended December 31, 2023 and 2024. Reversal of allowance for doubtful accounts on deposits and other receivables of RMB50 were recorded in general and administrative expenses for the year ended December 31, 2025.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;6. **Prepaid Expense and Other Assets (continued)** 

The movements in the allowance for doubtful accounts are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **December 31,**  | **December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| **Balance at beginning of the year** | **(14979)** | **(14654)** |
| Additions | (1154) | (59) |
| Reversals | 1030 | 109 |
| Write-off | 449 | 171 |
| **Balance at end of the year** | **(14654)** | **(14433)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;7. **Fair Value Measurement** 

#### Recurring
The following table presents the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis subsequent to initial recognition:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Level 1** | **Level 2** | **Level 3** | **Fair Value** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
| **Assets** |  |  |  |  |
| Investments under fair value option |  | 584773 |  | 584773 |
| Available-for-sale investments |  | 332489 |  | 332489 |
| **Total Assets** |  | **917262** |  | **917262** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2025** | **Level 1** | **Level 2** | **Level 3** | **Fair Value** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
| **Assets** |  |  |  |  |
| Investments under fair value option |  | 852299 |  | 852299 |
| Available-for-sale investments |  | 1086606 |  | 1086606 |
| **Total Assets** |  | **1938905** |  | **1938905** |

---

The Group elected the fair value option to record wealth management products with variable interest rates and deposits indexed to foreign exchange. As of December 31, 2024, these instruments had maturities of less than one year; as of December 31, 2025, they comprised both short-term and long-term maturities. The Group accounted for all such instruments at fair value.

For the available-for-sale investments, the Group estimates their fair value using the expected yield on similar instruments in the market, and classifies the valuation techniques that use these inputs as Level 2.

#### Non-recurring
Certain assets, such as prepayment, intangible asset, long-term equity investment are measured at fair value only if they were determined to be impaired. The fair values were measured under income approach, based on the Company's best estimation. Significant inputs (level 3) used in the income approach primarily included future estimated cash flows and discount rate.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;8. **Property, Equipment and Software, Net** 

Property, equipment and software, net, consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Computer and electronic equipment | 21529 | 23063 |
| Office furniture and equipment | 2363 | 3179 |
| Leasehold improvements | 46261 | 49705 |
| Software | 31022 | 31178 |
| Office buildings | 212804 | 234983 |
| **Total** | **313979** | **342108** |
| Less: accumulated depreciation | (73955) | (86410) |
| **Property, equipment and software, net** | **240024** | **255698** |

---

Depreciation expenses for the years ended December 31, 2023, 2024 and 2025 were RMB13,417, RMB11,442 and RMB13,784, respectively.

No impairment on property, equipment and software was recorded for the years ended December 31, 2023, 2024 and 2025.

&nbsp;&nbsp;&nbsp;&nbsp;9. **Intangible Assets, Net** 

Intangible assets, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Brokerage licenses | 60558 | 84816 |
| Insurance adjusting license | 2293 | 2293 |
| Insurance agency license | 35130 | 35130 |
| Trademark and software copyright | 77042 | 77042 |
| Medical institution license | 3708 | 3708 |
| **Total** | **178731** | **202989** |
| Less: Accumulated amortization | (735) | (864) |
| Less: Impairment | (24985) | (24985) |
| **Intangible assets, net** | **153011** | **177140** |

---

Amortization expense on intangible assets for the years ended December 31, 2023, 2024 and 2025 were RMB138, RMB128 and RMB129 respectively. As of December 31, 2025, the Group expects to record amortization expenses related to intangible assets RMB129, RMB129, RMB129 and RMB75 for the years ended December 31, 2026, 2027, 2028, 2029 and RMB nil thereafter. RMB nil, RMB24,268 and RMB nil of impairment losses were recognized on intangible assets and were included under "general and administrative expenses" in the consolidated statement of comprehensive income for the years ended December 31, 2023, 2024 and 2025, respectively.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;10. **Long-Term Investments** 

As of December 31, 2025, the Group's long-term investments comprised of i) long-term held-to-maturity investments, ii) available-for-sale investments, iii) investments under fair value option and iv) equity securities without readily determinable fair value.

Components of long-term investments are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Available-for-sale investments | 332489 | 1086606 |
| Long-term held-to-maturity investments | 738903 | 804023 |
| Investments under fair value option |  | 344663 |
| Equity securities without readily determinable fair value | 42768 | 48810 |
| **Total** | **1114160** | **2284102** |

---

As of December 31, 2025, the amortized cost of available-for-sale investments was RMB1,125,198, the unrealized losses were RMB38,592, and the fair value was RMB1,086,606.

#### Equity Securities Without Readily Determinable Fair Value
The Group invested less than 5% equity interest in certain preferred shares of private companies. These investments contain various right, including redemption right and a liquidation preference. As these investments were neither debt security nor in-substance common stock, they were accounted as equity securities without readily determinable fair values, were accounted for under the measurement alternative and were measured at cost, less impairment, subject to upward and downward adjustments resulting from observable price changes for identical or similar investments of the same issuer. In 2025, the Group conducted impairment assessment on its investments, and concluded that no investment in equity securities without readily determinable is qualitatively impaired. The Group determined the fair value of the investment based on income approach with significant unobservable inputs (level 3), which includes considering performance and financial position of the investee, such as investee's cash position, recent financing, as well as the financial and business performance. The Group recorded RMB2,060, RMB nil and RMB nil impairment on its equity securities without readily determinable fair value, with no observable price changes noted during the years ended December 31, 2023, 2024 and 2025, respectively.

The movement of the equity securities without readily determinable fair value is as follows:

---

| | |
|:---|:---|
|  | **Equity securities**<br>**without readily**<br>**determinable**<br>**fair value** |
|  | **RMB** |
| **Balances at January 1, 2023** | **11969** |
| Additions | 24208 |
| Impairment | (2060) |
| Foreign currency translation adjustment | (512) |
| **Balances at December 31, 2023** | **33605** |
| Additions | 8539 |
| Impairment |  |
| Foreign currency translation adjustment | 624 |
| **Balances at December 31, 2024** | **42768** |
| Additions | 7245 |
| Impairment | **—** |
| Foreign currency translation adjustment | (1203) |
| **Balances at December 31, 2025** | **48810** |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;11. **Accrued Expenses and Other Current Liabilities** 

Components of accrued expenses and other current liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Accrued marketing and customer service expenses<sup>(1)</sup> | 192901 | 530363 |
| Payroll and welfare payable | 308938 | 351673 |
| Payable related to services fee | 50849 | 92575 |
| Contract liability<sup>(2)</sup> | 29201 | 45996 |
| Payable related to medical crowdfunding<sup>(3)</sup> | 31072 | 31529 |
| Tax payable | 11861 | 24432 |
| Refund liability | 43478 | 22108 |
| Others | 35735 | 41772 |
| **Total** | **704035** | **1140448** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Amount represents the accrued channel cost and customer service expense payable to third-party companies.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Amount represents the fees for other revenues service to be provided over the service period. Revenue recognized for the year ended December 31, 2025 that was included in contract liabilities as of January 1, 2025 was RMB15,750. The balance of contract liability is expected to be recognized as revenue within one year.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Amount represents the fund collected through external payment network providers that have not transferred to the custodian bank related to medical crowdfunding. See note 6 for disclosure related to fund receivable from external payment network providers.

&nbsp;&nbsp;&nbsp;&nbsp;12. **Segment Information** 

As disclosed in Note 2(cc), the Group organized and reported its business in the following segments: (1) Insurance, which mainly includes insurance brokerage service and technical service; and (2) Crowdfunding, which mainly includes crowdfunding service; and (3) Others, which do not individually or in the aggregate meet the quantitative and qualitative thresholds to be individually reportable and are aggregated.

The CODM measures the performance of each segment based on metrics of operating profit/(loss) and uses these results to evaluate the performance of, and to allocate resources to, each of the segments by comparing actual operating profit/(loss) results to previously forecasted financial information. The Group currently does not allocate assets and share-based compensation expenses to its segments, as the information is not regularly provided to CODM to allocate resources to or evaluate the performance of the operating segments. As most of the Group's long-lived assets are located in the PRC and most of the Group's revenues are derived from the PRC, no geographical information is presented. Amounts included in operating costs and expenses include: (1) personnel costs, (2) costs of referral and service fees, (3) marketing expense for third-party traffic channels, (4) professional service fees, and (5) expenses of facilities and equipment and others. However, the CODM reviews consolidated expense information to manage the operations of the business.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;12. **Segment Information (continued)** 

The table below provides a summary of the Group's operating segment results.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **USD** |
| **Operating revenue, net** |  |  |  |  |
| &nbsp;&nbsp;Insurance | 2340915 | 2363777 | 3576566 | 511442 |
| &nbsp;&nbsp;Crowdfunding | 162683 | 267650 | 261636 | 37413 |
| &nbsp;&nbsp;Others | 127109 | 140394 | 139559 | 19957 |
| **Total consolidated operating revenue, net** | **2630707** | **2771821** | **3977761** | **568812** |
| **Operating costs and expenses** |  |  |  |  |
| &nbsp;&nbsp;Insurance | (1812778) | (1886572) | (2931662) | (419222) |
| &nbsp;&nbsp;Crowdfunding | (408459) | (362734) | (392311) | (56100) |
| &nbsp;&nbsp;Others | (282344) | (236925) | (231163) | (33056) |
| **Operating profit/(loss)** |  |  |  |  |
| &nbsp;&nbsp;Insurance | 528137 | 477205 | 644904 | 92220 |
| &nbsp;&nbsp;Crowdfunding | (245776) | (95084) | (130675) | (18687) |
| &nbsp;&nbsp;Others | (155235) | (96531) | (91604) | (13099) |
| **Total segment operating profit** | **127126** | **285590** | **422625** | **60434** |
| Unallocated items\* | (133869) | (107432) | (51767) | (7402) |
| **Total consolidated operating (loss)/profit** | **(6743)** | **178158** | **370858** | **53032** |
| Total other income | 170983 | 182432 | 172591 | 24679 |
| **Consolidated profit before income tax** | **164240** | **360590** | **543449** | **77711** |

---

\* The share-based compensation and impairment of intangible assets represent unallocated items in the segment information because the Group's management does not consider this as part of the segment operating performance measure.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;13. **Employee Benefits** 

Full-time employees of the Group in the PRC are entitled to welfare benefits including pension insurance, medical insurance unemployment insurance, maternity insurance, on-the-job injury insurance, and housing fund plans through a PRC government-mandated defined contribution plan. Chinese labor regulations require that the Group makes contributions to the government for these benefits based on certain percentages of the employees' salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions. Total contributions by the Group for such employee benefits were RMB207,820, RMB170,284 and RMB181,628 for the years ended December 31, 2023, 2024 and 2025, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;14. **Related Party Balances and Transactions** 

The table below sets major related parties of the Group and their relationships with the Group:

---

| | |
|:---|:---|
| **Entity or individual name**  | **Relationship with the Group** |
| Tencent Holdings Limited and its subsidiaries ("Tencent Group") | Shareholder of the Group |

---

Detail of related party balances and transactions as of and for the years ended December 31, 2023, 2024 and 2025 are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Service provided by related parties:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Marketing services from Tencent Group<sup>(1)</sup> | 79469 | 5282 | 2 |
| Payment processing services from Tencent Group<sup>(2)</sup> | 23759 | 21954 | 22092 |
| Cloud technology services from Tencent Group<sup>(3)</sup> | 31357 | 30748 | 31460 |
| Others | 891 | 2228 | 4321 |
| **Total** | **135476** | **60212** | **57875** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The Group entered into a series of cooperation agreements with Tencent Group since 2020. The Group uses Tencent Group as its platform to provide marketing service.

&nbsp;&nbsp;&nbsp;&nbsp;(2) The Group entered into a series of agreements with Tencent Group in 2016. The Group uses Weixin pay (from Tencent Group) as one of its payment processing platforms to collect cash from insurance policy holders, participants of its mutual aid plan, and users on its medical crowdfunding platform. Tencent Group charges service fee for each transaction processed.

&nbsp;&nbsp;&nbsp;&nbsp;(3) The Group entered into a series of agreements with Tencent Group since 2018. Tencent Group provides cloud technology services to the Group .

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;14. **Related Party Balances and Transactions (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;(2) Service provided to related parties:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Advertising services to Tencent Group | 560 | 1121 | 313 |
| **Total** | **560** | **1121** | **313** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(3) Amount due from related parties:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Tencent Group<sup>(1)</sup> | 257 | 209 |
| **Total** | **257** | **209** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) In addition, prepayments of RMB4,781 and RMB1,578 were recorded separately as of December 31, 2024 and 2025 under "Prepaid expense and other assets" in relation to the traffic channel service fee and others paid to Tencent Group, and the balance is amortized based on traffic volume consumed.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Amount due to related parties :

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Cloud technology services from Tencent Group | 10363 | 9324 |
| Others | 253 |  |
| **Total** | **10616** | **9324** |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;15. **Income Taxes** 

#### Cayman Islands
The Company was incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

#### Hong Kong
According to the Hong Kong regulations, Hong Kong entities are subject to a two-tiered income tax rate for taxable income earned in Hong Kong with effect from April 1, 2018. The first HK$2 million of profits earned by HK entity will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate. In addition, to avoid abuse of the two-tiered income tax rate regime, each group of connected entities can nominate only one entity to benefit from the two-tiered income tax rate. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. Under the Hong Kong tax laws, the Company is exempted from the Hong Kong income tax on foreign-derived income.

***China***

The Company's subsidiaries, consolidated VIEs and subsidiaries of the VIEs established in the PRC are mainly subject to statutory income tax at a rate of 25%.

Certain enterprises benefit from a preferential tax rate of 15% under the Enterprise Income Tax ("EIT") Law if they qualify as high and new technology enterprises ("HNTE"). Under such law, Waterdrop Technology is qualified for HNTE status and is eligible to the preferential tax rate of 15% for the years ended 2024 and 2025. Certain enterprises (including Puluo, Chongqing Hecheng Insurance Adjusting Co., Ltd., etc.) qualified as "small enterprises with low profits" and thus enjoyed a preferential income tax rate of 20% for 2024 and 2025.

#### Composition of Income Tax Expense
The current and deferred components of income tax expense included in the consolidated statements of comprehensive income were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Current income tax | 2697 | 1665 | 686 |
| Deferred income tax | (2142) | 8042 | (22294) |
| **Income tax expense / (benefit)** | **555** | **9707** | **(21608)** |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;15. **Income Taxes (continued)** 

#### Composition of Income Tax Expense (continued)
Income tax benefits for Chinese mainland operations is RMB22,283, and income tax expenses for non-Chinese mainland operations is RMB675 for the year ended December 31, 2025.

Profit/(loss) before tax consists of:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Chinese mainland | 287935 | 294733 | 471047 |
| Non-Chinese mainland | (123695) | 65857 | 72402 |
| **Profit/(loss) before tax** | **164240** | **360590** | **543449** |

---

#### Tax Reconciliation
Reconciliation between the income tax benefit computed by applying the EIT tax rate to profit before income tax and income tax expenses were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Year ended December 31,**  | **For the Year ended December 31,**  |
|  | **2023** | **2024** |
|  | **RMB** | **RMB** |
| Profit before income tax | 164240 | 360590 |
| Tax benefit at EIT tax rate of 25%<sup>(1)</sup> | 41044 | 90148 |
| Expenses not deductible for tax purposes | 108 | 634 |
| Research and development super deduction | (55169) | (42866) |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | 5653 | (17080) |
| Effect of PRC preferential tax rates | 25534 | 13091 |
| Changes in valuation allowance | (16615) | (34220) |
| **Income tax expense** | **555** | **9707** |

---

---

| | | |
|:---|:---|:---|
|  | **For the Year ended December 31,** | **For the Year ended December 31,** |
|  | **2025** | **Percent** |
|  | **RMB** | **%** |
| Profit before income tax | 543449 |  |
| Tax benefit at EIT tax rate of 25%<sup>(1)</sup> | 135862 | 25% |
| **Foreign tax effects** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Cayman Islands** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statutory tax rate difference between PRC and other jurisdictions | (24790) | (4.6)% |
| &nbsp;&nbsp;&nbsp;&nbsp;**Other foreign jurisdictions** | 6703 | 1.2% |
| **Effect of cross-border tax laws** | 582 | 0.1% |
| **Tax credits** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development super deduction | (43304) | (8.0)% |
| **Nontaxable or nondeductible Items** | 361 | 0.1% |
| **Changes in valuation allowance** | (69821) | (12.8)% |
| **Other adjustments** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of PRC preferential tax rates | (27201) | (5.0)% |
| **Income tax benefit** | **(21608)** | **(4.0)%** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The Group's major operations during the years ended December 31, 2023, 2024 and 2025 were conducted in PRC. Accordingly, the Group prepared its tax rate reconciliation starting with the PRC statutory tax rate during the years ended December 31, 2023, 2024 and 2025 .

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;15. **Income Taxes (continued)** 

#### Deferred Tax Assets and Deferred Tax Liabilities

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Deferred tax assets |  |  |
| &nbsp;&nbsp;Deductible advertising expenses exceeding the tax limit<sup>(2)</sup> | 2268 | 2149 |
| &nbsp;&nbsp;Accrued expenses | 55012 | 57089 |
| &nbsp;&nbsp;Other deductible expenses exceeding the tax limit<sup>(2)</sup> | 78 | 238 |
| &nbsp;&nbsp;Provisions for the doubtful accounts | 19117 | 21692 |
| &nbsp;&nbsp;Operating loss carry forward and others | 455358 | 494196 |
| &nbsp;&nbsp;Less: valuation allowances | (358569) | (295482) |
| &nbsp;&nbsp;**Total deferred tax assets** | **173264** | **279882** |
| Deferred tax liabilities |  |  |
| &nbsp;&nbsp;Intangible assets | 37734 | 43798 |
| &nbsp;&nbsp;Contract assets | 192687 | 277012 |
| &nbsp;&nbsp;**Total deferred tax liabilities** | **230421** | **320810** |

---

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Classification in the consolidated balance sheets: |  |  |
| &nbsp;&nbsp;Deferred tax assets | 27,028 | 2,870 |
| &nbsp;&nbsp;Deferred tax liabilities | 84,185 | 43,798 |

---

#### Movement of valuation allowance

---

| | | |
|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Balance at the beginning of the year | 378851 | 358569 |
| Additions | 54097 | 38424 |
| Reversals | (74379) | (101511) |
| **Balance at end of the year** | **358569** | **295482** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(2) Deferred income tax assets are recognized for advertising expenses and other deductible expenses that exceeds the tax deduction limit in a particular tax year to the extent that the realization of the related tax benefits through future taxable income is probable. Advertising expenses carry-forwards are permanently available for use by the Group. Other deductible expenses (mainly charitable donations) carry forwards generally expire within 3 years.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;15. **Income Taxes (continued)** 

***Movement of valuation allowance (continued)***

Valuation allowance is provided against deferred tax assets when the Group determines that it is more-likely-than-not that the deferred tax assets will not be utilized in the future. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more-likely-than-not realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses and forecasts of future profitability. These assumptions require significant judgment and the forecasts of future taxable income are consistent with the plans and estimates the Group is using to manage the underlying businesses.

As of December 31, 2024 and 2025, the Group had net operating loss carry forward of approximately RMB2,147,186 and RMB2,178,137, respectively, which arose from the subsidiaries, VIEs and the VIEs' subsidiaries established in PRC. As of December 31, 2025, the tax losses in the PRC can be carried forward for five years to offset future taxable income and the period was extended to ten years for entities qualified as HNTE in 2025 and thereafter.

In general, the PRC tax authorities have up to five years to conduct examinations of the Group's tax filings. As of December 31, 2025, the PRC subsidiaries' 2021 to 2025 tax returns remain open to examination.

#### Uncertain Tax Positions
The Enterprise Income Tax ("EIT") Law includes a provision specifying that legal entities organized outside of the PRC will be considered resident enterprises for the PRC income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered as PRC resident enterprises if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the Group's entities organized outside of the PRC should be treated as resident enterprises for the PRC income tax purposes. If the PRC tax authorities subsequently determine that the Company and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Company and its subsidiaries registered outside the PRC will be subject to the PRC income tax, at a rate of 25%.

In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises ("FIEs") earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under the double tax arrangement between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Group has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely. The Chinese subsidiaries of the Group are in accumulated loss position and will not distribute profits. Therefore, no withholding income taxes for accumulated deficit of the Group's subsidiaries have been provided as of December 31, 2024 and 2025.

The Group did not identify significant unrecognized tax benefits for the years ended December 31, 2023, 2024 and 2025. The Group did not incur any interest related to unrecognized tax benefits, did not recognize any penalties as income tax expense and also does not anticipate any significant change in unrecognized tax benefits within 12 months from December 31, 2025.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;**16.** **Ordinary Shares** 

The Company's Board of Directors approved a share repurchase program on September 7, 2021, under which the Company was authorized to repurchase up to US$50,000 of its ordinary shares in the form of ADSs over the following 12 months. On September 8, 2022, the Company's Board of Directors approved a new share repurchase program which authorized the Company to repurchase up to US$80,000 of its ordinary shares in the form of ADSs over the following 12 months. On September 6, 2023, the Company's Board of Directors approved a new share repurchase program which authorized the Company to repurchase up to US$50,000 of its ordinary shares in the form of ADSs over the following 12 months. On September 3, 2024, the Company's Board of Directors approved a new share repurchase program which authorized the Company to repurchase up to US$50,000 of its ordinary shares in the form of ADSs over the following 12 months. On September 2, 2025, the Company's Board of Directors approved a new share repurchase program which authorized the Company to repurchase up to US$50,000 of its ordinary shares in the form of ADSs over the following 12 months. 30,323,622 ADSs (equivalent to 303,236,220 Class A ordinary shares) were repurchased during the year ended December 31, 2023 at a total consideration of RMB526,025. 12,356,600 ADSs (equivalent to 123,566,000 Class A ordinary shares) were repurchased during the year ended December 31, 2024 at a total consideration of RMB 106,979. 7,981,923 ADSs (equivalent to 79,819,230 Class A ordinary shares) were repurchased during the year ended December 31, 2025 at a total consideration of RMB 91,234. The repurchased shares were presented as treasury stock, using the par value method on the consolidated balance sheets as of December 31, 2024 and 2025.

As of December 31, 2025, the Company has 3,608,834,920 shares issued and outstanding, including 2,806,929,941 Class A ordinary shares and 801,904,979 Class B ordinary shares.

**17.**Share-Based Compensation

A summary of share-based compensation expense recognized related to share options granted and RSUs granted is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Sales and marketing expenses | 35352 | 6825 | 6296 |
| General and administrative expenses | 85335 | 69245 | 40897 |
| Research and development expenses | 13182 | 10802 | 4574 |
|  | **133869** | **86872** | **51767** |

---

As of December 31, 2025, unrecognized compensation cost related to unvested RSUs granted, share option awards granted to employees of the Group was RMB58,412. As of December 31, 2025, such cost was expected to be recognized over a weighted average period of 1.6 years.

*Share Option granted by the Company*

In 2019, the Group adopted the 2018 share incentive plan (the "2018 Plan"), which permits the grant of three types of awards: options, restricted shares, and restricted share units. Persons eligible to participate in the 2018 Plan includes employees (including members of management) of the Company, the Company's parent companies and subsidiaries. Upon the adoption of the 2018 Plan, the maximum ordinary shares available for issuance were 62,504,000. According to the resolutions of the board of director in 2019, the Group reserved additional 321,655,746 ordinary shares for the 2018 Plan, and the maximum ordinary shares available for issuance were increased to 384,159,746.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;17. **Share-Based Compensation (continued)** 

*Share Option granted by the Company (continued)*

During the year ended December 31, 2023, the Group granted 281,250 options under the 2018 Plan with a weighted average exercise prices of US$0.08 (RMB0.57). During the year ended December 31, 2024 and 2025, there are no options granted under the 2018 Plan. The term of the option is fixed and does not exceed 10 years from the date of the grant. The options will vest in accordance with the vesting schedules set out in the respective share option agreements with vesting period ranging from 1 to 4 years.

In 2021, the Group adopted the 2021 share incentive plan (the "2021 Plan"), the maximum aggregate number of shares which may be issued pursuant to all awards under the 2021 Plan shall initially be 80,508,501 shares, plus an annual increase on the first day of each year during the ten-year term of the 2021 Plan commencing with the year beginning January 1, 2022, by an amount equal to the lesser of (i) 2% of the total number of shares issued and outstanding on an as-converted fully diluted basis on the last day of the immediately preceding year and (ii) such number of shares as may be determined by the board. The annual increase shall cease to occur upon expiry of the ten-year term of the 2021 Plan. There are no options granted under the 2021 Plan as of December 31, 2024 and 2025.

The vesting of the share options granted during the years ended December 31, 2023 are only subject to service condition.

The following table sets forth the share options activities under the 2018 Plan for the years ended December 31, 2023, 2024 and 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | <br>**Number of**<br>**Options** | <br>**Weighted**<br>**Average**<br>**Exercise**<br>**Price** | **Weighted**<br>**Average**<br>**remaining**<br>**contractual**<br>**life** | **Weighted**<br>**Average**<br>**Grant-**<br>**date Fair**<br>**Value** | <br>**Aggregate**<br>**Intrinsic**<br>**Value** |
|  |  | **RMB** | **RMB** | **RMB** | **RMB** |
| **Outstanding as of January 1, 2023** | **189412557** | **0.28** | **6.95** | **2.14** | **452543** |
| Granted | 281250 | 0.57 |  | 0.57 |  |
| Exercised | (72294940) | 0.14 |  | 1.52 |  |
| Forfeited | (11127905) | 0.46 |  | 4.11 |  |
| **Outstanding as of December 31, 2023** | **106270962** | **0.36** | **6.19** | **2.56** | **276835** |
| Exercised | (16036480) | 0.47 |  | 2.53 |  |
| Forfeited | (3312540) | 0.57 |  | 4.18 |  |
| **Outstanding as of December 31, 2024** | **86921942** | **0.37** | **5.19** | **2.55** | **226780** |
| Exercised | (22326290) | 0.28 |  | 2.72 |  |
| Forfeited | (116600) | 0.58 |  | 3.26 |  |
| **Outstanding as of December 31, 2025** | **64479052** | **0.40** | **4.15** | **2.48** | **161932** |
| **Exercisable as of December 31, 2025** | **57040610** | **0.37** | **4.00** | **2.12** | **122633** |

---

The total intrinsic value of options exercised during the years ended December 31, 2024 and 2025 was RMB6,190 and RMB21,003, respectively.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;17. **Share-Based Compensation (continued)** 

*Share Option granted by the Company (continued)*

The Group calculated the estimated fair value of the share options on the respective grant dates using the binomial option pricing model with the assistance from an independent valuation firm, with the following assumptions.

---

| | |
|:---|:---|
|  | **Year Ended** <br>**December 31** |
|  | **2023** |
| Risk free rate of interest | 2.55%-2.94 |
| Volatility | 28% |
| Dividend yield |  |
| Exercise multiples | 2.2 |
| Life of options (years) | 10 |
| Fair value of underlying ordinary shares | $0.11~$0.29 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Risk free rate of interest

Based on the daily treasury long term rate of U.S. Department of the treasury with a maturity period close to the expected term of the option.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Volatility

The volatility factor estimated was based on the annualized standard deviation of the daily return embedded in historical share prices of the selected guideline companies with a time horizon close to the expected expiry of the term.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Dividend yield

The Company had never declared or paid any cash dividends on the Company's ordinary shares as of December 31, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Exercise multiples

The expected exercise multiple was estimated as the average ratio of the stock price as at the time when employees would decide to voluntarily exercise their vested options. As the Group did not have sufficient information of past employee exercise history, it was estimated by referencing to academic research publications.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Fair value of underlying ordinary shares

The estimated fair value of the ordinary shares underlying the options as of the respective grant dates was determined based on market value of the Company's shares on each date of grant.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;17. **Share-Based Compensation (continued)** 

*Restricted share units("RSUs") granted by the Company*

During the year ended December 31, 2024 and 2025, the Group granted 22,140,000 and 3,180,000 restricted share units to certain employees and senior management under the 2018 Plan, which vest over 1 to 4 years. The estimated fair value of each RSU granted is based on market value of the Company's shares on each date of grant. A summary of the RSUs activities under the 2018 Plan for the year ended December 31, 2023, 2024 and 2025 is presented as follow:

---

| | | |
|:---|:---|:---|
|  | <br>**Number of RSUs** | **Weighted Average**<br>**Grant-date**<br>**Fair Value** |
|  |  | **RMB** |
| **Unvested as of January 1, 2023** | **101770350** | **0.84** |
| Granted | 69910980 | 1.41 |
| Vested | (22617630) | 0.91 |
| Forfeited or cancelled | (44548350) | 0.94 |
| **Unvested as of December 31, 2023** | **104515350** | **1.22** |
| Granted | 22140000 | 0.78 |
| Vested | (30681250) | 1.14 |
| Forfeited or cancelled | (23152890) | 1.44 |
| **Unvested as of December 31, 2024** | **72821210** | **1.08** |
| Granted | 3180000 | 1.43 |
| Vested | (34122920) | 0.95 |
| Forfeited or cancelled | (3751600) | 1.08 |
| **Unvested as of December 31, 2025** | **38126690** | **1.23** |

---

During the year ended December 31, 2024 and 2025, the Group granted 48,636,040 and 25,057,850 restricted share units to certain employees and senior management under the 2021 Plan, which vest over 1 to 4 years. The estimated fair value of each RSU granted is based on market value of the Company's shares on each date of grant. A summary of the RSUs activities under the 2021 Plan for the year ended December 31, 2024 and 2025 is presented as follow:

---

| | | |
|:---|:---|:---|
|  | <br>**Number of RSUs** | **Weighted Average**<br>**Grant-date** <br>**Fair Value** |
|  |  | **RMB** |
| **As of December 31, 2023** | **—** | **—** |
| Granted | 48636040 | 0.83 |
| Vested |  |  |
| Forfeited or cancelled | (2000000) | 0.84 |
| **Unvested as of December 31, 2024** | **46636040** | **0.83** |
| Granted | 25057850 | 1.09 |
| Vested | (7431200) | 0.85 |
| Forfeited or cancelled | (12875970) | 0.88 |
| **Unvested as of December 31, 2025** | **51386720** | **0.94** |

---

The total fair value of RSU vested during the years ended December 31, 2024 and 2025 was RMB26,798 and RMB44,733, respectively.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

**17.** **Share-Based Compensation (continued)**

*Share Option granted by Shenlanbao*

Shenlanbao has the following active share incentive plans: 2019 SLB share incentive plan, 2020 SLB share incentive plan, 2021 SLB share incentive plan and 2022 SLB share incentive plan (collectively referred to as the "SLB plans"). The SLB plans permit the grant of option to the directors and employees to purchase Shenlanbao's shares. Pursuant to the above plan, a maximum aggregate of 1,000,000 registered capital of Shenlanbao may be issued. The term of the option is fixed and does not exceed 5 years from the date of the grant. The options will vest ratably over a 4-year vesting period from the grant date and are only subject to service condition.

In September 2023, the board of Shenlanbao approved the amended and restated SLB plan (the "New SLB Plan"), which adjusted the number of shares to a maximum aggregate of 577,121 registered capital. The New SLB Plan also reduced the exercise price of the option and extended the term of option to 10 years. The Group accounted for the reduction of the exercise price of the options as a modification which requires the re-measurement of the fair value of these share options. This remeasurement resulted in a total incremental share-based compensation of RMB4,794, RMB2,018 of which is recognized on the modification date in 2023, and the remaining will be amortized through the vesting period of the option. During the year ended December 31, 2025, there are no options granted under the New SLB Plan.

In June 30 2025, the board of Shenlanbao approved the termination of the SLB plans and the New SLB Plan, and all the outstanding options as of the date were cancelled.

The following table summarizes the option activity for the year ended December 31, 2023, 2024 and 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | <br>**Number of**<br>**Options** | <br>**Weighted**<br>**Average**<br>**Exercise**<br>**Price** | **Weighted**<br>**Average**<br>**remaining**<br>**contractual**<br>**life** | **Weighted**<br>**Average**<br>**Grant-**<br>**date Fair**<br>**Value** | &nbsp;&nbsp;&nbsp;&nbsp; <br>**Aggregate**<br>**Intrinsic**<br>**Value** |
|  |  | **RMB** | **RMB** | **RMB** | **RMB** |
| **Outstanding as of the acquisition date** | **450246** | **15.90** | **7.68** | **24.81** | **7162** |
| Forfeited | (19438) | 23.57 |  | 21.41 |  |
| **Outstanding as of December 31, 2023** | **430808** | **15.55** | **7.69** | **24.96** | **6921** |
| Forfeited | (91563) | 15.48 |  | 28.84 |  |
| **Outstanding as of December 31, 2024** | **339245** | **16.01** | **6.54** | **23.91** | **5266** |
| Forfeited or cancelled | (339245) | 16.01 |  | 23.91 |  |
| **Outstanding as of December 31, 2025** | **—** | **—** | **—** | **—** | **—** |

---

The Group calculated the estimated fair value of the share options on the respective grant dates using the binomial option pricing model with the assistance from an independent valuation firm, with the following assumptions.

---

| | |
|:---|:---|
|  | **Year Ended December 31** |
|  | **2023** |
| Risk free rate of interest | 2.64%-3.01 |
| Volatility | 29.8%-44.2 |
| Dividend yield |  |
| Exercise multiples | 2.2-2.8 |
| Life of options (years) | 10 |
| Fair value of underlying ordinary shares | 13.37~36.29 |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;18. **Dividends** 

No dividends had been paid or declared by the Company for the year ended December 31, 2023.

On March 26, 2024, the Company announced that the Board of Directors approved a special cash dividend of US$0.004 per ordinary share, or US$0.04 per ADS, to shareholders of record as of the close of business on April 19, 2024. Dividends are recognized when declared. The aggregate amount of the special dividend was approximately RMB106,766 (US$14,792).

On September 4, 2024, the Company announced that the Board of Directors approved a special cash dividend of US$0.002 per ordinary share, or US$0.02 per ADS, to shareholders of record as of the close of business on October 11, 2024. Dividends are recognized when declared. The aggregate amount of the special dividend was approximately RMB51,905 (US$7,298).

On March 12, 2025, the Company announced that the Board of Directors approved a cash dividend of US$0.002 per ordinary share, or US$0.02 per ADS, to shareholders of record as of the close of business on April 11, 2025. Dividends are recognized when declared. The aggregate amount of the dividend was approximately RMB52,597 (US$7,268).

On September 4, 2025, the Company announced that the Board of Directors approved a cash dividend of US$0.003 per ordinary share, or US$0.03 per ADS, to shareholders of record as of the close of business on October 10, 2025. Dividends are recognized when declared. The aggregate amount of the dividend was approximately RMB77,816 (US$10,896).

On March 25, 2026, the Company announced that the Board of Directors approved a cash dividend of US$0.003 per ordinary share, or US$0.03 per ADS, to shareholders of record as of the close of business on April 24, 2026. The payment date is expected to be on or around May 13, 2026 for holders of ordinary shares and on or around May 20, 2026 for holders of ADSs. Dividends are recognized when declared. The aggregate amount of the dividend was expected to be approximately RMB74,629 (US$10,814).

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;19. **Net Profit Per Share** 

Net profit per share was computed by dividing net profit available to ordinary shareholders by the weighted average number of ordinary shares outstanding:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| **Basic net profit per share calculation** |  |  |  |
| **Numerator:** |  |  |  |
| Net profit attributable to ordinary shareholders for computing basic net profit per ordinary shares | 167221 | 367510 | 568936 |
| **Denominator:** |  |  |  |
| Weighted average ordinary shares outstanding used in computing basic net profit per ordinary shares | 3769679736 | 3650504339 | 3615328154 |
| Net profit per ordinary share attributable to ordinary shareholders basic | 0.04 | 0.10 | 0.16 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| **Diluted net profit per share calculation** |  |  |  |
| **Numerator:** |  |  |  |
| Net profit attributable to ordinary shareholders for computing diluted net profit per ordinary shares | 167221 | 367510 | 568936 |
| **Denominator:** |  |  |  |
| Weighted average ordinary shares outstanding used in computing basic net profit per ordinary shares | 3769679736 | 3650504339 | 3615328154 |
| Effect of potentially diluted share options | 74855096 | 40492143 | 48326766 |
| Effect of potentially diluted restricted share units | 36326664 | 28780473 | 49863156 |
| Weighted average ordinary shares outstanding used in computing diluted net profit per ordinary shares | 3880861496 | 3719776955 | 3713518076 |
| Net profit per ordinary share attributable to ordinary shareholders diluted | 0.04 | 0.10 | 0.15 |

---

The following shares outstanding were excluded from the calculation of diluted net profit per ordinary share, as their inclusion would have been anti-dilutive for the periods prescribed.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
| Shares issuable upon exercise of share options | 66,708,248 | 34,069,011 | 975,417 |
| Shares issuable upon vesting of restricted share units | 20,141,606 | 23,964,024 | 6,365,858 |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;20. **Leases** 

The Group leases certain office premises and equipment to support its core business under noncancelable leases. The Group determines if an arrangement is a lease at inception. Some lease agreements contain lease and non-lease components, which the Group chooses not to account for as separate components as the Group has elected the practical expedient. The Group also elected the short-term lease exemption for all contracts with lease terms of 12 months or less. As of December 31, 2024 and 2025, the Group had no long-term lease respectively that was classified as financing lease. As of December 31, 2024 and 2025, the Group had no significant lease contract that has been entered into but not yet commenced.

Some leases were terminated before the expiration of the lease term, the relevant right-of-use asset and the lease liability were derecognized with the difference amounted to RMB 378 recognized under operating costs and expenses in the consolidated statements of operations. The noncash decrease of operating lease right-of-use assets was RMB 20,165.

A summary of supplemental information related to operating leases and financing leases were as follow:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
| Operating leases-Weighted average remaining lease term | 2.03 | 1.43 | 2.52 |
| Financing leases-Weighted average remaining lease term | 0.04 | N/A | N/A |
| Operating leases-Weighted average discount rate | 5.10% | 4.00% | 3.95% |
| Financing leases-Weighted average discount rate | 7.10% | N/A | N/A |

---

The components of lease expense were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Operating lease cost | 36911 | 37490 | 23287 |
| Financing lease cost |  |  |  |
| &nbsp;&nbsp;Amortization of right-of-use assets | 87 |  |  |
| &nbsp;&nbsp;Interest on lease liabilities | 2 |  |  |
| Short-term lease cost | 8520 | 5441 | 6157 |
| Total | 45520 | 42931 | 29444 |

---

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;20. **Leases (continued)** 

Supplemental information related to the Group's leases were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Cash paid for operating leases | 31988 | 35491 | 25224 |
| Cash paid for financing leases |  |  |  |
| &nbsp;&nbsp;Operating cash flows from finance leases | 56 |  |  |
| &nbsp;&nbsp;Financing cash flows from finance leases | 19 |  |  |

---

Non-cash ROU assets in exchange for new lease liabilities:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,**  | **Year ended December 31,**  | **Year ended December 31,**  |
|  | **2023** | **2024** | **2025** |
|  | **RMB** | **RMB** | **RMB** |
| Operating leases | 67,122 | 63,570 | 21,420 |

---

The following is a maturity analysis as of December 31, 2025:

---

| | |
|:---|:---|
|  | **As of December 31,** <br>**2025** |
|  | **Operating Leases** |
|  | **RMB** |
| 2026 | 11867 |
| 2027 | 7855 |
| 2028 | 5406 |
| Subtotal | 25128 |
| Less: imputed interest | (1602) |
| **Lease liabilities** | **23526** |

---

&nbsp;&nbsp;&nbsp;&nbsp;21. **Commitments and Contingencies** 

The Group is subject to periodic legal or administrative proceedings in the ordinary course of business. The Group does not believe that any currently pending legal or administrative proceeding to which the Group is a party will have a material effect on its business or financial condition.

[**Table of Contents**](#TOC)

**WATERDROP INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(All amounts in thousands, except for share and per share data, or otherwise noted)**

&nbsp;&nbsp;&nbsp;&nbsp;22. **Statutory Reserves and Restricted Net Asset** 

In accordance with the PRC laws and regulations, the Group's PRC subsidiaries and VIEs are required to make appropriation to certain statutory reserves, namely general reserve, enterprise expansion reserve, and staff welfare and bonus reserve, all of which are appropriated from net profit as reported in their PRC statutory accounts. The Group's PRC subsidiaries and VIEs are required to appropriate at least 10% of their after-tax profits to the general reserve until such reserve has reached 50% of their respective registered capital.

Appropriations to the enterprise expansion reserve and the staff welfare and bonus reserve are to be made at the discretion of the board of directors of each of the Group's PRC subsidiaries and VIEs. There were no appropriations to these reserves by the Group's PRC entities for the years ended December 31, 2023, 2024 and 2025.

As a result of PRC laws and regulations and the requirement that distributions by the PRC entity can only be paid out of distributable profits computed in accordance with the PRC GAAP, the PRC entity is restricted from transferring a portion of their net assets to the Company. Amounts restricted include paid-in capital and statutory reserves of the Group's subsidiaries and VIEs. As of December 31, 2025, the aggregate amounts of paid-in capital and statutory reserves represented the amount of net assets of the relevant entity in the Group not available for distribution amounted to RMB1,601,509.

**23.**Subsequent event

The Board has approved a cash dividend of US$0.03 per ADS or US$0.003 per ordinary share, for a total amount of approximately RMB74,629 (US$10,814), to shareholders of record as of the close of business on April 24, 2026. The payment date is expected to be on or around May 13, 2026 for holders of ordinary shares and on or around May 20, 2026 for holders of ADSs.

[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### SCHEDULE 1-CONDENSED BALANCE SHEETS
**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,**  | **As of December 31,**  | **As of December 31,**  |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
|  |  |  | **(Note 2)** |
| **Assets** |  |  |  |
| Current assets |  |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | 589440 | 88969 | 12723 |
| &nbsp;&nbsp;Short-term investments | 566434 | 14636 | 2093 |
| &nbsp;&nbsp;Prepaid expense and other assets | 22875 | 21590 | 3087 |
| &nbsp;&nbsp;Amount due from its subsidiaries and the consolidated VIEs | 163933 | 235966 | 33743 |
| Total current assets | 1342682 | 361161 | 51646 |
| Non-current assets |  |  |  |
| &nbsp;&nbsp;Long-term investments and amount due from its subsidiaries and the consolidated VIEs (non-current) | 3603026 | 5155445 | 737219 |
| Total non-current assets | 3603026 | 5155445 | 737219 |
| **Total assets** | **4945708** | **5516606** | **788865** |
| **Liabilities** |  |  |  |
| Current liabilities |  |  |  |
| &nbsp;&nbsp;Accrued expenses and other current liabilities | 1563 | 1099 | 157 |
| &nbsp;&nbsp;Amount due to its subsidiaries and the consolidated VIEs | 146710 | 363579 | 51991 |
| Total current liabilities | 148273 | 364678 | 52148 |
| **Total liabilities** | **148273** | **364678** | **52148** |
| **Shareholders' Equity:** |  |  |  |
| &nbsp;&nbsp;Ordinary shares (US$0.000005 par value; 10,000,000,000 shares authorized, 8,900,000,000 Class A ordinary shares authorized, 3,282,256,521 Class A ordinary shares issued, 2,822,868,761 and 2,806,929,941 Class A ordinary shares outstanding as of December 31, 2024 and 2025, respectively; 1,000,000,000 Class B ordinary shares authorized, 801,904,979 Class B ordinary shares issued and outstanding as of December 31, 2024 and 2025) | 139 | 143 | 21 |
| &nbsp;&nbsp;Treasury stock | (15) | (16) | (2) |
| &nbsp;&nbsp;Additional paid-in capital | 6832214 | 6733696 | 962906 |
| &nbsp;&nbsp;Accumulated other comprehensive income | 159550 | 43622 | 6238 |
| &nbsp;&nbsp;Accumulated deficit | (2194453) | (1625517) | (232446) |
| **Total shareholders' equity** | **4797435** | **5151928** | **736717** |
| **Total liabilities and shareholders' equity** | **4945708** | **5516606** | **788865** |

---

[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### SCHEDULE 1-CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
**(All amounts in thousands, except for share and per share data, or otherwise noted)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
|  |  |  |  | **(Note 2)** |
| **Operating revenue, net** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;Operating costs and expenses | (87060) | (42575) | (24721) | (3535) |
| &nbsp;&nbsp;Interest income | 29337 | 93591 | 111796 | 15987 |
| &nbsp;&nbsp;Foreign currency exchange (loss)/gain | (92) | (216) | 864 | 124 |
| &nbsp;&nbsp;Income tax expense |  | (1433) | (365) | (52) |
| &nbsp;&nbsp;Others, net | 3077 | 13439 | 13731 | 1964 |
| &nbsp;&nbsp;Equity in profit of subsidiaries and VIEs | 221959 | 304704 | 467631 | 66868 |
| **Net profit** | **167221** | **367510** | **568936** | **81356** |
| **Net profit attributable to ordinary shareholders** | **167221** | **367510** | **568936** | **81356** |
| &nbsp;&nbsp;Foreign currency transaction adjustments | 37413 | 44773 | (106666) | (15253) |
| &nbsp;&nbsp;Unrealized loss on available-for-sale investments, net of tax | (1551) | (29330) | (9262) | (1324) |
| **Total comprehensive income attributable to ordinary shareholders** | **203083** | **382953** | **453008** | **64779** |

---

[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### SCHEDULE 1-CONDENSED STATEMENTS OF CASH FLOW

#### (All amounts in thousands, except for share and per share data, or otherwise noted)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
|  |  |  |  | **(Note 2)** |
| **Cash Flows from Operating Activities:** | **621178** | **1615062** | **427168** | **61084** |
| **Cash Flows from Investing Activities:** |  |  |  |  |
| &nbsp;&nbsp;Purchase of short-term investments | (1376678) | (2066920) | (2131234) | (304762) |
| &nbsp;&nbsp;Proceeds from maturity of short-term investments | 1140429 | 2132554 | 2650208 | 378975 |
| &nbsp;&nbsp;Investment in subsidiaries | (5938) | (14664) |  |  |
| &nbsp;&nbsp;Purchase of long-term investments | (57550) | (1009619) | (1294927) | (185172) |
| &nbsp;&nbsp;Proceeds from early redemption of long-term investments |  | 35979 | 72541 | 10373 |
| &nbsp;&nbsp;Prepaid investments |  |  |  |  |
| **Net cash used in investing activities** | **(299737)** | **(922670)** | **(703412)** | **(100586)** |
| **Cash Flows from Financing Activities:** |  |  |  |  |
| &nbsp;&nbsp;Proceeds from exercise of share option | 11710 | 7225 | 6430 | 920 |
| &nbsp;&nbsp;Payment for share repurchase | (526025) | (106979) | (91234) | (13046) |
| &nbsp;&nbsp;Dividend to shareholders |  | (158671) | (130413) | (18649) |
| **Net cash used in financing activities** | **(514315)** | **(258425)** | **(215217)** | **(30775)** |
| &nbsp;&nbsp;Effect of exchange rate changes on cash and cash equivalents | (24678) | 21208 | (9010) | (1289) |
| **Net (decrease)/increase in cash and cash equivalents** | **(217552)** | **455175** | **(500471)** | **(71566)** |
| **Total cash and cash equivalents at beginning of year** | **351817** | **134265** | **589440** | **84289** |
| **Total cash and cash equivalents at end of year** | **134265** | **589440** | **88969** | **12723** |

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[**Table of Contents**](#TOC)

#### WATERDROP INC.

#### SCHEDULE 1-CONDENSED STATEMENTS OF CASH FLOW (Continued)

#### (All amounts in thousands, except for share and per share data, or otherwise noted)
&nbsp;&nbsp;&nbsp;&nbsp;1. Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;2. The condensed financial information of Waterdrop Inc. has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;3. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Group and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Group as of December 31, 2024 and 2025 and the years ended 2023, 2024 and 2025. No dividend was paid by the Group's subsidiaries to Waterdrop Inc. in 2023, 2024 and 2025.

&nbsp;&nbsp;&nbsp;&nbsp;4. As of December 31, 2025, there were no material contingencies, significant provisions of long term obligations, and mandatory dividend or redemption requirements of redeemable shares or guarantees of the Group, except for those which have been separately disclosed in the Consolidated Financial Statement, if any .

## Exhibit 4.21

**Exhibit 4.21**

**Amended and Restated Equity Interest Pledge Agreement**

This Amended and Restated Equity Interest Pledge Agreement (this "**Agreement**") has been executed by and among the following parties on March 11, 2026 in Beijing, the People's Republic of China ("**China**" or "**PRC**").

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| | |
|:---|:---|
| **Party A:** | **Beijing Shuidi Technology Group Co., Ltd. (formerly known as Beijing Jiankang Zhijia Technology Co., Ltd.)** (hereinafter the "**Pledgee**"), a limited liability company established and existing under the laws of the PRC, with its registered address at Room 802, Section B, 8th Floor, No. 203, Zone 2, Lize Middle Park, Chaoyang District, Beijing. |

---

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| | |
|:---|:---|
| **Party B:** | Party C's all shareholders as listed in Annex I of this Agreement (Herein- after referred to individually as "**Pledgor**", collectively as "**Pledgors**"); and |

---

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| | |
|:---|:---|
| **Party C:** | **Beijing Zhuiqiu Jizhi Technology Co., Ltd.,** a limited liability company established and existing under the laws of the PRC, with its registered address at Room 704, Section B, 7th Floor, No. 203, Zone 2, Lize Middle Park, Chaoyang District, Beijing. |

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In this Agreement, each of Pledgee, Pledgors and Party C shall be referred to individually as a "**Party**", collectively as the "**Parties**".

**Whereas:**

&nbsp;&nbsp;&nbsp;&nbsp;1. Party A, Party B, Party C and YANG Guang (ID number: \*\*\*) entered into an Equity Interest Pledge Agreement on October 28, 2019 (the "**Original Agreement** ")

&nbsp;&nbsp;&nbsp;&nbsp;2. The Pledgors are the registered shareholders of Party C and lawfully hold all the equity of Party C. As of the effective date of this Agreement, Party C's ownership structure is as shown in **Annex I** hereto. Party C is a limited liability company registered in Beijing, China. Party C acknowledges the respective rights and obligations of Pledgors and Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge;

&nbsp;&nbsp;&nbsp;&nbsp;3. The Pledgee is a wholly foreign owned enterprise registered in China. Pledgee and Party C which is wholly owned by the Pledgors have executed an *Exclusive Business Cooperation Agreement* (as defined below) in Beijing; Pledgee, Pledgors and Party C have executed an *Exclusive Option Agreement* (as defined below); each Pledgor has executed a *Power of Attorney* (as defined below) in favor of Pledgee; Pledgee and Pledgors have executed a *Loan Agreement* (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;4. To ensure that Party C and Pledgors fully perform their obligations under the *Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Loan Agreement and the Power of Attorney*, each Pledgor hereby pledges to the Pledgee all of the equity interest that such Pledgor holds in Party C as security for fulfillment by Party C and Pledgors of their obligations under the *Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Loan* 

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*Agreement and the Power of Attorney*.

To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon the following terms.

**Section 1** **Definitions**

Unless otherwise provided herein, the terms below shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Pledge: shall refer to the security interest granted by Pledgors to Pledgee pursuant to Section 2 of this Agreement, i.e., the right of Pledgee to be compensated on a preferential basis with the conversion, auction or sales price of the Equity Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 Equity Interest: shall refer to all equity interests in Party C lawfully owned by Pledgors as of the date of this Agreement (for details of Equity Interest of each Pledgor, please refer to <u>Annex I</u>), and all of the equity interests hereafter acquired by Pledgors in Party C.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 Term of Pledge: shall refer to the term set forth in Section 3 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4 Transaction Documents: the Exclusive Business Cooperation Agreement executed on October 25, 2019 ()"**Exclusive Business Cooperation Agreement**") by and between Party C and Pledgee ； the Amended and Restated Exclusive Option Agreement executed on March 11, 2026 (**"Exclusive Option Agreement"**) by and among Party C, Pledgors and Pledgee; the Loan Agreement executed by the Pledgors on October 28, 2019 (**"Loan Agreement"**) and the Amended and Restated Power of Attorney executed by the Pledgors on March 11, 2026 (**"Power of Attorney"**), and any modification, amendment and/or restatement to the aforementioned documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5 Contract Obligations: shall refer to all the obligations of Pledgors under the Exclusive Option Agreement, the Loan Agreement, the Power of Attorney and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Loan Agreement and this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6 Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by Pledgee, incurred as a result of any Event of Default. The amount of such loss shall be calculated in accordance with the reasonable business plan and profit forecast of Pledgee, the consulting and service fees payable to Pledgee under the Exclusive Business Cooperation Agreement, all expenses occurred in connection with enforcement by Pledgee of Pledgors' and/or Party C's Contract Obligations and etc..

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7 Event of Default: shall refer to any of the circumstances set forth in Section 7 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.8 Notice of Default: shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default.

**Section 2** **The Pledge**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 Pledgors agree to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under this Agreement. Party C hereby assents that Pledgors pledge the Equity Interest to the Pledgee pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgors may receive dividends distributed on the Equity Interest only with prior written consent of Pledgee. Dividends received by Pledgors on Equity Interest after deduction of individual income tax paid by Pledgors shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 Pledgors may subscribe for capital increase in Party C only with prior written consent of Pledgee. Any equity interest obtained by Pledgors as a result of such Pledgor's subscription of the increased registered capital of Party C shall also be deemed as Equity Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgors upon Party C's dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designate and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee under the premise of compliance with applicable PRC laws.

**Section 3** **Term of Pledge**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein has been registered with relevant administration for market regulation (the "**AMR** "), and thereafter shall be continuously valid until all Contract Obligations have been fulfilled and all Secured Indebtedness have been repaid up. Pledgors and Party C shall (1) register the Pledge hereof in the shareholders' register of Party C within 3 business days following the execution of this Agreement, and (2) fulfill the registration of the Pledge hereof at AMR as soon as possible following the execution of this Agreement but shall be no later than one year following the execution of this Agreement. The Parties jointly confirm that for the

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purpose of registering the Pledge with the AMR, the Parties and other shareholders of Party C shall, submit a copy of this Agreement or an equity pledge agreement executed in the form required by the local AMR where Party C resides which shall truly reflect the information of the Pledge hereunder (the "**AMR Equity Pledge Agreement**") to the AMR. Where there is any inconsistency between AMR Equity Pledge Agreement and this Agreement and Transaction Documents, this Agreement and Transaction Documents shall prevail. Pledgors and Party C shall submit all necessary documents and complete all necessary procedures, pursuant to the PRC laws and regulations and the requirements of relevant AMR, to ensure that the Pledge shall be registered as soon as possible after filing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 During the Term of the Pledge, in the event the Pledgors and/or Party C fail to perform the Contract Obligations or pay Secured Indebtedness, the Pledgee shall have the right, but not the obligation, to exercise the Pledge in accordance with the provisions of this Agreement.

**Section 4** **Custody of Records for Equity Interest subject to Pledge**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 During the Term of the Pledge set forth in this Agreement, the Pledgors shall deliver to the Pledgee's custody the capital contribution certificate for the Equity Interest and the shareholders' register containing the Pledge within one week from the execution of this Agreement. The Pledgee shall have custody of such documents during the entire Term of the Pledge set forth in this Agreement.

**Section 5** **Representations and Warranties of Pledgors and Party C**

As of the execution of this Agreement, Pledgors and Party C hereby jointly and respectively represent and warrant to Pledgee that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 Pledgors are the sole legal and beneficial owner of the Equity Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 Except for the Pledge and the Transaction Documents, Each Pledgor has not placed any security interest or other encumbrance on the Equity Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 Pledgors and Party C have obtained any and all approvals and consents from applicable government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C's Sections of association or other constitutional documents; (iii) result in any breach of or constitute any default under any contract or instrument to which it is a party or by which it is otherwise bound; (iv) result in any violation of any related condition for the grant and/or maintenance of any permit or approval granted to any Party; or (v) cause any permit or approval

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granted to any Party to be suspended, cancelled or attached with additional conditions.

**Section 6** **Covenants of Pledgors and Party C**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 During the term of this Agreement, Pledgors and Party C hereby jointly and respectively covenant to the Pledgee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.1 Pledgors shall not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest or any portion thereof, without the prior written consent of Pledgee, except for the performance of the Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.2 Pledgors and Party C shall comply with the provisions of all laws and regulations related to the pledge of rights, and within ten (10) days of receipt of any notice, order or recommendation issued or prepared by relevant competent authorities regarding the Pledge, shall present the aforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee's reasonable request or upon consent of Pledgee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.3 Pledgors and Party C shall promptly notify Pledgee of any event or notice received by Pledgors that may cause any impact on the Equity Interest or any portion thereof, as well as any event or notice received by Pledgors that may have an impact on any guarantees and other obligations of Pledgors arising out of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.4 To maintain the validity of this Agreement, Party C shall complete the registration for the extension of its operation term within three (3) months prior to the expiration of its operation term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 Pledgors agree that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted or harmed by Pledgors or any heirs or representatives of such Pledgor or any other persons through any legal proceedings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 To protect or perfect the security interest granted by this Agreement for fulfillment of Contract Obligations and repayment of Secured Indebtedness, Pledgors hereby undertake to execute in good faith and to cause other parties who have an interest in the Pledge to execute all certificates, agreements, deeds and/or covenants required by Pledgee. Pledgors also undertake to perform and to cause other parties who have an interest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee of its rights and authority granted thereto by this Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with Pledgee or designee(s) of Pledgee (natural persons/legal persons). Pledgors undertake to provide Pledgee within a reasonable time with all

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notices, orders and decisions regarding the Pledge that are required by Pledgee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 Pledgors hereby undertake to comply with and perform all guarantees, promises, agreements, representations and conditions under this Agreement. In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgors shall indemnify Pledgee for all losses resulting therefrom.

**Section 7** **Event of Default**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 The following circumstances shall be deemed Event of Default:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.1 Pledgors' any breach to any obligations under the Transaction Documents and/or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.2 Party C's any breach to any obligations under the Transaction Documents and/or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described in Section 7.1, Pledgors and Party C shall immediately notify Pledgee in writing accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee's satisfaction within twenty (20) days after the Pledgee and/or Party C delivers a notice to the Pledgors requesting rectification of such Event of Default, Pledgee may issue a Notice of Default to Pledgors in writing at any time thereafter, demanding the exercise of Pledge in accordance with the provisions of Section 8 of this Agreement.

**Section 8** **Exercise of Pledge**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 Pledgee shall issue a Notice of Default to Pledgors when exercising the Pledge.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge at any time after the issuance of the Notice of Default. Once Pledgee elects to enforce the Pledge, Pledgors shall cease to be entitled to any rights or interests associated with the Equity Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 After Pledgee issues a Notice of Default to Pledgors in accordance with Section 8.1, Pledgee may exercise any remedy measure under applicable PRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest. The Pledgee shall not be liable for any loss incurred by the Pledgee's duly exercise of such rights and powers.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interest and to perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After the payment of the aforementioned amounts, the remaining balance shall be returned to Pledgors or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where such Pledgor resides, with all expense incurred being borne by such Pledgor. To the extent permitted under applicable PRC laws, Pledgors shall unconditionally donate the aforementioned proceeds to Pledgee or any other person designated by Pledgee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5 Pledgee may exercise any remedy measure available simultaneously or in any order. Pledgee may exercise the right to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest under this Agreement, without exercising any other remedy measure first.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6 Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and Pledgors or Party C shall not raise any objection to such exercise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7 When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgors and Party C shall provide necessary assistance to enable Pledgee to enforce the Pledge in accordance with this Agreement.

**Section 9** **Breach of Agreement**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 If Pledgors or Party C conducts any material breach of any term of this Agreement, Pledgee shall have right to terminate this Agreement and/or require Pledgors or Party C to indemnify all damages; this Section 9 shall not prejudice any other rights of Pledgee herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 Pledgors and Party C shall not have any right to terminate this Agreement in any event unless otherwise required by the applicable laws.

**Section 10** **Assignment**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 Without Pledgee's prior written consent, Pledgors and Party C shall not have the right to donate or assign their rights and obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 This Agreement shall be binding on Pledgors and his/her heirs and permitted assigns, and shall be valid with respect to Pledgee and each of his/her heirs and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 At any time, Pledgee may assign any and all of its rights and obligations under the Transaction Documents and under this Agreement to its

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designee(s), in which case the designee shall have the rights and obligations of Pledgee under the Transaction Documents and this Agreement, as if it were the original party to the Transaction Documents and this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4 In the event of a change in Pledgee due to an assignment, Pledgors and/or Party C shall, at the request of Pledgee, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register the same with the relevant AMR.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5 Pledgors and Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any of them, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. Any remaining rights of Pledgors with respect to the Equity Interest pledged hereunder shall not be exercised by any Pledgors except in accordance with the written instructions of Pledgee.

**Section 11** **Termination**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 This Agreement shall be terminated upon the fulfillment of all Contract Obligations and the full repayment of all Secured Indebtedness. Upon the fulfillment of all Contract Obligations and the full repayment of all Secured Indebtedness by Pledgors and Party C, Pledgee shall release the Pledge under this Agreement upon Pledgors' request as soon as reasonably practicable and shall assist Pledgors to de-register the Pledge from the shareholders' register of Party C and cancel the registration of Pledge with relevant AMR.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 The provisions under Sections 9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement.

**Section 12** **Handling Fees and Other Expenses**

All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees, shall be borne by Party C.

**Section 13** **Confidentiality**

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain the confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party's unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required

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to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall be held liable for breach of this Agreement.

**Section 14** **Governing Law and Resolution of Disputes**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of the PRC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.2 In the event of occurrence of any dispute arising from or with respect to the interpretation and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. Where the dispute is not solved within 30 days after delivery of request for friendly negotiation by any Party to other Parties, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with its arbitration rules. The place of arbitration shall be Beijing. The arbitration award shall be final and binding on the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.3 During the process of arbitration regarding any dispute arising from or with respect to the interpretation and performance of this Agreement or any other dispute, the Parties shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement except for the matters under dispute.

**Section 15** **Notices**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party below. A confirmation copy of each notice shall also be sent by E-mail. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.1.1 Notices given by personal delivery, courier service, registered mail or prepaid postage shall be deemed effectively given on the date of receipt or refusal at the address set forth below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission to the Fax no. set forth below (as evidenced by an automatically generated confirmation of transmission).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.2 For the purpose of notices, the addresses of the Parties are as follows:

If to Party A, Party B and Party C:

Address: Shuidi Tower, No. 203, Lize Zhong'er Road, Chaoyang District, Beijing

Attn: SHEN Peng

Telephone: \*\*\*

Email: \*\*\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.3 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms of this Section.

**Section 16** **Severability**

In the event that one or several of the provisions of this Contract are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Contract shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

**Section 17** **Effectiveness**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1 This Agreement shall become effective upon execution by the Parties. For a legal person, it shall become effective upon the affixing of its official seal; for a natural person, it shall become effective upon signing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.2 Any amendments, supplements and changes to this Agreement shall be in writing and shall become effective upon completion of the governmental filing procedures (if applicable) after the affixation of the signatures or seals of the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.3 Except for written amendments, supplements or modifications made after the execution of this Agreement, this Agreement constitutes the entire agreement among the parties with respect to the matters contemplated herein and supersedes all prior oral or written negotiations, representations and agreements with respect to the matters contemplated herein. The parties agree that upon the effective date of this Agreement, the Original Agreement shall terminate in its entirety and be superseded by this Agreement.

**Section 18** **Language and Counterparts**

This Agreement is written in Chinese in four copies. The Pledgor, the Pledgee and Party C shall hold one copy respectively and the other copy shall be used for registration.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Amended and Restated Equity Interest Pledge Agreement as of the date first above written.

Party A: Beijing Shuidi Technology Group Co., Ltd. (seal)

Authorized Representative: /s/ SHEN Peng

(Company seal: /s/ Beijing Shuidi Technology Group Co., Ltd.)

Party B: /s/SHEN Peng

Party C: Beijing Zhuiqiu Jizhi Technology Co., Ltd. (seal)

(Company seal: /s/ Beijing Zhuiqiu Jizhi Technology Co., Ltd.)

Signature Page to Amended and Restated Equity Interest Pledge Agreement

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**Annex I**

**Party C's Ownership Structure**

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| | | |
|:---|:---|:---|
| **Shareholder** | **Subscribed Registered Capital**<br>**(RMB)** | **Shareholding**<br>**Percentage** |
| SHEN Peng | 297000000 | 100% |

---

Annex I to Amended and Restated Equity Interest Pledge Agreement

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## Exhibit 4.22

**Exhibit 4.22**

**Amended and Restated Exclusive Option Agreement**

This Amended and Restated Exclusive Option Agreement (this "Agreement") is executed by and among the following Parties as of March 11, 2026, in Beijing, the People's Republic of China ("China" or the "PRC"):

---

| | |
|:---|:---|
| **Party A:** | **Beijing Shuidi Technology Group Co., Ltd. (formerly known as Beijing Jiankang Zhijia Technology Co., Ltd.)**, a limited liability company organized and existing under the laws of the PRC, with its registered address at Room 802, Section B, 8th Floor, No. 203, Zone 2, Lize Middle Park, Chaoyang District, Beijing; |

---

Party B: Shareholders of Party C as listed in <u>Annex 1</u> to this Agreement;

---

| | |
|:---|:---|
| **Party C:** | **Beijing Zhuiqiu Jizhi Technology Co., Ltd.**, a limited liability company organized and existing under the laws of the PRC, with its registered address at Room 704, Section B, 7th Floor, No. 203, Zone 2 , Lize Middle Park, Chaoyang District, Beijing; |

---

In this Agreement, each of Party A, Party B and Party C shall be hereinafter referred to as a "Party" individually, and as the "Parties" collectively.

Whereas:

&nbsp;&nbsp;&nbsp;&nbsp;1. Party A, Party B, and YANG Guang entered into an Exclusive Option Agreement on October 28, 2019 (the "**Original Agreement** ").

&nbsp;&nbsp;&nbsp;&nbsp;2. Party B are the shareholders of Party C and as of the date hereof hold all of the equity interests in Party C. As of the date hereof, the amount of Party B's capital contribution and shareholding percentage in Party C's registered capital is specified in <u>Annex I</u>. Party C is a limited liability company established and registered in Beijing.

&nbsp;&nbsp;&nbsp;&nbsp;3. Party A, Party B, and YANG Guang (ID number: \*\*\*) entered into a Loan Agreement ("Loan Agreement") on October 28, 2019, according to which Party A provides to Party B a loan in the aggregate amount of RMB297,000,000 for the purpose of subscription for Party C's increased capital by Party B or other purposes approved by Party A in writing.

&nbsp;&nbsp;&nbsp;&nbsp;4. Party B agrees to grant Party A an exclusive option right pursuant to this Agreement, and Party A agrees to accept such exclusive option right upon exercise of which to purchase all or part of the equity interests held by Party B in Party C.

In this regard, the Parties have reached the following agreement upon mutual discussion and negotiation:

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Sale and Purchase of Equity Interest** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <u>Option Granted</u> 

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Party B hereby irrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a "Designee") to purchase the equity interests in Party C then held by Party B one or more times at any time in part or in whole at Party A's sole and absolute discretion at the price described in Section 1.3 herein to the extent permitted by PRC laws (such right being the "Equity Interest Purchase Option"). Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party B. Party C hereby agrees to the grant by Party B of the Equity Interest Purchase Option to Party A. Each of Party B hereby waives its respective preemptive right regarding Party C's equity under Party C's articles of association and PRC laws, and hereby irrevocably agrees to transfer Party C's equity to Party A and/or the Designee. The term "person" as used herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts or non-corporate organizations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <u>Steps for Exercise of the Equity Interest Purchase Option</u> 

Subject to the provisions of the laws and regulations of China, Party A may exercise the Equity Interest Purchase Option by issuing a written notice to Party B (the "Equity Interest Purchase Option Notice"), specifying:(a) Party A's or the Designee(s)' decision to exercise the Equity Interest Purchase Option; (b) the respective portion of equity interests to be purchased by Party A or the Designee from Party B (the "Optioned Interests"); and (c) the date for purchasing the Optioned Interests or the date for the transfer of the Optioned Interests. If Party A and/or other foreign-invested or foreign entities designated by Party A are permitted to directly hold part or all of Party C's equity interests and engage in foreign investment restriction/prohibition business through Party C under the laws and regulations of PRC, Party A shall issue the Equity Interest Purchase Option Notice as soon as practicable. The proportion of Party C's equity interests that the Designee(s) purchase(s) from Party B shall not be less than the maximum limit of Party C's equity interests permitted under PRC laws to be held by Party A and/or other foreign-invested or foreign entities designated by Party A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 <u>Equity Interest Purchase Price</u> 

The total price for the purchase by Party A of all equity interest held by Party B upon exercise of the Equity Interest Purchase Option by Party A shall equal to the amount of registered capital contributed by Party B in Party C for such Optioned Interests (or such price may be as set forth in the equity transfer agreement to be executed between Party A (or the Designee) and Party B separately, provided that such price does not violate PRC laws and regulations and is acceptable to Party A, if required by Party A); if Party A exercises the Equity Interest Purchase Option to purchase part of the Optioned Interests held by Party B in Party C, then the purchase price shall be calculated on a pro rata basis. If at the time when Party A exercises the Equity Interest Purchase Option, the PRC laws impose mandatory requirements on the purchase price of such Optioned Interests, such that the minimum price permitted under PRC law

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is higher than the aforementioned price, then the purchase price shall be such minimum price permitted by PRC law (collectively, the "Equity Interest Purchase Price").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4 <u>Transfer of Optioned Interests</u> 

For each exercise of the Equity Interest Purchase Option:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.1 Party B shall cause Party C to promptly convene a shareholders' meeting, at which a resolution shall be adopted approving Party B's transfer of the Optioned Interests to Party A and/or the Designee(s);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.2 Party B shall obtain written statements from the other shareholders of Party C giving consent to the transfer of the Optioned Interests by Party B to Party A and/or the Designee(s) and waiving any right of first refusal with respect thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.3 Party B shall execute an equity interest transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable), in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5 <u>Payment</u> 

The Parties have agreed in the Loan Agreement that any proceeds obtained by Party B through the transfer of its equity interests in Party C shall be used for repayment of the loan provided by Party A (and any interest thereon) in

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accordance with the Loan Agreement. Accordingly, upon exercise of the Equity Interest Purchase Option, Party A may make the payment of the Equity Interest Purchase Price by way of offset of the outstanding debts owed by Party B to Party A (including without limitation the outstanding amount of the loan owed by Party B to Party A and any interest thereon) (such debts, the "Offset Debts"), in which case Party A shall not be required to pay any additional purchase price to Party B, unless the Equity Interest Purchase Price set forth herein is required to be adjusted in accordance with the PRC laws. If the PRC laws impose mandatory requirements on the Equity Interest Purchase Price agreed under this Agreement, such that the minimum Equity Interest Purchase Price permitted under PRC laws exceeds the price already offset with the Offset Debts, the Party B shall promptly donate all of the amount exceeding the Offset Debts received by it to Party A or any other person designated by Party A in the manner permitted by the applicable PRC laws, and Party B hereby irrevocably waives its right to receive the amount of price that exceeds the amount offset with the Offset Debts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6 <u>Assets Purchase Option</u> 

Party C hereby grants Party A an irrevocable and exclusive right to purchase, or Designee(s) to purchase the any part of or all of the assets of Party C at Party A's sole and absolute discretion to the extent permitted by PRC laws and at the price permitted by PRC laws. Under such circumstances, Party A or the Designee(s) and Party C shall otherwise execute an asset transfer contract to agree on the terms and conditions of such asset transfer. "Assets" under this contract refer to assets directly or indirectly owned or controlled by the company from time to time and related to the company's business operations, including current assets, capital equity for outbound investment, fixed assets, and intangible assets (including but not limited to patent and non-patented technology), deferred assets, the available benefits under all contracts entered into, and any other benefits that should be obtained by the company, including assets directly or indirectly owned or controlled by the company's branches and offices from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Covenants** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>Covenants regarding Party C</u> 

Party B (as a shareholder of Party C) and Party C hereby covenant as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.1 Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association of Party C, increase or decrease Party C's registered capital, or change its structure of registered capital in other manners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.2 They shall maintain Party C's corporate existence in accordance with good financial and business standards and practices, obtain and maintain all necessary government licenses and permits by prudently and effectively operating its business and handling its affairs;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.3 Without the prior written consent of Party A, Party C shall not at any time following the date hereof, sell, transfer, mortgage or dispose of in any manner any material assets of Party C or legal or beneficial interest exceeding RMB 100,000 in the material business or revenues of Party C, or allow the encumbrance thereon of any security interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.4 Without the prior written consent of Party A, Party C shall not incur, inherit, guarantee or suffer the existence of any debt, except for payables incurred in the ordinary course of business other than through loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.5 Party C shall always operate its businesses within the ordinary course of business to maintain the asset value of Party C and refrain from any action/omission that may adversely affect Party C's operating status and asset value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.6 Without the prior written consent of Party A, Party C shall not execute any major contract or any other contract inconsistent with the major contract at present, except the contracts in the ordinary course of business (for the purpose of this subsection, a contract with a price exceeding RMB 100,000 shall be deemed a major contract);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.7 Without the prior written consent of Party A, they shall not cause Party C to provide any person with any loan or credit, or provide guarantee to the debt of any third parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.8 They shall provide Party A with information on Party C's business operations and financial condition at Party A's request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.9 If requested by Party A, they shall procure and maintain insurance in respect of Party C's assets and business from an insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.10 Without the prior written consent of Party A, they shall not cause or permit Party C to merge, consolidate with, acquire or invest in any person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.11 They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to Party C's assets, business, revenue or equity interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.12 To maintain the ownership by Party C of all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriate actions, file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.13 Without the prior written consent of Party A, Party C shall not in any manner distribute dividends to its shareholders, provided that upon

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Party A's written request, Party C shall immediately distribute all distributable profits to its shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.14 At the request of Party A, they shall appoint any person designated by Party A as the director or executive director, shareholder representative supervisor or other company management personnel who should be appointed and removed by shareholders of Party C;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.15 Without Party A's prior written consent, they shall not engage in any business in competition with Party A or its affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.16 Unless otherwise required by PRC law, Party C shall not be dissolved or liquated without prior written consent by Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.17 If Party C is dissolved and liquidated in accordance with PRC laws, Party A may exercise Equity Interest Purchase Option and exercise all investor rights to Party C, and distribute Party C's remaining properties in accordance with the laws (i.e., remaining properties after paying liquidation expenses, employee salaries, social insurance expenses and statutory compensation, paying taxes owed paying off company debts). If Party A does not exercise the Equity Interest Purchase Option by then, Party B shall timely donate the liquidation proceeds of Party C to Party A or any person designated by Party A in accordance with PRC laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <u>Covenants of Party B</u> 

Party B hereby covenants as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.1 Without the prior written consent of Party A, Party B shall not sell, transfer, mortgage or dispose of in any other manner any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon, except for the interest placed in accordance with Party B's Equity Interest Pledge Agreement and Party B's Power of Attorney;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.2 Without the prior written consent of Party A, Party B shall cause the shareholders' meeting and/or the directors (or the executive director) of Party C not to approve any sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon of any security interest, except for the approval of interest placed in accordance with Party B's Equity Interest Pledge Agreement and Party B's Power of Attorney;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.3 Without the prior written consent of Party A, Party B shall cause the shareholders' meeting or the directors (or the executive director) of Party C not to approve the merger or consolidation with any person, or the acquisition of or investment in any person;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.4 Party B shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the equity interests in Party C held by Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.5 Party B shall ensure the shareholders (shareholders' meeting) or the directors (or the executive director) of Party C to vote in favor of the transfer of the Optioned Interests as set forth in this Agreement and to take any and all other actions that may be requested by Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.6 To the extent necessary to maintain Party B's ownership in Party C, Party B shall execute all necessary or appropriate documents, take all necessary or appropriate actions, file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.7 Party B shall appoint any designee of Party A as the director or the executive director of Party C, at the request of Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.8 Party B hereby waives all of its right of first refusal (if any) in the event that other shareholders of Party C transfer equity interests to Party A. Party B gives consent to the execution by each of the other shareholders of Party C with Party A and Party C of the exclusive option agreement, the equity interest pledge agreement and the power of attorney similar to this Agreement, Party B's Equity Interest Pledge Agreement and Party B's Power of Attorney, and undertakes not to take any action in conflict with such documents executed by such other shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.9 Party B shall promptly donate all such profit, interest, dividend or proceeds of liquidation received from Party C to Party A or any other person designated by Party A in accordance with the applicable PRC laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.10 If Party B fails to fulfill its tax obligations under applicable laws which results in the impediment for Party A to exercise of Equity Interest Purchase Option and/or asset purchase option, Party A shall be entitled to require Party B to perform such tax obligations, or require Party B to pay such taxes to Party A, and Party A will pay such taxes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.11 Party B shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party B, Party C and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. To the extent that Party B has any remaining rights with respect to the equity interests subject to this Agreement hereunder or under the Party B's Equity Interest Pledge Agreement or under the Party B's Power of Attorney, Party B shall not exercise such rights except in accordance with the written instructions of Party A.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Representations and Warranties** 

Party B and Party C hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of the transfer of the Optioned Interests, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 They have the power, capacity and authority to execute and deliver this Agreement and any equity interest transfer contracts to which they are parties concerning each transfer of the Optioned Interests as described thereunder (each, a "Transfer Contract"), and to perform their obligations under this Agreement and any Transfer Contracts. Party B and Party C agree to enter into Transfer Contracts substantially consistent with the terms of this Agreement upon Party A's exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 Party B and Party C have obtained any and all approvals and consents from the competent government authorities and third parties (if required) for the execution, delivery and performance of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shall not: (i) cause any violation of any applicable laws of China; (ii) be inconsistent with the articles of association, bylaws or other organizational documents of Party C; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, or constitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of any condition for the grant and/or continued effectiveness of any licenses or permits issued to either of them; or (v) cause the suspension or revocation of or imposition of additional conditions to any licenses or permits issued to either of them;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 Party B has the legal and complete title to the equity interests held by it in Party C. Except for Party B's Equity Interest Pledge Agreement and Party B's Power of Attorney, Party B has not placed any security interest or encumbrances on such equity interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 Party C represents that Party C has good and sellable ownership of all assets, and there are no liens, mortgages, claims and other security rights and third-party rights on Party C's assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 Party C represents that Party C does not have any outstanding debts, except for (i) debt incurred during the ordinary course of business; and (ii) debts disclosed to Party A for which Party A's written consent has been obtained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7 Party C represents that Party C has complied with all PRC laws and regulations applicable to the acquisition of assest; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8 Party C represents that there is no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party C, assets of Party C or Party C.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Effective Date and Term** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 This Agreement shall become effective upon execution by the Parties (for a legal person, it shall become effective upon the affixing of its official seal; for a natural person, it shall become effective upon signing), and remain effective until all equity interests held by Party B in Party C have been transferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 During the term this Agreement, Party A may decide to terminate this Agreement unconditionally by issuing a written notice to Party B in advance without any liability at Party A's own discretion. Except as otherwise required by PRC laws, Party B and Party C shall have no right to unilaterally terminate this agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Governing Law and Resolution of Disputes** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <u>Governing Law</u> 

The execution, effectiveness, interpretation, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of the PRC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <u>Methods of Resolution of Disputes</u> 

In the event of any dispute with respect to the interpretation and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. In the event the Parties fail to reach an agreement on the dispute within 30 days upon a written notice requesting a negotiated settlement sent by one Party to the other Party, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission in Beijing for arbitration, in accordance with the arbitration rules of such arbitration commission effective at that time. The place of the hearing of the arbitration shall be Beijing. The arbitration award shall be final and binding on both Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 Under the appropriate circumstances permitted by PRC laws, the arbitral tribunal may grant any remedies, including temporary and permanent injunctive remedies (such as injunctive remedies for commercial activities, or injunctive remedies for forced transfer of assets), actual performance of contractual obligations, remedies for Party B's equity or assets and rulings ordering Party B to wind up. As permitted by PRC laws, while waiting for the formation of the arbitration tribunal or under appropriate circumstances, both Parties are entitled to seek temporary injunctive remedies or other temporary remedies to support the arbitration. In this regard, both Parties have reached a consensus that the courts of Hong Kong courts, Cayman

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Islands, PRC and the courts of where Party B's main assets are located shall all be deemed to have jurisdiction without violating applicable laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 Upon the occurrence of any disputes arising from the interpretation and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**6.** **Taxes and Fees** 

Each Party shall pay any and all transfer and registration taxes, expenses and fees incurred thereby or levied thereon in accordance with the laws of China in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactions contemplated under this Agreement and the Transfer Contracts.

&nbsp;&nbsp;&nbsp;&nbsp;**7.** **Notices** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 All notices and other communications required to be given or otherwise made pursuant to this Agreement shall be delivered personally, or sent by registered mail, prepaid postage, a commercial courier service or facsimile transmission to the receiving Party's following address with an additional copy delivered via email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.1 Notices given by personal delivery, express services or registered mail, postage prepaid shall be deemed effectively given on the date of signed receipt or rejection;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful delivery (which shall be evidenced by the automatically generated transmission confirmation message).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 For the purpose of notices, the contact information of the Parties are as follows:

If to Party A, Party B and Party C:

Address: Shuidi Tower, No. 203, Lize Zhong'er Road, Chaoyang District, Beijing

Attn: SHEN Peng

Telephone: \*\*\*

Email: \*\*\*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 Any Party may at any time change its address for notices by a notice delivered to the other Party in accordance with the terms of this Section.

&nbsp;&nbsp;&nbsp;&nbsp;**8.** **Confidentiality** 

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The Parties acknowledge that the existence and the terms of this Agreement, and any oral or written information exchanged between the Parties in connection with the preparation and performance of this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of other Parties, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party's unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels, or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of, or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall be held liable for breach of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**9.** **Further Warranties** 

The Parties agree to promptly execute documents that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement and take further actions that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;**10.** **Breach of Agreement** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 If Party B or Party C materially breaches any provision under this Agreement, Party A is entitled to terminate this Agreement and/or require Party B or Party C to compensate the losses. This Section 10 shall not prejudice any other rights of Party A under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 Unless otherwise required by the applicable laws, Party B or Party C shall not terminate this Agreement in any event.

&nbsp;&nbsp;&nbsp;&nbsp;**11.** **Miscellaneous** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 <u>Amendments, changes and supplements</u> 

The amendment, change and supplement to this Agreement shall be made by all of the Parties in writing agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 <u>Entire agreement</u> 

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral and written consultations, representations and contracts reached with respect to the

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subject matter of this Agreement. The parties agree that upon the effective date of this Agreement, the Original Agreement shall terminate in its entirety and be superseded by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 <u>Headings</u> 

The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4 <u>Language</u> 

This Agreement is written in both Chinese in three copies, each Party having one copy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5 <u>Severability</u> 

In the event that one or several of the provisions of this Agreement are held to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.6 <u>Successors</u> 

The terms of this Agreement shall be binding on the Parties hereto and their respective successors and permitted assigns by each Party, and shall be valid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7 <u>Survival</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7.1 Any obligations that occurred or that are due in connection with this Agreement before the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7.2 The provisions of Sections 5, 8, 10 and this Section 11.7 shall survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.8 <u>Waivers</u> 

Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require the signatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver by such a Party with respect to any similar breach in other circumstances.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Amended and Restated Exclusive Option Agreement as of the date first above written.

Party A: Beijing Shuidi Technology Group Co., Ltd. (seal)

Authorized Representative: /s/ SHEN Peng

(Company seal: /s/ Beijing Shuidi Technology Group Co., Ltd.)

Party B: /s/SHEN Peng

Party C: Beijing Zhuiqiu Jizhi Technology Co., Ltd. (seal)

(Company seal: /s/ Beijing Zhuiqiu Jizhi Technology Co., Ltd.)

Signature Page to Amended and Restated Exclusive Option Agreement

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**Annex I**

**Shareholding Structure of Party C**

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| | | |
|:---|:---|:---|
| **Name of**<br>**Shareholder** | **Subscribed Registered**<br>**Capital (RMB)** | **Shareholding**<br>**Percentage** |
| SHEN Peng | 297000000 | 100% |

---

Annex I to Amended and Restated Exclusive Option Agreement

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## Exhibit 4.23

**Exhibit 4.23**

**Amended and Restated Power of Attorney**

I, SHEN Peng, a citizen of the People's Republic of China ("**China**" or the "**PRC**") whose Identification Card No. is \*\*\*, and a holder of 100% of the registered capital of Beijing Zhuiqiu Jizhi Technology Co., Ltd. ("**Zhuiqiu Jizhi**") as of the date of this Amended and Restated Power of Attorney (this "Power of Attorney"), hereby irrevocably authorize and entrust Beijing Shuidi Technology Group Co., Ltd. (formerly known as Beijing Jiankang Zhijia Technology Co., Ltd.) ("**WFOE**") to exercise the following rights and handle the following matters on my behalf relating to all equity interests held by me now and in the future ("**My Shareholding**") in Zhuiqiu Jizhi, during the term of this Power of Attorney:

WFOE or any person(s) designated by WFOE (including but not limited to directors of WFOE's parent company Waterdrop Group HK Limited, successors of such directors and liquidators in replacement of such directors, excluding any non-independent persons or persons who may result in the conflicts of interest) ("**Agent**") is hereby authorized to act on my behalf as my sole and exclusive agent to exercise the rights with respect to all matters concerning My Shareholding, including without limitation to: (1) as the shareholder's proxy, convening and attending shareholders' meetings of Zhuiqiu Jizhi according to the company's articles of association, (2) exercising all of the shareholder's rights and shareholder's voting rights that I am entitled to under the laws of China and the articles of association of Zhuiqiu Jizhi (including any other shareholder voting rights stipulated after the amendments to the articles of association), including without limitation handling the sale, transfer, pledge or disposition of My Shareholding in part or in whole, (3) designating and appointing legal representatives, directors, supervisors, general managers and other senior management personnel of Zhuiqiu Jizhi as my authorized representative, and (4) sign the notice of the shareholders meeting, the meeting minutes and resolutions on behalf of the shareholders, and submit the documents required for the approval, registration and filing related to the company's operation to the relevant government departments (including the company registration management department) on behalf of the shareholders.

Without limiting the generality of the powers granted hereunder, the Agent shall have the power and authority to, on behalf of myself, execute all and any supplementary agreements, ancillary documents, modifications, and/or amended and restated versions in relation to: (1) the Exclusive Option Agreement executed on October 28, 2019 by and among me, WFOE, Zhuiqiu Jizhi and other related parties, (2) the Equity Interest Pledge Agreement executed on October 28, 2019 by and among me, WFOE, Zhuiqiu Jizhi and other related parties and (3) the Loan Agreement executed on October 28, 2019 by and among me, WFOE, Zhuiqiu Jizhi and other related parties (in each case, including any modification, amendment or restatement to the aforementioned documents, collectively referred to as the "**Transaction Documents**"), and any documents and agreements I shall sign as required in the aforesaid agreements (including without limitation the Share Transfer Agreement as described under the Exclusive Option Agreement).

All the actions associated with My Shareholding conducted by the Agent shall be deemed as my own actions, and all the documents related to My Shareholding executed by the Agent shall be deemed to be executed by me. I hereby acknowledge

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and ratify the actions taken by the Agent and the documents executed by the Agent in relation to My Shareholding.

The Agent has the right to re-authorize or assign one or multiple matters and its rights related to such matters under this Power of Attorney to any other person or entity at its own discretion and without obtaining my prior consent. If required by PRC laws, the Agent shall designate a qualified PRC citizen to handle such matters and exercise such rights as set forth in this Power of Attorney.

During the period that I am a shareholder of Zhuiqiu Jizhi, This Power of Attorney shall be irrevocable and continuously effective and valid from the date of execution of this Power of Attorney. This Power of Attorney takes effect as of the date hereof and shall become effective until all equity or all assets of Zhuiqiu Jizhi have been transferred to the WFOE and/or other entities or individuals designated by it in accordance with the Exclusive Option Agreement signed by the parties on the date of execution of this Power of Attorney.

I hereby declare and covenant the following: (1) I am a Chinese citizen with full capacity and a registered lawful shareholder of Zhuiqiu Jizhi. I have full and independent legal status and legal capacity, and have been duly authorized to sign, deliver and perform this Power of Attorney. I can independently act as a party of litigation, (2) There is no litigation, arbitration or other judicial or administrative action that has arisen and is pending that will affect my ability to perform the obligations under this Power of Attorney, (3) natural person shareholders have made proper arrangements and signed necessary documents to ensure that in the event of his or her death, incapacity, bankruptcy, divorce or other events that may affect their exercise of equity, the heirs, guardians, creditors, spouses and other persons who may acquire equity or related rights as a result, shall not affect or hinder the performance of this Power of Attorney.

During the term of this Power of Attorney, I hereby waive all the rights associated with My Shareholding, which have been authorized to the Agent through this Power of Attorney, and shall not exercise such rights by myself.

I, as the sole shareholder of Zhuiqiu Jizhi, hereby issue this Power of Attorney to restate and amend the power of attorney (the "**Original Power of Attorney**") signed on October 28, 2019. Upon the execution of this Power of Attorney, the Original Power of Attorney shall be terminated and superseded by this Power of Attorney in its entirety.

This Power of Attorney is dated on March 11, 2026.

*The Remainder of this page is intentionally left blank*

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Principal: /s/SHEN Peng

Accepted by: Beijing Shuidi Technology Group Co., Ltd. (seal)

Authorized Representative: /s / SHEN Peng

(Company seal: /s/ Beijing Shuidi Technology Group Co., Ltd.)

Signature Page to Amended and Restated Power of Attorney

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## Exhibit 8.1

**EXHIBIT 8.1**

**List of Significant Subsidiaries and VIEs of the Registrant** 

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| | |
|:---|:---|
| **Subsidiaries** | **Place of Incorporation** |
| Waterdrop Group HK Limited | Hong Kong |
| Waterdrop Financial Services (HK) Limited | Hong Kong |
| Waterdrop Technology Group Co., Ltd. | mainland China |
| Beijing Yiqi Yuanhang Technology Co., Ltd. | mainland China |
| **Consolidated Variable Interest Entities** | **Place of Incorporation** |
| Beijing Shuidi Hubao Technology Co., Ltd. | mainland China |
| Beijing Shuidi Hulian Technology Co., Ltd. | mainland China |
| Beijing Zhuiqiu Jizhi Technology Co., Ltd. | mainland China |
| Beijing Zongqing Xiangqian Technology Co., Ltd. | mainland China |
| Beijing Guangmu Weichen Technology Co., Ltd. | mainland China |
| **Subsidiaries of Consolidated Variable Interest Entities** | **Place of Incorporation** |
| Shuidi Insurance Brokerage Co., Ltd. | mainland China |
| Miaoyi Hulian (Beijing) Technology Co., Ltd. | mainland China |
| Tairui Insurance Agency Co., Ltd. | mainland China |
| Beijing Yifan Fengshun Medical Technology Co., Ltd. | mainland China |
| Shuidi Health Technology Co., Ltd. | mainland China |
| Shenzhen Cunzhen Qiushi Technology Co., Ltd. | mainland China |
| Beijing Yifan Qihang Medical Technology Co., Ltd. | mainland China |
| Zhuanxin Insurance Brokerage Co., Ltd. | mainland China |

---

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## Exhibit 12.1

**Exhibit 12.1**

**Certification by the Principal Executive Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Peng Shen, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 20-F of Waterdrop Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: April 28, 2026 | Date: April 28, 2026 |
| By: | /s/ Peng Shen |
| Name: | Peng Shen |
| Title: | Chief Executive Officer |

---

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## Exhibit 12.2

**Exhibit 12.2**

**Certification by the Principal Financial Officer**

**Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

I, Xiaoying Xu, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 20-F of Waterdrop Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: April 28, 2026 | Date: April 28, 2026 |
| By: | /s/ Xiaoying Xu |
| Name: | Xiaoying Xu |
| Title: | Vice President of Finance, Head of Finance |

---

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## Exhibit 13.1

**Exhibit 13.1**

**Certification by the Principal Executive Officer**

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the Annual Report of Waterdrop Inc. (the "Company") on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peng Shen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| | |
|:---|:---|
| Date: April 28, 2026 | Date: April 28, 2026 |
| By: | /s/ Peng Shen |
| Name: | Peng Shen |
| Title: | Chief Executive Officer |

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## Exhibit 13.2

**Exhibit 13.2**

**Certification by the Principal Financial Officer**

**Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the Annual Report of Waterdrop Inc. (the "Company") on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Xiaoying Xu, Head of Finance of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| | |
|:---|:---|
| Date: April 28, 2026 | Date: April 28, 2026 |
| By: | /s/ Xiaoying Xu |
| Name: | Xiaoying Xu |
| Title: | Vice President of Finance, Head of Finance |

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## Exhibit 15.1

**Exhibit 15.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in Registration Statement No. 333-261408 on Form S-8 of our report dated April 28, 2026, relating to the financial statements of Waterdrop Inc., appearing in this Annual Report on Form 20-F for the year ended December 31, 2025.

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| |
|:---|
| /s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Beijing, the People's Republic of China |
| April 28, 2026 |

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## Exhibit 15.2

**Exhibit 15.2**

9/F, Office Tower C1, Oriental Plaza, 1 East Chang An Ave., Dongcheng DistrictBeijing 100738, PRCTel: +86 10 8525 5500&nbsp;&nbsp;&nbsp;&nbsp; Fax: +86 10 8525 5511 / 8525 5522Beijing . Shanghai . Shenzhen . Hong Kong . Hangzhou . Wuhan . Singapore . New York . Silicon Valley . Londonwww.hankunlaw.com

**Consent of Han Kun Law Offices**

**To:**

**Waterdrop Inc.**

Room B802, 8th Floor, No. 203 Wangjing Lize Zhongyuan Zone 2

Chaoyang District, Beijing 100101

People's Republic of China

**Date:** April 28, 2026

Dear Sirs,

We consent to the reference to our firm under the headings "Item 3.D—Risk Factors—Risks Related to Our Corporate Structure" and "Item 4.C—Organizational Structure—Contractual Arrangements with the Variable Interest Entities and Their Shareholders" in Waterdrop Inc.'s Annual Report on Form 20-F for the year ended December 31, 2025, which will be filed with the Securities and Exchange Commission (the "SEC") on the date hereof, and further consent to the incorporation by reference of the summaries of our opinion under these headings into the Registration Statement on Form S-8 (File No. 333-261408). We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report on Form 20-F for the year ended December 31, 2025.

Yours faithfully,

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| |
|:---|
| /s/ HAN KUN LAW OFFICES |
| HAN KUN LAW OFFICES |

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CONFIDENTIALITY. This document contains confidential information which may be protected by privilege from disclosure. Unless you are the intended or authorised recipient, you shall not copy, print, use or distribute it or any part thereof or carry out any act pursuant thereto and shall advise Han Kun Law Offices immediately by telephone, e-mail or facsimile and return it promptly by mail. Thank you.

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