WDH ALERT

Robbins Geller Rudman & Dowd LLP Files Class Action Suit Against Waterdrop Inc. and Announces Opportunity for Investors with Substantial Losses to Lead Case

Robbins Geller Rudman & Dowd LLP filed a class action lawsuit charging Waterdrop Inc. (NYSE: WDH), certain of its top executives and directors, as well as the underwriters of Waterdrop’s May 2021 initial public offering (the “IPO”) with violations of the Securities Act of 1933. Filed in the Southern District of New York on September 14, 2021 and captioned Sandoz v. Waterdrop Inc., the Waterdrop class action lawsuit seeks to represent purchasers of Waterdrop American Depositary Shares (“ADSs”) pursuant and/or traceable to the IPO.

The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud. You can view a copy of the complaint by clicking here.

If you wish to serve as lead plaintiff of the Waterdrop class action lawsuit, please provide your information by clicking here. You can also contact attorney Brian Cochran of Robbins Geller by calling 800/449-4900 or via e-mail at [e-mail]. Lead plaintiff motions for the Waterdrop class action lawsuit must be filed with the court no later than November 15, 2021.

CASE ALLEGATIONS: The Waterdrop class action lawsuit alleges that the IPO’s Registration Statement failed to disclose that Waterdrop was the subject of an intense regulatory investigation and pending crackdown by Chinese authorities because of a variety of market abuses perpetrated by Waterdrop used to artificially inflate Waterdrop’s short-term financial results in the lead up to the IPO, including, among other things: (i) operating insurance platforms without proper governmental authorizations; (ii) mispricing risks for consumers; and (iii) illicitly using client information. The Waterdrop class action lawsuit further alleges that, unbeknownst to investors, the reason that Waterdrop had discontinued its mutual aid segment was because it had been ordered to do so by Chinese regulators. Furthermore, Waterdrop had suffered rapidly accelerating operating losses in the first quarter of 2021 which was completed weeks before the IPO.

On June 17, 2021, Waterdrop issued a press release announcing Waterdrop’s financial results for the quarter conducted before the IPO. In doing so, Waterdrop reported that its operating costs and expenses had ballooned over 75%, or RMB579.1 million, to RMB1,343.9 million (US$205.1 million). As a result, Waterdrop suffered an operating loss for the quarter of RMB460.6 million (US$70.3 million), compared with operating loss of RMB111.1 million for the same period of 2020 – a more than four-fold increase. This rapid increase in operating expenses was due largely to the cessation of Waterdrop’s mutual aid business and growing customer acquisition costs.