NEW YORK, Oct. 06, 2021 (GLOBE NEWSWIRE) -- Lowey Dannenberg P.C., a preeminent law firm in obtaining redress for consumers and investors, is investigating claims of violations of federal securities laws on behalf of investors of Waterdrop Inc. (“Waterdrop” or the “Company”) (NYSE: WDH). If you are a shareholder of Waterdrop with more than $50,000 in losses who purchased the Company’s shares pursuant and/or traceable to the Company’s initial public offering conducted in May 2021 (the “IPO”) you should contact the Firm.
A federal securities class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of investors who purchased or otherwise acquired the American Depositary Receipts ("ADR's") of Waterdrop in or traceable to Waterdrop's May 2021 IPO.
On May 7, 2021, Waterdrop filed a prospectus for the IPO on a Form 424B4, which incorporated and formed part of the Registration Statement. The Registration Statement was used to sell to the investing public 30 million Waterdrop ADR's at $12 per ADR. The filed complaint alleges that the Registration Statement failed to disclose that Waterdrop had suffered ballooning losses in the first quarter of 2021 and violated numerous Chinese laws and regulations governing the insurance industry.
The truth began to emerge on June 17, 2021, when Waterdrop issued a press release announcing its financial results for the quarter ended March 31, 2021, the quarter conducted before the IPO. 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 an operating loss of RMB111.1 million for the same period of 2020 – a more than four-fold increase.
Then, on August 11, 2021, multiple news sources reported that China's banking and insurance watchdog, the China Banking and Insurance Regulatory Commission, had issued an order directing insurance companies to cease improper marketing and pricing practices rampant in the industry and enhance their user privacy protections. Failure to comply would reportedly result in the offenders being "severely punished" by Chinese authorities.
Finally, on September 8, 2021, Waterdrop issued a press release announcing its financial results for the quarter ended June 30, 2021. The release stated that Waterdrop's operating losses had continued to accelerate, totaling RMB815.4 million (US$126.3 million) for the quarter, compared with an operating profit of RMB7.2 million for the same period of 2020. This was once again due to a sharp increase in Waterdrop's operating costs and expenses, as the company's operating costs and expenses during the quarter increased by RMB1,081.1 million, or 160.5% year over year, to RMB1,754.7 million (US$271.8 million) from RMB673.6 million for the same period of 2020.
On September 13, 2021, the day before the complaint was filed, Waterdrop ADR's dropped to a low of just $3 per ADR, 75% below the price at which Waterdrop ADR's were sold to investors.
If you are a shareholder of Waterdrop Inc., and wish to participate, learn more, or discuss the issues surrounding the investigation, please contact our attorneys at (914) 733-7256 or via email at investigations@lowey.com.
Whistleblowers: Persons with non-public information regarding Waterdrop should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC.
About Lowey Dannenberg
Lowey Dannenberg is a national firm representing institutional and individual investors, who suffered financial losses resulting from corporate fraud and malfeasance in violation of federal securities and antitrust laws. The firm has significant experience in prosecuting multi-million-dollar lawsuits and has previously recovered billions of dollars on behalf of investors.
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Lowey Dannenberg P.C.
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White Plains, NY 10601
Tel: (914) 733-7256
Email: investigations@lowey.com
