Zepp Health Corporation Reports Fourth Quarter and Full Year 2021 Unaudited Financial Results BEIJING

Health Corporation Reports Fourth Quarter and Full Year 2021 Unaudited Financial Results

BEIJING, March 17, 2022 /PRNewswire/ -- Zepp

Health Corporation ("Zepp" or the "Company") (NYSE: ZEPP) today reported revenue of RMB1.7 billion (US$260.7 million);

GAAP diluted net income per share of RMB0.14 (US$0.02); and GAAP diluted net income per ADS of RMB0.55 (US$0.09) for the fourth quarter

ended December 31, 2021. Each ADS represents four Class A ordinary shares.

2021, we advanced our Amazfit and Zepp brands, elevated our technology, further enriched our product portfolio, and closed the year with

revenues in line with our revised fourth quarter guidance," said Wang Huang, Chairman and CEO of Zepp Health. "Despite the

challenges posed by the global macro-environment, shipment volume of our Amazfit and Zepp-branded products grew in the fourth quarter,

increasing 14.3% year-over-year thanks to their expanding worldwide appeal. In the year of 2021, our self-branded product shipments increased

60% year-over-year. This growth reflects our increasing global appeal. Our strong international expansion momentum continued, for example,

in the North America our shipment grew 200% in 2021. In the meantime, our relationship with Xiaomi stays strong. We are proactively in

discussion with Xiaomi on development of new products. We will continue our Share Repurchase Program. In

addition, we are pleased to announce a special cash dividend of US$0.025 per

ordinary share or US$0.1 per

ADS to thank our shareholders for their continued support.

We are confident that we will strive to excute our strategy and maximize our shareholders' value in the long-term. "

CFO Leon Deng stated, "Shadowed by the far-reaching effects of COVID-19 and a global shortage in semiconductors, our fourth

quarter top line came to RMB1,661.6 million. Despite the headwinds, our full year revenue reached RMB6.25 billion, and our self-branded

products contributed 46.5% of the revenue and over half of the gross profit. Effective cost control measures helped to decrease our operating

expenses in the fourth quarter by 0.1%, which also contributed to net income. With a strong cash balance of RMB1,468.5 million as of December 31,

2021 and continuous focus on cost and working capital management, we are well positioned to capture the demand rebound once the world

moves beyond COVID-19."

Quarter and Full Year 2021 Financial Summary

1 The US$ numbers in 2020 are referenced

with the prior 6-K disclosures, which translations from RMB to US$ are made at a rate of RMB6.5250 to US$1.00, the effective noon buying

rate for December 31, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board.

2Adjusted net income attributable

to Zepp Health Corporation is a non-GAAP measure, which excludes share-based compensation expenses. See "Reconciliation of GAAP and Non-GAAP

Results" at the end of this press release.

3 Adjusted diluted net income is the

abbreviation of adjusted net income attributable to Zepp Health Corporation, which is a non-GAAP measure and excludes share-based compensation

expenses attributable to Zepp Health Corporation, and is used as the numerator in computation of adjusted basic and diluted net income

per ADS attributable to Zepp Health Corporation.

Fourth Quarter 2021 Financial Results

Revenues for the fourth quarter of 2021 reached

RMB1.66 billion (US$260.7 million), a decrease of 15.8% from the fourth quarter of 2020. The decrease was mostly driven by the decrease

in Mi band shipments. Our self brand product sales is impacted by COVID-19 and shortage of semiconductors causing production to fall short

of market demand during the holiday season.

Total units shipped in the fourth quarter of 2021

was 8.3 million, compared with 13.3 million for the fourth quarter of 2020. This was driven by a 14.3% increase in unit shipments of Amazfit

and Zepp branded products, offset by a 47.3% decrease in unit shipments of Xiaomi wearable products.

Impact of COVID-19 and Russia-Ukraine Conflict

global impact of the COVID-19 pandemic continued in the fourth quarter of 2021, and affected the retail store sales and brought challenges

to the supply chain globally. The market is experiencing shortages of electronic components and chips for different industries

and accordingly affecting the supply and production cycle for the Company. The continued pandemic may cause the logistic time to be longer

for our products arriving at target places. The Company cannot predict the potential, if any, of future negative impacts on market conditions

or the Company's operations.

The current situation between Russia and the Ukraine

may affect the demand for and sales of Xiaomi wearable products and our self-branded products in the affected regions. Revenue from sales

of products in Russia and Ukraine accounted for approximately 4% of our total revenues in 2021. Currently the situation does not have

material adverse impact on the company.

margin in the fourth quarter of 2021 was 19.3%, compared with 19.0% for the same period of 2020. Gross margin and gross profit

were affected by the change in product mix.

Research and Development

Research and development expense in the fourth

quarter of 2021 was RMB93.8 million, decreasing 27.6% year-over-year, and comprising 5.6% of revenue, versus 6.6% for the same period

last year. This reflects effective expense control in the Company's R&D activities as well as the recognition of certain government

Selling and Marketing

Selling and marketing expense in the fourth quarter

of 2021 was RMB152.1 million, increasing 30.2% year-over-year, and comprising 9.2% of revenue, compared with 5.9% of revenue for the same

period in 2020. The increase was due to the launch of the new product GT3 series and other promotions during the holiday seasons.

General and Administrative

General and administrative expense was RMB64.7

million in the fourth quarter of 2021, and remained stable in the same period in 2020, and comprising 3.9% of revenue, compared with 3.3%

in the same period in 2020. It was largely attributable to the effective control of operating activities, offset by the negative foreign

exchange fluctuation.

Total operating expenses for the fourth quarter

of 2021 were RMB310.6 million, a decrease of 0.1% year-over-year, which accounted for 18.7% of revenue for the period, as compared with

15.8% in the fourth quarter of 2020.

Operating income for the fourth quarter of 2021

was RMB10.1 million, a decrease of 84.2% from RMB63.7 million for the same period in 2020. The Operating income of the fourth quarter

of 2021 represents 0.6% of the total sales income, compared to 3.2% of the same period in 2020. The decrease in the ratio was as a result

of an increase of 2.9% in the operating expenses as a percentage of revenue.

income attributable to Zepp Health Corporation for the fourth quarter of 2021 was RMB36.3 million, compared with RMB115.2 million

in the fourth quarter of 2020. The Company recognized a one-off RMB56.5 million (US8.7 million) gain from deconsolidation of a smart toothbrush

Liquidity and Capital Resources

of December 31, 2021, the Company had cash and cash equivalents of RMB1,468.5 million (US$230.4 million), compared with RMB2,273.3

million as of December 31, 2020, and RMB1,229.3 million as of September 30, 2021.

The liquidity improvement in the fourth quarter

as compared to the third quarter was mainly attributable to the lower inventory levels and better working capital management.

Share Repurchase Program Update

Management announced the authorization of up to

US$20 million to repurchase shares in the 2021 third quarter earnings, and the repurchased share will in part to be used to fund the Company's

employee stock plan. As of December 31, 2021, the Company has used US$3.4 million to repurchase 664,041 American Depositary

Shares ("ADS"). As of today, the Company has bought back approximately US$6 million of stock. The Company intends to continue

the repurchase program.

The Company today announced

that its Board of Directors has approved a special cash dividend of US$0.025 per ordinary share (US$0.1 per ADS) on its outstanding shares

to shareholders of record as of the close of trading on March 28, 2022, ex-dividend date will be March 25. Holders of ADS, each

representing four ordinary shares of the Company, are accordingly entitled to a cash dividend of US$0.1 per ADS. Deutsche Bank Trust Company

Americas, the depositary bank for the Company's ADS program, expects to pay out dividends to ADS holders on or about April 15,

revenue of 2021 was RMB6.25 billion, decreasing 2.8% from the full year 2020. However, our revenue grew slightly 1% (Non-GAAP)

over 2020 if we adopt the same reference to exchange rate of 6.5250 RMB to the US dollar as the previous year, and exclude the impact

on revenue in prior year from the deconsolidation of a smart toothbrush company. The exchange rate effect to revenue was RMB147.8 million

and the impact on revenue in prior year was RMB96.2 million as we deconsolidated such smart toothbrush company upon sale of its equity

in the full year 2021 was 36.1 million, compared with 45.7 million in the full year of 2020. The number of units shipped of our

self-branded products grew by 59.6%, offset by 30.5% decrease in Xiaomi wearable products.

Gross margin in the full

year 2021 was 20.9%, compared with 20.7% in the full year 2020. Higher gross margin is largely due to improvement in product mix.