Shares of Waystar Holding (WAY) have been struggling lately and have lost 16.1% over the past two weeks. However, a hammer chart pattern was formed in its last trading session, which could mean that the stock found support with bulls being able to counteract the bears. So, it could witness a trend reversal down the road.The formation of a hammer pattern is considered a technical indication of nearing a bottom with likely subsiding of selling pressure. But this is not the only factor that makes a bullish cas ...

Core Insights - Waystar has launched its Auth Accelerate solution, which automates the prior authorization process, reducing submission times by 70% and increasing auto-approval rates to 85% [1][3]. Industry Challenges - Prior authorizations are a significant challenge in healthcare, with providers prioritizing automation for patient access as their top investment for 2025 [2]. - The process of securing payer approval can take up to 24 minutes per authorization, contributing to administrative burdens in healthcare [2]. - A survey indicated that over 25% of physicians reported serious adverse events due to prior authorization delays, with 78% stating that such delays lead to patients abandoning care [2]. Company Innovations - Waystar Auth Accelerate automates every step of the authorization submission process, reducing the average wait time for payer approval by 75%, from over four days to one day or less [3]. - The solution aims to enhance productivity, reduce patient care delays, and prevent labor-intensive denials [3]. - Waystar's cloud-based software platform is increasingly relied upon by providers to improve operational efficiency and financial performance [5]. Client Impact - Prisma Health, South Carolina's largest healthcare organization, has implemented Waystar Auth Accelerate, serving over 1.6 million unique patients annually [4]. - The collaboration with industry partners on innovative processes is aimed at improving care delivery and addressing administrative challenges [5]. Company Overview - Waystar serves approximately 30,000 clients, representing over 1 million distinct providers, and processes over 6 billion healthcare payment transactions annually, amounting to over $1.8 trillion in gross claims [6].

Core Viewpoint - Waystar Holding Corp. is conducting a public offering of 20 million shares at a price of $40.00 per share, with no proceeds going to the company itself [1] Group 1: Offering Details - The offering includes a 30-day option for underwriters to purchase an additional 3 million shares [1] - The offering is led by an underwriting group that includes J.P. Morgan, Goldman Sachs & Co. LLC, and Barclays [2] - The expected closing date for the offering is around February 24, 2025, subject to customary closing conditions [1] Group 2: Company Overview - Waystar provides healthcare payments software and serves approximately 30,000 clients, representing over 1 million distinct providers [6] - The company processes over 6 billion healthcare payment transactions annually, amounting to over $1.8 trillion in gross claims [6] - Waystar's platform spans approximately 50% of U.S. patients and aims to simplify healthcare payments to allow providers to focus on patient care [6]

Company Overview - Waystar Holding Corp. is a provider of healthcare payment software, aiming to simplify healthcare payments for providers to enhance patient care and financial performance [6] - The company serves approximately 30,000 clients, representing over 1 million distinct providers, including 16 of the top 20 institutions on the U.S. News Best Hospitals Honor Roll [6] - Waystar's platform processes over 6 billion healthcare payment transactions annually, amounting to over $1.8 trillion in gross claims, covering around 50% of U.S. patients [6] Proposed Offering - Waystar announced a proposed underwritten public offering of 18,000,000 shares of its common stock by certain investment funds, including EQT AB, Canada Pension Plan Investment Board, and Bain Capital, LP [1] - The Selling Stockholders plan to grant underwriters a 30-day option to purchase up to an additional 2,700,000 shares [1] - Waystar will not receive any proceeds from the sale of shares in this offering [1] Underwriting Details - The offering is being managed by an underwriting group led by J.P. Morgan, Goldman Sachs & Co. LLC, and Barclays, acting as joint lead book-running managers [2] - A registration statement on Form S-1 has been filed with the SEC, but it has not yet become effective, meaning the securities cannot be sold or offered until then [3]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 reached $244 million, representing an 18% year-over-year increase, with full-year revenue totaling $944 million, reflecting a 19% year-over-year growth [14][41] - Adjusted EBITDA for Q4 was $100 million, up 16% year-over-year, with a margin of 41%, while full-year adjusted EBITDA was $383 million, equating to a 40.6% margin [19][42] - GAAP net income for Q4 was $19 million compared to a net loss of $14 million in the prior year, and for the full year, the net loss was $19 million compared to a loss of $51 million in 2023 [41] Business Line Data and Key Metrics Changes - The number of clients generating over $100,000 in trailing 12-month revenue grew to 1,203, an increase of 15% year-over-year [16][38] - Net revenue retention rate was 110% in Q4, at the high end of the historical range of 108% to 110% over the past 10 quarters [16][39] Market Data and Key Metrics Changes - Waystar processed over 6 billion insurance transactions and over $1.8 trillion in gross claims annually, generating significant network effects that enhance its AI-powered software [23] - The company reported a 69% conversion of adjusted EBITDA to unlevered free cash flow in 2024, indicating strong operational efficiency [20][45] Company Strategy and Development Direction - Waystar aims to simplify healthcare payments through its software platform, focusing on reducing administrative waste and enhancing operational efficiencies [11][35] - The company is committed to leveraging its strong cash flow profile for reinvestment, pursuing M&A opportunities, and reducing debt [21][46] - Waystar's strategy includes a focus on innovation, particularly in AI capabilities, to improve client value and operational efficiency [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, emphasizing the importance of delivering measurable results and maximizing returns for clients and investors [12][35] - The company anticipates continued growth in 2025, with revenue guidance set between $1 billion and $1.16 billion, representing a 7% growth over 2024 [47][51] Other Important Information - Waystar's cash balance increased by $55 million in Q4, bringing the total to $182 million at year-end, contributing to a reduced net leverage ratio of 2.8 times [20][43] - The company has adjusted its non-GAAP net income and EPS calculations to better align with peers, expecting non-GAAP net income for 2025 to be in the range of $237 million to $243 million [52] Q&A Session Summary Question: Can you discuss the dynamics around utilization on your volume-based revenue? - Management noted a sequential decline in volume-based revenue specific to patient payments but indicated that the decline was less than expected due to increased patient utilization [57][58] Question: Can you provide an update on direct connectivity with payers and quantify M&A contributions? - Management confirmed ongoing efforts to expand direct connections with payers and indicated that M&A contributions from HealthPay and Olive AI were small but expected to improve margins over time [62][66] Question: How is Waystar positioned regarding potential headwinds from policy changes? - Management believes that Waystar's software transcends political environments and is well-positioned to help providers eliminate wasteful spending and improve efficiency [71][75] Question: What products or solution areas are resonating more with clients? - Management highlighted strong demand for solutions that prevent denied claims and improve operational efficiency, particularly in eligibility automation and prior authorization [82][84] Question: Can you elaborate on the cross-sell opportunities with new clients? - Approximately 30% of new clients are exploring additional software modules, focusing on automation and efficiency to enhance their operations [90][92] Question: How should we think about net revenue retention in 2025? - Management indicated that while they do not provide specific guidance on NRR, they expect it to remain strong, supported by continued volume growth and cross-sell opportunities [130][131]

Financial Results 4Q'24 Earnings Presentation February 18, 2025 © 2025 Waystar. All rights reserved. FORWARD - LOOKING STATEMENTS This presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current views with respect to, among other things, statements regarding Waystar's expectations relating to future operating results and financial position, including full year 2025, and future periods; anticipated future investments; ...

Core Insights - Waystar Holding Corp. reported a fiscal year 2024 revenue of $944 million, representing a 19% year-over-year increase, with Q4 revenue growth of 18% year-over-year [1][5] - The company achieved a Q4 net income of $19.1 million, with a non-GAAP net income of $52.1 million, and a fiscal year 2024 net loss of $19.1 million, showing a 62.7% improvement year-over-year [1][5] - Adjusted EBITDA for fiscal year 2024 was $383 million, up 15% year-over-year, with a Q4 adjusted EBITDA margin of 41% [1][5] Financial Performance - Q4 revenue was $244.1 million, with a net income margin of 8% and adjusted EBITDA of $100.2 million [5][23] - The company reported cash flow from operations of $65 million and unlevered free cash flow of $80 million for Q4 [5][29] - The net revenue retention rate (NRR) was 110%, with subscription revenue of $121.6 million and volume-based revenue of $121.2 million, both up 18% and 19% year-over-year respectively [5][21] Future Outlook - Waystar anticipates total revenue for fiscal year 2025 to be between $1.0 billion and $1.016 billion, with adjusted EBITDA expected to be between $399 million and $407 million [5][21] - The company aims to leverage its cloud-based software platform to achieve solid revenue growth and compelling adjusted EBITDA margins in the future [2][5] Client Base and Market Position - Waystar serves approximately 30,000 clients, representing over 1 million distinct providers, including 16 of the top 20 institutions on the U.S. News Best Hospitals list [21] - The company processes over 6 billion healthcare payment transactions annually, amounting to over $1.8 trillion in gross claims, covering approximately 50% of U.S. patients [21]

Healthcare Payment Ecosystem - The healthcare payment ecosystem is complex, involving over 10,000 diagnosis codes and unique payer contracts, leading to significant challenges in reimbursement accuracy [35]. - In 2024, the company facilitated over 6 billion healthcare payment transactions, amounting to over $1.8 trillion in gross claims volume [36]. - Approximately 17% of healthcare claims were initially denied in 2021, underscoring the demand for solutions that reduce denials and simplify appeals [40]. - The healthcare sector accounted for 17.6% of the U.S. GDP in 2023, with total healthcare spending reaching $4.9 trillion [39]. Market Opportunity and Growth - The total addressable market (TAM) for the company's software solutions was estimated at $15 billion in 2022, with potential growth to nearly $20 billion by 2027, reflecting a 5% CAGR [41]. - Waystar serves over 1 million providers today, with an estimated 7.5 million providers that could benefit from its solutions, indicating a large market opportunity for growth [53]. - The company has the potential to approximately double its revenue through cross-selling and up-selling solutions to existing clients, leveraging a significant whitespace within its current client base [53]. - The number of clients generating over $100,000 in revenue increased from 982 in 2022 to 1,203 in 2024, driven by new client wins and successful cross-selling efforts [70]. Client Base and Retention - The company serves over 30,000 clients, representing over 1 million distinct providers, with the top 10 clients accounting for only 11.2% of total revenue [36]. - The company achieved a Net Revenue Retention Rate of 110.1% for the year ended December 31, 2024, indicating strong client loyalty and growth [46]. - Waystar's client base is highly diversified, with the top 10 clients accounting for only 11.2% of total revenue for the year ended December 31, 2024 [70]. - Client contracts typically have a two to three-year term, with automatic renewal for one-year terms, but clients can terminate with limited notice, impacting renewal rates [129]. Competitive Landscape - The company operates in a highly fragmented and competitive market, with principal competitors including revenue cycle technology vendors and point solution vendors, emphasizing the need for continuous innovation and quality [80][81]. - The company has a win rate of 83% against competitors from fiscal years 2022 to 2024 when clients switch vendors or purchase new solutions [50]. - The company faces competitive pressures from both smaller niche companies and large technology firms entering the revenue cycle technology market [122]. - Pricing pressures may arise due to competition, potentially affecting margins and overall results of operations [125]. Innovation and Development - The company leverages AI and advanced algorithms to enhance claim and billing accuracy, reduce labor costs, and improve the overall payment experience [33]. - Research and development expenses for the years ended December 31, 2024, 2023, and 2022 were $48.8 million, $35.3 million, and $32.8 million, respectively, indicating a significant increase in investment in innovation [79]. - The company has over 280 team members dedicated to product and research and development as of December 31, 2024, highlighting its commitment to enhancing its product offerings [79]. - Waystar's ability to innovate and develop new products is crucial, as the pace of change in the revenue cycle technology market is rapid [124]. Compliance and Regulatory Risks - The company must comply with NACHA rules and card network requirements for payment processing, with potential penalties for non-compliance [169]. - The company is subject to HIPAA regulations, with potential penalties for violations reaching up to $250,000 and ten years in prison, alongside civil penalties of up to $68,928 per violation, capped at $2,067,813 annually [207]. - The evolving healthcare regulatory framework poses uncertainties that could adversely affect the company's financial condition and operations [204]. - The company faces risks related to compliance with healthcare laws and data privacy regulations, which could result in civil and criminal penalties if not adhered to [156]. Financial Position and Performance - As of December 31, 2024, the company had outstanding indebtedness of approximately $1.2 billion, including $1.2 billion under the First Lien Credit Facility and $80 million under the Receivables Facility [231]. - The company had $400 million of availability under its Revolving Credit Facility as of December 31, 2024, with no outstanding balance on that facility [231]. - Goodwill and other intangible assets represented approximately 89% of the company's total assets as of December 31, 2024, indicating a significant reliance on these assets [229]. - The company is subject to legal and regulatory proceedings that could result in significant penalties, which may adversely affect its business operations and financial condition [221]. Employee Engagement and Culture - 83% of team members indicated they would recommend working at Waystar to friends and family, reflecting positive employee sentiment and company culture [72]. - The company has implemented a range of training and development opportunities to engage its workforce, including annual training that reinforces company values and promotes a respectful workplace [74][75]. - The company has an Inclusion & Diversity Council and various mentorship programs aimed at fostering a sense of belonging and empowerment among employees [78]. - The company emphasizes the importance of employee engagement and satisfaction, conducting annual surveys to gather feedback on various aspects of the workplace [75].

Revenue Performance - Fiscal year 2024 revenue reached $944 million, representing a 19% year-over-year increase[1] - Q4 revenue was $244.1 million, up 18% year-over-year, with a net income of $19.1 million and a net income margin of 8%[4] - Subscription revenue for Q4 was $121.6 million, up 18% year-over-year, while volume-based revenue was $121.2 million, up 19% year-over-year[8] - Revenue for the three months ended December 31, 2024, increased to $244.1 million, up 18.0% from $206.7 million in the same period of 2023[25] Profitability Metrics - Fiscal year 2024 adjusted EBITDA was $383 million, reflecting a 15% increase year-over-year, with an adjusted EBITDA margin of 41%[1] - Net income for the twelve months ended December 31, 2024, was a loss of $19.1 million, an improvement from a loss of $51.3 million in 2023[29] - Adjusted EBITDA for the twelve months ended December 31, 2024, was $383.5 million, representing a 14.9% increase from $333.7 million in 2023[31] - Non-GAAP net income for Q4 2024 reached $52,073 thousand, compared to $19,455 thousand in Q4 2023, representing a 167% increase[35] Cash Flow and Financial Health - Cash flow from operations for Q4 was $65 million, with unlevered free cash flow of $80 million[4] - The company reported a net cash provided by operating activities of $169.8 million for the twelve months ended December 31, 2024, compared to $51.5 million in 2023[29] - Operating cash flow for the twelve months ended December 31, 2024, was $169,768 thousand, compared to $51,460 thousand in 2023, representing a 229% increase[37] - Unlevered free cash flow for Q4 2024 was $80,128 thousand, up from $54,983 thousand in Q4 2023, indicating a 45% growth[37] Client and Market Metrics - The company reported a net revenue retention rate (NRR) of 110%, with 1,203 clients contributing over $100,000 in last twelve months (LTM) revenue, a 15% increase year-over-year[4] - The company serves approximately 30,000 clients, processing over 6 billion healthcare payment transactions annually, amounting to over $1.8 trillion in gross claims[23] Future Projections - For fiscal year 2025, total revenue is expected to be between $1.0 billion and $1.016 billion, with adjusted EBITDA projected between $399 million and $407 million[8] - Non-GAAP net income for fiscal year 2025 is expected to be between $237 million and $243 million, with diluted non-GAAP net income per share projected between $1.29 and $1.32[8] Balance Sheet and Liabilities - Cash and cash equivalents increased significantly to $182.1 million as of December 31, 2024, compared to $35.6 million at the end of 2023[27] - Total current assets rose to $371.0 million in 2024, up from $222.1 million in 2023, reflecting a 67.0% increase[27] - Total liabilities decreased to $1.5 billion as of December 31, 2024, down from $2.5 billion in 2023, indicating a reduction of 41.0%[27] - Net debt decreased to $1,061,413 thousand as of December 31, 2024, down from $2,213,236 thousand a year earlier, reflecting a reduction of 52%[39] Research and Development - Research and development expenses for the twelve months ended December 31, 2024, were $48.8 million, up from $35.3 million in 2023, marking a 38.1% increase[25] Stock and Compensation - The weighted-average shares outstanding for basic shares increased to 172.5 million in 2024 from 121.7 million in 2023[25] - Stock-based compensation for Q4 2024 was $7,037 thousand, up from $2,343 thousand in Q4 2023, indicating a 200% rise[35] Tax and Adjustments - Tax effect of adjustments for the twelve months ended December 31, 2024, was $(50,170) thousand, compared to $(36,660) thousand in 2023, reflecting an increase in tax adjustments[35] Financial Ratios - Adjusted Gross leverage ratio improved to 3.2x in Q4 2024 from 6.7x in Q4 2023, showing enhanced financial stability[39]

Core Insights - Waystar Holding Corp. has been recognized as the leading AI-powered healthcare payment software platform, ranking 1 in eight categories according to a survey by Black Book Market Research [1][2] - The company outperformed 80 vendors in the survey, with no other vendor securing more than one top ranking [2] - Waystar's AI capabilities have significantly improved claims submission, denial reduction, and reimbursement turnaround time, establishing its leadership in financial accuracy and efficiency [2][3] Company Performance - Waystar achieved the 1 ranking in various AI-driven financial and payment management categories, including reduction in claim rejection and denial rates, and improvement in overall claims reimbursement turnaround time [3] - The platform has been recognized for its effectiveness in patient collections and engagement, leading in upfront patient payment collection rates and automated payment processing [3] - Waystar's software processes over 5 billion healthcare payment transactions annually, managing over $1.2 trillion in gross claims and covering approximately 50% of U.S. patients [4] Technological Advancements - The launch of Waystar AltitudeAI™ introduced a comprehensive set of AI capabilities, including AltitudeCreate™, aimed at enhancing the appeal process for denied claims [2] - The platform utilizes AI-driven predictive analytics to minimize claim denials by identifying errors before submission [5] - Waystar enhances patient financial interactions through intuitive, patient-friendly portals that provide real-time cost estimates and higher collection rates with minimal friction [5]