Waystar Holding Corp.(WAY) - 2024 Q3 - Quarterly Results

Waystar Q3 2024 Earnings Release Waystar announced its third quarter 2024 financial results, highlighting key performance indicators and future outlook Q3 2024 Performance Overview Waystar reported strong Q3 2024 results with 22% revenue growth to $240.1 million, achieving $5.4 million net income and a 40% Adjusted EBITDA margin Q3 2024 Financial Highlights | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenue | $240.1 million | +22% | | Net Income | $5.4 million | N/A (vs. loss) | | GAAP Net Income per Share | $0.03 | N/A (vs. loss) | | Non-GAAP Net Income | $25.3 million | N/A | | Non-GAAP Net Income per Diluted Share | $0.14 | N/A | | Adjusted EBITDA | $96.7 million | +19.4% | | Adjusted EBITDA Margin | 40% | - | | Cash Flow from Operations | $79 million | N/A | Key Metrics and Revenue Disaggregation (Q3 2024) | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Clients with >$100k LTM Revenue | 1,173 | +14% | | Net Revenue Retention Rate (NRR) | 109% | - | | Subscription Revenue | $118.0 million | +16% | | Volume-based Revenue | $120.7 million | +28% | - CEO Matt Hawkins highlighted that the 22% year-over-year revenue growth represents an acceleration from the 20% growth in the previous quarter, driven by providers' need to get paid faster and more efficiently[2] Financial Outlook Waystar provided its guidance for the full fiscal year 2024, projecting total revenue between $926 million and $934 million and Adjusted EBITDA between $374 million and $378 million Full Fiscal Year 2024 Guidance | Metric | Expected Range | | :--- | :--- | | Total Revenue | $926 million - $934 million | | Adjusted EBITDA | $374 million - $378 million | | Non-GAAP Net Income | $47 million - $50 million | | Diluted Non-GAAP Net Income per Share | $0.30 - $0.32 | Financial Statements The consolidated financial statements detail Waystar's financial position and performance, showing a shift to profitability, stronger liquidity, and improved cash flow from operations Condensed Consolidated Statements of Operations For Q3 2024, Waystar reported revenue of $240.1 million, a 22% increase, achieving a net income of $5.4 million from a prior-year loss, largely due to reduced interest expense Q3 Statement of Operations Highlights (in thousands) | Account | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $240,112 | $197,263 | +21.7% | | Income from Operations | $27,146 | $32,215 | -15.7% | | Interest Expense | $(17,752) | $(50,755) | -65.0% | | Net Income/(Loss) | $5,413 | $(15,486) | N/A | | Diluted EPS | $0.03 | $(0.13) | N/A | Condensed Consolidated Balance Sheets As of September 30, 2024, Waystar's total assets stood at $4.54 billion, with cash increasing to $127.1 million and long-term debt significantly reduced to $1.19 billion Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $127,125 | $35,580 | | Total Assets | $4,540,547 | $4,582,974 | | Long-term debt, net | $1,189,630 | $2,134,920 | | Total Liabilities | $1,487,800 | $2,533,042 | | Total Stockholders' Equity | $3,052,747 | $2,049,932 | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash provided by operating activities significantly increased to $105.0 million, supported by an equity offering and debt payments Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Cash Flow Source | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $104,998 | $40,004 | | Net cash used in investing activities | $(21,044) | $(45,753) | | Net cash provided by (used in) financing activities | $14,965 | $(14,032) | Non-GAAP Financial Measures and Reconciliations Waystar uses non-GAAP measures like Adjusted EBITDA and Unlevered Free Cash Flow to clarify core operating performance, providing detailed reconciliations and showing reduced net leverage - The company presents non-GAAP financial measures to assist investors in comparing operating performance across periods by excluding items not indicative of core operations, such as stock-based compensation, transaction expenses, and certain fair value measurements[4][5] Reconciliation of Adjusted EBITDA Adjusted EBITDA for Q3 2024 increased to $96.7 million with a 40.3% margin, reconciled from GAAP net income by adding back non-cash and non-operating expenses Adjusted EBITDA Reconciliation - Q3 (in thousands) | Line Item | Q3 2024 (in thousands) | Q3 2023 (in thousands) | | :--- | :--- | :--- | | Net income/(loss) | $5,413 | $(15,486) | | Interest expense | $18,459 | $52,410 | | Depreciation and amortization | $60,185 | $43,675 | | Stock-based compensation expense | $7,903 | $2,207 | | Adjusted EBITDA | $96,677 | $80,990 | Reconciliation of Non-GAAP Net Income Waystar's Non-GAAP Net Income for Q3 2024 was $25.3 million, or $0.14 per diluted share, adjusted from GAAP net income by excluding non-cash and non-recurring expenses Non-GAAP Net Income Reconciliation - Q3 2024 (in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | GAAP Net income | $5,413 | | Stock-based compensation expense | $7,903 | | Other (office relocation) | $16,816 | | Tax effect of adjustments | $(5,276) | | Non-GAAP net income | $25,259 | Reconciliation of Unlevered Free Cash Flow Unlevered Free Cash Flow for Q3 2024 significantly increased to $89.1 million, calculated from operating cash flow by adjusting for interest paid and capital expenditures Unlevered Free Cash Flow Reconciliation - Q3 (in thousands) | Line Item | Q3 2024 (in thousands) | Q3 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $78,818 | $(10,447) | | Interest paid | $18,925 | $49,037 | | Purchase of property and equipment | $(8,616) | $(6,244) | | Unlevered free cash flow | $89,127 | $32,346 | Reconciliation of Net Debt As of September 30, 2024, Waystar's net debt decreased to $1.12 billion, resulting in a significantly improved adjusted net leverage ratio of 3.0x Net Debt and Leverage Ratio | Metric | Sep 30, 2024 (in thousands) | Sep 30, 2023 (in thousands) | | :--- | :--- | :--- | | Net Debt | $1,119,648 thousand | $2,208,861 thousand | | TTM Adjusted EBITDA | $369,587 thousand | $325,755 thousand | | Adjusted Net Leverage Ratio | 3.0x | 6.8x | Other Information This section includes forward-looking statements and provides an overview of Waystar's role in simplifying healthcare payments for a large client base - The report contains forward-looking statements about future performance and strategy, which are subject to various risks and uncertainties detailed in the company's SEC filings[12][13] - Waystar serves approximately 30,000 clients, representing over 1 million providers, and its platform annually processes over 5 billion healthcare payment transactions[14]