Waystar Holding
The toll road between a doctor's bill and the money: software that checks, sends, chases and collects payment from insurers and patients for about 30,000 healthcare providers.
The scores
Growth3/4 ↓
Revenue grew 18% in Q2 2026, but most was Iodine; growth without it was 7%, about 10% normalised.
Business quality3/4 →
Wired into billing systems and insurers, with retention near 97%, but untested against Epic selling the same tools inside its record.
Financial position3/4 ↑
Net debt of 2.5 times adjusted EBITDA, nothing due before 2029, and interest of $81M a year takes 19% of EBITDA after stock pay.
Execution record3/4 →
Nine quarters of beating forecasts since the 2024 IPO, but a short record, a finance chief change and a June 2026 breach.
Per share capture3/4 →
Paying for Iodine in stock lifted the share count 7%, shrinking each holder's slice; stock pay runs 4% of sales; a buyback has begun.
Potential2/4 →
Denials cost providers about $19.7B a year and Waystar earns $1.1B, but more share needs Epic to stay out and large deals to go live.
Risk profile3/4 →
Spread across 30,000 clients, but dependent on health-record vendors who are partners and rivals, and on keeping health data safe.
Valuation3/4 ↑
A 4.6% free cash flow yield needs about 5% growth for ever, near what the business delivers without a single deal.
Evidence quality3/4 →
Revenue, cash and debt are filed; growth without purchases and client retention are management's figures, and the denial costs are survey estimates.
The Verdict
We rate Waystar Neutral. It is a solid business: hospitals and clinics bill through it every day, almost none leave, and it keeps a wide margin on the work. The price is fair. At $28 a buyer is paying for about 5% growth a year for ever, roughly what the business is managing now that a rival's outage has stopped flattering the numbers. It would turn Attractive if growth without purchases climbed back towards 10%, or if the price fell far enough to pay for less. Debt, a possible sale and Epic's own billing tools keep us from more conviction.
The long caseEvery bill a provider sends an insurer can pass through Waystar, and as insurers deny more, providers pay more to be paid.
The evidence under this - 6 claims
Clients can end a renewed contract on limited notice, so a renewal is not a firm commitment.
- The filings give no organic figure; the normalised rate removes three large 2025 implementations that were real revenue at the time.
- Subscription growth of 34% reported is mostly Iodine, bought in October 2025.
Management calls 108% to 110% its historical range, so the fall may be a return to normal rather than a decline.
Leverage is measured on adjusted EBITDA; on GAAP EBITDA after stock pay it is about 3.0 times.
These are Epic's own figures, measured at its most active users, and nobody outside has checked them.
First-half tax timing and doubled capitalised software depress the trailing cash flow; on management's 70% conversion target the yield is nearer 5.5%.
The company
A hospital does not get paid when it treats you. It has to check your insurance, sometimes get permission first, send a claim the insurer will accept, fight it if it is denied, and then bill you for what is left. Each step fails often and costs staff time.
Waystar sells cloud software that does those steps, for about 30,000 providers and 7.5 billion transactions a year. The alternatives are other billing vendors, the hospital's own record system, or people doing it by hand.
The evidence under this - 3 claims
Gross claims are billed charges, which run well above what insurers actually pay.
How it makes money
Two ways. Providers pay a subscription for the software, and Waystar charges a fee on each claim or patient payment that runs through it. Over 99% of revenue is one or the other, on contracts of two to three years that then renew each year with price rises.
The patient payments fees look large but card and bank costs eat about 60% of them, so the subscription and claims work is where the profit sits.
The evidence under this - 4 claims
Clients can end a renewed contract on limited notice, so a renewal is not a firm commitment.
Where the money comes from, stream by stream
| Stream | Share of sales (first half 2026) | How it earns it |
|---|---|---|
| Provider subscriptions | 54% | Monthly fees per provider and minimums for claims, eligibility, denials and Iodine's clinical tools; $341.6M. |
| Patient payments volume fees | 26% | Fees on patient payment dollars or counts, of which card and bank fees take about 60%; $163.0M. |
| Provider volume fees | 19% | Per-transaction fees above contract minimums, which rise with patient visits; $118.6M. |
| Patient subscriptions, set-up and other | 2% | Patient portal fees, implementation fees spread over the contract, and payment hardware; $10.4M. |
Who runs it
Matt Hawkins has run Waystar since 2017, through its private-equity years and its 2024 listing; he owns about 1.9%. The buyout firms that own about a third, led by EQT, each name a director, so they decide whether to sell.
Executive bonuses ride on revenue and adjusted profit, and the chief executive's share awards on how the shares do against peers. Insider sales in the last year were almost all under plans set in advance. A new finance chief arrived in July 2026.
The evidence under this - 5 claims
Nothing in the pay plan rewards cash flow per share or GAAP profit.
Why it wins, and who could beat it
Why customers come back
Once a hospital's billing runs through Waystar, it is wired into the record system, the bank and hundreds of insurers. Moving means re-testing every link while the cash keeps coming in, so few try.
The numbers bear it out. Management says about 97% of revenue is kept each year, 98% of 2025 revenue came from clients signed before it began, and when a client did shop around from 2023 to 2025, Waystar won 85% of the time.
The evidence under this - 4 claims
Clients can end a renewed contract on limited notice, so a renewal is not a firm commitment.
Management calls 108% to 110% its historical range, so the fall may be a return to normal rather than a decline.
Both figures are measured by the company and neither is audited or checked by anyone outside.
The two figures measure different things: Waystar's revenue covers the whole claim cycle and patient payments, while Premier's counts staff time on denials.
The threat
The rival that matters is Epic, the private company whose records most large hospitals run on. Its AI tool Penny already cuts coding denials and drafts appeal letters, and Epic says it will later file appeals itself. Optum, inside UnitedHealth, sells the same kind of software through Change Healthcare. Epic needs no new wiring, which is exactly Waystar's moat.
The evidence under this - 3 claims
These are Epic's own figures, measured at its most active users, and nobody outside has checked them.
The rivals: UNH, ORCL, and 4 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| Private | Epic Systems (Penny revenue cycle AI)Priced against it: Private | Healthcare payments software for providers and patients | On sale | Private |
| UNH | Optum Insight (Change Healthcare)Priced against it: Different product | Healthcare payments software for providers and patients | On sale | Different product |
| Experian HealthPriced against it: Listed abroad | Healthcare payments software for providers and patients | On sale | Listed abroad | |
| ORCL | Oracle HealthPriced against it: Different product | Healthcare payments software for providers and patients | On sale | Different product |
| Private | Availity, FinThrive, R1 RCM and athenahealthPriced against it: Private | Healthcare payments software for providers and patients | On sale | Private |
| In-house | Health systems' own billing staff and systemsPriced against it: In-house | Healthcare payments software for providers and patients | On sale | In-house |
How big it could get
How big this could get
Insurers turn down about one claim in seven at first, and providers spend about $19.7B a year fighting them, by Premier's count from a survey of 516 hospitals. Federal data show the same picture on HealthCare.gov plans, where a fifth of claims were denied.
Waystar's 2025 revenue was about 5.6% of that sum. Management puts its whole market at $20B, growing about 5% a year: large, but growing slowly.
The evidence under this - 4 claims
A survey of Premier's own members, mostly hospitals, covering private insurers only; the three billion claims is Premier's round figure.
Marketplace plans are a small slice of insured claims and may deny more than employer plans.
The figure is Waystar's own pricing times a count of providers, partly from a study it paid for.
The two figures measure different things: Waystar's revenue covers the whole claim cycle and patient payments, while Premier's counts staff time on denials.
The results
The numbers
Sales grew 19% over the twelve months to Jun 2026, about the same pace as the 17% in the year to Dec 2025.
Operating margin is 23%, up from 18% in the year to Dec 2023.
Yearly sales growth has ranged from +12% to +19% over the last 3 years.
Each dollar put into the business earns 3.9% a year after tax, about where it was (3.4%) in the year to Dec 2025.
It turned 20% of sales into free cash, $246M over the last twelve months.
It owes $1.28B more than the cash it holds, about 4.4 years of the cash its operations bring in.
The share count rose 60% in 3.5 years, and pay in shares costs 4.1% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-31. Fiscal years end in December.
| Dec 2022 | Dec 2023 | Dec 2024 | Dec 2025 | 12 mo to Jun 2026 | |
|---|---|---|---|---|---|
| Size and growth | |||||
| Sales | $705M | $791M | $944M | $1.10B | $1.21B |
| Sales growth | - | +12% | +19% | +17% | +19% |
| Profit | |||||
| Operating margin | 13% | 18% | 13% | 23% | 23% |
| Net margin | −7.3% | −6.5% | −2.0% | 10% | 11% |
| What growth costs, per sales dollar | |||||
| Research and development | 4.7% | 4.5% | 5.2% | 5.0% | 5.6% |
| Sales and marketing | 16% | 16% | 17% | 16% | 16% |
| General and admin | 10% | 8.0% | 12% | 12% | 12% |
| Pay in shares | 1.1% | 1.1% | 5.8% | 3.8% | 4.1% |
| Capital spending | 2.5% | 2.7% | 2.9% | 2.4% | 3.9% |
| Cash | |||||
| Cash from operations | $103M | $51.5M | $170M | $310M | $293M |
| Free cash flow | $85.2M | $29.9M | $142M | $283M | $246M |
| Balance sheet | |||||
| Cash and short-term investments | $64.6M | $35.6M | $182M | $86.2M | $192M |
| Debt | - | $2.22B | $1.23B | $1.47B | $1.47B |
| Net cash | - | −$2.18B | −$1.05B | −$1.39B | −$1.28B |
| Returns and shares | |||||
| Return on capital | - | - | - | 3.4% | 3.9% |
| Shares (diluted) | 122M | 122M | 150M | 185M | 195M |
What growth costs
Growth is not getting cheaper to buy in one way: stock pay, research and capitalised software have all risen as a share of sales since 2022, while selling costs held flat. Margins still widened, because the extra revenue costs little to serve, but more of the profit now goes to staff in shares.
The evidence under this - 2 claims
First-half cash flow was cut by the timing of federal tax payments, so the trailing figure may understate a normal year.
The last report (29 Jul)
Quarter ended June 2026, filed figures.
On the surface Q2 2026 was a good quarter: revenue up 18%, an adjusted profit margin near 43%, and guidance for the year raised again.
Underneath, growth without Iodine was 7%, and fees on claims rose under 3%. Existing clients added less than a year before: net retention, the spending they add, fell to 108.3% from 114.6% as clients won after a rival's 2024 outage stopped counting as new. The shares fell 14.6% the next day.
What it did to the thesisIt showed the business still sticky and profitable, and confirmed the growth from the rival's outage has faded. It left open whether growth climbs back to management's target or settles slower, which is why the view stayed Neutral.
The quarter in detail
Sales growth from the previous quarter, filed figures.
Earnings per share $0.43 against $0.40 expected; $0.21 as filed, the gap being what the company adds back.
The evidence under this - 5 claims
- The filings give no organic figure; the normalised rate removes three large 2025 implementations that were real revenue at the time.
- Subscription growth of 34% reported is mostly Iodine, bought in October 2025.
Management calls 108% to 110% its historical range, so the fall may be a return to normal rather than a decline.
Guidance for the second half was left roughly unchanged after two quarters of beats, and volume revenue grew only 3% in Q2.
What management did with the money
The big move was buying Iodine, AI software that reads clinical notes, for $1.26B, part in cash and part in new shares, which raised the share count 7%. In May the board approved a $200M buyback, and Waystar bought shares near $19 in the second quarter.
Insiders in 2026Q3: 11 purchases and 13 sales, from their Form 4 filings.
The evidence under this - 3 claims
The price, and where we disagree
In short. Fair. The price pays for the business growing about as fast as it does today, leaving no reward for a recovery and no cushion against a slip.
The shares are 29% lower than a year ago after falling sharply on both 2026 prints, then rose 7.1% when Reuters reported in September that Waystar was exploring a sale.
Q3 2026 results arrive on 2 November. Management says 2026 is a year of selling new AI products, about 40% of bookings, with the revenue showing in 2027. The print will show whether growth without Iodine holds near 7% or starts to lift.
The evidence under this - 5 claims
The company has not confirmed it and nothing has been filed; the report itself says a sale may not happen.
Bookings are not filed and the company does not say what share of revenue AI products earn.
It also said three large 2025 launches had flattered volume revenue, so the drag on growth was known.
How we read the multiple
On adjusted earnings the shares look cheap; on reported earnings, after past deals and stock pay, they cost about 39 times profit. Cash is the fairer yardstick, and it says fair.
- At $28 the whole company is worth about $5.37B.
- Last year it produced $246M of free cash, a 4.6% yield.
- After the cost of stock pay that is about 3.7%.
- A common rule of thumb asks a share to return about 9% a year.
- So the cash has to grow about 5% a year for ever, roughly today's pace.
Against its own history. Cheaper on cash than its own past, but those years carried far more debt and interest, so the gap mostly reflects debt paid down, not a bargain.
The evidence under this - 4 claims
First-half tax timing and doubled capitalised software depress the trailing cash flow; on management's 70% conversion target the yield is nearer 5.5%.
Amortisation of bought intangibles uses no cash, so the non-GAAP figure is nearer cash earnings before stock pay.
First-half cash flow was cut by the timing of federal tax payments, so the trailing figure may understate a normal year.
Priced against its rivals
None of the listed rivals above sells the same thing to the same buyers as a large part of what it does. A price comparison needs at least two, so the price is judged against its own history instead.
Where we disagree with the market
AI and the record vendors will take this work, so slowing growth is the start of a decline.
The work is sticky and AI is also Waystar's product; growth near today's pace is likely, and the price already pays for it.
Buyers sold both 2026 prints on falling retention, but the fall is mostly the outage lift fading: the clients stayed. AI tools were about 40% of new bookings this year.
The evidence against us is real. Epic sits inside the hospital already, and a vendor that needs no new wiring weakens the very reason clients stay. If retention keeps falling after the outage clients are fully counted, the market is right.
What analysts say, and the evidence
The evidence under this - 5 claims
Management calls 108% to 110% its historical range, so the fall may be a return to normal rather than a decline.
These are Epic's own figures, measured at its most active users, and nobody outside has checked them.
Bookings are not filed and the company does not say what share of revenue AI products earn.
It also said three large 2025 launches had flattered volume revenue, so the drag on growth was known.
What could go wrong, and how we would know
The risks
- Epic does it inside. Hospitals on Epic can file and appeal claims without a second vendor, and Epic says its AI will soon submit appeals on its own.
- Debt on a floating rate. Net debt is about $1.28B, mostly a loan due 2029 whose interest moves with short-term rates.
- A sale on the owners' terms. Buyout firms own about a third and have reportedly hired bankers; a sale could come at a price that suits them, not later buyers.
- Slow patient volumes. Patient visits grow 1% to 2% a year, so fee growth depends on winning clients and selling more to them.
- Another breach. Intruders took source code and some health data from a supplier's storage in June 2026; a worse one would test the trust that keeps clients.
The evidence under this - 6 claims
These are Epic's own figures, measured at its most active users, and nobody outside has checked them.
Leverage is measured on adjusted EBITDA; on GAAP EBITDA after stock pay it is about 3.0 times.
The company has not confirmed it and nothing has been filed; the report itself says a sale may not happen.
A law firm announced an investigation on behalf of shareholders in September 2026, and more impact may yet be found.
It also said three large 2025 launches had flattered volume revenue, so the drag on growth was known.
What we still do not know
- Where net retention settles once the clients won after the 2024 outage are fully counted: management's target is 108% to 110%.
- Whether the AI products sold in 2026 show up as revenue growth in 2027, as management says.
- Whether growth without purchases returns to the 10% or more management targets, or settles nearer 7%.
The evidence under this - 4 claims
- The filings give no organic figure; the normalised rate removes three large 2025 implementations that were real revenue at the time.
- Subscription growth of 34% reported is mostly Iodine, bought in October 2025.
Management calls 108% to 110% its historical range, so the fall may be a return to normal rather than a decline.
Known only through an analyst note; RBC wrote that no new performance measures were given, which disappointed.
Bookings are not filed and the company does not say what share of revenue AI products earn.
What would change our view
- Neutral→AttractiveThe price pays for little growth
It needs:
- ○The price falls to about 16 times a year's free cash flow, a yield near 6%.checked daily
- Neutral→AttractiveGrowth without deals returns
It needs all of:
- ○Revenue growth without purchases of 10% or more for two quarters running.checked at the next results, due by 2 Nov
- ○Clients' spending, net of those leaving, up 10% or more a year: net retention of 110%.checked at the next results, due by 2 Nov
We would also be wrong if
- Growth without purchases below 6% for two quarters in a row.
- Net retention below 106% over twelve months.
- A large health system moves its claims work to Epic, and Waystar names it.
What is coming
- 2 November 2026 Q3 2026 results: Growth without Iodine, net retention, volume revenue and whether 2026 guidance holds.
Every dated event ahead
- 2 November 2026 Q3 2026 results: Growth without Iodine, net retention, volume revenue and whether 2026 guidance holds.
- 28 February 2027 Q4 2026 results and 2027 guidance: Whether 2027 growth is guided near the low double digits management targets, and Iodine's first full year.
- 30 June 2027 Outcome of the reported sale review: Whether a buyer pays a premium, or the review ends with the investors still holding a third.
Since we wrote this
- 1 NovThesis writtenNeutral, medium convictionA sticky, cash-rich billing network growing about 7% to 10% without deals, at a price that already pays for that.
Sources 16
Sources - 16
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-02-17business, solutions, competition classes, market estimate, clients and concentration, contracts, the Iodine purchase, debt, risk factorsbacksC01C02C03C04C07C08C25C29C31C38C44
- S02primarycompany release2026-02-172025 cash flow, net debt and leverage, the first 2026 guidance
Cash flow from operations of $310 million and unlevered free cash flow of $365 million
backsC10 - S03primarycompany release2026-07-29Q2 statements, non-GAAP reconciliations, net debt, trailing adjusted EBITDA, the raised 2026 guidance
Q2 revenue of $319.7M, up 18% YoY ... Raising revenue and adjusted EBITDA guidance for 2026
backsC05C09C10C11C12C13C20C43 - S04primarycompany filing2026-07-29revenue by type and by provider and patient, net revenue retention, debt terms, the buyback, the June 2026 cyber incidentbacksC05C07C11C19C21C32C33C38
- S05primarytranscript2026-07-29Waystar Q2 2026 earnings call transcript (FMP)data/cache/transcripts/WAY-2026Q2.jsonorganic growth, retention, bookings, AI share of bookings, capitalised software, the CFO change; questions from William Blair, Leerink, Mizuho, KeyBanc, Raymond James, Jefferies, Evercore, RBC, Canaccord, Deutsche Bank, BofA, Morgan Stanley and TD Cowen
organic revenue grew 7% year-over-year. Excluding previously discussed items affecting comparability, normalized organic growth was approximately 10% in the quarter.
backsC06C08C10C19C22C39C40 - S06primarycompany filing2026-04-17ownership table, the investors' board rights, leaders' records, bonus and award designbacksC16C18C42
- S07primaryindustry data2023-12-31initial denial rate on private payer claims, the share later paid, the cost per denied claim, the count of claims a year
Nearly 15 percent of all claims submitted to private payers for reimbursement are initially denied ... Over half (54.3%) of denials by private payers were ultimately overturned and the claims paid ... Respondents represented 516 hospitals across 36 states ... The average cost incurred by providers fighting denials is $43.84 per claim - meaning that providers spend $19.7 billion a year just to adjudicate with payers.
backsC26 - S08primaryindustry data2026-03-24insurer denial rates from the regulator's data, and how rarely denials are appealed
Insurers of qualified health plans (QHP) sold on HealthCare.gov denied 20% of in-network claims in 2023 and 36% of out-of-network claims ... 93% (436 million claims) filed for in-network services. Of these in-network claims, 86 million were ultimately denied ... fewer than 1% of denied claims were appealed
backsC27 - S09primarycompany release2026-03-10Epic, 'Real Results, Right Now: How Epic AI Is Reducing Costs, Improving Care, and Helping Patients' Epic Systemswhat Epic's own revenue cycle AI does, in its words
At health care systems most actively using Penny, coding-related denials have dropped by more than 20% ... organizations are creating denial appeal letters 23% faster with Penny.
backsC23 - S10primarycompany filing2026-03-02UnitedHealth Group Form 10-K for the fiscal year ended December 31, 2025 UnitedHealth Groupthat Optum Insight sells revenue cycle technology and services to care providersbacksC24
- S11tertiarynews2026-09-15the reported sale process; the Reuters original refuses this client
Sources say the company has hired bankers to advise on a possible sale, though the plans could change and sale may not come to pass.
backsC15 - S12tertiaryanalyst2026-08-26the long-term targets restated at the investor day: low double-digit growth, about 40% adjusted EBITDA margin, retention and cash conversion
düşük çift haneli gelir büyümesi ve %40 düzeltilmiş FAVÖK marjı beklentisini yineledi
backsC14 - S13secondaryvendor data2026-10-30Research pack, frozen 2026-11-01 (FMP market data, FINRA short interest, Form 4 roster)daily closes, the price decomposition, analyst estimates and ratings, short interest, insider rosterbacksC15C17C34C35
- S14primarycompany filing2026-10-26which sales were made under plans adopted earlierbacksC17
- S15primaryindustry data2025-09-22Experian Health, '3rd Annual State of Claims Survey Finds Denials Still on the Rise' Experian Healthhow denial rates have moved by providers' own account, and how few use AI in claims
41 percent of providers now face denial rates of 10 percent or higher, an issue that has grown each year since the first survey in 2022. ... only 14 percent are using it.
backsC28 - S16primarycompany release2026-10-14the date of the next print
Waystar to Report Third Quarter 2026 Financial Results on November 2, 2026
backsC41