Canaccord has revised its price target for Waystar (WAY, Financial) to $47, down from a previous $50, while maintaining a Buy rating on the stock. The firm cited strong performance, with results exceeding expectations in both revenue and EBITDA, reinforcing Waystar's position as a key focus for 2025. According to Canaccord, the first quarter results have heightened their optimism about Waystar's opportunities moving forward into future reports.
WAY Key Business Developments
Release Date: April 30, 2025
- Revenue: $256 million, a 14% year-over-year increase.
- Adjusted EBITDA: $108 million, a 16% year-over-year increase.
- Adjusted EBITDA Margin: 42%, aligning with the long-term target of approximately 40%.
- Net Revenue Retention Rate: 114% over the last 12 months.
- Subscription Revenue Growth: 18% year-over-year and 3% sequentially.
- Volume-Based Revenue Growth: Approximately 15% year-over-year, adjusting for prior year benefits.
- Unlevered Free Cash Flow: $79 million with a conversion ratio of 73%.
- Cash Balance: $224 million as of March 31.
- Net Leverage Ratio: 2.5x at the end of Q1.
- Client Base: 1,244 clients generating more than $100,000 in trailing 12-month revenue, a 15% increase year-over-year.
- Raised Revenue Guidance: $1.006 billion to $1.022 billion for the full year.
- Raised Adjusted EBITDA Guidance: $406 million to $414 million for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Waystar Holding Corp (WAY, Financial) reported a strong start to 2025 with Q1 revenue growth of 14% and adjusted EBITDA increase of 16% year-over-year.
- The company raised its full-year revenue guidance to a range of $1.006 billion to $1.022 billion, reflecting confidence in continued growth.
- Waystar's software platform is embedded in clients' workflows, playing a mission-critical role in helping providers get paid faster and more accurately while reducing administrative costs.
- The company has a high net revenue retention rate of 114%, indicating strong client satisfaction and expansion of existing client relationships.
- Waystar's AI-powered platform, AltitudeAI, is delivering significant ROI for clients, with early adopters seeing an 85% auto approval rate and a 70% reduction in time spent on authorizations.
Negative Points
- Despite strong performance, Waystar acknowledges the potential impact of macroeconomic volatility and recession risks on its business.
- The company faces competition from other vendors, with some clients temporarily switching back to competitors due to existing contracts.
- Waystar's growth is partly dependent on the continuation of strong patient payment utilization, which could be affected by changes in the economic environment.
- The company is exposed to potential challenges from new policy proposals in the US healthcare industry, although no major impact is anticipated in 2025.
- Waystar's business model, while recession-resistant, is not entirely insulated from economic cycles, which could affect future performance.
