An analyst from TD Cowen, Charles Rhyee, has begun coverage of Waystar (WAY, Financial), assigning it a Buy rating and setting a price target of $51. Waystar is recognized for its software-as-a-service offerings tailored for healthcare providers, focusing on areas such as patient payments and clearinghouse solutions. Rhyee suggests that the company stands to gain from advantageous market conditions. These include intricate billing processes and an increase in out-of-pocket expenses faced by patients.
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.
