Business model
Hybrid revenue: subscription (50.6% of revenue, H1 2023) and volume-based (49.0%), plus a small services line (0.4%). Independently, revenue also splits by solution category: provider solutions (~70% of total, tools that help providers manage payer workflows) and patient payment solutions (~30%, tools for collecting from patients directly). These are two overlapping classifications of the same revenue pool, not contradictory figures — provider solutions shows up inside both subscription and volume-based revenue.
Scale
- ~30,000 clients, ~1M distinct providers, including 18 of the top 22 US News Best Hospitals
- 2022: over 4 billion healthcare payment transactions, over $900B in gross claims volume, ~50% of US patients covered
- TAM: ~$15B today, growing to ~$20B by 2027 (5% CAGR, company estimate)
- Current penetration: ~3% of hospital segment, ~7% of ambulatory segment
- 82% win rate against competitors over the trailing 30 months
Growth and retention
- Revenue growth: 22% (2021→2022); decelerated to 12.3% (H1 2023 vs H1 2022) — worth investigating whether this is seasonal, macro, or structural deceleration
- Net Revenue Retention (NRR): 109.5% (FY2022), 109.7% (TTM June 2023)
- GRR not disclosed — a genuine diligence gap. NRR alone cannot distinguish a low-churn/low-expansion business from a high-churn/high-expansion business netting to the same headline number. This is a data-room question a real PE team would put directly to management, not something to infer from its absence.
- Top 10 clients = only 11.4–11.7% of revenue — low customer concentration risk
Profitability
- Adjusted EBITDA margin: 44.0% (2021) → 41.9% (2022) → 43.0% (H1 2023) — dipped before recovering; worth checking whether the dip ties to acquisition integration costs ($10.2M in 2021 vs $2.2M in 2022) or reflects real margin pressure
- Net loss margin improving: (8.1)% (2021) → (6.2)% (2022) → (5.5)% (H1 2023)
- Key addbacks to reach Adjusted EBITDA: interest expense, income tax, D&A, stock-based comp, acquisition/integration costs, asset and lease impairments, cost of extinguishing debt, IPO-related costs
Capital structure (as of June 30, 2023)
| Tranche | Outstanding | Rate | Notes |
|---|---|---|---|
| First lien term loan | $1,740M | SOFR + 4.00% | Matures Oct 2026; ~$4.5M quarterly amortization; 50% excess cash flow sweep |
| Second lien term loan | $468M | SOFR + 7.75–8.00% | Matures Oct 2027; bullet repayment, no amortization |
| Receivables facility | $50M | SOFR + 2.00% | Secured against AR via bankruptcy-remote SPV (Waystar RC LLC); matures Aug 2024 |
| Revolving credit facility | $200M available, undrawn | SOFR + 2.25–3.75% (pre-IPO) | Increased to $342.5M in Oct 2023 |
Total debt: ~$2,258M against ~$295.5M FY2022 Adjusted EBITDA — roughly 7.6x total leverage pre-IPO. IPO proceeds earmarked to retire second-lien debt (the most expensive tranche) in full, plus partial first-lien paydown — a classic delever-before-exit move.
Acquisition history (buy-and-build platform strategy)
Formed 2017 via Bain Capital/EQT-sponsored merger of Navicure and ZirMed. Eight acquisitions since 2018, each filling a specific gap in the pre-service → service → post-service healthcare payments workflow rather than random bolt-ons:
- Recondo Technology — AI/RPA patient access and prior-auth automation (pre-service)
- Connance — predictive analytics for collections prioritization
- PARO Decision Support — presumptive charity scoring
- UPMC’s Ovation — claims monitoring
- eSolutions — Medicare-specific RCM, 6,000+ payer connections; $1.3B valuation (Aug 2020); the single largest deal, creating the first platform spanning both commercial and government payers
- Patientco — omnichannel patient payments (post-service)
- HealthPay24 — patient payment platform (from EngageSmart)
- Practice Insight — acquired by eSolutions prior to Waystar’s acquisition of eSolutions
Individual deal financials are not publicly disclosed except eSolutions (SEC “significant acquisition” threshold likely triggered the disclosure requirement there specifically).
Risk factors
- Revenue growth deceleration (22% → 12.3%) needs monitoring — flag as a threshold thesis-breaker if it continues
- GRR opacity — true churn risk cannot be independently verified from public filings
- Competitive risk from EHR vendors (Epic, Oracle Cerner) building native competing functionality
- CMS/reimbursement policy risk — indirect but real, since provider spend on vendors is downstream of provider reimbursement health
- High leverage (~7.6x pre-IPO) means EBITDA sensitivity to first-lien covenant compliance is a live risk under a growth-deceleration scenario
Thesis fit
Core proof-of-concept for the RCM sub-sector thesis: recurring, workflow-embedded revenue; low customer concentration; genuine buy-and-build platform economics; and a clean PE value-creation case study (EQT’s delever-before-IPO execution). Primary open question is whether the H1 2023 growth deceleration is transient or structural — worth revisiting once FY2023 full-year and FY2024 numbers are available.