Waystar Holding Corp Stock

Please welcome Head of Investor Relations, Edward Parker.

Well, good afternoon, everyone, and welcome to Texas. I actually grew up in Austin, not far from here. So as a duly designated representative of Lone Star State. I'm very happy for us all to be here. And so thank you for all those in the room for making the trip and then also for all of those on the webcast joining us virtually. I'm Edward Parker, Head of Investor Relations at Waystar. And before we get started, if you'll indulge me, I need to review our safe harbor statement.

Today's presentation contains forward-looking statements, including expectations regarding our future financial performance, growth, margins, the development and commercial impact of our AI and automation capabilities. These statements involve risks and uncertainty that may cause actual results to differ materially from those we discuss today. For a full discussion of those risks, please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC, all of which are available at investors.waystar.com.

Okay. So for those of you who haven't met me, I joined Waystar just this summer, but I actually knew Matt and our CEO last summer before -- sorry, excuse me, serving as an outside adviser. And when I spent more time with Matt and the team and the business, the more convinced I actually became of the opportunity in front of Waystar. And I knew at that moment that I wanted to be a part of it. And fortunately, the team was willing to have me. So my hope here today is by the end of the afternoon, you'll have a deeper understanding of Waystar, our innovations and our vision for the future of the revenue cycle.

We have an outstanding agenda plan for you today. We're going to kick things off with Matt, our CEO. From there, William Chan, Brendan O'Connor and Sean Joyce, we'll discuss the products, technology and innovation that differentiate Waystar. Then Todd Woods will discuss how we bring those capabilities to market. We'll then take a short break. And then you'll be able to hear directly from some of our clients and our client panel, which is one of the moments I'm most looking forward to. After that, we'll open it up to Q&A. We have plenty of time for questions. So I ask that you hold Q&A to the end of the program.

And then following that, we are all going to grow over together to the Waystar Innovation Lab. We're going to have the opportunity to see many of our products and capabilities discussed today in action. And for all of those joining us here today in San Antonio, I hope you stay and stick around for dinner afterwards as well as this evening's True North events.

So with that, it's my pleasure to introduce Waystar's Chief Executive Officer, Matt Hawkins.

Okay. Hey, good afternoon, everybody. We're thrilled you're here. And I know many of you, and so it's nice to see you in person and some I haven't met. And so I'm thrilled to get a chance to connect with you as well. As Edward said, we're really grateful that you would make the trip to San Antonio. Is this anybody's first time here that's here in person? So a few. I mean San Antonio is a famous place. Willie Nelson and George Strait have made San Antonio famous, if you like country music, and there's a lot of things here culturally. We're grateful that you'd make the trip with us.

And I want to set the stage for why here right now. And that is because every year, we do a client conference. We call it Waystar True North. We typically will have it the last part of August through the middle part of October. That's when we see a lot of clients having availability to join us. And so we felt like it was natural for us to host it here to host our inaugural Investor Day here on the front end of that because it would give you as investors and analysts covering Waystar a tremendous opportunity, not only to meet the broader management team, but to meet with clients. And we can't wait for you to be able to interact with clients and get hands on with our technology.

As we jump in, I think what you'll hear from us is you'll meet talented leaders across our organization. We'll bring a few key messages to life that I'd love to just underscore at the outset. And at the end, we'll recap to make sure that we have punctuated these key points. The first is you'll hear us talk about Waystar's market leadership and the innovation that is powering our long-term growth trajectory. We're delivering significant value based on the outcomes that we measure that drive strong ROI and strong client retention and relationships. You'll hear us talk about that. And we're also therein laying the foundation for long-term value creation for shareholders. And we'll work to tie all of that together so you can think about and understand how we think about our business.

Just a little bit on True North. We've already been at work. We began last night hosting a Waystar Advisory Board meeting and dinner. Our Advisory Board has grown by about 20% to 25% year-over-year. So today, we have nearly 60 organizations that are represented on our advisory board. We work with a fantastic group of hospital-based decision-makers and large ambulatory provider decision-makers from some of the nation's finest institutions. And several of them you'll hear from today on our client panel discussion. These are people that run large and impressive organizations, and they understand the value of a revenue cycle partner like Waystar.

They are meeting now. And so while you'll meet some members of our leadership team, there are other members of our leadership team that are basically spending time with them in breakout sessions, learning about their input, sharing with them some of the same things that we'll show you today in our innovation lab, helping them get hands on with our technology and then incorporating what they have to say back into our solutions.

This evening, you'll also see, once we finish the Investor Day, we'll host an open reception for all folks that are joining us for the Waystar True North Client Conference. This is the fourth year of that conference. We hosted the first 2 years in Orlando in mid- to late September last year in Nashville. And this year, we moved it to a larger property that could accommodate more of our clients. This will be the largest client gathering that we've ever had. And so they've -- many of them have traveled to San Antonio, and we're grateful that they are here.

And I just would say a couple of things that are interesting to note as part of that client conference, and that is record attendance this year. We have over 40 client-led sessions where they will be best practice sharing, talking about how they're using the Waystar platform to their peers. And we work to not only promote community because it drives retention, but promote peer-to-peer sharing because it also actually drives cross-sell and upsell of incremental solutions on our platform. They are all accompanied by several dozen Waystar team members. These are product leaders, solution specialists and those that are very close to our technology to make sure that we create a very important and powerful event.

We like to say that we pack a lot in just a couple of short days. We try to have some fun and create some good memorable experiences with our clients, and we'll do the same with you. But one thing that I've heard and perhaps you have, too, is that innovation in health care occurs at the speed of trust. Health care is a highly regulated industry. And the penalties for being wrong are very high. And conversely, there's very low tolerance for errors. And so in a highly regulated space, it's valuable to create client trust and referenceability because then that helps us to grow and ensure that our innovation is adopted. We've earned that trust over time and through moments like this. So we're really grateful that you'll have firsthand experience to see our clients and be able to interact with us as we go about leading this client conference.

Before I move on, I'd like to take a moment to recognize Alpana Wegner, who is here with us today. Alpana, if you're here, just -- you probably had a chance to say hi to most, but she's standing here in the background for those that are participating virtually. And I'm thrilled to welcome her as our CFO. She joined Waystar about 3 weeks ago now. And while she's not presenting today, I hope that you will you'll have the opportunity to introduce yourselves to her if you're here. She brings experience leading publicly traded companies, public software businesses, and she brings a strong combination of financial and operational acumen and discipline and business judgment to Waystar. So I'm really looking forward to partnering with her. We've already gotten off to a great start. She's spending her early weeks meeting with the various teams, meeting with a few clients while she's here, which is fantastic, and then diving deep into our strategy and opportunities.

And one thing I'd highlight here is that we've also heard terrific feedback from you as our investors and analysts. Some of you have asked us questions or provided feedback around disclosures that we make. As a management team, we're committed to continuously improving how we communicate our business to investors and helping shareholders best understand our strategy, performance and the opportunity that we see forming over time. Alpana will be a very important partner in that effort as she gets deeper into our business, and we look forward to responding and being responsive to the feedback that you've shared with us.

Also today, I'm thrilled and delighted to welcome Amit Khanna to Waystar. Amit, if you're here, will you stand and just raise your hand as well. This is breaking news. Amit will join Waystar as our Chief Product and Technology Officer. He'll be working closely with a fabulous team of leaders, some of whom you'll hear with today and also with William Chan, who, as you know, was a co-founder of Iodine and plays the role of Chief AI Officer at Waystar today. You'll hear from William, you'll hear from Sean Joyce. You'll hear from Brendan O'Connor and a fantastic group of leaders. And Amit will be joining us there.

A little bit about Amit. He's an incredible software leader. He'll be deeply focused on helping us drive our innovation platform and vision for the autonomous revenue cycle, as you'll hear me highlight. Amit joins us from Salesforce, where he led the health care business, and he built and delivered agent force for health care. So he's got a very strong viewpoint on AI and on the convergence taking place between product and technology and even more accelerated product launches and delivery. And so we welcome him and we'll be excited to introduce him to this investor and analyst group.

Okay. So now let's get down to the star of the show, so to speak, the incredible growth map in front of us and what we're relentlessly focused on doing. Today is about giving you a deeper understanding of our opportunities and why we believe we are ideally positioned to execute on our value proposition to use all the trust and the goodwill that we have generated to propel us forward to future growth and innovation and shareholder return.

If you take anything away from today, I hope it's these 3 things. First, we are creating category leadership in what we do now. We're going after a very large and growing market, and I'll describe that to you in more detail in just a moment. That market is continuing to grow. And as you may have heard me say, we were anticipating and dreaming about these days 7 or 8 years ago. And we're thrilled to be able to see the momentum forming in our business that we do today.

And you'll also hear us talk about the fact that we have the right platform, and we'll spend some time talking about our platform and telling you what we mean by our software platform and also why we feel like we have the right people to execute on our game plan, just as you've seen us execute for several quarters on our game plan to create value for clients and again, value for shareholders. Waystar's system of action, our platform brings together mission-critical workflows, proprietary data and integrations across the health care ecosystem that gives us tremendous insight and visibility to what's going on in health care.

The third thing that I'd love for you to take away from today's discussion as we get through all of it is that we have the right vision for where the future is headed. And that as you think about the -- what our clients who are provider organizations want, they want to be able to consume the benefit of AI, but the vast majority of them do not have the resources or the ability to take an LLM model and form AI themselves, cybersecure it, integrate it and then deploy it in their organizations. As we did some third-party research recently, we've learned that the vast majority, nearly 90% would rather consume AI through a trusted vendor relationship from a group that they trust. And so we feel like we have the right vision and are forging the path to allow our clients to consume AI in a construct they understand. And that is something that we'll refer to as the autonomous revenue cycle.

So let's look at Waystar's growth trajectory and where it starts. We've talked a lot about these numbers. We talk about we're serving over 1 million providers across our platform today. That number has actually grown substantially. We only focus on the revenue cycle. And we are experts in the field of what we do, and you'll see us start to kind of bring these data points together through sustained investment through deep client partnership through continuous innovation, we have a purpose built a platform that we know works to help providers create value. And our focus is to give us a distinct understanding of how revenue moves from billing all the way through to collection and reimbursement where that revenues runs into friction and where AI can do a better job at driving better outcomes.

Today, we're actually trusted by more than 1.5 million providers. That's a 50% increase in just 2 years since we went public. And we like to say that every incremental provider that we help, helps us be that much smarter, helps us create a more robust network that can help the next provider and further strengthen our network. Likewise, we're serving more than 32,000 clients while we reach approximately 60% of the U.S. patient population today. One out of every 3 U.S.-based hospital discharges flows through our covered entity. It naturally comes to us, and we have the right to custody that information and use it on a proprietary basis. In fact, in more than 90% of our client contracts, we have the right to custody that information to improve product and to use it in HIPAA compliant and careful ways.

This scale is growing. Today, you see us talk about 7.5 billion insurance transactions that we're processing. That number has increased to nearly $8.5 billion. So we're growing and improving our reach. And again, every incremental transaction we process makes our network that much more robust, and you'll hear us talk about that in just a moment.

We feel like we have a resilient base in a market that's primed for transformation. One of the things that I've mentioned a time or 2 is we've seen retail, we've seen financial services. We've seen other industries go through a digital transformation. And sometimes people ask me, well, Matt, where are we on this journey toward more transformation in health care. We feel like there's still tremendous opportunity in front of us to bring technology to bear that will help to transform the market. We believe we have a differentiated platform. We have multiple levers of growth as you'll see me highlight and a proven model that combines growth and profit to allow us to strengthen our balance sheet and to create value for shareholders.

We know that revenue cycle pressure is intensifying as transform opportunities manifest themselves in this market. And there are some interesting statistics that you would know very well. There's -- we know that provider operating margins have been low for some time. One of the common feedback points that we hear from providers is they're constantly tasked to do more with the same resources or less because their margins are so constrained. We know on the payer side, though, there's constraint taking place there. And payers are using things in the billing and collection process, things like eligibility at the health plan and patient level to deny claims.

They're using prior authorization as an instrument to manage medical loss ratios. And increasingly, what you'll see is industry talk about automating aspects of prior authorizations, but reserving payers' rights to manage prior authorizations for more complex or medical necessity-based authorizations. And they'll use that as a lever to evaluate whether or not they should accept a claim for adjudication or deny it. We know that. And because of our deep expertise in this area, that's informed our strategy, and I'll try to draw that out here in just a second.

This tension creates friction, and we've talked about this a lot. It's nearly $0.5 trillion of friction that exists in the system today that's not being used toward patient care or patient initiatives. And in fact, providers are bearing most of the complexity here. I was at a group with a group the other night at dinner, and they mentioned that their biggest complaint or concern is that they have nearly 70% staff turnover on an annual basis. And I ask, where are those people going to work, they're going to other hourly type jobs, and so they're constantly trying to train new employees that understands the debts of the revenue cycle. So anything we can develop technologically that simplifies that, that creates more anticipation to prevent errors from occurring, reduced the likelihood that a human needs to be involved in high volume low complexity task could become very important.

You can see some of these other alarming statistics, and they're very real. I was talking to a lady who's a very impressive revenue cycle leader. She's a client of ours at a major children's hospital. And they -- this may get into the details but I just wanted to illustrate the bad debt write-off taking place. They order a vitamin D test for every single child they care for. They think it's best practice, clinically. And what she is concerned about is payers will sometimes reimburse that and sometimes they won't. They'll actually change their rules all the time. So what she's instructed her staff to do in this impressive children's hospital because the physicians want to order the vitamin D test. They think it's best practice clinically. So they'll order the test knowing that sometimes payers will reimburse, sometimes they won't. And in between time, they'll write it all off as bad debt because they'll never reach out to the patient and ask the patient to pay for it.

So that sounds really archaic and obtuse, but those are the types of things that are actually happening in the system and providers and patients ultimately bear the burden there. That makes way for a substantial market opportunity. You hear us talk about a $20 billion-plus addressable market that we are going after, it's a target-rich environment. It's punctuated by existing solutions in the market today, some of which are legacy and quite frankly, ripe for disruption. We're aware of competitors. Some of you have asked me at the start of the meeting, are you aware of a certain competitor that's under financial duress? Yes, we are. We don't talk about them by name, but we're aware of embedded in this addressable market opportunity is a lot of chance for us to help clients and prospects and those we don't work with yet embrace modern technology.

We believe that this market that we're after today is only the beginning. And because right adjacent to the market that we are serving is a services market. We develop software and increasingly, we're getting asked by clients, can we develop AI for them that will automate high-volume, low complexity work that could be addressed by AI because rather than by staff or rather than by point solutions that don't interconnect and aren't cybersecure on their platform.

So what you'll hear us focus on today from our leaders in innovation will be actually the pursuit of this much larger addressable market opportunity. It's 2x the size all in of what we've been pursuing thus far. And we're already making progress in delivering value as we deliver agents that automate tasks and begin -- we're able to begin to monetize those and create unique ROI for our clients.

I'd like to spend just a second here talking about our platform because we often refer to it. We were very intentional about building this platform. It starts on the one end when we -- sometimes you'll hear it called the front end of the revenue cycle. Other times, you'll hear it called the pre encounter begins with basically a patient financial clearance, understanding who the patient is. Do they have insurance? Do they -- when we go to work, we'll automate the eligibility and test for that. If not, we'll help detect insurance coverage for a patient. We'll then, given the details at the health plan level, we'll alert the provider on whether or not they actually have to get a prior authorization in order to deliver a health service and expect that the insurance company will reimburse it.

So this is the pre encounter over here. We facilitate co-payment collection and patient cost estimation, and I'll walk back and forth a little bit if that's okay for just a second. We're market leaders on the pre-encounter side. We're also walking over here a little, and I hope I don't pull a hamstring. We also are market leaders on the back side, the back end, often referred to as the post encounter. So we process claims better than anybody in the industry. We're typically ranked first in the industry in what we do here. Our first pass claim acceptance rate is market-leading.

And what's interesting is in the trend that we see is, and I hope you don't mind an extra second here, because we're really good at claims management, claims monitoring and clean claim submission that creates accuracy in the adjudication process and a higher likelihood that, that claim does not get denied, but rather successfully remitted, doing that at scale makes us really smart all the way back over on this side. So we -- given the volume that we process, we can often estimate patient payment, what's required of a patient as they engage in their financial responsibility prior to the patient actually receiving the health service.

So sometimes you'll hear us talk about shifting everything left. The biggest transformational trend in health care taking place is to shift work to this side pre-care because it creates a more consumer-like experience for patients. And each of us are a patient, but we know someone who has been. And so we -- this is kind of intuitive to us. We acquired a business called Iodine. Last October, we announced the sign of that acquisition. And William is just a fabulous partner to us and a co-founder of that business. It sits in the middle, beginning with utilization management, clinical documentation integrity, revenue capture and leading to some other exciting opportunities like auto codings and things that you may not see here.

But when we bought that business, and we felt so fortunate to be able to bring it together with Waystar, I described it as the perfect missing puzzle piece. We were market leaders on the front. We are market leaders on the back and bringing Iodine to our business has created market leadership and also has given us visibility because there's a compounding benefit when you don't just do a point solution that does one thing. If you're -- and this is important for you that are covering the industry and you that are investors with a lot of noise out there because a lot of people are saying things in revenue cycle, and it makes it sound like they're doing all this stuff, but they might only be doing patient payments or they might only be doing prior authorizations. But how can you successfully do a prior authorization if you don't actually process the claim and understand the ground of source of payment truth on the claims management side.

So you could -- that's something that's so important to understand. So that's why you hear me sometimes say, the claims management suite is the heart and soul of what takes place in the revenue cycle. Basically what we're doing given how accurately we're deploying AI in our platform and what we're integrating and uniting, is we're getting a view across the revenue cycle that's unrivaled. Not only are we getting clinical data coupled with financial and administrative data brought together. But the breakthrough -- Tom getting excited about this. The breakthrough is we're able to observe work on a proprietary basis. And it's observing that work and then designing workflows in the depths of the billing and collection process. That is what's going to lead to breakthrough transformation.

And so we're able to actually reverse engineer the payer adjudication process and anticipate what's going on there as an example. We're able to integrate financial and clinical interactions that lead to better outcomes for the clients that we serve and reduce the patient payment friction. Why? Well, because we're pulling it from 90 days post encounter and post health care delivery, in many cases, all the way back over -- and I'm burning some calories, too, all the way back over to here. That's valuable. And we're happy to go further into this, and you'll hear from our team later today. But I just wanted to highlight that to you, that we think that our platform, there's nothing like our platform in the industry that's solely focus on the revenue cycle, that brings all commercial payer, all government payer, all patient payments into a single integrated view. That becomes powerful for the providers that we served.

Ultimately, we know a providers care about. They care about driving outcomes that makes sense to them. Lowering the cost to collect, improving payment accuracy, getting paid transfer and increasing their payment yield. That's what they care about, in a nutshell. And on top of all that, by integrating all these capabilities on a single platform, we are displacing clients where -- in clients settings, we're displacing several point solutions. Because part of our messaging is there's a compound in benefit when you use all of our solutions or more and more of our solutions together, and you'll hear our team highlight that.

The next era of revenue cycle is more automated and more autonomous. The era that we're living through today is punctuated by manual work, high human touch. It's statically configured. So we'll send out or vendors that we compete against. They'll send out a rule package of day ones for the next 30 days and hope they're right. We're sending now 500 updates plus to our network on a quarterly basis, so we're -- that's more than 1 a day and it's not static. But the historic workflow has been reactive and FTE constraint. What we're doing today is as you see us utilize AI we're bringing more intelligent automation to the platform that is predicting, preventing, prioritizing work and assisting inside the workflow.

Where we headed is for this is -- autonomous revenue cycle where the attributes about will be autonomous orchestration more highly automated that it is today, self optimizing and learning. So every transaction we process if we know the grounded source of payment truth or we learn that what we did in prior authorization then you lead to accurate payment, we learn and heal and self diagnosed. Looking ahead to the future that is more agent-led with expert human-in-the-loop, plus working 24/7 not just on the weekdays from 9 to 5.

So, as I said this future is powered by proprietary data and proprietary observations on our platform because we see things across and through the workflows. We continuously learning and creating insights and intelligence. We're orchestrating agents and increasingly -- you'll hear the team talk about that intelligently harnessing agents together because we understand the workflow, we've touched each end of it, allowing us to bring more agent orchestration. One of things we know providers care about is the expensive tokens. There's a lot of dialogue in the industry about large language model use. Not every thing has to be done with a large language model.

So, part of what they look to, folks like us for, is smart orchestration when to deploy a large language a model versus when to deploy a small language model or other forms of AI that are far less expensive on behalf of client. That's an important area value creation for Waystar long term. And increasingly specialized agents, you may hear the expression atomic level agents, these are small purpose-built agents that maybe hundreds of them that are working next to each other with a high degree of specialty of doing a very small task that you harness together across the revenue cycle.

And finally, traceability, compliance, and adaptability becomes super important. We know that LLMs have the propensity or possibility of hallucinating or allowing the bias to creep in. One of our jobs is to ensure that the data being used filters out those biases and we check on that, monitor that closely too. Ensure that our client -- we can help a test. Almost like a blue check box, a test that the data our clients are using are traceable, that they understand the ground of source of that data and the reimbursement process.

Okay. So all of these leads to informing how we think about our growth engine. And our starting point for growth is something that I'd like to highlight for just a second. We have a strong track record of creating a terrific retention. So we start there. When you think about the building blocks of our growth, 97%-plus gross revenue retention and it's been that way for many years. We're grateful for the sticky relationships that we create with clients. That means, they like what they're using, and that allows us to cross sell and upsell them on even further capabilities. You'll hear Todd Woods, our Chief Commercial Officer talk about that.

We're also always focus on adding new clients to our platform and how the track record of doing that. When you look at our business today, about 60% of our bookings are existing client related cross sell and upsell and about 40% are coming from new clients. That various from quarter to quarter. But in the midst of seeing our bookings progression and the size of the annual contract value -- the average of our annual contract value for us increase. It's nice to know that we have a proven growth model that helps us win with current clients as well as add new clients. And certainly, we benefit from higher utilization and annual price increase program given the value that we're creating for our clients.

That gives us confidence in the long term, low double digit revenue target that we are building toward and inspire toward as well as the 40%-plus adjusted EBITDA margin target that we highlighted since we've been public. You'll note that every quarter we've been public, we've delivered on high double digit revenue growth, or -- excuse me, low double digit revenue growth and adjusted EBITDA margin has been higher than the 40% target that we've highlighted. We're a rule of 50 company and we're proud of that. That position, ultimately allows us to generate free cash flow. We have about a annual target of about 70% conversion from adjusted EBITDA to free cash flow. There's a little bit by quarters, but again, a strong track record of that type of conversion.

That gives us capital to invest in growth. You'll hear about some of our innovation and growth initiatives, strengthen our balance sheet, we have the ability to delever our balance sheet by about a full turn a year. Today, our net leverage ratio sits at 2.5x. And with every quarter, we're delevering it further and further and certainly to return capital to shareholders. When I think about the 5 most important things -- or excuse me, the priorities for me as a business leader, one of the most important things that I think about are how we allocate capital as a business. And there's 5 known ways to do that. Certainly, organic growth and innovation is a top priority. We believe that we're in a unique market opportunity and need to invest in capitalizing on this moment. And we're continuing to invest in the capabilities and innovation that deepen client value. And we know that and expand our long-term growth.

In addition to organic growth, we're continuing to reduced debt and strengthen our balance. And we expect to continue that trend over the next year and we're grateful for the business model that gives us the -- for just the opportunity to do that. I said to earlier in the audience that, financial stability becomes a competitive advantage in the market that we're in and it give us opportunity to compete in the market because we have resources, that we can help our clients embracing use AI in thoughtful ways.

And we're also focused on returning capital through the share repurchase program that we have launched at the end of May, and we'll continue to evaluate that as we go forward and see how we're trading and walk through the merits of us strengthening that program or putting capital to work in its highest and best use to create value for shareholders. Obviously, there's disciplined M&A that we can prosecute. We regularly assess M&A opportunities. We feel like in this environment that we're in right now, the top 3 listed here are our top priorities.

Before I turn it over to the team today, and I can't wait for this. I've been looking forward to this for a long time because I want you to meet our team. I'd like to just leave you with 3 thoughts again.

First, we're creating category leadership in the revenue cycle in a market that's undergoing what we believe is once in a generation transformation. And we're leading that transformation and have the opportunity to continue to do so. Waystar is built for this moment. Our status in their revenue cycle is essential to the health care ecosystem. Clients trust us. They want to work with us. We have the platform technology, data and network required to define the future of the autonomous revenue cycle. Second, you're going to spend the rest of the day with people and clients behind this story. You'll hear directly from our leaders and about our innovation and our growth path, and I look forward to that. And lastly, we believe that the opportunity ahead of us is powerful. And so we have a clear strategy. We have significant runway and I'm excited about the opportunity to have you here with us. We thank those that are participating virtually as well.

And with that, I'll turn the time over to our product and technology leaders, William Chan, Brendan O'Connor and Sean Joyce. Thanks, guys.

Thank you, Matt. Thanks, everyone, for joining us today. I really appreciate you all taking the time. I'm William Chan. I'm the Chief AI Officer, and I have the honor of leading our AI innovation here at Waystar. I'm also one of the co-founders at Iodine, which joined Waystar last year. And alongside with me today, you'll hear from 2 of my colleagues, Brendan O'Connor, Executive Vice President of Product Management; and Sean Joyce, Executive Vice President of Software Engineering.

Now both Sean and Brendan have spent years building and advancing the Waystar platform. They know our technology. They know our clients' workflows, and they know how to address the top priorities that is on everyone's minds, right? Today, we're going to discuss the advantages that we have built here at Waystar and how our AI-powered road map is driving significant outcomes for our clients.

Waystar's advantage really starts with the platform itself, right? The platform brings together several advantages that are quite honestly, difficult to replicate, right? It's the breadth of our network, it's proprietary data, deep workflow integration and end-to-end capabilities across the entire revenue cycle. We combine that foundation with the right AI for the right use case, whether it's machine learning, generative AI, predictive and even now agentic AI, right? We use all of that, and we operate and deploy AI across the full revenue cycle.

We support patient access before the encounter. We'll connect financial and clinical workflows during care delivery and manage claims, payments, recovery and patient financial engagement after the encounter.

Now, what makes Waystar powerful is that these are not disconnected point solutions, right? They operate across a unified platform with connected workflows, a shared intelligence and a comprehensive view of how one activity in one part of the revenue cycle can and probably affects another and another part of the revenue cycle. Across all of this, our analytics brings that visibility together, giving providers a clearer view of performance across the enterprise and determining, right, when action needs to be taken.

Now, intelligence that is learned from one workflow, as I mentioned, informs what happens next. It's also guiding future decisions and performance across the platform.

Revenue cycle is a long connected chain of activities. If any link across this chain breaks, reimbursement is at risk. That's what we don't want to have happen to our clients, right? Because Waystar sees across the entire workflow, across this chain, we can increasingly help providers identify issues earlier, prevent avoidable friction from occurring and move from a reactive approach to proactively ensuring everything is correct from the start. That's our goal, right? Ultimately, this is the outcome that matters. We want to make sure that our clients get paid appropriately for the care that they deliver.

Now, the breadth of the Waystar platform has created a set of structural advantages. These things have compounded over time and shape how we in the product and technology team think of how we're going to build and scale innovation, right?

I'm going to talk a little bit about the 4 pillars of our competitive moat, and I'm also going to drill down a bit more on how these pillars empower our product and technology strategy. So first off, a mission-critical infrastructure. Like I mentioned before, Waystar is deeply embedded in the workflows that our clients rely on every day to get paid. Our platform surfaces issues, guides decisions and even initiates corrective action through the use of Agentic AI. This is important because what this means is Waystar is the revenue cycle system of action. This is where work gets done.

Second, unmatched proprietary data. The breadth of our platform gives us access to a unique combination of transaction data, clinical data, workflow signals of what's happening or what's not happening across the way and payer behaviors and ultimately, outcomes. It's the ground truth. We are unique in the sense where we have the ground truth, the signal that says what eventually happened to a claim, right? These signals help us improve existing solutions. Clearly, we want to keep building on what we've got. And they provide and help us identify opportunities for entirely new capabilities.

Third pillar, our extensively deployed network, right? Waystar spans a broad collections of payers, providers, patients. What this does is it gives us visibility into billions of transactions, like Matt said, 7.5 billion to 8.5 billion transactions, and decisions that across -- that are occurring daily across the healthcare payment landscape. It's this scale that helps us identify patterns, understand root causes and determine where intervention can have the greatest impact.

Lastly, fourth, it's deep domain expertise. Now this is something that comes with a lot of experience and time. Revenue cycle is what Waystar does. It is extraordinarily complex. It's highly regulated, and it's constantly changing. Our teams understand the financial, clinical and operational context behind these workflows that are constantly changing and morphing, right? That expertise is critical for us to determine the technologies, the workflows and the applicable AI that should be used to solve these problems.

Our domain expertise shapes our platform architecture that continuously evolves. We're incorporating models and technologies from the leading technology and AI companies to drive performance and ultimately deliver outcomes for our customers. So taken together, these 4 pillars create what we believe is a self-reinforcing advantage. It's this foundation that creates the conditions for Waystar to realize the autonomous revenue cycle vision.

All right. I'd like to pass it on to Brendan.

Sounds good. Yes. Thank you, William. I'm going to build on that foundation a bit by highlighting 2 of our most powerful competitive differentiators, connectivity and data. Waystar sits at the center of a broad healthcare payments ecosystem, connecting providers to thousands of payers and deeply integrating into the practice management and EHR systems.

On the payer side, we connect with over 5,000 payers, giving us broad visibility into payer reimbursement behavior, policy changes and adjudication patterns as they evolve. At the same time, we're integrating with over 500 EHR and practice management systems that our clients rely on every day. That integration really matters because providers do not have to leave their core workflows to benefit from Waystar intelligence. Our users can leverage Waystar intelligence in our UI or we can bring that intelligence into the PM or EHR systems. And ultimately, those 2 sides of the network reinforce one another.

More payer connections create more payer-specific signals, deeper workflow integration gives us more context for how those signals should be applied. And together, that enables smarter automation and more preventative action. And that connectivity advantage is a critical prerequisite for how AI can perform well at scale, and it's a moat we've established over nearly 20 years.

The natural extension of the connectivity, though, is proprietary data. As Matt alluded to, we've very intentionally built a set of end-to-end capabilities that are best-of-breed across the entire revenue cycle continuum. And that breadth drove adoption at scale. Scale has expanded our network, and that network generates one of the richest and proprietary healthcare data and revenue cycle assets in the industry. So today, as we've noted, our platform facilitates more than 8.5 billion (sic) [ 7.5 billion ] healthcare transactions annually, reaching approximately 60% of the United States patient population. And we see the clinical data from roughly 1 in every 3 U.S. inpatient hospital admissions every year.

To put that into perspective, our footprint is multiple factors larger than the largest health systems in the United States, and it dwarfs those of point solutions in the market as well. So it's very important to highlight, though, that the value is not just in the volume of the data, but what matters is the breadth of visibility it gives us across settings of care, geographies, workflows and reimbursement patterns. We see activity across primary care, post-acute care, acute care and nearly all other ambulatory specialties. And that's important because each of those environments behaves very differently. Payer rules differ, documentation differs, utilization patterns differ and ultimately, payment behaviors differ. And so our context is what makes the data the most powerful.

We can identify patterns earlier, understand them more precisely and apply those insights back into the workflow. We are then leveraging that scaled payer behavior intelligence across our network to, as Matt said, reverse engineer the payer adjudication systems at the plan level. That allows us to predict, prevent and increasingly use agentic technology to eliminate denials and rejections before they can possibly occur.

We're also learning in real time as we process millions of transactions daily. So again, the advantage is not simply that Waystar has a lot of data. It's that we have broad, real-time and highly contextual data that's generated from the workflows we're already tightly embedded in, and we have the ability to translate that data into action. That's an important distinction as AI becomes more deeply embedded across the revenue cycle.

So I'm going to turn it over to Sean, who will talk to you a little bit more about how our technology architecture helps facilitate those advantages.

Thanks, Brendan. Now that you understand the scale of our data and connectivity advantage, I'd like to spend a few minutes to show you how we build that advantage into our platform. Now much of our road map draws on data from across the patient encounter. And every meaningful agentic use case that we're building either updates a record or predicts -- makes a prediction based on cross revenue cycle data. We have built AltitudeAI on a shared data foundation, so intelligence can move across the revenue cycle, decisions can be coordinated and every agent can act with the same underlying context.

At the base of our 4-tier architecture, agentic architecture, we bring together clinical information, claims and transaction data, payer policies, learned adjudication behavior and 2.5 million claims and rules -- claims, rules and edits based on decades of experience. To predict the denial before a claim is submitted, we must understand the payer, the policy, the clinical record, the claim edit history, the observed behavior from similar transactions. And then built on these heterogeneous data sets, we have formed our intelligence layer, applying predictive models to score potential actions, rank work by value and evaluate how our agents perform.

The next tier in our architecture is what makes our platform truly agentic, the orchestration layer. Now earlier, William was describing revenue cycle as a chain of processes, and it is, but it's more complex in that it's also this graph of actions. Tasks run in parallel, they repeat, they rely and depend on one another for success. Our orchestration layer determines the next best action and routes work to the appropriate capability.

This is increasingly important as the revenue cycle becomes more autonomous. Intelligence may originate in one part of the platform, while the action that needs to occur has to happen in another part of that platform. The interconnectedness, this is the heart of our design. It's a system of agents that understand the revenue cycle, coordinate actions across workflows and learn from its outcomes.

So let's zoom in on the intelligence layer for a second. One of the things that we've learned, one of the more important things that we've learned from our data is that payer behavior is not interchangeable. Each payer adjudicates claims differently, each apply policies differently. Those behaviors also shift over time. This variability has led us -- has led us to create a model architecture that is uniquely designed to solve the challenge of the revenue cycle.

Built on our common data foundation, we have a portfolio of payer-specific models, each trained to understand the unique patterns and behaviors of an individual payer. This is how the scale of the Waystar network becomes a true competitive advantage. Building a payer-specific model requires deep claim volume within that data segment. Without it, you're forced into creating generalized models that average away the very behavior you're trying to capture. Our network volume is what makes this segmentation possible.

Here's a straightforward example here. For the same category of denied claims, we have one major national payer in our data denying claims at the full claim level, about half the time. We have another very large national payer that denies at the claim line level. Now that's different than denying at the full claim. This is at the line level. And that happens about 90% of the time. These are meaningfully different behaviors. Our platform accounts for those distinctions, serves the right model and the provider doesn't have to think about which model sits behind the prediction.

Beyond that, when one of these payers changes its adjudication behavior and they do change their adjudication behavior, we see that change, and we retrain that model independently without impacting the rest of the portfolio. The scale that Brendan described is not valuable simply because we have more data. It's valuable because it unlocks an entirely different and more effective way to solve this problem.

Before I turn the mic back over to Brendan, I want to show you one more way AI is creating leverage for Waystar and this time inside our own engineering organization. AI is now embedded in every part of our software development process. It's accelerating coding, testing, expanding test coverage and documentation. It's improving the pace of integration engineering, quality assurance. It's become core to how we build software. Our mantra as we made the transformation to an AI-first organization was that we're not going to measure success based on tool adoption or token usage. These are inputs to that process and transformation. We are only going to measure success based on outputs.

When we compare data for the first half of 2026, to previous years, we're seeing right now 15% more commits per engineer, and each of those commits is about 1.6x more code per commit. Now a commit is a versioned and validated addition to our source code. It's one of the building blocks of software development. When you bring those together, that's about 1.8x more software output per engineer. That productivity translates into faster product development, more capacity to test and scale new ideas and more time for our engineers to focus on the hardest and most valuable product problems. Importantly, this accelerates how quickly innovation reaches our clients.

A really great example is the launch of our Recoupment Manager product. And I think we'll have some demos and some more details in our innovation lab. It is a particularly tricky problem and one we hear from our customers that they were increasingly feeling the pain. Recoupment are often called silent denials. They are a form of takebacks. And when people really dive in on this problem, they're often shocked that like this is possible within revenue cycle. Customers had a problem, we brought a solution. We used our AI-first development process in order to launch this product. Our initial estimate, we started with 14 months that we expected to develop it. And we delivered it in under 6 months. We cut the time from idea to launch by more than 50%.

The product we built is now helping providers reduce the time for them to reconcile recoupment by more than 80%. That's 2 layers of leverage using AI. It helps us build differentiated solutions faster, and those solutions are then using AI within the product to automate, create significant productivity gains for our customers. Combination gives us more capacity to innovate, shortens the path from idea to client impact and strengthens the pace at which we can extend the Waystar platform.

Now I'll turn it back to Brendan to show you where that innovation is taking the product portfolio next.

Sounds good. Yes. Thanks, Sean. So we're going to go through a few examples in our product road map. We're going to show you where we're applying those advantages across the platform and across the revenue cycle today. And so for the remainder of 2026 and 2027, we're focused on prioritizing opportunities where AltitudeAI can drive the greatest workflow and financial impact across the revenue cycle. And I am really excited because we're going to share a few of these examples, but then we're going to go right behind me to the innovation lab in a little bit, and you're going to see these come to life. You're going to have a chance to see the product, feel the product and understand what this is all about.

On the front end of the revenue cycle, we're advancing an omnichannel billing agent designed to make the patient financial experience more personalized, more efficient and easier to navigate. And we're utilizing data across the platform to make a differentiated offering relative to what any point solution could build in the patient financial experience realm.

In mid-cycle, we're extending our agentic capabilities into coding and clinical documentation, helping CDI teams reduce manual review and better align documentation with coding workflows. We're also applying agentic and predictive AI to emergency department status decisions using observed patient trajectories to help teams make faster, more informed decisions in real time. And on the back end, we're continuing to push further upstream in the claims process of shifting left in claims.

Our denial prediction capabilities are increasingly helping identify missing information before a claim is submitted so providers can address issues before they ever turn into denials. And we're also advancing automated claim resubmission, which is a really important step towards the autonomous revenue cycle because this allows those eligible rejected claims to be resubmitted automatically with significantly less manual or human intervention than what's historically been available.

And so across all of these areas, we're also making intelligence across the Waystar platform easier to access. We're introducing conversational analytics that allows our clients and their staff to ask questions of their revenue cycle data in natural language, understand what's happening very quickly, why it's happening and get recommendations on what they can do to improve their processes to drive the greatest possible impact. And so the common thread across our entire road map is very simple. We're leveraging cross-platform integration, payer behavior intelligence and AI to reduce manual intervention and improve outcomes across the entire revenue cycle.

But importantly, we understand that innovation does not just improve the product. It's also creating multiple paths to greater monetization across the platform. And we see that happening in 2 ways. First is through share of wallet expansion within the solutions our clients already use. As we add new intelligence, automation and workflow capabilities, we can drive more transaction volume, introduce premium pricing and deepen adoption across the platform. Automated coverage detection is a really good example of this. It builds on our existing eligibility verification capabilities to identify additional insurance coverage more effectively, leveraging our internal proprietary database, which can increase transaction volume, but also expand the value of our eligibility and financial clearance offering to our clients.

Personalized patient payment discounts is another great example. We're using AI here to tailor payment options to patients based on their various affordability and financial scenarios, and we can help improve patient collections in the process of doing this. So not only are we driving a better, more transparent and affordable patient financial experience, we're leveraging ML and we can prove that we're driving better payment outcomes in aggregate for those clients, and that's a better solution for both sides of the network.

The second path to incremental monetization is category creation. Here, AI is allowing us to introduce new products and new workflows to solve problems that have historically been too manual, fragmented or difficult to address via software. Pre-bill anomaly detection is a strong example of this. This is a mid-cycle solution where AltitudeAI connects clinical documentation, coding behaviors and patient data to identify high-impact opportunities before a claim is submitted. And that creates meaningful value for clients while also expanding our aggregate opportunity in the mid-revenue cycle.

Recoupment Manager is another great example. Sean just called this out, but this is a new offering that's identifying and addressing a problem that is historically -- has historically required significant manual effort. And so we're automating identification and reconciliation of those payer takebacks. And in doing so, we're helping providers reduce reconciliation time by nearly 80% and again, introducing a new product to the market and a new monetization opportunity for Waystar.

So importantly, innovations like these can also support pricing models that are more closely aligned to the value we're generating for our clients as well. So when you step back, we feel the model is very compelling. Organic investment in the platform, data and AI can deepen monetization of existing products, increase share of wallet and create new revenue opportunities for Waystar.

So William, I'm going to turn it back to you to close this out. Thank you.

Thank you, Brendan. So Waystar is already helping our providers apply predictive, generative and agentic AI across the revenue cycle. You already heard examples of that. Now sadly, the broader industry still depends heavily on manual work. It depends on fragmented processes and very disconnected data. That, unfortunately, is the norm. And that is why we believe that Waystar is at such an important inflection point with our platform, and the AI that is before us. Agentic AI gives us that ability to move beyond automating simple individual tasks and towards coordinating work across the entire workflow. So Waystar is deploying specialized agents into high-value use cases today while connecting those agents through shared data, shared intelligence and then orchestrating all of that together. This allows work that is historically dependent on labor-intensive processes to move into technology.

So what happens is provider teams will spend less time on manual administrative work and then more time overseeing exceptions and high-value priorities. What that means is as this shift occurs, we believe that a greater portion of the overall revenue cycle spend becomes addressable through technology. So Waystar is ushering in that autonomous revenue cycle future because the capabilities required to enable this future are the same advantages that we have been building for years.

To sum it all up, our connectivity creates more signals, right? These signals then strengthen our proprietary data, and it's that data that improves our intelligence. And then because we're deeply embedded across the revenue cycle workflows, we can then translate that intelligence directly into action and automating that to deliver meaningful outcomes for our clients. So this is the compounding advantage behind the Waystar platform. Thank you.

And now I'll introduce you to Todd Woods, Waystar's Chief Commercial Officer. Over to you, Todd.

All right. Well, good afternoon, everybody. My name is Todd Woods. I'm the Chief Commercial Officer here at Waystar. And I first want to thank you all for being here, and I want to thank you for your interest in our business. Since this is our first time together, I thought I'd spend just a minute and introduce myself to you, and I promise it will just be a minute.

I've been a part of this business for 24 years. I was fortunate enough to be a part of a group that founded a business called Navicure, which is the first business that makes up the Waystar platform. I was able to be part of that startup. We did a few private equity rounds and then our IPO in 2024. It's been a wild ride, and it's been an awesome ride. In every single stage of our company's life cycle, I've been a commercial leader focusing on our go-to-market engine.

When I think about our business, and I think about how you heard from William and Sean and Brendan a little while ago. And we talked about the power of our platform. We talked about the scale of our network. And they talked about the innovation that continues to expand our leadership in the space. It's those 3 things, it's literally just those 3 things that allow me to talk to you today about the durability of our growth model.

And so when we think about how our system is evolving and how we're extending that leadership, it's important for us to understand how all of those things come together. And so that's what I'm going to spend the next 20 minutes talking to you about.

I'm going to discuss how those advantages get us to the growth model that we have today. And you're going to see that our opportunity is pretty broad. We're not limited to one type of provider. We're not limited to one workflow. We're not limited to one single care setting. We operate across a very, very large, fragmented healthcare space. But what's interesting is that in that fragmented space, the challenges that our clients face are remarkably consistent. They need to get paid faster. They need to get paid fuller. They need to get paid more accurately, and they need to do all of that with less administrative effort. So these challenges, the challenges that I just spoke about, they create a significant opportunity for us here at Waystar. That's the power of our commercial model. We take Waystar's breadth of our unified platform. We change it into durable growth. We win new clients, we deepen relationships with existing clients and both of those expand our addressable market every single day.

So I take a step back, it's important for us to understand the breadth of the market that we serve and the consistency of the needs within that market. We serve healthcare organizations across the continuum. It's a very wide range of care settings from large acute health systems to big ambulatory practices to post-acute skilled nursing facility on down to that single ambulatory provider in Greenville, South Carolina. And ultimately, all of the patients that those constituents serve.

Now with that breadth, going across all of those different care settings, we interact with a whole bunch of different folks. We interact with multiple decision-makers across every single organization. Sometimes it's the CFO and the financial team. Sometimes it's the CIO and the IT group. Sometimes it's the CMO and the medical staff. And increasingly, in our platform deals, it's all of them. So they're all entering the conversation about what can Waystar do for us. They all bring different perspectives. And while those organizations may look different and the buyer may change, the underlying problems they are trying to solve are remarkably consistent, and they are increasingly trying to get to a common set of priorities.

They want to lower the cost to collect. They want to accelerate reimbursement. They want to improve staff efficiency. They have to protect and create a highly secure technology environment, and they want to create greater financial clarity for all of their patients.

We were recently in a large health system in the Southeast. And they were a large hospital system. They had just acquired 4 big specialty ambulatory practices. They also acquired an ambulance and transportation business. They were building a PT and behavioral health business. And so while the common -- while the hospital used a common EHR, and that's common EHR you guys are all very, very familiar with, the practices and the clinics and the transportation company and the behavioral health center, they used very, very highly specialized EHRs. So they had no way to synchronize the common workflows. They had no way to sync to common reporting, and they had no way to sync to a common user experience. In fact, the only thing that was common was how uncommon all of their stuff was. And so they quickly identified Waystar as the connective tissue for the entire health system.

As soon as the leader said, Waystar could be the connective tissue, I immediately wrote that down and said, I like that. I'm going to use that for a presentation. So James, thank you for the connective tissue comment. But what we did is we provided them a single unified view across their entire enterprise. That's one platform, one workflow and one user experience. And what I want you guys to understand is that our platform was purpose-built to address the needs across the entire revenue cycle and across every single care setting. It gives us multiple points of entry into a very broad market, and we solve common problems that are created in mission-critical challenges. So when you look at what has to happen between delivering care and collecting payment, you can easily see how issues arise. You could see it on all of the product sets that Matt showed you earlier. As a patient, we expect the sequence of events to be pretty straightforward. And I would argue with you clinically, it actually is pretty straightforward. However, the financial journey is increasingly complex.

So let me give you just a real-world example. Patient falls -- a person falls down the stairs. Ambulance comes and picks them up, takes them to the hospital, clinician sees them, orders X-ray, maybe an MRI, they get those results back. Clinician develops a care plan, puts a cast on the knee, maybe a couple of people sign it. They spend a lot of time figuring out what color of the cast is going to be. But after that, then there's prescription, there's crutches and then there's PT. This happens all the time. It's really straightforward. And the clinical process is fairly standard. But the reality is between each one of those interactions, the touch points for the revenue cycle are highly complex. It's a highly complex set of processes that the provider has to manage in order to get paid for the care that they deliver.

That journey starts in order for them to get paid with doing things like getting accurate information. So they've got to try to run an eligibility check. Maybe they have to do a prior authorization. Maybe they're going to want to give the patient an estimate. And then they're going to want to collect the appropriate co-pay or deductible. In the middle of the journey, the clinician has to document what they did during the visit, doing things like clinical decisions. All of that leads to accurate coding, but that's not done. The journey is actually just beginning. All of that information has to flow to the insurance carrier correctly. Claims need to be cleaned before they go out. If there is a denial or a rejection, those have to be identified and addressed. And the sooner they do it, the better. And after all of that, once payment is received from the payer, if there's a balance, then the provider has to go and try to contact the patient for the remaining balance.

So just a show of hands, when you get your first statement from your provider, how many of you guys pay it on the first one? You are lying. Yes, none of us. I'm in the business, and I rarely will pay it for the first time because I don't believe that it's right. So multiply all of our interactions by thousands and thousands of patients that are seen every single day.

The point I'm trying to make is that each step has its own set of challenges and every step builds on the next and affects the next. A missed authorization can lead to a denial. Incomplete documentation can lead to a lesser -- can lead to lesser revenue and a claim error or denial can impact the speed at which they can collect.

So for providers, those breakdowns, they carry a real cost. It's more manual work. It's slower cost to collect or slower speed to collect. Revenue is trapped and in some instances, lost altogether. We're purpose-built to handle this situation. We are purpose-built for these challenges. From the start, our thesis was and still is today, Waystar is the system of action. In order to be the system of action, we have to understand the provider's technology environment. And the EHRs and other clinical systems, they play an essential role. They're really good at what they do. But they are the system of record. They capture who the patient is. They capture what happened during the visit and they capture all of the clinical information associated with that encounter.

We play a very different role, a highly critical and highly complementary role. We're the system of action for the revenue cycle. We bring the EHRs to life by connecting them to the outside world every single step of the way on the patient's financial journey. We take the data generated from our over 5,000 payer connections, where we're transmitting back and forth in real time every single day. We're processing over 7.5 billion transactions, and we have every single claim that we process since day 1. And oh, by the way, 60% or more of the patients in the U.S. are coming through the Waystar network. That gives us an advantage, an irreplaceable advantage because we use that data to inform the workflows that are required to deliver care from care to reimbursement received. That's unique to us. And this happens before, during and even after the patient encounter. So for our clients, this value is critical, lower cost to collect, more accurate reimbursement, fewer denials, all with less effort.

Now the healthcare technology space is complex, and we believe we have a right to win in the fragmented technology landscape. The complexity of the revenue cycle has left many providers managing highly, highly inefficient technology environments. It's very, very common for providers to have multiple point solutions managing the same portion of the revenue cycle. We hear from clients all the time. I just heard from last night at dinner. They say, we are looking to Waystar to help us simplify our technology stack. We need Waystar to be part of our optimization strategy. That ask to help them optimize, that creates real opportunity for us. So in a typical client environment, if they buy the entire Waystar platform, they can get rid of 15 or more different point solutions, all with one vendor.

Last week, we were with an academic medical center on the East Coast. And they're using a popular EHR, again, all, one that you're very, very familiar with. And after a full day of analysis on their own, they turned to us and said, if we implement the entire Waystar stack, we can get rid of 32 vendors. Think about that, 32. That's 32 different software packages. That's 32 different interfaces someone has to manage, 32 different support organizations, 32 different contract renewals, 32 different pricing models that, oh, by the way, none of that happens at the same time.

So by delivering all of our solutions in one single platform, we give providers a clear, clear path to simplify the disparate technology stack. And from a commercial standpoint, that trend falls right into our strengths. That's why I believe we are so well positioned as the industry consolidates into a handful of strategic partners. It earns us the right to win. And just as importantly, it earns us the right to win new business as well as grow in existing relationships.

So now you're probably wondering, well, how the heck do you guys do all this? How do we grow? So because we solve meaningful challenges at every single stage of the revenue cycle, we have multiple ways into a client relationship. We've seen a tremendous increase in the appetite for clients to utilize the entire Waystar platform. We're seeing this more and more and more, and we're seeing it quarter after quarter after quarter. But the beauty of our model and what's important is that we also have the ability to meet clients where they are. They can deploy a few solutions right out of the gate and then land and expand with us over time. And that's a very, very important part of our strategy. We enter clients where they are, where we see the most acute need. We solve that problem. We demonstrate meaningful value. We delight those customers along the way. And by doing that, it creates such an experience and the clients see such great value, that's a natural path for us, to increase product expansion and our wallet share. This is a wildly critical component of our go-to-market engine.

So while the pain points and the priorities that we solve are remarkably consistent, the way clients buy is very different. It depends on care settings, size, complexity of the organization. Our go-to-market model, this is really important. It's not one size fits all. We have spent 25 years building a commercial engine specifically designed around how healthcare buys. We have specialized teams. We have distinct sales motions. We have ironclad playbooks for every single segment of the market that we serve.

In our Hospital and Health Systems segment, we have experienced executives pursuing large platform-level deals. These are sophisticated buyers typically with long sales cycles. But what I'm proud of is today, we serve 16 out of the 20 top hospitals on U.S. News Best Hospitals list. It's a really powerful message that we send to the market when the majority of the hospitals in the country trust and see value in the Waystar platform.

We then move to our ambulatory business. We've got a distinct sales motion there as well. We sell direct with dedicated teams. And I want you to understand that those deals are often 7 figures in annual contract value as well. These clients span a wide array of care settings. It could be a large ambulatory practice. It could be a skilled nursing facility. It could be a surgery center. It could be a physical therapy clinic. But despite all of those differences, in each one of those care settings, the challenges they face are pretty common. They want to get paid faster. They want to get paid fuller and they want to do it all with less effort.

So in the end, in this highly fragmented portion of an ambulatory market, we combine a high-velocity sales motion with an extensive channel network, which Brendan mentioned earlier, that allows us to reach providers efficiently and also at scale. Those channel relationships are really, really important to our growth engine.

Our channel partners do more than just connect with us. We do joint go-to-market efforts. We support clients together. We do joint campaigns. We embed the Waystar technology into their stack. We have over 500 EHR integrations. That reinforces the model and gives us the right to win. We make sure we can support a highly integrated workflow, allowing the customer to choose where they want to enter it for themselves. And whether that client is in Epic or Oracle Health or MEDITECH or one of the 200 or more ambulatory EHRs, our ability to integrate into their existing environment makes it easier for them to adopt our solutions and then expand with us over time.

Lastly, we've built strong relationships with BPOs and other RCM companies. We enable them to bring the Waystar technology forward to the set of customers that they have that have decided to outsource their revenue cycle. Many of the top BPOs in the country utilize the Waystar platform. They utilize it as the backbone of their offering, and that just strengthens our position and it strengthens their value position to the market. This dedicated motion, regardless of care setting, allows us to bring a unified consistent value proposition to whatever customer segment we're in, but we've tailored the commercial motion to how each segment buys. This model gives us extreme confidence in the repeatability of the Waystar growth engine.

So I'm going to give you a quick 3 real-world examples. The first one is a new client. They bought a new -- they went full platform with us. The community health system, a 7-figure deal in annual recurring revenue. That opportunity was driven by their need to consolidate vendors. Their tech stack was a mess. They called it [ spaghetti ]. We were able to give it all one single platform.

Second one is another academic health system. They expanded their offering with us. They were on a few solutions. They ended up expanding their contract with us. They did that in large part because the value that they saw and the results that they saw from the products that they initially bought helped fund the new ones. And so that expansion increased the ARR of that client for us by 5x. As Matt said, satisfying clients is a top priority for us. They trust us, they rely on us, and that drives their desire to buy more solutions.

The last one is a technology upgrade by a large skilled nursing facility, nationally known. They implemented our AltitudeAI stack. Many of you guys heard about that from William and Brendan and Sean. That client saw such a compelling value proposition in our solutions, that increased our revenue with that client by 3x. And it was really -- they were struggling to figure out what's real with AI and what's not. They relied on us to help them figure out their AI journey. They asked us to guide them through what's possible and to provide what's possible in a secure environment and then provide a road map for them on how to use the technology going forward. So that's 3 different case studies, but they all result in the exact same thing. One platform, one workflow, one user experience. That all plays straight into our strengths.

So now -- this is where it all comes together. This is where it all comes together into our broader growth engine. We have earned a leading position in the market by consistently delivering value to our clients and delighting them along the way. That is our recipe, and it's very simple. As we add more clients, we see more data, more data informs our workflows across the revenue cycle. Our foundation provides us scale that sharpens the insights and the intelligence that we can deliver to those clients. Better insights deliver better client outcomes. And when those clients see the outcomes, they are more likely to expand their relationship with us and they're more likely to recommend us to their peers. It creates a very, very powerful compounding network effect. A broader client portfolio gives us more intelligence, more signals and more scale. More scale helps us improve performance. Better performance drives expansion, retention and client advocacy.

On the hospital and health system side, getting referrals from your peers is about as good as it gets. And that is a very big part of our go-to-market model.

So I'll wrap this up by saying I hope you can see that our growth story is not by accident. It's the result of 25 years of deliberate investment in a differentiated platform that has proprietary data assets and a broad commercial model with real-time payer connectivity. We are purpose-built to meet clients where they are in their journey, and we grow with them over time.

If you remember one thing, we have multiple ways to enter a partnership with a client and we have multiple ways to expand it. And ultimately, our growth is in service to our purpose. And this purpose has guided us from day 1. Myself and Matt and Laura and others in the room, we're all sitting in a conference room as we develop this purpose.

And that purpose is to simplify health care payments so providers can spend more time and more of their resources delivering care. And at the end of the day, at the end of the day, that combination of value, commercial execution, with the underpinning of our purpose, it gives us extreme confidence in our durability of our growth model.

Now the good news for you is that you don't just have to take my word for it. You're going to hear from a number of our clients in a few minutes. So I'm going to wrap up by saying on behalf of the entire Waystar team, I want to thank you for your time this afternoon. I want to thank you for your interest in us. We appreciate you guys being here, and I hope you enjoy the client panel, which is coming in just a few minutes. Thank you.

All right. Good afternoon, everyone. My name is Lisa Osborne. I have the pleasure of running product marketing and communications here at Waystar. And I would like for you to join me in welcoming our esteemed panel of clients who will be chatting with you for a little bit more today. So you guys can come up, please.

All right. Well, thank you, everyone, for joining us, and thank you guys so much for being willing to come on stage with us and share a little bit more about your background and your experience.

So we're going to dive right in. We have so much of the innovations that you heard today really come from hearing from these clients and other clients like it. We have our Waystar Advisory Board where we really dive into the solutions and what we're doing and getting that real-time advice. We just pulled you guys off of that meeting to come here to stage with us. And we also have a very robust early adopter program where both WAB members and our broader client community engage with our product leaders and really dive in and test our solutions before we bring it to market.

So really excited to have you guys. To get us started and kicked off, I would love for you each to introduce yourselves, maybe share a little bit more about the organizations you represent. And just to make this a little fun, how would you describe what you do to somebody who is not in health care?

So Candice, I'll start with you.

Thank you. My name is Candice Davis. I'm the Chief Revenue Cycle Officer at EyeSouth Partners. We're based out of Atlanta. We're a private equity-backed managed service organization for ASCs and ophthalmology. We're roughly $1 billion in revenue, 15 states.

How would I -- so what...

Somebody who's not in health care? What do you do?

Well, I get doctors paid.

Great. Wonderful. Lisa?

Lisa Griffin, Chief Consumer Officer at University Hospitals in Cleveland, Ohio. About 32,000-plus employers -- employees, the third largest health care system in Ohio. About $7.3 billion in yearly revenue and then about 1 million unique visits a year.

The second question is, how would I explain it? It is vendor management, the digital front door, all the way until a clean bill drops and all those services in between. So from nurse triage all the way through is -- falls under my purview.

Great. Chris?

Okay. So I'm Chris Kiser, and I'm the Enterprise Vice President for Patient Access and Arrival for Advocate Health, which is the new company that was a merger of Atrium Health, which was based in Charlotte, North Carolina, and then Advocate Aurora based in Milwaukee and Chicago. As you can tell from my accent, I came from the North Carolina branch of that.

And I'm responsible for all of the front-end activities, from the time an appointment is scheduled all the way through until we check them in at the facility. And I would say, if I was going to describe to somebody, it's simply we start the party. We're patient arrival. If we don't get it right, it's wrong all the way through.

Genevieve?

Hello, everyone. My name is Genevieve Sagett. I'm the Chief Revenue Cycle Officer for SCA Health. We are an ASC management company. We manage roughly 350 ambulatory surgery centers across the country. We have just over $4 billion in net patient revenue. We've got -- we do about 1.4 million surgeries across the portfolio. And I think what I would say to describes my job is I go to bat for our patients against our insurance companies.

All right. Steve?

Good afternoon, everybody. Steve Burr. I am Senior Vice President, Revenue Cycle for CHRISTUS Health. And we are headquartered here in Texas in Irving. We have facilities in East Texas, West Louisiana, New Mexico. We have over 25 hospitals in Mexico. We're in Chile and Colombia. So we are an international company as well. We're roughly $13.5 billion in revenue. And pleased to be here.

What describe my job is end-to-end revenue cycle, from the patient intake through charge entry to coding to dealing with the claims and patient follow-up afterward as well. So all the way through the...

And I've talked to you guys so many times, and I know you guys are going to talk a lot more than I will, so I'm excited for that. Lisa, I would love to start with you and hear a little bit more about what problems were you looking to solve when you first came to Waystar and maybe a little bit about how that relationship started?

To get away from a fragmented system. So having 10 different vendor relationships to get to an endpoint. So we came to Waystar because we were saying, "Okay, Epic first, Waystar first." That's our premise now, and having Waystar as a vendor to solve those problems. So everything we say is with them. What's in it for the patient and what's in it for the employee?

So choosing Waystar has allowed us to actually build systems that say, just click Book It. Waystar will do the work behind the scenes and you don't have to go in registration all the time. And so being able to accomplish that in health care is pretty huge. So we can be a registration scheduling organization. And being able to do that with our Waystar partner has allowed us with our Epic go-live to get $20 million back from Epic.

Knowing that we could build systems and have everyone doing the same job. If you schedule, you register and you don't have to go into registration all the time. And think about with them, the patients that are self-pay or the patient that tells you, "I don't have my insurance card," having a system that actually goes and finds it for you where you're not waiting, making them self-pay, the system actually is intuitive enough to do that for you. And so I think that's just a piece of why we chose Waystar. The vendor partnership is another thing. And I'm trying to get all my things out now, just in case.

The biggest thing, I think, with Waystar is H.R.1 is coming. We just simply picked up the phone and we said, can you help us with the payers bring back the enrollment dates straight into our 271s? They started working with us with our payers. Even one of the payers had them update information that they import to us so we had everything we needed to be ready for this change that's coming. So I wanted to make sure I added that piece soon.

I love that. And it sounds like it's a lot about the partnership. Steve, I would love to follow up with you on that point. What problems were you guys looking to solve when you started with Waystar? And I think your start with Waystar is a little bit of an evolution too, right?

Sure, exactly. So I had been with the previous organization to CHRISTUS for 28 years, and we were a Waystar partner. And so I joined CHRISTUS little over 3 years ago. And at that time, we were trying to migrate from a system to Epic. And in that journey, we realized there were some deficiencies, things that I think we could do better. I had started to work with Waystar and established those contacts of where I felt like we could partner better and help my organization. And lo and behold, at that same time, this would have been February of '24...

Nothing happened in February of '24.

Nothing happened, right. We had a big event that happened in health care where probably one of the major claims providers had a data breach that affected 192 million people's records, and shut down our claims, as claims through a lot of other entities in the country. But in my world, your claims pipeline, that's your cash pipeline. And so we didn't have a lot of information. We didn't know is this going to be a 3-hour event or a 3-day event. Lo and behold, it was like a 3-month event.

A little bit longer.

But we didn't want to wait. We called Waystar right away. I said, hey, I know we're already talking. All our claims stopped. And I think it's a 3-month implementation. What do you think we could do in 3 days? And literally, he thought I was kidding. And then he says, let me call you back.

So anyway, I know we've had a scaled-down version of what we would implement for claims. But when you look at a partner, and this is on a Thursday morning, Friday afternoon, I had my team, our IT team at CHRISTUS, we had the Waystar team, we're on a call, we're figuring this out. And we sent claims Tuesday morning. So literally, it was less than 3 business days.

My team, the Waystar team, the CHRISTUS team worked through the night, 24/7, through the weekend. And it was skeletal, but we were sending claims lock, stock and barrel within 3 business days. And really saved our cash pipeline. And that's a partnership that you don't forget. It made a big difference. So that -- it truly is about partnership.

That's great. And I think, Candice, one of the things we've talked about is how the partnership, and I know that's a key theme in a lot of what you guys are saying, it's part of your strategy as you expand. Can you tell us a little bit more about that?

Yes. So as you all know, in private equity, you have to make sure you show a rapid return on your investment. And so we're a high-growth acquisition strategy. And part of being able to keep my commitment to my Board is consolidation and scalability.

And so coming into this particular organization, it's the fourth one I've done, coming into this organization, you look at the tech stack and you say, okay, what foundation or infrastructure do I need to consolidate all of those acquisitions and those practices or other MSOs that we purchased? How do I get them standardized not only on workflows, but on a tech stack as well so that you can accelerate cash and you can begin to have some predictability around future valuations?

And so what I did was I chose to partner with Waystar. Their full suite of products was exactly what my organization needed to build as that foundation. We started kind of at the very core of that particular time and then expanded as we grew as an organization. And so that integration playbook, it's repeatable.

So because we started, again, at the foundational level and worked with Waystar and built out that standard, okay, I've got an affiliate coming on, here's the inflow volumes, here's what their EBITDA is, and all of the transactions that we have, we put it into our model and it spits it out 300 steps in our integration playbook. And within a matter of months, the Waystar team already knows, everything is transitioned, there's zero gaps in cash.

It's really a beautiful thing. But it was built through that partnership and that trust of people that knew what they were doing on my side and operationally as well as the support and the willingness to do things very quickly, and being nimble at the same time to help us meet our needs, on the Waystar side.

I love that. And Chris, you got -- and I would love, Genevieve, to hear from you as well on this one. You haven't -- you didn't start your relationship with Waystar with everything, right? You expanded over time. So maybe tell me a little bit more about that journey and what that has looked like for you, starting with prior auth from there?

Sure, absolutely. So we actually started working with a company that was acquired by Waystar originally, I think, 17, 18 years ago. Had a great experience. And as our system has grown, our needs have grown, right? We went from being a regional health system in Charlotte, North Carolina to, with our latest merger, we're the third largest public health system in the country. So I mean, that size basically has vendors knocking on the door.

So when we go to look at what we need to change or expand, we have, as we do these acquisitions, different people are using different systems. And the thought was, okay, we've done the prior auth products forever. They've been reliable. My biggest compliment for Waystar is, am I going to sit here and tell you Waystar is perfect? Absolutely not. Nobody is perfect. But what I will tell you is they will make it right and they will work hard and they will be honest with you about the expectations to have. A lot of vendors tend to oversell things. And there's never been an issue that we've had that Waystar hasn't manned up and helped us fix that problem.

Even to the point of the executive leadership at Waystar, we have access to that team if something really needs to be escalated. That's not the case everywhere. So as we work through the prior auth products and had such great success with it, early adopters and all that fun stuff, we recently just bid out our RTE project, which is basically the RFP for that, that's your bread and butter. If you don't get your eligibility correct, then you've got problems. I mean you cannot get paid if you don't have the right insurance on the patient.

And I'll be honest, I lobbied hard, I mean, because we enjoyed it. And when it went through all the right channels, we chose Waystar to be our new RTE. And what would have been RTE for Charlotte-based Atrium Health is now RTE for nationally-based Advocate Health. So that's how we had valued the partnership and basically the fact you all had lived up to your commitments.

That's great. Genevieve, what thoughts do you have there?

Yes. I think what I would add and what I'm hearing from everybody here who's sitting here is there's a central theme, which is really Waystar looks at the entire revenue cycle and they look at it from start to finish. I think I can speak for all of us when I say we probably get at least a dozen phone calls, e-mails, reaches out through LinkedIn that says, "Hey, I've got this one product that does this niche service." Waystar does the entire revenue cycle start to finish.

And they're thinking about how does revenue cycle work from start to finish and how can we fold in the product offerings into your -- whether it's a patient accounting system, an electronic health record, an EMR? And I think that for all of us is why we find Waystar so valuable.

I can come to you and say, "This is my issue today. How are you guys thinking about it?" And I know that you're already thinking about it because you're not looking at it from one small lens. You're really looking at the entire revenue cycle pipeline and thinking about how do I start with, to your point, making sure that when a patient is going to present, that we've got the eligibility, we know whether or not they need an authorization, we've got to make sure their benefits are accurate, to literally get the claims out the door. You guys are a clearinghouse. You guys are the best clearinghouse we've ever had. It's like no comparison.

And then how do we make sure we get that count, through the process posted. And we've got denials. We've got -- we think about the denial management tool. We've got recoups. How do we think about processing recoups? Because I'm sure all of us can agree that the recoup process is a nightmare. And Waystar has just really thought about we're not going to come in and just do one thing well. We're really going to look at the entire pipeline and do everything well.

And literally, today, I was telling these guys, and my CEO reached out and said, "Hey, do you remember this teammate? He reached out and he's got this one little thing. Are you interested?" And I was like, no. Because that one little thing, then I have to think about how is it going to integrate to my patient accounting system? How is it then going to integrate, frankly, with Waystar? How is it going to integrate with all of my downstream systems that I have to worry about or any of my other IT platforms that I've created? I don't need that headache when I know that I've got a trusted partner in Waystar who can just come in and do it for me.

I want to piggyback on that as well too. It's also about customers for life on the opposite side of the table, right, just as much as it is a partner for life. And so one of the things that we enjoyed working with Waystar was, to echo what Chris said, was making things right. Not everything is perfect all of the time, but they're not a jack of all and a master of none. And I think when I hear platforms that want to do everything or try to be everything to everyone, I get very skittish around that because you can only be good at certain things.

The interesting thing with Waystar is that they go very deep in each of those individual products because they do understand revenue cycle. It's complex. It is not an easy thing to understand. But they take the time to listen -- and that's another unique thing, too, that I respect fully from the Waystar leadership team, product manager, who we've got, is in order to go deep and wide, they listen and they actually deliver the products that are needed, not just what's sexy on the cover of the magazine, if anybody reads those, of course.

I love that. Yes, go ahead, Steve.

I was just going to say I totally agree. And being in the industry as we've been, there's been a shift in that. We used to look for best of breed. We used to look for individual companies. But then as it's not as scalable, as the electronic medical record really came into being, those separate one-offs become hard to manage for us.

And so I've seen a shift in even what I desire and my colleagues, is a platform partner. And I think we see that in Waystar. I think they've been very strategic and innovative in how they've grown. We were a ZirMed client way back when, which kind of became Waystar, right? And then we used a company called Connance for scoring and other things. Well, Waystar merges with Connance.

Chris has already mentioned Recondo. We were using Recondo, Waystar merges with Recondo. We were using Iodine, and Iodine merges with Waystar. They've made the right moves, in my opinion. In fact, I think Matt and team just follow what Steve Burr thinks.

We just follow your...

But I do think that they see who's the best of breed out there and they -- and does it fit with them strategically, both from the outcomes perspective, but then probably culture too? Because culture eats strategy for lunch. We all know that. But I think that you look at the culture of this company and how it dovetails with all of our partners here, it makes a difference. And that truly, I think, helps drive outcomes too.

Yes. That's great. And I think, Genevieve, you kind of touched on this. It sounds like we have very well established here. And you guys make my job really easy because I just sit back and let you talk. We've established here that the partnership is key. Obviously, AI is a hot topic. It's something we always talk about. Are you guys at a high level looking to add AI to your solutions? And my question is how? Like how do you do that? Do you do that with partners? Do you do that by looking at foundational models? Like how are you thinking about how you incorporate AI into your organization? Maybe, Genevieve, I'll start with you and then let others.

Yes. I mean it feels as if -- well, it is the hottest topic right now. My leadership team feels like revenue cycle has this incredible opportunity to have AI, what are you guys doing?

The reality is, and I literally just had this conversation with my boss, who's our CFO, earlier this week, which was I am not going to go to a HIMSS conference and walk from booth to booth to find who's doing what AI and what does that look like. The reality is I'm going to come to Waystar and say, this is how we're thinking about this part of the revenue cycle, or this is what we're thinking about doing with this data. And how many times you guys heard us say, hey, you have so much of our data. How do we take that data and think about how are my claims processing? Which payers are giving me the hardest time? Which ones are denying me? What are they denying me for? How do I think about the contract management system and pair that up against the denials, right?

So for me, as I said to my leadership team, I'm not going to go play hide and seek with whichever niche vendors are out there doing AI. Because every time I seem to talk to them, it's really just smoke and mirrors. "Oh, we've got this amazing product." Really? Tell me about it. There's nothing there, right? They want me to come in and help them build it, and I'm just not willing to do it when I already have a partner like Waystar.

Great. Lisa, anything to add there?

I think the biggest thing about AI, I mean, we're an AI -- we use AI even in our call center. What I think about -- when I think about Waystar as a partner for AI is to have the conversations. We have meetings, business meetings with them so they can like be honest with what we're not doing well.

And they told us in the very beginning, can you imagine thinking you're doing -- you're like best-in-class and then someone comes and partners with you and says, hmm, let's just show you the data. And they showed us the data in the first business meeting, and we were like, oh my goodness, we're not first-in-class. And so taking that same premise and loading those things that they do well today to tell us how we can get better. I mean our denials plummeted. I mean everything has moved and shifted in a positive direction because we listened to what we didn't do well. And they were willing, and we were willing to listen to them because they had been great partners.

So I think because they have our data, they know how we operate, they know the market in health care overall, I think that AI is just a natural step for them. They can take that same data and synthesize it and where it can serve up to us well in the beginning. What we just asked them to do, and we just rolled a policy around it, is when you're out of network, what does that look like? And taking our patient population now and even the PARO data and going through and saying today, "Hey, Lisa Griffin, right now today is probably going to be a candidate for some type of financial assistance."

When we did all this other work behind the scenes to figure it out, just using AI, translating that right upfront to us, so that we know right when we're dealing with the patient right from the very beginning, a lot of things we work on now on the back end. I think AI through Waystar is going to bring it all to the front end, all those things that revenue cycle did and trying to clean up.

And on the back end, I think that AI is going to be the sweet spot on the front end with Waystar of making sure every bill goes out clean and that we get paid faster and that we identify things within our system early on in our patient population, early on, that may be an issue for payment for our patients or where we can help them early on. And I think that's where it's going to be the sweet spot of AI, really kind of generating those things in real time for us.

Yes. I think it's interesting the dichotomy between the slowness of health care -- health care is slow to change, regulatory change, payer change, and the rapid change of technology. And so it's so fascinating to watch those 2 come hand in hand. And you get to a point when you're running your organization or building your organization, in my case, where you do lean on others for certain competencies.

And that's one of the things that Waystar has done exceptionally well for my organization and myself personally over the last couple of years is they have stayed ahead of the game. The innovation that they've done from just research and understanding what's on the cusp, what's coming and being proactive about reaching out to me saying, very similar to what you were saying, but more so like are you seeing this? It's what's going on in the industry? Are you aware of what's going on? How can we partner together? We have some tools, but maybe you can help us build something cooler.

And so I think that to me is super important. I have a continuous improvement team and an AI team and whatnot within my division for rev cycle. And the first place we went was directly to Waystar and said, "Listen, you're our feeder system. Tell us what we need to know and where we need to go?" It doesn't mean that we don't do the work on our own. We certainly do the diligence on our back end. But if I were looking from an outsider looking in, like that's the first place you go, is to your core processor of your transactions.

The claim kind of holds that source of truth, right, of the actual...

So firmly embedded in my operations, from the clinical side. We're really focusing right now, and I probably will be shot for saying this, not on the financial side, but on the clinical side. Because those outcome-based payment models and whatnot that are coming are coming from the way that particularly AI can and does handle doctors' visits or surgical visits or things like that. So we're really spending a lot of time focusing in that space.

And I love how much so many of you guys have been involved. I know, Genevieve, you mentioned recoupments, like that is an AI solution that you guys helped us build, right? Like SCA was critical to that development. I know, Lisa, we're -- you already expanded to add prebill, and now you're going to be working with us on the quality module as a part of that, all leveraging AI to get to that source of truth.

Chris, I'm going to ask you, when you hear the autonomous revenue cycle, right, more than just a buzzword for us, what does that mean for you and for the future of what your teams are doing? And what gets you excited about that?

So it gets me excited because a lot of the things that people are doing today are a waste of their time, to get paid. And that's the reality. I mean people that aren't in the inner workings of health care every day, wonder why health care is so expensive, and yes, there's 500 reasons. But one of those reasons is we have to pay people to do administrative things that just are not necessary.

So I mean, things like corrections that have to be made to claims, registration corrections because something -- either the patient gave you something that was incorrect or oftentimes the payer gives you something that's incorrect, so then you have to go behind them and correct that. So you've got somebody sitting there doing that work.

And in the clinical world, for years, they've talked about highest level of licensure, right? Meaning to put that kind of in perspective for you guys, only when necessary do you want the RN emptying the bedpan. You want the medical assistant emptying the bedpan. Everybody needs to work to the highest level of their licensure.

Well, it's no different with our teams. We have really smart, bright, intelligent people, and we have been doing some rudimentary tasks that an autonomous revenue cycle, it should do that for us. I mean it's a repetitive task. We know what it is. It takes a little bit of anticipation. That's where the AI comes in. And that's where even in some of the pilots and things we've done, we have increased our teammate satisfaction substantially because they can go work on the hard infusion oncology cases, not some CT scan that should easily be authorized.

What about you, Steve? What do you think about when you hear about the autonomous revenue cycle?

Well, my thoughts are it's going to have a tremendous impact on health care. I think AI in general, we were just talking last night, will have an exponential impact in terms of what we do and how we do it. But at the same time, AI right now is very much the wild, wild west. I think we've all seen the videos of the Chinese robots racing in China, and then one was faster than Usain Bolt and he ran into the wall. But at the same time, if we were building racecars, I would do everything I could to become faster. I would do everything I could AI or not.

But we're dealing with patients' lives. We're dealing with patients' records. We have to be a little bit more guarded than other industries. And so I think our organization has put a lot of guardrails right now around the use of AI. But we want to partner with someone like Waystar who can help us with the test, the development, where does it make sense to use AI and it's in a safer environment. So we're a little bit different. I think you see in other industries. But I do think that the gains are going to be exponential. But I think we're going to be a little bit slower out of the gate and then it's going to take off.

And it's going to just compound from...

I think maybe this is the time to also say, can we get our payers onboard? Because as revenue cycle leaders, a lot of our challenges are our payers, right? So to your point, is there a payer edit? Why do we have a payer edit? What is the point of the payer edit? We have unnecessary denials. You get denied for a medical record when the contract simply states you don't need the medical record, right?

So I think our payers need to catch up just not only with their technology, but with how they're managing their business. And there's every reason why they want to delay and slow down payments. But if we're going to get to truly autonomous revenue cycle, we've got to make sure that both sides are here and ready to party. And I think one side right now is...

Not quite ready for the party. But we'll get them there.

Well, guys, thank you so much for being a part of this panel. I am so grateful. Hopefully, you guys were able to get so much out of it. If I can have you guys maybe like a one-liner, as you think about the next 12 to 18 months, if you have your crystal ball, what do you think your relationship with Waystar would look like in the broader industry from that perspective? So maybe, Steve, I'll start with you and then we can come back this way.

I think the partnership I've had with Waystar over the last, gosh, probably 20 years now, I guess, has been great. And I think over the next 5 years, it's going to continue to grow and be even better.

Yes, I echo that. I know that we're moving forward with the recoupment module, we're going to be moving forward with the authorization module. And it's just you guys are there with us every step of the way to fix all of our challenges. It's not going to change.

And to the point of we've used authorizations products forever, now we're moving to the RTE space. And the reality is I've hitched my career with Waystar. So they better do a good job.

We're on it.

We use several of the modules. So I just think it's just going to continue to grow from the patient access entry all the way to ensuring that, I hate to say this about revenue cycle, but it's going to be less work on the back end. So I just think that we're seeing it today. We're actually seeing where we don't hire enough people, so we don't have to hire. Because the system is going to be intuitive enough to it's going to meet those gaps that we fill today.

Great. Candice?

I'd like to think that -- and I know, I should say, that we'll continue to stay with the same partnership that we have with Waystar right now. But if you fast forward a couple of months, 5 years down the road even, I like exactly what you said, it's about needing the people, but I need the right people. And so I think it's expanding on the existing, helping my organization scale for the next transaction, but being able to essentially bring in more and more practices more quickly and take care of our patients so that we can make the change in health care that's so desperately needed together.

Thank you guys so much. Really appreciate it. You guys can join me in giving them a round of applause. Thank you, guys.

Okay. We're going to take a quick break. If everybody could be back here at 4:15, we'll do Q&A, and then we'll head over to the innovation lab.

[Break]

[Operator Instructions] And I know the team is excited to take your questions, and we're fortunate to have our go-to-market leadership and our product leadership. So I appreciate you focusing questions on those areas and on the materials today.

So with that, I'll start with you.

Brian Tanquilut, Jefferies. So maybe for the commercialization team and the go-to-market team, we're just curious, I mean, you present to us a very compelling product offering or product suite. It looks great, it looks very compelling. Our curiosity is more of the, what does the competitive environment look like, right? What are the competitors' products that are out there? What is Epic or Athena doing? That's a big question that we hear a lot from investors, like is Athena or Epic a risk? So as we think through your presentation, if you can just give us a picture of what does that look like on the other side.

Let me start with a thought or 2 around the competitive environment and backdrop that we see. And then I'll ask Todd, if you're okay, taking a thought or 2, perhaps specifically about Athena or Epic in the different markets.

I would bucket our competition in perhaps 3 different categories. First, we see the -- what you've heard me describe as long-standing perhaps legacy incumbents that have been installed in both the hospital side as well as the ambulatory side of the market that still comprise a meaningful market opportunity for us to pursue. So folks like Change Healthcare on the hospital side, FinThrive on the hospital side, TriZetto and others just as pure clearinghouses.

I think the second category is the one that you're highlighting. That is from time to time, we see forms of both cooperation but also competition from the EHRs who will venture into developing and launching point solutions of their own or to try to do something more concerted on more revenue cycle capability.

We're very well aware of what some have launched as intention. If I could orient everybody to one of the slides that I shared earlier, the end-to-end platform, what we see most often, and I'll be careful not to speak about specific competitors, but you'll be able to apply this, they'll launch intent around a specific point solution. And it's such a different development motion than perhaps the EHR is.

EHRs, you're developing towards something that you might be updating a couple of times a year. The frequency and the need to really develop something rapidly and constantly update it to ultimately support this dynamic environment in the revenue cycle makes it prohibitive and sometimes difficult for some of those EHRs to really make forward progress.

So we're aware of what they've announced. I don't -- we don't know what's going on in a couple of those places that you highlighted. There seems to be some flight and some other things. But where we have strength, that's where we're all focused. In the EHRs, where we have strength is because we have the claims management suite and the network, the deeply deployed network that connects us to 5,000-plus payers, that strengthens all of the integrated offerings on our platform. We have that grounded source of payment truth that reinforces what we have.

So if the EHR vendor doesn't have all those things totally built out fully operational, dynamic and working all the time, it's really tough for them to compete at scale, honestly. And we feel like we do very well there.

The third category, and then I'll turn it to Todd on specific comments around some of the EHRs that you've mentioned and perhaps others, is more of just the point solutions, some of which are novel and new and have energy. But again, they're point solutions and many of those are reaching out to us saying, could we get access to your data or to your network? And we know that behind the scenes. We know the business leaders at most of those.

And so we have -- some of them may have a role to play. We stay close to some of those. We think in the right setting and for the right price, some of those may make attractive homes for -- attractive assets for a great place like Waystar to be their next home. But we're super disciplined there.

Any comments you'd highlight as far as how we show up against Epic in the market or against Athena or others?

Sure. I think I'll first start out by saying when we talk about the Waystar platform, there's nobody in our space who can do all of the things. So in that instance, we don't have competitors. Now as Matt alluded to, we do have competitors who are different point solutions. But when you think about like an Epic or somebody like that, it's a great business, right? We have a lot of meaningful integrations with Epic. We have a lot of Epic clients. And we have a lot of Epic clients who are on stage and a lot who you'll meet over in the innovation lab. So we feel very good about our position within that client base, and we see a lot of interest for our solutions, and we see a lot of interest for the full platform.

Now in terms of what we see in the overall market, it's different based on segment, right? So in our smaller ambulatory segment, we're seeing more like traditional clearinghouse type players. When we get into the kind of middle to large ambulatory and enterprise ambulatory, then we'll see some of the folks who compete in the hospital side as well. But we've got a lot of confidence in the story that we're telling, and people are really gravitating to our full platform message. But they also like being able to grow with us and we can help them where they are in their journey.

The one thing I'd say is -- I'd highlight what Lisa, the client, said a few moments ago, we believe you can be Waystar first and Epic first. And without disclosing specific metrics, we've seen double-digit compound annual growth over the last several years in Epic EHR system of record accounts where Waystar is the system of action. So we like that double-digit compounded growth over many years and feel like that's our right to continue to do that.

Richard Close, Canaccord Genuity. Matt, maybe talk a little bit about the $44 billion TAM on the services. Obviously, if that gets automated, significant value to your clients. How do you think about pricing your offerings against that value?

First of all, just maybe add a description about that services addressable market. And then I may turn to Brendan for some thoughts on how we monetize our AI solutions today, if that's okay, because it's a really great question. We're all working to figure out the best way to monetize, and we've got some proven ways that we're already doing that.

I think we're -- we engaged a third party to really understand the total revenue cycle market spend. It's about $100 billion a year based on the chart that we showed. And of that, a pretty meaningful subset is labor that's being performed in-house that's outside of software today and some that's being outsourced to business process outsourcers. And so that labor, we said, is an incremental $23 billion a year market, again, either in-sourced in the system, lots of people doing manual work or outsourced to a third party.

That labor is adjacent to our software. So we find a number of instances where we might have a revenue capture module, a software module that's AI-powered. And sometimes the client will identify the right thing for the client to go do next in our software, but we're not doing that next thing after that. And we know now as we create agents, we can actually go do that next step of work.

So across our 6 product families that you heard William, Brendan and Sean highlight, we know by product family what the adjacent services market opportunity is and are now beginning to develop AI capability to eat into that very exciting, double the size of our addressable market opportunity.

So Brendan, will you talk about how we are monetizing today and how we anticipate becoming more outcomes first in monetization?

Yes, happy to. So as we've alluded to today, we're effectively monetizing incremental AI capabilities in 2 ways. One of those is category creation, the other is through incremental monetization of existing capabilities.

In the form of incremental monetization of existing capabilities, as we introduced new agentic or AI-powered functionality to existing modules, we've also launched what we're calling peak bundles, which is effectively premium bundles of those existing capabilities at a price point premium relative to the core pricing of those existing capabilities. So we're capturing value as we deliver those new capabilities to the market.

And prebill anomaly detection is a really good example of category creation, which we highlighted throughout the day today, that's actually an outcomes-based pricing model where we're charging a contingency fee in accordance with the value we're delivering. And as we look at the jobs to be done, if you will, across the revenue cycle, this notion of opportunities or micro-services across the revenue cycle where we can disintermediate previously labor-intensive services models, we think there's a continued opportunity to drive towards outcomes-based pricing for those types of solutions.

Charles Rhyee with TD Cowen. I appreciate all the day so far here. Maybe just to ask a question for Todd. You gave some really good examples of how you've been able to drive increased ARR. And I think you gave the example of that health system in the Southeast kind of said, hey, look, they identified Waystar as the platform to go to. Maybe help us understand how long did that process take to get to that point where they said Waystar is where we want to go?

Because, Matt, I know, I think on the last call, you talked about the sales cycle, it's 12 to 18 months. We always hear it's a very long sales cycle. But given sort of the value that you presented today and the sort of ROI model, any ways to think about how that sales cycle can get faster potentially as we go forward? Because it sounds like when we listen to the clients, they also are very excited. But I was struck by, I forget the gentleman's name when he talked about the real-time eligibility RFP, obviously was promoting you guys, it did get selected. But just curious how long did that RFP cycle actually take? And just trying to understand ways to how to shorten that, if possible.

Yes, sure. So in terms of the first part of it, the prospect that you referenced, we were fortunate. Most of our sales cycles do take between 6 to 12 to 18 months in the hospital setting. In our ambulatory settings, they're much, much faster. We have some, in the smaller section of our ambulatory business, that happened in 21 days, right?

But in this specific instance, we are very, very fortunate that the rev cycle leader who is spearheading this initiative actually came, they were a client in one area and actually moved to a totally different business. And so her objective was to bring us along for the ride. She had such a great experience at a previous employer that she brought us with her. And so we love that, right? We demonstrate the value. We delight clients along the way. And not only does that help us expand share of wallet in their current setting, but if they decide to leave and go somewhere else, they usually bring us with them.

In terms of what are we doing to speed up that process, we would love to go -- we'd love to go a heck of a lot faster. A lot of the hospitals and health systems have pretty complex, and even in some cases, siloed buying processes. You heard me talk about in my section where sometimes we're dealing with the financial side, sometimes we're dealing with the clinical side, sometimes we're dealing with IT. And increasingly, we're seeing them all together as we sell more and more of our platform.

So we're always looking for ways to speed it up. We're using a lot of technology within our sales group to make our sales cycles faster. But at the end of the day, we can only go as fast as those organizations can move. And if we have ways for us to move faster within them, I'd love to hear it.

One thought for you. I mean I think that's super great, Todd. I said this earlier today, that innovation does move at the speed of trust. And so much of what we see happening and ways to further accelerate growth opportunities is it's actually when peers are talking to each other about Waystar. That's what was phenomenally insightful for me, is the clients that -- of Waystar that we brought up a few minutes ago, they're not around each other, like we're just hearing them independently. But we know that they're actually talking to their peers.

And so sometimes we'll get in an opportunity, and the next best step from an account pursuit or deepening the relationship with those clients, as Todd leads so well, is to connect a current client to a prospective one, especially in the area of where they're exploring a solution or a growth path with us, or they may be in a current RFP situation, Charles. So that -- our distribution capability and every client that we're adding actually adds to that trust and that opportunity to create referenceability. And we think that's a long-term growth advantage for Waystar.

Let's go to Daniel Grosslight.

Daniel Grosslight with Citi. Thanks for hosting us today and looking forward to the Innovation Lab tour next.

I look forward to dinner, actually.

Are we having barbecue? That's my question.

Yes. I love it.

Lots of today's focus was on the benefits of having a full RCM platform, whether it's linking kind of the back-end data to the front-end data to shift decisions to the left or for just vendor management. I'm curious if there's any data you can disclose on the percent of clients that are using modules throughout each step of the RCM cycle. And for those just using the clearinghouse, what is the typical kind of next step or easiest cross-sell from there?

Let me hit that first part head on and then I'll turn to Todd and anybody else who would like to comment on our typical growth journey. So as you can appreciate, we track, we have the information behind the scenes. It's one of the disclosures that we're actively evaluating as far as talking about the average number of product modules that our clients are using. So we're evaluating that as a disclosure.

We know it. We are -- this is qualitative today, but we're pleased with the continued ACV progression of our typical deal sizes. We're signing clients to more modules at the outset than we ever have before. But we have not disclosed that yet, and we look forward to evaluating whether that would be an important metric that would help you have a sense for our growth opportunity across the 6 product families and the software modules within each of those product families.

So thank you for registering that with us. That's something that we're thinking through. Todd, maybe perhaps talk about when it's a clearinghouse-only client, what do you typically see as the natural growth progression to the thoughtful question?

Yes, sure. So of course, it varies by segment, right? In our smaller kind of more ambulatory segment, we -- people who are on the clearinghouse, we typically tend to see them move towards more of our front-end solutions. So think about patient payments, think about patient financial clearance, things like that, coverage detection. Those are all things that are right in the wheelhouse for us in terms of how we sell into the smaller ambulatory market.

When you go up into the hospital segment, our prebill solution, our charge integrity, our clinical documentation solutions, as we start to move from that front side of the stack, so to speak, into the middle, which Matt showed in his chart, those are 2 kind of natural expansions for us in terms of both ambulatory and on the hospital side. I'm certainly happy to pass it along.

Any other thoughts on this, guys?

Yes. I'd love to just supplement that answer. Obviously, I agree with it, but I want to add a little bit of color on why that progression from clearinghouse to front-end and eligibility makes so much sense.

As we've alluded to throughout the day, we really believe that the clearinghouse serves as the empirical source of truth around the payments that the provider is receiving from payers. And the reality is the single biggest problem our providers come to us with is solving denials. And we know from the remittance advice we get and the remittance information we're processing as the clearinghouse that very often the leading cause of denials for these providers is going to be on the front end in the form of eligibility and coverage-related errors.

So it creates a really natural opportunity for us to present that information to them, show them the data around the remittance advice they're receiving across their payer network and help them understand that they've got oftentimes an eligibility or a front-end problem. And it facilitates a really kind of fruitful dialogue that allows us to continue to drive value for them on the front end and increasingly expand from there into things like patient payments and denials and appeals on the back end.

I think that's a great point. And I think one thing that may be underappreciated about the actual what is taking place within the provider organization, they're typically trying to manage -- if they're larger in size, they're managing 50 to 100 to well over 100 different insurance company relationships. Because they -- as patients come through the door, they're having to understand who that patient is, understand whether or not they have eligibility.

Where it gets tricky, and I think this is also underappreciated, and we should call this out, is that, that patient -- let's say, it's Matt the patient and there's a relationship, and Matt has coverage through Aetna. Well, that's not sufficient because Aetna has so many different health plans based on whether Matt's employed or not or -- there are just so -- self-insured.

So actually, the coverage, the eligibility detection is at the service level for Matt -- within -- Matt, the patient's health plan. And payers are adjusting sometimes rather frequently what they're agreeing to cover in the form of a service or not. So Brendan's comment about the natural progression from clearinghouse to front-end eligibility, it's really in the pursuit of reducing the likelihood that a claim gets denied.

And when you triangulate that with what William and Sean highlighted in the different AI models that are payer-specific, those AI models that we are creating are designed to detect the health plan service level coverage difference, anticipate that and build it into the triggering that we use to prevent the denial from occurring. So that's the natural progression there. And of course, from there, as Daniel, as you highlighted, we can go any number of directions. We have a very malleable approach that Todd leads. So I hope that qualitative commentary is helpful.

Let's go to Jailendra from Truist.

Jailendra Singh from Truist Securities. I know we're not doing any deep dive on financials today, but I still want to ask about your low double-digit revenue growth target. You talked about growing TAM. Clearly, some new opportunities have emerged over the past 12 to 18 months. Keeping that in mind, can you talk about how the building blocks for that low double-digit revenue growth have evolved in terms of new client wins, cross-sell, volume, pricing? Has anything changed as you think about the next couple of years or next few years?

Yes. So I'll remind everybody here what our growth algorithm is. It really does start with the 97% gross revenue retention. Again, because we create lasting and enduring relationships with clients, we think that's a fantastic starting point.

As we walk our way to net revenue retention, we have -- on our platform, we benefit from utilization increases built into health care generally. So over the last 30 or 40 years, as we've talked about, there tends to be a 1% to 2% utilization increase. And because our system is designed to help providers see more patients, we help them do that very efficiently. The volumetric side of our business tends to benefit in that 1% to 2% range. That's how we orient every year.

And then on top of that, given the volume of improvements and innovations that we're delivering to clients in any given quarter, we impose a modest annual price increase. It averages about 3%. And then from there, we're cross-selling and upselling solutions as we walk our way to a net revenue retention rate of approximately 108% to 110%. That gives -- then if you add on top of that new client additions, then that's getting us to a very confident view, a long-term view that we can grow low double digits.

And a couple of things that I would add to that, that we've commented on publicly and historically so -- and again, these are areas that we're evaluating, working to be more descriptive, but I'll speak qualitatively for just a moment. We're coming off very strong bookings, several quarters of very strong and record bookings. We've highlighted that about any time you look at our pipeline of opportunity as well as recent bookings results, it tends to be a really nice mix of cross-sell and upsell as well as new client expansion.

For the first half of the year, we've had about 60% cross-sell and upsell and about 40% or so new clients that we've added to the platform. That fuels our growth algorithm. And then you think about some of the new solutions that we're developing and launching, some of those support cross-sell and upsell, some of those support new client pursuit. But again, it's adding total addressable market opportunity and creating incremental growth opportunity for us, too.

So the last thing I'd highlight is that we noted -- while our utilization increase tends to be 1% to 2% a year on average, that's how we start each year, thinking about our operating plan that way, we noted that post-COVID, we grew through COVID, but we noticed that post-COVID utilization upticked to about 3% or 4%. And some of our commentary called that out like, hey, we've seen higher than normal utilization during a few of the previous quarters since we've been a public company. But we are seeing that return to its kind of normal trend. We have confidence in our growth algorithm and wanted to reaffirm that to you today. So thank you.

Let's go to Allen, BofA.

Allen Lutz, Bank of America. To follow up on Jailendra's comments, moving down to EBITDA margins. You maintained the 40% EBITDA margins. You didn't talk a lot about investing and the spend on the investment side. There are 2 areas I'd love you to touch on just the cost to invest in AI. Can you refresh us on where you're investing within AI and the road map there over the next couple of years?

And then also, are there additional investments to capture the service, addressable market that is doubling your TAM? Is there a new way you're thinking about going to market? Are there additional investments there? How should we think about the OpEx over the next couple of years related to those items?

Yes. So thank you for highlighting the fact that as a public company, we've exceeded our adjusted EBITDA margin target of 40% every quarter we've been public. We like that as our long-term guide today because it is allowing us to reinvest for innovation and for growth. Allen, you've heard us talk about our innovation road map over the next few years, and we're actively pursuing that now. Those costs are showing up in our P&L now. And we're delivering better than 40% adjusted EBITDA margin.

So we're accounting for token use in our P&L today. We're accounting -- and we're working to be very smart and disciplined in any area of spend as we allocate resources carefully to the initiatives that we truly believe will drive the longest and best shareholder value.

I would say within our spend, some have noted that our CapEx software development spend has increased over the last 9 to 12 months. Part of that increase has come from the acquisition of Iodine, where they were already naturally spending a little bit more on new product initiatives. It tends to be those new products that we're able to capitalize. And so the increase there that we highlighted in the most recent quarter is a reflection of a spend level that we think is about the right level for the next little bit. And we were able to launch some of these new AI solutions that you saw us highlight.

The prebill anomaly detection solution that we launched in the middle of Q2 generated more than $6 million of bookings. Brendan talked about that being priced on a performance or a contingency basis, an outcomes basis. That's one example of what we expect on our road map as we march our way toward this portion of the market that is currently done manually with services that we believe we can automate with AI. So I think we have the building blocks and all the ingredients to continue that pursuit and that our spend level is reflected in our current P&L.

Ryan MacDonald with Needham. Matt, maybe strategically, and maybe it could be for multiple parts of the team. It seems like with the trend of consolidation that we're moving towards an in-sourced versus outsourced conversation in RCM. And AI is fueling that, you're investing in it, your partners are investing in it.

So maybe talk about as these -- your customers that were on the stage want to consolidate around vendors, how you're selling sort of the value of Waystar versus just kicking it out and outsourcing it completely end-to-end to another party? And then as you think about AI solution development, how do you sort of think about strategically whether how much of your AI innovation to show to these BPO partners over time given that they seemingly are moving to become your competitors longer term potentially?

Yes. It's interesting. We see the really smart -- and I think this is a key point for everybody here. Health care historically has been largely transactionally based. A provider would see a patient, the patient would be served by that provider and they would leave. And I think what we're moving to now is much more of a relationship. And what we hear from our clients and prospects that we're talking to that are considering in-sourcing even more is they want the proximity to the patient.

The lifetime value of a typical patient for a health system -- health care is largely local. So the lifetime value of a patient in that locale is about $1.5 million. And so where we believe the future will be, patients will have choice on where they go to get their care, and market choice. Smart decision-makers, what we hear is they want to have that proximity to the patients and retain that relationship themselves. So like outsourcing it to a third party where they lose the connectivity, they don't control the billing and collection and follow-up experience, that's one of the things on their minds.

And you couple that with, as you noted, point solution fatigue, you kind of heard that from the client panel earlier today. They -- and you heard it in Todd's presentation. I'll turn to Todd in just a second. But we see that as driving behavior toward Waystar, where you can be Waystar first and then EHR system of record first, whoever that may be. And we can be that linchpin that creates a system of action, the outcomes that we want.

Again, we know that providers are interested in consuming AI. They just want to consume it in a construct that they understand where they're not worried about what are my token expenses going to be this month and who's using it. We're kind of orchestrating that for them.

Is there anything that you'd highlight on any other aspects of the question?

So I would just say that what we hear from clients who are either -- regardless of which side of the fence they're on, the people who want to in-source, they want to get the results from the people who outsource. But to Matt's point, they want to stay close to the patient. They want to own the process. And we allow them to do that.

Now we're in a really good position because we have both sides as clients, right? But -- and I think you heard it from one of the panelists too, is not only can we help them with that, but we can also tell them where they might not be best-in-class because we have all the data, we have the insights. And so not only does it allow us to share those insights with them, it also allows us to guide them into what they should be doing next. And so we really can inform them on how they can -- which opportunity is best for them. And fortunately for us, we can support both models.

Yes. I mean we're coming up on football season. It's like the equivalent of a football team outsourcing its quarterback or its running back. So you want to kind of keep that part of the team, is what we see the future.

That being said, we believe we can be a long-term thoughtful partner to the managed services organizations that we serve today. And we're very well aware of some of the experimentation that they have going on. They're going through some form of their own kind of reenvisioning of their whole business model. And candidly, to a little bit of the kind of competitiveness of our team, we actually like our direction of travel. Going from software is a very natural extension to leverage AI into the clearly identified services addressable market that we've highlighted. So we can both be a great partner. But if there is intent to compete in certain areas, we think we can compete well too.

One of our -- one of the things that we really had to focus on is we have teams -- software teams that have built these workflow software for a long time. And we've brought in folks that have expertise around agentic. But what we found is that to go like as fast as we can, it is really focusing on retraining what these kind of SaaS teams with the deep domain, adding and augmenting agentic workflows, and helping them learn how to build that is the fastest way to get to market.

And so if you don't have that base of this deep domain expertise and understanding workflows, we can bring in some folks that have built out agentic software before, meld them together, but it's 80-20, 90-10 in terms of ratios. If you don't have that baseline, you're not going to get there first. And as Matt said, our trajectory, I think we'll get there first.

Brian Peterson from Raymond James. Matt, it's not lost on me that when you showed the TAM slides, the services number at $23 billion was actually bigger than the software number at $21 billion. So as you think about unlocking those opportunities, is there anything entrenched about how these customers are spending with some of these services or in-house partners? And as you think about autonomous RCM, where does that share come from in terms of software versus services?

It's a good question. It is an interesting time. When you look at historically the cost to collect on every dollar that you've collected, let's -- in an illustration, if you're spending 5% of every dollar to collect, historically, 80% of that's come from labor, 20% of it's come from technology. And we actually see that inverting. And we hear from clients that they want that to invert, in part because the effort to manage staff that are internal to a hospital or health system is just so costly and inefficient. You're constantly trying to retrain people.

And by the way, these are really smart decision-makers in their organizations. They're humans too. They're consuming or reading material about how AI is being consumed or potentially being thought about in other industry settings, and they're thinking about how do they apply it in health care. And so there is this belief, because when you look at their cost structures, the majority of their cost structure is still labor. It's not technology.

And so again, I'd go back to the recoupments as an example. We have AI that identifies the recoupment opportunity. We turn it back over to the provider organization today. And they say, well, we may or may not even have the team of people that can rapidly follow up and call the payer and do that recoupment work. That's a prime use case for AI that we can deploy. So they're turning -- they're looking back to us and saying, "Hey, you found all these recoupments, this is -- the silent denials, it's terrible. Can you help us build an agent or harness agents together that can actually go do the work to follow up with the payer to collect?"

And so those are the types of things that are informing our view of that services market opportunity. We think it's real and substantive. And we do note that it is -- it really expands our addressable market opportunity and the runway for growth.

Scott Schoenhaus with KeyBanc. Matt, given that your platform generates a lot of cash, you talked about capital allocation briefly, maybe touch about it a little bit more and what applications maybe you could be acquiring versus growing organically. And what the M&A marketplace looks like right now given that P/E probably is more reluctant to sell at these levels and valuations?

Yes. The private market valuations seem like they're higher than the public market valuations in our space right now. So we have a great view of different companies in the revenue cycle. We believe that Waystar would be a fantastic home for the right types of companies. We're close to several.

And I'll turn it to William and Brendan here in a second to talk about areas within our product road map that we would consider for kind of M&A or buying versus actually organically building it. But we are close to situations.

And before I do that, let me just reaffirm our commitment to be very disciplined in how we do allocate capital. We know that there's 5 tools, right? We can organically invest for innovation and growth. You see us doing that a little bit, while we delever, and we expect to delever further, and evaluate the merits of incremental share repurchase program work.

The other 2, the M&A, for the right market, we'll be disciplined on price. For the right company, we will be disciplined on it's got to fit our criteria. The fifth one is obviously dividends. I don't anticipate doing any dividends, not to disappoint anybody, but just -- this is a market moment that we want to go tackle head-on.

So what are areas you guys on the road map or on the pipeline of opportunity?

Go ahead.

Yes, happy to take it. So look, I'd highlight that we actually feel relative to where we were a few years ago, that we have all of the tools and the toolbox, so to speak, to build towards our kind of autonomous revenue cycle ambition organically. And so in my view, we'd look at a lot of M&A through the lens of opportunistic road map acceleration. What are small tuck-ins that might have interesting agentic capabilities that allow us to fuel faster pace or time to market in categories like autonomous coding in the mid-cycle, which we talked about earlier, or accelerate our efforts in prior auth in the front end.

But again, I think we feel like, especially with some of the advancements we've made in development efficiency, that we have the tools to go tackle a lot of these problems organically. And so again, look at it pretty opportunistically as road map acceleration.

And we'll just -- we'll take your question, and then we'll close out with Sean, if that's okay with everybody.

Craig Hettenbach with Morgan Stanley. Just on the topic of AI and how it's influencing the competitive backdrop across the industry. It's helpful to hear from your customers and partners that they value kind of your expertise within this space. You also have the large LLMs out there trying to encroach. So would love to get an update in terms of your thoughts on those companies, what they need to do, what you need to do to kind of stay out ahead of that just from a road map perspective.

Yes. Let me start, and I'll turn it to William. I think you spoke about our 4 key pillars. First of all, we feel like we're doing a number of things right. We're using LLM capability ourselves. We're partners with and consume several large language models to advance our own development work, and you're starting -- you're seeing the productivity -- we showed you the productivity gains we're experiencing today. So we feel like we'll continue to do that.

And William will talk about some of our advantages in just a moment, but I'll also just be really emphatic and say we are not seeing any competitive disruption from the foundation model players in our market. The vast majority of them, of our provider clients, want to consume AI through a trusted partner, not necessarily try to go direct to an LLM provider and try to do things themselves. They just can't get the same benefit that we can deliver.

And so what would you highlight?

I'll go back to a couple of things. One is the deep domain expertise that I talked about, right, that Waystar brings to the table. Even if you have a very large -- if you have a very strong large language model, you don't have this deep domain expertise to be able to take advantage of everything that you've got in your LLM. That's one.

The second one is we talked -- we also talked about the ground truth in terms of how claims eventually get adjudicated. And that is unique information. That's not public information that's available that you can go scrape off the Internet. Those are the signals that are captured through processing that Waystar does.

And it's those kinds of unique capabilities, domain expertise and the ground truth of claims, the ultimate completion of a claim, that information is unique to us. And we are able to take those 2 capabilities, those 2 benefits, take advantage and partner with the Anthropics and OpenAIs of the world and the Google Geminis, take advantage of those LLMs and then pick and choose which LLM works best for what problem we are trying to solve.

And in everything that we've talked about, one size doesn't fit all and also LLMs are not the be-all, end-all. We still turn back to things like machine learning because they do things still better than LLMs in certain situations. And so our approach to AI isn't to just go 100% in on the LLM. It's to say, let's pick the right AI to solve the right problem. And if it's LLM, let's go with it and find the best LLM. And if it's a different technology, let's use that best technology to solve that specific problem.

I'd just add one or 2 more thoughts for you. First, I'd go back to that platform view where we're getting so much access to data. Proprietary data is an advantage to us. We actually have some of these foundation model players reaching out to us to procure our data, to buy it. And we see that as an advantage for us. So we're not sellers.

Second, it's not just the data, but it's proprietary observation. So because we have, from one end to the other on our platform, we're able to observe the workflows because we have so many people embedded in working in close proximity to clients, seeing how they're consuming software, how they're using AI. That direct observation is actually unlocking incremental insights. We're going to generate so many insights here this week and already have with advisory board members and clients that will be in hands-on ask-the-expert sessions and Innovation Lab sessions we're about to walk you to. We get feedback in every one of those direct observation interactions.

Last thing I'd say is I'm actually on a Board of a company with a guy who's the Chief Product Officer for OpenAI. And we talk regularly. I'm not aware of specific things they're doing in health care that would be disruptive to us. It feels like they'd rather be more of the enterprise tool provider, not like the deep domain expert and anything that we're doing. Sean?

One thing that we really benefit from is decisions we made a long time ago that are really setting the stage for this moment right now. There's so much of health care that is deployed in individual instances and vertical solutions to have the consolidated data warehouse, data lakes that we have across financial and clinical data, is, I mean, setting us up right now to be able to leverage that for predictions. That is not something that is readily available to other parties. Even if you have those instances, you won't have them together.

Thank you for highlighting that.

Sean Dodge, BMO Capital Markets. Maybe going back to the land-and-expand opportunity and trying to dimension that out. You have like an average midsized health system right now that decided to go all in on Waystar kind of based on what you have in the platform right now. How much revenue would that contribute? Would that be like 8 figures, kind of well into the 8 figures? And then it sounds like you've got clients that are all-in now. Like how many do you have? Like what proportion of your base is kind of all-in now?

Well, first, just our land-and-expand strategy is one that's been really, really effective for us. Because, as Brendan alluded to, we have the data. So we're actually going in and making an informed pitch to those clients, and sharing with them where some of their challenges are occurring that they may not even know.

In terms of kind of how big those opportunities are, I mean, they are 7-figure deals all day long. And we've even seen some a little bit greater than that. And in terms of the number of how many of those, I'm not sure we can maybe...

Yes. We don't disclose that at this time. I will say that we've highlighted the volume or the number of million-plus deals that we signed in recent quarters by just alluding to them being strong and more than 10 or so in a quarter. And so we like that. Some of those maybe have characteristics of what Todd was describing earlier in the material that he shared.

But we see ample opportunity for that. As we've said previously, we can more than double the size of our business, of our revenue by simply cross-selling our solutions, available solutions into our installed base of clients. So there's embedded growth on our platform, and we're working to capitalize on that. And we're excited about the future.

So it's okay, we'll wrap off. And I'll just thank you all for joining us today. We thank those of you that have participated virtually as well. This is our first ever Investor Day. So we're really grateful for the chance to be here and show what we're doing and appreciate your questions and the opportunity to share more about Waystar. We're excited about what's ahead. We're very grateful for your partnership as we continue to simplify health care payments.

Next, we'll excuse the people participating virtually. But for those of you that are here, we'd like to walk you to the Innovation Lab next door, where you'll hear directly from our team members, many of whom have responsibility for the products that they're about to show you. It's a little bit of show and tell. And so we hope you'll have a great experience. It will bring some of our solutions to life, and that will -- this will be a nice conclusion to the day before we welcome everybody to dinner later this evening.

So thanks a lot, Edward. Thanks, everybody.

Good day, and thank you for standing by. Welcome to the Waystar Second Quarter 2026 Earnings Conference Call.

[Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Edward Parker, Head of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining Waystar's Second Quarter 2026 Earnings Call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer; and Steve Oreskovich, Waystar's Chief Financial Officer.

This afternoon, we issued a press release announcing our financial results and published an accompanying presentation deck. You can find these materials at investors.waystar.com.

Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance. Examples of these statements include expectations of future financial results, growth and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release and the reports we file with the SEC, all of which are available on the Investor Relations page of our website. Any forward-looking statements made on this call are only as of today and will not be updated unless required by law.

We will also discuss certain non-GAAP financial measures. These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck and our earnings release.

With that, I'd like to turn the call over to Matt.

Thank you, Edward, and good afternoon, everyone.

Thank you for joining our Q2 2026 earnings call. We delivered another solid quarter as we executed our strategy, supported our clients and advanced the Waystar platform toward a more autonomous revenue cycle. During the quarter, we delivered revenue of $320 million, representing 18% year-over-year growth and adjusted EBITDA of $137 million, resulting in an adjusted EBITDA margin of 43%, which exceeded consensus expectations for the quarter.

We also delivered another strong quarter of bookings, supported by ongoing momentum with larger provider organizations, expansion across our client base and sustained demand for Waystar's AI-powered solutions. While the operating environment continues to evolve, the breadth of our platform, the diversity of our client base and the mission-critical nature of our solutions support healthy demand across the business. At Waystar, our focus is to help providers lower the cost to collect, accelerate reimbursement and improve payment accuracy across the revenue cycle. In Q2, we saw healthy demand across the business, ongoing client expansion and broader adoption of Waystar solutions.

Large platform deployments drove strong bookings during the quarter, including a double-digit number of $1 million-plus ACV bookings, reinforcing the trend we have discussed over the past several quarters and our view that providers increasingly value a connected platform approach.

Larger client relationships also continue to grow. Clients generating more than $100,000 of trailing 12-month revenue grew to 1,453, up 15% year-over-year. Within this cohort, clients have expanded their use of Waystar solutions over the past several years, demonstrating the compounding value clients realize as they adopt additional Waystar capabilities over time.

Net revenue retention was 108%, within our historical range, demonstrating continued expansion within our existing client base. At the same time, new clients are increasingly selecting multiple Waystar solutions as part of their initial purchase decision. Platform consolidation continues to accelerate as providers move away from fragmented point solutions in favor of a single connected software platform. Class Research's inaugural revenue cycle management suites report reflects that shift. Among providers using multiple solutions from a single vendor, the study found that Waystar clients reported some of the strongest improvements in collections performance and cost to collect, providing independent validation of the operational and financial benefits providers can achieve when more of the revenue cycle is managed on a single platform.

One of our $1 million-plus ACV bookings is a nonprofit health system serving Central New Jersey and Southeastern Pennsylvania. The win reflects the value of Waystar's platform with the provider selecting Waystar to replace 3 separate vendors across claims management, patient financial care, clinical documentation integrity and revenue capture. We also continue to see existing clients expand their relationships with Westar. This quarter, one of the largest nonprofit health systems in the country began implementing an expanded partnership across eligibility verification and insurance coverage detection.

Already a 7-figure Waystar client, the added solutions are expected to generate more than $1 million in incremental annual revenue, reinforcing the advantage of a single connected platform over a patchwork of point solutions. Another established client and multibillion-dollar academic health system with more than 3,000 beds and 9,000 physicians also recently went live with additional Waystar Altitude AI capabilities designed to prevent denials as part of its strategy to centralize revenue cycle operations. The go-live increases the client's annual investment in Waystar by an incremental 7 figures while helping lower its cost to collect, reduce manual follow-up and operate more efficiently at enterprise scale.

During the quarter, we also saw encouraging adoption of iodine solutions within the existing Waystar client base. More than $6 million of bookings came from existing Waystar clients purchasing Iodine capabilities, an early proof point of our expanding cross-sell opportunity as clients bring together financial and clinical data to improve outcomes. As coverage dynamics evolve and self-pay populations grow, providers need stronger capabilities to identify available coverage and protect reimbursement.

In a newly published success story, ProMedica, a hospital and physician network serving 4.7 million patients annually, leveraged Waystar's patient insurance coverage solution to uncover nearly $10 million in previously unidentified billing opportunities that may have otherwise been missed. This quarter, we published an in-depth analysis of data from hundreds of hospitals using Waystar's clinical integrity and revenue capture capabilities. The analysis showed clients experienced outsized returns, including 3x greater financial impact from integrated clinical documentation workflows, generating $2.17 million in incremental reimbursement for 10,000 discharges and a 90% year-over-year increase in rebuild dollars caught by our revenue leakage protection capabilities.

Collectively, these examples demonstrate the value of the Waystar platform. As clients adopt more capabilities, they reduce complexity, improve performance and drive stronger financial outcomes. The momentum we're seeing across the business reflects more than strong execution, it reflects the position Waystar occupies within the health care payment ecosystem and the advantages that position creates for our clients. Waystar sits at the center of the health care payment ecosystem, connecting providers and payers through critical workflows that span the payment life cycle from authorization and claim submission through adjudication, payment and reimbursement. Providers see their workflows, payers see their workflows.

Waystar connects and acts autonomously across both. Operating at that intersection gives us insight into the interactions, dependencies and friction points between providers and payers. That perspective enables us to improve performance across the revenue cycle and deliver better payment outcomes. Every transaction provides intelligence about how payments move through the system. As payer requirements change, Waystar helps identify friction, adapt quickly and continuously improve performance across the network. The result is stronger operational and financial performance for clients, including faster payment decisions, accelerated time to payment, fewer errors and less rework across the revenue cycle.

Waystar processes more than 7.5 billion transactions annually. The scale of that network creates a unique combination of connectivity, data, workflow intelligence and payment intelligence that strengthens the value of the platform, supports innovation across the business and increasingly enables the application of AI across the revenue cycle. These advantages are reinforced by the 4 structural foundations you've heard me discuss previously, mission-critical infrastructure, proprietary data and extensively deployed network and deep domain expertise.

We believe these advantages contribute to the strong win rates we achieve and support our ability to compete successfully against point solutions, broader software platforms, end-to-end service providers and newer market entrants. Taken together, these strengths create a durable advantage that is difficult to replicate and increasingly valuable as providers look to reduce administrative burden, improve efficiency and drive better financial outcomes.

As we've discussed over the last several quarters, we continue advancing our vision of creating the industry's first autonomous revenue cycle. Our goal is not simply to deploy AI, it is to orchestrate the right AI at the right moment across the revenue cycle to reduce administrative burden, improve performance and deliver better outcomes for providers. Our AI deployment is not experimental. It is embedded and monetized, and it delivers meaningful outcomes inside the mission-critical workflows our clients rely on every day.

External recognition during the quarter provided additional validation of these efforts with Waystar named to the Time 100 Most influential Companies list and earning the Time Impact in AI award. More than a dozen clients have committed to our next-generation anomaly detection solution during the first half of the year. This solution represents an important step forward because it combines Iodine's clinical documentation capabilities with Waystar's revenue capture engine. We are encouraged by the interest it is generating from large hospitals and health systems. Early adopters are seeing approximately $3 million in incremental revenue recovered per 10,000 admissions through automated revenue leakage detection.

We are also seeing promising results from our newest Waystar Altitude AI-powered solution focused on care takebacks. U.S. Renal Care, a dialysis provider with more than 500 centers across 32 states, achieved an 88% autonomous match rate between recruitments and original claims, reducing the time spent managing recruitments by approximately 80%.

As we look ahead, we are focused on the same priorities that have guided us over the last several quarters, simplifying health care payments, driving innovation and delivering meaningful value for our clients, our team members and our shareholders. The fundamentals of the business are strong, client partnerships are healthy and our long-term opportunity is significant. We look forward to sharing more about our strategy, client adoption trends and long-term vision at the Investor Day in August.

Before I turn the call over to Steve, I want to take a moment to recognize him and thank him for everything he has done for Waystar. As we announced earlier today, Steve will be transitioning from the Chief Financial Officer role after 8 years with the company. Steve has been a tremendous leader, trusted adviser and great friend. He has played a critical role in helping build Waystar into the company we are today, helping us scale the business, build a world-class finance organization, navigate our IPO and establish the strong financial foundation that supports our continued growth today.

More importantly, Steve has been an invaluable partner to me and our leadership team. His judgment, integrity and steady leadership have had a lasting impact on this company, and we are all better because of his contributions. While Steve will be transitioning from the CFO role, he will remain with Waystar as an adviser over the coming months to help ensure a smooth transition.

We are pleased to welcome Alpana Wegner, who joined Waystar this week as our next CFO. Alpana brings extensive public company finance and software industry leadership experience, having served as CFO at several public software companies and held a variety of senior finance and operating leadership roles throughout her career. I look forward to introducing her to you in the coming weeks. Steve, thank you again. You've been a great partner and a great friend. On behalf of all of us at Waystar, thank you for your leadership, your friendship and everything you've done for this company. We wish you and your family the very best.

With that, I'll turn it over to you.

Thanks, Matt, and thank you for the kind words. Serving as CFO of War over the past 8 years has been one of the greatest privileges of my professional career. I've had the opportunity to work alongside an exceptional team, support incredible clients and be part of a remarkable journey. I'm incredibly proud of what we've built together and even more confident in where the company is headed. I want to thank our team members, clients, shareholders and the many friends I've made along the way for their trust, support and partnership. I'm grateful for the opportunity to have been part of this team and this company.

And with that, let me turn to the quarter. Revenue increased 18% year-over-year in the second quarter to $320 million and organic revenue grew 7% year-over-year. Excluding previously discussed items affecting comparability, normalized organic growth was approximately 10% in the quarter. Performance in the quarter reflects expansion across the client base, healthy adoption of high-value solutions and continued strong execution. Total booking value and expected margin composition again exceeded internal expectations. Bookings also include a double-digit count of $1 million-plus annual contract value engagements with activity continuing to skew towards larger platform deployments and new solutions such as the prebill demand Matt discussed.

Clients generating more than $100,000 of revenue in the last 12 months increased by 20 in the second quarter to 1,453 at quarter end, an increase of 15% year-over-year. Our net revenue retention rate also viewed on a last 12-month basis was 108% at the end of Q2. within our historical range of 108% to 110%. Subscription revenue of $176 million for the second quarter increased 34% year-over-year, 2% sequentially and was 55% of total revenue.

On an organic basis, subscription revenue grew 12% year-over-year, continuing to grow at a double-digit rate and reinforcing the health of the core Waystar business. Volume-based revenue of $142 million for the second quarter increased 3% year-over-year and 2% sequentially. Please recall the items impacting second quarter year-over-year comparability are volume-based. We are pleased that both subscription and volume-based revenue performance aligned with expectations indicated on our prior earnings call.

Adjusted EBITDA of $137 million for the second quarter increased 21.5% year-over-year. The adjusted EBITDA margin of 43% was consistent with the prior quarter and is indicative of the scalable nature of our platform model, disciplined cost management and the favorable margin profile of the solutions driving growth across the business. Our capital position remains strong with healthy cash flows as we ended the quarter with $192 million in cash, equivalents and short-term investments and $1.5 billion in gross debt.

In May, our Board of Directors authorized a stock repurchase plan for up to $200 million. And during the second quarter, we repurchased $13 million worth of Waystar stock at an average price of $19.24 per share. Unlevered free cash flow was $64 million in the second quarter, and we converted 47% of adjusted EBITDA to unlevered free cash flow. Cash flow and the conversion ratio reflect the typical timing of estimated federal tax payments in the quarter. Additionally, capital expenditures, including capitalized software development, increased year-over-year as we continue investing in AI platform capabilities that we believe will support future growth, drive greater automation and advance our vision for the autonomous revenue cycle over time. As of June 30, net leverage was 2.5x compared to 2.7x at the end of last quarter, which aligns with our historical ability to and cadence of delevering and is well below our goal of running the business at or below a 3x leverage ratio.

Based on our performance through the first half of 2026 and current expectations for the rest of the year, we are raising the low end of our revenue guidance range by $2 million, resulting in a revised guidance range of $1.276 billion to $1.294 billion and a midpoint of $1.285 billion, representing 17% year-over-year growth. We are also raising our adjusted EBITDA guidance to a range of $535 million to $545 million, with a midpoint of $540 million, an increase of $5 million versus prior guidance midpoint.

This concludes our opening remarks. With that, we are ready for your questions. Operator, please open the call.

Our first question comes from Ryan Daniels with William Blair.

Yes, Matt, a quick question for you, and congratulations to Steve on the announcement. Best wishes to you. I was hoping you could go into a little bit of detail about what you're hearing in the end market with kind of all the noise that's going on in health care with the ACH exchange lives rolling off into uninsured with Medicaid lives going down with OBVA likely to continue to push that down. I guess the question is, what are you seeing in regards to transaction volume or patient pay because of that? And then what are you hearing from your customers about demand for different solutions to help them combat some of those changes in the market?

Thank you, Ryan. I appreciate your thoughtful question and your well wishes for Steve. We are seeing the demand environment return to -- from a transaction utilization perspective, return to the long-term average of kind of that 1% to 2%. We know that the long-term secular trend is that 1% to 2%. In recent years, it's been higher based on probably a little bit of COVID catch-up maybe higher 3% or 4%. There are some trends that you rightly highlighted, whether it's a little bit of regulatory uncertainty around certain uninsured populations or things like that, the decrease in Medicaid lives covered that does create uninsurance. That really does create demand for Way start solutions.

When you think about what providers are most focused on, it is lowering the cost to collect, optimizing payment yield, whether from an insurance reimbursement or from a patient and reducing time to collect. We know that they want to use a platform approach versus a point solution because there's this point solution fatigue where many of them are using well over a dozen point solutions in a patchwork way to try to figure out how they can optimize their collections and address their patient population. And we think that, that is -- that setup is squarely within the line of what the value proposition is for Waystar solutions.

We know that our solutions are mission-critical that they could be very helpful to providers in addressing the utilization environment, helping them do more with less, helping them have optionality to address the self-pay population or the uninsured population with many of the software modules and capabilities that we have on Waystar's platform and certainly to continue to optimize and detect coverage where a patient may be eligible for coverage, our solutions use AI to detect that coverage. And so we think those factors all contribute to a strong demand environment that we see at Waystar and have contributed to strong bookings momentum and a robust pipeline as we address the second half of the year.

Our next question comes from Michael Cherny with Leerink Partners.

Maybe if I can delve a little bit on Ryan's question, thinking about the end market. As you go into RFPs and really nice to see some of these business wins, but especially now as you go in with iodine, what is the pitch that you're making? And are you seeing any different responses either against module components or potentially embedded EHR players as you drive towards your NRR levels and other new wins that you saw in the quarter?

Thank you, Michael. We are seeing client interest in combining clinical and financial intelligence. And that's exactly the opportunity that we saw when we acquired Iodine. We know that in doing so, what we're doing is effectively reaching further upstream into the clinical workflows and beginning there, working to prevent denials from occurring in the first place, which really helps providers, working to detect anomalies where as they begin to form a claim, we want that claim to be highly accurate. So we're deploying AI to help them.

We've seen some really nice wins, as we called out in our prepared remarks in the quarter, more than $6 million of some of the pre-bill anomaly detection capabilities that really come about because now Iodine and Waystar are one company. And we see strong pipeline and momentum in that regard. And again, all of it is oriented toward what our vision was at the outset of acquiring Iodine, which was to use Iodine as the AI engine to help form new solutions that are AI-based that can thematically prevent denials from occurring and create that perfect undeniable claim that will lead to accurate and timely payment. So we do like the setup, and we feel good about the strategy, believe it's intact.

Our next question comes from Steven Valiquette with Mizuho Securities.

Just kind of a high-level question. Just kind of curious about just overall RCM platform approach. Obviously, now you have iodine with CDI software. A lot of vendors sell medical coding software and CDI together. Just curious about your appetite for other vertical solutions within RCM to kind of round things out? And does medical coding software make sense tied into CDI?

Hanks, Steven. We're absolutely focused on building toward the robust autonomous revenue cycle solution. And again, the acquisition and the strategic logic of why iodine is very much a part of that vision because we're uniting the front end of our platform with the middle part, that perfect puzzle piece that you've heard me describe in quarters past with the back-end clearinghouse capabilities, which, as you all know, the clearinghouse is the heart and soul of the revenue cycle because that's where all the things that you do building up to payment, that's where the action -- the rubber hits the road, so to speak, and where the action occurs.

And so really, our platform is a system of action, and it's driving real benefit. within the mid-cycle, you highlight some important things that we believe that we have the right to do or the right to partner with others in the space. So on the one end of the clinical documentation improvement capability where, again, Iodine is deploying over 150 AI models and delivering more and more all the time. There is the ambient listening category. We know those players and there's opportunity for us to partner there.

On the other end, you highlighted coding. And in particular, there's the autonomous coding category or the auto coding category. With all the work that we're doing, we believe that we have the right to explore that area and expand our addressable market opportunity. We certainly are studying that space carefully, and I won't say more than that at this point in time. But again, when you look long term at what we're building toward, envision this autonomously acting revenue cycle platform where a lot of work is shifting from automated work to orchestrated work by agents acting on behalf of revenue cycle experts to create that perfect round-the-clock behaving solution that benefits providers and creates a highly informed patient who can engage in their financial responsibility where we seek payments as well.

That's where we're headed. And I hope my answer helps address some of the ways we're thinking about added opportunity in the middle part of the revenue cycle.

Our next question comes from Scott Schoenhaus with KeyBanc.

So you noted the strength in the large provider clients and you talked about bookings. I'm just wondering on the RFP process specifically and the pipeline there. Are you seeing more large provider clients this year versus last year in your RFP process? And what are they coming specifically for? Is iodine like the lead catalyst for that? I'm just trying to get a better sense of the RFP process given all the concern around large hospital systems contemplating whether in-house or other third-party AI platforms here.

Yes. Thank you, Scott. We are seeing an uptick in RFPs, and we're participating in more RFPs, and that is leading to the types of strong bookings results that we see. And because these are larger wins, recent wins and as we look ahead in our robust pipeline, there are RFP activities going on within our bookings pipeline, these -- some of these are taking slightly longer to implement. And it's not just one solution. It's multiple solutions, front, middle or back and often all. And so that's thrilling for us to be able to participate in those things. We're creating delighted clients as we take them live.

And when I step back, Scott, this is what we were alluding to all the way back in 2024 when we were working to rapidly address not only the Phase 1, as you may have heard me talk about it, clients that needed rescuing when a competitor of ours was cyberattack and their network was taken down. But we alluded to a Phase 2, what we thought was going to be a longer tail of Phase 2. We didn't know how to time box it at the time. We didn't know how big it was going to be, but we had a sense that this was going to be a longer Phase 2. We're living in that now. And we have seen an uptick. Some of that uptick has already resulted in bookings, but we don't see that diminishing.

And we believe that Waystar is well positioned to continue to participate and to win given the strength of our win rates. I'd highlight in our prepared remarks that class report that named us a top platform solution. It's an inaugural report in this topic. We were thrilled with that. And I think that's an evidence point for how we're positioning Waystar to be successful in this exciting Phase I that you've heard us talk about.

Our next question comes from Brian Peterson with Raymond James.

Congrats on the strong bookings. So I wanted to unpack the transaction component a bit. And how did that trend versus your internal expectations in the quarter? It looks like the patient volume was up a bit, but the provider was down. Is there anything that you can share that gives us more context on that?

Yes. Thanks, Brian. This is Steve. I'll take that. So I'd say for the quarter, the patient utilization aligns with both our expectations and with overall guidance for the year. And as Matt alluded to earlier, it's in line with what we've seen from a long-term historical annual uplift year-over-year, recognizing that we're looking at a tough comp when we're looking at '26 versus '25 because those that utilization was elevated in '25. To your question, and I'll probably specify a little more on the volume-based revenue. We talked about that in the past being about 45% of revenue, $142 million in the quarter. That is up 3% year-over-year.

If you were to normalize the items that we talked about that on prior calls, whether they were specific to '25 or earlier in '26, that volume-based revenue on a normalized basis is more like 8% year-over-year. So we feel really good about, again, where it is for the quarter and then where we've seen it so far year-to-date versus our expectations from a guidance perspective, recognizing that it is in line with the long-term historical trends versus what we've experienced or seen in the last couple of years.

Yes. I mean I'd say, Brian, really quickly adding on to what Steve just highlighted. Speaking specifically, we called out those 3 large client implementations a year ago in '25 that we were able to take live on a very compressed time line. And as we noted then, they were larger and the nature of the agreements we had with them were transactional volume based. And so that's part of what leads to the year-over-year comp that optically looks the way it does. But we feel good about the volume-based aspect of our business and the growth opportunity there.

Our next question comes from Brian Tanquilut with Jefferies.

Steve, and good luck with the move. So maybe just my question, as I think about guidance and the move on the EBITDA range, you beat by $7 million in Q1, $6 million in Q2 roughly. Just curious, is there anything we should be thinking about in the back half of the year that's kind of preventing you from guiding at least by the beat that you've seen this year?

Bryan, thank you. So first, we're pleased with the performance of the business. This is the ninth consecutive quarter of beating analysts' expectations and consensus on both revenue and EBITDA. We have confidence in our full year outlook. And what I'd say is that a couple of thoughts on EBITDA production in particular. We have a number of internal initiatives that you've heard us talk about in the past. Some of those are AI operating leverage type initiatives that create improvement in gross margin, which I think you see show up in our P&L, also continued expansion of our adjusted EBITDA margin as noted in the quarter.

We're balancing that with the tremendous opportunity we see to continue to invest for the long-term growth of the business. And that is additional growth investments in AI and continuing to position Waystar to be the category leader of this AI-first autonomous revenue cycle platform. So we are certainly confident in our full year guide on revenue and EBITDA, but we want to reserve a little bit of room for us to invest as appropriate. And by the way, we think that the 40-plus percent adjusted EBITDA margins that we're delivering are great because it is putting us in a strong capital position as you see us driving free cash flow. Steve, would you highlight anything incrementally?

Yes. Just to tie out what Matt just said, as you look through the entirety of the financials, Brian, I just -- and you saw it in my prepared remarks call out the capital software spend where it's capitalized software spend where it ties directly into what Matt said about focused on driving new solutions and implementing and inserting AI into our existing platform to round out the capabilities and drive an already impressive ROI for our clients even higher. If you looked at the capitalized software spend in the first half of the year, you'd see is roughly double what it was in 2025, and that is a reflection of how we're investing, as Matt said, into the products today to drive revenue growth for the future.

And I'd say we're doing it in a very thoughtful manner as well as you could see that from the unlevered free cash flow conversion of adjusted EBITDA being 47% in the quarter. I mentioned a couple of other items out there. But we're looking to invest in and spend it in prudent manners. And to Matt's point, just to circle back to it, we would expect some of that to be flowing through to the P&L in the second half of the year. And really, as we look at the full year guide of 42% adjusted EBITDA margin, I think that's phenomenal based upon how we're looking to invest for the future while being stewards of the business today.

Our next question comes from Elizabeth Anderson with Evercore ISI.

This is Ash on for Elizabeth. You've talked about the 6- to 18-month lead time for larger bookings a couple of quarters ago. And as you scale this number of $1 million contracts, as you kind of mentioned in the prepared remarks, are you seeing that range tighten closer to like 0 to 12 months now? Or is 6 to 18 months sort of the right way to still think about it?

Thank you, Yushan and Giv Elizabeth our best. We -- I'd say -- it's that 6 to 18 months is still generally how we're thinking about it. There's -- we're certainly working to pull that in as tight as we can see once in a while, people moving much faster, and we're always grateful for that as we position ourselves to win. But most often, it's a very deliberate, thoughtful process that provider decision-makers go through -- and it tends to be that 6 to 18 months, especially for the larger deals that -- where we've highlighted some examples. The good news is we have a robust growth team. We have a proven track record in how we go and discover opportunities in accounts, we're able to sell the full platform.

And but we're also able to go to where the clients need help the most. And so sometimes the variability there is if the client wants help or the prospect wants helping 1 particular area, that might be more 6 to 9 to 12 months if they want the full platform for multiple solutions on the form, like what we're seeing that the traditional average for us of 6% to 18% tends to hold true. So it's a proven method and we're always working to compress it because we know the benefits of doing so on our P&L, but we've got a great team pursuing it.

Our next question comes from Ryan Halsted with RBC Capital Markets.

I thought maybe you could comment just on the NRR, which has been kind of steadily stepping down appreciating kind of all the color you've offered so far on the business. It would be helpful just to kind of hear it in the context of NRR in terms of the moving parts. Should we be reading into it some impact of the volume-based business? Or is it sort of a lack of upsell? Or is there even some attrition? Any sort of color on the inputs that go into the NRR would be helpful.

Yes, certainly, Ryan, this is Steve. So first off, I'd say we view the NRR, the LTM view of 108 for this quarter is very healthy in alignment with our long-term historical sort of NRR rate. We talked about before and obviously, there's a slide that we included in our investor deck that shows the bridge from gross revenue retention to Par. And if you look at those components, gross revenue retention continues to remain very strong at 97%. The sort of the trend that you're noticing is a factor primarily of 2 things. One is declines in times of rapid revenue that Matt had mentioned earlier, how they benefited NRR for the quarterly period. I think around Q2 of through Q1 of '26. So that added to what historically we had seen. And then the fact that we had higher utilization rates through the middle to about the, I'll call it, midway through the second half of 2025 also had a positive benefit and impact on that.

So if you look at that slide in the -- again, in our IR deck, you'd see that Historically, it's been about 108 to 110 and the components that lead from gross to net are all in about those same ranges that are indicated on that slide. So -- we're very comfortable with the 108, and I wouldn't read more into it than we've just had some tailwind items the past few quarters that have allowed it to be beneficial and above that. that historical 108 to 110 range.

Our next question comes from Richard Close with Canaccord Genuity.

Steve enjoyed working with you over the last several years. With respect to -- you have a strong partnership with Google on the AI front. I'm just, Steve, curious maybe what you're seeing in terms of cost to compute as AI is integrated into your platform and how that gets baked into your guidance, how you think about cost of compute.

Yes. Thanks, Richard, for the kind words. And I'd say, as Matt talked earlier on the call about the internal initiatives that we have that are always ongoing that are looking to add scalability to our overall operating profile. One of the things that we know that, and the reinvestment areas that we've talked about previously, 1 of those areas that we know will -- we will utilize from the benefits of those operational activities just to cover things like cost to compute without impacting our overall margin profile. You could probably see that in the first couple of quarters here with not only a calculatable gross margin remaining at about 70%, which is in line with where we were in the back half of '25.

But the overall adjusted EBITDA margin as well as we look all the way through the P&L. So I think we feel really good about how we set the contract with Google and sort of the cost structure that we have in with that, without going into too much detail and feel like the other areas where we would expect cost to compute just to normally and appropriately increase as we continue to sell more and more AI and AI solutions or AI-enabled solutions into our client base. We feel very good about the other areas that we have ongoing that will allow us to absorb those for lack of a better phrasing.

Matt, anything else you'd add to that?

Yes. I'd add a couple of things. Thanks, Steve. So first, token expense is all the rage in the broader market discussion isn't it. It is -- and people are worried about the use or consumption of tokens and trying to manage and govern those broadly. And it's interesting to follow the broader industry conversation, which I'm sure you're all following. What we do at Wave star, we have an internal governance model and AI governance approach that really could be exportable, and we could help our clients manage the way they think about AI. As we create this operating system approach for the autonomous revenue cycle, we expect to deliver foundation model capability, a genetic capability while carefully and thoughtfully managing token expense and use of foundation model expense on behalf of the clients that we serve.

And we've got a unique approach. I appreciate you highlighting the relationship that we have with Google. It's a very constructive relationship. Again, we like the fact that they're a hyperscaler doing some very progressive things we're gaining the benefit of that as our teams are spending time co-developing on-site together, and there's some really breakthrough things that we're focused on. But amongst those is the importance of getting a grasp on governing the use of those models.

So while we've trained 100% of our internal team and given 100% of our internal team access to various foundation models to do real work. We're also taking approach thoughtfully to how to govern expense internally and also on behalf of the clients. And I think we'll see a steady long-term view that we can do so effectively.

Our next question comes from George Hill with DB.

I've got kind of 2 quick ones. I guess, Steve, can you talk about, given the slowdown in the volume-based growth, kind of what's embedded in the guidance for the back half of the year? And if that's like a number that continues to grow in the 3% range or if we should expect to see a continued deceleration there? And then my other kind of follow-up is like can you talk a little bit where the leverage in the model is coming in because the revenue guide for the year is up modestly, while the EBITDA guide is up significantly more than the revenue guide, like so I'd say so from a margin perspective, like that math doesn't perfectly mass. But like clearly, there's costs coming out there the revenues rolling on? Or would just kind of love to understand the dynamics between the revenue guide and the increase in the EBITDA guidance.

Yes, certainly, George. Just a couple of things. As you think about volume-based revenue for the rest of the year, the baseline for that is pain utilization of the health care system. And we talked our original guidance was for the impact for us, which is generally about a 1% to 2% uplift annually year-over-year, that was our expectation going into the year. That expectation hasn't changed. If you think about the 3% year-over-year increase on the volume-based side for the second quarter, I'd ask you to think about it in terms of the guidance for the full year, that normalized organic rate of 8% that I mentioned earlier in the call. So if you're looking at sort of how to impact that from a year-over-year perspective, and then I'd say, as you think about.

And your question about the revenue range and the uplift in the midpoint of guidance of $1 million versus the adjusted EBITDA uplift at the midpoint of range in guidance of $5 million, it's a factor of a couple of things. It's a reflection of where we've run the business for the first half of the year. and specifically from an adjusted EBITDA perspective there at 43%. While we still expect 42% for the full year, partially want to be able to recognize that we've run the business a little above our full year expectation at the beginning of the year.

And Matt and I talked about a little earlier on the call, just as a reminder, the areas of where we're looking to invest in AI and how we expect that to impact the back half of the year. The other piece to that is we've made a comment in not only on this call but in the last call in our prepared comments about the revenue mix and how we continue to see the revenue and the bookings and then how it's translating into revenue from higher-margin deals and it's a reflection of that factor as well that we continue to see the margin profile from the bookings side of things and how some of those are of the shorter time line being reflected in the P&L and feel really good about that factor as well.

And obviously, that's good for the business. That gives us additional ability to look at how we want to utilize those funds investing in or otherwise throughout the business.

Our next question comes from Allen Lutz with Bank of America.

First, Steve, it was great working with you, best wishes moving forward. I have 2 questions in 1 here. Last quarter, AI was 40% of bookings. I don't know if you provided what it was this quarter. But if you are going to provide it, can you let us know what that was? And then, Steve, as we think about the level of capitalized software, as you talked about earlier in the call, it's gone up over the past year and over the past couple of quarters. Can you talk about this level of capitalized software? Is this the right run rate -- and then as we think about the duration of the higher capitalized software spend, is there any time frame that you can give for us there?

Yes, certainly, Allan. I'll start with the first one. We saw again a very good composition and mix this quarter from a bookings perspective of AI-enabled solutions. To answer your question specifically, that's approximately 40% again. in this quarter. So feel really good about where we sit, not only for the quarter but for the year-to-date. On the capital capitalized software development cost front, I think that if we're looking at a very near-term run rate and our expectation through the rest of 2026, sorry, I would think that what we've seen in the first couple of orders here in 2025 are a good indication of what we see for the rest of the year. Absent our -- we'll reserve the right, if I can use that phrase, too. As we continue to understand where our opportunities are to rapidly bring new solutions to market and continue to differentiate ourselves versus the competition. We may go a little higher than what we've seen for the first couple of quarters from a run rate perspective. But I think we feel really good about our capabilities today and reserve the right to increase a little bit more.

Obviously, keeping in tune with our and conscious of our longer free cash flow conversion rate. I don't think you'd see us do something like some of the hyperscalers have done and which would mean looking at going negative from a cash flow perspective, not at all.

Matt, I don't know what else?

I would say it's a great question. I'd say we're working to meet this unique moment in time. We feel like we've got a great position to be a category leader to build the market's first and most robust autonomous revenue cycle platform. And so you have seen us step up our cap software spend. We're doing a number of things internally that are allowing us to accelerate the ability to deliver AI-powered solutions models to do specific work that we know based on some testing that we're doing with clients that these are things that are going to produce good outcomes.

And so we -- you'll see us be disciplined but we, at the same time, want to meet this unique moment in time, which is why we've doubled the cap software spend thus far. And we'll continue to track and report to the group. The nice setup for us is that we have a strong P&L that produces growth -- compounding growth and good free cash flow conversion from strong EBITDA performance, and it gives us optionality to do the right thing for the business that will create long-term shareholder benefit and client benefit just given our position in the market.

Our next question comes from Craig Hettenbach with Morgan Stanley.

On just 2026 guidance. So kind of implied for the back half is roughly unchanged. Anything you would call out between Q3 and Q4 and then as you think through the larger deal sizes, some that are extending out to 18 months for ramp up, how do you think about the visibility as you head into next year?

Yes. Craig, this is Steve. So we would expect from a second half of the year dynamic to your question specifically on Q3 and Q4 in that portion of the volume-based business that we have that are surrounding the patient, the collections from the patients, that's about 15% of overall revenue. It typically has dynamic whereas those patients that are on high deductible plans meet those deductible plans they would have slightly lower revenue in the fourth quarter versus the third quarter. We would still expect that seasonality component to exist similar to prior years. As we think about these large deals that we've talked about, the $1 million-plus signings, I think it gives us really good visibility and confidence as we look out into the future.

And specifically, we've talked in the passed about and we mentioned earlier on the call about the Iodine solutions that we're seeing cross-sell from it gives us real good encouragement and confidence in the comments we've made historically about the time to revenue from those cross-sell items and impact in 2027 and feel highly confident that, that opportunity still exists out here today as well as, obviously, the overall visibility from those million-dollar-plus agreements.

Yes, I think that's right. I mean I think 26 feels like it's about sales execution and setting up implementations, we expect revenue contribution and platform benefits to become increasingly visible through 27. And as Steve said, it does give us added confidence and conviction that the long term is performing well.

And our final question comes from Charles Reed with TD Cowen.

Yes. And Steve, nice working with you a good look in the future. I guess maybe I want to follow up on an earlier question that Matt and see if you kind of responded to you. When we think about competition, and obviously, the concerns are -- there are some concerns here that big health systems can leverage sort of added services from their EHR vendor who are trying to move into rev cycle. And I understand the value proposition that you guys are presenting in sort of the greater ROI that you would -- that customer is going to expect from deploying Westar. But can you talk a little bit about then when you're in discussion in the pipeline? Do you run into a situation where our customers say, "Well, we can just try this first and then see how that goes and then we'll come back? Or is there an understanding that recycle mission-critical it is, it's -- there's no -- maybe there's just not that value to try something that's maybe not as good, but just trying to understand a little bit the decision tree that clients could be going through or are going through and sort of how that fits into your discussions.

Yes. Thanks, Charles. This is a good question for us to address. Speaking of the large EHR systems, what I'd say is revenue cycle management isn't simply an extension of the EHR. It's not a natural extension to the EHR because it's a different development cycle. It requires different connection to payers. It's a different cadence, et cetera. And I'd say the large EHR vendors, they're important partners to us. We're grateful for their partnership. We work with nearly 2,000 hospitals and many of them use these large EHR solutions. I think where we see the decision tree is -- and by the way, we haven't really noted a change in the competitive environment.

So I think that's a really work to establish here. The decision tree, first and foremost, clients want outcomes. They prioritized outcomes and ROI more than they do novelty, point solution and free or built-in cost. So they really want outcomes because if you don't change outcomes, then you could have a free or included solution that becomes very expensive because if your deal rate stayed at 15%, that's a very expensive solution.

The second point is in the prioritization or decision tree of things is not only do they want outcomes. They want to see it from 1 end to the other. So if you think about some of these large EHR systems like empathic. Epic is the EHR system of record in many of these hospitals. Cerner is another one. MEDITECH is another one. We're grateful to work with each of them. But where they are the system of record, Westar is the system of action and our only focus is to build the best solutions that create the best outcomes in the revenue cycle for our clients. That's all we do.

So we think that as much as you hear about a BHR first approach, you could -- we think that there's a waste or first approach. And we work well in many places with EHR systems of record where waste started a system of action. And we have many evidences of where we're winning and securing business where a minimum viable product or an announced solution isn't showing up in the market and achieving the goal that, that provider is looking to achieve. -- they're looking for benefit today, and we're giving them benefit today.

So that's kind of how I'd respond to that. And again, grateful for the partners that we have. We serve and work with integrated with over 500 effort EHR vendors and over 200 active channel partners, and we're grateful to be that system of action and that waste our first approach to so many. So as we wrap up today, let me thank everybody for the time and the call, and we look forward to -- I'd like to also thank our team for helping us produce these results. We feel so grateful to serve the clients that we do. And we're grateful for your thoughtful questions today. So thanks, everybody.

This concludes today's conference call. Thank you for participating. You may now disconnect.

All right, everyone, let's go ahead and get started, please. Again, good morning. Welcome back to our session with Waystar. For those of you whom I've not yet met, my name is Ryan Daniels. I'm the health care IT and services analyst here. So very excited to have Matt Hawkins, the CEO of Waystar, with us for the second year, both at our conference and as a public company.

Waystar is a great HCIT holdings, one of our favorite names. It's a company that really sells into the marketplace, we think has very strong demand for services as hospitals continue to face pressure and look towards trusted providers to help them both increase their margins and cash flows and to provide a better experience for their patients and their providers. It's an integrated offering, which we think is in demand, single contract, cybersecure value-added offering that's totally comprehensive.

And really one unique thing we didn't even talk about a year ago is AI. And this is a company, I think, is really well positioned to benefit from that, not threatened by that. So it's offering new products. It's adding value to existing products, which helps with retention and cross-sells. And it's a company that sees an enormous outsourcing market that can move to in-source software as they continue to develop. So it's an expanding TAM, and we see accelerating growth going forward.

So super excited to have Matt here to tell you a little bit more about the story. A couple of quick housekeeping items. I'm required to inform you that disclosures are available at our website at williamblair.com. And second, we'll head up to Richardson. That's on the second floor where we'll do the Q&A. So without further ado, I'll turn it over to Matt to talk a little bit more about the story.

Appreciate it, Ryan. Thank you so much. Ryan basically just gave the story. So thank you for that kind introduction. I'm Matt Hawkins, and I'm the CEO of Waystar. I helped form Waystar with a fabulous team of people in the fall of 2017. And our hypothesis at the time was that provider organizations would absolutely need technology to simplify the way they get paid from both insurance companies and increasingly directly from patients.

And so we formed Waystar then, and we were dreaming about the opportunities that we're seeing in the market today all the way back then. So I look forward to introducing Waystar to you. I'm going to speak to what I assume is a crowd of some experts, health care experts, but also some non-health care experts and a generalist audience, if that's okay. And I look forward to following up in a potential Q&A session afterward and delighted to be more specific.

But as far as overviews are concerned, let's jump in and get going here. Our mission is to use technology in modern ways to help create efficiency and reduce the friction in the payment process in health care, often referred to as the revenue cycle, a series of tasks and steps that historically have been done very manually that increasingly is done with cloud-based software that deploys AI to automate work, to prioritize tasks and organize work and ultimately to eliminate the need for human intervention altogether. And if we can do that, then the exciting future is that provider organizations will have more time to dedicate toward caring for patients and way less time focused on the administrative burden and trying to figure out how they're going to get paid. So it's a very exciting thing that we're endeavoring to do.

We're at a critical inflection point in health care, where we just need to change what happens. As you likely know, health care represents about 20% of the U.S. GDP as far as spend is concerned. And within that $4 trillion plus of annual spend, there's a tremendous amount of administrative burden. By most estimates, it's nearly $0.5 trillion of spend just trying to administer these increasingly complex provider organizations who have consolidated together and you recognize many of their names. I'll speak to a few of them in a second.

Hospitals are now joined with other hospitals. They either own or affiliate with physician networks, post-acute or non-acute sites of care, all in a single system. And they're all trying to get paid accurately in the face of real difficulty. They face staffing shortages. They face friction in the insurance claim submission process that results in annual denials being about 18% of every claim that gets submitted is initially denied by an insurance payer. That's a byproduct of the fact that there's all sorts of manual work that takes place, a lot of error embedded in that manual work.

And consequently, sometimes providers don't get paid at all. So they're writing off services that they've performed that they're rightfully able to collect on as bad debt because they don't get paid and/or they're under coding claims so that they're not even accurately reflective of the health care occurrence or health service that has occurred. All the while, the backdrop is more and more patients in the United States of America are participating in high deductible health plans or they're self-insured and they have to come out of pocket for their own form of payment. And provider organizations historically have not been equipped to deal with patient collections.

So here comes Waystar to the rescue. Our vision and what we're working on building, and I'll tell you how we're getting there, and it's very exciting, is a world where there's an autonomous revenue management platform that does work automatically, where the need for manual intervention is overcome through technology that generates insights, that learns through the processing of transactions that resulted in a successful outcome and that connects providers to payers and to patients across the entire ecosystem where we ultimately create an outstanding experience for providers that enable those providers to care for patients very efficiently and also delight patients along the way.

When you think about Waystar, knowing that this may be an introduction to many of you and a new story to many of you and a familiar story to some, we'd ask that you think about us as a cloud-native platform, a platform where we're deploying hundreds and hundreds of feature improvements and capability gains in a typical quarter to the 1 million-plus providers that we serve.

We offer market-leading AI solutions that are powered by the work that we do with Google Gemini. The more modern generative AI capabilities and foundation model solutions are powerful and we're seeing increasing adoption. In fact, 40% of our bookings in the first quarter of '26 came from modern AI native solutions. We're thrilled with that. And what's exciting is that as providers consume our platform, and I'll show it to you in just a moment, they're consuming AI on the platform in ways that are intuitive to them, as most of you know.

AI capability is quite frankly, ahead of where the human factor is in some cases. And so what prohibits adoption is amongst some is just figuring out where do I put AI in to do this task? And how do I cybersecure it? How do I normalize the use of it in my work environment? We deliver a cloud-native platform that deploys AI to help bring that capability to providers in very intuitive ways that delight them, and we love that.

Our solutions are mission-critical. We want you to know that. This is the true definition of mission criticality. If you use our solutions, you get paid. If you don't use our solutions, your organizations don't get paid. And so in the prioritization of all the things that providers have to grapple with and face, they tend to prioritize revenue cycle as a category and therefore, our platform as a category because it's vital to how they operate, and we're bringing clarity and simplicity to their environments. We have proven and durable solutions and outcomes. And I'll show you an example of a few of those in just a moment.

There's very little tolerance for air in a highly regulated industry like health care. You don't vibe code something overnight and then deploy it because of the tolerance for air is so low. The cost for being wrong is very high due to penalties in how you handle and manage data and how that data ultimately is deployed to effectuate payment. We have a massive proprietary data advantage that I'll describe to you in just a moment.

When you look at our platform and what we're building, we're very excited about our increasing market reach. We serve over 1 million providers, as I mentioned a moment ago, across more than 30,000 client organizations. We have fabulous diversification in our business. In fact, our top 10 clients account for about 11% of our revenue composition. We reach through the providers that we serve, approximately 60% of the U.S. patient population each year. Now we may only have -- if you were to take a typical patient, they may have 10 health care encounters a year. We may only help a provider interact with one of those 10, but nevertheless, we're reaching them. We're helping to facilitate and optimize an interaction between provider and patient that we know statistically delights both.

Within our software, we're processing 1 out of every 3 clinical patient discharges from an acute setting in the United States. So in addition to the more than 7.5 billion insurance transactions we process each year that constitute nearly $2.5 trillion of gross claim charges, we get tremendous clinical information that we're able to use because we're a covered entity and we're a modern network, we naturally aggregate information as it flows and passes through our system. And that proprietary data gives us the right -- we're able to use that data in most cases, to be able to train our software, train the AI models that we deploy to continuously improve.

You can see our software is a workflow platform. It's a cockpit, if you will, organized from the front end of the experience that maps a patient's journey interacting with the provider to the clinical middle part to the back-end reimbursement and collection and payment remittance part. We have software modules that basically reduce the need for manual work. Beginning at the front end through things like insurance eligibility detection, we help providers understand whether or not a patient has any form of insurance. We also can detect insurance coverage for a patient if they show up to see a provider and they may not even know if they have access to insurance. There's something very noble about that.

Understanding the patient's wherewithal and insurance, we run things like propensity to pay algorithms in the background. So we help the provider understand who that patient is. For example, a patient may have the wherewithal to pay, but they may have been conditioned to not pay their health care bill the first time they see it. And so we help educate the provider who the patient is. If the patient is a self-insured case or a self-paid case, we also can help the provider understand if that patient is eligible for charity care. And if they're eligible for charity care, the provider sees the patient and then the cost of that service is often added to a charity care dollar amount that the provider is performing each year. And they typically get a tax credit or some favorable treatment by the government for caring for that patient. So it's all a net good thing.

When you move to the middle part of our business, that historically very difficult part of the accounting or reckoning for the health care interaction between a provider and a patient when the provider sees the patient, then they have to document what they actually did so they can accurately account for and form an insurance claim and then submit that claim to the payer and get reimbursed for it.

What's interesting is we have AI. In fact, we deploy over 150 AI models beginning at the front end of that clinical interaction between provider and patient, oftentimes taking unstructured clinical information from the patient chart as either notated or scribed by the provider. And then through filtration, we're able to, on the other end of that middle part of the revenue cycle, accurately account for the diagnostic codes used that reflect the encounter that the provider had with the patient, use those diagnostic codes in the formation of a highly accurate claim.

You can see where this is going, right? Historically, that was done very manually. So sometimes there was missing charges or codes. Sometimes it wasn't accurate at all. Sometimes there was overcoding. And so what our software using AI does is create an accurate reflection of the encounter that then we use to create the perfect claim that cannot be denied. And when we do that, we reduce the need for manual work, manual rework or errors tremendously, and we help drive to accurate payment quickly.

In the minds of provider decision-makers, our software helps address 4 things. The first is we help reduce the overall cost to collect. Historically, the average in the industry is about anywhere from 6% to 7% or 10% of that is software, let's say, and 90% of that is human labor. What we do invert that, where we can say 80% of that should be addressable with technology, 20% of that could be keeping an expert human in the loop to monitor the progress while we lower the cost to collect.

The second thing is we also drive to more accurate payment. That's what providers want. That's what payers want, too, and that's what patients want. And through the use of technology, smart technology, we're running algorithms to test and detect across the 7.5 billion proprietary data points that we process each year on our platform to help the provider understand, yes, this is an accurate combination of codes that can be used to submit a claim. The third, of course, is to compress the time to payment. And statistically, as I'll show you in a moment, we do just that.

Fourth, of course, is the need for a cybersecure working platform and a solution. The penalty for not being cybersecure is very high. And we take our cyber posture very seriously in a world of bad actors. We're mindful and try to be dutiful. And increasingly, as we interact with provider decision makers as they see our software platform. They ask us to attest for cybersecurity because of the demand and the need for that throughout their organizations.

We often displace point solutions. A point solution might be represented by any one of those small plus signs toward the bottom. But when we deploy our software and we show up in a competitive environment, we often talk about the benefits of using more and more of our platform and expanding the relationships with clients over time as we displace point solutions historically.

We believe that there are at least 4 pillars that enable Waystar's right to win in AI. First, we have a mission-critical system of record and system of action that drives to real outcomes in the reduction of cost to collect in the optimization for yield on each insurance claim we process and the compression of time to collect while being cybersecure. And we're doing it at scale. We also have an unmatched proprietary data advantage given the massive data that we custody and curate and are able to use in HIPAA-compliant ways to drive decisions to create optimized tools that help providers and to reduce the need for manual work.

And imagine in your minds, there's a lot of talk about AI today. Imagine that if everybody is using a foundation model at the same pace, then what foundation model use doesn't become the long-term advantage if we're all using foundation models? There's a asymmetry at the pace at some future point. So the advantage has to become something else. We believe that proprietary data is at the heart of our advantage.

We also have a very deeply deployed network. And by that, I mean, we're deployed across over 1 million providers who reach to every insurance company in the United States, and we connect to all the different -- more than 530 different practice management and electronic health record systems. Deeply deployed, hard to displace or disrupt because of the value that we're creating for the providers that we serve. And we have domain expertise that act as deployed engineer equivalents that are constantly sitting chair side next to provider team members doing work in the revenue cycle to optimize the experience and to ideate around the future of what's possible.

I tell you, I get pretty excited about this but where the industry is headed is from a traditional RCM on the left, which is often siloed set of information, disparate data points to a more organized unified RCM in the middle, where now you have a cohesive platform, you have access to data that you can unify to begin to draw insights from, as I've described, to optimize your insurance coverage detection process at scale, to optimize your prior authorization automation and understand when you need to include medical necessity-based justification to the payer along the way, et cetera, et cetera.

So this is shared intelligence, shared data to create insights and opportunities and orchestrate what AI should be used at what moment in time. Not all AI is created equal or necessary. Foundation model AI is very expensive. The cost of tokens are very expensive. And in some cases, you need to deploy foundation models to be able to derive the benefit for -- that you're trying to achieve. In other cases, depending on how your data is organized and ours is organized in a cohesive platform, a unified data model, you can actually deploy a much more cost-effective instead of large language model, small language model on a look at data and manage the cost and orchestrate to bring the right AI to the right use case.

Ultimately, deploying agent after agent. And Waystar, as I've said earlier in the year, we're committed to deploying multiple agents through the course of '26 and beyond. We're marching our path toward the autonomous revenue cycle management platform. And at some point, we'll do away with the term cycle, and it will just be the autonomous revenue management platform. Work being performed oftentimes without an end user even knowing it behind the scenes while the organization, the patient as the individual and the payer all get the benefit from that type of platform. We believe that this is the way of the future and that Waystar is well positioned to march our way toward that.

We deploy a number of agents already, as you've heard me describe, and algorithmic and AI capability. But imagine even further orchestration as we work our way into the use of more proprietary, well-organized data to look beyond the platform level and the user interface to the orchestration level and then down to utilize proprietary data where agents are benefiting from every transaction we process. They're getting smarter and smarter from front, middle and back of the revenue-generating experience.

Again, data and health care is a long time and persisting challenge. Data tends to be very siloed. You could go back 10 or 20 years and you might say -- and we work with 16 of the top 20 hospitals and health systems in the United States and nearly 2,000 hospitals overall. But the vast majority of our clients operate outside of hospitals, too. They operate in ambulatory settings, 10, 20 doc practices, so to speak, orthopedic surgery groups, primary care physicians, post-acute and non-acute sites of care. You can probably picture in your mind where historically, data has been very siloed in these entities, tough to aggregate. Therefore, it's tough to create insights and tough to know if you're working in a primary care physician group on the West Coast, how do you get insights from the insurance interactions of a primary care group operating in the Midwest or in the Southeast or the Northeast.

And because data has historically been siloed, it's been very tough to drive those insights. The nice thing about Waystar is, again, we have the right, given the fact that we are a covered entity and we're able to traffic in this information to appropriately and carefully custody this information, combine it with the clinical, administrative and financial information we use to then unlock unprecedented automation, unprecedented insights and unprecedented outcomes for the clients that we serve.

We're going after a large and addressable market. Historically, you'd say, well, this is about a $20 billion a year market, becoming a $25 billion a year market. The midpoint of our guide in 2026 from a revenue perspective is just shy of $1.3 billion. So we're a sizable business and growing into this addressable market opportunity. But we see even more addressable market opening up. If you were to look at the amount of dollars being spent for services being performed inside hospitals, health systems and throughout the country in these ambulatory settings, there are market estimates that it's nearly $100 billion plus of annual spend.

If we can deploy AI and modern capability that can eat into and displace the need for those services to occur altogether, we dramatically enhance the addressable market opportunity in front of us. And we're very excited about what we're seeing and what's on our road map to track toward that much larger addressable market.

We're grateful for the clients that we serve. These are market-leading institutions that operate, as you can see, in every care setting across the United States. We don't work with any clients outside the United States today because there's so much opportunity within the United States to drive improvement. In addition to all these clients, we also work with a number of channel partners. As I mentioned, there's over 530 integrations that we support. And of those 530 integrations, of practice management and EHR systems being used across the country. We support over 200 active channel partner relationships who give us the right to call into their practice management or EHR clients and then begin to use Waystar in coordination or as a linchpin to help those providers get the full benefit of our modern solution.

We also work with the outsourcing firms that you may recognize listed on the lower right-hand part of the page. Our platform drives meaningful impact. As I mentioned a moment ago, we're helping to reduce the likelihood that a claim gets denied. In 2025, after launching a brand-new AI-based solution, in 2025 alone, we help prevent nearly $16 billion of denials.

We bring financial visibility to providers who desperately need it to operate their organization successfully. Our first half claim acceptance rate across the billions of insurance transactions we process is nearly 99%, meaning the payer accepts the claim and is able to begin to adjudicate that. And if we know that statistically, we can do a bunch of analytics and create insights that would inform oftentimes preservice what the likely patient financial responsibility is or will be and empower the provider and the patient with that information through software and AI capability that we have.

We can deploy our software very rapidly, so there's a rapid time to value benefit. It's leading to quicker payments and increased revenue to provider organizations. And that's how we compete in the market. We have strong win rates and we've had record bookings quarters. In Q4 of '25, we had an all-time record booking quarter for us, inclusive for those that know our story of the period of time where we had a competitor that was cyber-attacked, and we helped several thousand providers begin to use Waystar in early 2024. So we're seeing demand and the 4 demand indicators for our business are high given the meaningful outcomes that we drive.

We're delighting clients. We're pleased with that. We're market leaders in positive Net Promoter Scores. Our Net Promoter Score of 74 puts us amongst the most trusted brands in the world. We are ranked first in the industry in satisfaction. And in a day and age where people are desirous to use AI, but they want to use it in trusted ways, client trust really matters. And so we're grateful for the recognition and acknowledgments that we're receiving along these lines.

I just would highlight as I close, that we had strong Q1 performance to start the year, 22% top line revenue growth, 26% adjusted EBITDA margin -- excuse me, adjusted EBITDA growth and 43% adjusted EBITDA margins. We generate cash that we use to build our balance sheet and gives us tremendous optionality to invest in the business, to smartly deploy our capital, and we have fabulous retention rates.

And the last thing I'd highlight is, as we look at the growth drivers for our business in the future, we feel like we have a track record of expanding within existing clients, adding new clients every quarter, deploying and launching new AI solutions that show up in meaningful ways to our business model, reaching the market through expanding channel partner relationships and adding incremental payer connections to our business with new novel interaction types and then certainly on occasion through being very disciplined in our approach to strategic M&A. We believe we can be a great home for some novel technologies that we could tuck in and add to our business.

So we're excited about this. And I thank you very much for your time today, and I look forward to those of you that have questions in the follow-up session. Thank you, Ryan, for hosting me.

Thank you.

Yes. I appreciate it.

Good day, and thank you for standing by. Welcome to the Waystar First Quarter 2026 Earnings Conference Call. [Operator Instructions] After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Edward Parker, Head of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining Waystar's First Quarter 2026 Earnings Call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer; and Steve Oreskovich, Waystar's Chief Financial Officer.

This afternoon, we issued a press release announcing our financial results and published an accompanying presentation deck. You can find these materials at investors.waystar.com. Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance.

Examples of these statements include expectations of future financial results, growth and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release and the reports we filed with the SEC all of which are available on the Investor Relations page of our website.

Any forward-looking statements made on this call are as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures. These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP.

We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck and our earnings release.

With that, let me turn the call over to Matt.

Thank you, Edward, and good afternoon, everyone. Thank you for joining our Q1 2026 Earnings Call. Waystar delivered a solid start to the year reflecting strong execution across the business and our innovation road map as we continue to position ourselves as the market leader in delivering an end-to-end health care revenue cycle platform.

We drove strong performance across the core business, built on our innovation momentum, including our recent innovation showcase and introduced a new AI-powered recruitment solution. What differentiates Waystar is the tangible value we deliver. Our platform is purpose-built and integrates powerful LMs into our core workflows to drive meaningful ROI for health care providers, improving accuracy, reducing friction and lowering the total cost of operating the revenue cycle.

As requirements expand across payers, policies and workflows, providers increasingly choose embedded solutions they trust that deliver consistent financial outcomes. Importantly, the AI era is expanding Waystar's total addressable market opportunity meaningfully. Historically, revenue cycle technology addressed a roughly $20 billion software market. As we embed Agentic AI directly into mission-critical workflows, we're building toward what we believe is the future of this industry, the autonomous revenue cycle platform.

That shift unlocks a much larger opportunity, the approximately $100 billion in annual revenue cycle labor services performed across the industry today. We believe we are well positioned to automate a meaningful portion of this labor pool through new AI-powered capability launches like denials, prior authorization and recoupment.

In Health Care, where regulation and risk defines success. This shift is critical, and Waystar is built to win. Our AI advantage is anchored in billions of proprietary longitudinal, financial and clinical data points, deeply integrated workflows with significant switching and disruption risk. Hard one domain expertise that positions us as the trusted AI partner and proven ability to operate at scale in an environment with little tolerance for hallucinations.

Our first quarter results reinforce our conviction. Revenue of $314 million, representing 22% year-over-year growth. Strong retention supported that performance with net revenue retention of approximately 111% alongside continued adoption of our AI platform and approximately 99% first pass acceptance rates across the platform. With that context, let me highlight a few key points from the quarter.

First, our core growth drivers are durable. Continued expansion across the platform and solid core execution drove our results. We expanded within our installed base and demand signals are strong. Second, AI traction is accelerating. AI-powered capabilities drove roughly 40% of new bookings in Q1 and our clients leaned into the platform for prevention, automation and visibility rather than downstream rework.

That shift reflects the value of embedded intelligence across the revenue cycle. Third, we maintained discipline through near-term headwinds. A few factors pressured patient payment volumes during the quarter, reflecting broader macro and weather-related dynamics, but we held financial discipline while continuing to invest in innovation.

Steve will expand on these dynamics shortly. Let me discuss the quarter in more detail. We continue to expand our client base in Q1, adding 42 new clients with more than $100,000 in trailing 12-month revenue. Win rates exceeded our historical averages across segments, and we continue to see RFP activity shift toward platform evaluations over point solutions, favoring Waystar's unified mission-critical platform. We also delivered strong bookings ahead of internal expectations and building on a record Q4. Demand was broad-based, driven by both new logo wins and expansions within our installed base.

We continue to build momentum with larger complex provider organizations as they consolidate vendors and standardize on a single platform. Our implementation backlog is elevated across segments. We carry what we believe is the largest qualified sales pipeline in our history, reflecting deep multiyear platform commitments from providers and supporting visibility into 2027.

Waystar delivered adjusted EBITDA of $135 million in Q1, representing an adjusted EBITDA margin of 43%. Revenue mix elevated the margin slightly above expectations, which Steve will discuss. We continue to balance profitability with targeted investment in innovation and AI.

Turning to iodine. Integration is running ahead of plan and continues to validate the strategic rationale of the acquisition. Iodine extends Waystar into the mid-cycle where clinical intelligence plays a critical role in preventing denials and ensuring compliant reimbursement. The convergence of financial and clinical data represents 1 of the largest unmet needs in the revenue cycle and new third-party research confirms it. A recent study of 50 mid-cycle leaders found that 86% of organizations have financial and clinical systems that are completely siloed or are reliant on manual data transfers resulting in a lack of visibility into payer payment and denial outcomes, 100% expressed interest in a single AI-powered platform to bridge the gap from mid-cycle to the final claim.

We'll publish the full study in the coming weeks, but these findings reinforce why we acquired Iodine and the demand signal we're seeing in the market. Iodine's AI talent is now fully integrated into Waystar, accelerating AI initiatives across the combined platform.

We're generating early cross-sell traction in both directions and go-to-market demand is exceeding our expectations. Last quarter, we outlined the 4 interconnected pillars that position Waystar to lead in the AI-powered revenue cycle. Now I'll focus on how those pillars translate into outcomes for providers. First, Waystar is the mission-critical infrastructure providers depend on to get paid, operating at scale in 1 of the most highly regulated payment environments, directly inside live revenue cycle workflows, eligibility, authorization, claims, denials, appeals and payments.

This results in very sticky long-term customer relationships. Second is our proprietary data at scale. We process over 7.5 billion transactions each year and with Iodine, our models now learn from clinical data on approximately 1/3 of U.S. hospital discharges annually, giving us visibility into the financial and clinical dimensions of reimbursement, not just what happened, but why?

Our models learn across hospitals, physician practices and ambulatory settings. Every claim, denial and payment improves performance. Clients benefit from patterns across tens of thousands of similar organizations. Third, Waystar operates a deeply deployed multisided network and proprietary data rails between payers and providers. We connect over 1 million providers to every major payer through 100,000-plus live integrations across electronic health records, practice management systems, clearing houses and clinical platforms.

We touch roughly 60% of the U.S. patient population each year, yet we only penetrate a small portion of the total transactions those patients generate. As volume increases, our platform delivers better outcomes. Fourth, Waystar combines scale distribution with deep domain expertise. We serve providers across all care settings with low client concentration, creating both resilience and broad reach. Our forward deployed teams, product, clinical, revenue integrity and client success work directly inside real workflows.

We develop and refine many of our AI capabilities in close partnership with clients, ensuring what we deliver works in production. With that foundation in place, let me turn briefly to how AI is operating and evolving across the platform today. At Waystar, AI is embedded directly inside workflows and where decisions are made and dollars move. The platform identifies issues upstream, resolves them inside live workflows and learns continuously from outcomes.

This quarter, we accelerated the shift from task level automation toward Agentic workflows. Each step moves us closer to the autonomous revenue cycle where the platform absorbs the administrative burden, so teams can focus on exceptions, strategy and patient care.

Today, approximately 50% of our solutions leverage AI and nearly 40% of revenue is generated by AI embedded workflows. At last week's spring innovation showcase, we introduced several net new capabilities that expand AI embedded workflows across the revenue cycle including deeper convergence of financial and clinical intelligence to prevent issues before billing and expanded Agentic intelligence that assesses documentation, prioritizes opportunities and guide next steps directly within live workflows.

Early deployments are delivering strong outcomes. Our new prebill anomaly detection solution delivers an estimated $3 million in net revenue per 10,000 patient discharges and a 5x return in recovered revenue over 3 years. New Waystar altitude AI-powered capabilities within our patient financial experience are expected to drive a 50% increase in collections meaningful in a market where patients account for more than $556 billion in out-of-pocket spending.

Some of the most damaging revenue loss in health care happens after providers have already been paid through payer recoupments. Payers regularly take back funds from previously paid claims, often months or years later by offsetting them against future payments with little transparency into which claims are involved, why the funds were recouped or whether the action is even valid. Based on our industry remittance data analysis, we estimate payers take back over $40 billion from providers each year through these offsets, and recruitments are growing at more than 2x the rate of overall claim volume creating significant accelerating cash flow volatility. Waystar's new recruitment solution built on Altitude AI brings transparency to this process.

Providers can now detect previously hidden recruitments, understand the root causes and take action efficiently, all using remittance data at scale. Early results are compelling. Providers are reducing recruitment reconciliation time by over 80% and 1 early adopter health system matched $32 million in revenue risk, work equivalent to approximately 13 full-time employees.

This new SKU integrates quickly for existing clients and demonstrates how we convert administrative complexity into financial outcomes through AI. Looking ahead, our priorities are clear: execute against our product road map with AI embedded deeper into every workflow, drive cross-sell and platform adoption across our installed base and maintain operational discipline while investing in the capabilities that widen our competitive advantage. Q1 reinforces that our role in the health care ecosystem is deepening. We're operating at the intersection of complexity, scale and outcomes, and our platform is engineered for exactly this environment. Before I turn the call over to Steve, I'm pleased to share that will be hosting our first Analyst Day on Tuesday, August 25, alongside our annual Waystar True North Client Conference. You'll hear directly from our customers partners and leadership team, we hope that many of you can join us.

With that, let me turn it over to Steve.

Thanks, Matt. Revenue increased 22% year-over-year in the first quarter to $314 million. Organic revenue grew 11% year-over-year. Performance in the quarter reflects strong execution across the business and expansion within the customer base. Bookings exceeded internal expectations and include a double-digit count of $1 million-plus annual value contracts, which is above our historical quarterly performance. These contracts have both longer lead time to revenue and attractive profitability.

Clients generating more than $100,000 of revenue in the last 12 months increased by 42% in the first quarter to 1,433 at quarter end, an increase of 15% year-over-year. Our net revenue retention rate also viewed on a last 12-month basis was 111% at the end of Q1, slightly above the historical range of 108% to 110%. Subscription revenue of $172 million for the first quarter increased 38% year-over-year, 3% sequentially and was 55% of total revenue.

On an organic basis, subscription revenue grew 14% year-over-year. The growth and revenue composition are in line with our expectations. Volume-based revenue of $139 million for the first quarter increased 7% year-over-year and 4% sequentially.

As we moved through the quarter, we saw some modest offsets within our volume trends that were most evident in patient interactions with health care providers and taken together, affected volume-based revenues. These headwinds were primarily concentrated in patient payment solutions, which represent approximately 25% of revenue and include a combination of external and client-driven dynamics.

Specifically, we saw accelerated conversion from print to digital patient statements as clients continue to focus on efficient ways to engage with patients. While we've been advocating for the shift to digital for some time, adoption in Q1 was ahead of historical rates, and we have updated expectations for the remainder of the year accordingly.

We also saw 2 factors affecting patient utilization of the health care system during the quarter, changes in health care coverage and weather-related impacts. Importantly, none of these factors were competitive or product-driven as evidenced by our strong bookings performance over the past 3 quarters and a record qualified sales pipeline at the outset of Q2.

Adjusted EBITDA of $135 million for the first quarter increased 26% year-over-year. The adjusted EBITDA margin of 43% was primarily driven by a shift to higher-margin solutions, specifically, provider solutions, which have higher margins and comprised approximately 75% of revenue organically grew year-over-year at double the rate of lower-margin patient payment solutions.

Please see our latest investor presentation for more details on historic growth rates of these 2 solution sets. Our capital position is strong with healthy cash flows as we ended the quarter with $159 million in cash, equivalents and short-term investments and $1.5 billion in gross debt. Unlevered free cash flow was $90 million in the first quarter and we converted 67% of adjusted EBITDA to unlevered free cash flow.

As of March 31, net leverage was 2.7x compared to 3x at the end of 2025, which aligns with our historical ability to delever 1 turn annually. As a reminder, we expect to run the business at or below a 3x leverage ratio. We are also pleased with the recognition of our efforts managing our capital structure as noted by both Moody's and S&P upgrading the ratings of our debt facility in the past couple of months.

Based on the first quarter performance and our current visibility for the rest of the year, we reaffirm our revenue guidance range of $1.274 billion to $1.294 billion, with the midpoint of $1.284 billion, representing 17% year-over-year growth and adjusted EBITDA range of $530 million to $540 million, with the midpoint of $535 million.

Our full year guidance at the midpoint continues to assume normalized organic revenue growth of approximately 10% consistent with our low double-digit long-term growth target. We expect the strong demand in booking activity we saw in the first quarter, along with similar results in the second half of 2025 to provide upside opportunity for growth in late 2026 and beyond. We are balancing that expectation with the near-term impact of the previously discussed offset, which we expect adjust the typical first half, second half of the year seasonality curve associated with patient payments to have much less variability in 2026 relative to the past couple of years.

Thus, while we previously communicated that we expect 1% to 3% sequential quarterly growth throughout 2026, with Q3 at the low end -- we now anticipate Q2 sequential growth to be flat to 1% in Q3 to be 1% to 3%.

This concludes our opening remarks. With that, we are ready for your questions. Operator, please open the call.

[Operator Instructions] Our first question will be coming from the line of Adam Hotchkiss of Goldman Sachs.

I guess, Matt, you spoke about 40% of revenue being associated with work flows related to AI. I think that speaks to the defensibility of the platform as you work AI into the existing solutions. But how should we think about the degree to which AI can be additive to your TAM and show up as rating revenue growth.

I guess I'm just trying to marry the stability of the current organic growth rate with some of the AI strength you're calling out in numbers and how we may see AI SKUs impact revenue growth in the future?

I appreciate your thoughtful question about AI. One of the things that you heard us just speak to, I believe we've provided a slide or 2 this quarter and in the past is a much larger total addressable market that we're able to go after by deploying AI capabilities that replace manual services.

We note that a recent McKinsey report stated that that this ongoing shift in value pools from services to technology and software platforms will expand its incredible addressable market opportunity. And so I think what you see with our recent spring innovation showcase launch where we are consistently pointing people towards the autonomous revenue cycle platform and then delivering new AI-powered capabilities, whether it's the new recruitment SKU that we highlighted or it's things that show up in our innovation showcase like the prebill anomaly detection solution that replaces manual work from needing to take place.

It's going to allow Waystar to pursue a much larger addressable market opportunity. We're very excited about that. We view AI as a tailwind and as the biggest opportunity in our lifetime.

Our next question will be coming from the line of Charles Rhyee of TD Cohen.

I want to ask about the comments you made about volume-based revenue is, obviously, it looks like patient revenue was up about 4% in the quarter. It's been going up more about 8% the last 2 quarters prior. You made some comment about accelerated move from print to digital building.

Just curious, why would that necessarily have an impact in you did call out weather, but are you able to sort of isolate how much maybe weather might have had impact on that? Just trying to understand a little bit what's happening there and how we should think about patient payments to look as we think about the guidance, particularly as the 2Q commentary on flat revenue. Any help there would be helpful.

Thanks, Charles. Let me start and then I'll turn it to Steve. We certainly work to be transparent with what we observed taking place in the business. And we did highlight couple of the offsets in the transaction volume. Most of that was a function of this dynamic of the acceleration of conversion from print statements to digital statements.

We've talked about this for quite some time. We know that there's this tremendous digital transformation opportunity that exists in health care, where we reduce paper and postage and take cost out of the system while we actually increase the patient experience and ensure that we get providers paid accurately and successfully.

So we view this digital transformation as ultimately being good for providers, good for patients, quite frankly, good for the earth and good for Waystar. And Waystar has digital integrated patient payment solutions that improve transparency, improve the patient payment plan adherence and really are also helpful to providers. So I guess I'd say 1 other thing and then we can comment on some of the quarterly commentary, and I'll ask Steve to help us there.

I'd say it's important to note that while we see this trend -- and we're kind of factoring that into how we think about 2026, we view this as an opportunity. We view this transformation as something that's good, as you've heard me describe, and this offset, if you will, has 0 to do with AI competition and more to do with doing what's right for health care. And so with that, Waystar can be an enabler of that. And I'll turn it to Steve for added commentary.

Yes. And hopefully, Charles, when you get a chance, I guide you to look at Slide 8 of our IR deck. We expanded it to include the split of provider and patient payment solutions revenue by quarter and the historical trends since the first quarter of transparently, most people could have picked it up from our filings, but you felt that it just made more sense to illustrate it here so you can actually see the same things that we're seeing going on in the business into.

To Matt's point, right, you continue to see the strength of the business and growing in Provider Solutions, which are 75% of the total revenue. And we talked about in the past, very high margins when we look at it from a very low direct third-party costs associated with it. Over the past 6 quarters, that's continued to grow nicely on an organic basis, which we also called out on the slide, anywhere between, on average, 13% to 14% year-over-year.

The offsets we talk about are in, and as you mentioned, inpatient payments that 25% of the revenue stream where we're helping providers connect with and interact with and get paid by patients. And that's where we're seeing that conversion of -- from print to digital statements.

Transparently, that does impact the top line revenue number on a unit economic basis. But when you look at it from a margin dollars or a cash flow, that conversion is neutral. So we see positivity long term in the business there, because it's going to allow us to see margin accretion in the business overall. A little bit of that, what you see in the first quarter here as well, and we called out based on the revenue composition for the order.

So hopefully, that's helpful commentary, and it's a good spot to go look and really dive into the details on that impact.

And our next question will be coming from Jailendra Singh of Truist Securities.

I wanted to follow up on your comments that about bookings coming in ahead of internal expectations. I think you talked about 40% new bookings driven by AI solutions, and I petite all the color there. Can you elaborate on the remaining 60% bookings? Are there any particular areas that are seeing outperformance -- and considering the rates we are seeing between payers and providers, are you seeing an increased genes from providers, which might result in a faster conversion than what we have seen in the past?

Thank you, Jailendra. Yes, we note that we've just seen nice momentum and I feel like our business is getting better and better every quarter. the bookings momentum is across both new prospects as well as cross-sell and upsell. We are growing across every segment of our business with high-quality opportunities. And as we -- it's interesting, we look at the size of the bookings, just a little color commentary here, we called out in the last 2 quarters of 2025 that the number of million dollar bookings were more than 2x the quarterly average of the past 3 years.

That trend is continuing. We're seeing more large bookings. To us, that validates our platform approach as these these bookings are often multi-solution or platform sales often involving AI that hopefully can be turned on faster. Generally, cross-sell and upsell bookings, we're able to build in an implementation plan for existing clients. But given the larger nature, whether it's new or existing, if these bookings are larger in size, they're still taking 6 to 18 months to show up in our revenue model.

And we've noted in the past how larger deals typically take this type of time for full revenue realization. But certainly, we have internal teams focused on compressing that time. It's just a balancing act. Sometimes it's what the actual provider organization. Overall, we're pleased with the progress that we're making. We start Q2 with the largest qualified pipeline of new and cross-sell upsell opportunities in our history. So that gives us a sense of momentum and conviction about the work that we're doing.

And we also start -- as you might anticipate, at the start of Q2, a large implementation backlog. So hopefully, that commentary is helpful, Jailendra, I appreciate your question.

And our next question will be coming from the line of Ryan Daniels of William Blair.

Matt, maybe 1 for you. You talked about early adopters of the payment recruitment solutions, seeing some very good ROI -- and I heard in your prepared comments, you stated that was a new SKU. So it sounds like a new AI-enabled revenue generation opportunity. So what I'm hoping you can dive into a bit more is how long does it take for solutions like this to kind of go broadly across your client base?

And then also, are you doing any go-to-market changes given the potential increased value of solutions like this that are new and AI enabled that can really add value on a rapid basis. Thank you, Ryan. We're sure excited about this new EI powered recruitment solution. It does represent a new SKU.

And as you've heard us speak to in the past, -- these AI-powered solutions have multiple ways to show up into our business model. First, certainly, longevity of clients and sustaining sticky relationships with clients Second, pricing, AI solutions, where we're strengthening in some cases, existing software with more LLM based AI capability. We price those to value for clients as we're delivering incremental capability.

In the case of a new SKU like this, like this AI-powered recruitment and what will soon follow in the prebuild anomaly detection solution. If I were to pull back the curtain just a bit we go through an extensive amount of training for our teams.

So certainly, the product and technology teams are stoked to build these kind of capabilities and to launch them. We do have a robust early adopter program. We're getting great feedback from some of the leading provider organizations in the United States. This is a robust kind of test and learn environment once we get ready to launch this, we also brought along our go-to-market teams, our product marketing teams.

We do a little bit of outbound product marketing to build excitement and webinars and things that will educate provider organizations on the benefits of these types of solutions, while we're training our go-to-market teams. Just last week, we were at a growth summit. We had several hundred people engaged in hands-on training on making sure that we're able to talk about these solutions, get these solutions into the hands of provider organizations and do ROI calculators, things like that. And then along the way, we're training our operational teams as well to be able to implement these solutions.

Depending on the -- and they do a fantastic job I might add. But depending on the SKU we're able to turn some of these things on rapidly. And to your question, we're always exploring ways for us to turn on new capability in a way that clients can absorb it into their -- into the platform and begin to use it and get the benefit of it.

So that often involves training and some educational component. And the nice thing about our platform Ryan, is we're conditioning end users to consume AI in a construct that they understand. And as you know, we deliver hundreds and hundreds of capabilities onto our platform each and every quarter. We want people to understand the power that they have. And sometimes the technology is a little bit ahead of where the human factor is.

And so -- it's not just about turning this capability on and on the platform. It's about making sure that providers can get the benefit that they want as they begin to consume this exciting new AI capability.

And our next question will be coming from Craig Hettenbach of Morgan Stanley.

Great. Matt, I just had a question. When I think about how fragmented the revenue cycle management space is your comments around kind of point solutions versus platforms -- what do you think is the tipping point in terms of driving a faster acceleration towards platforms?

What are some of the things you're hearing from your customers and seeing in the market?

Thank you, Craig. It's interesting. There's a lot of excitement right now. This is -- it's not necessarily a new phenomenon. Our health care and the revenue cycle space has had a long history of point solutions. And it was our vision from the very outset that Waystar could create an enterprise caliber end-to-end integrated platform. And that came -- that vision came from actually showing up and talking to provider organization decision-makers who are, quite frankly, fatigued at using point solutions.

When you use -- I was -- the example that I've given recently was I was with a CFO -- excuse me, a CIO of a very large system not long ago, and very impressive lady. She said, Matt, can you help us, can your platform help us? I currently use more than 12-point solutions just to manage our revenue cycle process.

And of course, that's where the platform approach really comes to play. What we hear providers want increasingly, they want a regulatory compliant, cyber secure, deeply integrated platform, and they want to be able to call 1 person, 1 organization to help them across the platform to be able to tackle their most persistent challenges. And I think that's where Waystar -- that's where you see the momentum and the size of the deals that we're signing the quality of our pipeline start to show up.

The forward demand indicators to us mean that there's more excitement about our platform than perhaps ever before. This is what we were dreaming of 8 years ago from Waystar. So hopefully, that context is helpful.

And our next question will be coming from the line of Sean Dodge of BMO Capital Markets.

Yes. Maybe just kind of staying on this AI and how that likely changes the market. Matt, you talked a lot about embedding more AI and waste or offerings and that driving more value for clients. You also talked before about pricing to value, so adjusting the revenue model in a way that helps waster participate in some of that value creation. I guess what do you think the time lines are that, that likely happens over this kind of idea of pricing to value.

How near term of an opportunity is that? And then like how big of a paradigm shift is that in your pricing approach? I guess you guys have always tried to price the value. So this is just kind of what you've always done.

Yes, Sean, that's a great question. Let me speak to that. I'd say we've always priced to value that we deliver. As we deliver these AI capabilities and in a way that clients can absorb them, we're very excited about it. I think this is a long-term opportunity for us to truly price to the value that these are delivering. When we call out in our prepared remarks on the earnings call, the type of impact oftentimes will associate the reduction of manual work and the number of people involved in historically doing that manual work.

And so we know that there's impact in the solutions that we have to offer. Now I would say we're already monetizing AI through our core business model. So part of this really isn't a science project by trying to tie it to modules or outcomes or operating discipline in a new way. We're already doing that. But also this does give us a chance to reflect on the continued effort to price to value. We know that the human labor factor in health care is the most expensive expense line in most health care organizations. And so if we can help then those people become even more productive and focus on higher order, higher value work. And we're doing our jobs, we're delivering AI in a way that can be very constructive to those organizations.

And so while we don't want to disclose too much on our pricing philosophy on a public call, I think what I'd also say is that we're -- we've always been a consumption-based pricing model. We've always deployed amazing software and AI capability that ties to the actual business activity in an organization. We're not a per seat fee-based company were tied to consumption and successful outcomes for the organizations that we work with.

Our next question will come from Stan Berenshteyn of Wells Fargo Securities.

I wanted to ask about the sales cycle. You obviously called out you have a lot more SKUs. You're generating much larger sales on a per client basis. And obviously, this requires your sales reps to do a bit more learning perhaps the clients have to do a bit more educating on what you're offering, how is that impacting the sales cycle? Any changes in the conversion rates as we think about this year and next year?

Thanks, Stan. I wish I could have taken you with me to our Growth Summit that we hosted just last week. It felt like an NFL mini can because we take our growth account executives, and we feel like they're the finest best in the industry.

We expect them to be very productive, very focused. These are very well-trained people. And our goal, if we do this right, is we want to consistently be delivering them new capability to introduce to clients and to prospects. First and foremost, we take a platform approach -- and so you can imagine that it becomes really additive to the platform every time we're talking about a new high-value AI-powered solution and our growth team loves that. So we have a methodology that we follow. We have great people in our training and development and strength and conditioning if I can use the NFL analogy and -- we have a really great team of people who want new product.

And as we give it to them, it shows up in the type of demand statistics that we've talked about, elevated really nice bookings higher deal sizes, a great qualified pipeline that we work with great sales leaders to qualify that pipeline, and it allows us to get traction and create some longer-term vision towards what can we build towards. So I hope that commentary is helpful, Stan.

But yes, they're always eager to get more solutions, and we take training very seriously, so we can empower great people to go help us grow.

And just to kind of reiterate, is that impacting the sales cycle at all given the shift towards more SKUs and larger sales?

And let me say that it is not. We've highlighted that each of the segments that we sell to have different sales cycles. And along the lines of your thoughtful question, hospitals and health systems tend to be 12 to 24 months sales cycles. Certainly, depending on the size of a nonhospital or an ambulatory type organization, those sales cycles can be or shorter in length. But we're not noticing a compression of time or any elongation of time.

We are also seeing elevated win rates. So as we're introducing new solutions, if anything, the validating point is that sales cycles are staying the same and we're seeing elevated win rates.

Our next question will be coming from the line of Ryan MacDonald of Needham & Company.

Matt, maybe we'll give you a little bit of a breather on this one. I got 1 for Steve on margins. Steve, I'm curious as how we should think about sort of the pacing and magnitude of incremental investment as we go throughout the year. Was there anything in Q1 in terms of investments where you sort of held back or pushed out to later in the year? The reason I ask is, obviously, has historically been sort of the low watermark from an adjusted EBITDA margin perspective.

And sort of based on the implied guidance, even if you run rate out Q1 adjusted EBITDA throughout the remainder of the year, we're getting to that sort of $540 million sort of high end of the range. So just wondering if the -- what the puts and takes there that with the reaffirmation of the guidance.

Yes. Certainly, Ryan. So our focus and where we're reinvesting back in the business hasn't changed to start with, right? It will continue to be an innovation in the client experience in cybersecurity. So no changes to areas of focus. To your question on the 43% margin -- adjusted EBITDA margin for the quarter versus 42% in overall guidance.

And you are correct, typically, Q1 tends to be a little lower. That really truly is what we're seeing in the growth of the sort of the revenue breakdown that I had mentioned earlier with the provider solutions growing at a faster rate and having a much higher bottom line contribution than patient payments. Now the 1 thing just to be -- as we look out for the full year, with some of the offsets we talked about and some of what you're seeing in patient payments and the interaction in the first quarter of the year, we do expect that first half of the year, second half of the year variability that we tend to see, just seasonality that we tend to see in that business to be tighter to the normal or if I could say, a lighter beta than we've seen in prior years.

So we would expect a little bit of that happening to the shaping it throughout the year, but there's nothing from an innovation or an investment perspective that we were light on from where we expected to be at in the first quarter. So good opportunity to continue to drive exceptional margins throughout the rest of the year.

Now our next question comes from the line of George Hill of Deutsche Bank.

I'll say, Steve, I've got another 1 for you, which is can we unpack the slowdown a little bit more in the Q2 expectations for the volume-based revenue -- and I think a lot of this in services have seen a slowdown in utilization kind of in the first part of Q1 as it relates to flu and weather. Is this like a paper to electronic conversion process -- is this a claims lag issue, which is why you guys are seeing it in Q2? Is it you guys haven't seen the reacceleration or the uptick yet. I'd really like just to understand more of the mechanics of the accounting and what you guys are seeing -- recognizing it's 25% of the revenue.

Yes. Certainly, George. So weather had an impact in the first quarter. We wouldn't expect knock on wood, wouldn't expect an impact going forward for the rest of the year. It is primarily the conversion of print to digital statements and then also a little bit of the utilization of the health care system by patients.

Now typically, to your question specifically on the second quarter and the shaping, typically, the second quarter tends to be 1 of the stronger utilization quarters historically that we've seen -- right now, what we're seeing with the printed digital conversion and how we're seeing that play out from a rest of the year perspective. Do you think that largely offsets what we see in sort of the the patient visitation uptick.

So that's really what we're looking at and how we're sort of giving the guidance for Q2 and then the rest of the year. Now the rest of the year is an impact of why we're seeing strength there. Some of those longer term -- the larger deals that we've seen and we've talked about in the Q3 and the Q4 time frame -- that we've previously said and still believe on the whole, they tend to take longer lead time to revenue more towards that 18-month side of the 6 to 18-month sort of full ramping period.

We're also seeing some good opportunities, as Matt had mentioned, working with clients to move some of those clients and get them up and running and seeing that ROI faster, positively impacting the back half of the year. And I know you're familiar with it, George, on the seasonality aspect in patient payments, especially in the processing of collections tends to be with those -- that segment of patients that are on high deductible plans, which that generally causes that seasonality aspect.

But for others on there, did want to mention that, and that's really why we see in that 25% of the revenue sort of that first half, second half of the year dynamic.

Our next question will be coming from the line of Daniel Grosslight of Citi.

This is Louis on for Daniel. I just had a follow-up. You noted earlier in the call that AI drove 40% of your bookings, and I know that you offer a broad array of AI products and not just products like Dale, can you give more details if providers are more in just the new or more innovative solutions like altitude -- or is the demand just for AI broad across your portfolio?

Thank you for the question. We know that providers are very interested in the use of AI to help them operate and run their businesses. And we know they want to use AI, but they're reticent to use point solutions, the vast majority of provider organizations aren't equipped to necessarily stand up their own technology teams, let alone teams that can support AI on a stand-alone basis in their organizations. And so they're looking for trusted partners like Waystar. I think as we engage, we know that there's certainly excitement around the new LLM or AI-powered solutions that Waystar offers.

There's also broader-based interest in some of our AI-powered solutions. AI is a broad category. So it would include machine learning and some data science that produces intelligence or insight -- and as you've heard us talk about in our prepared remarks, our deeply deployed multisided network, there's just so much learning that takes place on that network. As a result of all these different forms of AI.

That tends to be very interesting to provider decision makers. They're focused on outcomes. They want cybersecurity, they want efficiency they want industry compliance and to stay abreast with what's going on in the industry, and they want deep integration to the EHR systems that they may be using or the practice management systems. They may be using -- and they want the benefit of being able to do that at scale and get the learnings from thousands of other organizations like them and Waystar helps to deliver that to these providers.

And our next question will be coming from the line of Elizabeth Anderson of Evercore ISI.

Can you -- maybe to sort of macro-type questions. One, are you seeing any sort of change in anything as we're seeing hospitals have more difficulties on the financing side? And then two, are you hearing anything from your customers about like managed care companies and payers like back against some of these new solutions to do that? Any color on that would be super helpful.

Thanks, Elizabeth. We're seeing our solution which tend to get prioritized, as you've heard me talk about, because we're mission critical in nature and because we help organizations get paid for the services that they're rendering. We tend to get prioritized in the decision-making of things. And I think our pipeline and our bookings results and our financial results are a testament to that.

We continue to believe that, that will be the case. As we think about the -- you mentioned the payer provider tension, so to speak, and perhaps sometimes push back. I'm not sure exactly what you're referring to. But what I would say is we know that there are payers that are working to deploy AI capability to do the things that they're organized to do to make sure that payments are accurate to avoid broad waste and abuse.

And -- and sometimes that means they've denied claims, but they're increasingly using AI to do that. I don't know how an individual provider who isn't as deeply resourced as the deep-pocketed payers are could stand up against these payers by themselves. So we're really grateful to have to put waste are in a position where we can represent over 1 million providers and we can develop AI capability that leads to more accuracy in coding, leads to a higher first pass claim acceptance rate where the payer is accepting the accurate claim -- and that's leading to accurate payment, faster payment, a more efficient payment. And so we'd like to think that Waystar's role can be that constructive referee that intermediary that brings fairness and transparency to the marketplace that really needs it.

And honestly, we're also seeing outreach from a number of payer organizations directly who would like to talk about things like real-time claim adjudication for a portion of the claims that they're processing through Waystar. They're doing that -- and I think they're doing that as evidenced because they're seeing that we're bringing accurate plans. And so we'd like to think that we can help bring fairness and balance to this exchange between providers and payers.

Our next question will come from the line of Constantine Davides of Citizens.

Matt. I appreciate all the bookings color you provided. But I did want to just drill in a bit on momentum in the acute space, more specifically. And just wondering if you can describe how your execution and competitiveness are tracking there on the inpatient side of the market where you, I guess, historically had lower market share relative to what you've carried in ambulatory.

Thank you, Constantine. We're seeing nice momentum on the acute side. It's right. It's fair to say that when we formed Waystar 8 years ago, we had a small handful of hospitals and health systems that we're working with us. But today, we've built a really nice presence where approximately now we work with 16 of the top 20 hospitals and health systems in the United States.

We work with nearly hospitals in some form or another. And we're delivering them the message that we have a unified end-to-end revenue cycle platform that's marching towards an autonomous revenue cycle platform. And it tends -- that message is really taking hold. I'd also note that about 40% of our revenue today is hospital and health system or acute related. And we're excited about the progress that we're making in every segment of care, but certainly, the growth and continued momentum we see in the hospital health systems.

And I would now like to turn the call back to Matt Hawkins for closing remarks.

Well, thank you for joining our call today. We're very grateful for your interest and appreciate your thoughtful questions. As we wrap up today, I'd like to just reaffirm that our business is getting better and better every quarter. We're doing what we said we would do from the outset, and that is we're focused on disciplined execution.

This is now 8 consecutive quarters of strong revenue growth, EBITDA performance and cash flow above the consensus has allowed us to continue to delever. We've seen recent upgrades in -- by standard and S&P, excuse me, and Moody's and we're really grateful for the momentum that we see in our business.

And it's all possible because we have great people who buy into our mission of simplifying health care payments for providers so that they can spend more time caring for patients and less time trying to work through the administrative hassles that they do. So I'd like to just thank our team, thank our clients and thank our partners and we look forward to continuing to execute against our plan in 2026. Thank you.

This concludes today's program. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Waystar Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, [Edward Parker], Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining Waystar's Fourth Quarter and Fiscal Year 2025 Earnings Call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer; and Steve Oreskovich, Waystar's Chief Financial Officer. This morning, we issued a press release announcing our financial results and published an accompanying presentation deck. You can find these materials at investors.waystar.com. Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance. Examples of these statements include expectations of future financial results, growth and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements.

For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release and the reports we filed with the SEC, all of which are available on the Investor Relations page of our website. Any forward-looking statements made on this call are only as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures. These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck and our earnings release. With that, I would like to turn the call over to Matt.

Thank you, Edward, and good morning, everyone. Thank you for joining our Q4 2025 earnings call. Today, we're pleased to share Waystar's strong Q4 and full year 2025 results, reflecting the durability of our business model, the execution of our team and the trust providers place in our platform. 2025 was a defining year for Waystar. We crossed $1 billion in revenue, exceeded both our revenue and EBITDA guidance and achieved strategic milestones that strengthened our competitive position. We completed the acquisition of Iodine Software, adding more than 1,000 hospitals and health systems, deep clinical intelligence and significantly expanding our addressable market. This combination positions Waystar as the only platform with both clinical encounter visibility and financial outcome intelligence at scale. We also extended our AI leadership.

In 2025, Waystar AltitudeAI prevented more than $15 billion in denials for our clients, reduced appeal time by 90% and drove double-digit increases in denial overturn rates. We launched new agentic capabilities that cut documentation analysis by 40%, powered by data from 1 in 3 U.S. hospital discharges and more than 7 billion annual transactions. These results demonstrate accelerating demand for mission-critical AI-powered revenue cycle software and validate Waystar's ability to deliver meaningful ROI for providers. I'm proud of what our team accomplished in 2025. We entered 2026 with strong momentum, a clear leadership position and a platform we built to sustain durable profitable growth while delivering exceptional value to our clients. Let me walk through our fourth quarter performance.

Q4 revenue reached $304 million, growing 24% year-over-year and 12% organically. Both subscription and volume-based revenue contributed to this strength. These results underscore the mission-critical nature of our platform, elevated patient utilization and the successful onboarding of new clients. Waystar added 85 clients with trailing 12-month spend above $100,000, up from 30 a year ago and more than double last quarter. Win rates improved beyond our historical average of more than 80%, reflecting sustained competitive momentum and clear provider preference for Waystar's cybersecure unified platform. We delivered 112% net revenue retention with 97% gross revenue retention and a Net Promoter Score above 70. Cross-sell and upsell momentum in our large installed base drove this performance and reinforces how deeply Waystar is embedded in our clients' daily operations, serving as essential infrastructure for getting paid.

Waystar delivered a record bookings quarter in Q4, and we closed several sizable deals to cap off a strong 2025. We entered 2026 with a robust sales pipeline and the largest implementation backlog in our history. This demand signals strong customer confidence in our platform and reinforces our conviction in the durability of our low double-digit long-term growth outlook. Adjusted EBITDA reached $129 million, up 29% year-over-year with an adjusted EBITDA margin of 42.5%, exceeding our long-term target of 40%. Waystar continues to operate as a Rule of 50 business, pairing strong revenue growth with increasingly efficient operations. Our core business delivers durable organic growth. Iodine extends that strength through disciplined platform expansion, moving Waystar into the mid-cycle, a critical stage where payers deny roughly 60 million claims each year.

Together, we deliver full revenue cycle visibility through our unified financial and clinical platform. Iodine has more than 1,000 hospitals and health systems with only 35% customer overlap, expanding our addressable market and cross-sell opportunity. Integration is ahead of plan, and we now expect to realize over 90% of committed cost synergies in fiscal 2026. We fully integrated our commercial teams, and they are already producing results. In Q4, we generated cross-sell traction in both directions and built a robust new business pipeline. Market demand for the Waystar platform is strong. Unified financial and clinical data unlocks unique value and accelerates our innovation road map. Our next-generation pre-bill anomaly detection solution demonstrates this opportunity. We expect a midsized health system to recover $7 million annually in previously missed reimbursement, a 5x return over 3 years.

This is the first of many innovations only our integrated platform can deliver, advancing us toward a fully autonomous revenue cycle, including using clinical data to prove medical necessity for prior authorization and overturn denials requiring clinical documentation, all without human intervention. Now let me take a broader view on AI because it is core to who we are and where we're headed. While many new AI entrants add lightweight tools that sit on top of fragmented revenue cycle workflows, Waystar takes a fundamentally different approach. Our end-to-end platform gives us full visibility across the revenue cycle. including authorizations, claims, denials and payments and deep into the layers where complexity resides, payer policy, adjudication logic, diagnosis-related grouping and denial reasoning.

This breadth and depth makes Waystar the system of action, identifying issues upstream, resolving them inside the workflow and closing the loop on payment with minimal human intervention. For more than a decade, Waystar has deployed AI, including machine learning and advanced decisioning engines across revenue cycle workflows at scale, grounded in proprietary data and embedded processes few in the industry can match. We're extending those capabilities with LLMs, generative and agentic AI while maintaining control of the data, decisioning logic and outcomes that matter most to providers. Today, approximately 50% of our solutions leverage AI and nearly 40% of our revenue is driven by AI embedded in mission-critical reimbursement workflows.

In 2025, roughly 30% of new bookings came from AI-powered capabilities. This signal is clear. Clients trust Waystar to deliver AI that goes beyond assistance to enable agentic outcome-driven revenue cycle automation. We believe Waystar is well positioned to lead the next era of health care revenue cycle automation. The foundations of software moats are shifting in the age of AI from workflow stickiness and switching costs to a new set of structural advantages. Our strength comes from 4 interconnected pillars: mission-critical infrastructure, unmatched proprietary data, and extensively deployed network and scaled distribution paired with deep domain expertise. First, our platform is the mission-critical infrastructure providers need to get paid. Waystar is embedded directly in the flow of dollars, decisions and denials and our 97% gross revenue retention proves it.

Once clients implement Waystar, they stay. We reduce administrative burden, prevent billions in avoidable denials, accelerate cash flow and ensure reimbursement accuracy at scale. Our commercial model is aligned with consumption, which is a function of providers seeing patients. As Agentic AI streamlines workflows and reduces manual work, the durability of our model strengthens. Pricing is tied to claims, payments or prescribing providers, directly matching how value is created in the revenue cycle. Our multiyear partnership with Google Cloud's Gemini LLM accelerates innovation, and we retain control of the data, decisioning and outcomes providers care most about. As RCM moves toward agentic AI and autonomous workflows, our role deepens. Our agents act on behalf of providers, resolving issues, correcting errors and closing the loop on payment.

Second, Waystar has an unmatched proprietary data advantage. AI strength ultimately comes down to data, its scale, richness, structure and proximity to action. We operate one of the largest health care payment data sets in the United States, processing more than 7 billion transactions annually. With Iodine, we pair that financial depth with unmatched clinical data and our models now learn from approximately 1/3 of U.S. hospital discharges each year. We deploy AI across the full revenue cycle continuum from authorization and eligibility to denials and appeals. Our data advantage is self-reinforcing. Every claim denial and payment improves our models. When a provider uses Waystar, they benefit from the learnings of tens of thousands of organizations like theirs, similar size, similar payer mix, similar challenges. And because our data spans the full care continuum, hospitals, physician practices, outpatient surgery centers, our models see patterns no single organization or new entrant can match.

General purpose model vendors lack this real-time closed-loop proprietary data. Third, Waystar's platform is a deeply deployed multisided network, creating scale and connectivity that others cannot replicate. We sit at the center of the payer provider patient ecosystem, connecting over 1 million providers to every major payer powered by more than 100,000 live integrations across EHRs, practice management systems, clearinghouses and clinical platforms. We touch approximately 60% of the U.S. patient population each year and process billions of dollars in patient payments across our network annually. We built this network over more than a decade. It represents scale, trust and connectivity that cannot be bought or quickly engineered.

Every transaction flowing through Waystar increases network intelligence, sharpens model accuracy and expands our distribution advantage. The result, a platform that strengthens continuously with every client we serve and every workflow we power. Fourth, Waystar combines scaled distribution with deep domain expertise. We serve providers across all care settings with low concentration. Our top 10 clients represent approximately 11% of revenue, driving resilience, reach and durable bookings growth. Our go-to-market organization consistently delivers strong win rates, rapid time to value and compelling client ROI. Forward deployed teams, product management, revenue integrity, clinical documentation and client success experts work directly alongside real workflows. Dozens of clients codevelop and pilot new AI capabilities with us, validating outcomes before broad release.

We have already seen our AI-enabled engineering tools reduce manual work, in some cases, by more than 75%, and we expect further improvement as we scale these capabilities in 2026. These pillars enable our AI to deliver outcomes at scale. In less than a year, Waystar AltitudeAI has prevented $15 billion in denials and accelerated appeal package generation by 90%, turning work that once took days into minutes. Our network consistently achieves approximately 99% clean claim and first pass acceptance rates, driving faster, more accurate reimbursement. These outcomes expand our footprint, build trust and help providers improve margins while freeing staff for higher value work.

Last month, we shared our vision for Waystar's autonomous revenue cycle, a dynamic end-to-end agentic network that acts continuously within workflows, learns from outcomes and delivers meaningful financial results with minimal intervention. Providers don't want point solutions. They need trusted cybersecure platforms that unify financial, clinical and operational outcomes. Our product road map is robust, and we expect to launch several new AI agents this year on Waystar's platform. We have the data, the deployment, the distribution and the discipline to lead this next era of health care revenue cycle automation. We're moving with the urgency and the mindset of a disruptor because this moment demands nothing less. With that, I'll turn the call over to Steve.

Thanks, Matt. Please note that my comments regarding fourth quarter and full year 2025 results include a full quarter of contribution from Iodine. Revenue increased 24% year-over-year in the fourth quarter to $304 million. Organic revenue grew 12% and Iodine contributed $31 million in the quarter, slightly ahead of our previously communicated expectation. The growth reflects strong client retention and expansion, healthy patient utilization of the health care system and new client implementations. The quarterly results highlight our durable, predictable model of low double-digit revenue growth annually on a normalized basis. And the highly recurring volume aspect of health care provides us predictability, creating a notable differentiation compared to most consumption models.

For the full year, revenue increased 17% year-over-year to $1.1 billion. On an organic basis, revenue increased 13%, consistent with our long-term target of low double-digit growth. Clients generating more than $100,000 of LTM revenue increased by 85 in the fourth quarter to 1,391 at quarter end, an increase of 16% year-over-year. Roughly 1/2 of the increase in the fourth quarter was from the inclusion of Iodine clients. On an organic basis, the year-over-year growth rate is consistent with the quarterly average over the past 3 years. Our net revenue retention rate, or NRR, was 112% for the last 12 months compared to 13% organic growth rate over the same period. As we've discussed over the past several quarters, NRR benefited from the rapid time to revenue from clients impacted by a competitor's cyber event in early 2024.

Subscription revenue of $168 million for the fourth quarter increased 38% year-over-year and 25% sequentially. On an organic basis, subscription revenue grew sequentially at a similar pace as the past few quarters. From a mix perspective, subscription revenue was 55% of total revenue, which aligns with previously communicated expectations. For the full year, subscription revenue of $558 million increased 22% year-over-year. Volume-based revenue of $134 million for the fourth quarter increased 11% year-over-year and 1% sequentially. Consistent with our seasonality expectations, revenue from patient payment solutions was lower than the prior quarter. This was more than offset by sequential growth from provider solution volumes.

For the full year, volume-based revenue of $535 million increased 11% year-over-year with steady double-digit growth from both provider solution transactions and patient payment dollars. Adjusted EBITDA was $129 million for the fourth quarter at a 43% margin and increased 29% year-over-year. On a full year basis, adjusted EBITDA was $462 million at a 42% margin and increased 21% year-over-year. Our adjusted EBITDA margin of 43% for the fourth quarter benefits from approximately $2 million of realized acquisition cost synergies, reflecting 1% of margin improvement for the quarter.

Turning to the balance sheet and cash flow. We ended the quarter with $86 million in cash, equivalents and short-term investments and $1.5 billion in gross debt. Unlevered free cash flow was $80 million in the fourth quarter and $365 million for the full year. We converted 79% of adjusted EBITDA to unlevered free cash flow, enabling us to continue sustained deleveraging. As of December 31, net leverage was 3x, which is down almost 0.5 turn since the beginning of the quarter when we closed the Iodine acquisition. We expect to run the business at or below a 3x leverage ratio and delever in line with our historical rate of approximately 1 turn annually.

We continue to maintain flexibility within our overall capital structure and our allocation priorities remain unchanged: invest in the business to drive top line growth, evaluate disciplined acquisition opportunities and explore ways to enhance shareholder value. Looking ahead to 2026 full year guidance, we expect revenue of $1.274 billion to $1.294 billion with a midpoint of $1.284 billion, representing 17% year-over-year growth. Our full year guidance at the midpoint assumes normalized organic growth of approximately 10% with a similar implied growth rate for Iodine. We also expect revenue to grow 1% to 3% sequentially throughout the year, with the third quarter at the low end due to seasonality of patient payments.

Further, we assume utilization of the health care system by patients remains healthy throughout 2026 as the diversity of our client base and ROI from our solutions insulate us from the reimbursement rate pressures that may impact our clients. Lastly, as Matt mentioned, the record level of bookings and several sizable deals we generated this quarter contribute to our forward visibility. As a reminder, these larger agreements typically take 6 to 18 months to fully ramp, and we would expect many to land towards the longer end of that range, supporting our confidence in a normalized low double-digit revenue growth profile for 2026 and beyond. Please note that we have included a bridge from the 17% growth rate at the midpoint of guidance to the 10% normalized organic growth rate in the IR deck on our website.

We expect adjusted EBITDA of $530 million to $540 million with a midpoint of $535 million, representing 16% year-over-year growth and a margin of approximately 42% for 2026. This includes gross margins of approximately 68%, which is consistent with 2025. The 42% margin also includes an uplift of approximately 1% from realizing acquisition cost savings. Said differently, we expect to realize approximately $14 million of savings in 2026, which is over 90% of the committed $15 million we previously communicated and well ahead of the prior time line.

This reflects our commitment to quickly and successfully integrate Iodine. We are focused on reinvesting in the business in key areas we expect to drive long-term top line growth and remain confident in our ability to do so while being mindful of our long-term adjusted EBITDA margin target of 40%. This concludes our opening remarks. With that, we are ready for your questions. Operator, please open up the call.

[Operator Instructions] Our first question will be coming from Brian Peterson of Raymond James.

Congrats on the quarter. Matt, maybe I want to start off on AI, and I appreciate all the color you gave on the advantages you have in an AI world. But I wanted to understand when you talk to your customers and looking at RCM specifically, what is their appetite to kind of use LLMs and kind of build on their own versus buy from somebody like Waystar. Just wanted to understand how those conversations are going? And how can you kind of unlock some of that AI opportunity over the long term?

Our next question will be coming from Elizabeth Anderson of Evercore ISI.

I'll just let you respond to Brian's question, and then I can go.

Please standby.

Can you hear us okay?

Yes we can hear you.

Excellent. Let me go back to Brian's question about AI. I appreciate his comments regarding our quarter and also our position and our strength and the opportunity that we see in front of us to win in the delivery of AI. I would note that the vast majority of clients we talk to would rather integrate AI capability into their systems of record or action that run the backbone of their business, so to speak. And while there's some experimentation willingness and some exploration around how could we deploy AI or do some type of kind of science experiment within our organization, what we see is the vast majority of providers want to work with a trusted partner where they have a history of deploying AI in a cybersecure environment that's integrated and interoperable with other systems that they're utilizing.

And quite frankly, most provider organizations don't have the abundance of engineering talent that they need to kind of test and deploy AI. And it really isn't true to their core competency of taking care of patients. So we feel like Waystar is very well positioned to deliver AI as we've done so far and to continue that track record. Thank you, Brian, for the question. And sorry for the...

It's Elizabeth from Evercore. You've mentioned several new AI agents launching this year. How do you kind of think about that launching? Are those like individually incremental revenue opportunities for Waystar as it combined with Iodine too? Or is that something that you sort of see as like helping to increase the moat of your current AI offering or maybe some of both?

I believe it's a bit of both, Elizabeth. We're very excited about the product road map that we have in place, what we have ahead of us as far as delivering agentic capability to our clients and on our platform. Some of that will be brand new, and it will be a new SKU with new price to value, reflective of the value that, that agent is delivering to our clients. Other AI capability will add on to existing software modules that will bring incremental automation, and we're sure excited about that as well. As we think about monetization in general, the way to think about monetization of AI is this. First, if we deliver AI, it tends to drive retention and an elongation of a relationship with the client. So that tends to show up in strong retention results like the ones that we produce.

We also can impose an annual price increase that is reflective of the value that we deliver. And in this case, we're watching closely and seeing that when AI delivers incremental automation, we're able to reduce headcount associated with a manual task that is now automated given the agentic capability that we launched, we have the opportunity to price to value in that setting. And then the third, as I mentioned a moment ago, is the introduction of a new SKU, a new pricing, putting it in the hands of our go-to-market teams and selling it that way. So we look forward to further monetizing AI, but a lot of that is already showing up in monetizing through our core business model.

And our next question will be coming from Kevin Caliendo of UBS.

Just looking at the fourth quarter, you had G&A, R&D, D&A all stepped up. I'm assuming that's largely Iodine coming into the numbers. And I appreciate you gave us the $14 million in expected synergies to get to the margin guidance for the full year. I'm guessing, should we look at the 4Q sort of margin as the run rate for those individual cost centers and take out the synergies. I'm just trying to think about modeling the margins and where you might have additional leverage above and beyond that $14 million in synergy thinking through the fourth quarter.

Yes, Kevin, thanks for the question. This is Steve. I think to answer your first part of that question, you're correct. The step-up there does include the additional cost of one full quarter of Iodine in the fourth quarter. I think as we think about the guide for 2026, a couple of things to think about and mentioned in the prepared comments, we would expect similar gross margin in the high 60s for 2026 as we saw in 2025. In addition, well, to your point, there are opportunities that we're continually focused on to improve the overall margin profile.

We've set guidance at the midpoint of about 42% gross margin for 2026, which -- EBITDA, sorry, of 42% for 2026, which includes about 1% benefit from those cost synergies. And again, we're continuing to look and we'll find additional opportunities for cost savings. So that does exist. But right now, our focus from a capital allocation approach, and I mentioned it in the prepared comments, is to continue to reinvest in the business for long-term revenue and growth expansion. We've set the target, and we've probably beat the drum for quite a while now of low double-digit revenue growth long-term target. But obviously, the opportunities we see in front of us is how do we reinvest now to expand that ultimately in the years going forward.

And our next question will be coming from Ryan MacDonald of Needham & Company.

Congrats on a great quarter. I'd be curious, Matt, as you're having customer conversations, you talked about, obviously, there's a lot of new vendors in the space that are trying to sort of, let's call it, overlay generative AI functionality on top of their existing systems versus your approach, which obviously is deeply integrated and built sort of in an end-to-end platform. As you look at sort of how budgets are being developed and being allocated, are you seeing more sort of demand or sort of more of the conversations heading towards sort of one-off sort of more point solution functionality or SKUs from a generative AI perspective? Or is this creating, I guess, a broader, let's call it, refresh cycle where we might look at a sort of full end-to-end modernization within RCM? And how do we think those conversations develop over the next 12 to 18 months?

Thank you, Ryan. We're not necessarily seeing a clear delineation between a normal technology budget and an AI-specific budget. We are seeing willingness to -- from clients to embrace AI. And again, speaking to kind of our prepared remarks, they want to consume AI, but they want to do it in a very thoughtful way. I'd point to our recent Q4 results, the best quarter in our history, a really nice mix of new clients, cross-sell opportunities, AI embedded in those conversations. And we have -- as we start '26, we have a very robust pipeline of opportunities. And what we're seeing isn't necessarily just a point solution willingness. We're seeing clients wanting to embrace to your thoughtful question, Ryan, more and more of the platform approach, where there's an assumption that AI will be included in part of that platform.

If you looked at the -- our last 2 quarters of bookings in 2025, the number of million dollar bookings -- million dollar plus bookings in the last 2 quarters of 2025 were more than 2x the quarterly average of the past 3 years. And so what this signals to us is that our platform approach is working. It is displacing oftentimes point solutions in multiple vendors, and there is willingness by clients to embrace and explore AI in that context. We don't necessarily see that being fairly partitioned as a separate budget.

And our next question will be coming from George Hill of Deutsche Bank.

I guess, Steve, I'd ask you to break apart Iodine a little bit. The business did $31 million in the fourth quarter. The back of the napkin math looks like you're guiding to $125 million to $130 million for full year '26. So I guess it implies a little bit of the flattening there. I know that you guys are historically conservative as it relates to guidance. So I might like you to talk about that a little bit. And then maybe, Matt, like the question that goes with that is, what do you guys feel like you're seeing for AI market growth in the health care space? And kind of like I know that health care has historically been slow to adopt new technology solutions, but it would seem like the macro AI market may be growing faster than the AI market in health care. I would just love you to kind of talk about those dynamics.

Yes. George, I'll go first. We did in the prepared comments, mentioned we expect an Iodine year-over-year growth rate to be similar to the 10% normalized organic growth rate that we set aside or I commented on for Waystar for 2026. So I think our expectation would be a little higher than what you had mentioned, but somewhat in the ballpark there. And I think we see really good opportunities as it pertains to both the -- or the totality of the solution set from the bookings that we saw in the fourth quarter that Matt had mentioned and especially as we think through the $1 million plus bookings the metric that Matt had provided.

Maybe I'll just give a little bit more color on that before turning it to Matt to answer the second part of the question because I figure you guys are going to ask at some point. Maybe to put a range for you guys on the account for the Q4 and Q3 million-plus bookings number. That was in the 15 to 20 count range for each of the individual quarters. And as Matt had indicated earlier, that's 2x the amount we had typically seen on a quarterly basis for the past 3 years. So a healthy mix of both Iodine -- legacy Iodine solutions in that fourth quarter number as well. Matt?

Yes. Great, George. And let me speak to the general question about AI. And we feel like it's the biggest opportunity in our lifetime, and we're seizing it and making the most of it. What I'd say is LLMs are great tools and they're needed. And with specific to health care, it's time for the industry to embrace technology, perhaps instead of services and manual work that has taken place for far too long. We see curiosity and interest there. This underscores -- when you think about the LLMs in general, it underscores how important it is for us to have this now multiyear relationship with Google. But I think we talked about our relationship with Google's LLM even a couple of years ago in 2024 on one of our earnings calls.

And we're delivering AI, and I think there's some real interest. A few thoughts come to mind. While some software may be displaced by AI, other software platforms like Waystar are actually being strengthened. And AI is accelerating our ability to deliver capability. It's delivering strong results for our clients, and that's very important. I think trust, reliability and scalability matter more than ever, especially in regulated environments like health care, production-grade software has to be secure, scalable and accurate. And so we're really grateful for the relationship that we have with Google. As I think about the things that are required in -- a few things to keep in mind with respect to the mission-critical problems within the revenue cycle.

I won't opine broadly on health care, but just within the mission-critical problems in revenue cycle management, there are a number of things that are required. First, it's required to have rich and real-time proprietary data, not publicly available data. And you need a payment source of truth, and we have that at Waystar. What else is required? Well, cybersecurity is required when you're thinking about deploying AI. Regulatory compliance is required. Deep subject matter expertise is required. Deep integration and connectivity, strong distribution and client trust are required. And so when you think about this opportunity that we're seeing in health care, LLMs by themselves can't deliver those things, but companies can, companies like Waystar can. So we're excited about the AI opportunity before us.

Our next question will come from Stephen Valiquette of Mizuho Securities.

Just I was curious if you could provide a little more color on your assumption around the utilization of health care by patients remain, you said, I think, healthy throughout 2026. So how should we think about that, I guess, in the context of your historical baseline assumption of that 1% to 2% that you've talked about previously?

Yes, Stephen, this is Steve. We would expect it to be on the higher side of that 1% to 2% historically. It aligns with what we've seen coming through the fourth quarter and kind of the prepared comments as well that I made surrounding that. And we would expect continued nice healthy growth in both that volume-based aspect as it pertains to both patient payments revenue, which has historically been about 30% of our total revenue, mixing Iodine and going forward, it probably gets closer to 25%, but also then from those provider solutions, the -- as Matt had mentioned in the prepared comments, the transaction volumes that come from processing claims, eligibility checks, et cetera, et cetera, et cetera. So hopefully, that's helpful commentary.

And our next question will come from Alexei Gogolev of JPMorgan.

I was wondering if you can double-click on some of the comments you made last quarter about the time line for patients meeting their deductibles, which impacted the patient volumes that you just talked about. What trends did you see at the end of 4Q? And maybe how are you thinking about 2026?

Yes, certainly, Alexei. We did see sequential decrease from Q3 to Q4 as patients continue to hit those under high deductible health plans, as you mentioned, continue to hit their deductibles. That was more than nicely offset by the volumes coming through the provider solutions aspect or solutions of the business that led to a very -- less of an impact Q3 versus Q4 than we would have expected in our -- in the commentary that we had made last quarter.

As we think about that aspect into 2026, I provided some commentary surrounding quarterly sequential growth expectation. As you hit on, Alexei, we typically with that 30% of revenue from patient payment solutions now getting closer to 25% going forward. We typically see a first half, second half of the year dynamic, obviously, with the switch or the change in revenue mix, we would expect that to be not as notable as prior years. And we would expect nice sequential growth throughout the quarters in 2026.

I mentioned the range of sequential growth of 1% to 3% with calling out specifically the third quarter of the year being closer to that 1% of a range, and that's typically due to the dynamic expectations of -- over the past number of years, we typically see those patients that are on high deductible health plans start to hit those deductibles in the second half of the year, tend to see it most notably between the second and third quarter. So that's sort of the contextually a little bit more detail surrounding the sequential growth expectations in 2026.

And our next will be coming from Allen Lutz of Bank of America.

Matt, you mentioned 35% of bookings are now coming from AI-related products. When you're speaking to these health system customers and prospects and they're exploring AI, does this -- in your conversations, does this make them more hesitant to spend in the near term because they're trying to figure out where they want to put dollars to work? Or is this actually accelerating total spend? And I guess I'm asking that question in the context of what you saw in the fourth quarter and how you think about 2026.

Yes. What we see is some constants. First, decision-makers want efficiency. They want cost takeout. They want cybersecurity. They want to work with partners that can help them get paid faster and accurately and efficiently. And so within that, what we're seeing is we continue to get prioritize in their decision-making process because the revenue cycle is mission critical. It's truly mission-critical. And you take a system of record, system of action like Waystar, it's easier for clients to think through how do we work with Waystar to deploy more AI, obviously, very interested in using AI because it can drive efficiency, because it can reduce cost and because it can drive automation and some of those things we talked about.

And so where we tend to focus is on the ROI nature of the conversations. And that is what is driving these types of record bookings and strong pipeline of opportunity. We highlight the fact that our prior authorization, for example, is 90% touchless and can actually do the work that previously it took 12 employees to do in a midsized hospital. we highlight the fact that our coverage detection solution, which also uses AI capability is helping to discover more than $20 million of incremental insurance coverage to help aid these hospitals reimbursements.

And that's in a typical sized hospital. We also highlight things like -- I'll give you one more example for our digital patient payment and patient financial care suite. We use AI to help automate and create self-service for 80% of the patients that are interacting with our digital payment suite. And that is lifting patient payments by 20% because we're driving better patient payment plan adherence. And that typically is finding more than $8 million of annual impact or a typical hospital. So these are the types of things that we highlight as we go and engage with clients where they know they're going to be able to use AI in a setting and a platform that they trust. And that's why you're starting to see it show up in the bookings the way that we are.

And our next question will be coming from Ryan Halsted of RBC.

Maybe just sticking with the questions about AI and just competitive landscape. A lot of the color you provided today so far has been incredibly helpful. But maybe just to dig in a little further on the competitive landscape. I mean, when you're presenting your ROI? Are you hearing any feedback from your customers about the competitive nature of, say, some of the ROI that these other platforms are potentially offering or these other solutions, maybe not necessarily platforms that they are offering? How does -- how should we think about your ROI versus what maybe others are putting out there?

Well, we won't disclose exactly what our ROI is. What I will say, Ryan, and thank you for the question. We have a very robust ROI calculator. We go through a rich discovery process with clients, and we present to them a platform, and oftentimes, as you've heard us talk in the past, there's a compounding benefit when a client uses more and more of our solutions together on the platform. Again, those solutions are AI-infused, AI-enabled and are driving tremendous results.

And I'm sure that those clients are going through a process of comparing what Waystar offers versus what an upstart or a newcomer for a point solution may offer. But I think what stands the test of the time and what we're seeing is really robust win rates. We noted improvement in the quarter above our strong 80% win rates, we noted that it's even higher in the last little bit. And so we feel like our ROI is very compelling. And more and more clients are buying into this idea of the importance of a platform approach as they begin and they want to consume AI on the platform.

And our next question will be coming from Ryan Daniels of Blair.

Matt, maybe a strategic one for you on AI and the improvements you're seeing in the platform, especially with Iodine and their solutions and data assets. You've talked about the perfect claim. And I'm curious if this can provide you with a contracting advantage longer term strategically where not only can you go in with a fully integrated platform, but maybe increase the total value add, maybe share in some of those savings. So are there any potential thoughts on risk-based contracts or tying to other KPIs that you know you can improve on an accelerated basis and maybe see not only a win rate delta from doing that versus some of your peers, but also maybe greater revenue enhancement or an accelerated time frame with novel contracting?

Thanks, Ryan. I appreciate that thoughtful question as well. We talk a lot at Waystar about building the autonomous revenue cycle platform, this dynamic end-to-end agentic network that acts continuously within workflows, learns from outcomes with real sources of payment truth and then delivers the perfect undeniable claim, real financial results with minimal intervention. It's on our road map. And that's -- we have teams of people focused on how do we create with minimal intervention this -- where we keep a human in the loop appropriately as AI continues to learn from our massive proprietary data. How do we march toward that perfect undeniable claim? We're absolutely willing to explore some performance-based pricing opportunity in this space. It's something that we won't talk a lot about in the public domain here, but it's something that we contemplate internally as we think about how to price to the value that we're delivering to our clients.

And our next question will be coming from Brian Tanquilut of Jefferies.

Congrats on the quarter. I really appreciate all the comments today, Matt. But as I think about -- you talked about how important the platform is and kind of like the one-stop shop approach from your clients. One question we're getting a lot is when we think of the traditional EHR players or vendors trying to build AI capabilities that kind of touch into RCM, how do you think about that? And maybe how does the clearinghouse factor into that decision, which platform your clients, these hospitals or provider groups would build on when they choose the one-stop shop solution going forward?

Yes. Thanks for the question, Brian. We are very focused on revenue cycle, clearinghouse, successful payment. And so as you know, we connect to over 500 different instances of practice management and electronic health systems, including some of the largest in the United States. We have not seen a successful test or result of anybody -- EHR system creating a clearinghouse. And it tends to be just a different development motion, a very different set of capabilities required to build and sustain a network.

We've been building Waystar's cloud-native modern clearinghouse for over a decade, and we monitor it and pressure test it and update it continuously intradaily. That's very different from developing an electronic health record solution or a practice management system, quite frankly. And so as we stay focused on our platform and then being highly interoperable and deeply deployed with all the electronic health record systems in the market, we think that's the winning approach. We can specialize in what we're doing. We can be a lynchpin solution to those EHR systems and a great partner to our clients and helping them get paid.

And our next question will be coming from Richard Close of Canaccord Genuity.

Congratulations on the year. Just maybe a little bit more on the AI and OpenAI, Claude for Healthcare, both had some notable organizations listed in their press releases on the launches like HCA, Boston Children's, Stanford and some, I assume, are Waystar clients. And I'm just curious what your thoughts are -- and do you see situations where clients will have multiple vendors for certain AI functionality, meaning it's not necessarily a zero-sum game, which the market seems to be pricing in. And then also just your thoughts on health care system landscape overall. There's a lot of the haves and the have-nots. And maybe some of these larger AI companies are not necessarily good fits for certain customers.

Thank you, Richard. I would say, again, it's an exciting time in health care. This is a moment of a lifetime where generative AI capability is available to hospitals and health systems and any organization. LLMs are great tools to develop and deliver features and functions. We see that internal to Waystar again as we utilize Google's LLM. And what I'd say is having a heterogeneous deployment of technology is not a new phenomenon in health care. It tends to actually not be a zero-sum game in health care. And there may be some misunderstanding or a lack of appreciation for how heterogeneously help -- in health care technology is being deployed. But again, to solve the mission-critical problems that are demanded in the revenue cycle that, quite frankly, Waystar solves, you have to have a deeply deployed multisided network to connect organizations to payers and to patients.

It's required to have rich and real-time data that you can use to real-time train your network so that you don't really have the luxury of having a science experiment in your revenue cycle. There's a limited tolerance for any type of fault. And so RCM has to be 100% right. Otherwise, there are penalties, there are fines. There's all sorts of other things that can just go bad. And so having rich and real-time data is important, having subject matter expertise, it's tough to get all of that within one hospital or health system. And so most hospitals and health systems, to your second part of your question, don't necessarily have the abundance of engineering talent that they need to build and then sustain and support AI capability.

So we think the longer-term benefit is really what Waystar can do and vendors like Waystar can do to actually help deliver AI that can be consumed thoughtfully in workflows that employees understand, et cetera. The last thing I'd say is speaking of the haves and have-nots that you highlighted, Richard, I think there's very few hospitals and health systems that have the resources to deploy AI and sustain it and manage it themselves and meet regulatory requirements to do all the things that you're obligated to do if you're working and using technology inside a hospital and health system. The vast majority of our clients, for example, especially on the ambulatory side, the nonhospital side, we're bringing equity and fairness and modern AI capability to them that they'd never be able to develop by themselves. And so there's something really cool about that, that inspires our work.

And our next question will be coming from Michael Cherny of Leerink Partners.

Another AI one for me. But along all those same lines, as you think about your role, your integration with various different partners, how do you make sure that your organic, inorganic R&D investments stay on top of the curve so that you are continuing to deliver value, you are continuing to make sure that you box out other providers, be it purpose-built or some of these larger companies relative to their ability to try and deploy AI either to disrupt you, disintermediate you or whatever term you might want to use?

Yes. I mean I would say we talked a lot about LLM tools right now. They're good for coding efficiency. We're deploying LLM tools, as I've mentioned. And we feel like there's basically -- everybody is using LLM tools, is the LLM the advantage? Is the LLM -- is the use of the LLM the advantage? We would argue that you need other capability to be competitive and to deliver value to clients. So from an organic perspective, how do we stay ahead? Well, we're investing in innovation. We're using LLM capability ourselves. We're seeing productivity gains amongst our development teams as we highlighted in our prepared remarks.

And we're delivering hundreds and hundreds of feature improvements in any typical quarter that help our clients achieve fantastic results. We also have a dedicated corporate development team, and we scan the market all the time to look at some of the start-ups that are creating novel and unique AI capabilities that may not have the distribution or the deeply deployed network that we have. And we think we can be a great home for the right types of companies. But it's a very exciting time, and Waystar is very motivated to continue to deliver value to our clients and to our shareholders.

I would now like to turn the conference back to Matt Hawkins, CEO, for closing remarks.

Great. Okay. Thanks so much for the time and the thoughtful questions today. To summarize, Waystar is executing from a position of strength. We're delivering durable growth, strong margins and meaningful cash generation while extending our leadership in AI-powered revenue cycle automation. Our AI is not experimental. It's embedded, monetized and delivering measurable outcomes inside mission-critical workflows our clients rely on every day.

With unmatched data, deep deployment and domain expertise, strong distribution and a disciplined operating model, we believe Waystar is exceptionally well positioned to compound value over the long term. I'd especially like to thank our outstanding team for their dedicated and impactful work. They're the reason that Waystar continues to perform at this level. We appreciate your interest and support, and we look forward to updating you on our continued progress. Thank you, everybody.

And this concludes today's program. Thank you for participating. You may now disconnect.

Hello, everyone. This is Alexei Gogolev, Head of Vertical SaaS and HealthTech team here at JPMorgan Equity Research. Today, I'm delighted to have CEO, Matt Hawkins at Waystar, present at our conference. Matt, welcome and look forward to your presentation.

Thank you, and good morning to everybody. I look forward to sharing an overview of Waystar with you today. And I'm very grateful and honored to represent the Waystar team here as well as our Board. And I'm excited about what we'll talk about. I plan to anticipate presenting for about 20 to 25 minutes and then leave some time for some Q&A toward the last 15 minutes or so. Okay. Sounds good.

So let's jump in. First, I'd like to just highlight for those of you that may be new to the Waystar story or those of you would have great familiarity with our story, there's a few things that I would love to have you walk away and remember as you think about Waystar. The first is that we are establishing industry leadership in health care revenue cycle. We are a cloud-native platform. We deliver hundreds of capabilities and feature improvements, some of which we'll talk about here today on our platform to our clients in any given quarter. We have a very ambitious product road map. We're deploying AI solutions across the platform. And we are seeing the move from hype to reality as we deliver real meaningful value to the clients that we serve. And we'll talk about why we believe we have a long-term advantage in delivering AI to our clients. The work that we do is mission-critical. For those familiar with health care, you know that the revenue cycle and having clarity around how provider organizations can get paid really matters in health care.

And our solutions are deeply integrated into the workflows that provider organizations follow in order to not only see a patient and help that patient clinically, but on our side, how to administratively handle how they will get paid for the treatments and the encounters that they're having with patients. We're going after a large and growing addressable market.

We'll talk a little bit about the size of that market and what we're doing to inflect even future growth and more addressable market opportunity through some of the solutions that we're introducing. And then I'd also talk about our proven and durable growth model. We've now been public for 6 quarters through the end of Q3 of 2025. Every quarter, we've met and exceeded and improved our guidance for the year on both revenue and EBITDA. This is a business that has the ability to compound very consistent and growth -- durable growth. We also produce an impressive amount of cash, and we're very thoughtful with how we deploy our resources as we invest for innovation, invest for growth and continually improve our balance sheet and our capital structure.

The last is that as we look to the future, we believe, and this may be underappreciated in the market, that we have a fabulous proprietary data set. We're pleased to report that in 2025, we processed 7.5 billion insurance transactions that account for over $2.5 trillion of gross claim charges on our platform. We also bought a business in '25 called iodine. Iodine processes 1 out of every 3 hospital-based patient discharges in the United States.

So the combination of 7.5 billion insurance transactions and one out of every 3 clinical discharges enables us to take a tremendous amount of proprietary information and use that as we develop new AI solutions, as we train those solutions and refine those solutions, reinforcing what works and then learning rapidly across our platform, what can be improved. So we feel like that long term -- we feel like the proprietary data that we have access to. And as you all know, data is very valuable in the development and curation of AI tools. And so having access to this tremendous amount of information, we believe that will enable us to continue to launch new solutions and drive opportunity on our platform. Our mission is simple. It's to simplify the revenue cycle, simplify the payment process using modern, powerful technology that will enable the providers whom we work with to spend more time caring for patients and quite frankly, less time trying to figure out how they're going to get their organizations paid.

They're operating on razor thin margins. And as we have proven now over many years, our ability to deliver technology that makes a difference that drives down total cost of ownership and drives up return on investment for these providers as we simplify the health care payment process makes a meaningful difference, and we're motivated by this mission. Health care is prime for transformation right now.

And we are at an inflection point where technology can be used to make a real difference. Waystar is using technology to make a difference. As you know, there's nearly $0.5 trillion of administrative waste that occurs in health care. This feels like we're living in the upside down, if you're familiar with stranger things. It's fraught with manual work, and I see some of you smiling. It's fraught with manual work and errors and fax documents back and forth, siloed data and information and certainly labor shortages that lead to denial complexity that lead to lower reimbursements that never get followed up on, manual errors that persist , and a lot of this gets accounted for bad debt and bad debt write-offs and patients and providers are unduly burdened by this current situation.

This makes for a very large and addressable -- growing market opportunity. And so if you were to take the strictest definition of what we would call the addressable market, we would say it is $20 billion, part ambulatory, part hospital and health system as defined by current software, incumbent software. Some of that has been -- those software solutions have been in place for 20 or 30-plus years.

Some of them are homegrown home developed solutions. Some of them are Microsoft Excel-based access-based spreadsheets that we're replacing in the market. We approach this market, and we know it's growing. We approach it with what I'll show you in just a moment, but modern next-generation platform capability. But that's not all we're going after. We're not just anticipating that this market is going to grow from 20 to 25. We actually believe there's much more opportunity here to create a much larger addressable market. If you were to look at the BPOs and the staffing agencies that they would define the revenue cycle services market, in many cases, as being north of $100 billion a year in value. As we develop AI-based solutions that automate work, that prioritize tasks on our platform that eliminate the need for rework, and I'll show you exactly what we're talking about here in just a moment, we create incremental opportunity and expand the addressable market for us to go get.

So we're very excited about that. And we focus on that with our approach. Our approach is an end-to-end AI-powered software platform from one end, from what we would call the front end of the revenue cycle, where there's work taking place to identify who the patient is and whether or not they have access to any form of insurance or any form of insurance coverage to the mid-cycle where a patient begins to have a clinical encounter with a provider.

We know the source of 60 million denied claims in any given year begins in the mid-cycle because of the manual entry or the inefficient notations or unstructured notes that are housed in clinical records. We bring clarity. We bring over 150 AI trained models that will go and filter through, in many cases, unstructured clinical notes. And on the other end, as we venture toward the back end of the revenue cycle, we're able to produce a highly accurate, efficient claim using technology that minimizes rereviews by 70% that allows us to produce a first pass claim acceptance rate that's nearly 99% across our entire platform. That statistically reduces the likelihood that a claim ever gets denied. So what we're doing, we know brings real value.

It's a unified platform, all commercial payers, all government forms of payer, whether it's Medicare or Medicaid, are united on this platform. We have an integrated patient payment offering, and we're using insights from what we -- the insurance network side of things to then inform what the patient financial responsibility is. And the thing that's game changing is that we're doing that in many health care service moments in ways that now the patient can know before they ever see a doctor, what their financial responsibility is likely to be.

And we believe that unification of all forms of payment on a single cloud-native platform is game-changing and differentiated. We drive real and meaningful client ROI on our platform. We're not just talking about hype. We're talking about reality. And it's that reality that allows us to compete in the market and have very impressive win rates in this market. We're also cybersecure. So we come in as we talk to health care decision-makers who, in many cases, I was talking to a CIO not long ago from a very impressive health system. And she said, "Matt, can you help us? We're currently using more than 12 different point solutions just for the administrative side of our hospital system. We said, yes, because we have a platform approach that unites several of these capabilities that are AI-infused and drive automation and prioritize work.

And so we're able to win in moments like that because of our platform approach. And we're doing this at scale. We serve over 1 million providers across every care setting today. providers of different sizes, types, different geographies are all using and getting benefit from our platform. We just went through the updating of our data and information. These 1 million-plus providers are reaching now more than 60% of the U.S. patient population on an annual basis.

And as I mentioned a moment ago, one out of every 3 hospital-based patient discharges is flowing through our software, our technology. So again, we're getting tremendous access to information as we pursue this large and growing addressable market. We create enduring clients and partner relationships. We're trusted, again, by more than 30,000 clients that represent over 1 million providers that practice, as you can see from acute and emergency settings to ambulatory, post-acute, long-term settings, home-based settings, behavioral health, retail, virtual and even specialized settings of care. And when you look at the list of impressive organizations that we feel so grateful to work with, they trust us. They're advocating for us as they talk to their peers.

And it's a nice phenomenon to see that now as we approach the market, in many cases, we're getting referred -- we're very active in the market. We're very direct in how we go to market, but it's nice to also see we're getting referred to market opportunities, and we're very grateful for that. One of the things that I think may be underappreciated about our business model is that we support over 500 different integrations to other practice management and EHR vendors.

As you all know, data is siloed in many of these different systems. Waystar's technology acts as a linchpin. We sit side-by-side with these systems, and we're able to bring data to and from those in a HIPAA-compliant SOC 2, other forms of security attested ways to be able to help these provider organizations make the most of the data that they have access to. These more than 500 different integrations and channel partner relationships allow us to reach the breadth of the broad spectrum of different types of providers and the patients that they serve in the industry. And we're also, of course, grateful to work alongside outsourced RCM vendors many of whom are partners of ours because they're using our software behind the scenes to do their services work for the hospitals that they're engaged with.

And so in a way, we're growing with them as they grow, and we're grateful for that opportunity. Well, a few slides on -- that I'll move at pace through, but just to call out, our software is delivering real meaningful results from greater productivity. And in 2025, we prevented nearly $16 billion of denied claims from occurring. We're thrilled with that result. As I mentioned, our first pass claim acceptance rate across our platform is nearing 99%.

We're competing against incumbents that are in the low 90%. So when we come along and use our solution, there's a meaningful difference. In fact, we have clients that tell us, "You're helping us reimagine what's possible. in the use of Waystar's software and AI-infused technology. We're delivering rapid time to value. We're able to implement and deploy our software because it is cloud native very rapidly. That's leading to quicker payments, quicker time to value and real reimbursements that are lowering the overall total cost of ownership while improving the financial performance of these organizations. A few more. We're not trying to take a victory lap here you guys. But like these are large and impressive organizations that are telling us really positive things that we're grateful for. Same-day cash posting increased by 88%, $10 million of generated payment uplift. And 70% -- 77% reduction in manual work.

These are things that we know that we do that our platform delivers value to our clients. And of course, you can see a rapid -- a dramatic reduction in the decrease to days it takes to adjudicate a claim and an increase in automation. These are large and impressive organizations, and we find that there's so much opportunity as we address each situation with Waystar software platform.

We're also gaining trust in the market and trust is currency as we scale and as we begin to reach more and more clients with our capability, we're grateful for the trust that we're earning along the way. We use that trust -- we use client satisfaction. We use strong Net Promoter Scores to advocate for why Waystar software can make a difference for the next new client along the way, and that's fueling our go-to-market engine. Now this data I'll highlight is through the third quarter of 2025. As I mentioned earlier, we've had 6 consecutive quarters of revenue and EBITDA beat compared to the consensus. And that was the case through Q3 of 2025. We updated our guidance for full year 2025 by more than the Q3 revenue and EBITDA beat.

And this is really when you look at some of these metrics, it's a testament to our business model. We're a rule of 50-plus business that's got nice organic double-digit revenue growth, meaningful EBITDA production and strong net revenue retention. What I said in October, we look forward to providing an update to the market in several weeks from now, but in our normal earnings call. But what I said that we feel very good about is the momentum that we have in our business.

I noted in our earnings call in a few subsequent conversations during our open window that we have a robust pipeline of opportunity that our win rates of 80% against our competitors remain strong, that we -- as we measure activities and demonstrations and RFP participation, we feel very good about the work that we're doing, and I look forward to providing an update here in a few weeks. There's a sense of momentum that we have about our business as we look to the future. And we also have several levers of future growth opportunity that we're familiar with, that we've used, that we're using today to compound and create growth in our business. It starts for us with fantastic gross revenue retention of 97% as we walk to all the way up to the net revenue retention, which, as you'll know, speaks -- does -- that net revenue retention number excludes any impact of new clients that we're able to add to our business.

But our net revenue retention averaged anywhere between 108% and 110% over the last many quarters. In the last 1.5 years, it's even been higher than that, and we're grateful for that. But that algorithm, as you walk from gross revenue retention and net revenue retention is a function of utilization increases. We typically model 1% to 2% in any given year.

We have a modest annual price increase that we implement given the value of our solutions that we're delivering and we price our solutions increasingly to value. And then it's a function of cross-sell and upsell. So we begin our growth levers and we talk about how do we expand within existing clients. We've got about 5% market share in the hospital space and about 9% market share in the ambulatory space. And what we tell people is that if you didn't -- if we didn't develop another software solution and we didn't add another client, we could more than double the size of our business today. So there's plenty of opportunity to expand within existing clients. Certainly, we're focused on adding new clients as well. And in my previous comments about our pipeline and the bookings that we've closed year-to-date, I talked about it being approximately 50-50 as far as new versus cross-sell, upsell related.

We reach the market through channel partnerships, as you saw me highlight a few minutes ago, and alliances that allow us to partner along with other entities, practice management and EHR vendors that are advocating for us, giving us access to their user conferences and where in many ways, we're the lead, we sell, but we get favorable or preferential treatment in these channel partners.

We've also had a strong track record of extending our platform leadership through disciplined M&A. We have a dedicated corporate development team that looks at the market. We're very disciplined in how we deploy our capital and the build versus buy analysis of things. But in the iodine acquisition that we announced late last summer, we noted that there was tremendous cross-sell and upsell opportunity that there would be tremendous access to information that would fuel our future product road map. And we also noted in the October 29 call that we're tracking very nicely on the integration plans associated with that, both from a growth side, seizing the opportunity as well as from the cost structure synergy identification side. So we feel very good about that.

And then as I mentioned at the outset, we'll use this combination of information on this learning and dynamic platform. We'll take data to deliver new models. And again, as you know, the LLM is one thing, but it's the access to proprietary organized information that will help us design, develop, train and refine AI models that will deliver real value to our clients in the future, where our platform, we've conditioned -- we serve over 1 million providers.

So we've conditioned end users that work in those provider organizations to thoughtfully consume the AI that we're delivering, and we look forward to delivering more of those innovations in the days ahead. Our platform, and this will move from kind of history to a little bit of vision. Our vision is that the Waystar's platform can power an autonomous revenue cycle in health care. You look at the fact that we have conditioned and are conditioning end users to consume AI thoughtfully, responsibly, ethically to be able to do real work for them that automates tasks, again, that prioritizes work that drives insights. We ask ourselves often the question, what moral good can Waystar do to help drive dramatic transformation in health care? What can we do to leverage AI to drive more transparency? What can we do to leverage AI to drive more efficiency?

And for us, it starts with connecting the data, leads to activating the right AI at the right time, eliminating friction points, manual interventions that are unnecessary. Errors that occur, if we can prevent those upfront, we can compress the time to value. And then ultimately, while we'll keep a human in the loop on a couple of things that I'll show you in just a moment, ultimately, as we train and refine our AI, ultimately, how do we minimize human intervention.

And overall, that will lead to a smarter, more efficient, more effective revenue cycle. That's our vision. And we have the AI to scan the data and to drive toward outcomes in a number of these ways. Again, I think this is game changing. And I believe that this will prove very advantageous to Waystar over a longer period of time, the access to data, again, not siloed in lots of different locations, but centralized and curated. Not in paper somewhere or on a publicly available resource site, but proprietary within our data set that will allow us to develop innovations and turn unified data into trusted intelligence to power the right AI at the right time and deploy it effectively. We're doing that now as we prevent denied claims.

As I mentioned a minute ago, we help prevent in 2025 since the launch of Altitude AI, nearly $16 billion of denied claims, but expediting that even further and fueling that with clinical information so that when prior authorizations occur that require medical necessity or clinical information-based information to get that authorization fully authorized by the payer.

Now we've got access to that clinical data. to eradicate denials with an integrated documentation and coding revenue capture solution. That's industry compliant that leverages regulatory standards. We've got the right to do that with the data set that we have and to then accelerate reimbursements with intelligent-powered clinical appeals is very value creating. I want to show you just one thing is one of the early evidence points of us uniting Waystar with iodine will allow us to take clinical information that again comes from Iodine, unite it with Waystar's financial data to unlock revenue protection for the clients. What we're seeing in the process of creating a united platform that unites the front, mid and back end of the revenue cycle is, again, in that cumbersome middle part of the revenue cycle where so many denials originate we can leverage over 150 AI trained models and now infuse those models with administrative data to identify appropriate documentation, scan for any anomalies that may occur in the forming of the diagnostic codes that can ultimately be used to create an accurate claim and to ultimately unlock missed opportunity for providers.

So we're very excited about the early evidence points of Waystar plus Iodine working together to strengthen and bolster an existing solution and begin to launch new solutions. Let me show you one other thing. We announced this morning that we're -- and highlighted what we had previously said last year at this time where we launched Altitude AI. This morning, we're following up on that Altitude AI announcement from last year to indicate that we're beginning to expand into agentic AI capability.

We're creating agents that will begin to do real value-creating work for provider organizations. These aren't just normal agents. When a person -- an agent isn't just replicating one smart person. The agent is replicating 50,000 or 100,000 are the smartest people that do that job. And I want to show you a couple of things really quickly here. Available now is the ability to take a way star agent on the Waystar platform and put it to work.

Your smartest agent that's way smarter than a human or a group of humans that comes back and return information that's more accurate than a human can produce and uniting clinical information, to review documents, scan for coding errors and to improve the revenue capture. Waystar Altitude AI identifies documentation and coding gaps. The agent creates a compliant documentation or coding correction request and draft.

And then they return that to a human in the loop, a nurse in this case to review and approve that the documentation is accurate with 1 click. And then that documentation will be used to create a very efficient claim. Now this is step 1 as we keep a human in the loop, but where are we going from here? Can we create even more autonomy as we move from clinical documentation that's improved and filtered through these AI models to ultimately create that perfect undeniable claim that you may have heard me speak about. Coming soon is the ability to use an agent, a waste our agent to resolve open issues with a claim to detect and diagnose problems or problematic claims and then recommend resolution for those claims.

Experts will then review, they'll take the age and output and review the documentation from the agent and then be able to submit that claim successfully to a payer. And we're very excited about the work that we'll launch here soon. We're venturing into this world. I think we would characterize it as moving from -- we've been deploying AI on our platform for many years, moving from AI and machine learning to increasingly agentic where we do keep a responsible human in the loop to approve or validate.

We'll learn on every one of those validations and refine our model and refine our thinking and make us even better for the next time. Ultimately, as we move and progress toward a more autonomous revenue cycle platform that's always learning. We believe that it will be Waystar's right to compete and that we can be a long-term winner in the AI space. as we work to embrace this technology that delivers real value to our clients. So I thank you very much for letting me present and be delighted to take a few questions.

Thank you, Matt. And on the -- sticking on the AI theme, can you maybe talk a bit more about the moat that makes the space so much more difficult to disrupt? I think you talked in the past about the data points that you have and maybe update us on the latest.

Sure. Yes. So first, I think it does start with a platform approach. If I could liken it to a car, a platform versus a feature, right? A feature may be a mono for power windows or power steering, like we're delivering the whole car. We're delivering the platform now. And while some people are talking about a feature or an intent, our platform approach it learns from one side of the other. So if we're in the pre-revcycle, and we're doing something that's using AI and leveraging data, we're actually creating benefit because the other side of our revenue cycle platform is learning, too. So it starts with the platform approach. It all works together to create a successful outcome. Secondly, decision-makers really want cybersecurity.

They want to work with less vendors more and they want it cyber-secured. The third is we have the rails, the rails that are deeply embedded in the workflows today and have the right to deliver more and more AI capability to our clients because of how we're integrated to so many different systems and we reach across the broad ecosystem of health care providers. And the fourth is we're investing in AI. We'll deliver it and continue to thoughtfully deploy it as we work toward that more autonomous revenue cycle platform.

And I think you talked about 6 Billion data points in the past. Has this number expanded?

Yes. Yes. Thank you for calling that out. As you just highlighted, last year, we were processing about $6 billion insurance transactions per year. We've updated that to now be $7.5 billion insurance transactions. And so again, every incremental insurance transaction or payment transaction we process, we're learning from that. What were the codes and rules embedded in that transaction that will make us a smarter, more efficient network. And so we're pleased with the continued progress and growth that we have made there.

And I'm sure you've heard about the recent close for health care announcement over the weekend. So what do you think about the access to data that these newcomers may have Will they be able to get access to that proprietary data you're talking about the one that is protected by IPA?

Yes. I recently heard about the cloud announcement. I would say that the large language model, really large object model, we're using a different large language, large object model. We're partnered with Google and Gemini, and we really like the progress that we continue to make there. And -- but we think the long-term value isn't necessarily in the large language model itself. It's actually in the access to data and the ability to kind of utilize that data, scan that data and then deliver value to providers, again, across an organized platform.

One thing that I note today is it feels like -- and you may agree with this, it feels like the technology is advancing at a rapid pace, and it's ahead of where the human factor is or where the human organization is able to actually consume it. So I think one of the advantages that Waystar brings to the table to anybody whatever large language model would be one of the -- our competitive advantages is we have an organized approach where we're able to deploy AI in a way that the human factor can understand it and consume it and get the benefit of it. And do it in an organized fashion that can really help these provider organizations today.

And slightly switching gears. You obviously benefited from elevated patient utilization last year. do you consider it to be a potential tailwind this year?

We have benefited -- our model, just oriented toward how we think about utilization. We help providers in strong utilization periods because we help make them more efficient and enable them to see more patients. We help providers in periods of time where utilization may taper often be normalized as we help those providers use more of our software to help understand who the patient is and identify forms of payment and forms of coverage for them.

So in any model, I think we're adept at helping providers be efficient and utilize our software effectively. We typically approach -- in our business model for prudent's sake, we're -- as we walk from our gross revenue retention of 97% to the long average of about 108% to 110%. Again, it's been running a than not recently.

But we build into our thinking 1% to 2% utilization increases every year. That's about a 60-year average. And so when utilization runs better, it tends to benefit our business model. When utilization normalizes, it still may while utilization may normalize, our business model still may benefit because we have other solutions to sell the providers to help them, find coverage, find payments, process payments. So that's how we think about utilization.

But we currently feel good about the momentum that we have in our business from a growth perspective.

Great. And you also talked about very strong momentum that you're seeing in your pipeline, win rates, RFP participation. Can you double-click a bit more on that and maybe talk about the updates on the sales cycle dynamics.

Sure. Yes. I look forward to in a few weeks from now being able to give you a Q4 and 2025 full year update. Everything that I've said in recent conferences and our earnings call stands true. Feel very good about the robust pipeline of opportunity. The RFP participation rate, the activity, the win rates, for sure, I think it goes back to -- for those of you that have been following our narrative for a little while, as you'll recall, in 2024, one of our competitors was cyber attacked. And in that cyber attacked, there was there's massive urgent push to kind of -- for providers to come and adopt the waste or platform as a way to kind of rescue them from the cyber attack platform or the solution they were using. And -- and we characterize that as a Phase 1, urgent Phase I, where there's a lot of business activity, a lot of volume. And then we also -- for those of you that were following us, over the last year, we've talked about a longer-term Phase II, where we felt like, over time, given how we've been able to help providers how rapidly and successfully we were able to deploy Waystar's platform that, that Phase 2 would create incremental opportunities for us that would kind of bear to fruit, so to speak, as we move forward.

And in Phase II, we didn't characterize how long that Phase II would last. But as I noted in late October, we are seeing activity in that Phase II, and we're really pleased with the progress that we continue to make, and we look forward to giving you an update here in a few short weeks. But many positive signs.

Perfect. And final question, Matt. There's been a lot of discussion about vendor fatigue and the desire for fewer, more integrated solutions. Can you maybe update us on your deep integrations with EMR and PM?

Yes. We know that because of some of that vendor fatigue. And many of it's with legacy type vendors, Waystar is being prioritized in discussions. And that tends to aid us. Again, as I noted, and you'll recall on this slide, we're replacing point solutions with our platform approach with a modern cloud-native AI-infused learning platform. And I think that's aiding us in the conversations. We have many integrations with the large and impressive EMR, EHR vendors that you would know of.

We cited a few of them on our platform. And many of those -- the decision makers that use those systems many of them are in our user conferences on our advisory boards give us feedback about how we can continue to advance our solutions and be a trusted partner with these EMR solutions as well. So we feel great. We're always gaining new channel partnerships and new relationships, and that drives our growth model.

Perfect. Thank you very much, Matt. We appreciate you being here with us.

Yes. Thank you. Thanks, everybody.

Okay. Well, good afternoon, everyone. Welcome to Day 1 of the Barclays TMT Conference. My name is Saket Kalia. I cover software here at Barclays. Honored to have the team with us here from Waystar. We've got Matt Hawkins, CEO; and also have Sue Dooley, Head of Investor Relations, there in the audience as well.

So we've got about 30 minutes together. I'd love to leave some fireside chat here for 20 or 25 minutes because I know that's going to be fun here with Matt. And then would love to make this interactive so anyone that's got a question, just pop up your hand. We'll make sure we circulate the mic for the benefit of the webcast.

So with that, Matt, thanks so much for having -- for being here.

I'm grateful to be here. It's been a fast year since we were here together last.

Yes. Yes. I know a lot of good stuff that's happened, too. So I definitely want to jump into that. But maybe for those of us that are less familiar with the company, could you just maybe start with an overview of Waystar? And as part of that, maybe recap some of the points from last quarter that you were most proud of to just make sure we're all on the same page?

Absolutely. Waystar is a cloud-native software platform that's purpose built to help health care providers as they interact with insurance companies and as also as they interact with patients, to help those providers get paid faster, more efficiently and more accurately than they ever have before. We serve 1 million providers -- more than 1 million providers across our platform, including 17 of the top 20 hospitals and health systems in the United States today.

And we help them connect to every insurance company, including the government forms of insurance, Medicare and Medicaid, across the United States. And those providers are reaching approximately 50% of the U.S. patient population. And we're deploying AI on our platform as we serve these more than 1 million providers to help them bring efficiency and help them automate tasks that historically have been manual for a long time. We're helping to bring automation and insight and productivity to these provider organizations.

And our mission is taking hold. We've been public now since June of 2024. We now have had our sixth consecutive quarter of revenue and EBITDA beat above the consensus, the analyst consensus. Our business is performing well, and we have a sense of conviction in our business. In fact, we updated our full year 2025 guidance for '25, more than the revenue and EBITDA beat in Q3. So we're thrilled to have that.

A real beat and raise.

A real beat and raise. The midpoint of our guidance reflects $1.090 billion of revenue and is about 12% revenue growth year-over-year. So we're really a Rule of 50 business because we're producing greater than 40% adjusted EBITDA margins and converting a majority of that to free cash flow, and that allows us to do a number of good things.

Boy, I talk to our companies that are aspiring to a Rule of 40 and here we go on a Rule of 50, so that's a great highlight. I want to dig into some of the points that you mentioned just around the contours of the business like your acquisition of Iodine. But before we do that, right, I'd love to maybe do a little bit of a mini teach-in or a mini 101 here for tech investors just on the revenue cycle management space because I think it's another space that necessarily a lot of tech investors are following.

And so as I've spent time with the company, folks in the industry really talk about front end, right, front end, mid-cycle back-end revenue cycle management. Maybe it will be really helpful as all of us have gone to a physician, a doctor or some sort of medical professional, maybe you can just walk us through an example. Let's say, I go see my primary care physician for an annual checkup. Maybe you could just walk us through what are some of the key tools that Waystar provides in that process in terms of what's front end, what's mid-cycle, what's back end, taking us from sort of the appointment all the way to reimbursement?

Perfect. Yes, great setup. So we can relate to this, right? So Waystar's workflow platform is organized to help the provider understand who the patient is on the front end. They understand who that patient is and their financial ability to pay. For many patients, that means they have some form of insurance. It might be commercial insurance through their employer, it might be Medicare or Medicaid. Waystar has software that uses AI to automate the insurance eligibility verification process.

We also detect insurance coverage. Think about the nobility of this and humanity of this. We detect insurance coverage for a patient when they show up and they may not even know if they have access to health care insurance or not. So we've got AI working across our more than 6 billion insurance transactions that we're processing annually, to scan for whether or not a patient might be eligible for insurance coverage.

We are then helping to the provider interact with the payer before they see the patient especially if the health service is known, that the provider may need to get authorization from the payer to perform a certain health service. If it's an MRI or a complex laboratory test or something like that, they'll need to get insurance authorization, something that's referred to as prior authorization on that front end to know whether or not the patient is going to be insured for that service or to get approval from the payer. So we do all of that in a highly automated way. Historically, all of that's been done very manually in a very cumbersome way. So we're bringing efficiency and automation to that.

In the middle part of the revenue cycle, that really kicks in when a provider has an encounter with a patient. You can probably picture this in your minds but historically, the provider might see the patient and go their whole day and then at the end of the day, try to remember exactly what did they do with that patient and try to account for it in the patients. clinical record. Oftentimes in the clinical chart, there are unstructured clinical notes where they either remember or perhaps there's a physician assistant scribing in the clinical chart real time if they happen to be attending the patient's and that provider visit.

But therein is the middle part begins. And typically, historically, the middle part is where the source of a lot of manual work, agitation and inefficiency begin to occur, the source of where a claim could get denied. In fact, 60 million claims get denied beginning somewhere in that middle part of the revenue cycle. Waystar has a solution that we just acquired through Iodine that takes unstructured clinical information and using AI, begins to filter and improve that information. So that on the other side of that, a patient discharge information is cleared and understood using accurate diagnostic codes but then can also be used to create an accurate claim. And automating that process with software and AI, which we do, is unlocking tremendous value for providers and for patients.

On the back end of the revenue cycle then, we're processing insurance claims, and we're doing it at scale. Again, we're processing 6 billion insurance claims annually that constitute nearly $2 trillion of gross claim charges, and we're doing it with market-leading first pass claim acceptance rates that are nearly 99% across our entire platform. So while we're talking about this one patient example, imagine us seeing approximately 50% of the U.S. patient population that's flowing through Waystar's software at some point in their year and we're helping to bring tremendous efficiency to that provider transparency to the patient.

On the back end, not only are we processing the claim accurately. In the case where a claim might get denied, we're helping the provider to, again, use AI tools to automatically appeal that denied claim and have those denied claims get overturned. And our results are remarkable. We're having tremendous success in -- it's a prime use case for GenAI, by the way -- to create automated appeal letters that are leveraging clinical information and administrative health plan level information to help the provider return that denied claim. And that helps the patient and it helps the provider. It brings fairness to this historically imbalance system.

The last thing I'd say is we offer an integrated patient payment suite. So using all of the insurance knowledge that we have, we're informing what the patient financial responsibility is with AI-driven insights about what their copayment is, what their they're deductible, the remaining portion of their payment is reflecting the deductible balance that might be due. So we're doing a bunch of these things on our platform from front, middle to back and we're bringing unprecedented efficiency to this process in health care that historically has been very cumbersome and has resulted in nearly $400 billion a year of administrative waste.

So I mean what I take away from that is that we've got a really complete platform. I think Iodine is going to add to that, right, which we'll touch on in a second. But also there's a lot of opportunity for automation, right, which is where I'm sure we're going to talk a little bit about AI in discussion as well. But maybe another foundational question I want to ask again, just for the benefit of our tech investor audience. I mean Waystar's business is about 50-50 subscription and volume-based revenue. We'll call that pre-Iodine, right? We'll layer on Iodine in a second. But sometimes when software investors hear volume based, they immediately think not recurring. So maybe you could sort of share with us maybe the visibility that you have into that volume-based line, if you will?

You bet. So we have exceptional visibility to our revenue growth. In fact, our long-term organic revenue growth target is low double digits. And we've exceeded that every quarter that we've been public and have great confidence and conviction in our business model as we look ahead to the future. As you noted, 50% of our revenue today is subscription on a per provider per month kind of model. And the types of clients of ours that use that per provider per month subscription tend to be the types of doctors that practice in 10 to 20 to 50 doctor groups. Think orthopedic surgeons that are practicing together, cardiologists, primary care physicians.

Those that take advantage of our volume metric volumetric contractual relationship with us, they tend to be larger hospitals where a better measure of activity in those hospitals tends to be the number of patient visits that they have that tie to an insurance transaction or something that Waystar could help process for them. So typically, in those relationships, rather than a per provider per month subscription, we create a volumetric type relationship where there are volume minimums. And then on top of that, there are volume overages.

We get great visibility to all of those volumes because we're processing that insurance transaction or those transactional volumes through our software every single day. And they're very predictable. We start each year with about 98% visibility on future years' revenue opportunity. So the go get tends to be small and with coming from new clients that we have, And that gives us confidence in the business that we're building.

A portion of the volume metric side of our business, again, approximately 50-50, but about 30% of the volumetric side of our business is patient payment dollar volume related. So again, as I highlighted a moment ago, we offer an integrated patient payment solution on our platform. That's really helpful for providers, and it's helpful for patients to help them understand what their financial responsibility is going to be. And of that 30%, that is a take rate relationship. So for every dollar we process, we have a modest take rate on that dollar volume that we process.

And again, great visibility to that. We like the secular trend there because as you likely know, more and more patients are participating in high deductible health plans that require them to pay out of pocket and meet their deductible, which typically resets every January, and they fulfill that deductible as they visit doctors or hospitals throughout the year. And so we like the nature of our business model, fairly predictable.

Yes, absolutely. Maybe to put a bow on sort of that volumetric part of the business, I think one of the things that Steve mentioned on the Q3 call was that health care utilization has been elevated, it seems like, for the better part of the past year. Again, maybe for us tech investors that aren't following your end customers as closely, what do you look at to sort of get reads on how utilization is trending? And how should we -- maybe relatedly, because you talked about sort of the move to high deductible plans, which is very topical. But how should we be thinking about the seasonality in that volumetric part of the business?

Yes. So a lot to unpack there. Let me say this, utilization, Waystar starts in our growth algorithm, we start with an assumption that ties to a 60-year historical trend, which is that utilization increases about 1% to 2% every year. Utilization is a measure of how much patients are visiting the providers. And our business model is fine-tuned to help providers address utilization and to see patients. But that's where we start, 1% to 2% is what we conservatively model.

We've seen that in higher utilization years, that tends to mean patients are seeing the provider more or sooner in the year. And if they're participating in a high deductible health plan, then they're coming out of pocket to pay for their health care sooner. And that's what we've noted this year. Given higher utilization, as a patient meets their deductible, there tends to be some seasonality in the second half -- that starts in the second half of the year. And of course, we prudently or conservatively model that. And the Q4 guidance that we gave suggested that our Q4 growth reflecting the patient payment seasonality would be about 8% before it resets on January 1, and we go back to our kind of normal growth. We did that, but we also updated our guidance for 2025, too. So we feel good about our business. So hopefully, that's helpful.

Yes, that's really helpful, actually. I want to shift gears to AI a little bit, right, because it's clearly been topical for all of our application software companies. But I also think it's particularly topical in your end market because revenue cycle management is so process oriented. As you is that was the reason why I wanted to go through kind of the there different parts of the revenue cycle management process. So maybe, Matt, you could just talk to us about what generative or agentic AI looks like for Waystar in the next couple of years, perhaps leveraging some of what you walked us through in terms of your different parts of the workflow? Maybe we'll start there.

Thank you. Yes, foundationally, we believe that Waystar will be a long-term winner in the AI race in revenue cycle, and we've got a number of things that we're doing that are competitively differentiating. And let me start. So Waystar is primarily focused on leveraging AI to automate some of these tasks that have been manually performed. We've conditioned over 1 million providers and end users that we serve to consume AI that we've been delivering for over a decade. To do some of the work that I described it as bringing insight or automation or prioritization of work on this workflow platform that we have.

We have a tremendous amount of billions of administrative data elements. And now with Iodine, Iodine's processing through its software as we unite that and put that onto the Waystar software platform. Iodine is processing about 34% of all patient discharges that occur in the United States today, so a tremendous amount of clinical data. So just foundationally, we believe that data is in Waystar's data foundry, if you will. That's proprietary data that Waystar has access to, to train and fine-tune our LLMs and AI models to further automate, to further bring insight to and further delight our clients.

And as we've conditioned them to consume AI and as we deliver more of it that fits intuitively into how they think about the work that they do, we believe Waystar will be a long-term winner. We think the winning solution, as LLMs are important today, the winning solution will really be those that have access to the most relevant and proprietary data. And that's where Waystar -- you'll see as we unite Iodine with Waystar, this tremendous data foundry with billions of data elements that will train our AI models on will deliver real value. And we're already doing that today.

We've announced at the start of 24 several GenAI-based capabilities that we've launched to our clients, they're seeing tremendous efficiency gain in the world of preventing denied claims much more rapidly, doing far less work, deploying autonomous generative AI to gather content and information that will help us automate the prior authorization, for example. And on the other side of that, when a claim does get denied, we're using GenAI capability to automatically draft appeal letters that can then be submitted and we're doing that with better accuracy than a human can produce in moments, not hours and days to gather and write those appeal letters.

So we're doing some remarkable things there. And I'm pleased to report, we mentioned this a few weeks ago that we have a very robust pipeline of opportunity as we look ahead in our business with a record number of RFPs that we're participating in with strong win rates with tremendous sales activity. I alluded to the fact then, but I'd like to share with you today that a portion of the sales pipeline of opportunity that we closed year-to-date, these are bookings that we've won, have come from these new AI modules that we've sold. And I'm pleased to report that 31%, more than 30% of all of our bookings that we've closed year-to-date, have come from a new AI solution.

So Waystar is delivering AI capability that increasingly will impact our business model. And we believe we're very well positioned to win because of the proprietary data that we'll use to train the LLM, and we think that's the long-term winning strategy in this game.

Well, 31% of year-to-date bookings is a heck of a ramp.

And if you were to look at our qualified pipeline of opportunity that, again, is very robust, you see a nice mix of new clients that we're going after, cross-sell opportunities we're going after where AI is playing an increasing role in the opportunities that were -- and the dialogue that we're having with prospects and with clients. We're very encouraged by the work that we're doing.

Yes, absolutely. I mean it's funny, we've got a lot of coverage companies that are kind of talking about AI very conceptually. But in an industry like health care, where you can actually drive real dollars, real value, that's great to see. Maybe the follow-on question there is, how do we monetize it, right? Because you provide so much value to the health care industry. I mean, is this something where we can command maybe higher pricing for? Is it a separately billable SKU? How do we -- and there are multiple ways that you can monetize, but I'm just kind of curious, what's been the main driver of that 31%?

Well, so certainly, we sell everything on an ROI-based concept. We're turning AI hype into this ROI reality discussion with clients. As we think about monetization, I think there are 4 ways that we think about monetizing the AI benefit that we're delivering to clients. The first is certainly elongating relationships with clients. As we infuse more GenAI capability into existing software SKUs and they're consuming that, we're creating enduring retention with clients. We have fabulous gross revenue retention already at 97%, but elongating that it's a great starting point.

Again, as we infuse AI capability into our current software modules, there's a chance to reflect pricing, pricing to value there. We typically have an annual price increase program that averages about 3% today. And without disclosing more from a pricing perspective, we expect to be able to price AI solutions to the value that they're delivering, and we know they're delivering real value. Third, you mentioned new SKUs. We're excited about the new SKUs that we're launching and the value that they will bring and will have the chance to price those to value as well.

And then the fourth thing I'd say is it's not necessarily a commercialization effort, but more of an internal one. Internally, we've identified more than 100 AI use cases where we can use AI internally to delight clients and create market-leading client experiences. We're already really good at that. We have market-leading Net Promoter Scores that exceed 70 and we're thrilled with how we delight our clients but we're also able to create operating leverage. And we have a long-term EBITDA margin target of 40% today, adjusted EBITDA margin target of 40%. You've seen us the last couple of quarters exceed that. We've recently been at 41%, 42%. I think you're starting to see some of the impact of some of the operating leverage that we're creating.

My goal for our team is given the market moment and the opportunity to continue to drive growth and innovation, let's run the business at 40%, even though we know we could run it and higher than that. Let's create operating leverage through some of these AI use cases that we know are creating value. And then let's use that incremental identified resources to invest back in the business to drive further innovation and further growth and delight our clients.

It's funny to cover a company that would have a saying of, well, we would spend our way to our margin target right? And it sounds like a very...

You say invest.

Invest our way to our margin target, absolutely. Absolutely.

But we will be disciplined in how we think about the whole thing.

Absolutely, and that's definitely shown. I want to wrap up with some financial questions here in a second. But I think that AI point was really interesting. Any questions here before we move on?

Maybe just to move to a couple of financial questions here for you, Matt. I mean, clearly, this has been a strong year for growth. I think we've seen growth year-to-date in the mid-teens versus what we've seen historically kind of in the low double-digit growth, which you've just been so consistent with since the IPO. It's obviously early to guide to '26 and I'm not looking for a guide, but what are maybe some of the puts and takes that you want us thinking about from a growth perspective as we go into next year high level?

Yes, we have seen year-to-date growth of about 14%. We're thrilled with that. That's above our low double-digit kind of revenue growth target, for good reason. The business is creating value for our clients. And again, our full year '25 target that we've shared is 12%. I think what we would highlight to investors is that our long-term growth target is organic low double-digit revenue growth. And things that influence that our ability to launch and deliver new capabilities. As I just mentioned, we're doing that and our provider clients are beginning to buy those solutions and we'll implement those solutions and create value and be able to price to value appropriately.

Driving cross-sell on our platform, where it's an incredible cross-sell opportunity. We can more than double the size of our company if we didn't add another client and we just sold the existing software solutions that we have to those clients. We could more than double the size of our business. So that's another thing that can inflect growth.

The third is, as we think about this exciting acquisition and as we unite with Waystar, what we identified in Iodine that stands out to us is not only a philosophically be very aligned with us as we think about AI market leadership, but they have 151 clients that represent over 1,000 hospitals. Waystar serves well over 1,000 hospitals. And on a combined basis, we serve 17 of the top 20. But as we look at the Venn diagram of their group of clients and ours, there's about a 35% overlap. So one of the things that could really inflect growth as we think about it is how quickly can we begin to cross-sell Waystar solutions to Iodine clients and Iodine solutions to Waystar clients.

And of course, there's other factors that we look ahead to with confidence: the robustness of our pipeline, our continued strong win rates, the fact that we see great sales activity, and we're creating tremendous client referenceability. I'd highlight the fact that every spring and every fall, we do an Innovation Showcase. That's available on our website, you can see previous ones on our website where we're highlighting areas where Waystar is using AI to solve a real market problem in health care we're showing how our AI works. And then we're showing a client testimonial, a live person talking about how they're getting value from using our solution.

And so I'm generally excited about the momentum that we're creating in the business. And we've seen some of the stuff going on recently in our stock price. It feels like there's misunderstandings that I'm working to correct, and I hope you have a sense of confidence that I feel in our business. And the silver lining is I think there's a good buying opportunity right now for Waystar.

Yes. Now, I wanted to ask you about that point about where you think the disconnect might be, but we hit on that. Maybe the last question I want to ask on then is on capital structure. I think we financed the Iodine deal with a combination of debt, equity and some cash on the balance sheet. And ever since the IPO, we've just done a really good job of steadily delevering the balance sheet. Should we expect to continue to see sort of -- as you and the Board kind of think about capital allocation, should we sort of expect to see a similar pace of delevering or anything else that you want to snow in capital allocation?

Our business produces tremendous free cash flow. This year, I think we've averaged greater than 80% of adjusted EBITDA to free cash flow conversion. So we delever full turn a year and we did more than that the first kind of -- our more than that in the first 5 quarters we were public. So we're grateful for that. I think that puts us in a strong position. Our strong cash flow production gives us optionality. And we'll continue to be very disciplined as we approach all options on the table. So to continue to delever, to use our cash for other things as we evaluate the strength of our business and some of the opportunities we see in the market.

Got it. Excellent. Well, there's so much to talk about there, but I think that's about all the time that we have left. Matt, Sue, thanks so much for being with us here today. Really enjoyed it.

Thank you. Thanks for hosting us. Great to see you today.

Yes, absolutely. Same here, Matt.

Thank you.

All right. I think we're just about at time here. So thank you. Good afternoon, everyone, and thanks for joining us at the Waystar fireside chat. My name is Daniel Grosslight, I'm the health care technology and distribution analyst here at Citi.

And I'm very pleased to welcome Steve Oreskovich, the CFO of Waystar. Thank you for making the trip down to Miami.

Yes. Thank you for the time.

Maybe if we can get started with just a little bit of level-setting, for people who are newer to the Waystar story. You're still relatively new to the public markets. Can you just start by framing the core problem you're solving for health care providers?

And in particular, the question that I get the most, mostly from people who are newer to the story, is about where you fit within the competitive dynamic, the competitive field, I should say, because it is quite crowded. Can you discuss the importance of being kind of an end-to-end platform and the more modular way you approach that end-to-end platform versus some of the more full-stack outsourcers?

Yes, definitely, and appreciate the question. So if you think at its core, our clients, the health care providers for decades now have continued to see various types of pressure on their top line revenue reimbursement-wise. More recently, maybe the One Big Beautiful Bill and some of the auths to that, right? Where Waystar comes in is we're helping them with our software platform and the solutions on that hosted platform more efficiently and effectively, ensure they're getting paid in full for the services that they do.

And where we really go to market from a differentiation standpoint is talking about illustrating and showing them the ROI we believe we can deliver, our software can deliver, and lower their total cost of ownership. So as they're feeling top line pressures, we're able to help them. And especially if you think about health systems and hospitals that are working on relatively thin bottom line margins, we're helping them to maintain or expand those bottom line margins.

If we think about it from a competitive standpoint, I think there's a couple of things that are really resonating versus other legacy incumbents we see in the field out there. The first is the platform approach, right? We're hearing more and more from our clients that they want to work with a single trusted provider, highly cyber-secure, and reduce the number of vendors that they have in their ecosystem.

I think the second thing is I'd mentioned earlier the approach of illustrating the ROI and benefit that we can perform and we can deliver for our clients. And I think a tangible way to illustrate that is, as you think about nationally, typically, there's still about a 16% to 17% denial rate occurring when a claim is being submitted to a payer, right? We typically see a point differentiation in the starting point of that, meaning as a claim is initially delivered, we call it a first-pass clean claim rate, almost 99% across all our clients.

So if you think about that in terms of the amount of work that's spent in that follow-up and you have a provider that you're -- or a vendor, sorry, that you're utilizing today that's delivering a low-90s first-pass clean claim rate, versus Waystar, you're talking a marked difference in the amount of work that has to occur thereafter to rightfully get paid for the services that our clients are providing.

Got it. So as you go to market, and we'll dig a bit deeper into the competitive dynamic later, but as you go to market, are you mostly replacing kind of these vendors that just haven't performed well? Or is it completely you replacing very traditional school ways of doing things on paper? What are you...

Yes. A bit of both, right? So we still see homegrown systems and manual effort and work that's being done. I think what we're starting to see more and more is the opportunity -- especially as we talked to and I've mentioned earlier, the approach of having all of our software solutions on a single platform. We're starting to see in the RFPs that we're in, and in the pipeline, more opportunities to eliminate or to replace several different vendors they may be using today with Waystar.

Because they're seeing the benefits to clients, and potential clients -- are seeing the benefits of working with a single vendor, again, highly secure, highly cyber-secure, sorry, with a good set of existing clients that are referable or can actually be leading and helping us out with that conversations with potential clients on illustrating what Waystar was able to do for them. So it's more -- it's a combination of what we commit to, but then also having others speak on our behalf.

Yes. Yes, makes sense. I want to touch on one of your recent acquisitions, a large acquisition you made, the $1.25 billion acquisition of Iodine. This is really interesting because it kind of got you more into the clinical documentation setting. Could you just maybe talk a little bit about the value that Iodine is bringing to your end-to-end platform? Because I think as I look at your platform, it's pretty robust, but this is kind of a new step for you. And what opportunities does this specifically unlock for you?

Yes. We've talked about previously the opportunity for us to help our clients be able to submit what we've called the perfect, undeniable claim, right? That's our out-year vision. I think Iodine goes a long way to helping that occur.

If you think of the Waystar solutions today, we do really well at the outset of when a provider interacts with a patient, meaning helping to look for eligibility, prior authorization, coverage detection. And then obviously, you mentioned how we have a point-step differential between the competition on when it comes to processing the claim for them to be paid, interacting with the payers and/or interacting with patients.

What Iodine does for us is it helps in that process of as the patient and the physician are having his or her interaction and taking, to your point, the clinical diagnostics, and taking those unstructured notes, turning them into the structured information that forms the basis, the codes that form the basis of the claim. So we think by informing and putting together ultimately the Iodine clients and the solutions on the Waystar platform, we can even improve the enhancements and the outcomes that we see today.

The other part of it that we see from a more near-term perspective is often certain aspects of that interaction between the payer and the clinician will require some clinical data in order to ensure that we can eliminate back-and-forth processes that occur one area is in prior authorizations, right? And that is a pain point that has a lot of national coverage and we've heard about lately.

So we think there's an opportunity to take with the Iodine, not only the algorithms, but the clinical information, and allow us to really shorten the time line of enhancements that we were looking to bring already in certain of the Waystar end solutions that we have today.

And can you talk a little bit about the AI models that Iodine also brings to your tech stack?

Yes. I mean it's -- they have over 160 different AI modules that are actually helping to take, again, unstructured information, unstructured data, look at it and help to form the basis of basically reading and helping to form the basis of the clinical codes that go into -- ultimately go into the claims. We think there's opportunities to take that base structure and apply them in other areas into the ecosystem as well, and continue to enhance and shorten the time to market for other solutions that we already had in our product road map.

Yes. Let's talk about a little bit of a nearer-term dynamic. I think 4Q is typically one of the busier quarters from a sales cycle perspective. Now that we're kind of nearing the end of 4Q, how has the sales cycle shaped up this year versus prior years? Are there any solutions that you're seeing kind of outsized demand for? I think you mentioned kind of the pre-auth and, I'm assuming, denials too are big for you. But any solutions that this year had seen a marked change in demand?

Yes. We mentioned on the last earnings call, we see really good activity on, not only from a pipeline perspective and a demand perspective, but also in the RFP side. And those tend to be the larger opportunities out there. I think probably specific solution, are we seeing a marked differential from what we've historically seen? It's along those same lines. There's, obviously, in the areas that you mentioned, Daniel.

I think where we're really seeing excitement and significant uptick is in what we would consider multiple sales solutions platform type solutions and opportunities with new clients, that earlier comment I made about the opportunity and the desire for potential clients to eliminate or reduce the number of vendors in the ecosystem. So we're starting to see -- and we started to see that in the past 12 months or so. Starting to really see a nice uptick in that specific types of opportunities.

Got it. Okay. And from the RFPs, is that mostly health systems, or is it really throughout -- you typically are bigger on the ambulatory space. But has the nature of the RFP and who's running an RFP changed as well?

It remains largely health systems and hospitals, but then those larger enterprise, ambulatory companies also do a similar type structured arrangement when they're looking at bringing on a new vendor in their ecosystem as well.

Okay. Great. Utilization has been very strong for you guys for the past couple of years. I'm wondering, is this a temporary bump that you're seeing? Or is this more of a structural shift in the market that is durable for the next few years? And importantly, how does this impact the demand for your platform? And do you think it will intensify provider focus on revenue capture from that utilization?

Yes. A couple of things. So in general, our revenue mix is about 50% subscription, 50% volume-based. So we like that mix because it allows us to capture the upside from utilization, whether that's coming from, for the past decades now, continued patient greater utilization of the health care system, as I'll put myself in these category, as we continue to age, right? I think also our solutions allow our clients to become more efficient, more effective and further increase their capacity as well. So we get to see upside when that occurs.

To your point, we've seen continued utilization. We've commented strong utilization, that we've commented on in our prior calls for about the past 5, 6 quarters now, above what we've historically seen. Is that a step-mark change into what our expectations would be going forward? I don't think we've seen anything that would say what we've seen over the past 5 to 6 quarters would change at any immediate point in time in the future. Am I ready to sit here as a CFO and try to call the future, at least the next couple of years at this point? Probably not.

But feel really good about the totality of our revenue sort of algorithm, whether it's subscription and software, whether it's coming from newer or existing clients, and the durability of that to allow us to continue to meet our long-term low double-digit revenue growth rate, and continue to reinvest back in the business to help us ultimately exceed that.

Yes. We'll switch over to AI. We already mentioned it with Iodine and what that brings to your platform. But you also have a partnership with Google, and you've rolled out several generative AI products, the Altitude product suite, which is really interesting and I think one of the only ways to play the AI trade right now in health care in a real way. A lot of people talk about AI, but you're actually introducing products that have real AI in it. How are you pricing these products? And what has the early reception been to these products?

Yes. Maybe I'll hit that in reverse, if it's okay. So the early reception has been fantastic, right? And to your point, we're -- and we've used this phrase before, we're taking AI hype and turning it into ROI reality.

You mentioned 2 pain point areas earlier, being prior authorizations, right? The generative AI solution that we brought so far, and the clients that are using it, are reporting about a 70% decrease in the time to go ahead and receive and interact with the payers and receive that prior authorization. That's fantastic results if you think of it, as you and I as patients, of having faster time to understand what our next care path step is, right?

In the area -- the other area you mentioned, in denials, right? Our denials and appeals management solution, we've seen, with the generative AI capabilities enhanced into that, a decrease of 90% of the time it takes to go ahead and not only gather the information and understand why it was denied, but turn around, appeals -- put the appeal package together and submit that appeals package to the payer, right? That's significant savings that our clients are seeing, right?

How are we then in turn looking to monetize those rightfully for the ROI that we are delivering with those solutions? It's in a couple of different ways, right? For those early adopters, we'll look at -- that helped us formulate these, we're looking, think through how do we -- in our annual price increase or price uplift program that we've had throughout our entire client base for several years now, how do we look to, in the next turn of interacting with that client, price to value there?

We've also created new SKUs, you alluded to them. They're the peak product solutions; you can see on our website. That also allows for those existing clients have not yet adopted that are looking to adopt. Or for new clients, for us to charge a differentiated price point for those new solutions because of the vast differential in savings that we think they're allowing those clients to achieve.

Yes. And is there any way to dimensionalize what percent of revenue or percent of clients have adopted some of these newer AI-driven technologies?

Yes, we haven't stated specifics around it yet from an adoption perspective. What we did comment on is we're starting to see a healthier and healthier portion of the pipeline, and started to see the last couple of quarters a growing portion of the bookings being comprised of these solutions.

So we're excited about where we stand today. We still think we're in the early innings of the opportunity in front of us. And we're going to continue to -- you alluded to it earlier, we're going to continue to look at it on a solution-by-solution basis and continue to bring to market. So from a CFO perspective, the beauty of that is that it's not going to be a one big bang and done for us from a revenue growth opportunity. It's going to be continued -- a long-term continued layering effect.

And remind me, there are -- typically, I know every contract is a little bit different, but there are typically, even for non-AI products, annual escalators. Can you frame what a typical annual escalator is? And then how perhaps the GenAI escalator compares to that?

Yes. So if you look at our bridge from gross revenue retention to net, it typically starts out with very strong 97% gross revenue retention. We talked about the patient utilization. Annually, we continue to see increases there. It generally drives about a 1% to 2% uplift. Price increases, the program we've had in place now for 7 years generates generally between 3% and 4%. And then as we get to the 108% to 110% net revenue retention rate, 6% to 8% comes through cross-sell.

We haven't yet indicated how much we think we can change that 3% to 4% dynamic. Obviously, it will be a change over time, but we think there's opportunity on client-by-client basis as appropriate to continue to increase that. And then obviously, the other place that it will benefit the NRR rate altogether will be in that cross-sell, upsell as those new SKUs go in.

Yes. Makes sense. Okay. And then looking ahead, what do you think is next for GenAI? Do you think you'll move to kind of an agentic AI product at some point? How should we think about the future of that product set?

Yes. So look, we've got a lot of excitement. I don't want to get ahead of our tech folks, I should say. They might not be happy if I start committing us to certain things on this call here today. But I think it's safe to say that we -- we mentioned a while back that, at the beginning of the year, we were looking at 16 use cases. We've obviously brought several of those to market. We continue to add to that.

We typically have every 6 months or so, what we call our innovation showcase. It's on our websites as well. You could see the one that we recently did and the solutions that we highlighted that we're bringing to bear that have generative AI as part of that. Going forward in the future, would I expect agentic AI to be part of the solutions that we bring forward as well and even things that we haven't thought of yet today? 100%.

Got it. Okay. Let's switch over to the competitive dynamic. As I alluded to, it's a very crowded field. And this is, as I mentioned, probably one of the questions that I get asked most often, because you do seem to hear about a new company every week or so that is AI-native revenue cycle management. You hear about what Epic and Cerner are doing on the revenue cycle management side, which has not typically been an area of strength for them, but they do tend to own, at least on the health system side, the tech stack. And then you've got your traditional competitors, which have always been around.

How do you differentiate yourself among those different constituencies? And also, there is this dynamic too where you're partners with EHR companies, so it's this coopetition dynamic too that is playing out in the market. How do you maintain those strong relationships while also being a competitor?

Yes. Several parts of the question, so I'll try to go through them in sort of pieces. So if we look at the existing or what you might call legacy competitive field, I think the differentiation point comes in the marked differential of ROI versus the solutions that they're providing.

It also comes in our client experience, right? So we tend to believe and live by that we have a high-touch client experience, right? And by that, I mean, I'll give you an example. For clients of a certain size, we have what we call a client success management team. That team is there to say, are you receiving the benefits and are you gaining the benefit that you would get when you first bought the solution? How can I help solve your challenges?

They're also there to identify and look for new opportunities for us to be able to work with that client in other areas where they're having challenges with other -- whether homegrown systems or other vendors that are not meeting their needs, right? So we think we have a highly differentiated technological and client experience approach.

If you look at the new potential upstarts that you mentioned, and we see the same splashy announcements as well. I think it comes down to the differential between hype and ROI reality, right? So for instance, I'll take in the area of prior authorizations clients, as we -- or a vendor, a new vendor says, "We've solved for and automated prior authorizations." Well, when you dig under the covers, what you find is for the couple of clients that they have, maybe they're doing it for a few specialties and a few end-user payers. Where when we're bringing something to bear, that's a highly -- a more highly automated approach to prior authorizations, it's for the entirety, that 70% opportunity. The time reduction I had mentioned earlier, it's for the entirety across the continuum of our client base.

I'd say the other thing is we believe that we've got a bit of a moat differential both versus those new upstarts and probably the EHR, theirs as well. And the fact that we have this big database over 6 billion transactions processed annually for our LLMs to learn from, which means that they can learn faster and they can be more accurate in their output, right?

The other thing is the connectivity within the ecosystem that we have today is a marked differential as well, whether that's with over 500, not only EHR practice management systems, but thousands of end-use payers where we have direct connection to as well. So as we're solving problems for our customers in the ecosystem, we're doing it in a way that has mass connectivity and we're solving it on a broader scale, right?

We've also, to your point in mentioning we have good partnerships with Epic, a contractual partnership with Oracle, Cerner, MEDITECH as well on the health system and hospital side. So they are good partners and whom we work with. I think what we've seen in the past is when they've made certain announcements, they've been more of an effect of looking to put the market on hold while they develop something, right?

And what has tended to come out in the past is we've seen that there is still an opportunity for Waystar to partner with those clients, that they would say they have a solution to provide, because of the marked differential in the ROI that we're still able to deliver versus what they may bring to bear is more of a minimally viable solution.

So not discouraging or disparaging any of the competition out there. We like to compete, but we think we still have ways that we are ahead of the competition in certain areas and obviously looking to continue to maintain that lead, whether it's technologically or in the client experience.

Yes, makes sense. And I'm wondering though, do you think as AI becomes more prevalent, that this dynamic changes at all? And what I mean by that is I get a lot of questions also on how does -- and this isn't just for revenue cycle management, but you can ask this question for any vertical SaaS company. How does vertical SaaS operate in an AI dominated industry?

And I'm thinking maybe we'll have this barbell effect where it does make it easier for health systems and larger ambulatory groups to in-source with AI tools, and maybe it does make the EHRs a little bit better in terms of product quality or a little bit faster to market. Do you see that -- it's probably not here right now, but looking out a year or 2 years from now, do you see AI changing the competitive dynamic and that barbelling effect?

Yes. I think what we're seeing today, I won't try to predict the future, but what we're seeing today is, to your point, a lot of interest, right, from our clients, the providers, the health care providers. And what I think they're looking at when you talk about do I want to as a health care provider start to use generative AI internally to solve problems versus work with a vendor like Waystar, you start to think about the ways in which they're going to have to connect into the health care ecosystem, right? They would have to solve that problem to all of their payers. They would have to solve that problem as it connects to a multiple of their other systems that they're utilizing internally.

What we see and hear more and more is, hey, look, even if they're evaluating a point solution from a new generative AI company out there, is we'd rather look and work with a trusted adviser like Waystar that we know and we can see what you're -- how you're innovating, not only today but how you're looking to innovate into the future, rather than to have to not only design that ourselves, but then have to continue to maintain that ourselves in an ever-changing environment.

I think that's part of the beauty of where we sit in the health care ecosystem, and maybe some from a vertical SaaS provider or a vendor as well, is that the workflow involved in it, the interconnectivity involved in it with other vendors is significant.

So could there be some on the peripheries -- I don't know that I'd necessarily see it as a dumbbell approach, right, or barbell approach. But could there be some improvement opportunities on the peripheries one way or the other that also enhance and help bring forward and help reduce waste in the health care ecosystem? Yes. Do I see it being sort of a pressure point on Waystar and our opportunity in front of us? No. Not today.

Got it. Okay. And let's talk about some of that connectivity that you do have within the health care system. When I think about you guys, you also have a big clearinghouse business, which has benefited from some competitor disruption. Can you -- I don't think you've ever really sized the clearinghouse business, but is there any qualitative commentary around the size of that business that you can provide?

And then really my question is with that disruption that came from your competitor, there's obviously a big upsell opportunity. And I think that was one of -- that has been one of the drivers of your very strong dollar-based retention. Can you just comment on the progress that you've made and if there's more juice to squeeze out of those clients?

Yes. I'll hit it in reverse, if that's okay. So yes, there's definitely more juice to squeeze, more cross-sell opportunity, so to speak. We've talked about in the past in a couple of phases. Phase one being those clients -- potential clients that were hard-stop business down that we helped bring on board, sign them intentionally to standard Waystar agreements, 2 to 3 years in contract length, whatever, and evergreen annual renewals thereafter, right? And mentioned a couple of quarters ago that we've seen about 30% of those clients looking at follow-on sales opportunities in the pipeline, which is right in line with what we see in any new cohort of clients that we bring on.

So feel really good about the trust we've built with that client base, the opportunities to continue to cross-sell into those client base. And we've got a go-to-market team that's wholly focused on cross-sell, upsell within our existing client base, that's highly focused on those and all our -- all other clients that we have, right?

We also noted that there's this -- that there was a phase two. So those clients that could weather the storm or contractual obligations that were significant enough -- potential clients, sorry, that were significant enough, that we thought were going to come up for opportunities here around this time and through the next couple of years. And we're seeing that strength in our commentary in the surrounding RFPs in the pipeline. So we feel really good about that opportunity to continue to win market share.

Now that being said, as we disclosed in our S-1, we have really high win rates against the entirety of the competition, 80% plus, right? So feel really, really good about where that sits and where the opportunity could go.

The second part of your -- the first part of your question was around?

Sizing how big the clearinghouse is...

Yes, sizing, how big. Sorry. Thank you for the reminder. So if you think about it from a go-to-market perspective, our teams are focused not only on new client and cross-sell opportunities, but also health systems and hospitals and ambulatory, right?

Typically, the sale process into an ambulatory client tends to be that, we call it the claims management solution suite or solutions in their clearinghouse, right? So if you think about ambulatory from a revenue perspective being about 2/3 of the business, health system and hospital revenue being about 1/3 of the business, you can kind of get a sense of how many ambulatory clients and revenue is -- has -- includes those clearinghouse solutions, right?

The health system and hospital opportunity and go-to-market approach tends to be one that is very diagnostic and pretty agnostic, meaning we say, what is the solution that we can help you -- what is a problem area we can help you solve today? Land that, prove ourselves. And then expand and gain other solution sales in there. So it's not focused on it has to start with those clearinghouse solutions. Rather, it has many paths and ways that we can continue to expand -- enter into and expand with clients in that area.

So hopefully, that's helpful sizing to say it is a meaningful portion of the revenue that we derive. And obviously, it's a different -- it's the entry point into most of our ambulatory sales opportunities.

Yes, makes sense. One other industry dynamic that has come up this year is kind of an arms race between provider tech and payer tech. And it does seem like provider tech, and maybe this is just a false narrative and me searching for a narrative, but it does seem like provider tech has kind of gotten the upper hand this year at least. And perhaps next year we'll see payers invest more in their technology stacks to combat some of the headwinds they're facing on the MLR side. Are you seeing a similar dynamic or am I just searching for a narrative here? What's the tension been like between providers and payers as they invest in their technologies?

Yes. As we speak to our clients, I think what they would say is, for years, the playing field was heavily tilted towards the payers, right? And vendors like Waystar are now starting to bring an equality or fairness to it. And as we continue to drive generative AI solutions, it's even helping them further and faster identify and get paid rightfully for the work that they're providing.

We've kind of heard the similar characterization of: is it leading up to an arms race? I mean I'd look at it and say, our hope -- my hope, I'll speak for Steve, my hope is that it helps us -- bring us -- continues to bring us closer and partner more with the payers in opportunities that we can both derive efficiencies into the ecosystem, whether that's through direct API connectivity or otherwise, that we can help illustrate that the work that the payers and the costs that payers are incurring today with manual or inefficient processes in the background, hopefully, vendors like Waystar can help make them more efficient as well and see goodness in the entirety of the ecosystem, as opposed to it kind of building up and trying to be this arms race.

Would you ever consider getting more into payer tech, maybe through payment integrity or something like that?

I'd say never say never, right? But today, we're clearly focused on who our customer set is. Those are the providers. We look at our $17 billion plus total addressable annual market opportunity and the low penetration we have in that. If you blend between ambulatory and health system and hospitals, it's in the high single digits. So we've got a lot of runway within the area that we're fully focused on today. But I wouldn't close out any opportunity in the future.

Okay. Let's stick to the giant opportunity you have in front of you then. You bought Iodine, which got you into kind of clinical document management. You acquired a patient payment asset that got you more into patient payments. Looking forward, where do you see the most opportunity? And this could be organic or inorganic. But where do you see the most opportunity for either expansion into new products, new markets? What's next there?

Yes. Yes. So we're continually looking to listen and understand from our clients' areas of pain points we think we can bring new solutions to help mitigate, right? A couple of areas that we've talked about from past earnings calls are still relevant.

One, potentially, if you look at the front end of where we engage with patients today, the digital front door, you know the market well, obviously, highly fragmented. But it's an area that we're looking at build-buy-partner, that we're studying and understand the opportunity there. Because our end users are business people as well and they know that, if they can engage with and maintain a patient for their life cycle, that's millions of dollars of revenue opportunity for them, right?

The other area is real adjacent to what Iodine does, and it's actually between the clinical diagnostic and the claim. And you might have heard it characterized as autonomous coding, right? And that's an area where we think, and fits really nicely and dovetails nicely into that perfect, undeniable claim, right, is an area where we think there's opportunity to drive efficiencies and drive accuracy and continue to lower the labor burden of our clients and what occurs even today in the technologies that we brought to bear and Waystar and Iodine combined can bring to bear.

Yes. What about ambient scribing? We hear a lot about the hype in that market. Any interest in those solutions?

Yes. I mean an area that we're looking at transparently. We've heard a lot in -- recently there where it seems to -- I don't want to use the word commoditized, but it seems to be getting pretty quick for generative AI to solve there. But the outcome of that is still unstructured clinical notes. So it could be a place to partner, it could be a place internally to look at. I think -- we think that the real benefit is in the ecosystem as it sits today and the future is more on the autonomous coding side.

Got it. Okay. And let's turn to your guide, your '25 guide, which was strong. But to us, it does seem a bit conservative, maybe prudently conservative. If we assume an increase -- a sequential increase in your subscription revenue, it implies kind of a mid-single-digit sequential drop in volume. Can you just remind us of the seasonality in the business and some of the building blocks of your '25 guide?

Yes. So to your point, the '25 guide, hopefully full year and inherent in the fourth quarter, you saw a pickup above the beat on the midpoint of our revenue guidance versus the Q3 beat, which we're really pleased with. It continues to signal, as you noted, strength in the business, at an implied Waystar standalone growth rate in the fourth quarter alone of 8% year-over-year.

It's a consideration of a couple of things. One, sort of the rapid time to revenue last year for those clients that we onboarded and the potential impact that Q4-over-Q4 might be a tougher quarter just from a percentage of revenue growth opportunity.

The other piece is in the 30% of our revenue that comes from patient payments, how those providers interact with and collect from patients, we've seen stronger utilization and payment activity in the earlier half of the year. And we typically see growth year-over-year there. Stronger in the first half of the year versus second half of the year seasonality.

And we're just to you all, to use your word, whether it's a gauge of prudency, we're just trying, to our best estimate, think about where the outcomes could be. At the midpoint of our guide, we think that stronger utilization we see means less payments to occur in the back half of Q4. Obviously, at the upside, on the high side of guidance, it could be a little stronger payment and less patients hitting their deductibles that are on high deductible plans, over a broader swath versus what our internal expectation is.

Got it. And we're just about out of time here, but I'd be remiss not to ask about 2026. I know you're not going to give formal guidance, unless that is something you want to do. But I would like you to kind of help frame how we should be thinking about growth in '26. I think margins are pretty safe, but growth, I think, has been a bigger area of debate, particularly because you have had such -- and I'm talking about on an organic basis, such a nice organic growth over the last couple of years, above your targets. Maybe help decompose kind of the growth, bridge the growth from '25 to '26. Are there any temporary or nonrecurring items in '25 we should be thinking about as we model out '26?

Yes. I appreciate the question, right? And to your point, look forward to in our next earnings call digging deep into 2026. I don't think there's anything we see that significantly changes from what our long-term targets that we have talked about have been, right? Low double-digit revenue growth on an annualized basis, 40% plus adjusted EBITDA margins. Continue to expect strong free cash flow conversion of 70% plus. And then obviously, we have a history of, and I mentioned in the last earnings call, that we continue to expect to delever 1 turn annually.

So I think those are still, as you're looking at long-term projections and how to think about the business, the right way in which to characterize the business.

Great. Well, we are out of time now. Steve, thank you so much for all your time this afternoon. Super interesting.

Thank you, Daniel. Appreciate it.

Good day, and thank you for standing by. Welcome to the Waystar's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sue Dupuly, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining Waystar Third Quarter 2025 earnings call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer; and Steve Oreskovich, Waystar's Chief Financial Officer. This afternoon, we issued a press release announcing our financial results and published an accompanying presentation deck.

You can find these materials at investors.waystar.com. Before we begin, I'd like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance. Examples of these statements include expectations of future financial results, growth and margins.

These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release and the reports we file with the SEC, all of which are available on the IR page of our website.

Any forward-looking statements made on this call are only as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures. These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP.

We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck and our earnings release.

With that, I would like to turn the call over to Matt.

Thank you, Sue, and good afternoon, everyone. In Q3, Waystar continued its strong momentum, achieving solid revenue growth and profitability. This performance was anchored by healthy client retention and expansion, reflecting our leading position in modernizing the health care payment process. Our cloud-based AI-powered software creates compelling value that drives meaningful ROI, strengthens client financial outcomes and improves transparency in the cost of patient care.

Let's review a few key highlights. Reflecting strong execution, Waystar delivered another quarter of double-digit revenue growth and strong margins, outpacing our guidance on both measures. Revenue grew to $269 million, representing 12% year-over-year growth with an adjusted EBITDA margin of 42%.

On October 1, Waystar completed the acquisition of Iodine Software, expanding our reach to more providers uniting clinical, administrative and financial data, increasing the total addressable market and unlocking new opportunities to drive profitable growth.

We announced innovations across our AI-powered platform and engaged hundreds of health care's top technology and industry leaders at Waystar True North. Our annual client conference to foster connection, success and ensure our product road map continues to meet providers' needs today and in the future. At Waystar, the mission is clear, to simplify health care payments, the health care financial system is complex, fragmented and administratively heavy and Waystar is modernizing it through a cloud-based platform that streamlines the entire process.

Our technology helps providers get paid faster, more accurately and with less administrative burden so they can focus on what matters most, delivering quality patient care, purpose-built for health care, our platform integrates with more than 500 electronic health records and practice management systems.

This extensive integration enables us to serve over 1 million providers nationwide of all types and sizes. And we believe Waystar's impact is unmatched. Waystar leads the market in advanced automation and intelligence, leveraging AI-powered workflows, unrivaled data assets and meaningful innovation.

Our powerful software fuels industry-leading client satisfaction and is transforming the financial and administrative engine of health care. As the industry seeks greater efficiency, transparency and value, we believe Waystar is positioned to capture a vast and durable growth opportunity for years to come. Turning to the completion of the iodine software acquisition, Waystar has taken a major step forward in our mission. The addition of iodine expands our total addressable market by more than 15% and accelerates innovation and strengthens our ability to drive durable, profitable growth.

We've also welcomed nearly 150 health systems, representing more than 1,000 hospitals to our client base. Iodine brings proven AI-powered mid-cycle capabilities, including clinical documentation integrity, utilization management and prebill anomaly detection. With Iodine now part of Waystar, we're uniting clinical, financial, administrative and payer data in a single intelligent platform -- by infusing these capabilities and data into our software, we're extending and compounding the value Waystar provides before, during and after care.

Our platform and access to this tremendous data spans every stage of the revenue cycle powering AI insights, automation and accuracy that enable complete compliant and defensible claims, accelerating reimbursement and strengthening provider financial performance.

We estimate that Iodine accelerates portions of our product road map by nearly 2 years as we deliver the next generation of clinically informed AI-powered capabilities. We are pleased to have Ionis Founder, William Chan, now serving as Waystar's Chief AI and Product Officer. In this role, William is shaping the future of the Waystar platform and advancing our innovation agenda.

He is joined by several senior leaders and domain experts from Iodine who bring deep clinical and technical expertise to accelerate our progress. To give you a sense of what's ahead, we envision a future where AI continuously scans data, identifying anomalies across patients, providers and payers, automating tasks, validating documentation accuracy and predicting and delivering financial outcomes.

This is the path toward true autonomous AI in health care revenue management. And ultimately, we believe these innovations will power the future of the health care system. Waystar recently hosted its sold-out client conference, Waystar True North, convening more than revenue cycle leaders, 1 of the largest gatherings of decision-makers in the industry.

At the conference, we highlighted client results that generated meaningful ROI and strong performance. A few examples of client impact include reduced prior authorization submission time by 70% within weeks of implementation at a large regional health system. Achieved a 4x ROI for a major nonprofit health system through lower denials and higher revenue capture and increased point-of-service cash collections while redeploying the equivalent of 10 full-time employees to higher-valued work and a large Midwestern health system.

These outcomes reinforce the scalability and financial impact of the Waystar platform and our ability to deliver sustainable, profitable growth. Also at Waystar True North, we convened the Waystar Advisory Board, senior executive decision makers and early adopters of Waystar software from leading provider organizations who provide invaluable insights that fuel our innovation and help shape our strategy.

Our discussions reflected the realities provider space today, rising utilization accelerating denial rates and ongoing workforce shortages that continue to pressure margins. Many are turning to AI, seeking technology to drive greater efficiency, reduce administrative waste and deliver the financial transparency that builds trust across all stakeholders. Despite this progress, key barriers remain, most notably data fragmentation. Much of the health care data is siloed or locked in unstructured formats, such as clinical charts and notes, PDFs, lab reports and images, limiting the effectiveness of AI.

An MIT study found that nearly 95% of AI initiatives rely on incomplete or inconsistent data. The results without high-quality data, AI doesn't create efficiency, it creates more work. The second challenge is integration. Providers need technology that operates seamlessly within their current systems and workflows without interoperability, the value of AI remains unrealized.

And finally, cybersecurity remains critical as AI becomes more deeply embedded in clinical and financial processes, secure, compliant data management at every point of contact is essential. These challenges underscore the need for a unified intelligent and trusted platform and this is where Waystar is uniquely positioned to lead. An independent market study ranked Waystar, the #1 trusted vendor among top competitors, recognizing a sustained commitment to data protection client experience and innovation.

Insights from the Waystar Advisory Board and independent studies reinforce our differentiated position and confirm the growing demand for a unified intelligent and trusted platform. We continue to build client confidence and deepen relationships that drive expansion, accelerate adoption and power the next generation of innovation across the platform.

At the heart of Waystar's differentiation is innovation. Our platform advances continuously with hundreds of new capabilities launched each quarter to improve automation, accuracy and ease of use. Twice each year, new product capabilities are unveiled through the innovation showcase highlighting how the platform is advancing to meet providers' needs. Launched at Waystar True North, our fall innovation showcase, introduced new AI-powered capabilities that address some of the most pressing challenges in health care including denial prevention and recovery and patient financial care, driving better outcomes for providers and the patients they serve.

The important advancements we announced include denial prevention. Waystar altitude AI targets the 60% of denials that are preventable, reducing time related to critical prevention work by 95% for a midsized health system and building on our industry-leading 98.5% plus first pass clean claim rate across our client base, accelerating reimbursement and improving cash flow.

In denial recovery, Waystar is addressing the $20 billion annual denial problem. Waystar Altitude AI enables providers to create hundreds of appeal packages simultaneously more than 90% faster than before, driving double-digit increases in overturn rates for early adopters and improving reimbursement speed and accuracy and patient financial engagement to address the $17 billion uncompensated care gap related to patient collections.

Waystar's cost estimation capability is seamlessly integrated within our patient digital experience to increase pre-service patient payments accelerate cash flow and reduce uncompensated care. Client feedback on these innovations has been very positive, validating our road map and reinforcing the growing demand for AI-powered automation.

This innovation continues to build client confidence and deepen long-term relationships that drive adoption, expansion and sustained growth across the Waystar platform. Trust remains central to our success. Following Waystar True North, attendees reported a 93% confidence level in Waystar as a trusted partner. That confidence is reflected in our performance with strong Net Promoter Scores and a net revenue retention rate of 113%.

The A number of clients generating more than $100,000 in trailing 12-month revenue grew to 1,306 in Q3, an increase of 11% year-over-year. And the market is taking note of our progress. We were proud to receive 2 prestigious awards during the third quarter, powerful validation for Waystar. Fast Company named Waystar 1 of the Best Workplaces for Innovators in North America and the 2025 Stevie Awards named Waystar Healthcare Company of the Year, and honored us as the top-ranked payments solution.

In closing, sustainable transformation in health care requires a strong foundation. We believe Waystar's industry-leading AI-powered platform is that foundation, the essential differentiated choice for providers seeking to simplify health care payments and achieve better outcomes.

Waystar's momentum is strong and accelerating as we advance our mission and capture a large expanding market opportunity. We are operating with discipline and delivering results, building a rule of 50-plus software business with the ability to compound revenue and profitable growth.

With that, I'll turn it over to Steve to walk through the financial details from the quarter.

Thanks, Matt. Please note that my comments regarding Third Quarter and year-to-date results reflect Waystar's performance only, while full year guidance and implied Q4 guidance include a full quarter of contribution from Iodine. Revenue increased 12% year-over-year in the third quarter to $269 million, driven by healthy client retention and expansion, highlighting our durable, predictable model of low double-digit revenue growth annually on a normalized basis.

We also expanded our client base generating more than $100,000 of LTM revenue by 38 clients in the third quarter to 1,306 at quarter end, an increase of 11% year-over-year. Our net retention rate, or NRR, was 113% for the last 12 months compared to 15% year-over-year revenue growth over the same period.

As we've discussed over the past several quarters, NRR benefited from the rapid time to revenue from clients impacted by a competitor's cyber event in early 2024, and elevated patient utilization of the health care system since early 2024.

Subscription revenue of $134 million increased 14% year-over-year and 3% sequentially. Going forward, we expect Iodine to further enrich our subscription revenue mix. Volume-based revenue of $132 million increased 10% year-over-year and decreased 4% sequentially, in line with our seasonality expectations associated with revenue from patient payment solutions.

Also, we saw overall patient utilization in the third quarter, begin to revert back to historical growth rates. Adjusted EBITDA of $113 million for the third quarter increased 17% year-over-year. Our adjusted EBITDA margin was 42%, and above our long-term target of approximately 40%.

The adjusted EBITDA outperformance was driven by a revenue shift to higher-margin solutions, along with ongoing operational cost initiatives, outpacing reinvestments in areas such as innovation, cybersecurity and client experience.

Please note that none of the $15 million of expected cost synergies from the Iodine acquisition are reflected in our third quarter results. We have already notified and acted on approximately 70% of annualized cost synergies. We expect these action synergies to be realized and beginning to positively impact results over the next few quarters.

We are confident in our ability to achieve the full cost synergies within the previously communicated period of 18 to 24 months post close. We further believe our track record and M&A will demonstrate with time and integration that Iodine's clinical expertise, robust data and AI capabilities add to our long-term profitable growth profile.

Turning to cash flow and the balance sheet. We ended the quarter with $421 million in cash and equivalents and $1.2 billion in gross debt. As a reminder, in conjunction with the Iodine acquisition, we issued $250 million of debt and drew on $30 million of our revolving credit facility.

We also lowered the interest rate on both facilities by 25 basis points to SOFR plus 200 for the entire debt and SOFR plus 1.75 for the revolver. Unlevered free cash flow was $96 million in the third quarter of 2025 with an unlevered free cash flow to adjusted EBITDA conversion ratio of 85% for the third quarter and 86% year-to-date, which are both well ahead of our 70% long-term target.

The trend of high cash flow conversion, coupled with the expansion of our trailing 12-month adjusted EBITDA, generated a 1.9x leverage ratio at September 30, which is down almost a full turn since the beginning of the year, ahead of our previously stated goal of reducing our leverage ratio by approximately 1 turn annually.

If we carry this calculation forward to October 1, 2025, to account for the Iodine acquisition, the leverage ratio would be 3.4x. We are confident in our ability to delever approximately 1 turn annually. Regarding 2025 full year guidance, please note that the following includes a full quarter of contribution from Iodine. We are raising revenue guidance for 2025 to a range of $1.85 billion to $1.93 billion, with the midpoint of $1.89 billion representing a 15% year-over-year growth rate.

This is an increase of $53 million or 5% versus the prior guidance midpoint. The increase represents a 12% year-over-year growth rate for standalone Waystar and an expectation of approximately $30 million of revenue from Iodine in the fourth quarter. Our expectation for Iodine revenue for the full year 2025 is approximately $120 million, which includes alignment with Waystar accounting policy and in line with prior expectations.

Further, given our approach to rapidly uniting all aspects of iodine and the significant progress we have made towards organizational alignment, including product development, go-to-market and cross-selling. We don't expect to separately break out Iodine going forward.

We are also raising adjusted EBITDA guidance to a range of $451 million to $455 million with a midpoint of $453 million, increasing by $31 million or 7% versus the prior guidance midpoint. We now expect an adjusted EBITDA margin of approximately 42% for 2025, driven in part by the outperformance through the first 3 quarters of the year.

This guidance assumes $12 million of contribution from iodine in the fourth quarter at its historic adjusted EBITDA margin of approximately 40%. We look forward to providing 2026 guidance on our next earnings call. This concludes our opening remarks. With that, we are ready for your questions. Operator, please open the call.

[Operator Instructions]. Our first question comes from the line of Ryan Daniels from William Blair.

Congrats on the strong performance. Matt, maybe 1 for you. Interesting that True North took place right around the Iodine transaction closed. And I'm curious if you had the opportunity to introduce clients to that. and see new iodine clients? And just overall, kind of what areas were key focus and what the overall feedback on Iodine and Waystar from the Iodine clients were.

Thanks, Ryan. It was a perfectly timed in conference for us. Waystar True North was fabulous. As we indicated, it was sold out -- and we were able to highlight -- we hosted an innovation lab where we allowed clients to get hands on with our technology advancements and see AI at work. We also had the opportunity to showcase how Iodine, which, again, is this middle revenue cycle, tremendous software set of solutions, how Iodine can really connect Waystar front-end and back-end solutions effectively together.

And the client sentiment was 100% positive. We heard feedback from our advisory board meeting that we hosted just on the front end of the Waystar True North Client Conference. And I noted a couple of particular quotes. One said, we're so thrilled about this announcement. This will be awesome for us and for health care. And another 1 said, I'm actually an Iodine user too. So I'm very excited about this acquisition, and it feels like a perfect fit -- for you.

And so as we think about the opportunity now to combine these 2 special companies, we feel like it's a perfect strategic fit and it's helping us toward our ultimate goal of creating that perfect undeniable insurance claim. Thank you for the question.

Our next question comes from the line of Brian Peterson from Raymond James.

And I'll echo my congrats on a strong quarter. Matt, maybe a high-level 1 for you, especially as you think about the platform with Iodine the fold, how do you think about the cadence of the legacy or replacement of legacy processes in RCM. I know some of these sales cycles for Waystar health systems can be long.

But I'm curious kind of an AI-enabled and a genetic world, we start to see customers maybe move faster to tackle this opportunity.

Thanks, Brian. Let me start with maybe just a bit of 1 more background to comment on Iodine and then how we're leaning into being able to sell the full Waystar platform. So just as a quick reminder, Iodine sits in the mid-revenue cycle -- it is really a powerful software that does clinical documentation, integrity, utilization management and prebuilt anomaly detection.

And these capabilities bring bring structure to unstructured clinical information. They detect missing codes or incorrect codes before a bill is complete. And they keep a human in the loop, so to speak, as they deploy over 160 different leading AI models within Iodine software that that allow the human to validate what the AI has identified as an accurate code.

So what that's doing is that's leading to a 70% reduction in the likelihood of a set of codes need to be rereviewed before a claim is submitted. So that fits perfectly into Waystar next-generation, cloud platform, and we really feel like this will allow us to continue to demonstrate market leadership and establish us as the next-generation revenue cycle solution of choice.

We've cross-trained our sales teams. We noted at the announcement that there was this tremendous cross-sell and upsell opportunity with -- when you do the overlap or the Venn diagram of the portion of clients that are both Iodine and Waystar, gosh, there's only somewhere between 35% and 40% of clients that are using bold.

So not only have we cross-trained our sales teams, we've introduced Iodine now to Waystar our clients we're beginning to tell that story and promote some of the incredible capabilities that we'll be able to do together. And conversely, we've been able to introduce Waystar to Iodine clients.

So there's certainly cross-sell opportunities where we'll replace legacy and incumbent software that may have been in place for years. There's also the opportunity for us to increasingly promote the whole platform. And when you think about the clinical data access that Iodine brings to Waystar's software solutions. Iodine process is more than 160 million patient encounters annually and about 34% of all patient discharges in the United States annually.

So there's a tremendous amount of clinical information that we're already figuring out how to integrate and unite and place into the large language models that we're using to automate prior authorizations, for example, or to strengthen our claims processing capability, or to further automate the appeal management process where some clinical information is super helpful.

Overall, we're headed toward more platform sales opportunities, and we're very excited by it. So thank you for asking the question, Brian.

Our next question comes from the line of Adam Hotchkiss from Goldman Sachs.

I think, Steve, you mentioned that patient utilization has started to move back to historical levels. Could you maybe just expand a little bit on that. And I know that the volume-based business declined 4% sequentially. I think it's a little bit more than we've seen in the last couple of years. So -- could you maybe just expand on what the right way for us to think about seasonality in a more normalized environment going forward looks like?

Yes. Certainly, Adam. So I can a sure few thoughts here. So maybe a couple of level-setting thoughts and then I can specifically address your questions. Recall that our solutions help providers become more efficient and effective, so they have the ability to capture utilization upside of the health care system as we've seen in the past several quarters.

Also, our mix of revenue is generally 50% from subscription based and 50% volume-based -- with the volume base coming from both provider solutions, those solutions that help providers interact with and obtain payments from commercial payments and governmental entities as well as you mentioned, Adam, patient payments, those that help them interact with and collect from patients. So my prepared comment is based on what we're seeing, particularly within patient payments, which, as you noted, has a natural first half, second half seasonality aspect to it based on the timing of patients with high deductible plans.

And notably, what I was looking at qualifying is we started to see the timing of patients reaching deductibles occur earlier in the third quarter than we had last year. It's an early indication though versus a long-term or a trended expectation. So we've kind of taken that into context in how our approach is to guidance, which we believe is prudent.

So as we set guidance, particularly for the remainder of 2025 and implied fourth quarter -- we've taken that into account. What I mean there, Adam, is if our volume-based outcomes and the patient utilization continue on sort of that same trended rate we've seen for -- the first 3 quarters of the year, we would expect to come in at the high side of guidance.

If we see that those patients that are reaching those deductibles within those high deductible plans continue as we started to see them here in the third quarter and that sequential change versus the third quarter and second quarter, we could be at closer to the midpoint of guidance versus potentially even on the lower end of guidance. So hopefully, that's helpful context.

Our next question comes from the line of Allen Lutz, Allen from Bank of America.

At 1 of your innovation showcases several weeks ago. You talked about shipping patients from mail payments to mobile. Can you talk a little bit about discussions with your customers around making that change and how long that would take? And then how should we think about the relative gross margin delta between those 2 products?

So thank you, Allen. And thank you for tuning into our innovation showcase, by the way. It's available to anybody on our website -- we do it once in the spring and once in the fall. And in the fall, we did it in conjunction with the Waystar Tudor Client Conference. It felt like we were at a rock rock concert.

It was really well received. And with respect to the digitization of the patient statement and the integration of the patient payment with a well-informed digital statement. It certainly has a different margin profile. We think it has a different impact

One of our -- 1 of the things that we foresee overall across the health care marketplace and what we're pursuing is a tremendous opportunity to move from analog to digital in several areas. And we believe that Waystar could be a market leader in that.

One of the pain points that has persisted on the analog side of things, is a tremendous amount of paper that continues to be used in health care. So in faxes, in back offices, some inpatient statements where it's a fact that there's a portion of the population that still wants their patient statement and paper form so that they can review it. Waystar is working to make that as intuitive and as easy as possible and to integrate the patient payment capabilities to create transparency, ease of understanding and facilitate accurate and timely payments to providers.

We're doing all that now and making it available in a digital format. And providers are beginning to opt in to that strategy. They're beginning to embrace it. They're asking patients that they would like to opt in. And we're thinking through the time line. We don't see it dramatically shifting in 1 quarter or 2 quarters.

This is a long tail of transformation and opportunity as we help providers connect with patients, but we know that Waystar to be a market leader there and that the experience for the patient can be meaningful because it will -- we're introducing patient statements that oftentimes do -- is like educating for the patient is anything, which is really great way to think about that.

But it's also meaningful for the provider. When you look at Waystar's patient financial care suite of solutions, 1 of the things that we measure is patient NPS scores, not just provider NPS for us, but patient NPS scores. And what we find is that when a patient understands their financial responsibility at the point of care that the Net Promoter Score goes up because they appreciate the transparency, they can make appropriate plans for how they'll make payment -- in fact, Waystar software helps the provider a range for payment plans within this integrated software solution within our patient financial care suite.

So we know that digitization is on the way and we're a facilitator and a driver of that to help both providers and patients.

The next question comes from Vikram Kesavabhotla from Baird.

I wanted to ask about the Iodine acquisition as well. And I think in your prepared remarks, you said that this could accelerate parts of your product road map by nearly 2 years. And I'm just wondering if you can elaborate on that comment a little more. What are some of the best examples of how this is adding to your innovation process? And how should we think about the time line to seeing some of those combined capabilities start to emerge in the product portfolio?

Terrific. Thank you, Vikram. Let me give you some tangible examples of why we're so excited and why we think it will accelerate the road map by nearly 2 years as we've indicated Let's take a couple of product examples. So 1 is a Waystar product called prior authorizations. As you know, and as we've stated and showcased in our innovation lab and in our innovation showcase, we're automating 90% of the prior authorization experience for provider organizations.

But sometimes, that prior authorization when a provider is committing an authorization to perform a service or patient they submit that authorization request to a payer. Sometimes the payer come back comes back and asks for clinical information. We'll ask for, is this medically necessary, and that is a medical necessity based for our authorization.

So if Waystar were to go and gather that clinical information itself, we would go out to all of our hospitals that we work with, build appropriate APIs ourselves and then gather that clinical information. Getting access to Iodines incredibly powerful clinical data set, uniting it with Waystar not only creates 1 of the most comprehensive administrative and clinical data sets to our knowledge in the United States of America, but we'll be able to use that clinical data set to do things like medical necessity-based prior authorizations where clinical information is required by the payer before they're fully authorized in treatment or a service provider to perform for a patient.

One other example, when a claim gets denied, and we know that denials are on the minds of all provider decision makers. When a claim does get denied, and providers are working to contest or appeal that denied claim. 450 million claims we get denied annually. So this is a real problem.

When they go through the process of appealing the denied claim, oftentimes, it's helpful to supplement the appeal letter with clinical information that can be used to help a test for the reasons for why that denied claim should be overturned and successfully adjudicated and payment remitted to the provider. So those are solutions that Waystar has in place. Those are generative AI solutions. -- prior authorization and appeal management letters where we're generating learners very rapidly.

We're keeping a human in the loop, and now as we infuse clinical information into that appeal letter where we believe that, that will drive successful overturn rates and supplement and accelerate an already great product with clinical information. Those are 2 examples.

But we're very excited about the acceleration of an Bowstreet of Waystar software with this clinical information. And conversely, I would say, as we learn more about the in suite of software capabilities -- there are -- as you know, Waystar process is 6 billion insurance transactions annually. And we have a tremendous amount of administrative data that we can use to then also support and strengthen in software solutions in clinical documentation improvement.

We're processing billions of claims. We understand pro combinations and we understand what gets successfully adjudicated and reimbursed. We can use that to train Iodine's AI models. Likewise, with prebuilt anomaly detection, we'll use administrative data there to further supplement Iodine's already strong and a tremendously capable solution. So hopefully, those examples are helpful Vikram.

Our next question comes from Elizabeth Anderson from Evercore ISI.

Congrats on the quarter, obviously, you've given us a tremendous amount of detail about how Iodine the portfolio and sort of your view for the fourth quarter. I was wondering as we have used hospitals who are seeing some margin pressure on the horizon or currently -- have you guys noticed a -- and you have a broad suite of solutions to address all sorts of things, but have you noticed any shift in terms of the types of modules people are -- hospitals are interested in.

Are they going for sort of more things versus other things? Just any additional color you can provide on that front would be helpful in just kind of understanding the broader landscape.

Thank you, Elizabeth. Speaking of the hospital demand environment, let me start with a high-level idea or 2 and then speak to solutions that we see being very attractive to decision makers. We know that decision-makers want efficiency. They want entity. They want to work with entities or partners that can help them get paid faster accurately and efficiently in our side of the world, so to speak. They want cybersecure solutions. There's also, as I mentioned just a moment ago, a greater focus on the mile rates and what is actually driving them -- and these are all areas that completely align with Waystar's value proposition.

Our solutions are mission-critical. They help drive efficient cash flows, and we get prioritized amongst decision-makers. So in this demand environment, -- we've been saying this now for a few quarters, but we tend to get prioritized because we are mission-critical. And we see strong demand for our -- increasing demand for our platform -- but it's interesting provider decision makers are now starting to understand the relationship, the compounding benefit of using more than 1 or 2 of Waystar software markets.

For example, if they're using Water's claims management suite, which already has a tremendously high first pass claim acceptance rate that is greater than 98.5% across our entire network. But denial prevention and denial reduction is on their mind, then we're able to have a conversation with them about eligibility and eligibility automation and insurance coverage detection, which we know statistically reduces the likelihood that a claim gets denied.

We are then often talking to provider decision-makers about prior authorization automation, another sticky point. When a provider doesn't get authorized to perform a health service, that's a reason why claims get denied. So we have seen demand across our platform. But we see a note that there is interest in reducing denials. And we see -- we're able to articulate as we go through the discovery process with these clients and prospects and decision makers, we were able to understand their current activity rates or metrics and then compare that with what we could do prospectively when they begin to use more of our solutions.

And so eligibility, automation, coverage detection, prior authorization are seemingly hot areas of product. On the other side of that, denial and appeal management software Waystar solutions shine because of the autonomous generative AI work that we're doing there is also something of interest to providers.

Our next question comes from Daniel Grosslight from Citi.

Congrats on the quarter end closing line. I was at a conference recently and the most striking thing to me was just the number of vendors that have popped up with AI-powered RCM capabilities. Given what seems to be increasing competitive intensity, can you talk a little bit about how your go-to-market strategy has changed or will change and how bringing William on as your Chief AI and Product Officer may impact this?

Sure. Yes. Thank you, Daniel, for that question. So let me speak to our approach and then the competition and growth opportunities as we see them. We have a strong pipeline of opportunities with a very healthy mix of new and cross-sell opportunities.

It's interesting to note that we've seen new products that we've launched, so think about some of the altitude AI solutions that we've launched, now beginning to make a meaningful contribution to our pipeline and our year-to-date results. This is very important.

And our go-to-market came, I think it's a fabulous team. This is a fabulous group of leaders. They care a tremendous amount about not just proving results, but actually transforming health care, and it's a privilege for me to work alongside such a fantastic group of go-to-market people and team members. With respect to our approach, it's -- we feel like we have a market-leading approach. We're not going to tell the world our secret sauce on this call.

But we do some things to train and make our team members productive. And enrich a discovery process that enables us to understand what's going on at our client sites that then enable us to have an ROI-based discussion and really promote and drive our solutions.

What I'd say with respect to competition, we are at the street level. We see what's going on. And we think that imitation may be the nicest form of admiration or flattery, and we appreciate that. There does seem to be plenty of noise in the market with splashy announcements, being made. But we're focused on executing our business plan. And what we see is continued momentum and success in our platform approach.

Again, we're driving real ROI conversations. We're moving from AI hype to drive to the kind of ROI reality. We believe that we're the best platform in the market or a platform. We're not a point solution, we are a platform from end to end. We have the lowest total cost of ownership and the highest ROI. And our win rates are consistently high, and they've increased modestly since we last published or so. So we feel very good about the strong pipeline of opportunity, the continued elevated participation rates in RFPs and sales activities.

And we know that there's a lot of curiosity and interest in the RCM revenue cycle management category. And we believe that our competitive advantage or edge is the fact that we're cloud native. We have a data rich and robust rules engine that governs our network. We are AI-enabled and driving automation, and we delight clients with high client satisfaction.

Our next question comes from the line of Saket Kalia.

Matt, maybe for you, actually, I want to pick up on that thread a little bit. It sounds like there's been a ton of innovation through Altitude AI, and you just talked about how it's starting to contribute to Waystar. I was just curious how you kind of think about monetization some software companies create separately billable SKUs, right, that sort of add an AI layer on top.

Some are able to sort of deliver or charge additional value. How do you kind of think about that monetization strategy for Waystar.

Thank you, Saket. So for us, monetization comes in multiple forms. We're beginning to monetize it now. But it starts with retention and a long enduring relationship with clients as they use our software and they get the benefit of that, and it shows up in real returns to that.

The second is we have an annual price uplift program that has been in place for several years. And we priced the value, and we're beginning to price the value where we see incremental benefits as we've begun to introduce autonomous or generative AI capabilities within the various software modules.

So we're starting to price those to value without disclosing things further. The third is the opportunity to introduce actual new SKUs, so to speak, or new software modules, and we've begun to do that in a couple of areas, and we're excited about that without necessarily publicly commenting on what those are.

We are absolutely focused on introducing those to our clients. And those are the 3 that come to mind. I might just add that Waystar, as you know, Saket, and this is more of a general comment, but Waystar has been a long-time deployer of AI on our platform. And I think it's very important in this world where AI may be the biggest opportunity in our lifetime, especially in health care, where the technology might be a little bit ahead of where the human factor is.

And we see that in health care provider organizations who are very interested in beginning to consume and get the benefit of AI. For us at Waystar, we're working to set the standard in how we use AI -- we want AI to be deployed responsibly and ethically. And we want to be able -- people to be able to trust us. We believe that there's an opportunity for us to use AI for more good and to advocate for providers and patients to improve access to care and transparency and fairness and empathy and reduce waste and burden.

So those are things that excite us. One of the last comments I'll make is as we monetize AI. One of the things that we hear from providers is they want to use it, but they don't know quite how it fits into their workflow. And so what Waystar has now been doing for a long time on our platform, please recall that our platform is a workflow platform. So we're deploying AI across the platform today. It's intuitive.

It's easy for end users. It likes them. What we're doing is we're conditioning end users to consume AI as they use our platform. We're bringing the right AI to the right use case, often with a human in the loop, where appropriate to validate that the results are accurate. But we're making -- the AI that we're deploying is making the end users that use Waystar software, making their life easier.

And they may not even know or fully realize that they're consuming AI because AI is automating tasks in the background or AI is prioritizing work for them. we're driving insights to them to make their day easier. And so that AI high ROI realities are mantra, and we'll continue to monetize it, but we're very encouraged by the products that we have launched, pricing that we are achieving and their long-term enduring relationships that we're creating with our clients.

Our next question comes from the line of Charles Rhyee from TD Cowen.

Matt, just wanted to -- obviously, in the last 12 months, you've also seen some big annuates from the big EHR vendors. I think you have to get there annual event as well as Oracle talking about Cerner. They're starting to build more AI into the EHR itself as well as talking about solutions for recycle management, using agents -- can you talk about sort of how you see that developing, maybe talk about how the Waystar platform can work with the HR systems as well and maybe points of difference in maybe doing different things? Or maybe if you could just talk a little bit more about how these will all go this together.

Thank you. So it's interesting because in health care we have well over 1,000 hospitals today, and the majority of those are on EPIC, that are clients of ours. So they're using Waystar today. We have many Cerner clients today. We have many Meditech and other practice management and EHR clients today that are the lighting to be using Waystar software, use at a phrase that I'd like to just highlight.

And that is these organizations are "talking" about RCM. Waystar is doing RCM. That's all we do. And we have a team of people completely focused on simplifying health care payments. using modern AI capabilities. We are using every modern LLM that you can envision in the market to do work. But we think that the value is actually in the access to data to train these large language models. They should really call large object models because they can do a lot more than just consume language.

They're consuming lab charts. They're consuming objects that are in PDF forms and images. And Waystar doing that today. So we think we can be a fabulous partner. We could be a linchpin technology for these EHR systems, where they become the large monolift and they're focused on so many different things.

We've proven that our interoperability and integration to their systems actually delight their clients and we welcome the chance to partner with these systems. And while I'm on this point, this theme of interoperability and connectivity, I would just say from a regulatory perspective, the Waystar is an advocate for modern connectivity via APIs to all the payers we promote that we're connected to the vast majority of payers in the United States.

We also connect to more than 500 different instances of electronic health record, practice management and hospital information system vendors. So we think there we can be a great partner and we're demonstrating that as we help them and their clients grow and achieve great results as they use our software.

Our final question comes from Jailendra Singh from Truist Securities.

Congrats on a very strong quarter. I want to ask about EBITDA margin trends. I know you guys have talked about 40% as being a reasonable long-term target. But what are your views on the sustainability of some of these margin efficiencies and gains that you've seen recently? You shared examples around the way you're using AI to create value for your clients. But given your expertise, is it fair to assume you're using AI to drive some internal operational efficiencies? And what kind of opportunities do you see in that area?

Well, thank you, Jailendra. I appreciate your question. It's a very important 1 for us as well. We appreciate all these questions actually. What I would say is, just to start by grounding us in fact, we talk about our business model being an enduring long-term normalized low double-digit revenue growth business -- you've also heard us talk about our long-term target of adjusted EBITDA margins of 40%.

And those are targets for us. And we're very mindful of we know we could run the business at greater than 40% EBITDA margins, for example. But we feel like the right range to run it in today is while we invest in innovation, invest in cybersecurity, invest in go-to-market go-to-market capabilities in this unique period of time in health care, it's the right kind of way to run the business at that 40% or so level.

We're certainly pleased with the recent quarter's results and being slightly higher than that. But I suspect we'll continue to find areas to invest, and we'll be very conscious about that long-term target. With respect to some of the internal initiatives around AI, let me just highlight a couple of things. One, we do have William acting as a Chief AI and Product Officer. We're very excited about that because he complements an incredibly talented team of other leaders who are very passionate about driving to our long-term targets.

We also have established an internal AI team, it's we call it our Kaizen AI team, and this is a team that works within Waystar cross-functionally across all the businesses, all the functional teams to identify use cases where AI could be used to create market-leading experiences, but at a higher -- or maybe create more operating leverage by deploying AI instead of people for certain tasks.

One of the things that we emphasize internally is that we believe that AI is more of a productivity augmentation tool that will allow us to scale future from here as we make our team members even more and more productive in their jobs. This is an awesome group of people.

And what we've done is we've given every single team member at Waystar, a copilot license. We've taken them through certification and training on how to responsibly and ethically -- and from a business perspective, the Waystar way of how we like them to deploy CoPilot. We have contest internally where we celebrate individuals and teams who have created novel use cases using CoPilot through some prompting or some engineering capabilities to improve or automate certain tasks that have been done manually previously to make our team members even more productive and to help them delight clients as they do to help them write source code and have it be reviewed.

Our development teams, for example, are using GitHub and Copilot and we're starting to see some increased efficiency and as they deploy AI and they're using it to review code and do integrity testing and other types of testing in our software. We're really excited about the opportunity there.

And I suspect that we'll find future opportunities to advance and drive operating leverage in the business as we find those operating leverage basis points or percentage point, so to speak. We may not convert that all to adjusted EBITDA, because we may choose at this point in our journey as a company to reinvest operating leverage that we find back into the business to drive innovation and drive go-to-market success, drive cybersecurity and drive a market-leading client experience.

And so that's how we're thinking about the internal use of AI. We've got well over 100 use cases that are actively being explored and pilot tested within Waystart today on the internal side. So we're very excited about that.

Thank you. This concludes the question-and-answer session. Now I will turn the call over to Matt Hawkins, CEO, for closing remarks.

Yes. So let me just close here. We thank everybody for participating today and for your thoughtful questions. I hope the sense that we're pleased with the performance of the business we -- it's -- there's a sense of momentum. We are raising our full year guidance on that basis.

We're thrilled to have closed the Iodine acquisition, and we're well underway and excited to work together as 1 team to really do some transformational work in health care. What I'd say is it's all due to our team. I'm so grateful to work alongside such a talented and dedicated group of people. This is a team that really cares about our mission to simplify health care payments, and it's an honor for me to work alongside them.

What we're building is a market-leading platform, we're beginning to get data and network effects as we process more transactions and we get richer data drive the smarter automation. That creates higher client value and deeper stickiness and retention with our clients.

So we're excited about the work that we're doing, and we look forward to continuing to execute on our business plan. Thank you very much for the time today.

Thank you, everyone, for your participation in today's conference. This does conclude the program. You may now disconnect.

Well, great. Thanks so much, everyone, for being here. My name is Adam Hotchkiss. I cover the emerging software space here at Goldman. Really thrilled to have Matt Hawkins, CEO of Waystar, here with us today. Matt, thanks so much for being here. for your first time.

Yes, my first Goldman Tech Conference. I'm grateful to be here. Thank you.

Fantastic. I guess for those in the room, I know you obviously have a health care angle to you. So for those in the room who are a little bit less familiar with what Waystar does and what you're trying to build at the company, maybe just give a brief overview of the history, your role at the company and then maybe help us understand the software angle a little bit here.

So I'm Matt Hawkins. I'm the CEO of Waystar. I spent most of my career in and around software. And a lot of that has been private equity backed. I've worked with private equity firms in leading portfolio companies for them with Vista Equity Partners and Bain Capital. And I came to this opportunity in 2017 with Bain Capital, and I helped form Waystar with a really great team of people in the summer fall of 2017. And I'll tell you a little more about that. But essentially, what we did is we brought 2 really impressive revenue cycle technology businesses together. One of them had been backed by Sequoia Capital, a business called ZirMed. It had architected and built this great cloud-native software platform. And we thought to ourselves, let's combine ZirMed with a business called Navicure, which we did in the fall of 2017.

We formed Waystar then. And our first test was to unite all the Navicure clients onto what we call the Waystar software platform. It was the ZirMed great cloud-native tech stack. And we did that. And as we did it, we discovered, gosh, this cloud software is very extensible. We can add capability to it. It delighted clients. It was a really great user interface, and we could also do it without disrupting their workflow of operations.

What Waystar does to get to the second part of your question, Adam, is we help health care providers get paid from all different types of insurance companies and also from patients. We help them get paid faster, more accurately and more efficiently than ever before. We're going after a tremendously large addressable market that is fraught with inefficiency and errors and manual services. And as we work to create cloud software that deploys AI on our platform, we have now created a really strong track record of delighting our clients with modern software and disrupting the status quo that has persisted in health care for a long time.

Yes. One of the things, Matt, I think I underappreciated when I first started looking at your business was what the legacy operations look like, how fragmented the technology solutions are almost to the point where we were seeing a reversal of all of the other sort of on-prem to cloud or services to cloud transitions that we had seen in software where you had a bunch of fragmented technology and there were decision-makers at hospitals saying, "I now want to go and do services." And it was a backward-looking situation. It's really surprising for me. So maybe distill that a little bit for people who are less familiar with your industry. And then with that backdrop in mind, where do you think Waystar is positioned? And how do you convince folks who didn't enjoy the fragmented situation to look back at technology?

Sure. A couple of facts for the group here. In health care, in the United States, on the administrative side of care, there's approximately $450 billion of administrative waste that occurs every year. The industry is fraught with denied claims. It's fraught with manual work and services that take too long. There are staffing shortages, hospitals and other health care providers are constantly trying to train new staff. And as we formed Waystar, what we observed on top of all this was that provider organizations in the U.S. were consolidating to form integrated delivery networks or health systems. And you guys have observed this where hospitals were buying other hospitals, they're buying physician sites, post-acute, non-acute sites of care to form these integrated delivery networks. That was exacerbating this administrative complexity of helping these providers understand how they were going to get paid from insurance companies and trying to collect from patients.

And so we came along and we observed that there wasn't really any enterprise caliber or scaled modern platform to serve the needs of these increasingly complex organizations. And we said, let's get to work. What we did see, to your point, Adam, was a bunch of legacy incumbent software, some of which have been in place for 20 years. We saw a bunch -- and we still do see a bunch of homegrown solutions. And sometimes decision-makers, they tend to be a little more risk adverse in health care because on the clinical side, patients' lives are on the line. And on the administrative side, they're operating at such low operating margins that cash flow becomes super important.

So we come along now, we deploy our software. We've created over 1 million providers that are now using Waystar software every day. Hundreds of thousands of those people in those organizations are using Waystar software for the majority of their workdays to streamline and reduce the friction in the payment process. And our proposition, quite frankly, to these decision-makers is a very strong ROI use case. a minimal disruption, if no disruption to their business. And we can deploy our software because it is cloud-based very rapidly. And so we're creating a lot of interest and momentum in the business.

Okay. And maybe in addition to the administrative waste, talk a little bit about the gap in what hospitals are receiving from insurance companies versus what they should be? And how you bridge that gap versus maybe others in the market?

Okay. It's another statistical fact that there are still 450 million denied claims a year. Approximately 17% of every claim that a hospital or other providers submit initially get denied and sent back to the provider for rework. So Waystar, when these providers use Waystar software, the denial rate that they experience drops substantially. Part of that's because we use a cloud-based rules engine that governs our network, and we help providers accurately and successfully submit claims with a first pass claim acceptance rate that's nearly 99% across our entire network.

So we're coming along with something completely new and novel and allowing them to reimagine the way they use software that leverages AI on our platform. And you get large impressive provider organizations like the Cleveland Clinic telling us when they began to use our software, they were experiencing denial rates, they were experiencing a low first pass claim acceptance rate as they self-reported in the low 90s. So when they went to work with us where it was nearly 99% right out of the box, they said, you're helping us reimagine what's possible. We're minimizing the gaps. We're helping them find more revenue. We're helping them find it much faster. We're helping them collect from patients as well because given our insurance knowledge, we process over 6 billion insurance transactions every year that constitute over $1 trillion of gross claim charges. So because we do that, we algorithmically can understand what the patient's financial responsibility is oftentimes before the patient even sees the provider.

And we're helping to shape behavior where providers can present to the patient before they receive care, here's what your estimated financial responsibility will be. We have an integrated patient payment capability on our platform. And we're helping kind of reduce the gap in the patient payment rate as well. Sometimes and we might all experience this in one form or another as patients ourselves or if we know someone who is, we oftentimes don't even get bills in the mail until 60 or 90 days post care, right? That makes it very hard for a provider to collect once it's that old. And they're not equipped to collect. So our software helps kind of reduce that gap and reduce that burden, too.

Yes. In a lot of ways, you sit in a really unique position in a classic vertical software sense where you utilize AI to effectively help you with things like patient payments and improving things at point of sale and also with providers, right? And so when you think about -- and this is what other vertical software companies are doing from a moat perspective. When you think about your moat, right, versus other Gen AI opportunities out there, how do you think about what that looks like? And in particular, how do you think about what that looks like given the risk aversion of buyers in your space?

Sure. We -- it's a fact that even since inception when we formed Waystar, one of the things we admired all the way back when we saw those 2 companies that we brought together was the cloud software from the ZirMed side was using some form of basic AI even then. So it had smart fields and doing some simple machine learning to prioritize work or to automate certain tasks. And so now as we've expanded the use of that platform to over 1 million providers, we've basically conditioned end users to be able to consume AI sometimes it's invisible to them. It's worked at tasks that have been automated and prioritized for them. So they're consuming it today. And as we have a relationship with Google, we launched at the start of 2025, something that we call AltitudeAI.

It's Gen AI capability that we begin to embed in certain software modules across the Waystar platform. And we think our competitive moat is a couple of things. One, we have a very engaged end user group that's using our software and conditioned to consume AI and they trust us. The platform is very cybersecure. We're doing all the things we can to attest to those things, cybersecurity protocols. We have a massive data set. and that we're constantly training our foundation models on as we introduce more and more Gen AI capability. And what we're excited about is our platform is a learning platform. It's not the static platform that only gets updated a couple of times a year. We're delivering hundreds and hundreds of feature improvements to our clients every quarter. And so they're used to that. In a way, we're future-proofing their use of our software as we deliver them more and more AI capability versus some static monolithic software application. That probably will die over some certain period of time. We like what we're doing.

And with the acquisition of Iodine, something we haven't necessarily talked about yet, we're uniting one of the largest financial or administrative data sets with from Iodine, one of the largest clinical data sets that we'll use to continuously train and teach our platform. So we create this learning model that we expect to be able to deliver the AI platform of the future for revenue cycle or even revenue management within health care.

Yes. The word that was escaping me in my last question was rules-based engines. I think whenever we see rules-based engines being used in so many different use cases, it feels like there is a particularly large percentage of workflows that can be augmented by AI. Is that something you think is true across your platform and in your space as well?

It's a great prompt, Adam, because we do have a cloud-based rules engine. And one of the things that we do, it's a classic use case for the use of AI is we're going out and gathering using Gen AI, health plan claim rule updates Also, we're scouring CMS for CPT code changes and updates. There's thousands of changes that are occurring in a very dynamic way in health care. And so because we have this rules engine that is a learning engine, we like to say every transaction we process makes us incrementally smarter, and we're delivering that value to our clients. And so we're excited about the deployment of autonomous AI, some agentic AI capability, where we do, in some cases, keep humans in the loop where they oversee certain things to make sure that it meets their standards or what they expect. And we think we're very early in a very exciting run as an AI platform of the future for health care.

Okay. Very helpful. I want to pivot into the business and growth drivers. And I'll just start this open-ended, right? You've talked about this business being a 10%-plus growth business, and you far exceeded that since you came public. Talk about what you're seeing from that perspective. I know you had a cyberattack at a competitor that drove some business to you. But even after -- and now that we've lapped that a year later, you still managed to reaccelerate the business last quarter, lapping that. And so talk a little bit about, I guess, the drivers for the first couple of quarters as a public company and then maybe more recently, what you're seeing as well.

Thank you for acknowledging that. Yes, we've had 5 consecutive quarters of double-digit revenue growth above our long-term growth rates. I think it starts for us, we're going after a very large addressable market. The conservative strictest definition of that market is a $15 billion a year of replacing legacy software market. But what we're really going after is all of the manual services work. The BPOs that serve health care today would say that's a $100 billion-plus market. So we start there and we say, for every AI application or capability that we can offer that eats into that service work, then we're expanding this massive addressable market opportunity.

So we love the momentum that we're building. We delight clients with the use of our software. We have very strong ROI and Net Promoter Scores and client satisfaction. That tends to show up for us in referenceability and new sales. It shows up in cross-sell and upsell referenceability as well. And it ultimately shows up in us creating enduring very sticky relationships with our clients. When you look at our growth algorithm, you start with gross revenue retention that has lasted for -- been consistent for the last several years of 97%. And our net revenue retention pre-public has averaged somewhere between 108% and 110%. So as a prudent young public company, we think, well, we talked about low double-digit revenue growth. But since we've been out, we're -- we've exceeded that by several percentage points. Early on, it was the Change Healthcare clients that were impacted by that cyberattack that we've been able to rescue and help put on the Waystar software platform. And more recently, it's just consistent delivery of our solutions and driving growth to new clients and cross-selling others.

Yes. I wanted to touch on in the most recent quarter in particular. And I think this is one of the most remarkable things is you -- again, you lapped this event and yet accelerated growth. And I think you talked about, in particular, a couple of client -- large clients that you were pulling forward implementations for in the quarter. And so maybe what is driving that incremental level of interest in your business? And then how should we think about the sustainability of that as we go forward? Because your guidance does imply some deceleration in the back half and you have sort of talked us to normalization in revenue growth to more normalized levels in future years. So maybe just talk about those dynamics.

Yes. I think part of the guidance is us not necessarily being able to foresee the future and also kind of balancing a little bit of prudence there. But what I would say is we did update our guidance for the full year to be above what our beat was in Q2. With respect to the call out in Q2, we did highlight that there were 3 clients that were large competitive takeaways from others besides Change Healthcare. And as they joined us, these larger clients, they tend to have 12-month plus implementation plans, not because it's difficult to implement our software, but because they have other things that they have going on in their often multisite, multi-hospital organizations.

In this case, one of the things we were able to showcase is with these 3 clients, in particular, was they got into the implementation process in configuring and deploying our software, realizing how straightforward and easy it is to begin to use our software successfully that they said, let's do it all right now." And so we saw the benefit of that in Q2. And we would love for every client to do that. I mean what we've been able to educate clients with and in some ways, overcome a long-standing perception of how hard it is to install software is when we present Waystar they'll ask us sometimes, how many man years of IT staff should we procure for this implementation. And we look at each other and scratch our heads and say, well, you could take, I guess, maybe man hours.

But we can configure and deploy our software with large health systems like we did during the Change cyberattack outage, we took hospitals live in a weekend. And we're able to deploy that successfully. And I think there is opportunity for us to continue to educate the market that you can deploy Waystar and not have your business operations get disrupted. And there's opportunity in front of us that way. And as we compete in a record number of RFPs that we're involved in and have a strong pipeline, you can be assured that we're highlighting that ability to deploy our software very rapidly and successfully.

And is it as simple as referenceability and being able to tell someone, look at, we implemented a very large customer that's a similar size of yours in a very short time period, and that's maybe the first time or first handful of times we've done that, and so we can prove to you that we can do that. Is it as simple as that referenceability? Or is there something else going on?

I think it really does help. Referenceability surely helps. And I'll say this, health care decision-makers, they are brilliant people in all over the world, but certainly in health care. On the clinical side, they tend to be a little more risk adverse because if they implement their own technology, it impacts people's lives. So they want to see other examples of how it works in other settings. So before they tend to be a little more risk on in that regard. On the administrative side, they tend to be a little more risk adverse because if it disrupts their cash flow or their business operations, these hospitals are operating on razor-thin margins.

And so they tend to have that orientation. We've grown enough, and we have enough referenceability where we can go to clients. Let's say, it's a large health system in New York that has 20 hospitals and has a $5 billion a year net patient revenue Epic customer. We can go to them and say, guess what, we've got someone that looks like you, and they're in the Southeast, and they do $4.5 billion of net patient revenue, and they use Epic. And here's how they're deploying Waystar software to help them. And so we're finding that now we have enough of those matches and enough case studies where it really is becoming hopefully a long-term momentum shift and a market share gain element to how we approach the opportunity.

Yes. And does that actually help you catalyze RFPs in excess of what the normal replacement cycle market looks like? Because you did talk about that $15 billion software replacement market. Does you having more referenceability actually make you catalyze RFPs in excess of what a historical procurement cycle might look like for a hospital? Or is that not something you're seeing yet?

We believe that's a contributor to our seeing more elevated RFP participation for sure. We're now hearing people talk to each other and then calling us, which is a really nice phenomenon to experience as you're growing a software business. And we're grateful for that. And that plus the -- they wouldn't be referenceable if we weren't delivering a real return on investment for these organizations. And so we stand by that, and we do think that's a contributor to our growth.

Okay. And who do you compete with specifically? Is it really just a bunch of homegrown solutions or small fragmented solutions? Are there any large players we should think about in the software space? And then on the BPO side, are you actually competing with the BPOs today in that $100 billion market? Or are you helping augment them with technology as well?

Yes. It's a great question. We like to say that we don't have a competitor that's like us in the market, a cloud-based, cloud-native platform that's using AI across the platform to organize work for both the ambulatory client base, that long field of non-hospitals providers that are caring for patients as well as for the hospital base. Think about the power of that. We have one platform that can be deployed in small care settings where they may not even have a dedicated IT person and also in large sophisticated settings where they have several hospitals. So I don't know if there's anybody like us in the space. And I think that's going to give us the chance to grow. That being said, when you look at the incumbent legacy kind of providers of solutions, you would say Change Healthcare is one of those. That's the amalgamation of Emdeon and Relay Health and multiple businesses that weren't ever necessarily tightly integrated.

You would also run into other competitors that have presence in only one side or the other. So you think TriZetto, primarily on the ambulatory side, Availity, which incidentally is owned by a group of payers on the ambulatory side. You have FinThrive that is mostly on the hospital side. And that's who we run into most often, and we have strong 80% or so win rates against those when we go head-to-head. We -- when you think about the BPOs and the work that they do, they have been partners of ours in the sense that they're consuming our software behind the scenes when they go to a hospital and the hospital elects to say, "Hey, I don't want to do this work myself. I would rather have the billing and collection work be done by a third party." Those third parties oftentimes are using elements of Waystar software.

It's never the case that they're using all of Waystar software to be clear. We're constantly talking to them about how they can use more. In some cases, we're competing against them for certain aspects of revenue cycle work within a hospital or health system. In other cases, we're cooperating with them. They're a partner of ours. But people like Conifer and Optum and Ensemble and R1 are names that you may recognize, where we've had some form of coopetition with those type of entities.

We -- more often than not as we go forward, with the way that we're deploying AI agentically or even autonomously to gather information and compress work and automate work, sometimes making it invisible to the end user. So they don't even know what's going on. They're just seeing the end result of it or reviewing appropriate data elements. We think the long-term opportunity, again, is to eat into this much larger service market with great software. And we've seen that take place in other industries and other vertical markets as well. But we believe that Waystar can be that AI-powered platform that helps providers succeed.

Okay. So you operate in the revenue cycle from sort of that initial patient touch point to patient eligibility all the way to that claims management process. You made an acquisition recently or announced an acquisition of Iodine Software, which fits the middle piece, as you said, of that revenue cycle. For those in the audience, maybe not as familiar, what does that mean? And why did you announce the acquisition?

Perfect. Yes. So just a quick grounding on what we -- when we talk about the revenue cycle, it's a series of processes or tasks that is organized in the front when a provider is trying to understand who the patient is and understand whether or not they have insurance or a form of payment. Waystar software is market-leading, market leader in helping to financially clear that patient, gather insurance eligibility information, detect insurance coverage using AI where the patient may not even know if they have access to coverage and automate prior authorizations. That's the front part.

The back part is in the claims processing. Again, market leadership, first pass claim acceptance rates that are 99% across our entire network and recognized to be fast and help to dramatically reduce denials, the likelihood that a claim gets denied. We got familiar with a business called Iodine. Iodine is in the middle part, where Waystar doesn't have any competing software. And what the middle part typically reflects is the point in time where a provider is actually seeing a patient clinically. And you can probably picture this in your minds, where that provider may be seeing 40 or 50 patients a day. They're trying to keep track of all the clinical encounter information for each and every patient. Sometimes they're transcribing, sometimes they've got a physician assistant, keeping track of the notes. What Iodine does is Iodine is also cloud native. Iodine also deploys AI, hundreds of AI models that take unstructured clinical information and begin to make it more intelligent and structure it.

And through their AI models, I'm kind of drawing a funnel. They begin to filter what actually shows up and create structured clinical notes that are used to create accurate codes, commonly combined codes, CPT codes, if I can use that designation, clinical codes that can be used ultimately to form and create a highly accurate claim. So with the combination of all of these capabilities, Iodine by itself, a couple of other interesting data points. They're processing over 160 million clinical encounters on -- in their software every year and work with over 1,000 hospitals. So they have this massive clinical data set. They're discharging -- like 34% of every patient in the United States right now.

So one thing that I think since the announcement that we made, people are underappreciating is this really amazing clinical data set that they trust with HIPAA compliant usage, everything else that we can use to combine with Waystar's massive administrative data set and begin to train AI models to, again, constantly learn, constantly do work, identify, I can use that expression, work that has never been automated or done by another entity before. And all of a sudden, we get this opportunity to combine these businesses look to create that perfect undeniable claim where we reduce the likelihood that a denial ever occurs. And then we start talking about things that are happening in other industries for decades.

But like auto adjudication, auto payment, real-time understanding of what the payment to the provider is going to be. What does that mean for a patient? What type of transparency? What type of satisfaction does that bring to a patient? How does that streamline a bunch of work and reduce a bunch of inefficiencies that exist on the administrative side of care. So we're super pumped about the Iodine acquisition opportunity. And just as we've done in 9 previous acquisitions that we've made as we've built out the Waystar software platform, we do the hard work to unite and completely integrate that capability onto the Waystar software platform so that ultimately, the end users have a very consistent, I'll say, delightful user experience. It's intuitive. It's easy. There's in-app prompts and training to guide the end users, and we'll expect to deliver the same thing as we unite iodine with Waystar.

To what degree are there limitations or guardrails around what you're able to actually do with the underlying data, whether that's anonymized or otherwise in the context of AI models to help inform the other pieces of the revenue cycle. Can you use this data at large? Are there limitations? How do you go about?

I mean we certainly have some limitations, some that are self-imposed just given our approach to being responsible and ethical in the use of information. We always appropriately anonymize information. As you would expect, we are absolutely HIPAA compliant, HITRUST Certified. And we'll always make that as a standard. So we're -- and in some cases, we have some contracts with provider organizations that limit how information can be used, and we absolutely abide by those.

Helpful. I want to switch gears a little bit in the last 5 minutes to your exposure to patient payments volumes and just visits volumes and things that are maybe separate from the minimums that are paid for your software product. How should we think about Waystar's exposure as a subscription business to these volumes, how that impacts revenue on a year-to-year basis?

Sure. I think we should basically start with an understanding of our revenue model. Approximately 50% of Waystar's revenue model today is subscription. And the primary driver of that is a per provider per month subscription. Interestingly, Iodine is also a subscription-based model. where the provider count is the best driver of value in that type of situation. We tend to offer subscription agreements to the smaller end of the market, where provider count is knowable, it tends to be the best driver of activity. So you think about the 25-person doc practice of primary care physicians orthopedic surgeons that are practicing together, they often have a subscription.

Where health care is being delivered where a volumetric relationship becomes more meaningful or places like laboratories where they might be processing 5 million lab tests a year, and they have 3 providers on staff. So like we would enter a volumetric relationship with them where there's often a volume minimum that acts like a subscription. And then the way our software works is we know we have great visibility to these volumes. We know and we can update as we need to on a regular basis, like what the volume overages are, and that tends to show up in our model.

Also, larger hospitals, you think about these large multisite, multi-hospital systems that -- where provider count would not be the right kind of driver of activity. It's more patient visits to your point. And as patient volumes increase, patient visits increase, we have a volumetric relationship with them. The third thing I'd call out in that other -- that 50% of our business that has a volumetric component is there's a smaller portion of that, that is patient payment related. And what we have is we have an integrated patient payment solution where Waystar is taking a take rate on the patient dollars where we put a card on file or they swipe a card or we establish a financial care plan for the patient, and we secure that, we tokenize it, of course. But where we have a -- if we're processing that payment, we have a modest take rate associated with that, and that shows up in the volumetric side of our business as well.

Got it. And we don't need to break down between the sort of payments volumes versus the visits volume. But how should we think about what sort of outlook is embedded in your numbers or your guidance or how you think about the growth of these things? I know there's been an elevated utilization environment. How much have you benefited from that? And how should we think about how that's embedded into numbers?

Yes. We take a conservative view on volume estimates or expectations. I think the long-term historical average has been about a 2% increase a year. What we're seeing today is a little higher than that. We're seeing about a 4% utilization impact the year. And part of the secular trends in health care, you see the baby boomer population going to the doctor more, et cetera. There's some tailwinds there. Waystar, -- that being said, we tend to take a conservative approach. There also is a little bit of seasonality in -- for patient payment processing, if there's a high deductible health plan, and we know more patients are participating in high deductible health plans than ever before, they tend to reset in January.

And at the start of each year, they'll have a higher out-of-pocket payment responsibility, then they'll work through it over the course of the year. So we see a little bit of seasonality that starts to taper off in the back half of the year. We factor all of that in. And overall, we try to take a prudent approach to our guidance as a young public company and -- but we have a model that benefits from utilization and from usage. And we help providers successfully navigate utilization increases with less resources.

That's great. In the last 30 seconds, what are you most focused on over the next 6 to 12 months as CEO? And what are you most excited about over a 3- to 5-year time frame?

Thank you, Adam. It's great to visit with you. Successful integration of the Iodine acquisition, really starting to leverage the power of the clinical and administrative data set to continue to train these AI models to grow into that massive addressable market opportunity. That's what we're focused on and of course, delighting our clients along the way so we continue to build momentum in the business.

Okay. Matt Hawkins, thanks so much.

Thank you very much. Good to see you.

Good to see you. Thanks so much.

All right.