Waystar Holding Corp. Q2 FY2025 earnings call

• Announced acquisition of Iodine Software, a strategic fit for AI-powered clinical intelligence, expected to be accretive to margins and revenue growth. - Q2 saw 15% y-o-y revenue growth to $271 million with an adjusted EBITDA margin of 42%. - Strong demand for Waystar's AI-powered platform as providers seek efficient revenue cycle management. - Key innovations include insurance coverage detection, patient payment optimization, and reimbursement/cash flow solutions. - Net revenue retention rate is 115%, with 1,268 clients generating over $100,000 in trailing 12-month revenue.

Revenue in Q2 reached $271 million, representing 15% year-over-year growth. Subscription revenue was $131 million, up 17% year-over-year, and volume-based revenue was $138 million, up 14% year-over-year. Provider solutions comprise approximately 70% of the total revenue.

• Raised 2025 revenue guidance to a range of $1.30 billion to $1.42 billion (midpoint $1.36 billion), representing 10% y-o-y growth. - Raised adjusted EBITDA guidance to a range of $418 million to $426 million (midpoint $422 million). - Excludes impact of Iodine acquisition, which is expected to add subscription revenue and over $15 million in cost synergies within 2 years.

• Potential impact of legislative changes or funding reductions on specific payer types, but Waystar's diverse client base and solutions insulate from downside. - Competitive landscape and potential for competitors to regain lost clients.

Q: In 1Q '25, you mentioned $10 million revenue boost from client migration, any benefit in 2Q?

A: The benefit had lapped by Q2 2025, so no notable difference.

Q: Rapid onboarding of large clients, is the volume-based revenue from them recurring?

A: Highly recurring, subscription revenue will follow as contract progresses.

Q: Impact of MCO earnings calls complaining about AI tools?

A: Waystar is insulated due to its diverse business model and solutions serving all payer types.

Q: Feedback on prior authorization pledge?

A: Early feedback is positive, with providers benefiting from streamlined authorization processes.