WAY

• Overall Financial and Client Growth Performance

  • Delivered total Q2 revenue of $320 million, representing 18% year-over-year growth, exceeding consensus expectations.
  • Achieved adjusted EBITDA of $137 million with a 43% adjusted EBITDA margin, up 21.5% year-over-year and consistent with the prior quarter.
  • Net revenue retention was 108%, which remains within the company's historical 108-110% range. Gross revenue retention holds at a strong 97%.
  • The number of clients generating more than $100,000 in trailing 12-month revenue grew to 1,453, up 15% year-over-year, reflecting ongoing expansion of large client relationships.
  • Bookings exceeded internal expectations, with a double-digit number of $1 million+ annual contract value (ACV) bookings, continuing the trend of larger platform deployment wins.

• Platform Strategy and AI Innovation

  • Accelerating demand for Waystar's connected end-to-end platform as providers consolidate fragmented point solutions; independent industry research validated that Waystar clients achieve stronger collections performance and lower collection costs than competitors.
  • AI solutions are embedded and monetized across core workflows, with 40% of bookings consisting of AI-enabled solutions for two consecutive quarters.
  • Combined Iodine clinical AI capabilities with Waystar's revenue engine to deliver new anomaly detection, with early adopters seeing ~$3 million in incremental recovered revenue per 10,000 admissions. Over $6 million in Iodine-related bookings came from existing client cross-sales in Q2.
  • New Altitude AI for payer take-backs delivered 88% autonomous matching and 80% time reduction for clients, demonstrating strong real-world AI value.
  • Waystar processes over 7.5 billion annual transactions, giving the company unique data and network advantages that reinforce its durable competitive position in healthcare revenue cycle management (RCM).

• Leadership Transition

  • Long-serving CFO Steven Oreskovich will transition from his role after eight years with the company, and will remain as an advisor for a smooth transition. Alpana Wegner has joined as the new CFO, bringing extensive public software company finance leadership experience.

• Management raised full-year 2026 revenue guidance to a range of $1.276 billion to $1.294 billion, a $2 billion increase to the lower bound of the prior range. The midpoint of $1.285 billion represents 17% year-over-year total revenue growth.
• Full-year 2026 adjusted EBITDA guidance was raised to a range of $535 million to $545 million, with a $5 million increase to the midpoint of guidance compared to prior estimates. The full-year adjusted EBITDA margin is expected to be ~42%.
• Long-term revenue trend expectations remain unchanged: overall patient utilization and transaction volume is expected to grow 1% to 2% annually, in line with long-term historical averages. The higher year-over-year Q2 volume growth headline reflects easy comparables from large transactional client wins in the prior year, not a change in underlying trend.
• The expected historical seasonality pattern for patient collections revenue (15% of total revenue) remains in place, with slightly lower revenue expected in Q4 compared to Q3, consistent with prior years.
• Strong large-client bookings give management good visibility into future revenue growth, with meaningful contributions from large $1 million+ deals and Iodine cross-sales expected to become increasingly visible in 2027.

Waystar reports two core product segments for the quarter: 1) Subscription revenue: $176 million, up 34% year-over-year, 2% sequentially, and accounting for 55% of total Q2 2026 revenue. Organic subscription revenue grew 12% year-over-year, maintaining double-digit growth. 2) Volume-based revenue: $142 million, up 3% year-over-year, 2% sequentially, and accounting for 45% of total Q2 2026 revenue. On a normalized basis (adjusting for prior year comparability items), volume-based revenue grew 8% year-over-year, in line with long-term trends and management expectations.

• Regulatory and coverage shifts, including reductions in Medicaid coverage and increases in uninsured populations, create uncertainty around transaction volume trends, though management notes these shifts also increase demand for Waystar's coverage detection and patient payment solutions.
• AI development requires ongoing higher capitalized software investment, and rising compute/token costs for AI model deployment could pressure margins if not effectively managed. Management has implemented internal AI governance frameworks to mitigate this risk.
• Large client deal cycles remain 6 to 18 months on average, which can delay near-term revenue recognition even with a strong booking pipeline. Longer implementation timelines create near-term visibility risk for quarterly revenue.
• Competition from embedded EHR RCM solutions could lead clients to test in-house offerings instead of adopting Waystar's platform, though management notes clients prioritize proven ROI and outcomes over untested included solutions.

Q: How are shifts in healthcare coverage (Medicaid/ACA changes, rising uninsurance) impacting transaction volume and demand for Waystar solutions? / A: Transaction volume growth has returned to its long-term 1-2% annual average after elevated post-COVID catch-up growth of 3-4% in prior years. Coverage shifts that increase uninsurance and self-pay volumes actually boost demand for Waystar's platform, as providers prioritize lowering collection costs and optimizing payment yield. Provider fatigue with fragmented point solutions also works in Waystar's favor, as its integrated platform addresses these market pressures better than patchwork solutions.

Q: What is Waystar's appetite for additional acquisitions like Iodine to round out its RCM platform, specifically for medical coding capabilities tied to clinical documentation integrity? / A: Waystar's core strategic goal is to build a full autonomous revenue cycle platform, and Iodine was a key puzzle piece uniting front-office clinical workflows with the company's core back-end clearinghouse capabilities. Management confirms the company is carefully studying the autonomous medical coding space to evaluate expansion to add this capability to its mid-cycle offerings, aligned with the long-term vision of an end-to-end autonomously operating platform. No definitive plans have been announced at this time.

Q: Why did management only raise guidance modestly after beating consensus estimates in the first two quarters of the year? / A: The modest guidance increase reflects management's deliberate choice to allocate current better-than-expected EBITDA performance to accelerated long-term investments in AI platform development, rather than pulling forward all margin gains into the current year. Higher capitalized software investment for AI solutions is expected to flow through the P&L in the back half of 2026. The 42% full-year adjusted EBITDA margin guidance is considered strong even with this ongoing investment, and the company maintains strong free cash flow conversion.

Q: How do you compete against embedded RCM offerings from large EHR vendors when pursuing new client business? / A: Waystar notes that RCM is not a natural extension of EHR systems, as it requires unique payer connectivity and different development priorities. Large EHR vendors remain important partners to Waystar, and there has been no material change in the competitive environment. Clients consistently prioritize proven outcomes and ROI over 'free' embedded offerings, as an underperforming free solution ends up being far more costly due to persistent high denial rates. Waystar positions itself as the 'system of action' for revenue cycle, working alongside EHR systems of record to deliver better results, and this approach has driven consistent win rates against EHR-native offerings.