Waystar raises 2025 revenue guidance to $1.089B amid Iodine acquisition and platform expansion

Earnings Call Insights: Waystar Holding Corp. (WAY) Q3 2025

MANAGEMENT VIEW

* CEO Matthew Hawkins reported strong momentum in Q3, highlighting "solid revenue growth and profitability" driven by client retention and expansion and described the company as "outpacing our guidance on both measures." Revenue grew to $269 million, with an adjusted EBITDA margin of 42%. Hawkins emphasized the October 1 completion of the Iodine Software acquisition, noting the expansion of Waystar's reach and total addressable market by more than 15%. "We've also welcomed nearly 150 health systems, representing more than 1,000 hospitals to our client base."
* Hawkins detailed new AI-powered product capabilities, including advancements in denial prevention and recovery, and patient financial care, showcased at the Waystar True North client conference. He stated, "Waystar AltitudeAI 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."
* William Chan, Iodine Founder, was appointed Chief AI and Product Officer, joined by several senior leaders from Iodine.
* CFO Steven Oreskovich stated, "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." Oreskovich also reported, "Adjusted EBITDA of $113 million for the third quarter increased 17% year-over-year."

OUTLOOK

* Oreskovich announced raised full year 2025 revenue guidance to a range of $1.085 billion to $1.093 billion, "with the midpoint of $1.089 billion, representing a 15% year-over-year growth rate." This is an increase of $53 million or 5% over the prior guidance midpoint. Adjusted EBITDA guidance was raised to a range of $451 million to $455 million, with a midpoint of $453 million. Adjusted EBITDA margin is now expected at approximately 42% for 2025. "Our expectation for Iodine revenue for the full year 2025 is approximately $120 million."
* Management indicated that Iodine will not be reported separately going forward due to integration progress.
* Oreskovich stated, "We look forward to providing 2026 guidance on our next earnings call."

FINANCIAL RESULTS

* Subscription revenue was reported at $134 million, increasing 14% year-over-year and 3% sequentially. Volume-based revenue totaled $132 million, up 10% year-over-year but down 4% sequentially, "in line with our seasonality expectations associated with revenue from patient payment solutions."
* Net retention rate was 113% for the last 12 months. The number of clients generating more than $100,000 in trailing 12-month revenue increased to 1,306 at quarter end, up 11% year-over-year.
* Unlevered free cash flow was $96 million, with a conversion ratio of 85% for the quarter. Cash and equivalents totaled $421 million, and gross debt was $1.2 billion at quarter end. Oreskovich noted, "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."
* No cost synergies from the Iodine acquisition are reflected in Q3, but "we have already notified and acted on approximately 70% of annualized cost synergies."

Q&A

* Ryan Daniels, William Blair: Asked about client feedback on the Iodine acquisition at True North. Hawkins: "The client sentiment was 100% positive...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."
* Brian Peterson, Raymond James: Asked about the impact of Iodine on platform sales and replacing legacy RCM processes. Hawkins discussed cross-selling opportunities and the high volume of patient encounters handled by Iodine, noting, "We're headed toward more platform sales opportunities, and we're very excited by it."
* Adam Hotchkiss, Goldman Sachs: Questioned patient utilization trends and the decline in volume-based revenue. Oreskovich: "We started to see the timing of patients reaching deductibles occur earlier in the third quarter than we had last year...if our volume-based outcomes and the patient utilization continue on that same trended rate...we would expect to come in at the high side of guidance."
* Allen Lutz, BofA: Inquired about shifting payments from mail to mobile and relative margin impact. Hawkins described the ongoing transition to digital, stating, "We don't see it dramatically shifting in 1 quarter or 2 quarters. This is a long tail of transformation and opportunity."
* Other analyst questions focused on Iodine's acceleration of the product road map, demand for specific modules, competitive pressures from new AI entrants, monetization strategy for AI capabilities, interoperability with EHR vendors, and internal use of AI for operational efficiencies.

SENTIMENT ANALYSIS

* Analysts were largely positive, congratulating the company and seeking clarity on integration, margins, and strategic product initiatives. There was particular interest in the competitive landscape and the impact of Iodine.
* Management's tone was confident and expansive during prepared remarks, frequently referencing strong results and future growth. Hawkins was upbeat when discussing integration and product innovation, while Oreskovich provided detailed financial context. The Q&A revealed continued confidence with some defensiveness when discussing seasonality and longer-term digital transitions.
* Compared to the previous quarter, analysts remain constructive but are probing more on details of integration and competitive threats. Management's confidence remains high, with increased emphasis on the impact of acquisitions and platform expansion.

QUARTER-OVER-QUARTER COMPARISON

* Revenue growth slowed to 12% year-over-year from 15% in Q2, with volume-based revenue declining 4% sequentially, compared to a 6% sequential increase previously.
* Net retention rate decreased to 113% from 115% in Q2.
* The number of clients generating more than $100,000 in revenue increased to 1,306 from 1,268.
* Full year guidance for revenue and adjusted EBITDA was raised more sharply this quarter, reflecting the Iodine acquisition and stronger Q3 performance. The prior quarter's guidance did not include Iodine.
* The tone of management remained optimistic but more focused on integration and realizing synergies.

RISKS AND CONCERNS

* Hawkins highlighted challenges such as "rising utilization, accelerating denial rates and ongoing workforce shortages that continue to pressure margins."
* Data fragmentation and lack of interoperability were identified as barriers to AI effectiveness. Hawkins cited an MIT study, stating, "nearly 95% of AI initiatives rely on incomplete or inconsistent data."
* Security and compliance remain critical concerns as AI is further embedded into workflows.
* Oreskovich addressed patient payment seasonality and the risk of volume-based revenue fluctuations.
* Analysts asked about the competitive threat from new AI entrants and the sustainability of margin gains.

FINAL TAKEAWAY

Waystar emphasized its strengthened position following the Iodine Software acquisition, delivering double-digit revenue growth, expanding its client base, and raising full year guidance. Management highlighted the acceleration of its product road map, ongoing innovation in AI-powered automation, and a disciplined approach to realizing synergies and cross-sell opportunities. The company reinforced its commitment to platform expansion, client retention, and operational efficiencies, signaling confidence in achieving long-term growth and profitability targets.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/way/earnings/transcripts]

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