Waystar Holding Corp. Q4 FY2024 earnings call

• Sustainable and compounding revenue growth: Q4 2024 revenue up 18% YOY, full year up 19% YOY. Net revenue retention in Q4 was 110%, and number of clients generating over $100,000 in trailing 12-month revenue grew to 1,203.
• Operational profitability and efficiency: Adjusted EBITDA in Q4 was $100 million, up 16% YOY. Full year 2024 adjusted EBITDA margin was 40.6%. Unlevered free cash flow conversion to adjusted EBITDA in 2024 was 69%. Net leverage ratio reduced to 2.8 times.
• Platform innovation: Modern cloud-based platform streamlines healthcare payments workflow. Launched Waystar AltitudeAI with generative AI capability Altitude Create in denial and appeal management. Innovations in denial prevention-oriented solutions like eligibility verification and prior authorization.
• Client and team successes: Helped over 30,000 providers recover from a cyber attack. Completed IPO in June 2024, raised ~$1 billion. Ranked number one trusted vendor in an independent market study. Named one of America's most trusted companies by Forbes and one of the best workplaces in healthcare by Fortune.

In Q4 2024, Waystar's revenue reached $244 million, representing an 18% year-over-year increase. Full year 2024 revenue was $944 million, up 19% year-over-year. Adjusted EBITDA in Q4 was $100 million, up 16% year-over-year. For the full year 2024, adjusted EBITDA was $383 million with a margin of 40.6%. Unlevered free cash flow in Q4 was $80 million, and full year 2024 unlevered free cash flow was $265 million.

• Revenue: Expect $1 billion to $1.16 billion in 2025, midpoint represents 7% full year growth over 2024 and 10% normalized growth. Faster time to revenue in first half of 2025 expected to drive higher quarterly growth rates.
• Adjusted EBITDA: Range of $399 million to $407 million, equating to 40% margin. Includes investments in software development, generative AI, cybersecurity, and go-to-market excellence.
• Non-GAAP net income: Range of $237 million to $243 million, equating to non-GAAP EPS of $1.29 to $1.32 at midpoints.

Forward-looking statements involve risks and uncertainties. Actual results may differ from forward-looking statements. Risks discussed in press release and SEC filings, including factors impacting financial performance and forward-looking statements.

Q: Anne Samuel asked about dynamics of utilization on volume-based revenue and normalized rate in 2025.

A: Steve Oreskovich said saw a decline in volume-based revenue sequentially but less than expected, expecting continued growth in 2025 back to traditional 1%-2% annual growth.

Q: Elizabeth Anderson asked about direct connectivity with payers and M&A contribution.

A: Matt Hawkins said work on direct connections with payers continues; Steve Oreskovich said ~3% of 2024 year-over-year growth was from two acquisitions in 2024, still integrating and expecting margin expansion.

Q: Richard Close asked about Medicaid, ACA, and Waystar's positioning.

A: Matt Hawkins said Waystar's software transcends political environments, providers focus on operating efficiency, and Waystar's solutions address waste and inefficiency.

Q: Jared Hasse asked about product areas resonating and hospital priorities.

A: Matt Hawkins said AI-driven automation to prevent denied claims, eligibility automation, prior authorization automation are relevant; hospitals focus on efficiency and operating margin.

Q: Adam Hotchkiss asked about cross sell opportunities and embedding in guidance.

A: Matt Hawkins said ~30% of cyber attack impacted clients are exploring additional modules; Steve Oreskovich said cross sell considered in overall revenue guidance, net revenue retention rate of 110% includes cross sell.