Photo Credit: Gerd Altmann from Pixabay
Earlier this year, healthcare payments technology provider, Waystar (Nasdaq: WAY) went public to a tepid debut. The market seems to have improved now and the stock has been climbing since.
Waystar’s Offerings
Lehi, Utah-based Waystar was founded to provide healthcare providers with a cloud-based solution that simplified their complex payments process. It was formed in 2017 when revenue cycle management companies Navicure and ZirMed merged to become Navicure. In 2023, it renamed itself as Waystar.Today, its platform streamlines the reimbursement processes of healthcare providers. Waystar leverages its home-grown AI solution along with advanced algorithms to automate payment-related workflow tasks and drive improvement across claim and billing accuracy for providers.The US healthcare payment ecosystem is not an easy one to figure out. The process begins at the time of patient onboarding and continues up to post-service revenue collection. To get reimbursed for services rendered, the provider needs to identify the correct diagnosis code and understand the terms of unique payer contracts that are governed by their independent rules, processes, and reimbursement requirements.Historically, healthcare providers have relied on manual processes and systems to navigate these complexities that lead to payment delays. Waystar’s platform addresses these challenges and optimizes healthcare payments across all stages of the patient journey. By integrating AI into its solution, Waystar has built a solution that continues to improve its capabilities. Every transaction processed by its platform provides additional data insights across providers, patients, and payers to the AI model that then uses the learnings to deploy updates across its client base. This learning continues to improve the Waystar platform, in turn adding more value for its clients.Its software is widely accepted in the industry. It currently has over 30,000 clients of various sizes, accounting for over one million distinct providers practicing across a variety of care sites. In 2023, it facilitated over five billion healthcare payments transactions, translating to more than $1.2 trillion in gross claims volume in the United States.
Waystar’s Financials
Waystar earns revenues primarily through a subscription-based model. For the three months ended March 2024, it generated revenues of $224.8 million, growing 18% over the year. During the same period, net loss increased 50% to $15.9 million, and adjusted EBITDA improved 12% to $92.8 million. For the year ended December 2023, its revenue grew 12% to $791.0 million, its net loss was flat at $51.3 million, and its adjusted EBITDA grew 13% to $333.7 million.Waystar is confident of its growth opportunity. It believes that it is tackling a total addressable market of $15 billion this year that is expected to grow to $20 billion in 2027. But the market is dominated by big players – one such being United Healthcare’s Change Healthcare. Recently though, Change Healthcare experienced a cyber attack that shut down its services. The attack helped accelerate the movement of providers away to smaller vendors like Waystar.Privately held athenahealth is another big competitor for Waystar. athenahealth is a cloud-based health tech company that provides a suite of products to healthcare providers that are aimed at maximizing financial outcomes, improve revenue cycle management, address staffing shortages and streamline clinical data to improve clinical decisions. When I spoke with its former CEO, Jonathan Bush in 2009, he talked about how he set up athenahealth to improve the collections process for providers. It had about 2% of the physician market share in the US in 2009 and a client portfolio of over 13,000 MDs and 19,000 medical providers.Since then, athenahealth has expanded its capabilities beyond revenue cycle management (RCM) to include electronic health record (EHR) and patient engagement capabilities. athenahealth rose to success by building out a rules-based engine that leveraged intelligent algorithms to improve claims processing. Today, its RCM offering lets healthcare providers free their staff of repetitive and time-consuming billing work while its platform takes care of claims processes that ensure patients are pre-verified for eligibility. Its rules engine has continued to evolve and helps providers make accurate claims by reducing errors before submission. Before athenahealth went private in 2019, it was generating revenues of $1.2 billion annually. Since 2019 it has changed owners twice and was last bought by Bain Capital and Hellman & Friedman for an estimated $17 billion in 2021.Waystar went public in June this year when it raised $967.5 million by selling stock at $21.50 a share, that valued it at $3.5 billion. In 2019, the EQT Partners and the Canadian Pension Plan Investment Board bought a majority stake in Waystar, valuing it at $2.7 billion. Bain Capital was also an investor in the company. Its stock is currently trading at $27.33 with a market capitalization of $4.6 billion.More By This Author:Cloud Stocks: Klaviyo Targets Social CommerceCloud Stocks: Workday Wants AI To Reimagine End To End Business Processes Cloud Stocks: Salesforce Preps To Enter Veeva’s Territory
