• Q4 Revenue: $244 million, an 18% year-over-year increase.
• Full Year Revenue 2024: $944 million, a 19% year-over-year growth.
• Net Revenue Retention: 110% in Q4.
• Clients Generating >$100,000 Revenue: 1,203 clients, a 15% year-over-year increase.
• Adjusted EBITDA Q4: $100 million, a 16% year-over-year increase.
• Adjusted EBITDA Margin 2024: 40.6%.
• Unlevered Free Cash Flow Q4: $80 million.
• Unlevered Free Cash Flow 2024: $265 million.
• Net Leverage Ratio: Reduced to 2.8 times.
• GAAP Net Income Q4: $19 million.
• GAAP Net Loss 2024: $19 million.
• 2025 Revenue Guidance: $1.0 billion to $1.016 billion.
• 2025 Adjusted EBITDA Guidance: $399 million to $407 million.
• 2025 Non-GAAP Net Income Guidance: $237 million to $243 million.
• 2025 Non-GAAP EPS Guidance: $1.29 to $1.32.

• Warning! GuruFocus has detected 5 Warning Signs with VC.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Waystar Holding Corp (NASDAQ:WAY) achieved significant growth in 2024, with a revenue increase of 18% year over year in Q4, reaching $244 million.
• The company completed its IPO in June 2024, raising approximately $1 billion, which strengthened its financial position for continued growth and innovation.
• Waystar's software platform is designed to reduce administrative waste in healthcare, enhancing operational efficiencies and improving payment accuracy and timeliness.
• The company reported strong adjusted EBITDA performance, reaching $100 million in Q4, up 16% year over year, with a full-year margin of 40.6%.
• Waystar launched Waystar Altitude AI, a generative AI capability that accelerates denial recovery, improving efficiency and reimbursement speed for clients.

Negative Points

• Despite strong growth, Waystar's GAAP net income for the full year 2024 was a loss of $19 million, though improved from a loss of $51 million in 2023.
• The company expects a normalized revenue growth rate of 10% in 2025, which is lower than the 19% growth reported in 2024 due to timing benefits recognized in 2024.
• Waystar's guidance for 2025 includes a lower adjusted EBITDA margin of 40%, indicating potential challenges in maintaining profitability while investing in growth.
• The company faces ongoing challenges in expanding direct connectivity with payers, which is crucial for enhancing its network and service offerings.
• Waystar's growth strategy heavily relies on cross-selling and upselling to existing clients, which may face limitations if market conditions change or client needs shift.

Q & A Highlights

Q: Can you discuss the dynamics around utilization and volume-based revenue, given the strong performance despite expected seasonal drop-offs? A: Steven Oreskovich, CFO: We observed a decline in volume-based revenue in Q4 as expected, but it was less than anticipated due to more patients utilizing the system. We believe this is due to a larger number of patients not having hit their deductibles. For 2025, we expect volume growth to return to the historical 1% to 2% range, compared to the higher growth rates seen in 2024.

Q: Can you provide an update on direct connectivity with payers and the contribution from M&A activities? A: Matthew Hawkins, CEO: We are expanding our network with direct connections to more payers, using modern protocols to enhance healthcare efficiency. Steven Oreskovich, CFO: The M&A contribution accounted for about 3% of our year-over-year growth in 2024. We are finalizing integrations and expect to improve margins from these acquisitions in 2025.

Q: How is Waystar positioned regarding potential policy and funding changes from DC, particularly concerning Medicaid and ACA? A: Matthew Hawkins, CEO: Waystar's software transcends political environments, and we don't foresee negative impacts from policy changes. Our focus on reducing wasteful spending aligns with current priorities, and we expect providers to increase IT spending on solutions that offer a strong ROI.

Q: Are there any particular products or solutions that are resonating more with clients, and how are hospital priorities shifting in 2025? A: Matthew Hawkins, CEO: We see strong demand for solutions that prevent denied claims and improve efficiency, such as our eligibility automation suite and prior authorization automation. Hospitals are focused on efficiency and operating margins, and we have a robust pipeline for 2025.

Q: Can you elaborate on the cross-sell opportunities with the 30% of clients pursuing additional solutions beyond remittance and claims? A: Matthew Hawkins, CEO: We have over 30,000 providers who joined us due to a competitor's cyberattack, and 30% are exploring additional software modules. These clients are interested in automation and efficiency solutions, and we expect this number to grow as we continue to engage with them.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.