WAY Q2 2024: $9M Cyberlift Drives 20% Beat, Sees 13% Normalized Growth
- Rapid Client Onboarding & Revenue Uplift: Management highlighted that following a competitor’s cyberattack, Waystar quickly onboarded thousands of new providers – in some cases in as little as 3 days – which contributed approximately $9 million of incremental Q2 revenue, demonstrating strong market demand and product validation.
- Robust End-to-End Platform & Cross-Sell Potential: Executives emphasized that both new and existing clients are increasingly adopting multiple modules of Waystar’s comprehensive cloud-based software. This broader platform engagement not only reinforces high client retention but also creates significant cross‐sell opportunities to drive further recurring revenue.
- Improving Margin Profile via Digital Transformation: The Q&A discussions underscored initiatives to transition from traditional paper-based billing to digital engagement tools. This digital shift is visibly improving collection speeds and rates, highlighting potential for margin expansion as operational efficiencies are realized over time.
- Reliance on one‐time events: The revenue acceleration, including the $9 million uplift from swiftly switching competitors in the wake of a cyberattack, may not be repeatable, suggesting that normalized growth could revert to a lower rate (around 13% rather than the reported 20%).
- Consumer credit and collection risks: Questions raised about potential consumer weakness in patient financial responsibility indicate that rising out‐of-pocket burdens and slower collections might pressure margins and affect the sustainability of patient payments growth.
- Challenging sales dynamics: Concerns about a shifting sales environment—from modular to a more bundled offering—could complicate the go-to-market strategy and limit the scalability of new client adoption, which may impact long-term revenue growth.
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Normalized Revenue
Q: How do you bridge 20% to 13% growth?
A: Management explained the headline 20% growth includes a $9M benefit from the competitor cyberattack, higher patient payment volumes, and acquisition timing adjustments, which together normalize growth to about 13%. -
Cyberattack Impact
Q: What’s the impact of the competitor cyberattack?
A: They noted the cyberattack led to a rapid onboarding of thousands of providers, generating an incremental $9M revenue boost in Q2, though such momentum is expected to normalize in the back half. -
Volume Revenue Outlook
Q: What drives back-half volume-based revenue?
A: Management attributed the robust volume-based revenue to increased patient payment volumes—reflecting strong seasonality effects—and expects these trends to persist into the second half. -
Software Buying Climate
Q: How are purchase decisions evolving in RCM tech?
A: Executives highlighted that health systems, driven by an ROI focus and recession-resistant needs, are favoring an end‐to‐end, cyber secure platform over modular point solutions. -
Revenue Source Breakdown
Q: How is the $9M uplift divided?
A: They clarified that the uplift came partly from existing clients expanding their use and partly from net new clients switching from the competitor, with the benefit observed across diverse provider settings. -
Customer Adoption
Q: Are clients adopting the full platform?
A: Management observed more clients, both new and existing, are now using multiple modules of their end‐to‐end system, reinforcing confidence in their recurring revenue model. -
Patient Payments Opportunity
Q: Is there opportunity in patient payments?
A: Executives noted that as patients face higher out-of-pocket costs, improved pre-care estimates and digital engagement are driving higher collection rates, suggesting significant share gain in this segment. -
Patient Payments Growth
Q: Will patient payments grow faster than provider solutions?
A: They expect patient payment solutions to grow slightly faster than provider solutions due to the inherent volume effect, while maintaining a roughly 70/30 revenue split. -
Vendor Diversification
Q: How are clients approaching vendor diversification?
A: Management said that most new clients appreciate a trusted, multi-year, cyber secure platform rather than juggling multiple vendors, reinforcing long-term relationships. -
Consumer Weakness
Q: Are you seeing consumer weakness in payments?
A: They reported strong patient interactions and collection rates, with no significant signs of consumer credit weakness impacting the payment segment so far. -
Sales Process Challenges
Q: Are sales processes facing bundling challenges?
A: Management maintained that their ROI-based, consultative sales approach remains robust and there’s no indication they need to shift strategy toward bundling aggressively. -
Digital vs. Paper
Q: What’s the trend on digital versus paper collections?
A: While a portion of clients still uses paper statements, growing evidence shows that digital tools yield faster and higher collection rates, signalling a gradual but clear shift.
Research analysts covering Waystar Holding.