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Waystar Holding Corp. (WAY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong top-line and profitability: Revenue $244.1M (+18% YoY), GAAP net income $19.1M (diluted EPS $0.11), non-GAAP net income $52.1M (diluted EPS $0.29), and adjusted EBITDA $100.2M (41.0% margin) .
  • Growth drivers included a durable $12M quarterly uplift from faster-than-normal implementations tied to a competitor’s clearinghouse cyber event, sustained higher transaction volumes, and modest 2023 acquisition timing benefits; full-year uplift totaled $34M and accounted for ~4% YoY growth in 2024 .
  • FY 2025 guidance raised/initiated: Revenue $1.000B–$1.016B, adjusted EBITDA $399M–$407M (≈40% margin), non-GAAP net income $237M–$243M, and diluted non-GAAP EPS $1.29–$1.32; management highlighted normalized 10% revenue growth at guidance midpoint after adjusting for 2024 timing benefits .
  • Balance sheet/financing catalyst: Term loan repriced to SOFR+2.25% and revolver expanded/lowered to SOFR+1.75%; net leverage fell to 2.8x TTM by year-end (cash $182M), supporting continued deleveraging and investment capacity .
  • Product catalyst: Launch of Waystar AltitudeAI (incl. AltitudeCreate) with early evidence of 3x faster appeal packages and improved denial overturn rates, reinforcing demand momentum in AI-driven automation .

What Went Well and What Went Wrong

What Went Well

  • Sustained growth with operating leverage: Q4 revenue $244.1M (+18% YoY) and adjusted EBITDA $100.2M (41.0% margin); CEO: “exceeding expectations and reflecting the successful execution of our strategic priorities” .
  • Commercial momentum: Net Revenue Retention at 110% (high end of historical range) and clients >$100k LTM reached 1,203 (+15% YoY); ~30% of newly onboarded providers are actively pursuing cross-sell beyond claims/remit .
  • Cash generation and de-risking: Q4 unlevered FCF $80.1M; 2024 EBITDA→UFCF conversion ~69%; net leverage reduced to 2.8x, aided by repricing (SOFR+2.25%) and higher cash .

What Went Wrong

  • Margin mix and investment: Q4 adjusted EBITDA margin 41.0% vs 41.7% in Q4 2023, reflecting continued investments (AI, cybersecurity, go-to-market) and revenue mix .
  • Patient payments seasonality: Sequential decline in volume-based patient payments in Q4 vs Q3 occurred as expected (deductible dynamics), albeit less than initially modeled .
  • Non-GAAP framework change and GAAP optics: Full-year GAAP net loss remained (-$19.1M) despite Q4 profitability; non-GAAP net income definition updated to include intangible amortization add-back to align with peers .

Financial Results

Core Financials by Quarter

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$234.5 $240.1 $244.1
GAAP Diluted EPS ($)$(0.21) $0.03 $0.11
Non-GAAP Diluted EPS ($)$0.04 $0.14 $0.29
Adjusted EBITDA ($USD Millions)$93.9 $96.7 $100.2
Adjusted EBITDA Margin (%)40.0% 40.3% 41.0%
GAAP Net Income ($USD Millions)$(27.7) $5.4 $19.1

YoY Growth vs Prior-Year Quarters and Consensus

MetricQ2 YoYQ3 YoYQ4 YoYQ4 Consensus (S&P Global)
Revenue YoY (%)20% 22% 18% N/A (see Estimates Context)
GAAP Diluted EPS YoY ($)$(0.09)→$(0.21) $(0.13)→$0.03 $(0.12)→$0.11 N/A
Adjusted EBITDA YoY ($M)$83.8→$93.9 $81.0→$96.7 $86.2→$100.2 N/A

Note: Prior-year Q2/Q3/Q4 2023 figures referenced in cells above for YoY comparisons .

Revenue Disaggregation

MetricQ3 2024Q4 2024
Subscription Revenue ($USD Millions)$118.0 (+16% YoY) $121.6 (+18% YoY)
Volume-based Revenue ($USD Millions)$120.7 (+28% YoY) $121.2 (+19% YoY)

KPIs and Cash Metrics

KPIQ2 2024Q3 2024Q4 2024
Net Revenue Retention (NRR)108% 109% 110%
Clients >$100k LTM1,117 1,173 1,203
Cash from Operations ($USD Millions)$15.5 $78.8 $64.8
Unlevered Free Cash Flow ($USD Millions)$50.3 $89.1 $80.1
Net Debt ($USD Millions)$1,292.5 $1,119.6 $1,061.4
Adjusted Net Leverage (x)3.7x 3.0x 2.8x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025“Approach $1B” (prelim, Q3 call) $1.000B–$1.016B Raised to defined range
Adjusted EBITDAFY 2025N/A$399M–$407M (~40% margin) New
Non-GAAP Net IncomeFY 2025N/A$237M–$243M New
Diluted Non-GAAP EPSFY 2025N/A$1.29–$1.32 New
Volume Growth AssumptionFY 2025N/A1%–2% annual volume growth (normalized) New
Revenue WeightingFY 2025N/A1H share slightly >49% (vs 2024) New

Context notes: Company expects faster time-to-revenue effects to support higher YoY quarterly growth in 1H 2025 (particularly Q1) relative to full-year as-reported midpoint (7%) . Seasonality in patient payments persists, with higher revenue dollars typically in 1H due to deductible resets .

Earnings Call Themes & Trends

TopicQ2 2024 (Prev-2)Q3 2024 (Prev-1)Q4 2024 (Current)Trend
AI/Technology InitiativesIdentified >12 generative AI use cases; Google Cloud collaboration; pilots in prior auth/appeals/contracts Demonstrated GenAI use cases; Innovation Lab; 300+ quarterly enhancements Launched AltitudeAI; AltitudeCreate shows 3x faster appeals and improved overturn rates Accelerating deployment and tangible ROI
Cybersecurity/Network ResiliencyDetailed robust cybersecurity posture and audits Building nonexclusive direct payer connections; resiliency focus Vigilant cybersecurity efforts; proactive risk monitoring Strengthening connectivity and security
Patient Payments/SeasonalityOverperformance in 1H; modeled normalization in 2H Volumes above expectations; seasonality acknowledged Sequential decline vs Q3, less than expected; normalization in 2025 Elevated usage moderating toward normalized growth
Cross-sell/RetentionNRR 108%; land-and-expand highlighted NRR 109%; active cross-sell momentum NRR 110%; ~30% of new cohort exploring cross-sell Improving retention and expansion
Capital StructureIPO proceeds reduced debt; repriced to SOFR+2.75% Additional paydown; net leverage 3.0x Repriced to SOFR+2.25%; net leverage 2.8x Cheaper debt and continued deleveraging
Policy/Macro——DC policy environment viewed as neutral-to-positive; focus on reducing waste via tech Supportive backdrop for automation

Management Commentary

  • CEO framing: “We are pleased to report strong results for the fourth quarter and full year 2024, exceeding expectations and reflecting the successful execution of our strategic priorities” .
  • Growth and profitability: “Adjusted EBITDA reached $100 million, up 16% year-over-year… full year margins of 40.6%” .
  • AI impact: “Altitude Create accelerates denial recovery by autonomously drafting appeal letters… clients… complete appeal packages 3x faster, saving an average of 16 minutes per appeal package. Additionally, denial overturn rates are significantly improving” .
  • Revenue uplift durability: “Rapid implementations… generated $12 million of revenue above our normal business model in Q4… $34 million for the full year… increasingly confident this revenue is durable and sustainable” .
  • 2025 setup: “We expect revenue of $1 billion to $1.016 billion… 10% on a normalized basis” and “adjusted EBITDA… equating to an adjusted EBITDA margin of 40%” .
  • Financing: “On December 30, we repriced the full $1.2 billion of first lien debt, lowering our rate by 50 basis points to SOFR plus 2.25%” .

Q&A Highlights

  • Patient payments dynamics: Sequential Q4 decline vs Q3 was less than expected due to utilization trends; 2025 volume growth expected to normalize to 1–2% (vs elevated 2024) .
  • Cross-sell into new cohort: ~30% of Change-impacted providers are actively evaluating additional modules; NRR supported by broad-based cross-sell across the installed base .
  • Payer connectivity: Direct connections expanding, especially where prior exclusivity existed; focus on modern protocols for resiliency .
  • Policy backdrop: Management sees no near-term regulatory headwind; emphasis on tech to reduce waste aligns with Waystar’s ROI narrative .
  • NRR direction: 110% in Q4 aided by higher volumes; 2025 NRR should reflect normalized volume growth .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 could not be retrieved due to a daily request limit exceeded on the data service; as a result, we do not present “vs. consensus” comparisons in this recap. Management’s press release noted performance “exceeding expectations,” but no numeric Wall Street benchmarks are cited here .

Key Takeaways for Investors

  • Durable uplift and normalization: The $34M 2024 uplift from accelerated onboarding is viewed as durable, but 2025 growth is guided to ~10% normalized at midpoint after timing effects; model 1–2% volume growth and slightly higher 1H revenue weighting .
  • AI adoption as a growth vector: AltitudeAI/AltitudeCreate shows tangible ROI (speed and overturn improvement), likely supporting cross-sell and platform adoption in 2025 .
  • Operating leverage intact: Adjusted EBITDA margins anchored around 40% with continued investment; mix and cost actions (payer connectivity, interchange/digitalization) provide medium-term margin support .
  • Strengthening balance sheet: Lower interest costs (SOFR+2.25%) and net leverage at 2.8x increase strategic flexibility for deleveraging and disciplined M&A .
  • Embedded expansion: NRR at 110% and rising client count >$100k LTM (1,203) highlight land-and-expand dynamics; ~30% of newly onboarded providers engaged on incremental modules suggests cross-sell runway .
  • Seasonality watch: Expect patient payments seasonality (higher 1H) and normalization of elevated 2024 volumes; Q1 2025 likely shows above full-year as-reported growth due to faster time-to-revenue carryover .
  • Payer network resiliency: Ongoing build-out of direct, nonexclusive payer connections is a structural differentiator improving speed-of-payment and platform stickiness .