10-Q: Waystar Holding Corp. Reports Q3 2024 Results, Revenue Up 21.7% Year-Over-Year

• Waystar Holding Corp. reported a revenue of $240.1 million for the third quarter of 2024, a 21.7% increase compared to $197.3 million in the same period of 2023.
• The company's net income for the quarter was $5.4 million, a significant improvement from a net loss of $15.5 million in the third quarter of 2023.
• Subscription revenue increased by 15.9% to $118.0 million, while volume-based revenue grew by 27.8% to $120.7 million.
• The company's net revenue retention rate was 109.4% for the twelve months ended September 30, 2024.
• Adjusted EBITDA for the quarter was $96.7 million, compared to $81.0 million in the same period last year.
• The company completed its initial public offering (IPO) in June 2024, raising $914.3 million, and an additional $102.8 million through the underwriters' overallotment option.
• Proceeds from the IPO were used to repay $1.02 billion of outstanding debt under the First Lien Credit Facility.

Score: 8

Explanation: The document presents a positive outlook with strong revenue growth, improved profitability, and successful IPO. However, there are some concerns about increasing operating expenses and the competitive landscape.

• The company experienced strong revenue growth, driven by both subscription and volume-based services.
• Waystar achieved a net profit in Q3 2024, a significant improvement from the net loss in the same period last year.
• The company's Net Revenue Retention Rate of 109.4% demonstrates strong client loyalty and expansion.
• The successful IPO provided substantial capital for debt reduction and future growth.
• Adjusted EBITDA increased year-over-year, indicating improved operational efficiency.

• Operating expenses increased by 29.0% year-over-year, outpacing revenue growth.
• Depreciation and amortization expenses increased significantly due to the relocation of an office location.
• The company incurred losses on extinguishment of debt related to the debt repayments.

• The company operates in a highly competitive industry.
• The company's ability to retain existing clients and attract new clients is crucial for future growth.
• The company's implementation cycle is dependent on client timing and resources.
• The company is subject to risks related to cybersecurity and data privacy.
• The company's performance is affected by the healthcare regulatory and political framework.
• The company's ability to use net operating losses to offset future taxable income is limited.

The company expects to continue to grow its client base and expand its relationships with existing clients, leveraging its platform's network effects and AI capabilities. The company also expects to incur stock-based compensation expenses related to the IPO and additional public company expenses.

• Management believes that the company's existing cash, future cash flows, and additional borrowings will provide sufficient resources to fund operating requirements, capital expenditures, debt service, and investments in future growth for at least the next 12 months.
• Management uses non-GAAP financial measures to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business.

The company's performance is influenced by the broader healthcare industry, including consolidation trends, regulatory changes, and the adoption of new technologies. The company's cloud-based platform and AI-driven solutions position it to capitalize on the increasing demand for efficient healthcare payment processing.

• The company's Net Revenue Retention Rate of 109.4% is a strong indicator of customer satisfaction and loyalty, which is a key metric for SaaS companies.
• The company's revenue growth of 21.7% year-over-year is competitive within the healthcare technology sector, where growth rates vary widely depending on the specific market segment.
• The company's adjusted EBITDA margin of 40.3% is a solid performance, indicating good profitability and cost management.
• Comparable companies in the healthcare technology space include R1 RCM, Change Healthcare, and athenahealth, which have varying growth rates and profitability profiles. Waystar's growth rate is in line with some of the faster growing companies in the sector.
• The company's focus on AI and automation aligns with industry trends towards leveraging technology to improve efficiency and reduce costs in healthcare.

• Shareholders benefit from the company's strong revenue growth and improved profitability.
• Employees benefit from the company's growth and stock-based compensation plans.
• Customers benefit from the company's innovative solutions that improve healthcare payment processing.
• Creditors benefit from the company's debt reduction and improved financial stability.
• Suppliers benefit from the company's continued operations and growth.

• The company will continue to focus on expanding its client base and cross-selling its solutions.
• The company will continue to invest in research and development to enhance its platform.
• The company will monitor and manage its debt obligations and interest rate risk.
• The company will continue to integrate acquired businesses and realize synergies.

• The company has related party transactions with Bain Affiliated Funds and CPPIB Credit Investments III Inc., affiliates of Bain Capital LP and Canada Pension Plan Investment Board, related to outstanding debt.
• Canada Pension Plan Investment Board has an ownership interest in the company and a significant interest in the landlord that leases the company office space in Houston, Texas.
• Bain Capital LP has an ownership interest in the company and a significant interest in some clients for whom the company provides software solutions and a vendor that provides the company with software solutions.

• October 22, 2019: Date of the First Lien Credit Agreement.
• August 13, 2021: Date of the receivables financing agreement.
• October 13, 2021: Date of one of the interest rate swaps.
• January 13, 2023: Date of one of the interest rate swaps.
• August 3, 2023: Date of the HealthPay24 acquisition.
• October 31, 2023: Date of the acquisition of certain assets of Olive AI, Inc.
• February 9, 2024: Date of the Eighth Amendment to the First Lien Credit Agreement.
• May 15, 2024: Date of the reverse stock split.
• May 22, 2024: Date of the amendment to the reverse stock split ratio.
• June 6, 2024: Date of the Prospectus and the 2024 Equity Incentive Plan.
• June 10, 2024: Effective date of the amended and restated certificate of incorporation.
• June 27, 2024: Date of the Ninth Amendment to the First Lien Credit Agreement.
• July 5, 2024: Date the underwriters exercised the overallotment option.
• September 6, 2024: Date of draw on the Receivables Facility and paydown of the First Lien Credit Facility.
• October 1, 2024: Annual goodwill impairment evaluation date.
• November 4, 2024: Date of the amendment to the outstanding option awards.
• December 6, 2025: Date after which performance-vesting options may vest based on the Alternative Performance Hurdles.