Waystar Holding Corp

Previous wording

We have demonstrated an ability to drive recurring, predictable, and profitable growth. Over 99% of our revenue is either recurring subscription or based on highly predictable volumes. For the twelve months ended June 30, 2024, our Net Revenue Retention Rate was 107.5% and we have 1,117 clients as of June 30, 2024 generating over $100,000 over the same twelve month period. For the six months ended June 30, 2024, we generated revenue of $459.3 million (reflecting a 18.7% increase compared to revenue of $387.1 million for the same period in the prior year), net loss of $43.6 million (reflecting a 103.5% increase to net loss compared to net loss of $21.4 million for the same period in the prior year), and Adjusted EBITDA of $186.7 million (reflecting a 12.1% increase compared to Adjusted EBITDA of $166.5 million for the same period in the prior year).

Current wording

We have demonstrated an ability to drive recurring, predictable, and profitable growth. Over 99% of our revenue is either recurring subscription or based on highly predictable volumes. For the twelve months ended September 30, 2024, our Net Revenue Retention Rate was 109.4% and we have 1,173 clients as of September 30, 2024 generating over $100,000 over the same twelve month period. For the nine months ended September 30, 2024, we generated revenue of $699.4 million (reflecting a 19.7% increase compared to revenue of $584.3 million for the same period in the prior year), net loss of $38.2 million (reflecting a 3.5% increase to net loss compared to net loss of $36.9 million for the same period in the prior year), and Adjusted EBITDA of $283.3 million (reflecting a 14.5% increase compared to Adjusted EBITDA of $247.5 million for the same period in the prior year).

Previous wording

Following the February 2024 cybersecurity incident involving one of our competitors, more than 30,000 providers, including a significant number of large health systems and ambulatory providers, began adopting our solutions, and we were able to implement our solutions for many of these new clients in as little as 48 hours. This incident and our response to it generated approximately $9 million and $10 million, respectively, in additional revenue in the three and six months ended June 30, 2024 due to increased win rates above our historically competitive rates and associated accelerated implementation timeline.

Current wording

Following the February 2024 cybersecurity incident involving one of our competitors, more than 30,000 providers, including a significant number of large health systems and ambulatory providers, began adopting our solutions, and we were able to implement our solutions for many of these new clients in as little as 48 hours. This incident and our response to it generated approximately $12 million and $22 million, respectively, in additional revenue in the three and nine months ended September 30, 2024 due to increased win rates above our historically competitive rates and associated accelerated implementation timeline.

Previous wording

Cost of revenue includes salaries, stock-based compensation, and benefits (“personnel costs”) for our team members who are focused on implementation, support, and other client-focused operations, as well as team members focused on enhancing and developing our platform. Cost of revenue also includes costs for third-party technology such as interchange fees and infrastructure related to the operations of our platform, including communicating and processing patient payments, and services to support the delivery of our solutions. Third-party costs for patient payments solutions are approximately 60% of the revenue generated from these solutions, while third-party costs for provider solutions are approximately 6% to 8% of the associated revenue, in each case, for both the three and six months ended June 30, 2024 and 2023.

Current wording

Cost of revenue includes salaries, stock-based compensation, and benefits (“personnel costs”) for our team members who are focused on implementation, support, and other client-focused operations, as well as team members focused on enhancing and developing our platform. Cost of revenue also includes costs for third-party technology such as interchange fees and infrastructure related to the operations of our platform, including communicating and processing patient payments, and services to support the delivery of our solutions. Third-party costs for patient payments solutions are approximately 60% of the revenue generated from these solutions, while third-party costs for provider solutions are approximately 6% to 8% of the associated revenue, in each case, for both the three and nine months ended September 30, 2024 and 2023.

Previous wording

Revenue was $234.5 million for the three months ended June 30, 2024 as compared to $196.0 million for the three months ended June 30, 2023, an increase of $38.6 million, or 19.7%, of which $13.0 million was attributed to subscription revenue from new and existing clients, with $12.0 million generated by provider solutions, and $1.0 million generated from patient payments solutions. Another $25.1 million was attributed to volume-based revenue primarily related to expansion of existing client usage and acquired clients, of which $9.3 million was generated by provider solutions and $15.9 million by patient payments solutions.

Current wording

Revenue was $240.1 million for the three months ended September 30, 2024 as compared to $197.3 million for the three months ended September 30, 2023, an increase of $42.8 million, or 21.7%, of which $16.2 million was attributed to subscription revenue from new and existing clients, with $16.0 million generated by provider solutions, and $0.2 million generated from patient payments solutions. Another $26.3 million was attributed to volume-based revenue primarily related to expansion of existing client usage and acquired clients, of which $10.3 million was generated by provider solutions and $16.0 million by patient payments solutions.

Previous wording

Included within the revenue increases over the period is an estimated $9.0 million increase due to our heightened win rates above our historically high rates and accelerated implementation timelines related to the cybersecurity incident involving one of our competitors in February 2024.

Current wording

Included within the revenue increases over the period is an estimated $12 million increase due to our heightened win rates above our historically high rates and accelerated implementation timelines related to the cybersecurity incident involving one of our competitors in February 2024.

Previous wording

Cost of revenue was $80.5 million for the three months ended June 30, 2024 as compared to $60.5 million for the three months ended June 30, 2023, an increase of $20.0 million, or 33.0%. The increase was primarily driven by $14.7 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $3.9 million was from costs associated with provider solutions and $10.8 million from patient payments solutions. Additionally, there was a $1.6 million increase in stock-based compensation expense primarily related to the recognition of performance condition options.

Current wording

Cost of revenue was $80.5 million for the three months ended September 30, 2024 as compared to $62.9 million for the three months ended September 30, 2023, an increase of $17.6 million, or 28.0%. The increase was primarily driven by $14.6 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $3.7 million was from costs associated with provider solutions and $10.9 million from patient payments solutions. In addition, there was a $1.9 million increase in personnel costs.

Previous wording

Sales and marketing expense was $45.7 million for the three months ended June 30, 2024 as compared to $31.4 million for the three months ended June 30, 2023, an increase of $14.3 million, or 45.5%. The increase was driven by an $8.4 increase in stock-based compensation expense primarily related to the recognition of performance condition options. Additionally, there was an increase in channel partner fees and amortization of the internal sales commission deferred contract costs assets of $4.0 million associated with revenue growth.

Current wording

Sales and marketing expense was $38.5 million for the three months ended September 30, 2024 as compared to $32.1 million for the three months ended September 30, 2023, an increase of $6.3 million, or 19.7%. The increase was driven by an increase in channel partner fees and amortization of the internal sales commission deferred contract costs assets of $4.8 million associated with revenue growth. Additionally, there was an increase of $1.1 million in stock-based compensation expense primarily related to new option and RSU grants related to the June IPO.

Previous wording

Revenue was $459.3 million for the six months ended June 30, 2024 as compared to $387.1 million for the six months ended June 30, 2023, an increase of $72.3 million, or 18.7%, of which $22.7 million was attributed to subscription revenue from new and existing clients, with $20.4 million generated by provider solutions, and $2.2 million generated from patient payments solutions. Another $48.3 million was attributed to volume-based revenue primarily related to expansion of existing client usage and acquired clients, of which $21.1 million was generated by provider solutions and $27.2 million by patient payments solutions.

Current wording

Revenue was $699.4 million for the nine months ended September 30, 2024 as compared to $584.3 million for the nine months ended September 30, 2023, an increase of $115.1 million, or 19.7%, of which $38.8 million was attributed to subscription revenue from new and existing clients, with $36.4 million generated by provider solutions, and $2.4 million generated from patient payments solutions. Another $74.5 million was attributed to volume-based revenue primarily related to expansion of existing client usage and acquired clients, of which $31.4 million was generated by provider solutions and $43.2 million by patient payments solutions.

Previous wording

Included within the revenue increases over the period is an estimated $10 million increase due to our heightened win rates above our historically high rates and accelerated implementation timelines related to the cybersecurity incident involving one of our competitors in February 2024.

Current wording

Included within the revenue increases over the period is an estimated $22 million increase due to our heightened win rates above our historically high rates and accelerated implementation timelines related to the cybersecurity incident involving one of our competitors in February 2024.

Previous wording

Cost of revenue was $155.6 million for the six months ended June 30, 2024 as compared to $119.7 million for the six months ended June 30, 2023, an increase of $36.0 million, or 30.1%. The increase was primarily driven by $28.1 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $9.1 million was from costs associated with provider solutions and $19.0 million from patient payments solutions. Additionally, there was a $3.5 million increase in personnel costs, and a $1.4 million increase in stock-based compensation expense primarily related to the recognition of performance condition options.

Current wording

Cost of revenue was $236.2 million for the nine months ended September 30, 2024 as compared to $182.6 million for the nine months ended September 30, 2023, an increase of $53.6 million, or 29.4%. The increase was primarily driven by $42.7 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $12.8 million was from costs associated with provider solutions and $29.9 million from patient payments solutions. Additionally, there was a $5.4 million increase in personnel costs, and a $2.1 million increase in stock-based compensation expense primarily related to the recognition of performance condition options and new option and RSU grants related to the June IPO.

Previous wording

in stock-based compensation expense primarily related to the recognition of performance condition options, and an increase in channel partner fees and amortization of the internal commission deferred contract costs asset of $6.5 million associated with revenue growth.

Current wording

Sales and marketing expense was $117.9 million for the nine months ended September 30, 2024 as compared to $93.5 million for the nine months ended September 30, 2023, an increase of $24.5 million, or 26.2%. The increase was primarily driven by an increase in channel partner fees and amortization of the internal commission deferred contract costs asset of $11.3 million associated with revenue growth. Additionally, there was an $9.6 million increase in stock-based compensation expense primarily related to the recognition of performance condition options and new option and RSU grants related to the June IPO.

Previous wording

General and administrative expense was $66.1 million for the six months ended June 30, 2024 as compared to $29.2 million for the six months ended June 30, 2023, an increase of $36.9 million, or 126.7%. The increase was driven by a $19.9 million increase in stock-based compensation primarily related to the recognition of performance condition options. Additionally, there were third-party fees of $12.8 million expensed as incurred, including $10.3 million related to the debt modification related to the February 2024 refinancing of the First Lien Credit Facility and $2.4 million related to the June 2024 debt repricing.

Current wording

General and administrative expense was $88.8 million for the nine months ended September 30, 2024 as compared to $46.5 million for the nine months ended September 30, 2023, an increase of $42.3 million, or 90.9%. The increase was driven by a $23.4 million increase in stock-based compensation primarily related to the recognition of performance condition options and new option and RSU grants related to the June IPO. Additionally, there were third-party fees of $12.8 million expensed as incurred, including $10.3 million related to the debt modification related to the February 2024 refinancing of the First Lien Credit Facility, $2.4 million related to the June 2024 debt repricing and $0.1 million relates to the payoff of the Second Lien Credit Facility in February 2024.

Previous wording

Research and development expense was $26.2 million for the six months ended June 30, 2024 as compared to $16.6 million for the six months ended June 30, 2023, an increase of $9.6 million, or 58.2%. The increase was driven by a $5.5 million increase in stock-based compensation primarily related to the recognition of performance condition options, and higher personnel costs, net of capitalized expenses, of $4.4 million.

Current wording

Research and development expense was $37.3 million for the nine months ended September 30, 2024 as compared to $25.5 million for the nine months ended September 30, 2023, an increase of $11.8 million, or 46.0%. The increase was driven by a $6.3 million increase in stock-based compensation primarily related to the recognition of performance condition options and new option and RSU grants related to the June IPO. Additionally, there were increased personnel costs, net of capitalized expenses, of $5.8 million.

Previous wording

Income tax benefit was $20.7 million for the six months ended June 30, 2024 as compared to $7.0 million for the six months ended June 30, 2023, an increase of $13.6 million, or 193.9%. The increase was primarily due to the increase in pre-tax loss, which was primarily driven by stock-based compensation expense related to the recognition of performance condition options.

Current wording

Income tax benefit was $17.4 million for the nine months ended September 30, 2024 as compared to $11.7 million for the nine months ended September 30, 2023, an increase of $5.7 million, or 48.2%. The increase was primarily due to the increase in pre-tax loss, which was primarily driven by stock-based compensation expense related to the recognition of performance condition options, partially offset by improved income from operations and a decrease in interest expense.

Previous wording

debt service requirements. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. A reconciliation is provided below for our non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Current wording

Adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income / (loss), and non-GAAP net income / (loss) per share are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) or net income (loss) margin as measures of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, and debt service requirements. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. A reconciliation is provided below for our non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Previous wording

The following table presents a reconciliation of net loss to adjusted EBITDA and net loss margin to adjusted EBITDA margin for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents a reconciliation of net loss to adjusted EBITDA and net loss margin to adjusted EBITDA margin for the three and nine months ended September 30, 2024 and 2023:

Previous wording

The following table presents a reconciliation of net loss to non-GAAP net income / (loss) and non-GAAP net income / (loss) per share for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents a reconciliation of net loss to non-GAAP net income / (loss) and non-GAAP net income / (loss) per share for the three and nine months ended September 30, 2024 and 2023:

Previous wording

On June 30, 2024 and December 31, 2023, we had restricted cash of $12.1 million and $9.8 million, respectively, which consists of cash deposited in lockbox accounts owned by us which are contractually required to be disbursed to participating clients on the following day, as well as cash collected on behalf of healthcare providers from patients that have not yet been remitted to providers. These funds payable are not available for our use and liquidity, and are offset on our balance sheet by an aggregated funds payable liability.

Current wording

On September 30, 2024 and December 31, 2023, we had restricted cash of $17.2 million and $9.8 million, respectively, which consists of cash deposited in lockbox accounts owned by us which are contractually required to be disbursed to participating clients on the following day, as well as cash collected on behalf of healthcare providers from patients that have not yet been remitted to providers. These funds payable are not available for our use and liquidity, and are offset on our balance sheet by an aggregated funds payable liability.

Previous wording

Cash flows from operating, investing, and financing activities for the six months ended June 30, 2024 and June 30, 2023, are summarized in the following table:

Current wording

Cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 and September 30, 2023, are summarized in the following table:

Previous wording

Cash flows provided by financing activities were $21.3 million for the six months ended June 30, 2024 as compared to cash flows used of $8.7 million for the six months ended June 30, 2023. The increase was due to the proceeds from our IPO net of third-party IPO issuance costs (see Note 1 in Financial Statements), as well as the issuance of debt, net of creditor fees (see Note 10 in Financial Statements). These increases were offset by increased payments on our debt compared to the prior period (see Note 10 in Financial Statements).

Current wording

Cash flows provided by financing activities were $15.0 million for the nine months ended September 30, 2024 as compared to cash flows used of ($14.0) million for the nine months ended September 30, 2023. The increase was due to the proceeds from our IPO net of third-party IPO issuance costs (see Note 1 in Financial Statements), as well as the issuance of debt, net of creditor fees (see Note 11 in Financial Statements). These increases were offset by increased payments on our debt compared to the prior period (see Note 11 in Financial Statements).