Waystar Holding Corp.

Previous wording

The following discussion and analysis of Waystar Holding Corp. (“Waystar”, the “Company”, “we”, “us”, and “our”) financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Form 10-Q, and the consolidated financial statements and related notes included in the 2024 Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties, and other factors outside the Company’s control, as well as assumptions, such as our plans, objectives, expectations, and intentions. Our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including those described under the sections entitled “Cautionary Statement Concerning Forward-Looking Statements” above and “Risk Factors” in the 2024 Form 10-K and our other filings with the SEC.

Current wording

The following discussion and analysis of the financial condition and results of operations of Waystar Holding Corp. (“Waystar”, the “Company”, “we”, “us”, and “our”) should be read in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Form 10-Q, and the consolidated financial statements and related notes included in the 2025 Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties, and other factors outside our control, as well as assumptions, such as our plans, objectives, expectations, and intentions. Our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including those described under the sections entitled “Cautionary Statement Concerning Forward-Looking Statements” above and “Risk Factors” in the 2025 Form 10-K and our other filings with the SEC.

Previous wording

Waystar provides healthcare organizations with mission-critical cloud software that simplifies healthcare payments. Our enterprise-grade platform streamlines the complex and disparate processes our healthcare provider clients must manage to be reimbursed correctly, while improving the payments experience for providers, patients, and payers. We leverage AI as well as proprietary, advanced algorithms to automate payment-related workflow tasks and drive continuous improvement, which enhances claim and billing accuracy, enriches data integrity, and reduces labor costs for providers.

Current wording

Waystar provides healthcare organizations with mission-critical AI-powered software that simplifies healthcare payments for providers across the continuum of care. Our enterprise-grade platform streamlines the complex and disparate processes our healthcare providers must manage to ensure accurate reimbursement and improves the payments experience for providers, patients, and payers. We leverage AI as well as proprietary, advanced algorithms to automate payment-related workflow tasks and drive continuous improvement, which enhances claim and billing accuracy, strengthens data integrity, and reduces labor costs for providers.

Previous wording

Our software is used daily by providers of all types and sizes across the continuum of care, including physician practices, clinics, surgical centers, and laboratories, as well as large hospitals and health systems. We currently serve over 30,000 clients of various sizes, representing over one million distinct providers practicing across a variety of care sites, including 17 of the top 20 U.S. News Best Hospitals. Our business model is designed such that as our clients grow to serve more patients, their claims and transactional volumes increase, resulting in corresponding growth in our business. In addition, our clients frequently adopt a greater number of our solutions over time and introduce our solutions across new sites of care. In 2024, we facilitated over six billion healthcare payments transactions, including over $1.8 trillion in gross claims volume. As of 2024, we facilitated healthcare payments transactions spanning approximately 50% of patients in the United States.

Current wording

Our software is used daily by providers of all types and sizes across the continuum of care, including physician practices, clinics, surgical centers, and laboratories, as well as large hospitals and health systems. We currently serve over 30,000 clients of various sizes, representing over one million distinct providers practicing across a variety of care sites, including 16 of the top 20 U.S. News Best Hospitals. Our business model aligns with our clients' growth; as they serve more patients, claims and transaction volumes increase, driving corresponding growth in our business. In addition, our clients frequently adopt a greater number of our solutions over time and introduce our solutions across new sites of care. In 2025, we facilitated over 7.5 billion healthcare payments transactions, including over $2.4 trillion in gross claims volume spanning approximately 60% of patients and one-in-three hospital discharges in the United States.

Previous wording

Our platform benefits from powerful network effects. Our cloud-based software is driven by a sophisticated, automated, and curated rules engine, employing AI to generate and incorporate real-time feedback from millions of network transactions processed through our platform each day. Every transaction we process provides additional data insights across providers, patients, and payers, which are embedded in updates that are deployed efficiently across our client base. This results in cumulative benefits to us over time —as we capture more data from each transaction we process, we leverage that data to continue to improve the Waystar platform through embedded machine learning, advanced algorithms, and other in-house AI technologies to deliver added value to our clients. In turn, the more value we create for our clients, the more likely it is that they will continue to use our products, allowing us to continue to capture more data that results in tangible improvements to our platform. As a result, our clients benefit from faster and more efficient performance from software that is evolving to meet ever-changing regulatory and payer requirements, enabling accurate and timely reimbursement.

Current wording

Our platform benefits from powerful network effects. Our cloud-based software is driven by a sophisticated, automated, and AI-powered engine to generate and incorporate real-time feedback from millions of network transactions processed through our platform each day. Every transaction we process provides additional data insights across providers, patients, and payers, which are embedded in updates that are deployed efficiently across our platform. This results in cumulative benefits to us over time. As we capture more data from each transaction we process, we leverage those insights to continuously improve the platform through Waystar AltitudeAI, our proprietary AI engine. Waystar AltitudeAI utilizes a multi-model approach that incorporates machine learning, large language models, and generative and agentic AI to automate complex workflows and deliver added value to our clients. In turn, the more value we create for our clients, the more likely it is that they will continue to use our products, allowing us to continue to capture more data that results in tangible improvements to our platform. As a result, our clients benefit from faster and more efficient performance from software that is evolving to meet ever-changing regulatory and payer requirements, enabling accurate and timely reimbursement.

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 September 30, 2025, our Net Revenue Retention Rate was 113.1% and we have 1,306 clients as of September 30, 2025 generating over $100,000 over the same twelve month period. For the nine months ended September 30, 2025, we generated revenue of $795.7 million (reflecting a 13.8% increase compared to revenue of $699.4 million for the same period in the prior year), net income of $92.1 million compared to net loss of $38.2 million for the same period in the prior year, and Adjusted EBITDA of $333.0 million (reflecting a 17.5% increase compared to Adjusted EBITDA of $283.3 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 12 months ended March 31, 2026, our Net Revenue Retention Rate was 110.5%, and we have 1,433 clients as of March 31, 2026 generating over $100,000 over the same 12-month period. For the three months ended March 31, 2026, we generated revenue of $313.9 million (reflecting a 22.4% increase compared to revenue of $256.4 million for the same period in the prior year), net income of $43.3 million compared to net income of $29.3 million for the same period in the prior year, and Adjusted EBITDA of $135.4 million (reflecting a 25.7% increase compared to Adjusted EBITDA of $107.7 million for the same period in the prior year).

Previous wording

On February 24, 2025, the Institutional Investors closed an underwritten public offering of 23,000,000 shares of our common stock (inclusive of the underwriters’ option to purchase additional shares) (the “First Secondary Offering”). On May 15, 2025, the Institutional Investors closed another underwritten public offering of 14,375,000 shares of our common stock (inclusive of the underwriters' option to purchase additional shares) (the "Second Secondary Offering"). Additionally on September 10, 2025, the Institutional Investors closed another underwritten public offering of 18,000,000 shares of our common stock (the "Third Secondary Offering"). The Company did not sell any shares in these offerings or receive any proceeds from these offerings. Pursuant to the terms of the Amended and Restated Registration Rights Agreement, dated as of June 10, 2024, by and among the Company, the Institutional Investors, and certain other parties thereto, we paid $1.4 million and $4.6 million in certain expenses on behalf of the selling stockholders related to these offerings for the three and nine months ended September 30, 2025, respectively, while the selling stockholders paid all applicable underwriting discounts and commissions.

Current wording

On February 24, 2025, the Institutional Investors closed an underwritten public offering of 23,000,000 shares of our common stock (inclusive of the underwriters’ option to purchase additional shares) (the “First Secondary Offering”). On May 15, 2025, the Institutional Investors closed another underwritten public offering of 14,375,000 shares of our common stock (inclusive of the underwriters’ option to purchase additional shares) (the “Second Secondary Offering”). Additionally, on September 10, 2025, the Institutional Investors closed another underwritten public offering of 18,000,000 shares of our common stock (the “Third Secondary Offering”). We did not sell any shares in these offerings or receive any proceeds from these offerings. Pursuant to the terms of the Amended and Restated Registration Rights Agreement, dated as of June 10, 2024, by and among Waystar, the Institutional Investors, and certain other parties thereto, we paid $1.4 million in certain expenses on behalf of the selling stockholders related to these offerings for the three months ended March 31, 2025, while the selling stockholders paid all applicable underwriting discounts and commissions.

Previous wording

On July 23, 2025, we entered into the Merger Agreement to acquire Iodine through a series of mergers. Iodine is a trusted leader in AI-powered clinical intelligence, enhancing clinical documentation and accuracy, streamlining utilization management, and preventing revenue leakage before billing. This strategic move is expected to bolster our AI leadership, automate manual work, and improve financial performance for providers. The acquisition was completed on October 1, 2025 for a total purchase price of $1.25 billion. The consideration paid was approximately $458.6 million in cash consideration and 16,639,920 shares of common stock having a value of $37.31 per share, and certain adjustments as outlined in the Merger Agreement.

Current wording

On July 23, 2025, we entered into an Agreement and Plan of Merger (the "Merger Agreement") to acquire Iodine through a series of mergers. Iodine is a trusted leader in AI-powered clinical intelligence, enhancing clinical documentation and accuracy, streamlining utilization management, and preventing revenue leakage before billing. This strategic move is expected to bolster our AI leadership, automate manual work, and improve financial performance for providers. The acquisition was completed on October 1, 2025 for a total purchase price of $1.26 billion. The consideration paid was approximately $638.9 million in cash consideration and 16,639,920 shares of common stock having a value of $37.31 per share, and certain adjustments as outlined in the Merger Agreement.

Previous wording

•Subscription revenue. Reflects recurring monthly provider count fees and minimum amounts owed. The vast majority of subscription revenue is generated by provider solutions, which constituted approximately 70% of total revenue in each of the three and nine months ended September 30, 2025 and 2024.

Current wording

•Subscription revenue. Reflects recurring monthly provider count fees and minimum amounts owed. The vast majority of subscription revenue is generated by provider solutions, which constituted approximately 70% of total revenue in each of the three months ended March 31, 2026 and 2025.

Previous wording

We also derive revenue from implementation fees for our software, as well as hardware sales to facilitate patient payments. Our implementation fees are billed upfront and the revenue is recognized ratably over the customer's life.

Current wording

We also derive revenue from implementation fees for our software, as well as hardware sales to facilitate patient payments. Our implementation fees are billed upfront and the revenue is recognized ratably over the contractual term.

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 nine months ended September 30, 2025 and 2024.

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 7% of the associated revenue, in each case, for both the three months ended March 31, 2026 and 2025.

Previous wording

Income tax expense/(benefit) includes current income tax and income tax credits from deferred taxes. Income tax expense/benefit is recognized in profit and loss except to the extent that it relates to items recognized in equity or other comprehensive income, in which case the income tax expense/(benefit) is also recognized in equity or other comprehensive income.

Current wording

Income tax expense includes current income tax and income tax credits from deferred taxes. Income tax expense is recognized in profit and loss except to the extent that it relates to items recognized in equity or other comprehensive income, in which case the income tax expense is also recognized in equity or other comprehensive income.

Previous wording

Revenue was $268.7 million for the three months ended September 30, 2025 as compared to $240.1 million for the three months ended September 30, 2024, an increase of $28.5 million, or 11.9%, of which $16.5 million was attributed to subscription revenue from new and existing clients, almost all of which was generated by provider solutions. Another $11.7 million was attributed to volume-based revenue primarily related to expansion of existing client usage, of which $5.7 million was generated by patient payments solutions and $5.9 million was generated by provider solutions.

Current wording

Revenue was $313.9 million for the three months ended March 31, 2026 as compared to $256.4 million for the three months ended March 31, 2025, an increase of $57.4 million, or 22.4%, of which $47.1 million was attributed to increased subscription revenue from existing and acquired clients, almost all of which is generated by provider solutions. Another $9.5 million was attributed to increased volume-based revenue, primarily related to expansion of existing client usage, of which $6.4 million of the volume-based increase was generated by provider solutions and $3.2 million by patient payment solutions.

Previous wording

Cost of revenue was $255.5 million for the nine months ended September 30, 2025 as compared to $236.2 million for the nine months ended September 30, 2024, an increase of $19.3 million, or 8.2%. The increase was primarily driven by $13.9 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $20.1 million was third-party costs associated with payment solutions offset by a decrease of $6.2 million from third-party costs associated with provider solutions, primarily from timing of prior acquisition synergy attainment. Additionally, there was an increase in personnel costs, net of capitalization expenses, of $5.8 million.

Current wording

Cost of revenue (exclusive of depreciation and amortization) was $97.0 million for the three months ended March 31, 2026 as compared to $83.3 million for the three months ended March 31, 2025, an increase of $13.7 million, or 16.4%. The increase was driven by $6.7 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $4.7 million was from third-party costs associated with provider solutions and $2.0 million was third-party costs associated with payment solutions. Additionally, there was a $4.8 million increase in personnel costs, net of capitalized expenses.

Previous wording

Sales and marketing expense was $128.8 million for the nine months ended September 30, 2025 as compared to $117.9 million for the nine months ended September 30, 2024, an increase of $10.9 million, or 9.2%. 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.

Current wording

Sales and marketing expense was $45.8 million for the three months ended March 31, 2026 as compared to $40.1 million for the three months ended March 31, 2025, an increase of $5.7 million, or 14.2%. The increase was primarily driven by an increase in channel partner fees and amortization of the internal commission deferred contract costs asset of $3.6 million associated with revenue growth as well as increased personnel costs of $3.4 million.

Previous wording

General and administrative expense was $32.4 million for the three months ended September 30, 2025 as compared to $22.7 million for the three months ended September 30, 2024, an increase of $9.7 million, or 42.8%. The increase was primarily due to an increase in third party professional fees of $7.1 million from acquisition activity, the August 2025 Debt Repricing and secondary offerings during the quarter. Additionally, there was an increase in stock-based compensation expense of $2.4 million.

Current wording

General and administrative expense was $30.7 million for the three months ended March 31, 2026 as compared to $23.3 million for the three months ended March 31, 2025, an increase of $7.4 million, or 31.9%. The increase was primarily due to an increase in stock-based compensation expense of $4.6 million as well as an increase in personnel costs of $1.6 million.

Previous wording

Research and development expense was $12.4 million for the three months ended September 30, 2025 as compared to $11.1 million for the three months ended September 30, 2024, an increase of $1.3 million, or 11.9%. The increase was primarily due to an increase in personnel costs of $0.8 million and an increase in stock-based compensation expense of $0.4 million.

Current wording

Research and development expense was $18.4 million for the three months ended March 31, 2026 as compared to $11.1 million for the three months ended March 31, 2025, an increase of $7.3 million, or 65.8%. The increase was primarily driven by an increase in personnel costs, net of capitalized expenses, of $3.4 million, as well as an increase in stock-based compensation expense of $1.6 million.

Previous wording

Income tax expense was $12.1 million for the three months ended September 30, 2025, as compared to an income tax expense of $3.3 million for the three months ended September 30, 2024, an increase of $8.8 million. The increase was primarily driven by the increase in pre-tax income/(loss).

Current wording

Income tax expense of $16.5 million for the three months ended March 31, 2026 was relatively flat compared to an income tax expense of $17.0 million for the three months ended March 31, 2025, a decrease of $0.5 million.

Previous wording

We present adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income/(loss), and non-GAAP net income/(loss) per share as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes these non-GAAP financial measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses these to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide.

Current wording

We present adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, and non-GAAP net income per share as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes these non-GAAP financial measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses these non-GAAP financial measures to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide.

Previous 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.

Current wording

Adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, and non-GAAP net income per share are not recognized terms under GAAP and should not be considered as an alternative to net income, net income per share, or net income 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

We define adjusted EBITDA as net income/(loss) before interest expense, net, income tax expense/(benefit), depreciation and amortization, and as further adjusted for stock-based compensation expense, acquisition and integration costs, asset and lease impairments, costs related to amended debt agreements, and costs related to our IPO and the Secondary Offerings. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.

Current wording

We define adjusted EBITDA as net income before interest expense, net, income tax expense, depreciation and amortization, and as further adjusted for stock-based compensation expense, acquisition and integration costs, asset and lease impairments, costs related to amended debt agreements, and costs related to our IPO and the Secondary Offerings. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.

Previous wording

The following table presents a reconciliation of net income/(loss) to adjusted EBITDA and net income/(loss) margin to adjusted EBITDA margin for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following table presents a reconciliation of net income to adjusted EBITDA and net income margin to adjusted EBITDA margin for the three months ended March 31, 2026 and 2025:

Previous wording

(a)Adjustments relate to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and $0.7 million, respectively, and executive severance totaling $0.0 million and $0.6 million, respectively, for the three and nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, adjustments relate to additional lease costs due to the relocation of our Louisville office.

Current wording

(a)Adjustments relate to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and executive severance totaling $0.5 million for the three months ended March 31, 2025.

Previous wording

We define non-GAAP net income as GAAP net income/(loss) excluding the impact of stock-based compensation, acquisition and integration costs, asset and lease impairments, costs related to our IPO, and the Secondary Offerings, and costs related to amended debt agreements and amortization of intangibles. The tax effects of the adjustments are calculated using a management estimated annual effective non-GAAP tax rate of 21%, which is based on our statutory federal tax rate and provides consistency across interim reporting periods by eliminating the effects of non-recurring and period specific items. Due to the differences in the tax treatment of items excluded from non-GAAP net income, our estimated tax rate on non-GAAP net income may differ from our GAAP tax rate.

Current wording

We define non-GAAP net income as GAAP net income excluding the impact of stock-based compensation, acquisition and integration costs, asset and lease impairments, costs related to our IPO and the Secondary Offerings, costs related to amended debt agreements and amortization of intangibles. The tax effects of the adjustments are calculated using a management estimated annual effective non-GAAP tax rate of 21%, which is based on our statutory federal tax rate and provides consistency across interim reporting periods by eliminating the effects of non-recurring and period specific items. Due to the differences in the tax treatment of items excluded from non-GAAP net income, our estimated tax rate on non-GAAP net income may differ from our GAAP tax rate.

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 nine months ended September 30, 2025 and 2024:

Current wording

The following table presents a reconciliation of net income to non-GAAP net income and non-GAAP net income per share for the three months ended March 31, 2026 and 2025:

Previous wording

(a)Adjustments relate to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and $0.7 million, respectively, and executive severance totaling $0.0 million and $0.6 million, respectively, for the three and nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, adjustments relate to additional lease costs due to the relocation of our Louisville office.

Current wording

(a)Adjustments relate to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and executive severance totaling $0.5 million for the three months ended March 31, 2025.

Previous wording

Our Net Revenue Retention Rate compares twelve months of client invoices for our solutions at two period end dates. To calculate our Net Revenue Retention Rate, we first accumulate the total amount invoiced during the twelve months ending with the prior period-end, or Prior Period Invoices. We then calculate the total amount invoiced to those same clients for the twelve months ending with the current period-end, or Current Period Invoices. Current Period Invoices are inclusive of upsell, downsell, pricing changes, clients that cancel or chose not to renew, and discontinued solutions with continuing clients. The Net Revenue Retention Rate is then calculated by dividing the Current Period Invoices by the Prior Period Invoices. Our total invoices included in the analysis are greater than 98% of reported revenue. We use Net Revenue Retention Rate to evaluate our ongoing operations and for internal planning and forecasting purposes. Acquired businesses are included in the last-twelve month Net Revenue Retention Rate in the ninth quarter after acquisition, which is the earliest point that comparable post-acquisition invoices are available for both the current and prior twelve-month period.

Current wording

Our Net Revenue Retention Rate compares 12 months of client invoices for our solutions at two period end dates. To calculate our Net Revenue Retention Rate, we first accumulate the total amount invoiced during the 12 months ending with the prior period-end, or Prior Period Invoices. We then calculate the total amount invoiced to those same clients for the 12 months ending with the current period-end, or Current Period Invoices. Current Period Invoices are inclusive of upsell, downsell, pricing changes, clients that cancel or choose not to renew, and discontinued solutions with continuing clients. The Net Revenue Retention Rate is then calculated by dividing the Current Period Invoices by the Prior Period Invoices. Our total invoices included in the analysis are greater than 98% of reported revenue. We use Net Revenue Retention Rate to evaluate our ongoing operations and for internal planning and forecasting purposes. Acquired businesses are included in the last-12 month Net Revenue Retention Rate in the ninth quarter after acquisition, which is the earliest point that comparable post-acquisition invoices are available for both the current and prior 12-month period. Included within our net revenue retention rates for the twelve months ended March 31, 2026 and 2025 is the impact from the heightened win rates above our historically high rates and accelerated implementation timelines related to the cybersecurity incident of one of our competitors in February 2024.

Previous wording

Our count of clients who generate more than $100,000 of revenue is based on an accumulation of the amounts invoiced to clients over the preceding twelve months. The invoices for acquired clients are included starting in the first full calendar quarter after the date of acquisition.

Current wording

Our count of clients who generate more than $100,000 of revenue is based on an accumulation of the amounts invoiced to clients over the preceding 12 months. The invoices for acquired clients are included starting in the first full calendar quarter after the date of acquisition.

Previous wording

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses on a short-term and long-term basis are for working capital, capital expenditures, debt service requirements, and investments in future growth, including acquisitions. We have historically funded our operations and acquisitions through our cash and cash equivalents, cash flows from operations, and debt financings. We believe that our existing unrestricted cash on hand, expected future cash flows from operations, and additional borrowings will provide sufficient resources to fund our operating requirements, as well as future capital expenditures, debt service requirements, and investments in future growth for at least the next 12 months. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings, or a combination of these potential sources of funds. In the event that we need access to additional cash, we may not be able to access the credit markets on commercially acceptable terms or at all. Our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control, including those described under “Risk factors” in the 2024 Form 10-K.

Current wording

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses on a short-term and long-term basis are for working capital, capital expenditures, debt service requirements, and investments in future growth, including acquisitions. We have historically funded our operations and acquisitions through our cash and cash equivalents, cash flows from operations, and debt financings. We believe that our existing unrestricted cash on hand, expected future cash flows from operations, and additional borrowings will provide sufficient resources to fund our operating requirements, as well as future capital expenditures, debt service requirements, and investments in future growth for at least the next 12 months and beyond the next 12 months. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings, or a combination of these potential sources of funds. In the event that we need access to additional cash, we may not be able to access the credit markets on commercially acceptable terms or at all. Our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control, including those described under “Risk Factors” in the 2025 Form 10-K.

Previous wording

On September 30, 2025 and December 31, 2024, we had restricted cash of $24.3 million and $22.4 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 March 31, 2026 and December 31, 2025, we had restricted cash of $28.4 million and $15.5 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 nine months ended September 30, 2025 and September 30, 2024, are summarized in the following table:

Current wording

Cash flows from operating, investing, and financing activities for the three months ended March 31, 2026 and March 31, 2025, are summarized in the following table:

Previous wording

Cash flows provided by financing activities were $14.8 million for the nine months ended September 30, 2025 as compared to $15.0 million for the nine months ended September 30, 2024, a decrease of $0.2 million. The net cash provided in 2024 was driven by proceeds from last year's IPO, net of underwriting discounts and the corresponding paydown on debt, as well as proceeds from the issuance of debt, net of creditor fees, during the nine months ended September 30, 2024. The net cash provided in 2025 was from proceeds from the exercise of stock options during the nine months ended September 30, 2025.

Current wording

Net Cash Provided by Operating Activities

Previous wording

Cash flows provided by operating activities were $243.0 million for the nine months ended September 30, 2025 as compared to $105.0 million for the nine months ended September 30, 2024, an increase of $138.0 million. This increase is largely driven by changes in working capital, increases in revenue and profits, and decreases in cash paid for interest due to multiple paydowns on our First Lien Credit Facility in 2024.

Current wording

Net cash provided by operating activities was $84.9 million for the three months ended March 31, 2026 as compared to $64.2 million for the three months ended March 31, 2025, an increase of $20.7 million. This increase was largely driven by increases in revenue and profits and changes in working capital.

Previous wording

Cash Flows Used in Investing Activities

Current wording

Net Cash Used in Investing Activities

Previous wording

Cash flows used in investing activities were $17.1 million for the nine months ended September 30, 2025 as compared to $21.0 million for the nine months ended September 30, 2024 a decrease of cash used of $4.0 million. Cash flows used in investing activities decreased due to less purchases of property and equipment during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Current wording

Net cash used in investing activities was $112.5 million for the three months ended March 31, 2026 as compared to $29.9 million for the three months ended March 31, 2025, an increase of cash used of $82.6 million. Net cash used in investing activities increased due to an increase in investment security purchases, as well as more purchases of property and equipment during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Previous wording

Cash Flows Provided By Financing Activities

Current wording

Net Cash Provided by Financing Activities

Previous wording

Cash Flows Provided by Operating Activities

Current wording

Net cash flows provided by financing activities was $13.5 million for the three months ended March 31, 2026 as compared to $10.7 million for the three months ended March 31, 2025, an increase of $2.7 million. The primary driver of the increase was an increase in restricted cash related to customers' cash deposited into our lockbox but contractually required to be disbursed to the participating clients (see Note 2 in our 2025 Form 10-K for details on restricted cash accounting policies). This increase was offset by a decrease in proceeds from issuance of common stock from employee equity plans, as well as the net impact of proceeds from amendment to our Receivables Facility (see Note 11) and the corresponding paydown on our First Lien Credit Facility (see Note 12).