Waystar Holding Corp.

Previous 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.

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 condensed 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 Regarding Forward-Looking Statements” above and “Risk Factors” in the 2025 Form 10-K and our other filings with the SEC.

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 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 payment 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.

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 approximately 1.5 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 8.5 billion healthcare payment transactions, including over $3.0 trillion in gross claims volume spanning approximately 60% of patients and one-in-three hospital discharges in the United States.

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 12 months ended June 30, 2026, our Net Revenue Retention Rate was 108.3%, and we have 1,453 clients as of June 30, 2026 generating over $100,000 over the same 12-month period. For the six months ended June 30, 2026, we generated revenue of $633.5 million (reflecting a 20.2% increase compared to revenue of $527.1 million for the same period in the prior year), net income of $84.2 million (reflecting a 36.9% increase compared to net income of $61.5 million for the same period in the prior year), and Adjusted EBITDA of $272.1 million (reflecting a 23.5% increase compared to Adjusted EBITDA of $220.3 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 September 30, 2026, our Net Revenue Retention Rate was 107.6%, and we have 1,488 clients as of September 30, 2026 generating over $100,000 over the same 12-month period. For the nine months ended September 30, 2026, we generated revenue of $959.2 million (reflecting a 20.5% increase compared to revenue of $795.7 million for the same period in the prior year), net income of $115.2 million (reflecting a 25.1% increase compared to net income of $92.1 million for the same period in the prior year), and Adjusted EBITDA of $411.4 million (reflecting a 23.6% increase compared to Adjusted EBITDA of $333.0 million for the same period in the prior year).

Previous wording

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 $1.8 million and $3.2 million in certain expenses on behalf of the selling stockholders related to these offerings for the three and six months ended June 30, 2025, while the selling stockholders paid all applicable underwriting discounts and commissions.

Current wording

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 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, while the selling stockholders paid all applicable underwriting discounts and commissions.

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 six months ended June 30, 2026 and 2025.

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 75% of total revenue in each of the three and nine months ended September 30, 2026 and 2025.

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 7% of the associated revenue, in each case, for each of the three and six months ended June 30, 2026 and 2025.

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 each of the three and nine months ended September 30, 2026 and 2025.

Previous wording

Revenue was$319.7 million for the three months ended June 30, 2026 as compared to$270.7 million for the three months ended June 30, 2025, an increase of $49.0 million, or 18.1%, of which $45.2 million was attributed to subscription revenue from existing and acquired clients, almost all of which was generated by provider solutions. Another $3.9 million was attributed to volume-based revenue primarily related to the expansion of existing client usage, of which $5.9 million was generated by patient payments solutions, partially offset by a decrease of $2.1 million by provider solutions.

Current wording

Revenue was $325.6 million for the three months ended September 30, 2026 as compared to $268.7 million for the three months ended September 30, 2025, an increase of $57.0 million, or 21.2%, of which $46.3 million was attributed to subscription revenue from existing and acquired clients, almost all of which was generated by provider solutions. Another $10.5 million of the increase was attributed to volume-based revenue primarily related to the expansion of existing client usage, of which $4.0 million was generated by patient payments solutions and $6.5 million by provider solutions.

Previous wording

Cost of revenue was $97.7 million for the three months ended June 30, 2026 as compared to $87.0 million for the three months ended June 30, 2025, an increase of $10.6 million, or 12.2%. The increase was primarily driven by $5.1 million in increased costs stemming from higher transaction volumes and associated third-party costs, including higher platform usage of which approximately $5.6 million was third-party costs associated with provider solutions, partially offset by a decrease of $0.5 million from third-party costs associated with patient solutions. Additionally, there was $4.0 million of increased personnel costs, net of capitalized expense.

Current wording

Cost of revenue (exclusive of depreciation and amortization) was $99.2 million for the three months ended September 30, 2026 as compared to $85.1 million for the three months ended September 30, 2025, an increase of $14.1 million, or 16.5%. The increase was primarily driven by $8.1 million in increased costs stemming from higher transaction volumes and associated third-party costs, including higher platform usage of which approximately $7.4 million was third-party costs associated with provider solutions and $0.7 million from third-party costs associated with patient payments solutions. Additionally, there was $3.5 million of increased personnel costs, net of capitalized expense.

Previous wording

Sales and marketing expense was $50.4 million for the three months ended June 30, 2026 as compared to $43.5 million for the three months ended June 30, 2025, an increase of $6.9 million, or 15.7%. 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 and increased personnel costs of $2.5 million.

Current wording

Sales and marketing expense was $52.0 million for the three months ended September 30, 2026 as compared to $45.2 million for the three months ended September 30, 2025, an increase of $6.8 million, or 15.1%. The increase was primarily driven by an increase in channel partner fees and amortization of the internal commission deferred contract costs asset of $3.7 million and increased personnel costs of $2.1 million.

Previous wording

Research and development expense was $17.7 million for the three months ended June 30, 2026 as compared to $12.6 million for the three months ended June 30, 2025, an increase of $5.1 million, or 40.4%. The increase was primarily due to increased personnel costs, net of capitalized expenses, of $4.5 million.

Current wording

Research and development expense was $20.3 million for the three months ended September 30, 2026 as compared to $12.4 million for the three months ended September 30, 2025, an increase of $7.9 million, or 63.7%. The increase was primarily due to increased personnel costs, net of capitalized expenses, of $4.8 million, as well as an increase in stock-based compensation expense of $1.1 million.

Previous wording

Depreciation and amortization expense was $41.5 million for the three months ended June 30, 2026, as compared to $33.4 million for the three months ended June 30, 2025, an increase of $8.0 million, or 24.1%. The increase is primarily due to additional amortization from new Iodine intangible assets acquired on October 1, 2025.

Current wording

Depreciation and amortization expense was $41.5 million for the three months ended September 30, 2026, as compared to $33.3 million for the three months ended September 30, 2025, an increase of $8.2 million, or 24.5%. The increase was primarily due to additional amortization from new Iodine intangible assets acquired on October 1, 2025.

Previous wording

Total interest expense, net (including related party interest expense) was $19.6 million for the three months ended June 30, 2026 as compared to $18.3 million for the three months ended June 30, 2025, an increase of $1.4 million, or 7.6%. The increase was primarily driven by the additional balance borrowed under our First Lien Credit Facility to help fund the Iodine acquisition completed on October 1, 2025, resulting in an increase to the corresponding interest expense. This increase was partially offset by interest earned in our investment securities.

Current wording

Total interest expense, net (including related party interest expense) was $19.3 million for the three months ended September 30, 2026 as compared to $17.5 million for the three months ended September 30, 2025, an increase of $1.8 million, or 10.2%. The slight increase was primarily driven by the additional balance borrowed under our First Lien Credit Facility to help fund the Iodine acquisition completed on October 1, 2025, resulting in an increase to the corresponding interest expense. This increase was partially offset by interest earned on our investment securities.

Previous wording

Income tax expense was $15.5 million for the three months ended June 30, 2026, as compared to income tax expense of $14.4 million for the three months ended June 30, 2025, an increase of $1.1 million. The increase was primarily driven by the increase in pre-tax income.

Current wording

Income tax expense was $10.9 million for the three months ended September 30, 2026, as compared to income tax expense of $12.1 million for the three months ended September 30, 2025, a decrease of $1.1 million.The slight decrease was driven by the impact of certain limitations on the deductibility on stock-based compensation recognized for financial reporting purposes during the three months ended September 30, 2025.

Previous wording

Revenue was $633.5 million for the six months ended June 30, 2026 as compared to$527.1 million for the six months ended June 30, 2025, an increase of $106.5 million, or 20.2%, of which $92.3 million was attributed to increased subscription revenue from existing and acquired clients, almost all of which is generated by provider solutions. Another $13.4 million was attributed to increased volume-based revenue, primarily related to the expansion of existing client usage, of which $4.3 million of the volume-based increase was generated by provider solutions and $9.1 million by patient payments solutions.

Current wording

Revenue was $959.2 million for the nine months ended September 30, 2026 as compared to $795.7 million for the nine months ended September 30, 2025, an increase of $163.4 million, or 20.5%, of which $138.6 million was attributed to increased subscription revenue from existing and acquired clients, almost all of which is generated by provider solutions. Another $23.9 million of the increase was attributed to increased volume-based revenue, primarily related to the expansion of existing client usage, of which $10.8 million of the volume-based increase was generated by provider solutions and $13.1 million by patient payments solutions.

Previous wording

Cost of revenue (exclusive of depreciation and amortization) was $194.7 million for the six months ended June 30, 2026 as compared to $170.4 million for the six months ended June 30, 2025, an increase of $24.3 million, or 14.3%. The increase was driven by $11.7 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $10.2 million was from third-party costs associated with provider solutions and $1.5 million was from third-party costs associated with payment solutions. Additionally, there was an $8.8 million increase in personnel costs, net of capitalized expenses.

Current wording

Cost of revenue (exclusive of depreciation and amortization) was $293.9 million for the nine months ended September 30, 2026 as compared to $255.5 million for the nine months ended September 30, 2025, an increase of $38.4 million, or 15.0%. The increase was driven by $19.8 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $17.7 million was from third-party costs associated with provider solutions and $2.1 million was from third-party costs associated with patient payments solutions. Additionally, there was a $12.3 million increase in personnel costs, net of capitalized expenses.

Previous wording

Sales and marketing expense was $96.2 million for the six months ended June 30, 2026 as compared to $83.6 million for the six months ended June 30, 2025, an increase of $12.6 million, or 15.0%. The increase was primarily driven by an increase in channel partner fees and amortization of the internal commission deferred contract costs asset totaling $7.2 million associated with revenue growth as well as increased personnel costs of $5.8 million.

Current wording

Sales and marketing expense was $148.2 million for the nine months ended September 30, 2026 as compared to $128.8 million for the nine months ended September 30, 2025, an increase of $19.4 million, or 15.1%. The increase was primarily driven by an increase in channel partner fees and amortization of the internal commission deferred contract costs asset totaling $10.9 million associated with revenue growth, as well as increased personnel costs of $8.0 million.

Previous wording

General and administrative expense was $36.4 million for the three months ended June 30, 2026 as compared to $29.2 million for the three months ended June 30, 2025, an increase of $7.2 million, or 24.6%. The increase was primarily due to an increase in stock-based compensation expense of $2.5 million as well as increased personnel costs of $1.4 million. In addition, there was an impairment expense related to a right-of-use asset and leasehold improvements at an office we plan to exit (see Note 7) driving a $2.0 million increase.

Current wording

General and administrative expense was $118.5 million for the nine months ended September 30, 2026 as compared to $84.9 million for the nine months ended September 30, 2025, an increase of $33.6 million, or 39.5%. The increase was primarily due to an increase in stock-based compensation expense of $18.1 million, as well as increased personnel costs of $6.1 million and increased third party professional fees of $2.0 million. Lastly, impairment expense related to a right-of-use asset and leasehold improvements at an office we plan to exit (see Note 7) drove a $2.0 million increase.

Previous wording

Research and development expense was $36.1 million for the six months ended June 30, 2026 as compared to $23.7 million for the six months ended June 30, 2025, an increase of $12.4 million, or 52.3%. The increase was primarily driven by increased personnel costs, net of capitalized expenses, of $7.9 million, as well as increased software license expense of $1.5 million.

Current wording

Research and development expense was $56.4 million for the nine months ended September 30, 2026 as compared to $36.1 million for the nine months ended September 30, 2025, an increase of $20.3 million, or 56.2%. The increase was primarily driven by increased personnel costs, net of capitalized expenses, of $12.8 million, as well as increased stock-based compensation expense of $2.0 million. Lastly, there was an increase of software license expense of $2.2 million.

Previous wording

Depreciation and amortization expense was $82.9 million for the six months ended June 30, 2026, as compared to $66.8 million for the six months ended June 30, 2025, an increase of $16.1 million, or 24.1%. The increase is primarily due to additional amortization from new Iodine intangible assets acquired on October 1, 2025.

Current wording

Depreciation and amortization expense was $124.4 million for the nine months ended September 30, 2026, as compared to $100.1 million for the nine months ended September 30, 2025, an increase of $24.3 million, or 24.3%. The increase was primarily due to additional amortization from new Iodine intangible assets acquired on October 1, 2025.

Previous wording

Total interest expense, net (including related party interest expense) was $40.3 million for the six months ended June 30, 2026 as compared to $37.2 million for the six months ended June 30, 2025, an increase of $3.1 million, or 8.4%. The increase was primarily driven by the additional balance borrowed on our First Lien Credit Facility to help fund the Iodine acquisition completed on October 1, 2025, resulting in an increase to the corresponding interest expense. This increase was partially offset by interest earned on our investment securities.

Current wording

Total interest expense, net (including related party interest expense) was $59.6 million for the nine months ended September 30, 2026 as compared to $54.7 million for the nine months ended September 30, 2025, an increase of $4.9 million, or 9.0%. The increase was primarily driven by the additional balance borrowed on our First Lien Credit Facility to help fund the Iodine acquisition completed on October 1, 2025, resulting in an increase to the corresponding interest expense. This increase was partially offset by interest earned on our investment securities.

Previous wording

Income tax expense of $32.1 million for the six months ended June 30, 2026 was relatively flat compared to income tax expense of $31.4 million for the six months ended June 30, 2025, an increase of $0.6 million.

Current wording

Income tax expense of $43.0 million for the nine months ended September 30, 2026 was relatively flat compared to income tax expense of $43.5 million for the nine months ended September 30, 2025, a decrease of $0.5 million.

Previous 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, costs related to our IPO and the Secondary Offerings, and costs related to other unusual, non-recurring or otherwise notable items. 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, integration and transaction costs, asset and lease impairments, costs related to amended debt agreements, costs related to our IPO and the Secondary Offerings, and costs related to other unusual, non-recurring or otherwise notable items. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.

Previous wording

The following table presents a reconciliation of net income to adjusted EBITDA and net income margin to adjusted EBITDA margin for the three and six months ended June 30, 2026 and 2025:

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 and nine months ended September 30, 2026 and 2025:

Previous wording

(a)For the three and six months ended June 30, 2026, adjustments related to costs for the cybersecurity incident (see Item 1A below). For the three and six months ended June 30, 2025, adjustments related to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and $0.4 million, respectively, and executive severance totaling $0.0 million and $0.5 million, respectively.

Current wording

(a)For the three and nine months ended September 30, 2026, adjustments related to costs for the cybersecurity incident (see Item 1A below) totaling $1.4 million and $3.0 million, respectively, and executive severance totaling $1.1 million and $1.1 million, respectively. For the three and nine months ended September 30, 2025, adjustments related tosecondary offering costs of $1.4 million and $4.6 million, respectively; costs related to amended debt agreements totaling $0.6 million; 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.

Previous 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, and costs related to other unusual, non-recurring or otherwise notable items. 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, integration and transaction costs, asset and lease impairments, costs related to our IPO and the Secondary Offerings, costs related to amended debt agreements and amortization of intangibles, and costs related to other unusual, non-recurring or otherwise notable items. 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 income to non-GAAP net income and non-GAAP net income per share for the three and six months ended June 30, 2026 and 2025:

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 and nine months ended September 30, 2026 and 2025:

Previous wording

(a)For the three and six months ended June 30, 2026, adjustments related to costs for the cybersecurity incident (see Item 1A below). For the three and six months ended June 30, 2025, adjustments related to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and $0.4 million, respectively, and executive severance totaling $0.0 million and $0.5 million, respectively.

Current wording

(a)For the three and nine months ended September 30, 2026, adjustments related to costs for the cybersecurity incident (see Item 1A below) totaling $1.4 million and $3.0 million, respectively, and executive severance totaling $1.1 million and $1.1 million, respectively. For the three and nine months ended September 30, 2025, adjustments related tosecondary offering costs of $1.4 million and $4.6 million, respectively; costs related to amended debt agreements totaling $0.6 million; 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.

Previous 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 12 months ended June 30, 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.

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

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 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.

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, share repurchases, 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 June 30, 2026 and December 31, 2025, we had restricted cash of $32.8 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.

Current wording

On September 30, 2026 and December 31, 2025, we had restricted cash of $24.2 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 six months ended June 30, 2026 and June 30, 2025, are summarized in the following table:

Current wording

Cash flows from operating, investing, and financing activities for the nine months ended September 30, 2026 and September 30, 2025, are summarized in the following table:

Previous wording

Net cash provided by operating activities was $144.3 million for the six months ended June 30, 2026 as compared to $161.0 million for the six months ended June 30, 2025, a decrease of $16.7 million. This decrease was largely driven by deferred federal tax payments in 2025 as allowed by the IRS, as well changes in working capital. These decreases were partially offset by increases in revenue and profits.

Current wording

Net cash provided by operating activities was $248.2 million for the nine months ended September 30, 2026 as compared to $243.0 million for the nine months ended September 30, 2025, an increase of $5.1 million. This increase was primarily attributable to higher profitability, including increased non-cash depreciation, amortization and stock-based compensation. The increase was also driven by changes in working capital, which is impacted by factors such as growth in new business, timing of cash receipts from customers, and timing of payments to vendors. These increases were partially offset by a decrease driven by deferred federal tax payments in 2025 as allowed by the IRS.

Previous wording

Net cash used in investing activities was $182.1 million for the six months ended June 30, 2026 as compared to $61.7 million for the six months ended June 30, 2025, an increase of cash used of $120.4 million. Net cash used in investing activities increased primarily due to net investment activity for our securities, as well as more purchases of property and equipment during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Current wording

Net cash used in investing activities was $258.6 million for the nine months ended September 30, 2026 as compared to $17.1 million for the nine months ended September 30, 2025, an increase of cash used of $241.5 million. Net cash used in investing activities increased primarily due to purchases of investment securities exceeding proceeds from sale or maturity of investment securities, as well as more purchases of property and equipment and an increase of capitalized software development costs during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.

Previous wording

Net cash flows provided by financing activities was $6.4 million for the six months ended June 30, 2026 as compared to $7.6 million for the six months ended June 30, 2025, a decrease of $1.2 million. The primary driver of the decrease was due to common stock repurchased during the quarter (see Note 15), as well as a decrease in proceeds from issuance of common stock from employee equity plans. Also driving the decrease was the net impact of proceeds from amendment ro our Receivables Facility (see Note 11) and the corresponding paydown on our First Lien Credit Facility (see Note 12). These decreases were partially offset by 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).

Current wording

Net cash used in financing activities was $11.4 million for the nine months ended September 30, 2026 as compared to $14.8 million cash provided by financing activities for the nine months ended September 30, 2025, a change of $26.2 million. The primary driver of the change was due to common stock repurchased during the nine months ended September 30, 2026 (see Note 15). Also driving the change was the net impact of proceeds from the amendment to our Receivables Facility (see Note 11) and the corresponding paydown on our First Lien Credit Facility (see Note 12). These items were partially offset by an increase in the aggregated funds liability (see Note 2 in our 2025 Form 10-K for details on restricted cash accounting policies).

Previous wording

Refer to Item 1, Financial Statements, Notes 11 (Accounts Receivable Securitization) and 12 (Debt), for a description of our Credit Facilities.

Current wording

Refer to Item 1, Financial Statements, Notes 11 (Accounts Receivable Securitization) and 12 (Debt), for a description of our Receivables Facility and Credit Facilities.

Previous wording

On May 19, 2026, we announced that our Board of Directors authorized a stock repurchase plan pursuant to which we may repurchase up to $200 million of shares of its outstanding common stock. Under the plan, we may repurchase shares from time to time using a variety of methods, which may include open market purchases or other methods, in accordance with applicable securities laws and regulations. The timing, price, and size of repurchases will depend on a number of factors, including the market price of our common stock, our financial performance and liquidity, general economic and market conditions, and other considerations. The stock repurchase plan does not obligate us to acquire any particular amount of common stock and may be suspended or discontinued at any time. The repurchase plan will be funded using our working capital.

Current wording

On May 19, 2026, we announced that our Board of Directors authorized a stock repurchase plan pursuant to which we may repurchase up to $200 million of shares of our outstanding common stock. Under the plan, we may repurchase shares from time to time using a variety of methods, which may include open market purchases or other methods, in accordance with applicable securities laws and regulations. The timing, price, and size of repurchases will depend on a number of factors, including the market price of our common stock, our financial performance and liquidity, general economic and market conditions, and other considerations. The stock repurchase plan does not obligate us to acquire any particular amount of common stock and may be suspended, modified or discontinued at any time. The repurchase plan will be funded using our working capital.

Previous wording

The above discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and disclosures of contingent assets and liabilities. Critical accounting policies are those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest amount of judgments by management. Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.

Current wording

The above discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and disclosures of contingent assets and liabilities. Critical accounting policies are those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest amount of judgment by management. Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.