Waystar Holding Corp.(WAY) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q4 2024 reached $244 million, representing an 18$944 million, reflecting a 19% year-over-year growth [14][41] - Adjusted EBITDA for Q4 was $100 million, up 16$383 million, equating to a 40.6% margin [19][42] - GAAP net income for Q4 was $19 million compared to a net loss of$14 million in the prior year, and for the full year, the net loss was $19 million compared to a loss of$51 million in 2023 [41] Business Line Data and Key Metrics Changes - The number of clients generating over $100,000 in trailing 12-month revenue grew to 1,203, an increase of 15$1.8 trillion in gross claims annually, generating significant network effects that enhance its AI-powered software [23] - The company reported a 69% conversion of adjusted EBITDA to unlevered free cash flow in 2024, indicating strong operational efficiency [20][45] Company Strategy and Development Direction - Waystar aims to simplify healthcare payments through its software platform, focusing on reducing administrative waste and enhancing operational efficiencies [11][35] - The company is committed to leveraging its strong cash flow profile for reinvestment, pursuing M&A opportunities, and reducing debt [21][46] - Waystar's strategy includes a focus on innovation, particularly in AI capabilities, to improve client value and operational efficiency [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, emphasizing the importance of delivering measurable results and maximizing returns for clients and investors [12][35] - The company anticipates continued growth in 2025, with revenue guidance set between $1 billion and$1.16 billion, representing a 7% growth over 2024 [47][51] Other Important Information - Waystar's cash balance increased by $55 million in Q4, bringing the total to$182 million at year-end, contributing to a reduced net leverage ratio of 2.8 times [20][43] - The company has adjusted its non-GAAP net income and EPS calculations to better align with peers, expecting non-GAAP net income for 2025 to be in the range of $237 million to$243 million [52] Q&A Session Summary Question: Can you discuss the dynamics around utilization on your volume-based revenue? - Management noted a sequential decline in volume-based revenue specific to patient payments but indicated that the decline was less than expected due to increased patient utilization [57][58] Question: Can you provide an update on direct connectivity with payers and quantify M&A contributions? - Management confirmed ongoing efforts to expand direct connections with payers and indicated that M&A contributions from HealthPay and Olive AI were small but expected to improve margins over time [62][66] Question: How is Waystar positioned regarding potential headwinds from policy changes? - Management believes that Waystar's software transcends political environments and is well-positioned to help providers eliminate wasteful spending and improve efficiency [71][75] Question: What products or solution areas are resonating more with clients? - Management highlighted strong demand for solutions that prevent denied claims and improve operational efficiency, particularly in eligibility automation and prior authorization [82][84] Question: Can you elaborate on the cross-sell opportunities with new clients? - Approximately 30% of new clients are exploring additional software modules, focusing on automation and efficiency to enhance their operations [90][92] Question: How should we think about net revenue retention in 2025? - Management indicated that while they do not provide specific guidance on NRR, they expect it to remain strong, supported by continued volume growth and cross-sell opportunities [130][131]