Waystar's Q3 2025 Earnings Call: Contradictions in Patient Utilization, AI Monetization, and Iodine Acquisition Impact

Date of Call: October 29, 2025

Financials Results

• Revenue: $269 million, representing 12% year-over-year growth
• Operating Margin: Adjusted EBITDA margin 42%, above long-term target of approximately 40% (adjusted EBITDA up 17% year-over-year)

Guidance:

• 2025 revenue raised to $1.085B–$1.093B (midpoint $1.089B), ~15% YOY and $53M (5%) above prior midpoint
• Expect ~ $30M of Iodine revenue in Q4 and ~ $120M of Iodine revenue for full-year 2025
• Adjusted EBITDA raised to $451M–$455M (midpoint $453M), ~42% margin (assumes $12M Q4 Iodine contribution at ~40%)
• 2026 guidance to be provided on next earnings call

Business Commentary:

• Revenue Growth and Profitability:
• Waystar Holding Corp. reported revenue of $269 million for Q3 2025, representing 12% year-over-year growth, with an adjusted EBITDA margin of 42%.

• The growth was driven by strong execution and double-digit revenue growth, along with the acquisition of Iodine Software, which expanded the company's reach and total addressable market.

• Iodine Acquisition and Integration:

• The acquisition of Iodine Software is expected to increase Waystar's total addressable market by more than 15%, accelerating innovation and driving profitable growth.

• Iodine's capabilities in clinical documentation integrity, utilization management, and prebill anomaly detection are enhancing Waystar's revenue cycle management solutions, enabling better data integration and patient care outcomes.

• Client Retention and Expansion:

• Waystar achieved a net revenue retention rate of 113% for the last 12 months, with a 11% year-over-year increase in clients generating more than $100,000 in trailing 12-month revenue.

• This strong performance is attributed to healthy client retention, expansion, and the value-driven client outcomes achieved through Waystar's AI-powered platform.

• Innovation and Product Development:

• Waystar introduced new AI-powered capabilities, such as denial prevention and patient financial care solutions, driving better client outcomes and increasing patient payments.
• The integration of AI into Waystar's platform has enhanced automation, accuracy, and ease of use, leading to increased client satisfaction and reduced administrative burdens for providers.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 12% revenue growth to $269M, adjusted EBITDA margin of 42%, raised full-year revenue and EBITDA guidance, and closed the Iodine acquisition (expected to expand TAM >15% and add ~ $120M revenue). Commentary emphasized strong client feedback, 113% net revenue retention and accelerating product roadmap.

Q&A:

• Question from Ryan Daniels (William Blair & Company L.L.C., Research Division): True North occurred around the Iodine close — did you introduce clients to Iodine and what was the feedback from clients and Iodine users?
  Response: True North enabled introductions to Iodine with uniformly positive client feedback; management called the acquisition a strategic, well‑timed fit that resonated with attendees.

• Question from Brian Peterson (Raymond James & Associates, Inc., Research Division): With Iodine in the fold, how will cadence of replacing legacy RCM processes change — will AI accelerate customer adoption and sales cycles?
  Response: Iodine's mid‑cycle clinical capabilities reduce re‑reviews (~70%), enabling broader platform sales and faster displacement of legacy RCM through cross‑sell and integrated AI workflows.

• Question from Adam Hotchkiss (Goldman Sachs Group, Inc., Research Division): Can you expand on patient utilization reverting to historical levels and how to think about seasonality given the 4% sequential decline in volume‑based revenue?
  Response: Patient utilization showed earlier deductible timing in Q3; if that trend persists results could move from the high end of guidance toward midpoint or lower, so guidance reflects that uncertainty.

• Question from Allen Lutz (BofA Securities, Research Division): Regarding shipping patients from mail to mobile, how long will that transition take and what's the gross margin delta between paper and digital payments?
  Response: Digitization has a different (better) margin profile and is gaining provider opt‑ins, but adoption is a multi‑quarter, long‑tail transformation rather than a near‑term quarter shift.

• Question from Vikram Kesavabhotla (Robert W. Baird & Co. Incorporated, Research Division): You said Iodine accelerates the roadmap by ~2 years — can you give examples and timelines for combined capabilities appearing?
  Response: Iodine's clinical dataset enables medical‑necessity prior‑auth automation and clinically augmented appeal letters (improving overturn rates), accelerating roadmap delivery by ~2 years as clinical/admin data are integrated.

• Question from Elizabeth Anderson (Evercore ISI Institutional Equities, Research Division): Have you seen shifts in which modules hospitals prioritize amid margin pressure?
  Response: Providers prioritize mission‑critical modules that improve cash flow—especially eligibility automation, coverage detection, prior authorization and denial/appeal management—driving multi‑module platform adoption.

• Question from Daniel Grosslight (Citigroup Inc., Research Division): With many new AI‑powered RCM vendors, how is go‑to‑market changing and how will William Chan as Chief AI and Product Officer affect this?
  Response: Go‑to‑market remains ROI‑driven and platform‑focused; William strengthens AI/product leadership but core strategy stays executional—leveraging cloud‑native, data and AI advantages to win deals.

• Question from Saket Kalia (Barclays Bank PLC, Research Division): How are you thinking about monetization of AltitudeAI and AI capabilities—separate SKUs, price‑to‑value, etc.?
  Response: Monetization is via price‑to‑value annual uplifts, introducing new SKUs/modules and driving retention/expansion as AI delivers measurable ROI embedded into workflows.

• Question from Charles Rhyee (TD Cowen, Research Division): EHR vendors are adding AI and RCM agents — how will Waystar coexist or differentiate with EHRs?
  Response: Waystar will partner with EHRs via APIs and integrations, leveraging its RCM focus, extensive interoperability (500+ EHRs) and data assets to complement EHR AI initiatives rather than compete head‑on.

• Question from Jailendra Singh (Truist Securities, Inc., Research Division): Are recent EBITDA margin gains sustainable and are you using AI for internal operational efficiencies?
  Response: Target long‑term adjusted EBITDA ~40%; internal Kaizen AI (Copilot licenses, >100 use cases) is driving productivity, but some gains may be reinvested into innovation, go‑to‑market and cybersecurity.

Contradiction Point 1

Patient Utilization and Revenue Growth Expectations

It involves differing expectations regarding patient utilization and revenue growth, which are crucial for investor expectations and operational planning.

Can you explain the return of patient utilization to historical levels and the 4% sequential decline in volume-based business? - Adam Hotchkiss (Goldman Sachs Group, Inc.)

2025Q3: We are seeing a trend in patient utilization beginning to revert back to historical growth rates. Our patient payments, particularly for high deductible plans, are driving the seasonality changes. - Steven Oreskovich(CFO)

How do utilization dynamics and the expected 2025 normalized rate reconcile with the strong Q4 performance despite seasonal volume-based revenue decline? - Anne McCormick (JPMorgan)

2024Q4: We saw a decline in volume-based revenue but less than expected due to a larger swath of patients utilizing the system, reducing the impact of deductibles. In 2025, we expect volume growth to return to a traditional 1 to 2% range after a strong year in 2024. - Steven Oreskovich(CFO)

Contradiction Point 2

AI Capabilities and Monetization Strategy

It involves the company's strategy for monetizing AI capabilities, which is critical for understanding their approach to generating value from technological advancements.

How do you plan to monetize your AI capabilities? - Saket Kalia (Barclays Bank PLC, Research Division)

2025Q3: We monetize through retention, price uplift based on value, and potentially new SKUs. We're pricing AI capabilities within our software modules to reflect the incremental benefits. - Matthew Hawkins(CEO)

Update on direct payer connectivity and quantify M&A contributions, particularly from Health Pay and Olive AI? - Elizabeth Anderson (Evercore ISI)

2024Q4: We do not incorporate AI capabilities, such as Olive's RPA capabilities, into our pricing, as we believe they will become table stakes. - Steven Oreskovich(CFO)

Contradiction Point 3

AI Integration and Monetization

It involves the strategy and expectations regarding the integration and monetization of AI capabilities, which are crucial for company growth and investor confidence.

How do you plan to monetize your AI capabilities? - Saket Kalia (Barclays Bank PLC, Research Division)

2025Q3: We monetize through retention, price uplift based on value, and potentially new SKUs. We're pricing AI capabilities within our software modules to reflect the incremental benefits. - Matthew Hawkins(CEO)

How might rapid onboarding of large clients affect second-half guidance? - Adam Hotchkiss (Goldman Sachs)

2025Q2: Our demand environment is robust, with providers prioritizing mission-critical solutions. We're grateful for Waystar's strong position in this stressed decision-making environment. - Matthew Hawkins(CEO)

Contradiction Point 4

Iodine Acquisition and Product Roadmap Acceleration

It involves the impact of the Iodine acquisition on the product roadmap and expectations for its integration, which could affect product development and market positioning.

How does the Iodine acquisition accelerate your product roadmap, and when will combined capabilities appear in the product portfolio? - Vikram Kesavabhotla (Robert W. Baird & Co. Incorporated)

2025Q3: The integration of Iodine's clinical data will accelerate product roadmap timelines by nearly 2 years. - Matthew Hawkins(CEO)

Have you observed any impact from AI and revenue cycle tools in MCO earnings calls? Are there revenue implications? - George Hill (Deutsche Bank)

2025Q2: We're #1 in AI platform solutions, and AI is pervasive in our software. Our solutions prevent $6 billion of denied claims. - Matthew Hawkins(CEO)

Contradiction Point 5

AI Monetization Strategy

It involves differing strategies for monetizing AI capabilities, which are crucial for revenue growth and competitive positioning.

How do you plan to monetize your AI capabilities? - Saket Kalia(Barclays Bank PLC, Research Division)

2025Q3: We monetize through retention, price uplift based on value, and potentially new SKUs. We're pricing AI capabilities within our software modules to reflect the incremental benefits. - Matthew Hawkins(CEO)

Which products are driving the 114% net revenue retention and its growth? - Saket Kalia(Barclays)

2025Q1: We will drive same-store growth through AI through same-store pricing actions. Initially, we will focus on those customers that are consuming AI capability. - Matthew Hawkins(CEO)