Waystar Holding Corp.

Today, thank you for standing by. Welcome to Waystar Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in the suddenly mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I'm now in the conference of a dear speaker host, Sonny Draper, Head of Investillations, please go ahead.

Thank you, Operator, and good morning, everyone. It is my pleasure to welcome you to Waystar Holding Corporation's fourth quarter 2024 earnings call. Matt Hawkins, Waystar's Chief Executive Officer, and Steve Oreskewicz, Waystar's Chief Financial Officer, are joining me today. After their remarks, we'll open the call for your questions. Earlier this morning, we issued a press release announcing our financial results and a presentation slide deck to accompany our prepared remarks. The materials are available on the investor relations section of our website at investors.waystar.com. Before we get started, I will remind you that this call contains forward-looking statements, which are predictions about future events. Examples of these statements include expectations of future financial results, growth, and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this morning's press release and the reports we filed with the SEC, all of which are available on the investor relations page of our website. Any forward-looking statements provided during our call are made only as of the date of this call. During today's call, we will also discuss certain non-GAAP financial measures. We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck and our earnings release. Please note that in order to better align with our peers, we are now excluding amortization of intangibles from our non-GAAP net income and EPS metrics. A reconciliation of these metrics for 2023 and 2024 are included in the earnings slides on our website. With that, I'll turn the call over to Matt.

Thank you, Sandy, and good morning, everyone. Thank you for joining our Q4 2024 earnings call. 2024 was a defining year for Waystar as we achieved significant growth, demonstrated agility, and reached strategic milestones that strengthened our position in the industry. In addition to our normal work of adding clients and expanding relationships with them, we helped more than 30,000 providers recover from a cyber attack on a competitor, restoring their cashflow and expanding our client community. In June, we completed our IPO, raised approximately a billion dollars and strengthened our financial position to drive continued growth and innovation. In today's rapidly evolving healthcare landscape, Administrative waste costs more than $350 billion annually, which creates extra work and stress for healthcare providers. The Waystar software platform is purpose-built to reduce administrative waste, manual work, and errors. Our mission is to simplify healthcare payments with modern software that enhances operational efficiencies, improves payment accuracy and timeliness, and augments cash flow. We believe Waystar is positioned to drive sustainable growth and create long-term value. We have optimism about our future and are focused on delivering measurable results and maximizing returns for our clients and investors. Now, as I do each quarter, I'll cover four key topics that highlight our progress and future direction. First, I will discuss Waystar's sustainable and compounding revenue growth. Second, I will share how we are driving operational profitability and efficiency. Third, I will highlight the latest innovations driving client value. Fourth, I will review recent client and team member successes. Then, I'll turn the call over to our CFO, Steve, who will review our financial results for Q4 2024 and fiscal year 2024 and speak to our fiscal 2025 guidance. First, sustainable growth. In Q4, Waystar delivered another quarter of strong top-line growth. Our revenue reached $244 million, representing an 18% year-over-year increase, bringing full-year revenue to $944 million, or 19% year-over-year growth. This exceeded our long-term target of low double-digit normalized growth. Steve will cover the details of this outperformance in more detail later in our call. Our sustainable growth strategy is to create enduring client relationships by delivering software that drives tangible return on investment while reducing the total cost of achieving their goals. As clients realize value, they deepen their adoption of the Waystar software platform making it essential to their business operations and cash flow management. Two key metrics highlight our momentum. First, net revenue retention came in at 110% in Q4, at the high end of our historical range of 108 to 110% over the past 10 quarters. Second, the number of clients generating more than $100,000 in trailing 12-month revenue grew to 1,203, an increase of 15% year over year. Our Q4 growth continued to benefit from the clients we onboarded who were seeking an alternative clearinghouse after a cyber attack on a competitor. We are confident most of these clients will deepen their adoption of the Waystar platform. In fact, approximately 30% are already pursuing cross-sell opportunities beyond their initial implementation of claims and remit solutions. In 2024, we achieved a record number of implementation activations from the backlog of projects. In 2025, we start the year with a strong pipeline of projects ready for implementation. Additionally, recent activations are ramping as expected, reinforcing our view into 2025's outlook. Next, profitability and efficiency. This quarter continues the trend of strong adjusted EBITDA performance. Adjusted EBITDA reached $100 million, up 16% year over year. For fiscal year 2024, we delivered on our target of 40% adjusted EBITDA margins, with full year margins of 40.6%. This performance highlights the value of our software platform and our commitment to creating operating leverage as we scale, while we continue to make important long-term investments that position Waystar for future growth. Our Q4 performance also highlights our business model's ability to generate strong cash flow. Unlevered free cash flow in the quarter was $80 million, bringing fiscal 2024's total to $265 million. The 69% conversion of adjusted EBITDA to unlevered free cash in 2024 underscores our operational efficiency and ability to generate cash. We are pleased to report that growth in adjusted EBITDA and a higher cash balance reduced our net leverage ratio to 2.8 times compared to the three times at the end of Q3 24. Waystar's cash flow profile provides opportunities to reinvest in the business, pursue M&A, and reduce debt. We remain committed to leveraging our strong position to drive sustainable growth and maximize value for our investors. Now, platform innovation. At Waystar, innovation fuels our growth empowering clients to get paid faster, more accurately, and more efficiently. Our modern cloud-based platform streamlines the end-to-end healthcare payments workflow, from pre-service patient identification and access to post-service collections, with hundreds of new enhancements delivered each quarter to drive efficiency, accuracy, and sustainable return on investment. Waystar processes more than 6 billion insurance transactions and over $1.8 trillion in gross claims annually, generating powerful network effects that fuel our AI-powered software. By leveraging this data, our AI capabilities continuously learn, which enables providers to automate error-prone workflows and reduce manual intervention. As a result, providers can allocate more time and resources to patient care. AI has been a core component of our end-to-end software platform for over a decade and is pervasive across our solutions. Last year, we formed a collaboration with Google Cloud and identified more than a dozen high-impact generative AI capabilities to advance our mission. On January 9th, We launched Waystar Altitude AI, continuing to deliver on our vision of AI-powered innovation for providers. Its first of its kind generative AI capability, Altitude Create, is now embedded in our denial and appeal management solution, giving existing clients early access to the new capability. Altitude Create accelerates denial recovery by autonomously drafting appeal letters across multiple denial types, improving efficiency and reimbursement speed. In its first month, early access clients are already seeing meaningful results. Clients use Waystar to complete appeal packages three times faster, saving an average of 16 minutes per appeal package. Additionally, Denial overturn rates are significantly improving when Altitude Create generates the appeal. Beyond these early access clients impact, we believe the launch will drive incremental ROI for current clients and fuel interest for prospective clients in our denial and appeal management solution, reinforcing strong demand for AI powered automation in the market. In addition to the denial and appeal management solution, We delivered innovation within our denial prevention oriented solutions, including eligibility verification and prior authorization to further streamline patient financial clearance. In our eligibility verification solution, we introduced the ability to automatically trigger additional eligibility checks when secondary or unknown coverage is detected to enable faster, more accurate insurance verification. In prior authorizations, we increased the level of software automation to boost the rate of auto approvals, which significantly benefits provider reimbursement and timely patient care. Early adopter clients of the prior authorization automation are already experiencing reduced submission times of 70% from seven minutes to two. Recent industry events have reinforced the need for cybersecurity as well. Waystar is vigilant in our cybersecurity efforts as we work to proactively monitor, measure, and mitigate against risk. Our focus on innovation and cybersecurity is reflected in an independent market study that ranked Waystar as the number one trusted vendor among our top competitors, recognizing our commitment to data protection, client experience, and innovation. Finally, client and team successes. Clients invest their time with us because they trust Waystar as a long-term partner in achieving their goals. Demonstrating our commitment to excellence, we delivered exceptional client support during a year of rapid expansion, sustaining industry-best satisfaction scores and strong win rates against direct competitors. A recent third-party survey confirms that that client service is the top reason healthcare providers consider switching revenue cycle management vendors. Waystar is strengthening its position as the industry's most trusted leader. The latest best-in-class results reflect our focus on supporting clients at the highest level, earning the number one rankings in claims management and clearinghouse and patient access solutions. Additionally, in a comprehensive survey of 600 clients and prospects, Waystar was ranked highest for having its, quote, best days ahead, unquote, reflecting strong confidence in our future. Additionally, Forbes recognized Waystar as one of America's most trusted companies, an honor backed by hundreds of thousands of data points. These recognitions give us confidence that Waystar can be a strong choice for providers as they evaluate potential vendors who they can trust to meet their needs. These achievements are truly a direct result of our exceptional team. In 2024, Waystar team members went the extra mile to support new and existing clients amid unpredictable industry events. In December, Fortune recognized our team members and the performance culture we cultivate by naming Waystar one of the best workplaces in healthcare, reflecting our commitment to fostering an environment where top talent thrives. We are incredibly proud of our team's unwavering commitment and the fulfillment that they find in driving Waystar's mission forward. In conclusion, Waystar enters 2025 with momentum, purpose, and a clear vision for the future We have experience delivering stable, enduring and compounding growth and affirm our long-term outlook of normalized low double-digit revenue growth and disciplined adjusted EBITDA margin performance. We will continue to disrupt the status quo, transform the revenue cycle and shape the future of healthcare payments. We believe the best days for Waystar and those we serve are indeed ahead and are excited about the work we do. With that, I will hand the call over to Steve, who will discuss the financial details.