Waystar Holding Corp.

Good day and thank you for standing by. Welcome to the Waystar Second Quarter 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised today's conference is being recorded. I would not like to hand the conference over to your first speaker today, Greg McDowell of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone. And thank you for joining Waystar Second Quarter 2025 Earnings Call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer, and Steve Arescovich, Waystar's Chief Financial Officer. After their remarks, we will open the call up for questions. This afternoon, we issued a press release announcing our financial results and published a presentation slide deck to accompany our prepared remarks. You can find these materials in the Investor Relations section of our website at .waystar.com. Before we begin, I would like to 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 afternoon's press release and the reports we file with the SEC, all of which are available on the Investor Relations page of our website. Any forward-looking statements provided during this 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. With that, I will turn

it over to Matt. Thank you, Greg, and good afternoon, everyone. Thank you for joining our second quarter 2025 earnings call. I will begin today by highlighting Waystar's recently announced agreement to acquire Iodine Software, a proven leader in AI-powered clinical intelligence. Iodine is a highly complementary strategic fit, and this transaction is a major step forward in accelerating Waystar's mission to simplify healthcare payments. We look forward to extending Waystar's leadership in the critical stage of the revenue cycle between care delivery and claim submission, where providers lose billions each year to administrative inefficiencies, and expanding Waystar's total addressable market by more than 15%. The purchase price of $1.25 billion represents a high teens enterprise value to adjusted EBITDA multiple based on Iodine's estimated 2025 EBITDA adjusted for synergies. As a clear vote of confidence in Waystar, Advent International, Iodine's largest shareholder, is expected to receive 100% of its consideration in the form of Waystar common stock, subject to an 18-month lockup agreement. Iodine brings a highly recurring subscription-based business model with a financial profile that is aligned with Waystar's. We expect the transaction to be immediately accretive to gross margin and adjusted EBITDA margin following closing, and accretive to revenue growth and non-GAAP net income per diluted share in 2027. The acquisition of Iodine also accelerates Waystar's product roadmap by nearly two years, unlocking a new level of automation, accuracy, and performance for providers. It advances Waystar's strategic position to eradicate unnecessary denials, maximize reimbursement, and deliver meaningful ROI across the revenue cycle. Following the anticipated close by year end, we will activate Waystar's proven M&A playbook. Our combined -to-market team will capitalize on bi-directional cross-sell opportunities, expanding Waystar's reach into Iodine's client base, introducing Iodine's platform to Waystar clients, and unlocking greater value where we already intersect. Across the nine acquisitions Waystar has completed, we have demonstrated our ability to ensure seamless integration and capture identified synergies to drive growth, operational excellence, and financial performance. For more on this important milestone, we encourage you to review the materials published last week available on our investor relations website. We will dedicate the remainder of today's call to reviewing Waystar's Q2 results. Waystar delivered its fifth consecutive quarter as a public company of double digit revenue growth and strong margins in Q2. Revenue reached $271 million, representing 15% year over year growth with an adjusted EBITDA margin of 42%. Our momentum in the first half of 2025 has enabled Waystar to raise full year guidance for both revenue and adjusted EBITDA, which Steve will cover in more detail shortly. As providers navigate margin pressure, workforce shortages, and legislative changes, Waystar's AI powered software platform is in strong demand. Decision makers prioritize our mission critical platform because we help their organizations get paid fully and accurately while reducing complexity and administrative burden. Waystar is uniquely positioned to address evolving industry needs, deliver meaningful ROI, and create long-term value for shareholders. In a dynamic market and evolving policy landscape, two recent developments are worth noting. First, the One Big Beautiful Bill Act, and second, the Prior Authorization Pledge led by America's Health Insurance Plans. The One Big Beautiful Bill Act introduces changes to Medicaid funding over the next decade and imposes stricter eligibility criteria for both Medicaid and Affordable Care Act exchange coverage. Importantly, we believe Waystar is well insulated from downside risk across a range of scenarios. In a hypothetical analysis in which 15% of Medicaid funding were to be affected, Waystar's trailing 12-month revenue would be impacted by less than 1%. More importantly, these conditions highlight the advantage of Waystar's purpose-built platform, which is already equipped to support providers across all payer types. Whether volumes shift across Medicaid, Medicare, commercial, or self-pay, Waystar enables providers to maximize reimbursement, reduce denials, and operate efficiently. As I will describe in a moment, capabilities such as insurance coverage detection, charity screening, patient payments, and unified payment processing are essential for helping providers navigate this evolving funding landscape. Now, let's turn to the Prior Authorization Pledge led by America's Health Insurance Plans. More than 60 health insurers recently signed a non-binding commitment with the US Department of Health and Human Services outlining a multi-year path to reduce unnecessary prior authorization requirements by 2026 and implement standardized electronic workflows by 2027. We note that Waystar has long been a market leader in prior authorization automation, well ahead of this anticipated industry pledge. Our software, Authorization Manager, connects healthcare providers to a broad range of payers while Auth Accelerate, launched earlier this year, automates every step of the prior authorization process and enables auto approval. With more than two billion prior authorization submissions occurring annually, this remains one of healthcare's most burdensome and resource-intensive manual processes. Today, Waystar delivers more than 90% touchless authorizations. For a mid-size help system, this level of advanced automation can unlock capacity equivalent to over a dozen full-time employees, freeing staff to focus on higher value work. Waystar is encouraged to see the broader industry coalescing around initiatives that benefit providers and patients. And Waystar will continue to lead from the front, anticipating change and tackling healthcare's most complex challenges with AI-powered software. As a result, Waystar clients are well-equipped to navigate regulatory demands, unlock meaningful ROI, and drive strong financial performance. Waystar has established deep trust with over one million providers reinforcing our conviction that our growth strategy is making a tangible impact. This trust is reflected in our 115% net revenue retention rate and the growing number of clients generating more than $100,000 in trailing 12-month revenue. Now at 1,268, which is a 14% increase year over year. Our compounding growth algorithm begins with the enduring relationships we create with our clients. Waystar is a proven innovator, delivering software that empowers providers to get paid fully and faster with unprecedented automation and greater accuracy. Each innovation is purpose-built to address healthcare's most complex challenges. Let me highlight a few now. First, insurance coverage and eligibility. As shifting coverage policies introduce more complexity and increase gaps in insurance eligibility, providers face a rising risk of denied or delayed payments. Waystar's AI-powered software platform delivers unmatched performance in resolving inaccurate or unknown coverage, automatically identifying the correct insurance in as many as 55% of cases that would otherwise result in write-offs. The result, revenue is recovered in seconds with no manual effort required from the provider. For a mid-size health system, this can drive upwards of $20 million in incremental annual reimbursement. Second, patient payment optimization. As more financial responsibility shifts to patients, providers face growing pressure to improve affordability, streamline collections, and deliver a positive patient experience. Waystar's AI-powered software platform automatically identifies financial assistance eligibility and pairs it with intuitive digital-first billing and integrated patient payment options. This approach drives up to 80% patient self-service adoption and more than a 20% lift in patient collections, translating to nearly $8 million in annual impact for a mid-size health system, while significantly reducing the effort required to collect. Importantly, a strong patient payment experience builds trust between the provider and patient at a critical point in the patient journey, reflecting in patient net promoter scores above 60 for healthcare providers using Waystar's software platform. Third, reimbursement and cash flow. In the first half of 2025, Waystar's AI-powered software platform prevented nearly $6 billion in denied claims. When denials do occur, our appeal capabilities accelerate recovery and increase overturn rates, unlocking millions in reimbursement. Clients also reduced days to pay by up to 15%, strengthening cash flow and operational resilience. AI is at the center of Waystar's innovation strategy. Today, the vast majority of revenue is generated from software where AI is actively driving results. We are also generating new incremental revenue with the launch of Waystar Altitude AI, which deploys generative AI in key use cases on Waystar's platform. Waystar Altitude AI delivers tangible outcomes such as a 70% boost in appeal productivity and double-digit increases in overturn rates, bringing up capacity equivalent to nearly 10 full-time employees for a mid-size health system. Innovations like these are delivering meaningful ROI and strengthening Waystar's leadership in improving provider financial performance. A recent Forrester study of more than 300 provider leaders confirmed that trusted vendors like Waystar are preferred for AI adoption. In contrast to new market entrants, revenue cycle leaders cited scale, integration, and outcomes as top priorities, areas where Waystar has demonstrated clear leadership in all three categories. Waystar's growth strategy is grounded in proven results, impactful innovation, and enduring client trust. As the industry evolves, Waystar is uniquely positioned to lead with a unified AI-powered software platform that delivers automation, accuracy, and meaningful results at scale. We look forward to advancing our software product roadmap and helping providers strengthen financial performance and stay ahead in an increasingly complex environment. Waystar is proud of the continued recognition of its software platform, culture, and the results we deliver to providers and patients. In Q2, Waystar was recognized as the best overall healthcare payments solution provider by MedTech Breakthrough and named one of the US News best companies to work for. These accolades reflect the unwavering commitment of the Waystar team and our clients to simplify healthcare payments. Waystar is well-governed by a strong, experienced board of directors. In Q2, two new independent board members, Ashima Gupta and Mike Roman, joined, bringing valuable expertise and perspective that are already contributing meaningfully to Waystar's long-term strategy. With that, I'll turn it over to Steve to walk through the financial details from the quarter.