Waystar Q1 Earnings Call Highlights

Key Points

• Waystar reported a strong Q1 with revenue up 22% to $314 million, adjusted EBITDA up 26% to $135 million (a 43% margin), subscription revenue up 38% to $172 million, and the company reaffirmed full-year guidance of $1.274–$1.294 billion in revenue and $530–$540 million in adjusted EBITDA.
• AI-powered capabilities drove roughly 40% of new bookings, with about 50% of solutions now leveraging AI and nearly 40% of revenue from AI-embedded workflows, and Waystar introduced new AI products (Prebill Anomaly Detection, Altitude AI, Recoupment) that management says materially boost collections and recovered revenue.
• Bookings and client expansion remain strong—42 new clients above $100k TTM revenue, ~111% net revenue retention, and a record qualified pipeline including multiple >$1M deals—but patient-payment headwinds (faster print-to-digital shift, coverage and weather impacts) led to updated quarterly cadence of Q2 flat–1% and Q3 1–3% sequential growth.

Waystar NASDAQ: WAY reported first-quarter 2026 results that management characterized as a “solid start to the year,” supported by platform expansion, strong bookings, and growing adoption of AI-embedded workflows across its healthcare revenue cycle offerings.

Financial results: revenue up 22% and adjusted EBITDA margin at 43%

Revenue rose 22% year-over-year to $314 million, according to CFO Steve Oreskovich. Organic revenue grew 11% year-over-year. Adjusted EBITDA increased 26% to $135 million, translating to an adjusted EBITDA margin of 43% in the quarter.

Oreskovich attributed the margin performance primarily to revenue mix, noting that higher-margin provider solutions (about 75% of revenue) grew organically “at double the rate” of lower-margin patient payment solutions (about 25% of revenue). He added that the conversion from print to digital patient statements “does impact the top line revenue number on a unit economic basis,” but said the shift is “neutral” to margin dollars and cash flow and could be positive for margins over time.

On revenue composition, Waystar reported subscription revenue of $172 million, up 38% year-over-year and representing 55% of total revenue. Volume-based revenue was $139 million, up 7% year-over-year.

Client expansion and bookings strength, including larger contracts

CEO Matt Hawkins said Waystar added 42 new clients generating more than $100,000 in trailing 12-month revenue during the quarter. Oreskovich said the number of clients above that threshold increased to 1,433 at quarter end, up 15% year-over-year.

Net revenue retention was approximately 111% at the end of Q1, slightly above the company’s historical range of 108% to 110%, Oreskovich said. Hawkins also cited “approximately 99% first-pass acceptance rates across the platform.”

Bookings exceeded internal expectations, Oreskovich said, and included a “double-digit count” of contracts worth more than $1 million in annual value, above Waystar’s historical quarterly performance. Hawkins said the company is seeing momentum with “larger, complex provider organizations” that are consolidating vendors and standardizing on a single platform. He added that the implementation backlog remains elevated and that Waystar is carrying what it believes is the “largest qualified sales pipeline” in its history, providing “visibility into 2027.”

In response to a question about sales cycle dynamics, Hawkins said Waystar is not seeing a meaningful change, stating, “We’re not noticing a compression of time or any elongation of time,” while also pointing to “elevated win rates.”

AI adoption, new capabilities, and an expanded view of TAM

Hawkins emphasized AI as a central driver of the company’s product and market strategy, describing Waystar’s platform as “purpose-built” with “powerful LLMs” integrated into core workflows to improve accuracy and reduce friction for providers. He said the “AI era is expanding Waystar’s total addressable market opportunity,” contrasting a historical roughly $20 billion revenue cycle software market with what he described as approximately $100 billion in annual revenue cycle labor services across the industry.

Waystar said AI-powered capabilities drove roughly 40% of new bookings in Q1. Hawkins also said approximately 50% of Waystar solutions now leverage AI, and “nearly 40% of revenue is generated by AI-embedded workflows.”

At Waystar’s Spring Innovation Showcase, Hawkins said the company introduced net new capabilities focused on “agentic workflows” and a deeper convergence of financial and clinical intelligence. He cited early deployments of several products, including:

• Prebill Anomaly Detection: Hawkins said it delivers an estimated $3 million in net revenue per 10,000 patient discharges and a “5x return” in recovered revenue over three years.
• Altitude AI capabilities for patient financial experience: Hawkins said these are expected to drive a 50% increase in collections.
• Recoupment solution (new SKU): Hawkins introduced an AI-powered recoupment product aimed at payer offsets and clawbacks. He said providers are reducing recoupment reconciliation time by over 80%, and that one early adopter “matched $32 million in revenue risk,” work he said was equivalent to about 13 full-time employees.

Asked how AI may translate into future growth, Hawkins reiterated the company’s view that AI can allow Waystar to pursue larger market opportunities by “replacing manual services,” referencing an industry shift “from services to technology and software platforms.” He called AI “a tailwind” and “the biggest opportunity in our lifetime.”

On pricing, Hawkins said Waystar has “always priced to value” and described the company as “a consumption-based pricing model” tied to “successful outcomes,” rather than a per-seat approach. He described monetization pathways from AI including strengthening existing software, introducing new SKUs, and supporting customer retention.

Patient payments headwinds and updated expectations for quarterly shaping

Management discussed headwinds that affected patient payment volumes and, in turn, volume-based revenue trends during the quarter. Oreskovich said the headwinds were concentrated in patient payment solutions and reflected a mix of external and client-driven dynamics, including:

• Accelerated conversion from print to digital patient statements, which the company said occurred faster than historical rates
• Changes in healthcare coverage
• Weather-related impacts on patient utilization

Oreskovich stressed that these factors were “not competitive or product-driven,” pointing to strong bookings over the past three quarters and a record qualified pipeline at the outset of Q2. Hawkins also framed the print-to-digital shift as a long-term opportunity, describing it as beneficial for providers, patients, and cost reduction.

For quarterly cadence, Oreskovich said Waystar previously communicated expectations for 1% to 3% sequential quarterly growth throughout 2026, with Q3 at the low end. He said the company now anticipates Q2 sequential growth of flat to 1% and Q3 of 1% to 3%, reflecting the updated view of patient payment dynamics and seasonality.

Balance sheet, guidance reaffirmation, and upcoming Analyst Day

Waystar ended the quarter with $159 million in cash equivalents and short-term investments and $1.5 billion in gross debt, Oreskovich said. Unlevered free cash flow was $90 million, and the company converted 67% of adjusted EBITDA to unlevered free cash flow. Net leverage was 2.7x as of March 31, down from 3.0x at the end of 2025. Oreskovich said Waystar expects to run the business at or below a 3.0x leverage ratio and noted that Moody’s and S&P upgraded ratings on the company’s debt facility in recent months.

The company reaffirmed full-year guidance. Oreskovich reiterated revenue guidance of $1.274 billion to $1.294 billion (midpoint $1.284 billion) and adjusted EBITDA guidance of $530 million to $540 million (midpoint $535 million). He said the midpoint assumes normalized organic revenue growth of approximately 10%, consistent with Waystar’s low double-digit long-term growth target, while also citing upside potential in late 2026 and beyond from strong bookings and larger deals that typically have longer lead times to revenue.

Hawkins said Waystar will host its first Analyst Day on Tuesday, Aug. 25, alongside its annual Waystar True North client conference.

About Waystar NASDAQ: WAY

Waystar NASDAQ: WAY is a leading provider of cloud-based revenue cycle management and payment solutions for healthcare organizations. The company's unified platform streamlines the entire financial continuum of patient care, from eligibility verification and claim submission to payment reconciliation and patient billing. By automating key processes and improving claim accuracy, Waystar helps providers reduce administrative overhead, accelerate cash flow and enhance overall revenue performance.

At the core of Waystar's offering is a SaaS-based architecture that integrates seamlessly with existing electronic health record (EHR) systems and payer networks.

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