NASDAQ:WAY Waystar Q2 2024 Earnings Report $37.02 -0.26 (-0.70%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$37.01 -0.02 (-0.04%) As of 04/25/2025 04:20 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Waystar EPS ResultsActual EPS$0.04Consensus EPS -$0.01Beat/MissBeat by +$0.05One Year Ago EPS-$0.07Waystar Revenue ResultsActual Revenue$234.50 millionExpected Revenue$216.25 millionBeat/MissBeat by +$18.25 millionYoY Revenue Growth+19.60%Waystar Announcement DetailsQuarterQ2 2024Date8/7/2024TimeAfter Market ClosesConference Call DateWednesday, August 7, 2024Conference Call Time4:30PM ETUpcoming EarningsWaystar's Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled at 4:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Waystar Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 7, 2024 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Waystar Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Sandy Draper, Chief of Staff and Vice President of Special Projects. Operator00:00:35Please go ahead, sir. Speaker 100:00:38Thank you, operator, and good afternoon, everyone. It's my pleasure to welcome you to Waystar Holding Corporation's Q2 2024 Earnings Call. Today's call is being webcast and a replay along with the transcript will be available on our website along with other related materials following the conclusion of this call. Matt Hawkins, Waystar's Chief Executive Officer and Steve Orescovich, Waystar's Chief Financial Officer are joining me today. After their remarks, we will open the call to your questions. Speaker 100:01:06Earlier today, 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 include all statements that are not historical facts. Examples of these statements include expectations of future growth and margins. Speaker 100:01:32These statements do not guarantee future performance and involve a number of risks and uncertainties and undue reliance should not be placed on these forward looking statements. Actual results may differ materially from those expressed in these statements. Please refer to this please refer to this evening's press release and our prospectus filed with the SEC on June 7, 2024 and in other 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 this call are made only as of the date of this call and we undertake no obligation to update and revise such statements except as required by law. During today's call, we will also discuss certain non GAAP financial measures, which we believe may be useful in evaluating our financial performance. Speaker 100:02:25We have provided reconciliations of adjusted EBITDA and non GAAP net income and earnings per share and certain other 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. These non GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Lastly, we are pleased to note our participation in the Canaccord Genuity Annual Growth Conference in Boston on August 13, where we look forward to engaging with many of you. With that, I'll turn it over to Matt. Speaker 200:03:02Thank you, Sandy, and good afternoon, everyone. Thank you for joining our inaugural earnings call as a publicly traded company. On today's call, we will cover the following 4 topics. First, I will review Waystar's 2nd quarter results reflecting on our strong performance and highlighting a few areas that favorably impacted our results. 2nd, I will provide insight into our response to and the impact of February 21, cybersecurity attack on a competitor's claims clearinghouse. Speaker 200:03:333rd, I'll take the opportunity to share what we are building at Waystar including innovations and developments that are shaping our future. And last, I'll turn the call over to Steve Areskovitch, our CFO, who will walk through more detailed financial materials and highlight guidance for the full year 2024. We're pleased to report that we have delivered a strong Q2, continuing our momentum and showcasing the efforts of our entire team. Q2 revenue was $235,000,000 representing a 20% year over year growth. Our revenue growth in the quarter, which was greater than the low double digit growth rate that we typically expect is attributable to a few primary factors. Speaker 200:04:18First, our business continued to perform well in Q2. We maintained solid client retention, closed a number of new sales opportunities that we expect to implement at our regular cadence and continue to grow our bookings pipeline. 2nd, Q2 revenue had some favorability due to increases in patient payment volumes that we processed on the Waystar software platform. We believe this outperformance is due to expected increases in patient visits as well as patients choosing to make payments to fulfill their insurance deductible at a modestly faster pace. We note that there is some seasonality in the timing of when patients fulfill their insurance deductibles in any given year. Speaker 200:05:053rd, we completed 2 small acquisitions in the second half of twenty twenty three, which favorably impacted the year over year comparison versus last year. And finally, as I will address in more detail in just a moment, our revenue growth benefited from our efforts to onboard thousands of providers to the Waystar software platform after these providers' operations were disrupted by the February 21 cyber attack against a competitor. Importantly, we expect to retain the majority of this revenue uplift going forward. So to summarize, we were pleased with our business performance and a few favorable factors in Q2 supplemented our revenue growth. Normalized for these items, the business grew slightly above our expected low double digit range. Speaker 200:05:56We're also pleased to report that Q2 adjusted EBITDA was $94,000,000 up 12% year over year and in line with our adjusted EBITDA margin goal of 40%. Within Q2 adjusted EBITDA, we incurred expenses associated with onboarding thousands of providers to the Waystar software platform who were impacted by the February 21 cyber attack. We also focused on integrating recent acquisitions and incrementally investing in growth, cybersecurity and innovation related initiatives. From a margin perspective, we're pleased with our adjusted EBITDA margin and are actively pursuing ways to drive operational efficiency to maintain and expand margins over the longer term. Our business model promotes strong cash flow conversion and Q2 was no exception. Speaker 200:06:47In the Q2, we generated unlevered free cash flow of $50,000,000 The combination of our strong cash flow profile and our recent IPO puts Waystar in a sound financial position. As we committed, we used the proceeds of our initial public offering in June to pay down debt, bringing our net leverage to 3.7 times at the end of the quarter, reflecting subsequent debt pay down with the proceeds from the partial exercise of the IPO addition, want to highlight 2 key metrics that we use to track our business' performance and give us confidence in our durable growth model. First, the number of clients generating more than $100,000 in trailing 12 month revenue increased to 11.17, an increase of 9% year over year. We believe this metric demonstrates our ability to land and then expand business with our clients. 2nd, our net revenue retention in Q2 was 108%, within the range of the 108% to 110% that we have seen over the past 10 quarters. Speaker 200:08:02Our strong net revenue retention highlights the enduring relationships we establish with our clients, beginning with strong gross revenue retention and then delivering value to our clients as we focus on expanding the Waystar software modules they use through our cross and upsell efforts. Steve will discuss Q2 financials in more detail and also provide guidance for fiscal year 2024. Now on to the second point, on a topic that I know many of you are keenly focused on, Waystar's response to and the impact of the February 21 competitor cyber attack event. Following this unfortunate event in the market, healthcare providers and patients faced tremendous disruption. At Waystar, we quickly focused our efforts and marshaled additional resources to help impacted providers simplify their healthcare payments and regain cash flow. Speaker 200:08:56We are pleased to report that Waystar has helped more than 30,000 providers move rapidly to the Waystar software platform, many in as little as 3 days to minimize their disruption during this time and to get paid for the healthcare services they delivered. This urgency to maintain continuity in critical business operations resulted in pulling forward implementation timelines for many of these providers and the corresponding time to revenue for Waystar. We feel grateful to be in a position to help thousands of providers resume normal business operations so quickly. Importantly, we expect to build enduring relationships with these new clients, most of whom signed standard Waystar business agreements with 2 to 3 year terms and annual auto renewals thereafter. This incident not only created a near term opportunity for Waystar to help thousands of providers, but also a longer term opportunity to cross sell additional Waystar software modules to these provider organizations. Speaker 200:10:02For many, this cyber attack reinforced the importance of using a modern cloud based software platform such as WayStar's, which provider organizations can deploy rapidly with limited to no disruption while successfully managing their finances. Due to Waystar's performance during this trying period, we believe our competitive position in the industry is even stronger and we continue to work hard to help provider organizations and to capitalize on the positive momentum that we have seen. I want to also comment briefly on Waystar's approach to cybersecurity. We understand the importance of protecting our clients' data and privacy. We are committed to proactively monitoring and safeguarding our clients' information in today's ever evolving cyber landscape. Speaker 200:10:52Waystar utilizes a robust framework for cybersecurity to proactively monitor, measure and mitigate risk. We validate our cyber program and readiness with regular HITRUST, PCI, SOC 2 and NIST audits. In light of the recent cyber attack on a competitor's system, it's important to note that we have already been using modern cybersecurity protocols such as requiring multi factor authentication for system access, credential restrictions and theft alerts, data exfiltration and endpoint detection capabilities, and system backups that cannot be modified by malware or bad actors to secure our software platform and data, we believe our rigorous approach to cybersecurity can help us minimize the cost of any potential disruption through system resiliency and rapid restoration, and we will remain vigilant in safeguarding against potential threats. Now on to the 3rd point. In our inaugural call, I want to highlight Waystar's mission and what makes our company unique. Speaker 200:12:02We are focused on simplifying healthcare payments through our modern end to end cloud based software, enabling our provider clients to prioritize patient care and optimize their financial performance. We are transforming healthcare payments for providers while simultaneously helping patients navigate an often frustrating healthcare payments experience with greater transparency and clarity. I will now highlight 6 attributes that make us unique and fuel our belief in the positive benefits we can deliver to our clients. 1st, we are a software company purpose built for healthcare. We are not a services company trying to become more tech enabled, Building great software to disrupt long standing payment challenges is the focus of Waystar's work. Speaker 200:12:542nd, our software is mission critical to our clients. In 2023, we facilitated over $5,000,000,000 healthcare payment transactions, including over $1,200,000,000,000 in gross claims. When clients adopt the Waystar platform, we become essential to their business operations and cash flow generation. We develop long enduring relationships with clients because our software helps them get paid faster, more accurately and more efficiently than ever before. Our strong client and revenue retention attest to this. Speaker 200:13:323rd, our differentiated cloud based software platform with advanced technology is integrated into more than 500 electronic health record and practice management systems. This allows us to serve more than 1,000,000 providers of all sizes across every setting of care. Our platform enables us to deliver several benefits to our clients. We rapidly deploy and implement our cloud software to serve clients of all types and sizes, addressing their unique needs. Waystar's end to end capabilities enable providers to manage all of their healthcare payments through a single platform, which serves as a meaningful differentiator for Waystar relative to numerous point solution vendors that exist in the market. Speaker 200:14:19We believe that no competitor matches the breadth, depth and quality of our software platform. And we deliver an average of 300 software feature innovations and improvements each quarter without interrupting the operations of our clients. And our clients achieve the real return on investment they expect as they work with Waystar. 4th, as we are at the forefront of actively deploying AI and machine learning to automate work, prioritize tasks and eliminate errors as clients use waste our software, our software uses AI pervasively today and we are well positioned to harness the power of generative AI to drive ROI for our clients. We recently announced that we have identified more than a dozen promising new generative AI capabilities across the healthcare payments processes. Speaker 200:15:13Our collaboration with Google Cloud builds on Waystar's proven track record of deploying innovative AI solutions. I'd like to highlight just a few generative AI use cases we are actively developing. 1st, a co pilot to further automate prior authorization submission. We believe this will materially differentiate our existing prior authorization product, positioning it to accelerate the pace of penetration. 2nd, a co pilot to automate appeal management when a claim has been denied, substantially accelerating speed to payment. Speaker 200:15:52And 3rd, an agent to enable real time conversion of payer policy changes into claims rules. This technology will allow clients to upload their specific payer contracts and policies to Waystar's cloud rules engine with high degree of automation and accuracy, driving lower denial rates and improving the ROI of Waystar's products versus the competition. In addition, we have several longer term generative AI products in our pipeline for 2025 and beyond that drive automation and efficiency across the processes that lead to accurate healthcare payments. The 5th attribute is that we have a strong track record of delighting our clients resulting in number one rankings in client satisfaction in several industry surveys and strong Net Promoter Scores. We have an active and engaged client advisory board and delighted referenceable clients. Speaker 200:16:49And finally, we have a highly visible and durable revenue growth model with sustainable 40% plus EBITDA adjusted EBITDA margins. We believe there is meaningful embedded growth within our client base and a large addressable market to pursue. We are focused on building and sustaining this momentum that we have created. Now, I will turn the call over to Steve to discuss our results in more detail and highlight our full year guidance for 2024. Speaker 300:17:21Thanks, Matt. Before I discuss the results and guidance, I'd like to briefly cover the durable and visible financial model you mentioned. As it is the basis of our highly recurring, predictable and profitable growth at scale. Over the past several years, we have consistently delivered low double digit revenue growth and adjusted EBITDA margins of 40% or more. Over 99% of our revenue comes from our cloud based software platform, which means we derive less than 1% of revenues from services. Speaker 300:17:55Software revenue consists of contractually committed subscriptions and predictable recurring volumes processed on the platform. In Q2, revenue was roughly equal between these two streams and both grew double digits. The subscription fee provides a fixed recurring revenue stream, while the volume based component allows us to benefit from our clients' growth. We generate more revenue as our clients see more patients and deliver more care. Apart from seasonality tied to health plan deductibles and seasonal illnesses, volumes are relatively stable and predictable year to year given that the demand for healthcare is largely inelastic and growing annually. Speaker 300:18:43Therefore, in the aggregate, we believe we have meaningful visibility over the entire revenue base. Another important metric that demonstrates the visibility of our model is our net revenue retention. Over the past 10 quarters, we have shown a net revenue retention rate between 108% 110% on a trailing 12 month basis with Q2 at 108%. Turning to financial results, we had a strong second quarter with all financial metrics showing impressive growth. Revenue increased 20% year over year to $235,000,000 This growth was primarily driven by 4 outcomes. Speaker 300:19:28First, our business model continues to be strong. This is evidenced by the successful expansion in the number of clients of scale to 11 17 as of the end of Q2, adding 37 new clients in the quarter who produced more than $100,000 of LTM revenue. This expansion validates our land and expand strategy as well as our ability to sell more multiple solution deals to new clients. 2nd, we processed more patient payments from existing clients on our software platform than we have typically seen in the Q2 over the past couple of years. We expect the associated beat to offset in the second half of twenty twenty four and have appropriately factored this into our full year guidance. Speaker 300:20:223rd, as indicated in our filings, we completed 2 small acquisitions in the second half of twenty twenty three. Consequently, the timing of the acquisitions modestly benefit the 2nd quarter year over year growth rate. And finally, our teams 20 fourseven work to swiftly onboard new clients impacted by the competitor cyber attack and to help existing Waystar clients in minimizing the impact on their operations generated $9,000,000 of incremental revenue in Q2 versus what we would have expected from our historical win rates and associated implementation timing. To provide context, we typically see client implementation cycles of a few to several months due to client and insurance payer readiness factors versus the 3 day implementations Matt previously mentioned. Most importantly, we believe the majority of revenue generated from this work will be enduring and increase our long term revenue baseline. Speaker 300:21:25While 20% year over year growth for Q2 and 19% growth in the first half of twenty twenty four are strong, we also recognize some of the items that we have highlighted today or referenced in our filings impact the year over year comparability. Normalizing for those items, revenue growth would be closer to 13%, which is slightly above our expected low double digit range. GAAP net loss for the Q2 of 2024 was $28,000,000 compared to a net loss of $11,000,000 in the prior year. Q2 2024 results include $37,000,000 of stock based compensation costs with $33,000,000 associated with performance based options expensed from going public. They also include $4,000,000 of year over year channel partner commission increase based on revenue performance. Speaker 300:22:22Adjusted EBITDA of $94,000,000 for the 2nd quarter increased 12% year over year. The adjusted EBITDA margin of 40% also reflects investment in the business to ensure we were able to meet client expectations and ongoing investments in the areas Matt mentioned, including innovation and cybersecurity. Switching gears, we have significantly improved our capital structure through several events since the beginning of the year. First, we used the net proceeds from the IPO to pay down $909,000,000 of debt. This payment our consistent ability to delever through solid financial performance resulted in upgrades of 2 notches from all 3 rating agencies. Speaker 300:23:09We use these two outcomes to reprice our debt in late June, reducing our interest rate to SOFR plus 2.75%, down from sulfur plus 4% at the beginning of the year. And finally, after the quarter ended, most of the IPO green shoe was exercised for net proceeds of $103,000,000 and we used those proceeds along with a bit of cash on hand to pay down an additional $111,000,000 of debt. We ended the quarter with $1,360,000,000 of total debt and net debt of $1,290,000,000 On a trailing 12 month basis, our net debt to adjusted EBITDA leverage is 3.7x, down from 6.6x at the beginning of the year. And if one were to adjust the leverage ratio to reflect the additional debt pay down in July, it would have decreased to 3.4 times. Unlevered free cash flow was $50,000,000 in the Q2 of 2024 compared to $77,000,000 in the prior year. Speaker 300:24:17Our unlevered free cash flow includes a tax burden of $26,000,000 in Q2 versus $6,000,000 last year as we are a full taxpayer. Our capital allocation priorities remain the same. We expect to continue to delever the balance sheet, targeting approximately one turn a year. We continue to invest in the business to drive sustainable top line growth and we will also look at opportunities for inorganic growth based on our disciplined acquisition criteria. As evidenced from the financial discussion, we had a solid first half of twenty twenty four and are confident in our outlook for the remainder of the year. Speaker 300:25:02For fiscal 2024, we expect revenue to be within the range of $902,000,000 to $918,000,000 At the midpoint, this represents 15% growth over 2023. For additional context, we expect both subscription and volume based revenue to grow by over 10% year over year. We have also considered the seasonality aspect of patient payments processed on the software platform, which is typically more robust in the first half of the year because patient deductibles reset at the beginning of each year. Additionally, while we experienced revenue over performance in Q2 due to the impact of rapid implementations as we helped providers, our full year guidance reflects an expectation of normal implementation timelines going forward. Our expectations for adjusted EBITDA incorporate public company expenses, continued investment in client support, innovation and cybersecurity along with higher channel partner commission costs due to strong sales. Speaker 300:26:10Factoring in these items, we expect to deliver adjusted EBITDA between $360,000,000 $368,000,000 representing 9% year over year growth at the midpoint of guidance along with an adjusted EBITDA margin of 40% for 2024. We are now ready to answer your questions. Operator00:26:32Thank you. And our first question comes from the line of Anne Samuel with JPMorgan. Your line is open. Please go ahead. Speaker 400:26:57Hey, guys. Congrats on the great print, and thanks for taking the question. I was hoping maybe you could talk a little bit about in your conversations with clients kind of post the change disruption, how are they thinking about kind of how they were historically tied to one vendor and that caused them some disruption? Are you have an appetite for diversification so they don't end up kind of being stuck again? How are they talking about that and how are they thinking about vendor diversification? Speaker 400:27:27Thanks. Speaker 200:27:28Thanks, Andy, for the question. This is Matt. We try to provide our perspective. We first of all, we're very grateful to be in a position where we could help the thousands of providers as we've described. I think we were able to not only showcase the speed and ability of Waystar and our team members to rapidly respond to help these providers. Speaker 200:27:52But I think it's we did so as we also mentioned in the prepared remarks, using standard Waystar agreements that as we've described are multi year in nature with auto renewing aspects thereafter. What we believe is the majority of the clients that move to the Waystar platform are looking certainly for a cyber secure platform and we, as described, will be vigilant and focused on cyber security posture. We think while there is some chatter or market noise around needing redundancy or having a resilient network, we also believe that that could be rather inefficient. A question would be, will people have multiple EHR solutions because they want redundancy that just doesn't seem very tenable. And so what we'll focus on is establishing that we can be a trusted partner. Speaker 200:28:47We're proving that now. We're actually beginning to have conversations with many of these clients about expanding the use of the Waystar software platform to include other software modules. And I hope that's a helpful perspective. Speaker 400:29:02Yes. And sounds like a great opportunity for you. Maybe just my follow-up would be on the back half volume based revenue expectations. I was hoping you could just provide a little bit more color there, maybe what's driving that? Thank you. Speaker 200:29:15Okay. Let me turn to Steve for that one. Speaker 300:29:18Thanks, Matt. Thanks, Annie. Yes, so at midpoint of guidance, 15% for the full year would imply roughly about 12.5% year over year growth in the second half of the year. We did see and talked about in the walk from the first half of the year 19% to more of a normalized view of 13%. I did mention in the prepared remarks, patient payment volume coming in stronger in the first half of the year, meaning we've seen patients utilizing the healthcare system and the amount of payments being greater than what we've seen in prior years. Speaker 300:29:58So we've reflected that in the second half of the year expectations. I think you also see in the deck, you may not have had a chance to look at it yet, but the investor deck we put on our website that obviously we've continued to grow and for the past several quarters now and continue to grow sequentially the subscription based revenue. And I think that's a fair assumption to as you think about the second half of the year that sequential growth, I think what we reflected in that back half of the year for the volume base is the over performance or greater performance that we've seen from the patient payments side of the business for the first half Operator00:30:49of the year. Yes, some seasonality that's natural Speaker 200:30:49in our business. Correct. Speaker 400:30:52Very helpful. Thank you. Operator00:30:55Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Adam Hojkis with Goldman Sachs. Your line is open. Please go ahead. Speaker 500:31:07Great. Good speaking with you all and thanks so much for taking the questions. I guess to start, I'd be curious on what you're seeing in the buying environment, agnostic of the cyber attack demand increase. How would you describe the prioritization stack for purchase decision makers at the hospital and health systems for RCM technology? And then I just have a quick follow-up. Speaker 200:31:27Thanks, Adam. We see it as very important. RCM is a top priority to decision makers. As we reflect on the broader macro market, so to speak, I think it's fair to acknowledge that healthcare is an important industry for all of us. It relates to us personally. Speaker 200:31:44In the United States, we're spending a substantial amount of money on healthcare each year where there's also significant waste, more than $750,000,000,000 a year of waste. And so we see what's on decision makers' minds is how to gain more operating efficiency within their systems. We know that hospital margins have been challenged. We've seen that smoothing out over the last 6 months when you read some different industry reports. What we've noted is that there is a desire amongst prospects and clients to consume more of the Waystar software platform. Speaker 200:32:24There's an emphasis on platform versus point solution. I think part of that might be tied to some cybersecurity impact, harder to cybersecurity multiple point solutions than it is to work with a trusted partner that has a platform and a cybersecurity approach. But when you think about broader economic macro trends, talk around potential recession even, What we would say is healthcare as an industry is recession resistant, not recession proof, but recession resistant. Even during market downturns, people still need healthcare services. Where I think Waystar has a perspective is that we are helping decision makers because our software platform delivers operating efficiency. Speaker 200:33:15We are automating work. We're reducing error associated with all of the billing, insurance and interactions and collection interactions between providers and insurance companies and providers and patients. We're bringing efficiency and automation to that. And so we become an important part of the dialogue. We've seen an uptick in our RFPs. Speaker 200:33:41We see we like the position of our bookings pipeline and our high performing sales organization are having conversations with decision makers that we feel like gives us a sense of confidence as we look into this economy, as we stay close to decision makers and as we continue to do work at Waystar to execute on our business plan. Speaker 500:34:07Okay, great. Appreciate all that detail. That was really helpful. And then Steve, you mentioned the financial impact from the cyber attack at one of your competitors. Could you maybe just talk about what you're baking in there for the back half of the year? Speaker 500:34:19Are you continuing to see customers come in the door as recent as the last couple of months? Or is that faded? Has February 21st moves further in the background? And then, when you think about the dollar amounts that you're baking in for the back half of the year, how much of what's in guidance now is just what you've already done? And how do you view the upside potential from Speaker 600:34:47the creation Speaker 500:34:48of some of these relationships and module cross sell? Thanks so much. Speaker 300:34:52Yes. Thanks, Adam. I think it's as you alluded to in the we saw $9,000,000 of uplift in the Q2 versus a typical cadence we have expected as a result of the competitor cyber attack, some of that being generated from greater business wins. We have very high win rates to begin with. A lot of that also being generated from the faster implementation. Speaker 300:35:19It's we've it was kind of while it was a bad event for the industry and it impacted clients, it also reinforced what we've been saying in the past that it does not take long to switch to waste iron implement and we can implement people quickly. It generally is the timeline in which it falls in the client readiness and in some of the payer connectivity readiness. And I think as far as we looked out into the second half of the year, I think I briefly mentioned, we would expect those implementation timelines for clients that we've continued signing new clients to revert back more towards the norm, right? And that's sort of how we were thinking through it. And I think it's appropriate for us as a in our initial foray into the public markets to think in that manner. Speaker 300:36:12We've also, as you alluded to, have a very good track record of cross selling into our client base. And obviously, these clients there's a bolus of clients that are newer to us and that we brought on board in the Q2. And I think we I think also our as we think through the second half of the year, do we see opportunities for cross sell and further revenue expansion? I think, yes, we definitely do. I think we would characterize that more towards a longer term and enduring out in follow on years versus seeing an immediate impact coming in Speaker 200:36:55the second half of the year. I would also add, Adam, that we are learning through this period of time. We're very active in helping these clients, as I mentioned, to supplement what Steve said. We do see an uptick in RFPs where Waystar is getting invited to participate in more and more of these conversations. Some of those many of those are clearinghouse related. Speaker 200:37:19And so we see as we've described the near term, call it 2024 impact, then what we'll say the longer term opportunity, we'll continue to learn and hopefully be able to describe more as we get a little further out in the future. But one thing for sure, we are focused on having conversations with clients and prospects who we know we can help. And once they become a client of Waystar, then we naturally have cross sell and up sell conversations with them. Speaker 500:37:49Okay. All really helpful. Thank you, Matt. Thank you, Steve. Thank you. Operator00:37:53Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Saket Kalia with Barclays. Your line is open. Please go ahead. Speaker 600:38:05Okay, great. Hey, Matt. Hey, Steve. Nice result here and congrats on your Q1 as a public company. Speaker 200:38:12Thank you, Saket. It's sure nice to have this one done and we look forward to the conversation. Speaker 600:38:21I'm sure. Matt, maybe just to start with you, maybe just to change it up a little bit. It was great to see the upside in volume related revenue. And I know that there was some timing benefit there, but can we just talk a little bit about the patient payments business and why you maybe feel like there's an opportunity for share gain in that market? Speaker 300:38:43Yes. Speaker 200:38:47We now understand an important part of a provider's total revenue is increasingly coming from patients themselves, who as you know are participating in high deductible health plans at a faster rate than ever. Their out of pocket responsibility is increasing each year. And so Waystar, as we've described, as we talk about the Waystar software platform has united insurance and payer interactions for providers, both commercial insurance as well as government insurance, I think Medicare and Medicaid, as well as patient payment processing all on a single cloud based platform. We think that's very important because it gives the provider a total view of their sources of payment. It's also important because it positively impacts patients. Speaker 200:39:42We know from our own work and from hearing and listening to patients and perhaps experiencing that for ourselves that patients want more transparency in their care. They want more understanding of what their financial responsibility is. And oftentimes they want that before they receive healthcare versus the 60 or 90 days post care. Well, that's where Waystar software can really be helpful. Because of the $5,000,000,000 insurance transactions we're processing each year within our platform, We gain a tremendous amount of insight and intelligence that informs what the patient financial responsibility is likely to be and we can produce a highly accurate patient payment estimate often pre care that then the provider can use to engage with the patient to put appropriate payment form on file within Waystar's software, we call it the Waystar patient wallet and then begin to interact with that patient, put them on a financial care plan or be able to process the payment appropriately over a period of time. Speaker 200:40:48We're seeing that capability take hold. And so that is influencing our volumes. We know that when providers use this portion of our software, the patient payment portion of our software, it's increasing certainly patient satisfaction, but it's also increasing collection rates and improving time to collection and overall likelihood of getting collected through collection. And so those things are kind of a high level are absolutely influencing the use of how providers are thinking about patient payments. And we also know that providers see patients. Speaker 200:41:28I think historically you might say, well, provider organizations are just treating patients carefully with care, but also like a transaction. Increasingly, we see many large health systems and hospitals view the patient in kind of a long term relationship, a patient relationship that they like to sustain. And so all those factors are influencing patient payment volumes that we're processing on the software platform. We're bringing improvement and transparency and elegance to what has historically been a very cumbersome process for both providers and patients. Speaker 600:42:08That makes a lot of sense. Steve, maybe for my follow-up for you, that 13% normalized growth number was actually a very helpful metric. And apologies if I missed it, but can we just go maybe one level deeper into the bridge from the 20% reported growth to 13%. I think you mentioned something about $9,000,000 in terms of benefit from sort of competitor disruption. But can you just maybe walk us through that bridge from $20,000,000 to $13,000,000 How much was from that? Speaker 600:42:40How much was from outside patient payments or any other granularity that you can provide to help bridge that? Speaker 300:42:47Yes, definitely Saket. So you are correct. There were probably if you think about it for the Q2, there's 3 items. If you want to think it more holistically the first half of the year, I'd add a 4th item that we talked about in our S-one filing of a contract, a customer contract being terminated by request of that client in the March timeframe as a result of them spinning off a portion of their business. So again, if you think about it from the Q2, it's really the work surrounding the competitor cyber attack. Speaker 300:43:24That's probably the most meaningful item in that bridge. Second is the fact that in the amount of transactions, patient payment transactions that we saw come through our clients during the Q2 being above what we've seen historically. And then the third, as we had indicated in the prepared remarks, just the timing of 2 small acquisitions in the second half of 2023 and their benefit when you're looking at Q2 year over year growth rate. And I would expand each of those three as we look to the first half of the year, year over year growth rate. And then add on that last item, that last item we had mentioned in the S-one filing was about roughly $4,000,000 of benefit to the Q1, if you think about that versus ratable timing over the rest of the year at the halfway mark, that would be about $2,500,000 worth of benefit. Speaker 600:44:24Very helpful. Thanks guys. Speaker 200:44:26Thanks, Saket. You're welcome. Operator00:44:28Thank you. One moment as we move on to our next question. And our next question is going to come from the line of Ryan Daniels with William Blair. Your line is open. Please go ahead. Speaker 700:44:38Yes. Good evening, guys. I'll add to the chorus of congratulations and thanks for taking my questions. Matt, maybe I'll start with my first for you. You mentioned there's a broader adoption of the full solution platform. Speaker 700:44:50And I'm curious 2 things. Number 1, is that really among new clients moving over to Waystar? Are you seeing that same desire among your current client base? And then number 2, depending on your answer there, does that change at all your sales team or go to market strategy? Speaker 200:45:06Thanks, Ryan. Appreciate your thoughtful question. We're noticing a couple of things that we are particularly pleased with and encouraged by. We are noticing that there are increasingly more clients that are utilizing the end to end platform from the start. One of the metrics as you'll recall that we report on is the number of clients that are producing over $100,000 of LTM revenue. Speaker 200:45:35So we'd start there and we believe that's an important metric because it measures both to your question, the new clients that join us and are consuming our several modules or perhaps even the whole platform Speaker 300:45:49at the outset. It Speaker 200:45:51also measures as clients we may land in one area. For example, in Q2, we had, as you know, the urgent work of helping clients begin to use the Waystar Clearing House. Well, that's a software module within the Waystar software platform. And we land there typically and then we'll expand the relationship with them over time. And so we're pleased with both the new client pursuit, which where we're organized with high performing sales team members as well as our efforts to once landed to expand the relationship. Speaker 200:46:31And so that metric that we report on is a reflection of both new and existing clients who are consuming more and more of the Waystar software platform. Speaker 300:46:41Yes. I think, Ryan, maybe to add a little bit of financial context surrounding your question. And I think Saket may have asked about it or maybe alluded to it in his question to Matt as well. We documented or disclosed, sorry, in the S-one that provider solutions generate about 70% of revenue in patient payment. Solutions generate about 30% of the revenue. Speaker 300:47:10And for the first half of twenty twenty four, we've seen both we've seen that sort of mix continue at substantially the same rate, in both, which implies then both are growing well over 10% as well. So, I think we like the totality of the solution offering and I don't think we've seen any big shift in mix there and think both market the opportunity within the client base and the broader healthcare base for both sets of high level family solutions still remain significant. I think that's right. And Ryan, if Speaker 200:47:47it's okay, let me address the second part of your question, which was focused on given what we've seen, are there any kind of go to market team implications? And what I'd say there is, as you'll know very well, we're going after a very large addressable market opportunity of $15,000,000,000 a year where we have substantial opportunity to grow within the market. We feel like our new client pursuit is well organized, both in hospitals and health systems as well as on the ambulatory side of our business. And then we also part of that market, that addressable market is again once we land a client then we get right to work and expand those relationships and create a unique client experience so that they want to use more of our software. And I feel like we're well organized from a go to market perspective there as well. Speaker 700:48:44Okay, perfect. Thank you so much. And given the 2 part question, I'll go ahead and hop back in the queue for you. Thanks guys. Speaker 200:48:49Thanks Ryan. Operator00:48:51Thank you. One moment as we move on to our next question. And our next question is going to come from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead. Speaker 800:49:03Hi, guys. Congratulations on your Q1 as a public company and thanks so much for the question. I was wondering if you could comment on the visibility that you guys are getting sort of from the chain situation. Like if we think about the 1117 customers that over 100 ks you announced in the quarter, like that doesn't count some of these new ones that have come through. So as we think about kind of that increased visibility that brings you internally, I was wondering what you could potentially share with that? Speaker 800:49:30And then maybe as a follow-up, I have a question about the bookings and pipeline. Thanks. Speaker 200:49:36Okay. So we at Waystar and thank you, Elizabeth, we pride ourselves on staying very close to our clients and to opportunities within our pipeline where we track things, we measure a lot of things as you can appreciate. So we know a lot we're learning. There's been a surge of work as we've described to help many new providers begin to use the Waystar software platform. What I'd say is, we're continuing to help those clients begin to use Waystar and learn and identify opportunities that are beginning to show up in our bookings pipeline of opportunity. Speaker 200:50:22So we'll continue to track that and report our progress as we get the opportunity to visit with you in the future. Speaker 400:50:29Got it. Thank you. Operator00:50:32Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Sean Dodge with RBC Capital Markets. Your line is open. Please go ahead. Speaker 600:50:46Hey, good afternoon. This is Thomas Keller on for Sean. Congrats on the results and thanks for taking the question. I wanted to follow-up on the previous questions on patient payments and I want to make sure I heard this right. Are you expecting this part of the business to sort of grow in tandem with the other solutions or are you expecting this to grow a little bit faster? Speaker 600:51:04Thanks. Speaker 300:51:05Yes, Tom, this is Steve. I think if you think about the base, the seventy-thirty split with provider solutions being 70% of the business, patient payments, 30% of the business. Naturally, just due to the sort of the law of numbers that growth rate for patient payment solutions is going to be a little bit larger than provider solutions inherent in the expectation for the full year guidance. I would say though that obviously maintaining that seventy-thirty split that we've seen historically and seeing that in the first half is also part of would be part of our expectations as well. So we see both sides or both, I shouldn't say sides, both high level product families growing very nicely, not only in the historical results, but Speaker 200:51:59what we would expect for the rest of 2024. Speaker 600:52:03I appreciate that color. And then just a quick follow-up on that. Are there any near term opportunities to drive 1st margin expansion in that business as well? Speaker 300:52:13Yes. So we've talked about, I think in our long term target of low double digit revenue growth annually and a 40% adjusted EBITDA margin that we would look to look for opportunities as they made sense to reinvest in the business to maintain somewhere around that low double digit or sorry that 40% plus adjusted EBITDA margin, investing in areas like bolstering an already strong cybersecurity posture or in generative AI solutions. Are there opportunities then that we would look at from a scalability perspective that would allow us to do that? Definitely, right? I think there's opportunities as we look at those 2 acquisitions, the smaller acquisitions that we finalized in 2023 to sort of finish the pot surrounding synergy expectations that we have associated with them. Speaker 300:53:15I think there's also opportunities and projects that we're looking at internally that looks at that 60% direct cost associated with patient payments and our ability to look at whether it's the interchange rails in which those payments are processed on to better those from a cost structure perspective or for those interactions with the patient population that still occurs through a printed statement that gets mailed. There's an opportunity to change that into a more digital interaction that long term we think benefits the overall margin profile of the business and allows us to continue to invest back in the business, running it at 40% plus adjusted EBITDA. Speaker 600:54:04That's very helpful. Thanks again for the color. Speaker 300:54:07You're welcome, Tom. Operator00:54:08Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of George Hill with DB. Your line is open. Please go ahead. Speaker 900:54:20Yes. Good afternoon, guys. Welcome to the Public Markets and thanks for taking my questions. Matt and Steve, I guess on as it relates to the patient payments portion of the business, we talked about the split and I know it's a smaller part. But I guess the question I would ask is have you guys seen any sign of consumer weakness as it relates to the patient financial responsibility part of the business? Speaker 900:54:40I think that's my follow-up question there were kind of be like, I'm trying to understand like is the core like is the collections portion growing in line with what unit sales look like or whatever is the right way to think of that metric. But this is really like a patient financial responsibilityconsumer credit question like are you guys seeing any erosion in that part of the business? And then I have a quick follow-up if you don't mind. Speaker 300:55:04Yes, certainly. George, this is Steve. I think what we've seen is actually stronger interaction and payments coming from patients in the first half of the year. And it's reflected stronger meaning above and beyond the normal seasonality we would expect to see, right. And we reflected that in the prepared comments, sorry. Speaker 300:55:29If we think about your question, I think the second part of your question is, how do we think about the potential weakness, if you want to call it that, in the consumer aspects of it that may surface in the second half of the year as we're hearing commentary from other companies more broadly. I don't think that we've seen anything specific to date that would state that. But I think the other thing is in being prudent and in our expectations and guidance range, I think we've accounted for that as we think through the overall revenue guidance that we've provided of top line growth of $918,000,000 to $902,000,000 Speaker 900:56:18Okay. That's great color. And my quick follow-up would be some other competitors in this space have commented that the sales environment into the provider setting seems to be getting a little bit more challenging. And we're kind of trying to migrate the sales model from, I'll call it, more modular to more bundled. And we just I'd kind of ask if you feel like you're seeing any incremental challenges kind of in the sales process and kind of just if that would drive any changes in how you guys think about go to market strategy? Speaker 200:56:52Hi, George, it's Matt. Short answer is we have a strong and compelling ROI based sales approach. We have many referenceable clients and case studies that support this ROI and our approach, I can't comment on what other companies you're referencing. What I can say is, we have a robust pipeline of opportunity. We take an approach where it's very thoughtful. Speaker 200:57:22We discover, we go we have thoughtful dialogue, we understand the needs and the pain points of these prospects and clients that we work with as we create and identify opportunities. And then we're bringing appropriate resources and expertise to bear, reflecting our understanding of how to improve and that leads to really good conversations and engagement with clients. And so I would say our ROI based approach is one that we feel confident in and we'll continue to emphasize as we go to market. Speaker 900:58:00I thought that was the case. Thank you. Speaker 300:58:02Thank you. Operator00:58:03Thank you. One moment as we move on to our next question. And our next question is going to come from the line of Richard Close with Canaccord Genuity. Your line is open. Please go ahead. Speaker 1000:58:14Yes. Congratulations and thanks for the question. Just to maybe hit on the digitization of payments a little bit more. As you go away from paper, I'm just curious the percentage of your client base that's still doing statements and collections through mail? And then as you think about as it moves to digitizing like the success difference between the traditional paper and digitized? Speaker 200:58:54Thanks, Richard. So what we would say is, as you'll recall, Waystar has taken a holistic approach to connecting providers to patients in the ways that patients want to be connected to. And the fact is there is still a portion of the population that prefers a paper based invoice or statement. And so we facilitate that today. We are we also have solutions that enable a digital engagement and a digital conversation that are taking it's taking hold and providers and patients are using our solutions increasingly. Speaker 200:59:36And so we see over time the increasing opportunity to drive that digital engagement. We don't disclose the portion of our business that has this paper based patient statement. But we do see over time there being opportunity to continue to help providers connect to patients and do so increasingly with modern digital tools that all providers and patients will benefit from as we go forward. Speaker 1001:00:07And then the success between the 2, I assume digital is much more successful getting the patients to pay. Speaker 201:00:17We are seeing and tracking most of our case studies, I would say, that track faster collection rates and higher collection rates, emphasize the digital engagement tools. And that's what we would expect as we lean into that opportunity over the longer term. Speaker 701:00:37Great. Thank you. Speaker 201:00:38Thanks, Richard. Operator01:00:40Thank you. And one moment for our next question. And our next question is going to come from the line of Brian Peterson with Raymond James. Your line is open. Please go ahead. Speaker 301:00:51Thanks, gentlemen, and congrats on the strong print right out of the gate. I appreciate all Speaker 201:00:55the detail here, Steve, on the $9,000,000 in the impact. But I'd love to understand, if we think about that revenue, how much of that was kind of net new customers to Waystar versus customers that may have needed help in facing those challenges? And is there any commonality between where you saw a bigger increase in terms of areas or customers and location? I would just love to understand that a little better. Yes. Speaker 201:01:17What we would say and thanks, Brian, and we appreciate your kind comments. What we would say is that the $9,000,000 of Q2 revenue that we outlined is or highlighted as a benefit to us in the Q2 that comes from these over 30,000 providers that we've been able to help really comes in 2 general categories. The first category that we've seen are existing clients that might be using one portion of the Waystar software platform that reached out to us quickly and then rapidly began using more of our software. That came in all types of providers and all sizes of organizations, so big large hospitals and health systems as well as those that are practicing in smaller care setting. We also have noticed a phenomenon of simply adding net new clients to the Waystar platform, where there was urgency to move from the cyber attack competitor system to Waystar. Speaker 201:02:25And again, we would characterize that as being across the United States, all types, all sizes of care settings. And again, we would just underscore that we're grateful to be in a position to respond so quickly to help these providers. And we'll continue to learn more and report on our progress and any insight that we continue to gain as we go forward. Great to hear. Thank you. Speaker 201:02:52Thanks, Brian. Operator01:02:54Thank you. And I would now like to hand the conference back over to Matt Hawkins for any further remarks. Speaker 201:02:59Okay. Well, thank you so much, Michelle, for organizing and running the call today. Before signing off, I want to thank our dedicated Waystar team members. And if there's a public forum to do that, I just want to say thanks. They're fantastic. Speaker 201:03:13We also have incredible clients and new and existing investors who have supported us on our journey as a newly public company. We're passionate about what we're building at Waystar and we're focused on executing our business plan to achieve results in the next quarter as well as the year ahead. So thank you for joining today. We wish everybody a great evening. Operator01:03:38This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallWaystar Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Waystar Earnings HeadlinesWaystar debuts AI tools to streamline healthcare paymentsApril 25 at 8:02 PM | uk.investing.comInnovative Advancements and Strategic Positioning Justify Buy Rating for Waystar Holding Corp.April 24 at 6:52 PM | tipranks.comTrump Treasure April 19Thanks to President Trump… A $900 investment across5 specific cryptos… Could gain 12,000% so quickly that, just 12 months later…April 26, 2025 | Paradigm Press (Ad)Waystar Launches New Generative AI and Advanced Automation Across Its Software Platform to Address Billions in Administrative WasteApril 23 at 9:00 AM | prnewswire.comWaystar (NASDAQ:WAY) Given New $45.00 Price Target at BarclaysApril 16, 2025 | americanbankingnews.comRBC Capital Keeps Their Buy Rating on Waystar Holding Corp. 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There are 11 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Waystar Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Sandy Draper, Chief of Staff and Vice President of Special Projects. Operator00:00:35Please go ahead, sir. Speaker 100:00:38Thank you, operator, and good afternoon, everyone. It's my pleasure to welcome you to Waystar Holding Corporation's Q2 2024 Earnings Call. Today's call is being webcast and a replay along with the transcript will be available on our website along with other related materials following the conclusion of this call. Matt Hawkins, Waystar's Chief Executive Officer and Steve Orescovich, Waystar's Chief Financial Officer are joining me today. After their remarks, we will open the call to your questions. Speaker 100:01:06Earlier today, 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 include all statements that are not historical facts. Examples of these statements include expectations of future growth and margins. Speaker 100:01:32These statements do not guarantee future performance and involve a number of risks and uncertainties and undue reliance should not be placed on these forward looking statements. Actual results may differ materially from those expressed in these statements. Please refer to this please refer to this evening's press release and our prospectus filed with the SEC on June 7, 2024 and in other 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 this call are made only as of the date of this call and we undertake no obligation to update and revise such statements except as required by law. During today's call, we will also discuss certain non GAAP financial measures, which we believe may be useful in evaluating our financial performance. Speaker 100:02:25We have provided reconciliations of adjusted EBITDA and non GAAP net income and earnings per share and certain other 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. These non GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Lastly, we are pleased to note our participation in the Canaccord Genuity Annual Growth Conference in Boston on August 13, where we look forward to engaging with many of you. With that, I'll turn it over to Matt. Speaker 200:03:02Thank you, Sandy, and good afternoon, everyone. Thank you for joining our inaugural earnings call as a publicly traded company. On today's call, we will cover the following 4 topics. First, I will review Waystar's 2nd quarter results reflecting on our strong performance and highlighting a few areas that favorably impacted our results. 2nd, I will provide insight into our response to and the impact of February 21, cybersecurity attack on a competitor's claims clearinghouse. Speaker 200:03:333rd, I'll take the opportunity to share what we are building at Waystar including innovations and developments that are shaping our future. And last, I'll turn the call over to Steve Areskovitch, our CFO, who will walk through more detailed financial materials and highlight guidance for the full year 2024. We're pleased to report that we have delivered a strong Q2, continuing our momentum and showcasing the efforts of our entire team. Q2 revenue was $235,000,000 representing a 20% year over year growth. Our revenue growth in the quarter, which was greater than the low double digit growth rate that we typically expect is attributable to a few primary factors. Speaker 200:04:18First, our business continued to perform well in Q2. We maintained solid client retention, closed a number of new sales opportunities that we expect to implement at our regular cadence and continue to grow our bookings pipeline. 2nd, Q2 revenue had some favorability due to increases in patient payment volumes that we processed on the Waystar software platform. We believe this outperformance is due to expected increases in patient visits as well as patients choosing to make payments to fulfill their insurance deductible at a modestly faster pace. We note that there is some seasonality in the timing of when patients fulfill their insurance deductibles in any given year. Speaker 200:05:053rd, we completed 2 small acquisitions in the second half of twenty twenty three, which favorably impacted the year over year comparison versus last year. And finally, as I will address in more detail in just a moment, our revenue growth benefited from our efforts to onboard thousands of providers to the Waystar software platform after these providers' operations were disrupted by the February 21 cyber attack against a competitor. Importantly, we expect to retain the majority of this revenue uplift going forward. So to summarize, we were pleased with our business performance and a few favorable factors in Q2 supplemented our revenue growth. Normalized for these items, the business grew slightly above our expected low double digit range. Speaker 200:05:56We're also pleased to report that Q2 adjusted EBITDA was $94,000,000 up 12% year over year and in line with our adjusted EBITDA margin goal of 40%. Within Q2 adjusted EBITDA, we incurred expenses associated with onboarding thousands of providers to the Waystar software platform who were impacted by the February 21 cyber attack. We also focused on integrating recent acquisitions and incrementally investing in growth, cybersecurity and innovation related initiatives. From a margin perspective, we're pleased with our adjusted EBITDA margin and are actively pursuing ways to drive operational efficiency to maintain and expand margins over the longer term. Our business model promotes strong cash flow conversion and Q2 was no exception. Speaker 200:06:47In the Q2, we generated unlevered free cash flow of $50,000,000 The combination of our strong cash flow profile and our recent IPO puts Waystar in a sound financial position. As we committed, we used the proceeds of our initial public offering in June to pay down debt, bringing our net leverage to 3.7 times at the end of the quarter, reflecting subsequent debt pay down with the proceeds from the partial exercise of the IPO addition, want to highlight 2 key metrics that we use to track our business' performance and give us confidence in our durable growth model. First, the number of clients generating more than $100,000 in trailing 12 month revenue increased to 11.17, an increase of 9% year over year. We believe this metric demonstrates our ability to land and then expand business with our clients. 2nd, our net revenue retention in Q2 was 108%, within the range of the 108% to 110% that we have seen over the past 10 quarters. Speaker 200:08:02Our strong net revenue retention highlights the enduring relationships we establish with our clients, beginning with strong gross revenue retention and then delivering value to our clients as we focus on expanding the Waystar software modules they use through our cross and upsell efforts. Steve will discuss Q2 financials in more detail and also provide guidance for fiscal year 2024. Now on to the second point, on a topic that I know many of you are keenly focused on, Waystar's response to and the impact of the February 21 competitor cyber attack event. Following this unfortunate event in the market, healthcare providers and patients faced tremendous disruption. At Waystar, we quickly focused our efforts and marshaled additional resources to help impacted providers simplify their healthcare payments and regain cash flow. Speaker 200:08:56We are pleased to report that Waystar has helped more than 30,000 providers move rapidly to the Waystar software platform, many in as little as 3 days to minimize their disruption during this time and to get paid for the healthcare services they delivered. This urgency to maintain continuity in critical business operations resulted in pulling forward implementation timelines for many of these providers and the corresponding time to revenue for Waystar. We feel grateful to be in a position to help thousands of providers resume normal business operations so quickly. Importantly, we expect to build enduring relationships with these new clients, most of whom signed standard Waystar business agreements with 2 to 3 year terms and annual auto renewals thereafter. This incident not only created a near term opportunity for Waystar to help thousands of providers, but also a longer term opportunity to cross sell additional Waystar software modules to these provider organizations. Speaker 200:10:02For many, this cyber attack reinforced the importance of using a modern cloud based software platform such as WayStar's, which provider organizations can deploy rapidly with limited to no disruption while successfully managing their finances. Due to Waystar's performance during this trying period, we believe our competitive position in the industry is even stronger and we continue to work hard to help provider organizations and to capitalize on the positive momentum that we have seen. I want to also comment briefly on Waystar's approach to cybersecurity. We understand the importance of protecting our clients' data and privacy. We are committed to proactively monitoring and safeguarding our clients' information in today's ever evolving cyber landscape. Speaker 200:10:52Waystar utilizes a robust framework for cybersecurity to proactively monitor, measure and mitigate risk. We validate our cyber program and readiness with regular HITRUST, PCI, SOC 2 and NIST audits. In light of the recent cyber attack on a competitor's system, it's important to note that we have already been using modern cybersecurity protocols such as requiring multi factor authentication for system access, credential restrictions and theft alerts, data exfiltration and endpoint detection capabilities, and system backups that cannot be modified by malware or bad actors to secure our software platform and data, we believe our rigorous approach to cybersecurity can help us minimize the cost of any potential disruption through system resiliency and rapid restoration, and we will remain vigilant in safeguarding against potential threats. Now on to the 3rd point. In our inaugural call, I want to highlight Waystar's mission and what makes our company unique. Speaker 200:12:02We are focused on simplifying healthcare payments through our modern end to end cloud based software, enabling our provider clients to prioritize patient care and optimize their financial performance. We are transforming healthcare payments for providers while simultaneously helping patients navigate an often frustrating healthcare payments experience with greater transparency and clarity. I will now highlight 6 attributes that make us unique and fuel our belief in the positive benefits we can deliver to our clients. 1st, we are a software company purpose built for healthcare. We are not a services company trying to become more tech enabled, Building great software to disrupt long standing payment challenges is the focus of Waystar's work. Speaker 200:12:542nd, our software is mission critical to our clients. In 2023, we facilitated over $5,000,000,000 healthcare payment transactions, including over $1,200,000,000,000 in gross claims. When clients adopt the Waystar platform, we become essential to their business operations and cash flow generation. We develop long enduring relationships with clients because our software helps them get paid faster, more accurately and more efficiently than ever before. Our strong client and revenue retention attest to this. Speaker 200:13:323rd, our differentiated cloud based software platform with advanced technology is integrated into more than 500 electronic health record and practice management systems. This allows us to serve more than 1,000,000 providers of all sizes across every setting of care. Our platform enables us to deliver several benefits to our clients. We rapidly deploy and implement our cloud software to serve clients of all types and sizes, addressing their unique needs. Waystar's end to end capabilities enable providers to manage all of their healthcare payments through a single platform, which serves as a meaningful differentiator for Waystar relative to numerous point solution vendors that exist in the market. Speaker 200:14:19We believe that no competitor matches the breadth, depth and quality of our software platform. And we deliver an average of 300 software feature innovations and improvements each quarter without interrupting the operations of our clients. And our clients achieve the real return on investment they expect as they work with Waystar. 4th, as we are at the forefront of actively deploying AI and machine learning to automate work, prioritize tasks and eliminate errors as clients use waste our software, our software uses AI pervasively today and we are well positioned to harness the power of generative AI to drive ROI for our clients. We recently announced that we have identified more than a dozen promising new generative AI capabilities across the healthcare payments processes. Speaker 200:15:13Our collaboration with Google Cloud builds on Waystar's proven track record of deploying innovative AI solutions. I'd like to highlight just a few generative AI use cases we are actively developing. 1st, a co pilot to further automate prior authorization submission. We believe this will materially differentiate our existing prior authorization product, positioning it to accelerate the pace of penetration. 2nd, a co pilot to automate appeal management when a claim has been denied, substantially accelerating speed to payment. Speaker 200:15:52And 3rd, an agent to enable real time conversion of payer policy changes into claims rules. This technology will allow clients to upload their specific payer contracts and policies to Waystar's cloud rules engine with high degree of automation and accuracy, driving lower denial rates and improving the ROI of Waystar's products versus the competition. In addition, we have several longer term generative AI products in our pipeline for 2025 and beyond that drive automation and efficiency across the processes that lead to accurate healthcare payments. The 5th attribute is that we have a strong track record of delighting our clients resulting in number one rankings in client satisfaction in several industry surveys and strong Net Promoter Scores. We have an active and engaged client advisory board and delighted referenceable clients. Speaker 200:16:49And finally, we have a highly visible and durable revenue growth model with sustainable 40% plus EBITDA adjusted EBITDA margins. We believe there is meaningful embedded growth within our client base and a large addressable market to pursue. We are focused on building and sustaining this momentum that we have created. Now, I will turn the call over to Steve to discuss our results in more detail and highlight our full year guidance for 2024. Speaker 300:17:21Thanks, Matt. Before I discuss the results and guidance, I'd like to briefly cover the durable and visible financial model you mentioned. As it is the basis of our highly recurring, predictable and profitable growth at scale. Over the past several years, we have consistently delivered low double digit revenue growth and adjusted EBITDA margins of 40% or more. Over 99% of our revenue comes from our cloud based software platform, which means we derive less than 1% of revenues from services. Speaker 300:17:55Software revenue consists of contractually committed subscriptions and predictable recurring volumes processed on the platform. In Q2, revenue was roughly equal between these two streams and both grew double digits. The subscription fee provides a fixed recurring revenue stream, while the volume based component allows us to benefit from our clients' growth. We generate more revenue as our clients see more patients and deliver more care. Apart from seasonality tied to health plan deductibles and seasonal illnesses, volumes are relatively stable and predictable year to year given that the demand for healthcare is largely inelastic and growing annually. Speaker 300:18:43Therefore, in the aggregate, we believe we have meaningful visibility over the entire revenue base. Another important metric that demonstrates the visibility of our model is our net revenue retention. Over the past 10 quarters, we have shown a net revenue retention rate between 108% 110% on a trailing 12 month basis with Q2 at 108%. Turning to financial results, we had a strong second quarter with all financial metrics showing impressive growth. Revenue increased 20% year over year to $235,000,000 This growth was primarily driven by 4 outcomes. Speaker 300:19:28First, our business model continues to be strong. This is evidenced by the successful expansion in the number of clients of scale to 11 17 as of the end of Q2, adding 37 new clients in the quarter who produced more than $100,000 of LTM revenue. This expansion validates our land and expand strategy as well as our ability to sell more multiple solution deals to new clients. 2nd, we processed more patient payments from existing clients on our software platform than we have typically seen in the Q2 over the past couple of years. We expect the associated beat to offset in the second half of twenty twenty four and have appropriately factored this into our full year guidance. Speaker 300:20:223rd, as indicated in our filings, we completed 2 small acquisitions in the second half of twenty twenty three. Consequently, the timing of the acquisitions modestly benefit the 2nd quarter year over year growth rate. And finally, our teams 20 fourseven work to swiftly onboard new clients impacted by the competitor cyber attack and to help existing Waystar clients in minimizing the impact on their operations generated $9,000,000 of incremental revenue in Q2 versus what we would have expected from our historical win rates and associated implementation timing. To provide context, we typically see client implementation cycles of a few to several months due to client and insurance payer readiness factors versus the 3 day implementations Matt previously mentioned. Most importantly, we believe the majority of revenue generated from this work will be enduring and increase our long term revenue baseline. Speaker 300:21:25While 20% year over year growth for Q2 and 19% growth in the first half of twenty twenty four are strong, we also recognize some of the items that we have highlighted today or referenced in our filings impact the year over year comparability. Normalizing for those items, revenue growth would be closer to 13%, which is slightly above our expected low double digit range. GAAP net loss for the Q2 of 2024 was $28,000,000 compared to a net loss of $11,000,000 in the prior year. Q2 2024 results include $37,000,000 of stock based compensation costs with $33,000,000 associated with performance based options expensed from going public. They also include $4,000,000 of year over year channel partner commission increase based on revenue performance. Speaker 300:22:22Adjusted EBITDA of $94,000,000 for the 2nd quarter increased 12% year over year. The adjusted EBITDA margin of 40% also reflects investment in the business to ensure we were able to meet client expectations and ongoing investments in the areas Matt mentioned, including innovation and cybersecurity. Switching gears, we have significantly improved our capital structure through several events since the beginning of the year. First, we used the net proceeds from the IPO to pay down $909,000,000 of debt. This payment our consistent ability to delever through solid financial performance resulted in upgrades of 2 notches from all 3 rating agencies. Speaker 300:23:09We use these two outcomes to reprice our debt in late June, reducing our interest rate to SOFR plus 2.75%, down from sulfur plus 4% at the beginning of the year. And finally, after the quarter ended, most of the IPO green shoe was exercised for net proceeds of $103,000,000 and we used those proceeds along with a bit of cash on hand to pay down an additional $111,000,000 of debt. We ended the quarter with $1,360,000,000 of total debt and net debt of $1,290,000,000 On a trailing 12 month basis, our net debt to adjusted EBITDA leverage is 3.7x, down from 6.6x at the beginning of the year. And if one were to adjust the leverage ratio to reflect the additional debt pay down in July, it would have decreased to 3.4 times. Unlevered free cash flow was $50,000,000 in the Q2 of 2024 compared to $77,000,000 in the prior year. Speaker 300:24:17Our unlevered free cash flow includes a tax burden of $26,000,000 in Q2 versus $6,000,000 last year as we are a full taxpayer. Our capital allocation priorities remain the same. We expect to continue to delever the balance sheet, targeting approximately one turn a year. We continue to invest in the business to drive sustainable top line growth and we will also look at opportunities for inorganic growth based on our disciplined acquisition criteria. As evidenced from the financial discussion, we had a solid first half of twenty twenty four and are confident in our outlook for the remainder of the year. Speaker 300:25:02For fiscal 2024, we expect revenue to be within the range of $902,000,000 to $918,000,000 At the midpoint, this represents 15% growth over 2023. For additional context, we expect both subscription and volume based revenue to grow by over 10% year over year. We have also considered the seasonality aspect of patient payments processed on the software platform, which is typically more robust in the first half of the year because patient deductibles reset at the beginning of each year. Additionally, while we experienced revenue over performance in Q2 due to the impact of rapid implementations as we helped providers, our full year guidance reflects an expectation of normal implementation timelines going forward. Our expectations for adjusted EBITDA incorporate public company expenses, continued investment in client support, innovation and cybersecurity along with higher channel partner commission costs due to strong sales. Speaker 300:26:10Factoring in these items, we expect to deliver adjusted EBITDA between $360,000,000 $368,000,000 representing 9% year over year growth at the midpoint of guidance along with an adjusted EBITDA margin of 40% for 2024. We are now ready to answer your questions. Operator00:26:32Thank you. And our first question comes from the line of Anne Samuel with JPMorgan. Your line is open. Please go ahead. Speaker 400:26:57Hey, guys. Congrats on the great print, and thanks for taking the question. I was hoping maybe you could talk a little bit about in your conversations with clients kind of post the change disruption, how are they thinking about kind of how they were historically tied to one vendor and that caused them some disruption? Are you have an appetite for diversification so they don't end up kind of being stuck again? How are they talking about that and how are they thinking about vendor diversification? Speaker 400:27:27Thanks. Speaker 200:27:28Thanks, Andy, for the question. This is Matt. We try to provide our perspective. We first of all, we're very grateful to be in a position where we could help the thousands of providers as we've described. I think we were able to not only showcase the speed and ability of Waystar and our team members to rapidly respond to help these providers. Speaker 200:27:52But I think it's we did so as we also mentioned in the prepared remarks, using standard Waystar agreements that as we've described are multi year in nature with auto renewing aspects thereafter. What we believe is the majority of the clients that move to the Waystar platform are looking certainly for a cyber secure platform and we, as described, will be vigilant and focused on cyber security posture. We think while there is some chatter or market noise around needing redundancy or having a resilient network, we also believe that that could be rather inefficient. A question would be, will people have multiple EHR solutions because they want redundancy that just doesn't seem very tenable. And so what we'll focus on is establishing that we can be a trusted partner. Speaker 200:28:47We're proving that now. We're actually beginning to have conversations with many of these clients about expanding the use of the Waystar software platform to include other software modules. And I hope that's a helpful perspective. Speaker 400:29:02Yes. And sounds like a great opportunity for you. Maybe just my follow-up would be on the back half volume based revenue expectations. I was hoping you could just provide a little bit more color there, maybe what's driving that? Thank you. Speaker 200:29:15Okay. Let me turn to Steve for that one. Speaker 300:29:18Thanks, Matt. Thanks, Annie. Yes, so at midpoint of guidance, 15% for the full year would imply roughly about 12.5% year over year growth in the second half of the year. We did see and talked about in the walk from the first half of the year 19% to more of a normalized view of 13%. I did mention in the prepared remarks, patient payment volume coming in stronger in the first half of the year, meaning we've seen patients utilizing the healthcare system and the amount of payments being greater than what we've seen in prior years. Speaker 300:29:58So we've reflected that in the second half of the year expectations. I think you also see in the deck, you may not have had a chance to look at it yet, but the investor deck we put on our website that obviously we've continued to grow and for the past several quarters now and continue to grow sequentially the subscription based revenue. And I think that's a fair assumption to as you think about the second half of the year that sequential growth, I think what we reflected in that back half of the year for the volume base is the over performance or greater performance that we've seen from the patient payments side of the business for the first half Operator00:30:49of the year. Yes, some seasonality that's natural Speaker 200:30:49in our business. Correct. Speaker 400:30:52Very helpful. Thank you. Operator00:30:55Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Adam Hojkis with Goldman Sachs. Your line is open. Please go ahead. Speaker 500:31:07Great. Good speaking with you all and thanks so much for taking the questions. I guess to start, I'd be curious on what you're seeing in the buying environment, agnostic of the cyber attack demand increase. How would you describe the prioritization stack for purchase decision makers at the hospital and health systems for RCM technology? And then I just have a quick follow-up. Speaker 200:31:27Thanks, Adam. We see it as very important. RCM is a top priority to decision makers. As we reflect on the broader macro market, so to speak, I think it's fair to acknowledge that healthcare is an important industry for all of us. It relates to us personally. Speaker 200:31:44In the United States, we're spending a substantial amount of money on healthcare each year where there's also significant waste, more than $750,000,000,000 a year of waste. And so we see what's on decision makers' minds is how to gain more operating efficiency within their systems. We know that hospital margins have been challenged. We've seen that smoothing out over the last 6 months when you read some different industry reports. What we've noted is that there is a desire amongst prospects and clients to consume more of the Waystar software platform. Speaker 200:32:24There's an emphasis on platform versus point solution. I think part of that might be tied to some cybersecurity impact, harder to cybersecurity multiple point solutions than it is to work with a trusted partner that has a platform and a cybersecurity approach. But when you think about broader economic macro trends, talk around potential recession even, What we would say is healthcare as an industry is recession resistant, not recession proof, but recession resistant. Even during market downturns, people still need healthcare services. Where I think Waystar has a perspective is that we are helping decision makers because our software platform delivers operating efficiency. Speaker 200:33:15We are automating work. We're reducing error associated with all of the billing, insurance and interactions and collection interactions between providers and insurance companies and providers and patients. We're bringing efficiency and automation to that. And so we become an important part of the dialogue. We've seen an uptick in our RFPs. Speaker 200:33:41We see we like the position of our bookings pipeline and our high performing sales organization are having conversations with decision makers that we feel like gives us a sense of confidence as we look into this economy, as we stay close to decision makers and as we continue to do work at Waystar to execute on our business plan. Speaker 500:34:07Okay, great. Appreciate all that detail. That was really helpful. And then Steve, you mentioned the financial impact from the cyber attack at one of your competitors. Could you maybe just talk about what you're baking in there for the back half of the year? Speaker 500:34:19Are you continuing to see customers come in the door as recent as the last couple of months? Or is that faded? Has February 21st moves further in the background? And then, when you think about the dollar amounts that you're baking in for the back half of the year, how much of what's in guidance now is just what you've already done? And how do you view the upside potential from Speaker 600:34:47the creation Speaker 500:34:48of some of these relationships and module cross sell? Thanks so much. Speaker 300:34:52Yes. Thanks, Adam. I think it's as you alluded to in the we saw $9,000,000 of uplift in the Q2 versus a typical cadence we have expected as a result of the competitor cyber attack, some of that being generated from greater business wins. We have very high win rates to begin with. A lot of that also being generated from the faster implementation. Speaker 300:35:19It's we've it was kind of while it was a bad event for the industry and it impacted clients, it also reinforced what we've been saying in the past that it does not take long to switch to waste iron implement and we can implement people quickly. It generally is the timeline in which it falls in the client readiness and in some of the payer connectivity readiness. And I think as far as we looked out into the second half of the year, I think I briefly mentioned, we would expect those implementation timelines for clients that we've continued signing new clients to revert back more towards the norm, right? And that's sort of how we were thinking through it. And I think it's appropriate for us as a in our initial foray into the public markets to think in that manner. Speaker 300:36:12We've also, as you alluded to, have a very good track record of cross selling into our client base. And obviously, these clients there's a bolus of clients that are newer to us and that we brought on board in the Q2. And I think we I think also our as we think through the second half of the year, do we see opportunities for cross sell and further revenue expansion? I think, yes, we definitely do. I think we would characterize that more towards a longer term and enduring out in follow on years versus seeing an immediate impact coming in Speaker 200:36:55the second half of the year. I would also add, Adam, that we are learning through this period of time. We're very active in helping these clients, as I mentioned, to supplement what Steve said. We do see an uptick in RFPs where Waystar is getting invited to participate in more and more of these conversations. Some of those many of those are clearinghouse related. Speaker 200:37:19And so we see as we've described the near term, call it 2024 impact, then what we'll say the longer term opportunity, we'll continue to learn and hopefully be able to describe more as we get a little further out in the future. But one thing for sure, we are focused on having conversations with clients and prospects who we know we can help. And once they become a client of Waystar, then we naturally have cross sell and up sell conversations with them. Speaker 500:37:49Okay. All really helpful. Thank you, Matt. Thank you, Steve. Thank you. Operator00:37:53Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Saket Kalia with Barclays. Your line is open. Please go ahead. Speaker 600:38:05Okay, great. Hey, Matt. Hey, Steve. Nice result here and congrats on your Q1 as a public company. Speaker 200:38:12Thank you, Saket. It's sure nice to have this one done and we look forward to the conversation. Speaker 600:38:21I'm sure. Matt, maybe just to start with you, maybe just to change it up a little bit. It was great to see the upside in volume related revenue. And I know that there was some timing benefit there, but can we just talk a little bit about the patient payments business and why you maybe feel like there's an opportunity for share gain in that market? Speaker 300:38:43Yes. Speaker 200:38:47We now understand an important part of a provider's total revenue is increasingly coming from patients themselves, who as you know are participating in high deductible health plans at a faster rate than ever. Their out of pocket responsibility is increasing each year. And so Waystar, as we've described, as we talk about the Waystar software platform has united insurance and payer interactions for providers, both commercial insurance as well as government insurance, I think Medicare and Medicaid, as well as patient payment processing all on a single cloud based platform. We think that's very important because it gives the provider a total view of their sources of payment. It's also important because it positively impacts patients. Speaker 200:39:42We know from our own work and from hearing and listening to patients and perhaps experiencing that for ourselves that patients want more transparency in their care. They want more understanding of what their financial responsibility is. And oftentimes they want that before they receive healthcare versus the 60 or 90 days post care. Well, that's where Waystar software can really be helpful. Because of the $5,000,000,000 insurance transactions we're processing each year within our platform, We gain a tremendous amount of insight and intelligence that informs what the patient financial responsibility is likely to be and we can produce a highly accurate patient payment estimate often pre care that then the provider can use to engage with the patient to put appropriate payment form on file within Waystar's software, we call it the Waystar patient wallet and then begin to interact with that patient, put them on a financial care plan or be able to process the payment appropriately over a period of time. Speaker 200:40:48We're seeing that capability take hold. And so that is influencing our volumes. We know that when providers use this portion of our software, the patient payment portion of our software, it's increasing certainly patient satisfaction, but it's also increasing collection rates and improving time to collection and overall likelihood of getting collected through collection. And so those things are kind of a high level are absolutely influencing the use of how providers are thinking about patient payments. And we also know that providers see patients. Speaker 200:41:28I think historically you might say, well, provider organizations are just treating patients carefully with care, but also like a transaction. Increasingly, we see many large health systems and hospitals view the patient in kind of a long term relationship, a patient relationship that they like to sustain. And so all those factors are influencing patient payment volumes that we're processing on the software platform. We're bringing improvement and transparency and elegance to what has historically been a very cumbersome process for both providers and patients. Speaker 600:42:08That makes a lot of sense. Steve, maybe for my follow-up for you, that 13% normalized growth number was actually a very helpful metric. And apologies if I missed it, but can we just go maybe one level deeper into the bridge from the 20% reported growth to 13%. I think you mentioned something about $9,000,000 in terms of benefit from sort of competitor disruption. But can you just maybe walk us through that bridge from $20,000,000 to $13,000,000 How much was from that? Speaker 600:42:40How much was from outside patient payments or any other granularity that you can provide to help bridge that? Speaker 300:42:47Yes, definitely Saket. So you are correct. There were probably if you think about it for the Q2, there's 3 items. If you want to think it more holistically the first half of the year, I'd add a 4th item that we talked about in our S-one filing of a contract, a customer contract being terminated by request of that client in the March timeframe as a result of them spinning off a portion of their business. So again, if you think about it from the Q2, it's really the work surrounding the competitor cyber attack. Speaker 300:43:24That's probably the most meaningful item in that bridge. Second is the fact that in the amount of transactions, patient payment transactions that we saw come through our clients during the Q2 being above what we've seen historically. And then the third, as we had indicated in the prepared remarks, just the timing of 2 small acquisitions in the second half of 2023 and their benefit when you're looking at Q2 year over year growth rate. And I would expand each of those three as we look to the first half of the year, year over year growth rate. And then add on that last item, that last item we had mentioned in the S-one filing was about roughly $4,000,000 of benefit to the Q1, if you think about that versus ratable timing over the rest of the year at the halfway mark, that would be about $2,500,000 worth of benefit. Speaker 600:44:24Very helpful. Thanks guys. Speaker 200:44:26Thanks, Saket. You're welcome. Operator00:44:28Thank you. One moment as we move on to our next question. And our next question is going to come from the line of Ryan Daniels with William Blair. Your line is open. Please go ahead. Speaker 700:44:38Yes. Good evening, guys. I'll add to the chorus of congratulations and thanks for taking my questions. Matt, maybe I'll start with my first for you. You mentioned there's a broader adoption of the full solution platform. Speaker 700:44:50And I'm curious 2 things. Number 1, is that really among new clients moving over to Waystar? Are you seeing that same desire among your current client base? And then number 2, depending on your answer there, does that change at all your sales team or go to market strategy? Speaker 200:45:06Thanks, Ryan. Appreciate your thoughtful question. We're noticing a couple of things that we are particularly pleased with and encouraged by. We are noticing that there are increasingly more clients that are utilizing the end to end platform from the start. One of the metrics as you'll recall that we report on is the number of clients that are producing over $100,000 of LTM revenue. Speaker 200:45:35So we'd start there and we believe that's an important metric because it measures both to your question, the new clients that join us and are consuming our several modules or perhaps even the whole platform Speaker 300:45:49at the outset. It Speaker 200:45:51also measures as clients we may land in one area. For example, in Q2, we had, as you know, the urgent work of helping clients begin to use the Waystar Clearing House. Well, that's a software module within the Waystar software platform. And we land there typically and then we'll expand the relationship with them over time. And so we're pleased with both the new client pursuit, which where we're organized with high performing sales team members as well as our efforts to once landed to expand the relationship. Speaker 200:46:31And so that metric that we report on is a reflection of both new and existing clients who are consuming more and more of the Waystar software platform. Speaker 300:46:41Yes. I think, Ryan, maybe to add a little bit of financial context surrounding your question. And I think Saket may have asked about it or maybe alluded to it in his question to Matt as well. We documented or disclosed, sorry, in the S-one that provider solutions generate about 70% of revenue in patient payment. Solutions generate about 30% of the revenue. Speaker 300:47:10And for the first half of twenty twenty four, we've seen both we've seen that sort of mix continue at substantially the same rate, in both, which implies then both are growing well over 10% as well. So, I think we like the totality of the solution offering and I don't think we've seen any big shift in mix there and think both market the opportunity within the client base and the broader healthcare base for both sets of high level family solutions still remain significant. I think that's right. And Ryan, if Speaker 200:47:47it's okay, let me address the second part of your question, which was focused on given what we've seen, are there any kind of go to market team implications? And what I'd say there is, as you'll know very well, we're going after a very large addressable market opportunity of $15,000,000,000 a year where we have substantial opportunity to grow within the market. We feel like our new client pursuit is well organized, both in hospitals and health systems as well as on the ambulatory side of our business. And then we also part of that market, that addressable market is again once we land a client then we get right to work and expand those relationships and create a unique client experience so that they want to use more of our software. And I feel like we're well organized from a go to market perspective there as well. Speaker 700:48:44Okay, perfect. Thank you so much. And given the 2 part question, I'll go ahead and hop back in the queue for you. Thanks guys. Speaker 200:48:49Thanks Ryan. Operator00:48:51Thank you. One moment as we move on to our next question. And our next question is going to come from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead. Speaker 800:49:03Hi, guys. Congratulations on your Q1 as a public company and thanks so much for the question. I was wondering if you could comment on the visibility that you guys are getting sort of from the chain situation. Like if we think about the 1117 customers that over 100 ks you announced in the quarter, like that doesn't count some of these new ones that have come through. So as we think about kind of that increased visibility that brings you internally, I was wondering what you could potentially share with that? Speaker 800:49:30And then maybe as a follow-up, I have a question about the bookings and pipeline. Thanks. Speaker 200:49:36Okay. So we at Waystar and thank you, Elizabeth, we pride ourselves on staying very close to our clients and to opportunities within our pipeline where we track things, we measure a lot of things as you can appreciate. So we know a lot we're learning. There's been a surge of work as we've described to help many new providers begin to use the Waystar software platform. What I'd say is, we're continuing to help those clients begin to use Waystar and learn and identify opportunities that are beginning to show up in our bookings pipeline of opportunity. Speaker 200:50:22So we'll continue to track that and report our progress as we get the opportunity to visit with you in the future. Speaker 400:50:29Got it. Thank you. Operator00:50:32Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Sean Dodge with RBC Capital Markets. Your line is open. Please go ahead. Speaker 600:50:46Hey, good afternoon. This is Thomas Keller on for Sean. Congrats on the results and thanks for taking the question. I wanted to follow-up on the previous questions on patient payments and I want to make sure I heard this right. Are you expecting this part of the business to sort of grow in tandem with the other solutions or are you expecting this to grow a little bit faster? Speaker 600:51:04Thanks. Speaker 300:51:05Yes, Tom, this is Steve. I think if you think about the base, the seventy-thirty split with provider solutions being 70% of the business, patient payments, 30% of the business. Naturally, just due to the sort of the law of numbers that growth rate for patient payment solutions is going to be a little bit larger than provider solutions inherent in the expectation for the full year guidance. I would say though that obviously maintaining that seventy-thirty split that we've seen historically and seeing that in the first half is also part of would be part of our expectations as well. So we see both sides or both, I shouldn't say sides, both high level product families growing very nicely, not only in the historical results, but Speaker 200:51:59what we would expect for the rest of 2024. Speaker 600:52:03I appreciate that color. And then just a quick follow-up on that. Are there any near term opportunities to drive 1st margin expansion in that business as well? Speaker 300:52:13Yes. So we've talked about, I think in our long term target of low double digit revenue growth annually and a 40% adjusted EBITDA margin that we would look to look for opportunities as they made sense to reinvest in the business to maintain somewhere around that low double digit or sorry that 40% plus adjusted EBITDA margin, investing in areas like bolstering an already strong cybersecurity posture or in generative AI solutions. Are there opportunities then that we would look at from a scalability perspective that would allow us to do that? Definitely, right? I think there's opportunities as we look at those 2 acquisitions, the smaller acquisitions that we finalized in 2023 to sort of finish the pot surrounding synergy expectations that we have associated with them. Speaker 300:53:15I think there's also opportunities and projects that we're looking at internally that looks at that 60% direct cost associated with patient payments and our ability to look at whether it's the interchange rails in which those payments are processed on to better those from a cost structure perspective or for those interactions with the patient population that still occurs through a printed statement that gets mailed. There's an opportunity to change that into a more digital interaction that long term we think benefits the overall margin profile of the business and allows us to continue to invest back in the business, running it at 40% plus adjusted EBITDA. Speaker 600:54:04That's very helpful. Thanks again for the color. Speaker 300:54:07You're welcome, Tom. Operator00:54:08Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of George Hill with DB. Your line is open. Please go ahead. Speaker 900:54:20Yes. Good afternoon, guys. Welcome to the Public Markets and thanks for taking my questions. Matt and Steve, I guess on as it relates to the patient payments portion of the business, we talked about the split and I know it's a smaller part. But I guess the question I would ask is have you guys seen any sign of consumer weakness as it relates to the patient financial responsibility part of the business? Speaker 900:54:40I think that's my follow-up question there were kind of be like, I'm trying to understand like is the core like is the collections portion growing in line with what unit sales look like or whatever is the right way to think of that metric. But this is really like a patient financial responsibilityconsumer credit question like are you guys seeing any erosion in that part of the business? And then I have a quick follow-up if you don't mind. Speaker 300:55:04Yes, certainly. George, this is Steve. I think what we've seen is actually stronger interaction and payments coming from patients in the first half of the year. And it's reflected stronger meaning above and beyond the normal seasonality we would expect to see, right. And we reflected that in the prepared comments, sorry. Speaker 300:55:29If we think about your question, I think the second part of your question is, how do we think about the potential weakness, if you want to call it that, in the consumer aspects of it that may surface in the second half of the year as we're hearing commentary from other companies more broadly. I don't think that we've seen anything specific to date that would state that. But I think the other thing is in being prudent and in our expectations and guidance range, I think we've accounted for that as we think through the overall revenue guidance that we've provided of top line growth of $918,000,000 to $902,000,000 Speaker 900:56:18Okay. That's great color. And my quick follow-up would be some other competitors in this space have commented that the sales environment into the provider setting seems to be getting a little bit more challenging. And we're kind of trying to migrate the sales model from, I'll call it, more modular to more bundled. And we just I'd kind of ask if you feel like you're seeing any incremental challenges kind of in the sales process and kind of just if that would drive any changes in how you guys think about go to market strategy? Speaker 200:56:52Hi, George, it's Matt. Short answer is we have a strong and compelling ROI based sales approach. We have many referenceable clients and case studies that support this ROI and our approach, I can't comment on what other companies you're referencing. What I can say is, we have a robust pipeline of opportunity. We take an approach where it's very thoughtful. Speaker 200:57:22We discover, we go we have thoughtful dialogue, we understand the needs and the pain points of these prospects and clients that we work with as we create and identify opportunities. And then we're bringing appropriate resources and expertise to bear, reflecting our understanding of how to improve and that leads to really good conversations and engagement with clients. And so I would say our ROI based approach is one that we feel confident in and we'll continue to emphasize as we go to market. Speaker 900:58:00I thought that was the case. Thank you. Speaker 300:58:02Thank you. Operator00:58:03Thank you. One moment as we move on to our next question. And our next question is going to come from the line of Richard Close with Canaccord Genuity. Your line is open. Please go ahead. Speaker 1000:58:14Yes. Congratulations and thanks for the question. Just to maybe hit on the digitization of payments a little bit more. As you go away from paper, I'm just curious the percentage of your client base that's still doing statements and collections through mail? And then as you think about as it moves to digitizing like the success difference between the traditional paper and digitized? Speaker 200:58:54Thanks, Richard. So what we would say is, as you'll recall, Waystar has taken a holistic approach to connecting providers to patients in the ways that patients want to be connected to. And the fact is there is still a portion of the population that prefers a paper based invoice or statement. And so we facilitate that today. We are we also have solutions that enable a digital engagement and a digital conversation that are taking it's taking hold and providers and patients are using our solutions increasingly. Speaker 200:59:36And so we see over time the increasing opportunity to drive that digital engagement. We don't disclose the portion of our business that has this paper based patient statement. But we do see over time there being opportunity to continue to help providers connect to patients and do so increasingly with modern digital tools that all providers and patients will benefit from as we go forward. Speaker 1001:00:07And then the success between the 2, I assume digital is much more successful getting the patients to pay. Speaker 201:00:17We are seeing and tracking most of our case studies, I would say, that track faster collection rates and higher collection rates, emphasize the digital engagement tools. And that's what we would expect as we lean into that opportunity over the longer term. Speaker 701:00:37Great. Thank you. Speaker 201:00:38Thanks, Richard. Operator01:00:40Thank you. And one moment for our next question. And our next question is going to come from the line of Brian Peterson with Raymond James. Your line is open. Please go ahead. Speaker 301:00:51Thanks, gentlemen, and congrats on the strong print right out of the gate. I appreciate all Speaker 201:00:55the detail here, Steve, on the $9,000,000 in the impact. But I'd love to understand, if we think about that revenue, how much of that was kind of net new customers to Waystar versus customers that may have needed help in facing those challenges? And is there any commonality between where you saw a bigger increase in terms of areas or customers and location? I would just love to understand that a little better. Yes. Speaker 201:01:17What we would say and thanks, Brian, and we appreciate your kind comments. What we would say is that the $9,000,000 of Q2 revenue that we outlined is or highlighted as a benefit to us in the Q2 that comes from these over 30,000 providers that we've been able to help really comes in 2 general categories. The first category that we've seen are existing clients that might be using one portion of the Waystar software platform that reached out to us quickly and then rapidly began using more of our software. That came in all types of providers and all sizes of organizations, so big large hospitals and health systems as well as those that are practicing in smaller care setting. We also have noticed a phenomenon of simply adding net new clients to the Waystar platform, where there was urgency to move from the cyber attack competitor system to Waystar. Speaker 201:02:25And again, we would characterize that as being across the United States, all types, all sizes of care settings. And again, we would just underscore that we're grateful to be in a position to respond so quickly to help these providers. And we'll continue to learn more and report on our progress and any insight that we continue to gain as we go forward. Great to hear. Thank you. Speaker 201:02:52Thanks, Brian. Operator01:02:54Thank you. And I would now like to hand the conference back over to Matt Hawkins for any further remarks. Speaker 201:02:59Okay. Well, thank you so much, Michelle, for organizing and running the call today. Before signing off, I want to thank our dedicated Waystar team members. And if there's a public forum to do that, I just want to say thanks. They're fantastic. Speaker 201:03:13We also have incredible clients and new and existing investors who have supported us on our journey as a newly public company. We're passionate about what we're building at Waystar and we're focused on executing our business plan to achieve results in the next quarter as well as the year ahead. So thank you for joining today. We wish everybody a great evening. Operator01:03:38This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by