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Payment technology firm Waystar seeks to raise $1 billion in IPO, deploys Google Cloud’s generative AI in its platform

Jun 03, 2024

Louisville, Ky.-based Waystar Technologies, a company that provides revenue cycle management software to hospitals and health systems, launched an initial public offering on Tuesday with the hope of bringing in $1.04 billion.

Through the IPO, Waystar is offering 45 million shares at an estimated price of between $20 and $23 per share.

The firm was created in November 2017 when Navicure (a provider of cloud-based claims management and payment solutions for physician practices and hospitals) merged with ZirMed (a provider of cloud-based revenue cycle software and predictive analytics).

In 2019, a Stockholm-based global investment firm called EQT and the Canadian Pension Plan Investment Board (CPPIB) acquired a majority stake in Waystar from Bain Capital, which is still a minority stakeholder, according to Reuters. At the time, Waystar was valued at $2.7 billion.

Collectively, EQT, CPPIB, and Bain Capital will own slightly more than two-thirds of Waystar after the IPO. At the upper end of the IPO’s per-share price range, Waystar would have a valuation of about $3.83 billion. The company plans to use the net proceeds from the IPO to repay outstanding indebtedness.

Waystar said last August when it acquired HealthPay24, a cloud-based patient payment platform, for an undisclosed amount that it was the company’s eighth acquisition since 2018.

In its financial results for 2023, Waystar reported a net loss of $51.3 million and revenue of $791 million, similar to figures reported for the previous year.

Less than a week before launching the IPO, Waystar announced a collaboration with Google Cloud. Waystar’s software platform uses artificial intelligence and machine learning “to automate work, improve accuracy, and create a more intelligent and intuitive user experience.”

Waystar said it will leverage Google Cloud’s generative AI technology to address some of the “most complex and critical challenges” in the U.S. health care system, such as administrative burden and “substantial” spending waste.

“Our focus is to implement generative AI innovations on the Waystar software platform that will help providers get paid accurately, timely, and with newfound efficiencies for the health services they deliver to patients,” said Matt Hawkins, Waystar’s CEO.

Through their collaboration, Waystar and Google Cloud have automated the extraction of prior authorization requirements from payer data sets. According to Waystar, that particular application of the platform reduced the time to generate “an authoritative report of preauthorization” by 99.93% and increased accuracy by 13% in a pilot program.

According to Waystar, the firm serves “approximately 30,000 clients, representing over 1 million distinct providers.” Waystar says its platform processes more than 5 billion health care payment transactions per year.

Our Take: Until recently, the digital health IOP market had been flat since 2021, when 20 digital health companies went public and raised record amounts of capital in the process.

Only two digital health companies went public in 2022 and none did so last year, according to venture capital fund Rock Health — though Waystar publicly filed for a proposed IPO last October. The company held off, waiting for more favorable market conditions, according to Bloomberg.

Even publicly traded digital health companies have struggled the last few years.

In a report on digital health funding in the first quarter of 2024, Rock Health noted that three additional companies delisted from the NASDAQ or NYSE during the first three months of this year, bringing the number of publicly traded digital health companies to 43. Six more were at risk of delisting at the end of the quarter, Rock Health noted. In 2021, there were 54 publicly traded digital health companies.

Waystar’s IPO could be the largest one this year.

Alex Lennox-Miller, lead analyst in health care IT at CB Insights, said a successful digital health IPO could lead the way for other mature digital health startups to follow, Healthcare Dive reported.

“Regardless of how [the Waystar IPO] goes, we’re going to continue to see a slow increase in digital health IPOs for companies like this,” Lennox-Miller said. “But if it’s successful, it’s going to be a flood.”

What else you need to know

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