Waystar Holding Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Adam Hotchkiss - Goldman Sachs - Analyst : Great. Thanks. So much for taking the questions, Matt to start. I know we've talked a lot about the sustainable wave of larger customers making clearing house decisions. Post the change cyber attack. It seems like you saw some incremental benefit this quarter, as you mentioned. Could you maybe talk about your updated view on how sustainable the elevated demand picture is here, particularly on the new logo side and after the September conference and then Steve, you know, how did you contemplate some of that in your 2025 initial? Thanks so much.

Question: Adam Hotchkiss - Goldman Sachs - Analyst : Okay. Really helpful and then just quick follow up on patient payments. Where did Q3 shake out versus your expectations of a normalization and some of the patient payment activity, it it felt like things came in, you know, a little bit better than expected on the volume-based side but any more color on the financials that would be, Useful.

Question: Adam Hotchkiss - Goldman Sachs - Analyst : Really helpful. Thank you both.

Question: Stephanie Davis - Barclays - Analyst : Hey guys, thanks so much for taking my question and congrats on another fantastic quarter. So you mentioned delighting the client with those accelerated on brewing earlier this year. But what learning did you have for this and looking forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:30PM, WAY.OQ - Q3 2024 Waystar Holding Corp Earnings Call Are you thinking, you know, never again, that speed to market was unsustainable or is there something from that accelerated experience, you could leverage to improve your forward onboarding efficiency and differentiate yourself?

Question: Stephanie Davis - Barclays - Analyst : I guess related to that word-of-mouth kind of momentum you're getting. Should we think of this core inflection and large client growth as reflective of, you know, the existing clients buying more and getting there, their funds in order to buy more as well? Or is there anything else to call out in the uptick.

Question: Stephanie Davis - Barclays - Analyst : Better here. Thank you, Much.

Question: Sean Dodge - RBC Capital Markets - Analyst : Yeah. Thank you. Good afternoon and, and congratulations on another great quarter. On the on the 24-revenue guidance, I'm just trying to better understand the volume-based cadence for the fourth quarter, your subscription revenue should be pretty stable. I'd imagine probably up a little bit sequentially in Q4. But then if I look at what that implies for volume based being a pretty significant step down like on the order of $7 million sequentially to even get to the top end of your guidance for the full year. So I, know there's, I appreciate their seasonality, Steve as you mentioned in volume based. But, but directionally, do you think there was that much volume that was pulled forward into Q3? I guess, just looking for any more help you can provide kind of squaring all this and how to think about modeling volume based in the Q4.

Question: Sean Dodge - RBC Capital Markets - Analyst : Okay. That's helpful. And then Matt your comments earlier on AI and efficiency, you mentioned plans to launch some of those things that you're piloting now beginning it sounds like next year if we think about the savings or the efficiency boost, you can potentially drive from those. Is there any kind of color you can share just to help us understand how meaningful those could be?

Question: Sean Dodge - RBC Capital Markets - Analyst : Okay. That's great color. Thanks. Thanks again and congrats again.

Question: Richard Close - Canaccord Genuity - Analyst : Yeah, thanks. Congratulations. Steve, you referenced the $12 million related to new clients from rapid onboarding. I I think you also said something about existing, contributing to that. That sounds somewhat new to me. And so I was hoping you could explain that a little bit more. That would be great. And then do you think the $12 million is sort of the peak and we ratchet down from here? You know, considering the pipeline commentary that you just provided as well.

Question: Richard Close - Canaccord Genuity - Analyst : Okay. And then as a follow up, Matt, I was curious, the conference numbers up, 50% attendance is pretty significant. Are there any I guess metrics historically that you can provide in terms of, you know, attendees expanding their relationships with you or, or anything along those lines?

Question: Richard Close - Canaccord Genuity - Analyst : Great. Congratulations.

Question: Elizabeth Anderson - Evercore - Analyst : Hi guys. This is Samir Patel on for Elizabeth Anderson. Congrats on the quarter. I just was wondering, hey, I was wondering if you could talk to us a little about, about the Upsell traction you're seeing on these newly onboarded customers related to the disruption. Are you starting to have conversations about adding other modules and additional products like patient pay or is that still a bit too early? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:30PM, WAY.OQ - Q3 2024 Waystar Holding Corp Earnings Call

Question: Elizabeth Anderson - Evercore - Analyst : Got it. That makes sense. And then maybe just if you can put some color on the, the $12 million contribution from, you know, the rapid onboarding of the switch of existing customers. Is any of that from Up seller? Is that strictly like clearing house related revenues at this point?

Question: Elizabeth Anderson - Evercore - Analyst : Got it. Super helpful. Congrats again.

Question: Jonathan McCarry - Raymond James - Analyst : Hi, thank you. This is Jonathan McCarry on for Brian here. So we saw an impressive acceleration in this quarter. I just wanted to ask how durable do you think that expansion cadence could be going forward? I know you mentioned pricing, but how would you stack rank the products and then the levers of expansion more broadly that drove that metric up this quarter?

Question: Jonathan McCarry - Raymond James - Analyst : Okay. Very helpful. And then I think you guys have done a great job laying out Waystar versus the legacy and we appreciate, you know, you're hearing, you know, seeing more complex RFPs. I'm, actually hoping to get an update on how you think you're performing versus more modern players. Also looking to gain share from legacy. So is there anything that you can share there on win rates or what you're hearing from clients on Waystar versus the more, the more modern solutions? Thanks.

Question: Jonathan McCarry - Raymond James - Analyst : Great. Thank you

Question: Lisa Lee - Deutsche Bank - Analyst : Hi, good afternoon. Thank you for taking the question. We have been hearing a lot of chatter from both provider organizations about claim denials and payers about claim appeals. Can you talk about whether you're seeing any meaningful trends of either an increase or decrease in claim denial rates and talk about the company's role in helping providers reconcile these denials?

Question: Lisa Lee - Deutsche Bank - Analyst : Thank you, very helpful.

Question: Ryan Daniels - William Blair - Analyst : Yeah, guys. Thanks for taking the questions and all the color so far. Congrats on the strong performance. Matt, maybe one for you. You discussed when highlighting the uptick in RFPs, you're also seeing more parties involved and more complexity in those deals. So on the surface sounds like that could be a good thing with larger again, more platform-oriented deals, but I'm also curious if that's extending the sales cycle at all or impacting the close rate or if it's still such a kind of urgent area for investment. You don't see that happening.

Question: Ryan Daniels - William Blair - Analyst : Okay. Very helpful. And then maybe a broader, bigger picture question, obviously, very successful true North event with your clients. And I'm curious other than what you've kind of highlighted earlier, if there's any really key pain points that client mentioned. And you know, if there are those things that you think you can meet with the current platform or is that impacting your R&D or maybe even your M&A outlook as we go forward? Thanks again.

Question: Anne Samuel - JP Morgan. - Analyst : Hi, thanks so much for the question. Maybe just on the volume-based revenue, you had kind of tempered expectations on the second quarter call. I was just curious, you know, were you not expecting utilization levels to hold? And maybe where did that upside surprise come in? You know, relative to your expectations and then looking out to 4Q and next year, if utilization were to stay kind of similar to where it is. Now, would that be upside to your high single digit target? I think earlier, you had said your customers were still expecting utilization to stay high. Thanks.

Question: Anne Samuel - JP Morgan. - Analyst : That's really helpful. Thank you. And then, you know, just, you know, you've seen some really nice revenue out performance and that's obviously translated to even a dollar beats as well. But, you know, you kind of stayed around that 40% margin threshold. So curious, you know, is there a REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:30PM, WAY.OQ - Q3 2024 Waystar Holding Corp Earnings Call leverage potential in the model from faster growth? And just, I guess, how do we think about your philosophy on balancing, you know, reinvestment versus leverage. Thank you.

Question: Anne Samuel - JP Morgan. - Analyst : Really helpful. Thank you and agree. 40% is nothing to sneeze at.