Waystar Holding Corp at Barclays Global Technology Conference Transcript

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

Question: Saket Kalia - Barclays - Analyst : Yeah. It's fun, man. Tech is fun. So maybe on that point, maybe just to start, Waystar just had a very successful IPO earlier this year. So maybe for some of us tech investors that are just a little less familiar with the company, maybe, Matt, you could provide us an overview of Waystar, what Waystar is and what problem you're trying to solve?

Question: Saket Kalia - Barclays - Analyst : That's I mean --

Question: Saket Kalia - Barclays - Analyst : Yes, absolutely, absolutely. And just an important mission as well. Maybe we'll come back to products in a minute, but you just reported Q3, a second consecutive quarter of beating your estimate since the IPO. Sandy, maybe this question is for you. What were some of the points from the quarter that you were most proud of financially that you want us to know of? And Matt, just sprinkle in anything that we're missing in there as well. So Sandy, maybe you could kick us off.

Question: Saket Kalia - Barclays - Analyst : Absolutely. Matt, do you want to add anything to that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 7:00PM, WAY.OQ - Waystar Holding Corp at Barclays Global Technology Conference

Question: Saket Kalia - Barclays - Analyst : Yeah, absolutely. Matt, maybe just to zoom out a little bit again, just so that everybody could kind of get to know the business a little bit more. I think revenue is split about 50-50 between subscription and volume-based revenue. Can you just talk about which your product families are mostly priced to subscription and which ones are priced based on volume?

Question: Saket Kalia - Barclays - Analyst : Yes, sure. Sandy, maybe for you. I think as software investors, right, a lot of software investors in the crowd. I think as software investors, we often hear volume, and we think, wait, that's not recurring revenue, right? But this is health care, right? So maybe you could just enlighten us a little bit on just the visibility that you have into that volume-based model, if you will. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 7:00PM, WAY.OQ - Waystar Holding Corp at Barclays Global Technology Conference

Question: Saket Kalia - Barclays - Analyst : Yeah. No, absolutely. I want to pivot a little bit to something that you folks brought up earlier, which is the Change Healthcare cyber event and how that's impacted Waystar. Matt, maybe first off for you. Can you just walk us through how you'd sort of quantify the benefits to Waystar's growth? And maybe touch on -- I think you mentioned this earlier, but I want to make sure we flush it out. Maybe touch on whether those customers come to you on an interim basis until everything is sort of sorted out? Or is this a little bit more on more of a permanent basis?

Question: Saket Kalia - Barclays - Analyst : Absolutely. So I actually think that's a dovetail into an interesting question, right? So once we lap this event, right, which is going to be soon next year, maybe the question for you, Matt, is, how do you think the market share in this clearinghouse space is going to change? And I ask that specifically because you made an interesting comment last quarter about seeing more RFPs right? So I mean there was a little bit more daylight since the change event happened, but you're still seeing a lot more RFPs. So I'm just kind of curious if you're seeing any tail benefits from that breach or whether this is -- maybe this was a catalyst for additional market share shift. Curious how you think about that.

Question: Saket Kalia - Barclays - Analyst : Yeah, absolutely. Sandy, I kind of want to put a bow on this topic around Change. But I think Steve last quarter talked about just how activity was showing a little bit more of a normal cadence. Maybe you could just speak to that a little bit. And also just connect that to some of the preliminary comments that the team made on 2025 growth, again, as we think about lapping this event.

Question: Saket Kalia - Barclays - Analyst : Yeah, absolutely. I think that's a really important point. I think it was very prudent to the team to do that early to get ahead of that for what it's worth. So that's it on Change. I want to move on to some more fun stuff, right? So maybe starting with patient payments. So I mean, Matt, as you said, a big part of your volume-based business. Sandy, you touched on a little bit on the secular growth in that business. But I want to get your perspective, Matt, on why do you feel like Waystar has a right to win in the patient payment space, if that makes sense?

Question: Saket Kalia - Barclays - Analyst : Yes, that makes sense. That oh, c*** moment happens a lot in my house when we get those medical bills. So I (multiple speakers)

Question: Saket Kalia - Barclays - Analyst : Absolutely. Sandy, maybe just from a financial perspective, some helpful commentary you gave just on kind of the unique seasonality of that business. But maybe you could just touch a little bit on the profitability, right, particularly gross margins, anything you want us to know about the gross margin impact as -- just conceptually as that patient payments business gets bigger.

Question: Saket Kalia - Barclays - Analyst : For sure. I want to come back to the 40% EBITDA margins in a second because I think that's really important. But Matt, maybe for you, if we go back to the IPO, I think you and the team were just very consistent in talking about low double-digit compounding growth, right? Maybe the question is, again, for this audience, how do you think about the buildup of that growth conceptually, right? I mean you have a health care market that's maybe growing 5%, and you correct me there if I'm wrong. What adds to that? Is it pricing? Is it more product? Is it share gain? How do you think about that conceptually, again, not expressed guidance?

Question: Saket Kalia - Barclays - Analyst : Yeah, absolutely. Definitely something we see. Sandy, maybe back to you. I mean, we already have 40% EBITDA margins. It's been so consistent. How should we sort of think about margin expansion and where those margins could go over time?

Question: Saket Kalia - Barclays - Analyst : No, I think that's a good disciplined long-term approach. So it makes a ton of sense. Matt, maybe back to you. I mean, again, just for the larger percentage of tech investors in the room, I mean, there's just so much regulation around health care and payers that maybe we as tech investors aren't as familiar with. As you think about sort of the incoming administration, what are some of the more important policy changes that you're watching that could be either an opportunity or a threat to your customers and to your industry?

Question: Saket Kalia - Barclays - Analyst : Got it. Got it. Well, guys, we've -- I think that's about all the time that we've got left. Matt, Sandy, thanks so much for the time. Really appreciate it.

Question: Saket Kalia - Barclays - Analyst : Thank you, Sandy. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 7:00PM, WAY.OQ - Waystar Holding Corp at Barclays Global Technology Conference