Waystar Q2 2025 slides: 15% revenue growth, debt slashed as stock dips on acquisition news

Waystar Holding Corp (NASDAQ:WSRT) reported strong financial results for the second quarter of 2025, with 15% year-over-year revenue growth and significant debt reduction progress. Despite these positive metrics, the company’s stock fell 3.04% in premarket trading following the earnings announcement and news of its planned $1.25 billion acquisition of Iodine Software.

Quarterly Performance Highlights

Waystar delivered solid financial performance in Q2 2025, with revenue reaching $271 million, representing a 15% increase compared to Q2 2024. The healthcare payments technology company reported Adjusted EBITDA of $113 million, up 20% year-over-year, with an impressive 42% margin that exceeded the company’s long-term target.

As shown in the following chart of key financial highlights, Waystar maintained strong client metrics with 14% growth in clients generating over $100,000 in trailing twelve-month revenue and a robust 115% net revenue retention rate:

The company’s revenue growth has been consistent across both subscription and volume-based revenue streams. Subscription revenue has grown at a 15% CAGR over the last eight quarters, while volume-based revenue has increased at an even stronger 20% CAGR during the same period.

The following chart illustrates Waystar’s quarterly revenue trends, showing the breakdown between subscription and volume-based revenue:

Waystar has successfully expanded its base of high-value clients, growing the number of customers with over $100,000 in annual revenue to 1,268 in Q2 2025, representing a 14% year-over-year increase. This metric has shown accelerating growth compared to earlier periods.

The company’s net revenue retention rate of 115% in Q2 2025 demonstrates strong client satisfaction and expansion of services within existing accounts. According to the presentation, higher net revenue retention in the first half of 2025 reflects the impact of new client onboardings in late Q1 and Q2 2024.

Detailed Financial Analysis

Waystar has made remarkable progress in strengthening its balance sheet, reducing its adjusted net leverage ratio from 6.6x at the end of FY 2023 to just 2.2x by Q2 2025. The company paid down over $1 billion in debt during 2024, resulting in annual interest savings exceeding $100 million.

The following chart demonstrates Waystar’s significant deleveraging progress:

The company’s cash flow generation has been equally impressive, with unlevered free cash flow of $111 million in Q2 2025. For the first half of 2025, Waystar achieved an 86% conversion rate of Adjusted EBITDA to unlevered free cash flow, well above its long-term target of 70%. However, the company noted that this performance benefited from the deferral of approximately $27 million in federal tax payments to Q4 2025.

Waystar’s normalized revenue growth provides important context for understanding the company’s performance. While reported growth was 19% in FY 2024 and is projected at 10% for FY 2025, the normalized growth rate (adjusted for acquisitions and unusual events) has been more consistent at around 12%.

The following chart explains these adjustments, including the impact of a competitor’s cyberattack that accelerated some client onboardings:

Forward-Looking Statements and Strategic Initiatives

Waystar has raised its full-year 2025 guidance, increasing revenue projections by $22 million and adjusted EBITDA by $12 million at the midpoint. The company now expects FY 2025 revenue between $1.030 billion and $1.042 billion, representing 10% year-over-year growth.

The updated guidance is detailed in the following table, which excludes the impact of the pending Iodine Software acquisition:

A significant strategic development is Waystar’s planned acquisition of Iodine Software, expected to close by the end of 2025. While the acquisition will temporarily increase the company’s net leverage ratio to approximately 3.5x, management has expressed confidence in the strategic fit and potential synergies.

CEO Matt Hawkins emphasized the company’s strategic direction during the earnings call, stating, "Our ultimate goal is to create the perfect undeniable claim using AI." He also highlighted Waystar’s role in the industry as "a referee" bringing "transparency and accuracy and efficiency" to healthcare payments.

Market Context and Investor Response

Despite the strong quarterly results and raised guidance, Waystar’s stock declined 3.04% in premarket trading following the earnings announcement, closing at $35.07. This negative reaction may reflect investor concerns about the $1.25 billion Iodine Software acquisition and its impact on the company’s debt levels.

According to available market data, Waystar maintains excellent financial health with strong liquidity (current ratio of 3.43) and impressive revenue growth of 17.14% over the last twelve months. However, some analysts suggest the stock may be trading above its fair value, which could have contributed to the market’s cautious response.

The company faces several challenges going forward, including market saturation and intense competition in the healthcare payments sector, potential macroeconomic factors affecting Medicaid funding, and execution risks associated with integrating Iodine Software. Nevertheless, Waystar’s strong client retention and growing base of high-value customers position it well for continued success in the healthcare payments technology market.

Full presentation:

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