0001990354-26-000025
SEC filingRevenue grew 22.4% driven by subscription revenue, net income up 47.9%, and Adjusted EBITDA margin expanded to 43.1%.
For the three months ended March 31, 2026, Waystar delivered robust financial results. Revenue increased 22.4% to $313.9 million, driven primarily by a 37.7% surge in subscription revenue to $172.2 million, reflecting strong contributions from both existing clients and the Iodine acquisition. Volume-based revenue grew 7.3% to $139.5 million, supported by expanded usage across provider and patient payment solutions. Net income rose 47.9% to $43.3 million, outpacing revenue growth due to operating leverage and a lower effective tax rate. Adjusted EBITDA grew 25.7% to $135.4 million, with margin expanding 110 bps to 43.1%, underscoring cost discipline and scale benefits.
Cost of revenue (exclusive of D&A) increased 16.4%, slower than revenue, as third-party costs for provider solutions (6-7% of associated revenue) and patient payment solutions (60% of associated revenue) remained stable. Sales and marketing expenses rose 14.2%, driven by higher channel partner fees and commission amortization. General and administrative expense jumped 31.9% due to increased stock-based compensation, while R&D spending grew 65.8% reflecting continued investment in AI capabilities. Depreciation and amortization increased 24.2%, primarily from Iodine intangible assets.
The revenue mix continues to shift toward subscription, which now accounts for 54.9% of total revenue (up from 48.8% a year ago), providing greater predictability and higher margins. Volume-based revenue, while growing more slowly, retains strong underlying momentum from net revenue retention of 110.5%. Notably, the count of clients generating over $100,000 annually increased to 1,433 from 1,244, signaling deepening relationships. The Iodine acquisition contributed meaningfully to subscription growth, though related integration costs ($1.8M) and amortization ($34.5M) weighed on GAAP profitability.
Management’s outlook is cautiously optimistic, citing the cyclical tailwind from an aging population and secular shift toward value-based care. Key strategic priorities include cross-selling Iodine’s AI-powered clinical intelligence, expanding the client base (having onboarded over 30,000 providers from a competitor’s cyber incident), and investment in Waystar AltitudeAI. No specific guidance for Q2 2026 or FY2027 is provided, but the strong net revenue retention and robust subscription sales signal sustained momentum. Liquidity remains healthy with net cash from operations of $84.9 million, though investing outflows rose sharply due to increased capital spending and security purchases. The company’s $1.26 billion Iodine acquisition is expected to bolster margins over time as integration completes.
As of March 31, 2026, Waystar held $34.3M in cash and cash equivalents, $28.4M in restricted cash, and $124.6M in investment securities (available-for-sale debt securities), totaling $187.3M in highly liquid assets. This compares to $101.7M (cash + restricted cash + securities) at December 31, 2025, a significant increase primarily due to purchases of investment securities ($124.2M) partially offset by debt repayments. Accounts receivable, net of allowance, stood at $172.5M, slightly down from $177.0M at year-end 2025. Goodwill remained stable at $4.0B, with a $2.0M measurement period adjustment related to the Iodine acquisition. Total assets were $5.84B, up from $5.79B. Shareholders' equity increased to $3.94B from $3.88B, driven by net income and other comprehensive income.
The Notes disclose no material off-balance-sheet purchase commitments (e.g., supply agreements) beyond normal operating leases. The company has operating lease liabilities of $16.5M (undiscounted future payments) with a weighted-average remaining term of 3.4 years. Contract liabilities (deferred revenue) totaled $69.8M, with $64.7M current and $5.2M long-term. The transaction price allocated to unsatisfied performance obligations (RPO) was $117.4M as of March 31, 2026, of which $78.8M is expected to be recognized within 12 months.
There were no share buybacks or dividends declared during the period. The company's primary capital allocation actions involved debt management: it repaid $23.5M in debt (including $20.0M on the First Lien Credit Facility funded by an amendment to the Receivables Facility) and issued $19.8M in new debt (net of creditor fees). Net debt decreased by $3.5M. Capital expenditures (including capitalized software) were $15.3M, representing 4.9% of revenue. The company maintained $100.0M outstanding on its receivables facility (up from $80.0M at year-end) and had no borrowings on its Revolving Credit Facility.
Waystar operates as a single reportable segment. The CODM (CEO) evaluates performance using consolidated net income. Disaggregated revenue shows subscription revenue of $172.2M and volume-based revenue of $139.5M for Q1 2026, with implementation and other services revenue of $2.2M. No geographic mix is provided beyond the U.S. market.
Operating cash flow of $84.9M exceeded net income of $43.3M by a wide margin, reflecting strong non-cash add-backs (depreciation & amortization $41.5M, stock-based compensation $11.4M) and a net working capital outflow of only $11.1M. The CFO/Net Income ratio of 1.96x indicates high cash conversion quality.
Capex intensity rose sharply to $15.3M (18% of CFO), up from $5.4M (8% of CFO) in the prior year, signaling increased investment in property, equipment, and software. Free cash flow (CFO minus capex) was $69.6M, providing ample coverage of zero capital returns.
Investing cash flow was heavily negative ($112.5M) due to $124.2M in purchases of investment securities, partially offset by $25.0M in proceeds from sales/maturities. Financing activities provided $13.5M, driven by $19.8M in debt proceeds and $14.8M in aggregate funds liability changes, offset by $23.5M in debt repayments.
Anomalies: A $9.7M decrease in accounts payable/accrued expenses and a $3.5M decline in deferred revenue weighed on operating cash flow. Interest paid of $20.7M and minimal cash taxes ($0.2M) reflect the company's capital structure and tax position.