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Waystar touts gen AI efforts as it raises nearly $1B IPO

Illustration of a giant health plus on top of a pile of cash, the ground underneath is cracking.

Illustration: Aïda Amer/Axios

Health payments software company Waystar's generative AI work was a major draw for public investors, Waystar CEO Matthew Hawkins tells Axios.

Why it matters: At $968 million, Waystar's IPO is the best showing the health tech sector has seen since 2022.

Driving the news: Waystar priced its IPO at $21.50 per share for a market value of approximately $3.6 billion.

  • EQT, Bain Capital and Canada Pension Plan Investment Board-backed Waystar sold 45 million shares in Thursday's IPO, at the midpoint of its marketed range of $20 to $23.
  • The company opened Friday afternoon at $21.39 per share.

Inside the room: Waystar, which straddles financial services and health tech, comped to "vertical market software companies" like CCC Intelligent Solutions, an insurance software-as-a-service company, Hawkins tells Axios.

  • Health-specific comps included life sciences cloud software company Veeva Systems and physician networking service Doximity, he adds.

Flashback: Waystar began weighing IPO plans last July and last fall it started "testing the water," Hawkins says. (Hawkins is firm that it wasn't a formal road show.)

  • "Then, as we saw the macroeconomic conditions and even some of the geopolitical things emerge in October, we just chose to pause," he says.
  • Waystar picked up discussions again this spring, he adds.

Zoom in: Initiatives like Waystar's recently announced generative AI partnership with Google Cloud are particularly appealing to investors, Hawkins says.

  • In one use case, Waystar and Google Cloud automated extraction of prior authorization requirements from payer data sets, saving time while improving accuracy, the company claims.

By the numbers: Including debt, the company has an enterprise value of about $5 billion.

  • Waystar reported a net loss of $51.3 million on revenue of $791 million in 2023, compared with a loss of $51.5 million on revenue of $705 million in 2022.
  • Following the IPO, EQT is expected to remain the largest shareholder with a 29% stake, followed by CPPIB with 22% and Bain with 16.8%.

What's next: "We're aware of many other companies that could be potential tuck-in type acquisitions for Waystar in the future, or perhaps even some things that are more transformative," Hawkins says.

The intrigue: Waystar picked up assets from now-defunct AI startup Olive, which Hawkins says was primarily a customer acquisition play.

  • "As we looked at the company and the assets in particular ... The right thing for us to do was to bring those clients to Waystar, put them on the Waystar software platform and give them a home."

Catch up quick: Waystar was formed in 2017 through Bain's reportedly $750 million merger of Navicure and ZirMed.

  • Bain sold a majority stake in Waystar to EQT and CPPIB in 2019, in a deal that valued the business at $2.7 billion. Bain retained a minority stake.
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