Payment technology firm Waystar seeks to raise $1 billion in IPO, deploys Google Cloud’s generative AI in its platform
Louisville, Ky.-based Waystar Technologies, a company that provides revenue cycle management software to hospitals and health systems, launched an initial public offering on Tuesday with the hope of bringing in $1.04 billion.
Through the IPO, Waystar is offering 45 million shares at an estimated price of between $20 and $23 per share.
The firm was created in November 2017 when Navicure (a provider of cloud-based claims management and payment solutions for physician practices and hospitals) merged with ZirMed (a provider of cloud-based revenue cycle software and predictive analytics).
In 2019, a Stockholm-based global investment firm called EQT and the Canadian Pension Plan Investment Board (CPPIB) acquired a majority stake in Waystar from Bain Capital, which is still a minority stakeholder, according to Reuters. At the time, Waystar was valued at $2.7 billion.
Collectively, EQT, CPPIB, and Bain Capital will own slightly more than two-thirds of Waystar after the IPO. At the upper end of the IPO’s per-share price range, Waystar would have a valuation of about $3.83 billion. The company plans to use the net proceeds from the IPO to repay outstanding indebtedness.
Waystar said last August when it acquired HealthPay24, a cloud-based patient payment platform, for an undisclosed amount that it was the company’s eighth acquisition since 2018.
In its financial results for 2023, Waystar reported a net loss of $51.3 million and revenue of $791 million, similar to figures reported for the previous year.
Less than a week before launching the IPO, Waystar announced a collaboration with Google Cloud. Waystar’s software platform uses artificial intelligence and machine learning “to automate work, improve accuracy, and create a more intelligent and intuitive user experience.”
Waystar said it will leverage Google Cloud’s generative AI technology to address some of the “most complex and critical challenges” in the U.S. health care system, such as administrative burden and “substantial” spending waste.
“Our focus is to implement generative AI innovations on the Waystar software platform that will help providers get paid accurately, timely, and with newfound efficiencies for the health services they deliver to patients,” said Matt Hawkins, Waystar’s CEO.
Through their collaboration, Waystar and Google Cloud have automated the extraction of prior authorization requirements from payer data sets. According to Waystar, that particular application of the platform reduced the time to generate “an authoritative report of preauthorization” by 99.93% and increased accuracy by 13% in a pilot program.
According to Waystar, the firm serves “approximately 30,000 clients, representing over 1 million distinct providers.” Waystar says its platform processes more than 5 billion health care payment transactions per year.
Our Take: Until recently, the digital health IOP market had been flat since 2021, when 20 digital health companies went public and raised record amounts of capital in the process.
Only two digital health companies went public in 2022 and none did so last year, according to venture capital fund Rock Health — though Waystar publicly filed for a proposed IPO last October. The company held off, waiting for more favorable market conditions, according to Bloomberg.
Even publicly traded digital health companies have struggled the last few years.
In a report on digital health funding in the first quarter of 2024, Rock Health noted that three additional companies delisted from the NASDAQ or NYSE during the first three months of this year, bringing the number of publicly traded digital health companies to 43. Six more were at risk of delisting at the end of the quarter, Rock Health noted. In 2021, there were 54 publicly traded digital health companies.
Waystar’s IPO could be the largest one this year.
Alex Lennox-Miller, lead analyst in health care IT at CB Insights, said a successful digital health IPO could lead the way for other mature digital health startups to follow, Healthcare Dive reported.
“Regardless of how [the Waystar IPO] goes, we’re going to continue to see a slow increase in digital health IPOs for companies like this,” Lennox-Miller said. “But if it’s successful, it’s going to be a flood.”
What else you need to know
Merck signed a definitive agreement to acquire EyeBio, a privately held ophthalmology-focused biotech based in New York, in a deal that could be worth up to $3 billion. Under the agreement, Merck will make an upfront payment of $1.3 billion, through a subsidiary. The remaining $1.7 billion is to be paid as various developmental, regulatory, and commercial milestones are reached. Through the acquisition, Merck will gain EyeBio’s Restoret, a potential first-in-class treatment for retinal diseases, including diabetic macular edema (DME) and neovascular age-related macular degeneration, as well as EyeBio’s preclinical pipeline. The companies anticipate that Restoret will advance into Phase IIb/III testing in patients with DME later this year. Both companies’ boards have approved the acquisition, which is expected to close in the third quarter if regulatory approval is received and other customary closing conditions are met.
Epic released an open-source validation tool that hospitals and health systems can use to test and monitor AI models that integrate with their electronic health record systems — including EHR systems not developed by Epic. Epic published the AI trust and assurance software suite, which the company also refers to as the “seismometer,” on GitHub, where health systems can download the code to their EHR systems free of charge. The tool automates data collection and mapping to provide near real-time metrics and analysis on AI models, Fierce Healthcare reported, citing Seth Hain, Epic’s senior vice president of research and development. The current version does not validate the performance of generative AI models, according to Corey Miller, Epic’s vice president of R&D, but the company is planning to expand it to additional AI models.
Optum Rx, United Health Group’s pharmacy benefit manager, will launch a new guarantee-based drug pricing model on Jan. 1, 2025, called Clear Trend Guarantee. The model, according to UHG’s announcement, will offer drug benefit plan sponsors greater predictability of their pharmacy spend by combining retail pharmacy, home delivery, specialty drug, and rebate components into a single per-member price. UHG described Clear Trend Guarantee as “value-based model with shared savings to promote efficient care.” The new model builds upon the Cost Made Clear initiative Optum Rx announced last year, which includes pass-through models and cost-plus pricing.
Express Scripts, Cigna’s PBM, is collaborating with CPESN USA, a clinically integrated network of more than 3,500 community pharmacies that provide enhanced health services. The collaboration will focus initially on enhanced care services for Medicare beneficiaries with hypertension or diabetes, with CPESN pharmacies providing services such as coordinating with other health providers to address gaps in care; identifying at-risk individuals and offering interventions; and improving medication management and optimization for patients with either of these chronic conditions, according to a press release. Express Scripts is part of Cigna’s Evernorth Health Services segment. Although financial terms were not disclosed, Evernorth said in the release that the collaboration would create “new options for care delivery within the Express Scripts retail pharmacy network.” The collaboration is part of the IndependentRx Initiative Express Scripts launched a year ago to offer independent pharmacies in rural areas “increased reimbursement opportunities.”
Amgen’s Imdelltra (tarlatamab-dlle) received accelerated approval from the FDA for use in adults with extensive-stage small cell lung cancer (ES-SCLC) whose disease has progressed despite treatment with platinum-based chemotherapy. The immunotherapy, a first-in-class delta-like ligand 3 (DLL3)-targeting bispecific T-cell engager (BiTE) therapy, is approved as a second- or later-line therapy. Amgen has priced the drug at $31,500 for the first cycle of treatment (which lasts 28 days) and $30,000 for subsequent cycles; the median duration of treatment is 5.5 cycles. Though significantly rarer than non-small cell lung cancer, SCLC is more aggressive. Amgen’s chief scientific officer, Jay Bradner, said it’s “one of the most rapidly proliferating and most aggressive cancers there is,” Reuters reported. Imdelltra, which analysts believe could be a blockbuster, is also being evaluated in patients with earlier-stage SCLC and in patients with neuroendocrine prostate cancer.
HHS will invest over $50 million in the creation of a software suite hospitals can use to better safeguard their digital systems from cyberattacks. The Advanced Research Projects Agency for Health (ARPA-H), part of the Department of Health and Human Services, launched a new program called the Universal Patching and Remediation for Autonomous Defense, or UPGRADE. The program will seek proposals from “performer teams” to create a scalable platform that can probe models of digital hospital environments to identify potential software weaknesses that hackers could exploit. The platform would automatically procure or develop custom patches for any vulnerabilities it detects, test the patches in the model environment, and then deploy the patches “with minimum interruption” to devices in use at hospitals.
What we’re reading
The Humble, Tenfold Force of Jim Skogsbergh. Becker’s Hospital Review, 5.30.24
The Cash Generics Opportunity in Health Care. Boston Consulting Group, 5.22.24
