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Waystar to buy Iodine Software in $1.25 billion deal to boost AI in healthcare payments

ReutersJul 23, 2025 9:18 PM

- Healthcare software firm Waystar WAY.O said on Wednesday it would buy privately held Iodine Software in a deal worth over $1.25 billion, including debt, to expand its use of artificial intelligence in healthcare payments and reduce claim denials.

The deal, funded through a mix of cash and stock, is expected to close by the end of 2025. After completion, Iodine shareholders, led by private equity firm Advent International, will own about 8% of the combined company.

With U.S. healthcare providers facing mounting administrative costs and frequent claim denials, AI solutions are becoming increasingly important to streamline billing and improve documentation accuracy.

The acquisition extends Waystar's reach into clinical intelligence software, leveraging Iodine's AI-driven platform to help hospitals and health systems prevent denials and optimize revenue.

The deal is expected to expand Waystar's total addressable market by more than 15% and immediately add to its margins. Waystar projects more than $15 million in annual cost savings within 18 to 24 months of closing.

The company also said the combined platform will help address the roughly $440 billion in annual administrative costs that burden U.S. healthcare providers.

Up to 60 million medical claims are denied each year in the U.S. due to administrative errors, resulting in billions of dollars in lost revenue, Waystar noted.

Waystar processes over six billion healthcare payment transactions annually, covering about half of all U.S. patients.

The company expects its second-quarter 2025 revenue to be about $271 million, a 15% increase from a year earlier.

Barclays advised Waystar on the deal, while J.P. Morgan advised Iodine Software.

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