Waystar Q3 Revenue Rises 21%, 2026 Margin Outlook at 43%

Waystar Holding Corp. (NASDAQ: WAY) reported a 21% year-over-year increase in third-quarter 2026 revenue, including contributions from its Iodine acquisition, while adjusted EBITDA rose 24% and the adjusted margin remained near 43%. The healthcare payments software company also projected 17% full-year revenue growth at the midpoint of its 2026 guidance, supported by subscription revenue, client expansion and a growing implementation backlog.

Revenue for the three months ended September 30 rose to $325.6 million from $268.7 million a year earlier. GAAP net income was $31.0 million, compared with $30.6 million in the prior-year quarter, while GAAP operating income increased to $61.3 million from $60.2 million.

Adjusted EBITDA, a non-GAAP measure, reached $139.3 million, up from $112.7 million, with the adjusted EBITDA margin increasing to 42.8% from 42.0%. Waystar said favorable revenue mix and operating-cost savings have supported recent margins, with those savings running ahead of planned reinvestment in innovation, cybersecurity and the client experience.

Non-GAAP net income increased to $87.2 million from $67.8 million. Diluted non-GAAP earnings per share rose to $0.44 from $0.37.

Subscription Revenue and Client Expansion Support Growth

Recent growth was led by subscription revenue, nearly all of which is included in Waystar’s provider solutions. Organic subscription revenue increased 12% year over year in the third quarter, while organic provider revenue grew 11%.

The number of clients generating more than $100,000 in trailing-12-month revenue rose 14% year over year to 1,488. The company said approximately half of the quarterly increase in that client count came from the Iodine acquisition; the organic year-over-year growth rate was 12%.

Net revenue retention was 107.6%, or about 108% on a rounded basis, compared with 113.1% a year earlier. Waystar said the latest result was within its historical 108% to 110% range. The presentation attributed the higher retention levels recorded in 2025 partly to rapid revenue generation from new client launches in early 2024 and elevated patient utilization from 2024 through mid-2025.

Commercial indicators remained positive. Bookings for contracts worth more than $100,000 increased more than 30% during the first nine months of 2026, while the implementation backlog for contracts above that threshold grew more than 50% from a year earlier. Bookings represent estimated annualized contract value signed during the period, while implementation backlog covers signed contracts that had not yet gone live.

Waystar also highlighted the role of artificial intelligence across its platform. AI-powered solutions represented 43% of third-quarter bookings, while 50% of its solutions use AI. The company said software with deployed AI accounted for 40% of 2025 revenue. Its network processes more than 8.5 billion transactions annually and more than $3 trillion in gross claims, according to the presentation.

Cash Flow and Leverage

Third-quarter unlevered free cash flow increased to $114.8 million from $95.7 million a year earlier. For the first nine months of 2026, conversion of adjusted EBITDA into unlevered free cash flow was 65%.

Waystar’s adjusted net leverage ratio stood at 2.2 times at the end of the quarter, down 1.2 turns from 3.4 times immediately after the Iodine acquisition closed on October 1, 2025. Net debt was $1.19 billion, based on the company’s non-GAAP definition, while trailing-12-month adjusted EBITDA totaled $540.6 million.

2026 Outlook

Waystar expects full-year 2026 revenue of $1.277 billion to $1.287 billion, with the $1.282 billion midpoint representing 17% growth from 2025. The company’s growth-rate bridge indicated normalized organic revenue growth of 11%, consistent with its low-double-digit long-term target, after accounting for acquisition effects and timing-related customer implementations.

Adjusted EBITDA is projected at $543 million to $549 million, implying 18% growth at the midpoint and an adjusted EBITDA margin of approximately 43% across the guidance range. Non-GAAP net income is expected to be between $322 million and $337 million, while diluted non-GAAP EPS is forecast at $1.63 to $1.71. The outlook assumes an effective tax rate of 24.0% to 25.5% and approximately 197 million diluted weighted-average shares.

The company cautioned that its outlook remains subject to risks including competition, client retention, transaction volumes, implementation timing, the integration of Iodine, cybersecurity and data-privacy requirements, AI development and deployment, healthcare regulation, third-party dependencies, interest-rate movements and its substantial debt. Waystar also noted that forward-looking non-GAAP guidance was not reconciled to comparable GAAP measures because certain potential adjustments, including incentive compensation and transaction-related expenses, cannot be estimated without unreasonable effort.