Waystar Sees $15 Billion Market for Simplifying Healthcare Payments as It Preps for IPO

Healthcare payments are awash in paper, marked by inefficiencies, creaky legacy systems and manual processes.

Waystar leverages a cloud-based platform to improve what it terms “the administrative headwinds faced by providers.” The company has filed to go public and detailed a multibillion-dollar market in its S-1 with the Securities and Exchange Commission (SEC).

Healthcare remains one of the “largest and most complex vertical end-markets within the U.S. economy,” according to the filing. It’s an industry that accounts for more than 18% of U.S. gross domestic product (GDP), where wasteful spending is estimated to range between $760 billion and as much as $935 billion.

“Of this, $350 billion is administrative-related, which is inclusive of healthcare payments-related waste,” Waystar said in the filing.

Drill down a bit, and the company has estimated that its total addressable market “with respect to our current software solution set” is about $15 billion, growing mid-single digits, compounded, annually.

The Pain Points

Healthcare practices, the company said, are saddled with increasing labor and administrative costs, and reimbursement and collection remain challenges.

“Providers bear the burden of navigating reimbursement obstacles, and missteps can ultimately result in lost revenue or delayed cash flow,” the company said in the filing. “In addition, healthcare providers often struggle to convert patient bills (i.e., patient responsibility) to cash payments as patients are also tasked with navigating ever-changing benefits policies and interacting with outdated technology,” especially since the healthcare plans are marked by ever-increasing deductibles.

The company’s platform serves 30,000 clients tied to about 1 million providers across a subscription model. Waystar also disclosed in the filing that in 2022, the company facilitated over 4 billion healthcare payments transactions, including over $900 billion in gross claims volume, spanning approximately 50% of patients here in the U.S.

The Platform

Waystar’s platform, at a high level, uses machine learning and in-house artificial intelligence (AI) to offer financial clearance activities, which in turn verify insurance benefits, automate authorizations, and help practices collect revenues, as claims are automatically submitted and tracked. The platform is also a conduit for collecting payments from patients.

The company’s financials show roughly 22% revenue growth year over year in 2022 to $704 million. In the latest reported quarter, which ended June 30, the company’s top-line growth was a bit more than 13% to $196 million, and the net loss decreased slightly to $10.8 million. It should be noted, however, that Waystar’s income from operations has been positive, to $37.2 million, from $21.1 million in the year-ago June quarter.

The digital, AI-driven advantages to back-office functions described in the SEC filing come as the White House Office of Science and Technology Policy (OSTP) held a roundtable discussion earlier this month that highlighted the President Joe Biden administration’s priorities to “develop and deploy” advanced AI tools that improve the healthcare industry. Other firms have been staking a claim in the revenue cycle management space, including UiPath, which partnered with Apprio earlier this month.

PYMNTS Intelligence data underscores that platforms and digital interactions are being embraced by providers and their patients. Most consumers — at 80% — would like to access a single digital platform that includes bill payments.