Waystar's $1.25 Billion Acquisition of Iodine Software: Boosting AI in Healthcare Payments

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

July 23 (Reuters) - Healthcare software firm Waystar (WAY.O), opens new tab 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. Reporting by Mariam Sunny and Kamal Choudhury in Bengaluru; Editing by Devika Syamnath and Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab

AI-Focused Waystar, Iodine Deal Wins Praise For Margin Upside - Waystar Holding (NASDAQ:WAY)

Tim Melvin's system has spotted 10X winners like NVIDIA and Matador -- see his next 6 picks and the options strategies to multiply gains at a free July 23 event. Register Here. Waystar Holding WAY on Wednesday agreed to acquire Iodine Software from shareholders led by Advent International, a private equity firm, for a total of $1.25 billion. The proposed transaction is expected to accelerate Waystar's ability to transform healthcare payments through its leading cloud-based software platform, empowering more than one million providers with advanced AI capabilities to prevent denials, reduce manual work, and improve financial performance. Waystar expects the acquisition of Iodine to be immediately accretive to gross margin and adjusted EBITDA margin, and accretive to revenue growth and non-GAAP net income per diluted share in 2027. Also Read: Waystar, OneStream, Vertex Among Analyst Favorites As Solid Guidance Fuel Bullish Outlook The company estimates that up to 60 million claims are denied annually due to administrative errors in the critical stage between care delivery and submission, resulting in billions of dollars in lost revenue for providers. This highlights the essential role of accurate clinical documentation and coding in preventing revenue leakage and underpayments. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get StartedRationale Waystar and Iodine will be better positioned to help decrease the estimated $440 billion in annual administrative costs burdening providers. The addition of solutions is expected to expand Waystar's total addressable market by more than 15%. Waystar will benefit from Iodine's fully subscription-based revenue model as well as significant cross-sell potential to both companies' client bases. In addition, Waystar has identified more than $15 million in run-rate cost synergies, to be realized within the first 18-24 months following closing. The transaction will be funded with a 50/50 cash and stock consideration mix. Current Waystar shareholders will own approximately 92% of the combined company on a fully diluted, pro forma basis and Iodine equity holders will own approximately 8%. Advent, Iodine's largest shareholder, is expected to only receive Waystar shares in connection with the transaction and will agree to be locked up for 18 months after closing. Following the transaction, Waystar expects to maintain a strong balance sheet, with an estimated adjusted net leverage ratio of approximately 3.5x at the transaction close. The transaction is anticipated to close by year-end 2025. Waystar expects its second-quarter 2025 revenue to be approximately $271 million, representing approximately 15% year-over-year growth, compared to the consensus estimate of $254.96 million. 'Go-Forward Story' William Blair analysts "are not surprised to see Waystar strike on a strategic asset given the momentum we see in the market for AI-based RCM solutions." Analyst Ryan Daniels writes that Iodine appears to be a high-quality asset with solid channel partners, and leading AI and automation capabilities that drive efficiency in the revenue cycle. "Overall, we believe Iodine should be both strategically and financially accretive to the go-forward story," William Blair said. Price Action: WAY stock is up 3.90% at $38.40 at the last check on Thursday. Read Next: Pony AI Races Toward Mass Production, Gen-7 Robotaxi Hits Beijing Streets Image: Shutterstock WAYWaystar Holding Corp$38.263.52%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum82.49GrowthN/AQualityN/AValue10.14Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs