Another "Sneaky" IPO is Pending for Utah as "Recent" Transplant Waystar Holdings Announces its Forthcoming Initial Public Offering

Led by Utah native, Matt Hawkins (a long-recognized leading healthcare executive), Waystar Holdings announced it was opening a Utah office in August 2020. But by January 2022, the company had instead turned its Utah office into a 2nd headquarters.

Today, Lehi, Utah/Louisville, Kentucky-HQ'd Waystar is one of the leading HealthTech companies in the U.S. as it helps over 30,000 healthcare provider organizations process over 5 billion payments annually and generated more than $790 million in revenue in 2023, most of it Annually Recurring Revenue of ARR.

With its Prospectus filed with the U.S. Securities and Exchange Commission, Waystar is now on tap to produce the 2nd mega-IPO for Utah in 2024, all from another company I suspect few Utahns know even exist. And if all goes according to plan, Waystar will raise upward of $1 billion through its IPO.

Early yesterday, Waystar Holdings announced that it has finalized plans for an Initial Public Offering as it filed the 7th amendment to its Form S-1 with the U.S. Securities and Exchange Commission.

Presuming the anticipated IPO proceeds as planned, Waystar will sell 45 million shares of common stock to the public at an anticipated range of $21.00 to $23.00 per share, with shares listed on the Nasdaq Stock Market under the symbol WAY.

At the top end of the range, this would mean that Waystar would produce gross proceeds of over $1 billion from its IPO. [NOTE: This does not include any additional monies it would gain should its underwriters choose to acquire up to 6.75 million common shares of Waystar stock at the IPO price, minus the underwriting discount.]

According to its IPO announcement news release,

"J.P. Morgan, Goldman Sachs & Co. LLC, and Barclays are acting as joint lead book-running managers of the offering and as representatives of the underwriters for the proposed offering. William Blair, Evercore ISI, BofA Securities, RBC Capital Markets, and Deutsche Bank Securities are acting as joint bookrunners for the proposed offering. Canaccord Genuity and Raymond James are acting as co-managers for the proposed offering."

Waystar: A Brief Overview and its Historical Journey

In simplest terms, Waystar is a cloud-based provider of various Revenue Cycle Management tools designed to help healthcare provider firms more quickly, accurately, and efficiently maximize revenue throughout their organizations.

These RCM solutions can accurately be called Software-as-a-Service (or SaaS) applications, but due to the complexity of the procedures and services offered by these healthcare providers, plus the disparate platforms and approaches available to payers, many provider orgs and their staff struggle with the vast variety of classification and payment options they are presented with.

As a result, during its nearly 25-year history, Waystar has become more and more adept at creating and adapting proprietary, AI-based algorithms and machine learning technologies to create Large Learning Models (LLMs) to produce better and better results for individual Waystar clients, as well as Waystar's collective mixture of clientele.

Historically, Waystar traces its roots back to both 1999 and 2001 when two separate firms got their starts in the emerging information healthcare space, aka, HealthTech:

• Nashville, Tennessee-based ZirMed in 1999, and
• Duluth, Georgia-based Navicure in 2001.

By the mid-2010s, both ZirMed and Navicure had outside equity partners, with

• ZirMed backed by Sequoia Capital since 2009, and
• Navicure backed by JMI Equity.

And then change happened fairly quickly, with Bain Capital acquiring a majority interest in Navicure in June 2016 from JMI Equity and several minority shareholders.

The following year (2017), Navicure/Bain announced it would acquire ZirMed and fold it into Navicure in a transaction that valued ZirMed at ~$750 million.

With the closing of the ZirMed acquisition in September 2017, Bain hired Utah native, Matt Hawkins (a long-applauded and season healthcare industry executive), to serve as the CEO of the newly combined firms.

And then the combined firms were renamed Waystar Holdings in early 2018.

Hawkins' career stretches back to the late 1990s with positions at Electronic Data Systems (EDS) and TenFold Corporation, before he joined McKinsey & Company in 2001.

Then in mid-2004, Hawkins began what has now been an elevated 20-year career in executive management with such firms as

• Henry Schein (VP and General Manager);
• SirsiDynix (COO, CEO, and Board Member);
• Vitera Healthcare Solutions (CEO and Board Member);
• Sunquest Information Systems (President);
• Viewpoint (Board Member); and, since 2017,
• Navicure/ZirMed combo firm and Waystar (CEO and Board Member).

In July 2019, Bain announced it was selling majority ownership in Waystar to EQT and the Canada Pension Plan Investment Board, a transaction that valued Waystar at $2.7 billion.

[NOTE: In 2019 and 2020, Hawkins was named one of the Top 50 Healthcare CEOs by Healthcare Technology Report.]

Then, in August 2020, Waystar announced it was opening an office in Utah (Hawkins' home state), an office eventually based in the center of Utah's so-called Silicon Slopes in Lehi City.

And yet, by January 2022, Waystar began including both Lehi, Utah and Louisville, Kentucky in the "Datelines" of its news releases, a move signifying that the firm now had now, in fact, instituted a dual-headquarters structure.

[NOTE: Interestingly, the lead address shown for the company in its Form S-1 announcing its soon-so-occur IPO is Lehi, Utah and NOT Louisville, Kentucky.]

Waystar Going Forward

Under Hawkins direction, Waystar now generates "Over 99% of our revenue (from) either recurring subscription or based on highly predictable volumes ...." (as noted in the company's Prospectus). [In other words, readers, that's ARR: Annual Recurring Revenue.]

In addition, the Prospectus states that

"For the twelve months ended March 31, 2024, Waystar's Net Revenue Retention Rate was 108.8%."

This means that not only is Waystar keeping its clients, but the amount of money they spend with Waystar is growing on a year-over-year basis by nearly 9% per year.

In fact, as noted in the graphic shown immediately below (captured from its Prospectus filed on Tuesday with the SEC), Waystar is generating some impressive results.

In closing, here are just a handful of factoids I found fascinating from the Waystar Prospectus:

• Over 30,000 healthcare provider organizations use Waystar's solutions today and include physician practices, clinics, surgical centers, and laboratories, as well as large hospitals and health systems.
• In total, over 1 million healthcare professionals use one or more Waystar solution today.
• Additionally, in 2023, Waystar facilitated over five billion healthcare payments transactions, these included
  — Over $1.2 trillion in gross claims volume, and
  — Spanned ~50% of all patients in the United States.

OPINION: My Predicted Timing for Waystar's IPO

With a number of wild-card factors at play, not the least of which are the uncertainties surrounding the 2024 Presidential Election and the state of the national and global economies, there are still several truisms that underwriters and Wall Street tend to follow when it comes to IPOs specifically, and public offerings generally.

ONE: July and August are lousy months to try and complete a successful IPO, in part because up to one-third (or more) of stockbrokers can/will be on vacation during these two months.

TWO: In fact, anytime between July 4th and the week following Labor Day (in the U.S.) are lousy dates to attempt an IPO.

THREE: One should also be aware that a so-called "Roadshow*," even the most efficient one, will take three full weeks to complete (at a minimum). Hence, if Waystar begins its Roadshow next week, I believe the soonest Waystar's said Roadshow would be completed is Friday, 21 June 2024.

FOUR: Ergo, I predict that the soonest (and most likely IPO scenario for Waystar) is for its shares to begin trading the week of June 24—28, the week before the July 4th holiday.

Either that, or the IPO would almost assuredly be pushed back until sometime AFTER Labor Day 2024, some 2+ months into the future.

And no one, and I mean NO ONE, wants that to happen

So good luck, Team Waystar; it should be an interesting four weeks.

* — NOTE: A "Roadshow" is when underwriters crisscross the country from market to market (with top company execs in tow) to try and drum-up interest with both major corporate and retail investors before the IPO "goes effective."

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