Waystar Holding Corp. (WAY): what the price assumes

In the published model solve dated 2026-Q2, anchored at $23.38, Waystar Holding Corp. (WAY) is priced for +6.9% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/WAY

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 8: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.7pp.

Reconcile: at the x-ray's 9.3% required return this reads ~19%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.

Per-Model Detail (n=18)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Waystar runs the software that hospitals and clinics use to get paid, automating the revenue cycle in a market the company describes as plagued by "reimbursement complexity and collection challenges," with two revenue streams: subscription and volume-based.
• The defining disconnect is the price: the stock is valued as if growth has stopped, yet revenue grew about 22% in the latest quarter with net revenue retention of about 111%.
• The biggest risk is the balance sheet and ownership overhang: net debt sits near $1.3 billion from its leveraged-buyout heritage, and the share count has grown as private-equity sponsors sell down post-IPO.

Bull Case

Set what the market is pricing against what the company is actually doing, because the gap is the whole thesis. At about $18 the stock trades around 18 times operating income, which inverts to an assumption of essentially flat operating growth, roughly zero, for the next five years. That is what the market is paying for. What the company is delivering is the opposite: revenue grew about 22% year over year in the latest quarter, subscription revenue grew faster still, and net revenue retention ran about 111%, meaning existing customers spent more this year than last. A business compounding at this rate priced for stagnation is a genuine disconnect.

The model underneath is high-quality healthcare software. Waystar sits in the workflow between providers and payers, and the 10-K explains why that position is durable: revenue comes "from renewal of existing clients' contracts and sales of additional products and solutions to existing clients," so retention and cross-sell drive the growth. Healthcare billing is mission-critical and miserable to do manually, the filing citing data that "63% of revenue cycle leaders say their teams are understaffed," which is exactly the labor problem Waystar's automation solves. Once a hospital system runs its claims through Waystar, ripping it out means risking the cash flow that keeps the lights on, so switching costs are real and the retention shows it.

The economics are strong and improving. The company earns operating margins in the low 20s and adjusted EBITDA margins in the 40s, with most of its growth coming from high-margin subscription revenue, and it is generating real free cash flow that it is using to pay down debt. The AI layer is becoming a genuine growth driver rather than a marketing line: AI-powered capabilities contributed a large share of new bookings, and the platform automates the denial-and-appeal work that drains provider staff. For a SaaS business clearing the rule-of-40 bar comfortably, with a sticky installed base and an AI tailwind, a multiple that prices in zero growth is the bull case in one sentence.

Bear Case

Look at who owns the stock and how the share count is moving, because the ownership structure is the overhang the bull case skips. Waystar came public out of a private-equity buyout, and the sponsors that took it private still hold large stakes they are selling down over time. That creates persistent supply of stock hitting the market and a share count that has grown at a high-teens annual pace, diluting the per-share value even as the business grows. Until the sponsors are fully out, the stock carries a structural seller, and management's incentives and capital-allocation choices are shaped by owners whose horizon is their exit, not a long-term holder's.

The balance sheet is the buyout's other legacy. Net debt sits near $1.3 billion, about five times operating income, the leverage that private-equity ownership layered on and that the company is now working down. That debt is serviceable, with interest coverage near five times, but it is a real claim ahead of the equity, and it means the free cash flow the bull case celebrates is partly committed to deleveraging rather than fully available to shareholders. A SaaS company should not need this much debt; this one has it because of how it was owned.

Competition and concentration round out the caution. Waystar operates in a healthcare-IT market with large, well-resourced competitors, and the 10-K acknowledges that rivals "may have greater market share, larger client bases" and more resources. The 2024 cyberattack on a major competitor showed how concentrated and fragile healthcare payment infrastructure can be, a reminder that a single security incident could damage trust and revenue. The valuation, while modest, is not free: the static value methods, anchored on book value and on thin trailing earnings power, land well below the price, and only the relative-multiple and growth methods reach it. The price assumes the growth continues and the debt comes down on schedule. If retention slows, sponsor selling pressures the stock, or a security event hits, the equity has less cushion than the clean SaaS narrative suggests.

Valuation

The price is making a strikingly modest bet for a growing software company. At about $18 the market pays roughly 18 times operating income, which inverts to operating growth of about zero, even slightly negative, for the next five years. For a business growing revenue in the low 20s with net revenue retention above 110%, that implied assumption looks too pessimistic, which is the core of the value case. The market is pricing maturity into a company still compounding.

The methods we use to triangulate split in a telling way. The growth and relative-multiple methods land at or above the price: the relative-multiple lens against software peers reaches the low $30s, the exit-multiple cash-flow method lands in the low $30s, and the future-market-cap projection lands near the price. The static value methods land far below it: the earnings-power method, capitalizing thin trailing operating profit, and the asset-value methods, anchored on a book value near $20 against a low trailing return on equity, sit in the single digits to low teens. That pattern, growth methods reaching the price while the no-growth frames fall short, is normal for a SaaS business whose value lives in its forward subscription stream, not its trailing GAAP earnings. The peer cohort here is a mix of payments and vertical-software names rather than pure healthcare-IT comps, so the cleaner reference is Waystar's own retention and rule-of-40 profile, both of which support a higher multiple than the price implies.

Solvency reflects the buyout heritage. Net debt near $1.3 billion at about five times operating income is the leverage to watch, though interest coverage near five times and strong free cash flow make it serviceable, and the company is paying it down. The share count is rising as sponsors exit, which works against per-share value. The downside is bounded by the recurring subscription revenue and the sticky installed base; the risk is that the leverage and the sponsor overhang keep the multiple depressed even as the business executes, the value-trap version of a cheap growth stock.

Catalysts

Waystar's first quarter of 2026 underscored the growth the price seems to ignore. Revenue rose about 22% year over year to roughly $313.9 million, with GAAP net income of about $43.3 million, a 14% margin, and adjusted EBITDA of about $135.4 million, a 43% margin. Subscription revenue grew about 38% to roughly $172.2 million, and net revenue retention ran about 111%, the two numbers that matter most for a subscription software business.

The AI layer is moving from pitch to driver. Management said AI-powered capabilities contributed roughly 40% of new bookings in the quarter, and highlighted its AltitudeAI platform, which it says prevented a large volume of claim denials and sharply cut the time spent on appeals and recovery. For the full year 2026 the company guided to revenue of about $1.274 to $1.294 billion and adjusted EBITDA of about $530 to $540 million. The watch items are whether net revenue retention holds as the base grows, the pace of private-equity sponsor selling and the dilution that comes with it, continued debt paydown, and whether the AI bookings momentum sustains.

Peer Cohorts (Per Segment, With Filing Citations)

Healthcare payments software (whole-company) (reported)

• JKHY (JACK HENRY & ASSOCIATES, INC.)
• FY2025 10-K: …a contemporary, adaptable administrative portal. In addition to bill payment capabilities, we provide a 'pay a loan' feature, an 'open looped' real-time person-to-person ("P2P") solution, and account-to-account ("A2A") transfer features. The array of money movement options maintains consumer and business engagement…
• FY2025 10-K: …15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures. NOTE 2. REVENUE AND DEFERRED COSTS Revenue Recognition The Company generates revenue from data processing, transaction processing, software licensing and…
• EVTC (EVERTEC, Inc.)
• FY2025 10-K: …services to process credit, debit and prepaid cards; automated teller machines and electronic benefit transfer ("EBT") card programs (which principally consist of services to the government of Puerto Rico for the delivery of benefits to participants). Revenue is principally derived from fixed fees per transaction,…
• FY2025 10-K: Visa, Inc., American Express, Discover, Global Payments, Inc., dLocal Corp. LLP., Rappi Inc. and PayPal Holdings, Inc. Also, card associations and payment networks are increasingly offering products and services that compete with our products and services. The main competitive factors are price, system performance and…
• CCC (CCC Intelligent Solutions Holdings Inc.)
• FY2025 10-K: …that participate in the insurance economy. Our software solutions and platform are designed to create value for our customers by boosting efficiency, improving cycle time, increasing innovation potential, and enhancing end-customer experiences. Competition The insurance economy software market is highly competitive…
• FY2025 10-K: …cycle time while improving customer satisfaction. CCC International Solutions CCC provides insurance claims software to some of the largest automotive insurers in China. Our software solutions are tailored for the Chinese market, and include workflow, estimating, audit and analytics solutions. We are assessing other…
• VEEV (Veeva Systems Inc.)
• FY2025 10-K: . We use a combination of base salary and equity to compensate our employees. We also offer a range of benefits to our employees, including comprehensive healthcare and other wellness programs. We believe our compensation and benefits programs are competitive. We do not require any of our employees anywhere in the…
• FY2025 10-K: …content management, field optimization, and commercial insights and analytics. R&D Business Consulting enables continuous and sustainable innovation across the drug development value chain, including process efficiency, time-to-market acceleration, and optimized operating model and governance. Our Customers As of…
• NCNO (nCino, Inc.)
• FY2025 10-K: …to them. 6 Table of Contents Total Rewards To ensure our ability to attract and retain the very best global talent, we offer market competitive compensation that is consistently evaluated, opportunities for equity ownership, savings options to help employees invest in their future, and generous, country-specific…
• FY2025 10-K: …through our business development managers, account executives, field sales engineers, and customer success managers. Our sales efforts in the U.S. are organized around FIs based on size, whereas 35 Table of Contents internationally, we focus our sales efforts by geography. As of January 31, 2025, we had 194 sales and…
• OTEX (OPEN TEXT CORP)
• FY2025 10-K: …taking into consideration the type of customer, the type of transaction and specific facts and circumstances of each arrangement. We report revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue producing transactions. We have four revenue…
• FY2025 10-K: …that are imposed on and concurrent with specific revenue producing transactions. We have four revenue streams: cloud services and subscriptions, customer support, license, and professional service and other. Cloud services and subscriptions revenue Cloud services and subscriptions revenue are from hosting…
• AGYS (AGILYSYS, INC.)
• FY2025 10-K: $ 198,065 Products: Products revenue is comprised of revenue from the sale of software along with third party hardware and operating systems. Software sales include up front revenue for licensing our solutions on a perpetual basis. Software sales are driven by our solutions' ability to help customers meet the demands…
• FY2025 10-K: …service revenue from providing unspecified updates, upgrades, bug fixes, and technical support services for our proprietary software. These services represent a stand-ready obligation that is concurrently delivered and has the same pattern of transfer to the customer; we account for these maintenance services as a…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.