The following discussion and analysis of the financial condition and results of operations of Waystar Holding Corp. (“Waystar”, the “Company”, “we”, “us”, and “our”) should be read in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Form 10-Q, and the consolidated financial statements and related notes included in the 2025 Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties, and other factors outside our control, as well as assumptions, such as our plans, objectives, expectations, and intentions. Our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including those described under the sections entitled “Cautionary Statement Concerning Forward-Looking Statements” above and “Risk Factors” in the 2025 Form 10-K and our other filings with the SEC.
Overview
Waystar provides healthcare organizations with mission-critical AI-powered software that simplifies healthcare payments for providers across the continuum of care. Our enterprise-grade platform streamlines the complex and disparate processes our healthcare providers must manage to ensure accurate reimbursement and improves the payments experience for providers, patients, and payers. We leverage AI as well as proprietary, advanced algorithms to automate payment-related workflow tasks and drive continuous improvement, which enhances claim and billing accuracy, strengthens data integrity, and reduces labor costs for providers.
Our software is used daily by providers of all types and sizes across the continuum of care, including physician practices, clinics, surgical centers, and laboratories, as well as large hospitals and health systems. We currently serve over 30,000 clients of various sizes, representing over one million distinct providers practicing across a variety of care sites, including 16 of the top 20 U.S. News Best Hospitals. Our business model aligns with our clients' growth; as they serve more patients, claims and transaction volumes increase, driving corresponding growth in our business. In addition, our clients frequently adopt a greater number of our solutions over time and introduce our solutions across new sites of care. In 2025, we facilitated over 7.5 billion healthcare payment transactions, including over $2.4 trillion in gross claims volume spanning approximately 60% of patients and one-in-three hospital discharges in the United States.
Our platform benefits from powerful network effects. Our cloud-based software is driven by a sophisticated, automated, and AI-powered engine to generate and incorporate real-time feedback from millions of network transactions processed through our platform each day. Every transaction we process provides additional data insights across providers, patients, and payers, which are embedded in updates that are deployed efficiently across our platform. This results in cumulative benefits to us over time. As we capture more data from each transaction we process, we leverage those insights to continuously improve the platform through Waystar AltitudeAI, our proprietary AI engine. Waystar AltitudeAI utilizes a multi-model approach that incorporates machine learning, large language models, and generative and agentic AI to automate complex workflows and deliver added value to our clients. In turn, the more value we create for our clients, the more likely it is that they will continue to use our products, allowing us to continue to capture more data that results in tangible improvements to our platform. As a result, our clients benefit from faster and more efficient performance from software that is evolving to meet ever-changing regulatory and payer requirements, enabling accurate and timely reimbursement.
We have demonstrated an ability to drive recurring, predictable, and profitable growth. Over 99% of our revenue is either recurring subscription or based on highly predictable volumes. For the 12 months ended June 30, 2026, our Net Revenue Retention Rate was 108.3%, and we have 1,453 clients as of June 30, 2026 generating over $100,000 over the same 12-month period. For the six months ended June 30, 2026, we generated revenue of $633.5 million (reflecting a 20.2% increase compared to revenue of $527.1 million for the same period in the prior year), net income of $84.2 million (reflecting a 36.9% increase compared to net income of $61.5 million for the same period in the prior year), and Adjusted EBITDA of $272.1 million (reflecting a 23.5% increase compared to Adjusted EBITDA of $220.3 million for the same period in the prior year).
Secondary Offering
On February 24, 2025, the Institutional Investors closed an underwritten public offering of 23,000,000 shares of our common stock (inclusive of the underwriters’ option to purchase additional shares) (the “First Secondary Offering”). On May 15, 2025, the Institutional Investors closed another underwritten public offering of 14,375,000 shares of our common stock (inclusive of the underwriters’ option to purchase additional shares) (the “Second Secondary Offering”).
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Additionally, on September 10, 2025, the Institutional Investors closed another underwritten public offering of 18,000,000 shares of our common stock (the “Third Secondary Offering”). We did not sell any shares in these offerings or receive any proceeds from these offerings. Pursuant to the terms of the Amended and Restated Registration Rights Agreement, dated as of June 10, 2024, by and among Waystar, the Institutional Investors, and certain other parties thereto, we paid $1.8 million and $3.2 million in certain expenses on behalf of the selling stockholders related to these offerings for the three and six months ended June 30, 2025, while the selling stockholders paid all applicable underwriting discounts and commissions.
Iodine Acquisition
On July 23, 2025, we entered into an Agreement and Plan of Merger (the "Merger Agreement") to acquire Iodine through a series of mergers. Iodine is a trusted leader in AI-powered clinical intelligence, enhancing clinical documentation and accuracy, streamlining utilization management, and preventing revenue leakage before billing. This strategic move is expected to bolster our AI leadership, automate manual work, and improve financial performance for providers. The acquisition was completed on October 1, 2025 for a total purchase price of $1.26 billion. The consideration paid was approximately $638.9 million in cash consideration and 16,639,920 shares of common stock having a value of $37.31 per share, and certain adjustments as outlined in the Merger Agreement.
Significant Items Affecting Comparability
We believe that the future growth and profitability of our business, and the comparability of our results from period to period, depend on numerous factors, including the following:
Our Ability to Expand our Relationship with Existing Clients
As our clients grow their businesses and provide more services and see more patients, our volume-based revenues also increase. In addition, our growth in revenues also depends on our ability to sell more products and solutions to existing clients, including through cross-selling as our clients adopt additional Waystar offerings as well as up-selling as our clients leverage our solutions across additional providers and sites of care.
Our Ability to Grow our Client Base
We are focused on continuing to grow our client base, which will depend in part on our ability to continue to maintain our product leadership, invest in our research and development team, and maintain our reputation and brand.
Timing and Number of Acquisitions
Since 2018, we have completed and successfully integrated 10 acquisitions, one of which was Iodine that closed in the fourth quarter of 2025. The historical results of operations of our acquisitions are only included starting from the date of closing of such acquisition. As a result, our consolidated statements of operations for any given period during which an acquisition closed may not be comparable to future periods, which would include the results of operations of such acquisition for the entirety of such future period.
Components of Results of Operations
Revenue
We primarily generate two types of revenue: (i) subscription revenue and (ii) volume-based revenue, which account for 99% of total revenue for all periods presented. We believe we have high visibility into our volume-based and subscription revenue from existing clients. We refer to the solutions our clients use to better process and understand their payment workflows from payers as provider solutions, and we refer to the products that assist healthcare providers in collecting payments from patients as patient payments solutions. We expect provider solutions will continue to generate the substantial majority of our total revenue, although the revenue mix attributable to patient payments solutions is expected to increase slightly over time.
•Subscription revenue. Reflects recurring monthly provider count fees and minimum amounts owed. The vast majority of subscription revenue is generated by provider solutions, which constituted approximately 70% of total revenue in each of the three and six months ended June 30, 2026 and 2025.
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•Volume-based revenue. Represents recurring fees associated with transaction count or dollar volumes in excess of minimums. Generally, approximately half of our volume-based revenue is generated from provider solutions that are based on transaction count, with the other half from patient payments solutions that are based on either dollar volumes or transaction count.
We also derive revenue from implementation fees for our software, as well as hardware sales to facilitate patient payments. Our implementation fees are billed upfront and the revenue is recognized ratably over the contractual term.
Cost of Revenue (Exclusive of Depreciation and Amortization)
Cost of revenue includes salaries, stock-based compensation, and benefits (“personnel costs”) for our team members who are focused on implementation, support, and other client-focused operations, as well as team members focused on enhancing and developing our platform. Cost of revenue also includes costs for third-party technology such as interchange fees and infrastructure related to the operations of our platform, including communicating and processing patient payments, and services to support the delivery of our solutions. Third-party costs for patient payments solutions are approximately 60% of the revenue generated from these solutions, while third-party costs for provider solutions are approximately 6% to 7% of the associated revenue, in each case, for each of the three and six months ended June 30, 2026 and 2025.
Sales and Marketing
Sales and marketing costs consist primarily of personnel costs, internal sales commissions, channel partner fees, travel, and advertising costs.
General and Administrative
General and administrative expenses consist of personnel costs incurred in our corporate service functions such as finance expenses, legal, human resources, and information technology, as well as other professional service costs.
Research and Development
Research and development costs consist primarily of personnel costs for team members engaged in research and development activities as well as third-party fees. All such costs are expensed as incurred, except for capitalized software development costs.
Depreciation and Amortization
Depreciation and amortization consists of the depreciation of property and equipment and amortization of certain intangible assets, including capitalized software.
Other Expense
Other expense consists primarily of interest expense and related-party interest expense, inclusive of the impact of interest rate swaps and net of interest income.
Income Tax Expense
Income tax expense includes current income tax and income tax credits from deferred taxes. Income tax expense is recognized in profit and loss except to the extent that it relates to items recognized in equity or other comprehensive income, in which case the income tax expense is also recognized in equity or other comprehensive income.
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Results of Operations for the Three Months Ended June 30, 2026 and 2025
The following table provides consolidated operating results for the periods indicated and percentage of revenue for each line item:
Three months ended June 30,
2026 2025 Change
($ in thousands) ($) (%) ($) (%) ($) (%)
Revenue $ 319,674 100.0 % $ 270,654 100.0 % $ 49,020 18.1 %
Operating expenses
Cost of revenue (exclusive of depreciation and amortization) 97,686 30.6 % 87,044 32.2 % 10,642 12.2 %
Sales and marketing 50,379 15.8 % 43,524 16.1 % 6,855 15.7 %
General and administrative 36,378 11.4 % 29,192 10.8 % 7,186 24.6 %
Research and development 17,723 5.5 % 12,622 4.7 % 5,101 40.4 %
Depreciation and amortization 41,466 13.0 % 33,426 12.4 % 8,040 24.1 %
Total operating expenses 243,632 76.2 % 205,808 76.0 % 37,824 18.4 %
Income from operations 76,042 23.8 % 64,846 24.0 % 11,196 17.3 %
Other expense
Interest expense, net (18,635) (5.8) % (17,325) (6.4) % (1,310) 7.6 %
Related party interest expense (1,011) (0.3) % (930) (0.3) % (81) 8.7 %
Income before income taxes 56,396 17.6 % 46,591 17.2 % 9,805 21.0 %
Income tax expense 15,529 4.9 % 14,407 5.3 % 1,122 7.8 %
Net income $ 40,867 12.8 % $ 32,184 11.9 % $ 8,683 27.0 %
Revenue
Three months ended June 30,
2026 2025 Change
($ in thousands) Solution type ($) Solution type ($) ($) (%)
Revenue Patient Provider Total Patient Provider Total
Subscription revenue $ 3,487 $ 172,800 $ 176,287 $ 3,381 $ 127,727 $ 131,108 $ 45,179 34.5 %
Volume-based revenue 84,087 58,062 142,149 78,168 60,122 138,290 3,859 2.8 %
Service and other revenue 296 942 1,238 421 835 1,256 (18) (1.4) %
Total Revenue $ 87,870 $ 231,804 $ 319,674 $ 81,970 $ 188,684 $ 270,654 $ 49,020 18.1 %
Revenue was $319.7 million for the three months ended June 30, 2026 as compared to $270.7 million for the three months ended June 30, 2025, an increase of $49.0 million, or 18.1%, of which $45.2 million was attributed to subscription revenue from existing and acquired clients, almost all of which was generated by provider solutions. Another $3.9 million was attributed to volume-based revenue primarily related to the expansion of existing client usage, of which $5.9 million was generated by patient payments solutions, partially offset by a decrease of $2.1 million by provider solutions.
Cost of Revenue (Exclusive of Depreciation and Amortization)
Cost of revenue was $97.7 million for the three months ended June 30, 2026 as compared to $87.0 million for the three months ended June 30, 2025, an increase of $10.6 million, or 12.2%. The increase was primarily driven by $5.1 million in increased costs stemming from higher transaction volumes and associated third-party costs, including higher platform usage of which approximately $5.6 million was third-party costs associated with provider solutions, partially offset by a decrease of $0.5 million from third-party costs associated with patient solutions. Additionally, there was $4.0 million of increased personnel costs, net of capitalized expense.
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Sales and Marketing
Sales and marketing expense was $50.4 million for the three months ended June 30, 2026 as compared to $43.5 million for the three months ended June 30, 2025, an increase of $6.9 million, or 15.7%. The increase was primarily driven by an increase in channel partner fees and amortization of the internal commission deferred contract costs asset of $3.6 million and increased personnel costs of $2.5 million.
General and Administrative
General and administrative expense was $36.4 million for the three months ended June 30, 2026 as compared to $29.2 million for the three months ended June 30, 2025, an increase of $7.2 million, or 24.6%. The increase was primarily due to an increase in stock-based compensation expense of $2.5 million as well as increased personnel costs of $1.4 million. In addition, there was an impairment expense related to a right-of-use asset and leasehold improvements at an office we plan to exit (see Note 7) driving a $2.0 million increase.
Research and Development
Research and development expense was $17.7 million for the three months ended June 30, 2026 as compared to $12.6 million for the three months ended June 30, 2025, an increase of $5.1 million, or 40.4%. The increase was primarily due to increased personnel costs, net of capitalized expenses, of $4.5 million.
Depreciation and Amortization
Depreciation and amortization expense was $41.5 million for the three months ended June 30, 2026, as compared to $33.4 million for the three months ended June 30, 2025, an increase of $8.0 million, or 24.1%. The increase is primarily due to additional amortization from new Iodine intangible assets acquired on October 1, 2025.
Interest Expense, net
Total interest expense, net (including related party interest expense) was $19.6 million for the three months ended June 30, 2026 as compared to $18.3 million for the three months ended June 30, 2025, an increase of $1.4 million, or 7.6%. The increase was primarily driven by the additional balance borrowed under our First Lien Credit Facility to help fund the Iodine acquisition completed on October 1, 2025, resulting in an increase to the corresponding interest expense. This increase was partially offset by interest earned in our investment securities.
Income Tax Expense
Income tax expense was $15.5 million for the three months ended June 30, 2026, as compared to income tax expense of $14.4 million for the three months ended June 30, 2025, an increase of $1.1 million. The increase was primarily driven by the increase in pre-tax income.
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Results of Operations for the Six Months Ended June 30, 2026 and 2025
The following table provides consolidated operating results for the periods indicated and percentage of revenue for each line item:
Six months ended June 30,
2026 2025 Change
($ in thousands) ($) (%) ($) (%) ($) (%)
Revenue $ 633,548 100.0 % $ 527,089 100.0 % $ 106,459 20.2 %
Operating expenses
Cost of revenue (exclusive of depreciation and amortization) 194,721 30.7 % 170,389 32.3 % 24,332 14.3 %
Sales and marketing 96,209 15.2 % 83,647 15.9 % 12,562 15.0 %
General and administrative 67,102 10.6 % 52,492 10.0 % 14,610 27.8 %
Research and development 36,091 5.7 % 23,700 4.5 % 12,391 52.3 %
Depreciation and amortization 82,918 13.1 % 66,806 12.7 % 16,112 24.1 %
Total operating expenses 477,041 75.3 % 397,034 75.3 % 80,007 20.2 %
Income from operations 156,507 24.7 % 130,055 24.7 % 26,452 20.3 %
Other expense
Interest expense, net (38,349) (6.1) % (35,582) (6.8) % (2,767) 7.8 %
Related party interest expense (1,944) (0.3) % (1,573) (0.3) % (371) 23.6 %
Income before income taxes 116,214 18.3 % 92,900 17.6 % 23,314 25.1 %
Income tax expense 32,064 5.1 % 31,447 6.0 % 617 2.0 %
Net income $ 84,150 13.3 % $ 61,453 11.7 % $ 22,697 36.9 %
Revenue
Six months ended June 30,
2026 2025 Change
($ in thousands) Solution type ($) Solution type ($) ($) (%)
Revenue Patient Provider Total Patient Provider Total
Subscription revenue $ 6,893 $ 341,564 $ 348,457 $ 6,572 $ 249,577 $ 256,149 $ 92,308 36.0 %
Volume-based revenue 162,977 118,633 281,610 153,878 114,330 268,208 13,402 5.0 %
Service and other revenue 1,612 1,869 3,481 1,100 1,632 2,732 749 27.4 %
Total Revenue $ 171,482 $ 462,066 $ 633,548 $ 161,550 $ 365,539 $ 527,089 $ 106,459 20.2 %
Revenue was $633.5 million for the six months ended June 30, 2026 as compared to $527.1 million for the six months ended June 30, 2025, an increase of $106.5 million, or 20.2%, of which $92.3 million was attributed to increased subscription revenue from existing and acquired clients, almost all of which is generated by provider solutions. Another $13.4 million was attributed to increased volume-based revenue, primarily related to the expansion of existing client usage, of which $4.3 million of the volume-based increase was generated by provider solutions and $9.1 million by patient payments solutions.
Cost of Revenue (Exclusive of Depreciation and Amortization)
Cost of revenue (exclusive of depreciation and amortization) was $194.7 million for the six months ended June 30, 2026 as compared to $170.4 million for the six months ended June 30, 2025, an increase of $24.3 million, or 14.3%. The increase was driven by $11.7 million in increased costs stemming from higher transaction volume and associated third-party costs, including higher platform usage, of which approximately $10.2 million was from third-party costs associated with provider solutions and $1.5 million was from third-party costs associated with payment solutions. Additionally, there was an $8.8 million increase in personnel costs, net of capitalized expenses.
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Sales and Marketing
Sales and marketing expense was $96.2 million for the six months ended June 30, 2026 as compared to $83.6 million for the six months ended June 30, 2025, an increase of $12.6 million, or 15.0%. The increase was primarily driven by an increase in channel partner fees and amortization of the internal commission deferred contract costs asset totaling $7.2 million associated with revenue growth as well as increased personnel costs of $5.8 million.
General and Administrative
General and administrative expense was $67.1 million for the six months ended June 30, 2026 as compared to $52.5 million for the six months ended June 30, 2025, an increase of $14.6 million, or 27.8%. The increase was primarily due to an increase in stock-based compensation expense of $7.1 million as well as increased personnel costs of $3.0 million. In addition, there was an impairment expense related to a right-of-use asset and leasehold improvements at an office we plan to exit (see Note 7) driving a $2.0 million increase.
Research and Development
Research and development expense was $36.1 million for the six months ended June 30, 2026 as compared to $23.7 million for the six months ended June 30, 2025, an increase of $12.4 million, or 52.3%. The increase was primarily driven by increased personnel costs, net of capitalized expenses, of $7.9 million, as well as increased software license expense of $1.5 million.
Depreciation and Amortization
Depreciation and amortization expense was $82.9 million for the six months ended June 30, 2026, as compared to $66.8 million for the six months ended June 30, 2025, an increase of $16.1 million, or 24.1%. The increase is primarily due to additional amortization from new Iodine intangible assets acquired on October 1, 2025.
Interest Expense, net
Total interest expense, net (including related party interest expense) was $40.3 million for the six months ended June 30, 2026 as compared to $37.2 million for the six months ended June 30, 2025, an increase of $3.1 million, or 8.4%. The increase was primarily driven by the additional balance borrowed on our First Lien Credit Facility to help fund the Iodine acquisition completed on October 1, 2025, resulting in an increase to the corresponding interest expense. This increase was partially offset by interest earned on our investment securities.
Income Tax Expense
Income tax expense of $32.1 million for the six months ended June 30, 2026 was relatively flat compared to income tax expense of $31.4 million for the six months ended June 30, 2025, an increase of $0.6 million.
Non-GAAP Financial Measures
We present adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, and non-GAAP net income per share as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes these non-GAAP financial measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses these non-GAAP financial measures to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide.
Adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, and non-GAAP net income per share are not recognized terms under GAAP and should not be considered as an alternative to net income, net income per share, or net income margin as measures of financial performance or cash provided by operating activities as a measure of liquidity, or
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any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, and debt service requirements. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. A reconciliation is provided below for our non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
Adjusted EBITDA and Adjusted EBITDA Margin
We define adjusted EBITDA as net income before interest expense, net, income tax expense, depreciation and amortization, and as further adjusted for stock-based compensation expense, acquisition and integration costs, asset and lease impairments, costs related to amended debt agreements, costs related to our IPO and the Secondary Offerings, and costs related to other unusual, non-recurring or otherwise notable items. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.
The following table presents a reconciliation of net income to adjusted EBITDA and net income margin to adjusted EBITDA margin for the three and six months ended June 30, 2026 and 2025:
Three months ended June 30, Six months ended June 30,
($ in thousands) 2026 2025 2026 2025
Net income $ 40,867 $ 32,184 $ 84,150 $ 61,453
Interest expense, net 19,646 18,255 40,293 37,155
Income tax expense 15,529 14,407 32,064 31,447
Depreciation and amortization 41,466 33,426 82,918 66,806
Stock-based compensation expense 13,803 11,530 25,249 18,274
Acquisition and integration costs 1,801 655 3,607 884
Asset and lease impairments 1,990 — 1,990 —
Costs related to amended debt agreements — — 227 —
IPO and Secondary Offering related expenses 5 1,769 12 3,199
Other (a) 1,618 326 1,618 1,080
Adjusted EBITDA $ 136,725 $ 112,552 $ 272,128 $ 220,298
Revenue $ 319,674 $ 270,654 $ 633,548 $ 527,089
Net income margin 12.8 % 11.9 % 13.3 % 11.7 %
Adjusted EBITDA margin 42.8 % 41.6 % 43.0 % 41.8 %
_______________________________________________________________
(a)For the three and six months ended June 30, 2026, adjustments related to costs for the cybersecurity incident (see Item 1A below). For the three and six months ended June 30, 2025, adjustments related to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and $0.4 million, respectively, and executive severance totaling $0.0 million and $0.5 million, respectively.
Non-GAAP Net Income and Non-GAAP Net Income Per Share
We define non-GAAP net income as GAAP net income excluding the impact of stock-based compensation, acquisition and integration costs, asset and lease impairments, costs related to our IPO and the Secondary Offerings, costs related to amended debt agreements and amortization of intangibles, and costs related to other unusual, non-recurring or otherwise notable items. The tax effects of the adjustments are calculated using a management estimated annual effective non-GAAP tax rate of 21%, which is based on our statutory federal tax rate and provides consistency across interim reporting periods by eliminating the effects of non-recurring and period specific items. Due to the differences in the tax treatment of items excluded from non-GAAP net income, our estimated tax rate on non-GAAP net income may differ from our GAAP tax rate.
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Non-GAAP net income per share is shown on both a basic and diluted basis and is defined as non-GAAP net income divided by the basic or diluted weighted-average shares, respectively.
The following table presents a reconciliation of net income to non-GAAP net income and non-GAAP net income per share for the three and six months ended June 30, 2026 and 2025:
Three months ended June 30, Six months ended June 30,
($ in thousands) 2026 2025 2026 2025
Net income $ 40,867 $ 32,184 $ 84,150 $ 61,453
Stock-based compensation 13,803 11,530 25,249 18,274
Acquisition and integration costs 1,801 655 3,607 884
Asset and lease impairments 1,990 — 1,990 —
Costs related to amended debt agreements — — 227 —
IPO and Secondary Offering related expenses 5 1,769 12 3,199
Other (a) 1,618 326 1,618 1,080
Intangible amortization 34,474 28,115 68,948 56,230
Tax effect of adjustments (11,275) (8,903) (21,347) (16,730)
Non-GAAP net income $ 83,283 $ 65,676 $ 164,454 $ 124,390
Non-GAAP net income per share:
Basic $ 0.43 $ 0.38 $ 0.86 $ 0.72
Diluted $ 0.43 $ 0.36 $ 0.84 $ 0.69
Weighted-average shares outstanding:
Basic 191,868,642 173,358,382 191,719,015 172,467,988
Diluted 194,513,042 181,599,133 194,902,172 181,076,149
(a)For the three and six months ended June 30, 2026, adjustments related to costs for the cybersecurity incident (see Item 1A below). For the three and six months ended June 30, 2025, adjustments related to additional lease costs due to the relocation of our Louisville office totaling $0.2 million and $0.4 million, respectively, and executive severance totaling $0.0 million and $0.5 million, respectively.
Key Performance Metrics
Net Revenue Retention Rate
We also regularly monitor and review our Net Revenue Retention Rate.
The following table presents our Net Revenue Retention Rate for June 30, 2026 and 2025, respectively:
Twelve months ended June 30,
2026 2025
Net Revenue Retention Rate 108.3 % 114.6 %
Our Net Revenue Retention Rate compares 12 months of client invoices for our solutions at two period end dates. To calculate our Net Revenue Retention Rate, we first accumulate the total amount invoiced during the 12 months ending with the prior period-end, or Prior Period Invoices. We then calculate the total amount invoiced to those same clients for the 12 months ending with the current period-end, or Current Period Invoices. Current Period Invoices are inclusive of upsell, downsell, pricing changes, clients that cancel or choose not to renew, and discontinued solutions with continuing clients. The Net Revenue Retention Rate is then calculated by dividing the Current Period Invoices by the Prior Period Invoices. Our total invoices included in the analysis are greater than 98% of reported revenue. We use Net Revenue Retention Rate to evaluate our ongoing operations and for internal planning and forecasting purposes. Acquired businesses are included in the last-12 month Net Revenue Retention Rate in the ninth quarter after acquisition, which is the earliest point that
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comparable post-acquisition invoices are available for both the current and prior 12-month period. Included within our net revenue retention rates for the 12 months ended June 30, 2026 and 2025 is the impact from the heightened win rates above our historically high rates and accelerated implementation timelines related to the cybersecurity incident of one of our competitors in February 2024.
Customer Count with >$100,000 Revenue
We also regularly monitor and review our count of clients who generate more than $100,000 of revenue.
The following table sets forth our count of clients who generate more than $100,000 of revenue for the periods presented:
Twelve months ended June 30,
2026 2025
Customer Count with > $100,000 Revenue 1,453 1,268
Our count of clients who generate more than $100,000 of revenue is based on an accumulation of the amounts invoiced to clients over the preceding 12 months. The invoices for acquired clients are included starting in the first full calendar quarter after the date of acquisition.
Liquidity and Capital Resources
Overview
We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses on a short-term and long-term basis are for working capital, capital expenditures, debt service requirements, and investments in future growth, including acquisitions. We have historically funded our operations and acquisitions through our cash and cash equivalents, cash flows from operations, and debt financings. We believe that our existing unrestricted cash on hand, expected future cash flows from operations, and additional borrowings will provide sufficient resources to fund our operating requirements, as well as future capital expenditures, debt service requirements, and investments in future growth for at least the next 12 months and beyond the next 12 months. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings, or a combination of these potential sources of funds. In the event that we need access to additional cash, we may not be able to access the credit markets on commercially acceptable terms or at all. Our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control, including those described under “Risk Factors” in the 2025 Form 10-K.
On June 30, 2026 and December 31, 2025, we had restricted cash of $32.8 million and $15.5 million, respectively, which consists of cash deposited in lockbox accounts owned by us which are contractually required to be disbursed to participating clients on the following day, as well as cash collected on behalf of healthcare providers from patients that have not yet been remitted to providers. These funds payable are not available for our use and liquidity, and are offset on our balance sheet by an aggregated funds payable liability.
Our liquidity is influenced by many factors, including timing of revenue and corresponding cash collections, the amount and timing of investments in strategic initiatives, our investments in property, equipment, and software, share repurchases, as well as other factors described under “Risk Factors” in the 2025 Form 10-K. Depending on the severity and direct impact of these factors on us, we may not be able to secure additional financing on acceptable terms, or at all.
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Cash Flows
Cash flows from operating, investing, and financing activities for the six months ended June 30, 2026 and June 30, 2025, are summarized in the following table:
Six months ended June 30, Change
($ in thousands) 2026 2025 Amount Change
Net cash provided by operating activities $ 144,324 $ 161,009 $ (16,685) (10.4) %
Net cash used in investing activities (182,082) (61,718) (120,364) 195.0 %
Net cash provided by financing activities 6,361 7,596 (1,235) (16.3) %
Net increase/(decrease) in cash and restricted cash $ (31,397) $ 106,887 $ (138,284) NM
Net Cash Provided by Operating Activities
Net cash provided by operating activities was $144.3 million for the six months ended June 30, 2026 as compared to $161.0 million for the six months ended June 30, 2025, a decrease of $16.7 million. This decrease was largely driven by deferred federal tax payments in 2025 as allowed by the IRS, as well changes in working capital. These decreases were partially offset by increases in revenue and profits.
Net Cash Used in Investing Activities
Net cash used in investing activities was $182.1 million for the six months ended June 30, 2026 as compared to $61.7 million for the six months ended June 30, 2025, an increase of cash used of $120.4 million. Net cash used in investing activities increased primarily due to net investment activity for our securities, as well as more purchases of property and equipment during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Net Cash Provided by Financing Activities
Net cash flows provided by financing activities was $6.4 million for the six months ended June 30, 2026 as compared to $7.6 million for the six months ended June 30, 2025, a decrease of $1.2 million. The primary driver of the decrease was due to common stock repurchased during the quarter (see Note 15), as well as a decrease in proceeds from issuance of common stock from employee equity plans. Also driving the decrease was the net impact of proceeds from amendment ro our Receivables Facility (see Note 11) and the corresponding paydown on our First Lien Credit Facility (see Note 12). These decreases were partially offset by an increase in restricted cash related to customers' cash deposited into our lockbox but contractually required to be disbursed to the participating clients (see Note 2 in our 2025 Form 10-K for details on restricted cash accounting policies).
Indebtedness
Refer to Item 1, Financial Statements, Notes 11 (Accounts Receivable Securitization) and 12 (Debt), for a description of our Credit Facilities.
Stock Repurchase Plan
On May 19, 2026, we announced that our Board of Directors authorized a stock repurchase plan pursuant to which we may repurchase up to $200 million of shares of its outstanding common stock. Under the plan, we may repurchase shares from time to time using a variety of methods, which may include open market purchases or other methods, in accordance with applicable securities laws and regulations. The timing, price, and size of repurchases will depend on a number of factors, including the market price of our common stock, our financial performance and liquidity, general economic and market conditions, and other considerations. The stock repurchase plan does not obligate us to acquire any particular amount of common stock and may be suspended or discontinued at any time. The repurchase plan will be funded using our working capital.
Critical Accounting Policies and Estimates
The above discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. The preparation of financial statements in conformity with GAAP requires management to make
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estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and disclosures of contingent assets and liabilities. Critical accounting policies are those that we consider to be the most important in portraying our financial condition and results of operations and also require the greatest amount of judgments by management. Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.
There have been no material changes to our critical accounting policies and estimates from those disclosed in the 2025 Form 10-K.
Recent Accounting Pronouncements
Refer to Item 1, Financial Statements, Note 2 (Summary of Significant Accounting Policies).