Damp debut: The Nasdaq Market site in New York. The Utah-based Waystar ditched its old name Navicure in 2023 for the current one, which refers to a guiding star. — Reuters
New York: Healthcare payments software maker Waystar Holding Corp fell 3.7% in its trading debut after raising US$968mil in the year’s largest initial public offering (IPO) by a US-based company.
Shares of Waystar, whose backers include EQT AB and Canada Pension Plan Investment Board (CPPIB), closed last Friday at US$20.70, giving the company a market value of about US$3.45bil.
The company sold 45 million shares for US$21.50, the midpoint of the marketed range. Including debt, the company has an enterprise value of about US$5.7bil.
The listing is the fourth-biggest on a US exchange this year as IPOs continue to return after a two-year slump.
Companies have raised about US$18.7bil via US IPOs since Jan 1, according to data compiled by Bloomberg.
The largest of those was cruise operator Viking Holdings Ltd’s US$1.77bil listing in April. That compares with US$10.5bil raised at this point last year, the data show.
If Waystar’s underwriters exercise their full over-allotment option, the offering would top the US$1bil mark. Like Viking, the two other companies with bigger New York IPOs than Waystar this year are based outside the US.
Neuberger Berman and the Qatar Investment Authority had indicated an interest in buying as much as an aggregate of US$225mil in shares, the filings show.
The Lehi, Utah-based company ditched its old name Navicure in 2023 for the current one, which refers to a guiding star.
It also brings to mind the fictitious company Waystar Royco at the centre of the hit TV drama Succession, but the real Waystar would prefer to be known for using artificial intelligence (AI) to help the health-care industry manage revenue cycles.
“We’re going after a large addressable market, about US$15bil a year, growing to US$20bil a year in 2027,” Waystar chief executive officer Matthew Hawkins said in an interview.
“Waystar is growing at greater than two times the pace of the market as we do bring efficiency to the market and the providers, fuelled by our cloud-based software and AI,” he said.
The company leverages Google Cloud’s generative AI technology in tackling the healthcare system’s complex yet common issues like administrative coding and billing burden, boosting procedural accuracy and reducing errors, according to a statement in May.
Waystar plans to use the net proceeds from the IPO to repay debt.
“We’re using the IPO to improve our capital structure, to de-lever the business and to drive investments in innovation, growth and operating efficiencies that we think will enable us to be durable as we work towards transforming the healthcare industry,” Hawkins said.
Waystar said it had a net loss of US$51.3mil on revenue of US$791mil in 2023, compared with a loss of US$51.5mil on revenue of US$705mil the previous year.
The firm’s investors, which include Bain Capital and Francisco Partners and their affiliates, aren’t selling shares in the IPO.
After the offering, EQT is expected to remain the largest shareholder with a 29% stake, followed by CPPIB with 22% and Bain with 16.8%.
Bloomberg analyst Mike Holland said: “Waystar is approaching its IPO with strong momentum, earmarking proceeds to pare nearly half of its US$2.2bil debt load, meaning enhanced mergers and acquisitions flexibility and likely a one-notch upgrade at all three credit raters.
“More than 2.5 turns of deleveraging will be a marked improvement for Waystar.”
The offering was led by JPMorgan Chase & Co, Goldman Sachs Group Inc and Barclays Plc.
The company’s shares are trading on the Nasdaq Global Select Market under the symbol WAY. — Bloomberg
