Waystar Raises Guidance Even as Growth Engines Cool
Waystar posted 18% revenue growth to $319.7 million and raised its full-year outlook, even as volume-based revenue growth slowed to just 3% and net revenue retention fell to 108%.
Waystar Holding (WAY), a healthcare payments software provider, raised its full-year 2026 guidance even as several of the growth metrics underpinning its business decelerated for a second straight quarter. Revenue rose 18% year-over-year to $319.7 million in the second quarter, down from 22% growth in the first quarter and 24% in the fourth quarter of 2025.
The deceleration was broad-based rather than confined to one line item. Subscription revenue, the company's larger and stickier segment, grew 34% year-over-year, down from 38% in each of the prior two quarters. Volume-based revenue, tied to transaction activity, grew just 3%, the weakest print in the trailing five quarters and a sharp drop from 7% growth in the first quarter and 11% in the fourth quarter of 2025. Net revenue retention slid to 108% from 111% in the first quarter, 112% in the fourth quarter, and 113% in the third quarter of 2025, a steady four-quarter decline.
Profitability metrics held up better than the top-line trend. Net income margin came in at 13%, and adjusted EBITDA margin was stable at 43%, matching the prior two quarters and up from 42% in the third quarter of 2025. Trailing-twelve-month adjusted EBITDA reached $514.0 million, up from $417.1 million a year earlier, with the quarterly print rising each of the last four quarters to $136.7 million.
Client growth also continued, if at a slower clip. Clients contributing more than $100,000 in trailing-twelve-month revenue rose to 1,453 from 1,433 in the first quarter and 1,391 in the fourth quarter of 2025, though the year-over-year growth rate in that cohort slowed to 15% from 16% in the fourth quarter. Much of the underlying expansion traces to the October 1, 2025 acquisition of Iodine Software, which added more than 1,000 hospital and health-system clients and expanded Waystar's addressable market by more than 15%; the deal would lift gross and EBITDA margins immediately but would not contribute to revenue growth or non-GAAP earnings per share until 2027, a timeline now playing out in the subscription-revenue trend seen since the fourth quarter.
Despite the slowing growth rates, Waystar raised its full-year 2026 guidance across every headline metric. The company now expects revenue of $1.276 billion to $1.294 billion, up from a prior range of $1.274 billion to $1.294 billion, and adjusted EBITDA of $535 million to $545 million, up from $530 million to $540 million. Non-GAAP net income guidance rose to $322 million to $340 million and non-GAAP diluted earnings per share to $1.61 to $1.70, both up from the $317 million to $335 million and $1.59 to $1.68 ranges given in the first-quarter and fourth-quarter releases.
Cash generation moved in the opposite direction. Unlevered free cash flow fell to $63.9 million from $90.3 million in the first quarter and from $110.8 million a year earlier, while cash from operations dropped to $59.4 million from $84.9 million in the first quarter. Net debt rose to $1.283 billion from $896.9 million a year earlier, and the adjusted net leverage ratio ticked up to 2.5x from 2.2x, even as adjusted gross leverage improved slightly to 2.9x from 3.0x. Cash and cash equivalents fell to $12.6 million at June 30 from $61.4 million at year-end 2025, while investment securities rose to $179.0 million from $24.9 million, indicating a shift of liquid balances rather than an outright depletion of resources.
The quarter also introduced two new cost categories to Waystar's non-GAAP reconciliations. The company added back $1.6 million tied to a cybersecurity incident and $2.0 million in asset and lease impairment charges, both absent from the prior four quarters' adjusted EBITDA and non-GAAP net income calculations.