What You Should Know:
– Waystar, a provider of healthcare payment software announced a definitive agreement to acquire 100% of Iodine Software (“Iodine”) for $1.25B.
– The proposed acquisition is expected to significantly accelerate Waystar’s ability to transform healthcare payments through its leading cloud-based software platform, empowering more than one million providers with advanced AI capabilities to prevent denials, reduce manual work, and improve financial performance.
– Waystar expects the acquisition of Iodine to be immediately accretive to gross margin and adjusted EBITDA margin, and accretive to revenue growth and non-GAAP net income per diluted share in 2027.
Addressing Billions in Lost Revenue
Iodine Software is trusted by many of the nation’s premier health systems for its AI-powered clinical intelligence software. Up to $440B in annual administrative costs burden providers, with up to 60 million claims denied each year due to administrative errors between care delivery and submission, costing providers billions in lost revenue. This highlights the essential role of accurate clinical documentation and coding in preventing revenue leakage and underpayments.
Together, Waystar and Iodine will be better positioned to help decrease these administrative costs. Waystar brings a decade-long track record of applying AI pervasively across its software platform to simplify healthcare payments, while Iodine extends that leadership into clinical intelligence software. Iodine leverages proprietary AI models trained on one of the industry’s largest clinical datasets, representing more than a third of all U.S. inpatient discharges.
“Our mission is to simplify healthcare payments by eradicating unnecessary denied claims, automating manual work, and increasing transparency for providers and patients,” said Matt Hawkins, CEO of Waystar. “We are committed to transforming healthcare through harnessing the power of AI to tackle the most critical challenges in healthcare payments. Welcoming Iodine’s talented team and clinical intelligence platform to Waystar is a terrific next step in achieving our mission.”
Strategic and Financial Benefits of the Acquisition
The acquisition offers several strategic and financial benefits:
- Unlocks Transformational Outcomes: Waystar expects to unlock new automation throughout its platform, leveraging Iodine’s industry-leading AI capabilities in clinical documentation integrity, utilization management, and prebill revenue leakage identification. This is expected to expand Waystar’s total addressable market by more than 15%.
- Accelerates AI Innovation: Integrating Iodine’s unique clinical data assets with Waystar’s expansive data network is expected to enhance the impact and reach of Waystar AltitudeAI™. This will create opportunities to quickly expand Generative AI applications in prior authorizations, claims management, denial prevention, and appeals. Iodine’s proprietary clinical AI engine, IodineIQ, continuously trains on millions of patient encounters and billions of clinical data points to deliver relevant insights.
- Deepens Relationships with Premier Health Systems: Iodine brings strong adoption and credibility among leading hospitals and health systems, expanding Waystar’s scale and deepening relationships with premier providers. The combined company is expected to serve 17 of the 20 U.S. News Best Hospitals.
- Strengthens Financial Profile: Waystar will benefit from Iodine’s fully subscription-based revenue model and significant cross-sell potential. Waystar has identified more than $15 million in run-rate cost synergies, to be realized within the first 18-24 months following closing.
Transaction Details and Preliminary Q2 2025 Results
The transaction will be funded with a 50/50 mix of cash and stock consideration. Upon closing, current Waystar shareholders will own approximately 92% of the combined company on a fully diluted, pro forma basis, while Iodine equity holders will own approximately 8%. Advent, Iodine’s largest shareholder, is expected to only receive Waystar shares and will agree to be locked up for 18 months after closing.
Waystar expects to maintain a strong balance sheet with an estimated adjusted net leverage ratio at transaction close of approximately 3.5x. The transaction is anticipated to close by year-end 2025, subject to customary closing conditions and applicable regulatory approvals.
Waystar also provided preliminary second quarter 2025 results, expecting revenue to be approximately $271M, representing approximately 15% year-over-year growth. Waystar will share additional information on its Q2 2025 results on July 30, 2025.
