By Ava BennettWaystar Q3 revenue increased 21% year over year to $325.6 million for the period ended September 30, driven by a 34% surge in subscription software sales as health systems automated billing workflows. The healthcare payment provider reported GAAP net income of $31.0 million, or $0.16 per diluted share.
On a non-GAAP basis, third-quarter net income reached $87.1 million, or $0.44 per diluted share, while adjusted EBITDA climbed to $139.3 million, representing a 43% adjusted EBITDA margin. Shares closed up 0.50% at $28.14 following the release, valuing the company at $5.4 billion.
Operating cash flow totaled $103.9 million and unlevered free cash flow reached $114.8 million during the quarter. Analysts following healthcare business technology noted that hospital operators are prioritizing administrative automation to offset clinical labor costs.
Subscription Growth and Large Enterprise Client Retention
Subscription revenue expanded 34% year over year to $180.7 million, outpacing the 8% growth in volume-based transaction revenue, which totaled $142.9 million. Breakdown by customer segment showed provider revenue rising 28% to $243.4 million and patient payment revenue advancing 5% to $82.2 million.
Chief Executive Officer Matt Hawkins stated that robust bookings reflected healthcare providers consolidating more of their revenue cycle operations onto the company’s connected platform. Hospitals are increasingly adopting artificial intelligence and agentic software capabilities to prevent claim denials, verify insurance eligibility, and speed up reimbursement.
Enterprise client metrics underscored that platform consolidation. The number of customers generating more than $100,000 in trailing twelve-month revenue rose 14% year over year to 1,488 accounts, accompanied by a net revenue retention rate of 108%.
Full-Year 2026 Financial Outlook and Margin Discipline
Backed by high recurring subscription visibility, management issued full-year fiscal 2026 revenue guidance of $1.277 billion to $1.287 billion. Full-year adjusted EBITDA is projected between $543 million and $549 million, keeping operating profitability above the 42% mark.
Non-GAAP net income for 2026 is forecast between $322 million and $337 million, translating to diluted non-GAAP earnings of $1.63 to $1.71 per share. Strong cash conversion allows the company to invest in generative AI claim-scrubbing tools while steadily reducing leverage.
As medical billing complexity grows across commercial insurers and government payers, health systems face mounting pressure to reduce days in accounts receivable. Automated prior-authorization and patient financial engagement tools have become essential for maintaining hospital operating margins.
With nearly 1,500 large healthcare clients anchored on its cloud network and a 108% retention rate, the software provider enters the final months of 2026 with strong momentum. Expanding agentic AI adoption across existing hospital accounts remains the primary catalyst for 2027 growth.
Agentic AI Automation Across Hospital Billing Workflows
Hospital chief financial officers face persistent reimbursement complexity as commercial payers tighten prior-authorization rules and medical coding audits. Deploying agentic software capable of autonomously assembling clinical documentation, predicting claim denials before submission, and generating appeal letters has measurably shortened collection cycles for participating health systems.
Because the cloud platform processes billions of healthcare payment transactions annually, its machine learning models continuously adapt to shifting payer adjudication patterns across all 50 states. Cross-selling these advanced automation modules to its base of 1,488 large enterprise clients provides a clear runway for sustained margin expansion in 2027.
Integrating real-time patient cost estimation tools at the point of registration has also improved upfront collection rates for outpatient clinics and specialty practices. Scalable cloud architecture enables rapid onboarding as regional hospital networks merge.
