Healthcare Payments Firm Waystar Plans $1B IPO

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Dive Brief:

• Healthcare payment technology company Waystar expects to raise up to $1.04 billion in an initial public offering, the firm said in securities documents filed Tuesday.
• Waystar first publicly filed for a proposed IPO in October, but the company waited for more ideal market conditions to cement its public debut, according to a Bloomberg report, which cites sources familiar. The company plans to use proceeds from the IPO to repay outstanding debt, Waystar said in the filings.
• The IPO comes as the digital health market has stagnated in recent years, with few companies going public — but a successful exit from Waystar could move the needle, one expert told Healthcare Dive.

Dive Insight:

Waystar provides revenue cycle management software to about 30,000 clients, including physician practices, clinics, surgical centers, laboratories and health systems, according to its filing. The company, which applied to trade on Nasdaq under the ticker symbol “WAY,” is offering 45 million shares for $20 to $23 each. 

The deal comes as the public digital health market has frozen in recent years, following a boom in 2021 when private startups raised record amounts of capital and several companies made the jump to the public markets.

No digital health companies went public in 2023, according to Rock Health. The number of publicly traded digital health companies fell to 43 in the first quarter this year, from a peak of 54 in 2021 as some firms delisted, according to an April report by the venture capital firm and consultancy. 

But a successful IPO — or even a moderately lucrative exit — could help break some of the ice for mature digital health startups that may have been waiting for a safe time to go public, said Alex Lennox-Miller, lead analyst in healthcare IT at market intelligence company CB Insights.

Those companies may have raised plenty of money a few years ago, but cash may be running short, he said. Their investors are likely pushing for returns.

“Regardless of how this goes, we’re going to continue to see a slow increase in digital health IPOs for companies like this,” Lennox-Miller said. “But if it’s successful, it’s going to be a flood.”

Digital health had few public exits after 2021 boom

Some firms have struggled on the public markets. Babylon, a virtual primary care company that went public in 2021, filed for bankruptcy last year after a take-private deal fell apart. 

Digital therapeutics developer Pear Therapeutics also filed for bankruptcy in 2023, while Better Therapeutics delisted from Nasdaq in March and recently sold its assets to a competitor. 

Cue Health, a home diagnostics company that went public in 2021, also said this week it would wind down its business. 

But as a revenue cycle management company, Waystar may have an advantage over some public digital health firms that have struggled to stay afloat, Lennox-Miller said. 

“RCM is pretty much a known quantity. People know how much they need it, people understand what it’s for and what it does,” he said. “It’s not like home testing or a digital therapeutic, where there’s a level of convincing that has to happen to convince buyers that this is even something they should care about.”