Waystar to Acquire Iodine Software for $1.25B, Boosting AI-Driven Revenue Cycle Management

Waystar, a prominent healthcare payment software provider, has announced plans to acquire Iodine Software, an AI-driven revenue cycle management company, in a deal valued at $1.25 billion. This strategic move, Waystar's first acquisition since going public last year, aims to enhance its AI capabilities and expand its market presence in the healthcare technology sector.

Deal Structure and Financial Impact

The acquisition, expected to close by the end of the year, will be funded through a 50/50 mix of cash and stock. Upon completion, current Waystar shareholders will own approximately 92% of the combined company, while Iodine equity holders will retain about 8%. Advent International, Iodine's largest shareholder, will receive Waystar shares and agree to an 18-month lock-up period post-closing.

Waystar anticipates the acquisition to be immediately accretive to gross margin and adjusted EBITDA margin. The company projects that the deal will positively impact revenue growth and non-GAAP net income per diluted share by 2027. Additionally, Waystar has identified over $15 million in run-rate cost synergies, expected to be realized within 18 to 24 months after closing.

Technological Synergies and Market Expansion

The integration of Iodine Software's clinical intelligence capabilities with Waystar's extensive financial data network is set to create a powerful combination in the healthcare technology landscape. Waystar processes 6 billion healthcare transactions annually, serving approximately 30,000 clients and over 1 million distinct providers.

Iodine's proprietary AI models, trained on one of the industry's largest clinical datasets representing more than a third of all U.S. inpatient discharges, will complement Waystar's existing offerings. The acquisition is expected to expand Waystar's total addressable market by more than 15%, introducing new automation capabilities throughout its platform.

AI-Driven Innovation in Healthcare

This acquisition aligns with Waystar's ongoing investments in generative AI and advanced automation aimed at reducing administrative waste in the U.S. healthcare system. Earlier this year, Waystar launched Waystar AltitudeAI, a suite of AI capabilities designed to streamline provider workflows and improve financial performance.

The combined entity plans to leverage Iodine's clinical data assets to enhance the impact of Waystar AltitudeAI. Future developments include the launch of generative AI applications for prior authorizations, claims management and processing, denial prevention, and appeals.