(Bloomberg) -- Health-care payments software maker Waystar Holding Corp. shares declined as much as 4.7% after its initial public offering raised $968 million, the largest by a US-based company this year.
Shares of Waystar, whose backers include EQT AB and Canada Pension Plan Investment Board, opened at $21 each, 2.3% lower than the IPO price. The shares traded at $20.88each as of1:43 p.m.
The offering of 45 million shares priced at $21.50 apiece, the midpoint of a marketed range. At that price, Waystar has a market value of about $3.6 billion. Including debt, the company has an enterprise value of about $5 billion.
The listing is the fourth-biggest in the US this year as IPOs continue to return after a two-year slump. Companies have raised about $18.7 billion via US IPOs since Jan. 1, according to data compiled by Bloomberg. The largest of those was cruise operator Viking Holdings Ltd.’s $1.77 billion listing in April. That compares with $10.5 billion raised at this point last year, the data show.
Neuberger Berman and the Qatar Investment Authority have indicated an interest in buying as much as an aggregate of $225 million in shares, the filings show.
If Waystar’s underwriters exercise their full overallotment option, the offering would top the $1 billion mark — one of just four on US exchanges so far this year, according to data compiled by Bloomberg.
AI Revenue Management
The Lehi, Utah-based company ditched its old name Navicure in 2023 for the current one, which refers to a guiding star. It also brings to mind the fictitious company Waystar Royco at the center of the hit TV drama Succession, but the real Waystar would prefer to be known for using artificial intelligence to help the health-care industry manage revenue cycles.
“We’re going after a large addressable market, about $15 billion a year, growing to $20 billion a year in 2027," Waystar Chief Executive Officer Matthew Hawkins told Bloomberg News in an interview.
“Waystar is growing at greater than two times the pace of the market as we do bring efficiency to the market and the providers, fueled by our cloud-based software and AI," he said.
The company leverages Google Cloud’s generative AI technology in tackling the health-care system’s complex yet common issues like administrative coding and billing burden, boosting procedural accuracy and reducing errors, according to a statement in May.
“We’re using the IPO to improve our capital structure, to de-lever the business and to drive investments in innovation, growth and operating efficiencies that we think will enable us to be durable as we work towards transforming the health-care industry," Hawkins said.
Waystar said it had a net loss of $51.3 million on revenue of $791 million in 2023, compared with a loss of $51.5 million on revenue of $705 million the previous year.
The firm’s investors, which include Bain Capital and Francisco Partners and their affiliates, aren’t selling shares in the IPO. After the offering, EQT is expected to remain the largest shareholder with a 29% stake, followed by CPPIB with 22% and Bain with 16.8%.
The company plans to use the net proceeds from the IPO to repay debt, according to an earlier statement.
“We’re using the IPO to improve our capital structure, to de-lever the business and to drive investments in innovation, growth and operating efficiencies that we think will enable us to be durable as we work towards transforming the health-care industry," Hawkins said.
What Bloomberg Intelligence Says
“Waystar is approaching its IPO with strong momentum, eamarking proceeds to pare nearly half of its $2.2 billion debt load, meaning enhanced M&A flexibility and likely a one-notch upgrade at all three credit raters. More than 2.5 turns of deleveraging will be a marked improvement for Waystar." — Mike Holland, analyst
Click here to read the research note.
The offering was led by JPMorgan Chase & Co., Goldman Sachs Group Inc. and Barclays Plc. The company’s shares are trading on the Nasdaq Global Select Market under the symbol WAY.
More stories like this are available on bloomberg.com
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Published: 07 Jun 2024, 11:34 PM IST
