WAY

Waystar's FY2025 marks a genuine inflection: revenue grew 16.5% to $1.10B, operating income more than doubled to $249M (22.7% margin), and the company swung from a $19M loss to $112M of net income. The MD&A frames this as durable — over 99% of revenue is recurring subscription or based on 'highly predictable volumes,' Net Revenue Retention was 112.0%, and 1,391 clients generate >$100K each. Operating cash flow of $310M on just $26.5M of capex is the real story: this is a capital-light SaaS that processes ~$2.4T of gross claims volume across roughly 60% of U.S. patients, with AltitudeAI-driven network effects management explicitly calls out as 'cumulative benefits over time.' Returns on equity look depressed (2.9%) only because the equity base ballooned post-IPO; on cash-generation terms the business is clearly compounding.

The valuation, however, has caught up to the fundamentals. At $19.00, WAY trades at 31x trailing diluted EPS and 3.3x sales — defensible for a 16% grower with 22.7% operating margins and entrenched healthcare-payments share, but not cheap. The capital structure is the wrinkle worth dissecting: $1.46B of long-term debt against just $61M of cash (down 66% YoY), and retained earnings still at -$109M reflect the LBO history. Liabilities/equity of 0.49x is comfortable on the surface, but the cash cushion is thin enough that the debt has to be serviced from operations rather than the balance sheet. Current assets fell 17% while current liabilities jumped 50% — worth watching even if working-capital timing explains most of it.