Waystar Holding

Company overview

Waystar Holding Corp. (NASDAQ: WAY) sells cloud software that helps U.S. healthcare providers get paid — eligibility and prior auth through claims, denials, remittance, and patient payments. Scale: >30,000 clients / >1m providers; >7.5bn payment transactions and >$2.4tn of gross claims in 2025. >99% of revenue is recurring (subscription ~55% / volume-based ~44% of 6M26). Top-10 clients were 10.8% of FY2025 revenue.

EQT, CPPIB and Bain took the company public in June 2024; IPO equity drove most of the delever from ~6.8x to ~3x. Iodine Software ($1.26bn, closed Oct-2025) re-levered the balance sheet. Recent events disclosed in Q2-26: June 2026 cyber incident (test-environment source code; management expects no material adverse effect), CFO change Aug-2026, and a $200m buyback authorization.

Ask (illustrative for this case): refinance the $1,374m first-lien TL (currently SOFR+200, due Oct-2029) with a private $1,400m first-lien TL plus a $300m delayed-draw TL for tuck-in M&A. LTM Jun-26: revenue $1,206m, Adj. EBITDA $514m, net debt ~$1,283m → ~2.9x gross / 2.5x net. ~6.4x LTM historical interest coverage (Adj. EBITDA / reported interest); ~5.3x pro forma at illustrative SOFR+300. Goodwill + intangibles are ~89% of assets; receivables sit in an A/R securitization SPV. The IC question is not whether Waystar can service the debt — it is whether a private lender is paid enough versus the BSL alternative.

Downside snapshot (from §7): "Bundled & breached" (2027–28) on LTM revenue $1,206m / Adj. EBITDA $514m. Downside: revenue −15%, 60% decremental; Adj. EBITDA $405m; no RCF draw; 4.4x gross; PF stressed coverage 3.0x, at the 3.00x covenant floor (~1–12% leverage-covenant cushion); 1L recovery 100%. Severe: −25%, 70%; $303m; $250m RCF drawn; 6.8x; PF 1.8x; 1L 88%. Tail: −35%, 75%; $197m; $500m RCF drawn; 11.6x; PF 1.0x; 1L 40% after the $100m A/R facility. Cash after capex and interest (EBITDA − capex − interest $223m / $85m / ($39m)).

Your memo should answer

1. 01Why take this at SOFR+300 when the company pays SOFR+200 in the BSL market today (and has repriced tighter four times since Feb-2024)? What is the illiquidity premium buying, and at what spread do you walk away?
2. 02Strip out Iodine and the competitor-cyber windfall. What is organic growth, and what does NRR falling from 114.6% (LTM Jun-25) to 108.3% (LTM Jun-26) tell you about the next two years? Why did provider volume-based revenue decline in Q2-26?
3. 03Leverage fell from 6.8x to 2.9x. How much did the business earn vs IPO equity? With sponsors exiting, a $200m buyback authorized, and a DDTL on the table, where does management want leverage — and what in the docs stops them going higher?
4. 04Walk recovery: no hard assets, ~90% goodwill/intangibles, receivables in an SPV. In downside, what does the revolver look like at default, what multiple, and at what EBITDA/multiple does the first lien lose money?
5. 05FCF conversion dropped from 61% to 48% while EBITDA grew 24%. Temporary or structural? What do cash taxes and capex look like in a normal year, and what is Adj. EBITDA − SBC − capex − cash taxes − interest on this structure?
6. 06June cyber incident, August CFO change, and equity ~half the Iodine share price — which is the real credit signal? What diligence and documentation would you require before funding?

Financials ($M)

Term sheet

Facility

$1,400m senior secured first-lien TL + $300m DDTL (24-mo availability); existing $500m RCF A&E; $100m A/R securitization permitted (cap $150m) — ILLUSTRATIVE

Use of proceeds

Repay $1,374m existing first-lien TL + fees/OID; DDTL for permitted acquisitions only

Tenor / amort

7 years; 1.0% p.a. quarterly amort

Pricing (illustrative)

Term SOFR + 300 bp, 0% floor, 98.5 OID; −25 bp at ≤2.50x total net leverage; DDTL ticking fee 50%/100% of margin from day 46/91

Pro forma leverage at close

~2.9x gross / ~2.5x net on LTM Adj. EBITDA $514m; ~3.5x gross if DDTL fully drawn with no acquired EBITDA

Coverage note

~6.4x = LTM historical (Adj. EBITDA / reported interest on existing S+200 package). ~5.3x = pro forma at illustrative SOFR+300. Do not mix.

Financial covenants

Max total net leverage 4.50x → 4.25x (Q8) → 4.00x (Q12); min interest coverage 3.00x; equity cure 2-in-4 / 4 life

Covenant EBITDA / RP

SBC add-back OK; cost savings/synergies/other capped at 15% of EBITDA, 12-mo realization. Buybacks/dividends unlimited only at PF TNL ≤3.00x, else ≤$50m/yr

Other terms

101 soft call 12 mo; ECF sweep 50%/25%/0%; DDTL draw ≤3.75x PF TNL + QoE >$150m; MFN 50 bp for life; J.Crew / Chewy / Serta / Pluralsight blockers; cyber notice within 5 business days