Tech Giant Waystar Set to Acquire Iodine Software for $1.25 Billion
Waystar, a leading player in healthcare payments, has announced its acquisition of Iodine Software for a total enterprise value of $1.25 billion. The deal, expected to close by the end of 2025, subject to customary conditions and receipt of all necessary regulatory approvals, aims to significantly impact the healthcare industry by enhancing revenue cycle management (RCM) through advanced AI integration.
The acquisition positions Waystar to provide an end-to-end, AI-enhanced RCM platform. By leveraging Iodine's AI-powered clinical intelligence platform and proprietary AI models trained on a large dataset (about 35% of U.S. inpatient discharges), Waystar plans to automate and optimize critical mid-revenue cycle processes such as clinical documentation integrity, utilization management, prebill revenue leakage identification, prior authorizations, claims management, denial prevention, and appeals.
The collaboration between Waystar and Iodine aims to reduce the estimated $440 billion in annual administrative costs affecting providers by expanding Waystar’s total addressable market by over 15%. This AI-driven automation is expected to reduce costly manual errors and denied claims, which traditionally cause significant revenue loss.
The combined company will continue to focus on modernizing the revenue cycle for providers. Advent, Iodine's largest shareholder, will receive Waystar shares and will be subject to an 18-month lock-up after closing. Iodine's equity holders will own roughly 8% of the combined company.
Iodine's Co-Founder and Chairman, Mike Kadyan, looks forward to delivering greater outcomes for providers as part of Waystar's market-leading platform. Iodine's Co-Founder and CEO, William Chan, is proud of building a market-leading AI software company and is excited to join Waystar.
The acquisition is expected to enhance Waystar's cloud-based software platform, benefiting over one million providers. Barclays is serving as the exclusive financial advisor to Waystar, and Simpson Thacher & Bartlett is serving as the legal advisor. J.P. Morgan Securities is serving as exclusive financial advisor to Iodine, and Weil, Gotshal & Manges LLP and Queen Saenz + Schultz are serving as legal advisors.
Matt Hawkins, Chief Executive Officer of Waystar, is committed to simplifying healthcare payments and transforming healthcare through AI. Iodine's AI-powered clinical intelligence software helps prevent up to 60 million claim denials due to administrative errors annually. The partnership between Waystar and Iodine is a terrific next step in achieving Waystar's mission to simplify healthcare payments.
The deal will be funded with a mix of cash and stock, resulting in current Waystar shareholders owning approximately 92% of the combined company. The acquisition is anticipated to improve gross margin, adjusted EBITDA margin, revenue growth, and non-GAAP net income per diluted share by 2027. This strategic move is anticipated to accelerate AI adoption in healthcare administration, driving higher compliance, provider efficiency, and ultimately a more financially sustainable provider ecosystem.
In essence, the acquisition positions Waystar to provide an end-to-end, AI-enhanced RCM platform that not only decreases administrative overhead but also improves financial outcomes for providers by capturing revenue that otherwise might be lost to inefficiencies and errors in clinical documentation and billing workflows. Advent, Iodine's largest shareholder, is excited to build on Iodine's foundation with Waystar to drive even greater impact across healthcare. Iodine's success has been driven by strong partnerships, continuous innovation, and meaningful outcomes. The acquisition is a significant step forward in Waystar's journey to revolutionise healthcare payments and administration.
- The acquisition of Iodine Software by Waystar, driven by the integration of advanced AI technology, is expected to significantly impact the business sector of healthcare payments, aiming to reduce administrative costs and automate critical mid-revenue cycle processes.
- By leveraging Waystar's market-leading platform and Iodine's AI-powered clinical intelligence, the collaboration aims to advance technology in the healthcare industry, ultimately driving financial growth and streamlining revenue cycle management.
