Waystar plans to acquire artificial-intelligence-driven revenue cycle management company Iodine Software, its first acquisition since going public last year.
Waystar, a healthcare payment software maker, announced a definitive agreement Wednesday to acquire Iodine Software from shareholders led by Advent International, a global private equity investor, for a total enterprise value of $1.25 billion.
The transaction will be funded with a 50/50 mix of cash and stock consideration, the company said. Upon closing of the transaction, current Waystar shareholders will own approximately 92% of the combined company on a fully diluted, pro forma basis, and Iodine equity holders will own approximately 8%. Advent, Iodine's largest shareholder, is expected to only receive Waystar shares in connection with the transaction and will agree to be locked up for 18 months after closing.
The deal is anticipated to close by the end of the year.
Waystar expects the acquisition of Iodine to be immediately accretive to gross margin and adjusted EBITDA margin, and accretive to revenue growth and non-GAAP net income per diluted share in 2027, executives said in a press release.
The deal would add Iodine Software's clinical intelligence capabilities to Waystar's software. The company developed AI-powered software solutions to address automation for clinical administration and revenue cycle management. Iodine's technology uses proprietary AI models trained on one of the industry's largest clinical data sets, representing more than a third of all U.S. inpatient discharges, according to the company.
Waystar has an expansive financial data network, processing 6 billion healthcare transactions a year. The company offers healthcare payment and revenue cycle management tools, serving approximately 30,000 clients representing more than 1 million distinct providers
The company said it will "unlock" new automation throughout its platform, leveraging Iodine's AI capabilities in clinical documentation integrity, utilization management and prebill revenue leakage identification to further streamline cumbersome tasks for providers. The addition of these solutions is expected to expand Waystar's total addressable market by more than 15%, executives said.
Waystar has been investing in new generative AI capabilities and advanced automation to target administrative waste across the
Integrating Iodine's unique clinical data assets with Waystar's expansive data network is expected to enhance the impact and reach of Waystar AltitudeAI, executives said.
The company aims to launch GenAI applications for prior authorizations, claims management and processing, denial prevention, and appeals. Iodine's proprietary clinical AI engine, IodineIQ, continuously trains on millions of patient encounters and billions of clinical data points.
The healthcare AI company's footprint across 1,000 hospitals and health systems will broaden Waystar's scale and deepen relationships with premier providers, the company said. The combined company is expected to serve 17 of the 20 U.S. News Best Hospitals, executives said.
From a financial perspective, Waystar said the company will benefit from Iodine's fully subscription-based revenue model as well as significant cross-sell potential to both companies' client bases.
Waystar says it has identified more than $15 million in run-rate cost synergies, to be realized within the first 18 to 24 months following the deal's closing.
The RCM company expects second quarter 2025 revenue to be approximately $271 million, representing approximately 15% year-over-year growth. It will release its second quarter results next week.
Barclays is serving as exclusive financial advisor, and Simpson Thacher & Bartlett LLP is serving as legal advisor to Waystar.
J.P. Morgan Securities is serving as exclusive financial advisor, and Weil, Gotshal & Manges LLP and Queen Saenz + Schutz PLLC are serving as legal advisors to Iodine.