Good day, and thank you for standing by. Welcome to the Waystar First Quarter 2026 Earnings Conference Call. The operator will provide instructions for the question-and-answer session. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Edward Parker, Head of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining Waystar's First Quarter 2026 Earnings Call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer; and Steve Oreskovich, Waystar's Chief Financial Officer. This afternoon, we issued a press release announcing our financial results and published an accompanying presentation deck. You can find these materials at investors.waystar.com. Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance. Examples of these statements include expectations of future financial results, growth and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements. For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release and the reports we filed with the SEC, all of which are available on the Investor Relations page of our website. Any forward-looking statements made on this call are as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures. These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck and our earnings release. With that, let me turn the call over to Matt.

Thank you, Edward, and good afternoon, everyone. Thank you for joining our Q1 2026 Earnings Call. Waystar delivered a solid start to the year reflecting strong execution across the business and our innovation roadmap as we continue to position ourselves as the market leader in delivering an end-to-end health care revenue cycle platform. We drove strong performance across the core business, built on our innovation momentum, including our recent innovation showcase and introduced a new AI-powered recoupment solution. What differentiates Waystar is the tangible value we deliver. Our platform is purpose-built and integrates powerful LLMs into our core workflows to drive meaningful ROI for health care providers, improving accuracy, reducing friction and lowering the total cost of operating the revenue cycle. As requirements expand across payers, policies and workflows, providers increasingly choose embedded solutions they trust that deliver consistent financial outcomes. Importantly, the AI era is expanding Waystar's total addressable market opportunity meaningfully. Historically, revenue cycle technology addressed a roughly $20 billion software market. As we embed agentic AI directly into mission-critical workflows, we're building toward what we believe is the future of this industry, the autonomous revenue cycle platform. That shift unlocks a much larger opportunity, the approximately $100 billion in annual revenue cycle labor services performed across the industry today. We believe we are well positioned to automate a meaningful portion of this labor pool through new AI-powered capability launches like denials, prior authorization and recoupment. In health care, where regulation and risk define success, this shift is critical, and Waystar is built to win. Our AI advantage is anchored in billions of proprietary longitudinal, financial and clinical data points, deeply integrated workflows with significant switching and disruption risk, and hard-won domain expertise that positions us as the trusted AI partner and proven ability to operate at scale in an environment with little tolerance for hallucinations. Our first quarter results reinforce our conviction. Revenue of $314 million, representing 22% year-over-year growth. Strong retention supported that performance with net revenue retention of approximately 111% alongside continued adoption of our AI platform and approximately 99% first pass acceptance rates across the platform. With that context, let me highlight a few key points from the quarter. First, our core growth drivers are durable. Continued expansion across the platform and solid core execution drove our results. We expanded within our installed base and demand signals are strong. Second, AI traction is accelerating. AI-powered capabilities drove roughly 40% of new bookings in Q1 and our clients leaned into the platform for prevention, automation and visibility rather than downstream rework. That shift reflects the value of embedded intelligence across the revenue cycle. Third, we maintained discipline through near-term headwinds. A few factors pressured patient payment volumes during the quarter, reflecting broader macro and weather-related dynamics, but we held financial discipline while continuing to invest in innovation. Steve will expand on these dynamics shortly. Let me discuss the quarter in more detail. We continue to expand our client base in Q1, adding 42 new clients with more than $100,000 in trailing 12-month revenue. Win rates exceeded our historical averages across segments, and we continue to see RFP activity shift toward platform evaluations over point solutions, favoring Waystar's unified mission-critical platform. We also delivered strong bookings ahead of internal expectations and are building on a record Q4. Demand was broad-based, driven by both new logo wins and expansions within our installed base. We continue to build momentum with larger complex provider organizations as they consolidate vendors and standardize on a single platform. Our implementation backlog is elevated across segments. We carry what we believe is the largest qualified sales pipeline in our history, reflecting deep multiyear platform commitments from providers and supporting visibility into 2027. Waystar delivered adjusted EBITDA of $135 million in Q1, representing an adjusted EBITDA margin of 43%. Revenue mix elevated the margin slightly above expectations, which Steve will discuss. We continue to balance profitability with targeted investment in innovation and AI. Turning to Iodine. Integration is running ahead of plan and continues to validate the strategic rationale of the acquisition. Iodine extends Waystar into the mid-cycle where clinical intelligence plays a critical role in preventing denials and ensuring compliant reimbursement. The convergence of financial and clinical data represents one of the largest unmet needs in the revenue cycle and new third-party research confirms it. A recent study of 50 mid-cycle leaders found that 86% of organizations have financial and clinical systems that are completely siloed or are reliant on manual data transfers resulting in a lack of visibility into payer payment and denial outcomes. 100% expressed interest in a single AI-powered platform to bridge the gap from mid-cycle to the final claim. We'll publish the full study in the coming weeks, but these findings reinforce why we acquired Iodine and the demand signal we're seeing in the market. Iodine's AI talent is now fully integrated into Waystar, accelerating AI initiatives across the combined platform. We're generating early cross-sell traction in both directions and go-to-market demand is exceeding our expectations. Last quarter, we outlined the four interconnected pillars that position Waystar to lead in the AI-powered revenue cycle. Now I'll focus on how those pillars translate into outcomes for providers. First, Waystar is the mission-critical infrastructure providers depend on to get paid, operating at scale in one of the most highly regulated payment environments, directly inside live revenue cycle workflows: eligibility, authorization, claims, denials, appeals and payments. This results in very sticky long-term customer relationships. Second is our proprietary data at scale. We process over 7.5 billion transactions each year and with Iodine, our models now learn from clinical data on approximately one-third of U.S. hospital discharges annually, giving us visibility into the financial and clinical dimensions of reimbursement, not just what happened, but why. Our models learn across hospitals, physician practices and ambulatory settings. Every claim, denial and payment improves performance. Clients benefit from patterns across tens of thousands of similar organizations. Third, Waystar operates a deeply deployed multisided network and proprietary data rails between payers and providers. We connect over 1 million providers to every major payer through 100,000-plus live integrations across electronic health records, practice management systems, clearinghouses and clinical platforms. We touch roughly 60% of the U.S. patient population each year, yet we only penetrate a small portion of the total transactions those patients generate. As volume increases, our platform delivers better outcomes. Fourth, Waystar combines scale distribution with deep domain expertise. We serve providers across all care settings with low client concentration, creating both resilience and broad reach. Our forward deployed teams, product, clinical, revenue integrity and client success work directly inside real workflows. We develop and refine many of our AI capabilities in close partnership with clients, ensuring what we deliver works in production. With that foundation in place, let me turn briefly to how AI is operating and evolving across the platform today. At Waystar, AI is embedded directly inside workflows and where decisions are made and dollars move. The platform identifies issues upstream, resolves them inside live workflows and learns continuously from outcomes. This quarter, we accelerated the shift from task-level automation toward agentic workflows. Each step moves us closer to the autonomous revenue cycle where the platform absorbs the administrative burden, so teams can focus on exceptions, strategy and patient care. Today, approximately 50% of our solutions leverage AI and nearly 40% of revenue is generated by AI-embedded workflows. At last week's spring innovation showcase, we introduced several net-new capabilities that expand AI-embedded workflows across the revenue cycle including deeper convergence of financial and clinical intelligence to prevent issues before billing and expanded agentic intelligence that assesses documentation, prioritizes opportunities and guides next steps directly within live workflows. Early deployments are delivering strong outcomes. Our new prebill anomaly detection solution delivers an estimated $3 million in net revenue per 10,000 patient discharges and a 5x return in recovered revenue over 3 years. New Waystar Altitude AI-powered capabilities within our patient financial experience are expected to drive a 50% increase in collections, meaningful in a market where patients account for more than $556 billion in out-of-pocket spending. Some of the most damaging revenue loss in health care happens after providers have already been paid through payer recoupments. Payers regularly take back funds from previously paid claims, often months or years later by offsetting them against future payments with little transparency into which claims are involved, why the funds were recouped or whether the action is even valid. Based on our industry remittance data analysis, we estimate payers take back over $40 billion from providers each year through these offsets, and recoupments are growing at more than 2x the rate of overall claim volume, creating significant accelerating cash flow volatility. Waystar's new recoupment solution built on Altitude AI brings transparency to this process. Providers can now detect previously hidden recoupments, understand the root causes and take action efficiently, all using remittance data at scale. Early results are compelling. Providers are reducing recoupment reconciliation time by over 80% and one early-adopter health system matched $32 million in revenue risk, work equivalent to approximately 13 full-time employees. This new SKU integrates quickly for existing clients and demonstrates how we convert administrative complexity into financial outcomes through AI. Looking ahead, our priorities are clear: execute against our product roadmap with AI embedded deeper into every workflow, drive cross-sell and platform adoption across our installed base and maintain operational discipline while investing in the capabilities that widen our competitive advantage. Q1 reinforces that our role in the health care ecosystem is deepening. We're operating at the intersection of complexity, scale and outcomes, and our platform is engineered for exactly this environment. Before I turn the call over to Steve, I'm pleased to share that we will be hosting our first Analyst Day on Tuesday, August 25, alongside our annual Waystar True North Client Conference. You'll hear directly from our customers, partners and leadership team; we hope that many of you can join us. With that, let me turn it over to Steve.

Thanks, Matt. Revenue increased 22% year-over-year in the first quarter to $314 million. Organic revenue grew 11% year-over-year. Performance in the quarter reflects strong execution across the business and expansion within the customer base. Bookings exceeded internal expectations and include a double-digit count of $1 million-plus annual value contracts, which is above our historical quarterly performance. These contracts have both longer lead time to revenue and attractive profitability. Clients generating more than $100,000 of revenue in the last 12 months increased by 42 in the first quarter to 1,433 at quarter end, an increase of 15% year-over-year. Our net revenue retention rate, also viewed on a last 12-month basis, was 111% at the end of Q1, slightly above the historical range of 108% to 110%. Subscription revenue of $172 million for the first quarter increased 38% year-over-year, 3% sequentially and was 55% of total revenue. On an organic basis, subscription revenue grew 14% year-over-year. The growth and revenue composition are in line with our expectations. Volume-based revenue of $139 million for the first quarter increased 7% year-over-year and 4% sequentially. As we moved through the quarter, we saw some modest offsets within our volume trends that were most evident in patient interactions with health care providers and, taken together, affected volume-based revenues. These headwinds were primarily concentrated in patient payment solutions, which represent approximately 25% of revenue and include a combination of external and client-driven dynamics. Specifically, we saw accelerated conversion from print to digital patient statements as clients continue to focus on efficient ways to engage with patients. While we've been advocating for the shift to digital for some time, adoption in Q1 was ahead of historical rates, and we have updated expectations for the remainder of the year accordingly. We also saw two factors affecting patient utilization of the health care system during the quarter: changes in health care coverage and weather-related impacts. Importantly, none of these factors were competitive or product-driven as evidenced by our strong bookings performance over the past three quarters and a record qualified sales pipeline at the outset of Q2. Adjusted EBITDA of $135 million for the first quarter increased 26% year-over-year. The adjusted EBITDA margin of 43% was primarily driven by a shift to higher-margin solutions, specifically provider solutions, which have higher margins and comprised approximately 75% of revenue. Provider solutions organically grew year-over-year at double the rate of lower-margin patient payment solutions. Please see our latest investor presentation for more details on historic growth rates of these two solution sets. Our capital position is strong with healthy cash flows as we ended the quarter with $159 million in cash, equivalents and short-term investments and $1.5 billion in gross debt. Unlevered free cash flow was $90 million in the first quarter and we converted 67% of adjusted EBITDA to unlevered free cash flow. As of March 31, net leverage was 2.7x compared to 3x at the end of 2025, which aligns with our historical ability to delever one turn annually. As a reminder, we expect to run the business at or below a 3x leverage ratio. We are also pleased with the recognition of our efforts managing our capital structure as noted by both Moody's and S&P upgrading the ratings of our debt facility in the past couple of months. Based on the first quarter performance and our current visibility for the rest of the year, we reaffirm our revenue guidance range of $1.274 billion to $1.294 billion, with the midpoint of $1.284 billion, representing 17% year-over-year growth and adjusted EBITDA range of $530 million to $540 million, with the midpoint of $535 million. Our full year guidance at the midpoint continues to assume normalized organic revenue growth of approximately 10% consistent with our low double-digit long-term growth target. We expect the strong demand in booking activity we saw in the first quarter, along with similar results in the second half of 2026 to provide upside opportunity for growth in late 2026 and beyond. We are balancing that expectation with the near-term impact of the previously discussed offset, which we expect will adjust the typical first half, second half seasonality curve associated with patient payments to have much less variability in 2026 relative to the past couple of years. Thus, while we previously communicated that we expect 1% to 3% sequential quarterly growth throughout 2026, with Q3 at the low end, we now anticipate Q2 sequential growth to be flat to 1% and Q3 to be 1% to 3%. This concludes our opening remarks. With that, we are ready for your questions. Operator, please open the call.

The conference is now open for questions. Our first question will be coming from the line of Adam Hotchkiss of Goldman Sachs.

I guess, Matt, you spoke about 40% of revenue being associated with workflows related to AI. I think that speaks to the defensibility of the platform as you work AI into the existing solutions. But how should we think about the degree to which AI can be additive to your TAM and show up as recurring revenue growth? I guess I'm just trying to marry the stability of the current organic growth rate with some of the AI strength you're calling out in numbers and how we may see AI SKUs impact revenue growth in the future?

I appreciate your thoughtful question about AI. One of the things that you heard us just speak to, and I believe we've provided a slide or two this quarter and in the past, is a much larger total addressable market that we're able to go after by deploying AI capabilities that replace manual services. We note that a recent McKinsey report stated that this ongoing shift in value pools from services to technology and software platforms will expand its addressable market opportunity. And so I think what you see with our recent spring innovation showcase launch where we are consistently pointing people towards the autonomous revenue cycle platform and then delivering new AI-powered capabilities, whether it's the new recoupment SKU that we highlighted or things that show up in our innovation showcase like the prebill anomaly detection solution that replaces manual work, it's going to allow Waystar to pursue a much larger addressable market opportunity. We're very excited about that. We view AI as a tailwind and as the biggest opportunity in our lifetime.

Our next question will be coming from the line of Charles Rhyee of TD Cowen.

I want to ask about the comments you made about volume-based revenue. Obviously, it looks like patient revenue was up about 4% in the quarter. It's been going up about 8% the last two quarters prior. You made some comment about accelerated move from print to digital billing. Just curious, why would that necessarily have an impact? You did call out weather, but are you able to isolate how much maybe weather might have had impact on that? Just trying to understand a little bit what's happening there and how we should think about patient payments as we think about the guidance, particularly as the Q2 commentary on flat revenue. Any help there would be helpful.

Thanks, Charles. Let me start and then I'll turn it to Steve. We certainly work to be transparent with what we observed taking place in the business. And we did highlight a couple of the offsets in the transaction volume. Most of that was a function of this dynamic of the acceleration of conversion from print statements to digital statements. We've talked about this for quite some time. We know that there's a tremendous digital transformation opportunity that exists in health care, where we reduce paper and postage and take cost out of the system while we actually increase the patient experience and ensure that we get providers paid accurately and successfully. So we view this digital transformation as ultimately being good for providers, good for patients, and good for Waystar. Waystar has digital integrated patient payment solutions that improve transparency, improve patient payment plan adherence and are also helpful to providers. So I guess I'd say one other thing and then we can comment on some of the quarterly commentary: it's important to note that while we see this trend—and we're factoring that into how we think about 2026—we view this as an opportunity. This offset has zero to do with AI competition and more to do with doing what's right for health care. And so with that, Waystar can be an enabler of that. I'll turn it to Steve for added commentary.

Yes. And hopefully, Charles, when you get a chance, I guide you to look at Slide 8 of our IR deck. We expanded it to include the split of provider and patient payment solutions revenue by quarter and the historical trends since the first quarter. Transparently, most people could have picked it up from our filings, but you felt that it just made more sense to illustrate it here so you can actually see the same things that we're seeing going on in the business. To Matt's point, you continue to see the strength of the business in Provider Solutions, which are 75% of the total revenue. And we talked about in the past, very high margins with a very low direct third-party cost associated with it. Over the past six quarters, that's continued to grow nicely on an organic basis, which we also called out on the slide, anywhere between, on average, 13% to 14% year-over-year. The offsets we talk about are in the patient payments portion, that 25% of the revenue stream where we're helping providers connect with and interact with and get paid by patients. And that's where we're seeing that conversion from print to digital statements. Transparently, that does impact the top-line revenue number on a unit economic basis. But when you look at it from a margin dollars or cash flow perspective, that conversion is neutral. So we see positivity long term in the business there, because it's going to allow us to see margin accretion in the business overall. A little bit of that is what you see in the first quarter here as well, and we called that out based on the revenue composition for the quarter. Hopefully that's helpful commentary, and it's a good spot to go look and really dive into the details on that impact.

Our next question will be coming from the line of Jailendra Singh of Truist Securities.

I wanted to follow up on your comments that bookings came in ahead of internal expectations. I think you talked about 40% of bookings being driven by AI solutions, and I appreciate all the color there. Can you elaborate on the remaining 60% of bookings? Are there any particular areas that are seeing outperformance? And considering the rates we are seeing between payers and providers, are you seeing increased urgency from providers, which might result in a faster conversion than what we have seen in the past?

Thank you, Jailendra. Yes, we note that we've just seen nice momentum and I feel like our business is getting better and better every quarter. The bookings momentum is across both new prospects as well as cross-sell and upsell. We are growing across every segment of our business with high-quality opportunities. It's interesting: we look at the size of the bookings – just a little color commentary here – we called out in the last two quarters of 2025 that the number of million-dollar bookings were more than two times the quarterly average of the past three years. That trend is continuing. We're seeing more large bookings. To us, that validates our platform approach as these bookings are often multi-solution or platform sales often involving AI that can be turned on faster. Generally, cross-sell and upsell bookings, we're able to build an implementation plan for existing clients. But given the larger nature, whether it's new or existing, if these bookings are larger in size, they're still taking six to 18 months to show up in our revenue model. We've noted in the past how larger deals typically take this type of time for full revenue realization. We have internal teams focused on compressing that time, but it's a balancing act and sometimes it's what the actual provider organization needs. Overall, we're pleased with the progress that we're making. We start Q2 with the largest qualified pipeline of new and cross-sell upsell opportunities in our history. So that gives us a sense of momentum and conviction about the work that we're doing. And we also start Q2 with a large implementation backlog. Hopefully that commentary is helpful, Jailendra. I appreciate your question.

Our next question will be coming from the line of Ryan Daniels of William Blair.

Matt, maybe one for you. You talked about early adopters of the recoupment solution seeing some very good ROI — and I heard in your prepared comments you stated that was a new SKU. So it sounds like a new AI-enabled revenue generation opportunity. What I'm hoping you can dive into a bit more is how long does it take for solutions like this to kind of go broadly across your client base? And then also, are you doing any go-to-market changes given the potential increased value of solutions like this that are new and AI enabled that can really add value on a rapid basis?

Thank you, Ryan. We're sure excited about this new AI-powered recoupment solution. It does represent a new SKU. As you've heard us speak to in the past, these AI-powered solutions have multiple ways to show up in our business model. First, there's client longevity and sustaining sticky relationships. Second, there's pricing: AI solutions often strengthen existing software with additional LLM-based AI capability and we price those to the incremental value delivered. For a new SKU like this recoupment solution—and soon the prebill anomaly detection solution—we go through an extensive amount of training for our teams. The product and technology teams are excited to build these capabilities and launch them. We have a robust early adopter program and we're getting great feedback from some of the leading provider organizations in the United States. This is a robust test-and-learn environment. When we get ready to launch, we also bring along our go-to-market teams and product marketing teams. We do outbound product marketing, webinars and educational programs to inform provider organizations on the benefits of these solutions while training our go-to-market teams. Just last week, we were at a growth summit where several hundred people engaged in hands-on training to make sure we're able to talk about these solutions, get them into the hands of provider organizations and provide ROI calculators. We also train our operational teams to implement these solutions. Depending on the SKU, we're able to turn some of these things on rapidly. We're always exploring ways to turn on new capability so clients can absorb it into the platform and begin to use it. That often involves training and an educational component. The nice thing about our platform, Ryan, is we're conditioning end users to consume AI in a construct they understand. We deliver hundreds of capabilities onto our platform each quarter. We want people to understand the power they have. Sometimes the technology is a little bit ahead of the human factor. It's not just about turning capability on; it's about making sure providers get the benefit as they begin to consume this new AI capability.

Our next question will be coming from the line of Craig Hettenbach of Morgan Stanley.

Matt, I just had a question. When I think about how fragmented the revenue cycle management space is and your comments around point solutions versus platforms, what do you think is the tipping point in terms of driving a faster acceleration towards platforms? What are some of the things you're hearing from your customers and seeing in the market?

Thank you, Craig. There's a lot of excitement right now. This is not necessarily a new phenomenon. Health care and the revenue cycle space has had a long history of point solutions. It was our vision from the outset that Waystar could create an enterprise-caliber end-to-end integrated platform. That vision came from showing up and talking to provider decision-makers who are fatigued using point solutions. I was with a CIO of a very large system not long ago and she said, 'Matt, can you help us? I currently use more than 12 point solutions just to manage our revenue cycle process.' That's where the platform approach comes into play. What we hear providers increasingly want is a regulatory compliant, cybersecure, deeply integrated platform, and they want to be able to call one organization to help them across the platform to tackle their most persistent challenges. That's where Waystar is seeing momentum and the size of the deals we're signing and the quality of our pipeline reflect that. The forward demand indicators to us mean there's more excitement about our platform than perhaps ever before. This is what we were aiming for when Waystar was founded eight years ago. Hopefully that context is helpful.

Our next question will be coming from the line of Sean Dodge of BMO Capital Markets.

Maybe just staying on AI and how that likely changes the market. Matt, you talked a lot about embedding more AI in your offerings and that driving more value for clients. You also talked before about pricing to value, so adjusting the revenue model in a way that helps Waystar participate in some of that value creation. What do you think the timelines are for that pricing-to-value shift? How near-term is that opportunity? And how big of a paradigm shift is that in your pricing approach? You've always tried to price to value, so is this just an extension of that?

Sean, that's a great question. We've always priced to the value we deliver. As we deliver these AI capabilities in a way clients can absorb, we're excited about the opportunity to truly price to the value delivered. When we highlight the impact of AI, we often associate that with reduction of manual work and the number of people historically doing that manual work. We know there's significant impact in the solutions we offer. We're already monetizing AI through our core business model, so part of this isn't a science project of tying it to modules or outcomes in a new way. We're already doing that. But this gives us a chance to continue to price to value. The human labor factor in health care is the most expensive expense line in most health care organizations. If we can help those people become more productive and focus on higher-value work, that's constructive. While we don't want to disclose too much on our specific pricing philosophy on a public call, we've always been a consumption-based pricing model. We've always deployed software and AI capability that ties to actual business activity in an organization. We're not a per-seat fee company; we're tied to consumption and successful outcomes for the organizations we work with.

Our next question will be coming from the line of Stan Berenshteyn of Wells Fargo Securities.

I wanted to ask about the sales cycle. You obviously called out that you have a lot more SKUs, and you're generating much larger sales on a per-client basis. This requires your sales reps to do more learning and clients to be educated on what you're offering. How is that impacting the sales cycle? Any changes in conversion rates as we think about this year and next year?

Thanks, Stan. I wish I could have taken you with me to our Growth Summit that we hosted just last week. It felt like an NFL minicamp because we take our growth account executives seriously; they're among the best in the industry. We expect them to be very productive and focused. These are well-trained people. Our goal is to consistently deliver them new capability to introduce to clients and prospects. First and foremost, we take a platform approach — so it becomes additive to the platform every time we introduce a new high-value AI-powered solution, and our growth team loves that. We have a methodology we follow and strong training and development teams. We have a great team of people who want new product, and as we give it to them it shows up in the demand statistics we've discussed: elevated bookings, higher deal sizes, and a great qualified pipeline. We work with sales leaders to qualify that pipeline, which helps us get traction and create longer-term vision. So yes, we take training very seriously to empower great people to go help us grow.

And just to reiterate, is that impacting the sales cycle at all given the shift towards more SKUs and larger sales?

Let me say that it is not. Each of the segments we sell to have different sales cycles. Hospitals and health systems tend to be 12 to 24 months. Nonhospital or ambulatory organizations can be shorter. But we're not noticing a meaningful compression or elongation of time. We are also seeing elevated win rates. So as we introduce new solutions, if anything, the validating point is that sales cycles are staying the same and we're seeing elevated win rates.

Our next question will be coming from the line of Ryan MacDonald of Needham & Company.

Matt, maybe we'll give you a little breather on this one. I got one for Steve on margins. Steve, I'm curious how we should think about the pacing and magnitude of incremental investment as we go throughout the year. Was there anything in Q1 in terms of investments where you sort of held back or pushed out to later in the year? The reason I ask is Q1 has historically been the low watermark from an adjusted EBITDA margin perspective. Based on the implied guidance, even if you run Q1 adjusted EBITDA throughout the remainder of the year, we're getting to the higher end of the range. So just wondering what the puts and takes are with the reaffirmation of guidance.

Yes, Ryan. Our focus and where we're reinvesting back in the business hasn't changed. It will continue to be innovation, the client experience and cybersecurity. No changes to areas of focus. To your question on the 43% adjusted EBITDA margin for the quarter versus the 42% in overall guidance — and you are correct that typically Q1 tends to be a little lower — that is truly what we're seeing in the growth of the revenue breakdown I mentioned earlier with provider solutions growing at a faster rate and having a much higher bottom-line contribution than patient payments. As we look out for the full year, with some of the offsets we discussed in patient payments, we do expect the first-half versus second-half variability to be tighter than in prior years. So we would expect some of that shaping throughout the year, but there's nothing from an innovation or investment perspective that we were light on relative to where we expected to be in Q1. So there's a good opportunity to continue to drive exceptional margins throughout the rest of the year.

Our next question will be coming from the line of George Hill of Deutsche Bank.

Steve, I've got another one for you. Can we unpack the slowdown a little more in the Q2 expectations for the volume-based revenue? A lot of services have seen a slowdown in utilization in the first part of Q1 due to flu and weather. Is this a paper-to-electronic conversion process, is this a claims lag issue, or have you not seen the reacceleration or uptick yet? I'd really like to understand more of the mechanics of the accounting and what you guys are seeing, recognizing it's 25% of the revenue.

Yes. Certainly, George. Weather had an impact in the first quarter, and we wouldn't expect that to continue for the rest of the year. It is primarily the conversion from print to digital statements and a little bit of utilization of the health care system by patients. Typically, Q2 tends to be one of the stronger utilization quarters historically. Right now, with the printed-to-digital conversion and how we're seeing that play out for the rest of the year, that largely offsets the typical patient visitation uptick. That's what we're evaluating as we give guidance for Q2 and the rest of the year. The back half strength is also driven by longer-term larger deals we've covered and previously noted that tend to have longer lead time to revenue—toward the 18-month side of the 6- to 18-month ramping period. We're also working with clients to move some of those implementations through faster, which positively impacts the back half. As you're familiar with seasonality, patient payments, especially collections from those with high-deductible plans, can cause seasonality. That's why the 25% figure matters in the shaping of the year.

Our next question will be coming from the line of Daniel Grosslight of Citi.

This is Louis on for Daniel. I just had a follow-up. You noted earlier in the call that AI drove 40% of your bookings, and I know that you offer a broad array of AI products and not just models. Can you give more details if providers are more interested in just the new or more innovative solutions like Altitude, or is the demand just broad across your portfolio?

Thank you. We know that providers are very interested in the use of AI to help them operate and run their businesses. They want to use AI but are often reticent to adopt point solutions. The vast majority of provider organizations aren't equipped to stand up their own AI platforms. They're looking for trusted partners like Waystar. There's excitement around new LLM- or AI-powered solutions Waystar offers, but there's also broad-based interest in machine learning and data science that produce intelligence or insight. As we've discussed, our deeply deployed multisided network provides a lot of learning across that network. That breadth of AI capability tends to be very interesting to provider decision-makers. They're focused on outcomes: cybersecurity, efficiency, compliance, and deep integration to EHR and practice management systems. They want to do that at scale and get the learnings from thousands of other organizations, and Waystar helps deliver that.

Our next question will be coming from the line of Elizabeth Anderson of Evercore ISI.

Two macro questions. One, are you seeing any change in hospital financing stress that impacts purchasing decisions? Two, are you hearing anything from customers about managed care companies or payers pushing back against some of these new solutions? Any color would be helpful.

Thanks, Elizabeth. We're seeing our solutions get prioritized because they're mission-critical and help organizations get paid for services rendered. Our pipeline and bookings results are a testament to that. Regarding payer-provider dynamics, payers are deploying AI capability to ensure accurate payments and to avoid waste and abuse; sometimes that leads to increased denials. Individual providers typically don't have the resources to stand up equivalent AI capabilities to counter that. We're grateful to be in a position to represent over 1 million providers and develop AI capability that leads to more accuracy in coding and higher first-pass claim acceptance rates, resulting in accurate and faster payments. We aim to be a constructive intermediary that brings fairness and transparency to the marketplace. We're also seeing outreach from several payer organizations about real-time claim adjudication for portions of claims processed through Waystar. They're engaging because they see that we're improving accuracy.

Our next question will be coming from the line of Constantine Davides of Citizens.

Matt, I appreciate all the bookings color. I wanted to drill into momentum in the acute space specifically. Can you describe how your execution and competitiveness are tracking on the inpatient side of the market where you historically had lower market share relative to ambulatory?

Thank you, Constantine. We're seeing nice momentum on the acute side. When we formed Waystar eight years ago, we had a small handful of hospitals. Today we've built a presence where we work with approximately 16 of the top 20 hospitals and health systems in the United States. We work with nearly hundreds of hospitals in some form and we're delivering the message that we have a unified end-to-end revenue cycle platform marching toward an autonomous revenue cycle platform. That message is taking hold. About 40% of our revenue today is hospital and health system or acute-related. We're excited about the progress we're making in every segment of care and the continued momentum in hospitals and health systems.

I would now like to turn the call back to Matt Hawkins for closing remarks.

Well, thank you for joining our call today. We're very grateful for your interest and appreciate your thoughtful questions. As we wrap up today, I'd like to reaffirm that our business is getting better and better every quarter. We're doing what we said we would do from the outset: we're focused on disciplined execution. This is now eight consecutive quarters of strong revenue growth, EBITDA performance and cash flow that has allowed us to continue to delever. We've seen recent upgrades by S&P and Moody's and we're really grateful for the momentum that we see in our business. It's all possible because we have great people who buy into our mission of simplifying health care payments for providers so that they can spend more time caring for patients and less time working through administrative hassles. I'd like to thank our team, our clients and our partners, and we look forward to continuing to execute against our plan in 2026. Thank you.

This concludes today's program. Thank you for participating. You may now disconnect.