SecProbe.io

United States securities and exchange commission logo
September 20, 2023
Matthew J. Hawkins
Chief Executive Officer
Waystar Holding Corp.
1550 Digital Drive, #300
Lehi, UT 84043
Re:Waystar Holding Corp.
Draft Registration Statement on Form S-1
Submitted August 24, 2023
CIK No. 0001990354
Dear Matthew J. Hawkins:
            We have reviewed your draft registration statement and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to these comments and your
amended draft registration statement or filed registration statement, we may have additional
comments.
Draft Registration Statement submitted August 24, 2023
Summary, page 1
1.You reference that your platform leverages artificial intelligence, as well as proprietary,
advanced algorithms to automate payment-related workflow tasks.  Please clarify what
you mean by artificial intelligence and explain how it is used in your platform and differs
from simple algorithmic code that automates processes in your platform. In addition,
clarify whether your platform utilizes third-party artificial intelligence products or
internally developed artificial intelligence processes.
2.Please clarify what you mean by the “flywheel effect” on page 2 and how it relates to your
use and capture of data as part of your AI-related systems.

 FirstName LastNameMatthew J.  Hawkins
 Comapany NameWaystar Holding Corp.
 September 20, 2023 Page 2
 FirstName LastName
Matthew J.  Hawkins
Waystar Holding Corp.
September 20, 2023
Page 2
3.We note that the Institutional Investors have certain corporate governance rights if they
collectively own 40% of more of the voting power of the total outstanding common stock,
such as a lower voting threshold to change your articles or bylaws.  Please briefly disclose
these rights in the summary.
Our Market Opportunity, page 3
4.Please provide the basis for your belief that your total addressable market is $15 billion
and why you believe it will grow on a compounded annual basis of 5%.  Clarify how you
calculated these figures.
5.We note your disclosure that “we estimate that our TAM with respect to our current
software solution set, is approximately $15 billion today....”  Please clarify if this means
your market healthcare payment system providers and software-related products and
services, or if it is a narrower term meaning a subset of the healthcare payment systems
that only have the functions that you currently offer.  If you are referring to a broader
market of healthcare-related software beyond payments, provide a more complete
description of the market you are referencing.
6.Please clarify how you determined your market share was between 3% and 7% for
hospitals and ambulatory practices, respectively, and define the market these market
share percentages measure.
Risk Factors
We are subject to health care laws and data privacy and security laws and regulations
governing..., page 32
7.On page 33 of this risk factor, you reference that your AI platform and data it uses may
subject you to additional risks under HIPPA and other health privacy laws.  Please clarify
whether are referring specifically to the use of AI in the operation of your platform and
whether such use may expose you to risks of non-compliance with such health privacy
laws.  For example, whether the AI functionality may cause your controls and procedures
related to privacy protection to be avoided or overwritten without proper authorization or
oversight.
Restrictive covenants in the agreements governing our Credit Facilities may restrict our ability to
pursue our business strategies, page 39
8.Please provide more detail regarding the restrictive covenants in your existing Credit
Facilities and how they may limit your current business operations, including, for
example, acquiring other companies, engaging in new lines of business, entering into
transactions with affiliates, and transfer or disposal of assets.  You should specify the
existing restrictions and explain how it limits your ability to do certain activities and
transactions.

 FirstName LastNameMatthew J.  Hawkins
 Comapany NameWaystar Holding Corp.
 September 20, 2023 Page 3
 FirstName LastName
Matthew J.  Hawkins
Waystar Holding Corp.
September 20, 2023
Page 3
Management’s discussion and analysis of financial condition and results of operations
Results of operations for the six months ended June 30, 2023 and 2022, page 60
9.For revenue, cost of revenue, and other line items where there is a material changes from
period-to-period, please expand your discussion to describe the underlying reasons for the
material changes in both quantitative and qualitative terms.  If more than one factor
contributed to the change, quantify each factor.  We refer to guidance in Item 303 of
Regulation S-K.
Key performance metrics and non-GAAP financial measures, page 64
10.You state on pages 58 and 62 that increases in revenue were driven by expansion of
existing and new clients.  Please disclose statistical data regarding client numbers for each
period presented in your key performance metrics or tell us why such a metric is not
provided.  We refer to guidance in Item 303(a) of Regulation S-K.
Liquidity and Capital Resources, page 65
11.You state that you believe your "existing unrestricted cash on hand, expected future cash
flows from operations, and additional borrowings will provide sufficient resources to fund
our operating requirements, as well as future capital expenditures, debt service
requirements, and investments in future growth for at least the next twelve months."
Please expand your discussion to also analyze your ability to generate and obtain adequate
amounts of cash to meet your requirements in the long-term (i.e., beyond the next 12
months).  We refer to guidance in Item 303(b)(1) of Regulation S-K.
Critical accounting policies and use of estimates
Goodwill and long-lived assets, page 72
12.Please expand your discussion of goodwill impairment to explain how goodwill was
tested, significant judgements and assumptions made during testing, and the sensitivity of
goodwill to future impairment.
Business
Our go-to-market strategy, page 79
13.On pages 3 and 16, you reference that your platform is integrated with over 200 vendors,
including ERP, EHR and PM systems.  You further indicate that you have entered
strategic relationships with channel partners to sell your solutions.  Please described these
relationships in more detail and clarify if you are materially dependent on any of these
ERP, EHR, PM or strategic partners or types of strategic partners.  For example, clarify, if
true, whether you are dependent on a small number of ERPs to sell your platform through
their systems for your larger enterprise clients or clients where you generate more than
$100,000 in revenue per client.

 FirstName LastNameMatthew J.  Hawkins
 Comapany NameWaystar Holding Corp.
 September 20, 2023 Page 4
 FirstName LastName
Matthew J.  Hawkins
Waystar Holding Corp.
September 20, 2023
Page 4
14.On pages 21-22, you reference that you are reliant on third-party vendors for critical
services such as clearinghouse systems, payment processing services, software
development, and eligibility verification.  Please clarify whether any of these relationships
are material, and if so, please describe the respective agreements.  Further, please expand
your Business section to discuss how these critical services operate through your
platform.  For example, your Research and Development discussion appears to imply that
the development and improvement of your platform is handled in-house.  If you are reliant
on outside software developers for this work, please clarify so.
15.We note that billing errors and mistakes related to billing may have a significant effect on
your clients, the end users, and your business.  Please clarify how your system can avoid
or reduce billing errors.
Client Case Studies, page 80
16.We note that you provide several examples of how your clients use your platform to
address their payment and business challenges, which include references to various
statistics and financial measures.  When using such information, please reference the
periods, timeframes, and/or dates being measured to provide context of what is being
measured.
Our Clients, page 80
17.On page 15, you briefly describe your client agreements are typically are 2-3 years in
duration, renew automatically in 1-year increments, and allow the client to terminate the
agreement early.  Please clarify whether your typical client agreement allows for early
termination without significant penalty and the ease, or lack thereof, to switch to a
competitor from a financial or technological point of view.  Further, clarify whether
management calculates and evaluates renewal rates as part of this oversight and
management of your business and if they are a key metric.
Competition, page 84
18.Please provide more details of your competition and your competitive environment.  We
note that you indicate that your market share is less than 7% of the market.  Yet you
believe that no competitor matches the breadth and depth of your solutions.  Clarify, for
example, if the market is highly fragmented and mostly consists of similarly sized or
smaller healthcare payments focused companies.  It is unclear whether the ERP, HER, PM
or other strategic partners also provide potentially competing payments or payments
workflow-related solutions.
Management, page 92
19.We note that several of your directors are affiliated with principal stockholders, namely
your Institutional Investors.  Please clarify if these directors were appointed through any
nomination or appointment right through any agreement.

 FirstName LastNameMatthew J.  Hawkins
 Comapany NameWaystar Holding Corp.
 September 20, 2023 Page 5
 FirstName LastNameMatthew J.  Hawkins
Waystar Holding Corp.
September 20, 2023
Page 5
Certain Relationships and Related Party Transactions, page 107
20.Please explain further what you mean by the “highest level of support” that will be
provided to EQT, CPPIB, and Bain director nominees.  For example, clarify whether each
of EQT, CPPIB, and Bain may nominate a director and whether the parties to the
shareholders agreement are obligated to vote their shares to elect those nominees.  Further,
clarify whether this provision terminates if EQT, CPPIB, and Bain’s collective beneficial
ownership falls below a certain voting threshold similar to the provision that would
eliminate the classified board structure should they collectively own less than 15% of the
voting power of the total outstanding shares entitled to vote in director elections.
Principal stockholders, page 110
21.Please disclose the natural person(s) that hold investment and/or voting power over the
shares held by the Institutional Investors, other than the funds affiliated with EQT
Investor.
Description of Capital Stock, page 112
22.You indicate in this section there is a single class of common stock, but you refer to issued
and outstanding Class A Common Stock with no voting rights on page F-28.  Please
clarify.
Notes to Consolidated Financial Statements
16. Stock-based compensation, page F-28
23.We note your statement on page F-29 that, "At December 31, 2022, we did not believe the
vesting of performance condition options criteria was probable and, therefore, no stock-
based compensation has been recorded."  That statement appears to contradict disclosure
regarding stock-based compensation expense recorded on page F-28.  Please clarify your
disclosure to distinguish between various types of stock options.
24.For performance based stock options, please disclose the specific performance conditions
and the amount of expense you will incur once the vesting of performance criteria
becomes probable.
25.Please provide a summary of stock options granted since January 1, 2022.  Provide the
date and amount of each stock option granted along with estimated fair value of the
underlying shares of common stock. Reconcile and explain the differences between the
fair values determined on each grant date including the difference between the most recent
grant date fair value and the midpoint of your offering range. This reconciliation should
describe significant intervening events within the company and changes in assumptions
with the valuation methodologies employed that explain the changes in fair value of your
common stock up to the filing of the registration statement. Continue to provide us with
updates to the above analysis for all equity related transactions through the effectiveness
date of the registration statement.

 FirstName LastNameMatthew J.  Hawkins
 Comapany NameWaystar Holding Corp.
 September 20, 2023 Page 6
 FirstName LastName
Matthew J.  Hawkins
Waystar Holding Corp.
September 20, 2023
Page 6
General
26.Please supplementally provide us with copies of all written communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do so on your behalf,
present to potential investors in reliance on Section 5(d) of the Securities Act, whether or
not they retain copies of the communications.
            You may contact Inessa Kessman, Senior Staff Accountant, at (202) 551-3371 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions regarding
comments on the financial statements and related matters.  Please contact Edwin Kim, Staff
Attorney, at (202) 551-3297 or Matthew Derby, Legal Branch Chief, at (202) 551-3334 with any
other questions.
Sincerely,
Division of Corporation Finance
Office of Technology
cc:       William Brentani, Esq.