0001410578-24-001768 | 10-Q | XBRL Viewer

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2024

Goodwill and Other Intangible Assets

7. Goodwill and Other Intangible Assets

Goodwill has a balance of $3.0 billion as of both September 30, 2024 and December 31, 2023. During the three and nine months ended September 30, 2024, we recorded an out-of-period adjustment to record a previously unrecognized deferred tax asset for the future benefit of rollover options originally issued in 2019 in connection with a change of control. The recorded adjustment increased deferred tax assets by $11.5 million, increased income tax benefit by $1.3 million for the three and nine months ended September 30, 2024, and decreased goodwill by $10.2 million. During the three and nine months ended September 30, 2023, we recorded an addition of $13.4 million to goodwill related to the HealthPay24 acquisition (Note 5). There were no other additions, disposals or impairments to goodwill during the three and nine months ended September 30, 2024 and 2023.

Amortization for definite-lived intangible assets is as follows (in thousands, except useful life):


							Weighted-
					Net		Average
	Gross Carrying		Accumulated		Carrying		Remaining
	Amount		Amortization		Value		Useful Life
As of September 30, 2024
Customer relationships	$	1,429,400	$	(417,009)	$	1,012,391	11.3
Purchased developed technology		301,100		(264,346)		36,754	4.0
Tradenames and trademarks		40,700		(20,149)		20,551	5.0
Total	$	1,771,200	$	(701,504)	$	1,069,696
As of December 31, 2023
Customer relationships	$	1,429,400	$	(345,848)	$	1,083,552	12.3
Purchased developed technology		301,100		(221,558)		79,542	3.0
Tradenames and trademarks		40,700		(16,857)		23,842	6.0
Total	$	1,771,200	$	(584,263)	$	1,186,936

Amortization expense was $39.1 million and $39.8 million for the three months ended September 30, 2024 and 2023, respectively, and was $117.2 million and $120.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Stock-based Compensation

9 Months Ended

Sep. 30, 2024

Stock-based Compensation

Stock-based Compensation

16. Stock-based Compensation

Equity incentive plans

On October 22, 2019, the Board of Directors approved the Waystar Holding Corp. 2019 Stock Incentive Plan (“2019 Waystar Holding Plan”). Under this plan, we can issue up to 9.9 million options or other equity awards. The granted awards contain service criteria, performance criteria, market conditions, or a combination thereof for vesting and have a 10-year contractual term. Options with a service condition generally vest over 5 years with 20% vesting in equal vesting installments. Options with a performance condition and a market condition vest based upon a change in control, initial public offering, or a sponsor distribution or deemed return if the investors have achieved specified levels of return on investment. In addition, as part of a change in control in 2019, 3.4 million fully vested rollover options remain outstanding.

The Board of Directors approved the Waystar Holding Corp. 2024 Equity Incentive Plan (the “2024 Equity Incentive Plan”), effective as of June 6, 2024, the date of pricing of our IPO. Under this plan, we can issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted shares of the Company’s Common Stock, restricted stock units, and other equity-based awards tied to the value of the Company’s shares. Under this plan, we can issue up to 10 million options and other equity awards. The number of shares available to be issued automatically increases on the first day of each fiscal year beginning next year by a number of shares equal to the lesser of the positive difference, if any, between 5% of the outstanding common stock on the last day of the immediately preceding fiscal year, minus the plan share reserve on the last day of the immediately preceding fiscal year or such lesser number of shares as may be determined by the Board of Directors. Options with a service condition generally vest over 5 years with 20% vesting in equal vesting installments. The restricted stock units (“RSUs”) under the 2024 Equity Incentive Plan generally vest over 4 or 5 years with 25% or 20% vesting, respectively, in equal vesting installments. As of September 30, 2024, 4.7 million shares were available for future grants under the plan.

The Board of Directors approved the Waystar Holding Corp. 2024 Employee Stock Purchase Plan (the “ESPP”), effective as of June 6, 2024, the date of pricing of our IPO. A total of 3,250,000 shares of common stock are initially reserved for the ESPP. The number of shares available to be issued for the ESPP will automatically increase each fiscal year beginning next year by a number of shares equal to the lesser of the positive difference, if any, between 1% of the outstanding common stock on the last day of the immediately preceding fiscal year and the number of shares of common stock available for the issuance of shares pursuant to the plan on the last day of the immediately preceding fiscal year or such lesser number of shares as may be determined by the Board of Directors. The number of shares available to be issued for the ESPP will not exceed 27,000,000 as outlined in the plan agreement. As of September 30, 2024, the ESPP has not been made available to employees and no shares have been issued.

Stock Options

We utilize the Black-Scholes option pricing model to estimate the fair value of the service condition options under all plans and the Monte Carlo pricing model to estimate the fair value of the performance condition options under the 2019 Waystar Holding Corp. Plan. We value both types of options at the grant date using the following assumptions:

●

Risk-free interest rate—reflects the average rate on the United States Treasury bond with maturity equal to the expected term of the option;

●

Expected dividend yield—as we do not currently pay dividends or expect to pay dividends in the near future, the expected dividend yield is zero;

●

Expected term of stock award – under the 2024 Equity Incentive Plan, we utilized the simplified method due to the lack of historical experience activity for our Company. The simplified method calculates the expected term as the mid-point between the vesting date and the contractual expiration date of the award. Under the 2019 Waystar Holding Corp. Plan, it is based on historical experience that is modified based on expected future changes;

●

Expected volatility in stock price—reflects the historical volatility of comparable public companies over the expected term of the stock option.

The weighted average grant date fair value of options granted during the three months ended September 30, 2023 was $20.63 per share. No options were granted during the three months ended September 30, 2024. The weighted average grant date fair value of options granted during the nine months ended September 30, 2024 and 2023 was $12.89 and $19.88 per share, respectively. As of September 30, 2024, we had 7.0 million fully vested options with a weighted average exercise price of $11.47 per share, an aggregate intrinsic value of $116.2 million and an average remaining contractual term of 4.3 years. The total fair value of options vested for the three months ended September 30, 2024 and 2023 were $2.9 million and $2.6 million, respectively. The total fair value of options vested for the nine months ended September 30, 2024 and 2023 were $4.8 million and $4.0 million, respectively.

In June 2024, we determined the vesting of all our performance condition options became probable as a result of the IPO (see Note 1). Therefore, we recognized an additional $33.1 million of stock-based compensation for the nine months ended September 30, 2024 as the implicit service period for the awards established at the grant date had elapsed. As of September 30, 2024, there is no remaining unrecognized compensation expense related to the performance condition options issued under the 2019 Waystar Holding Corp. Plan.

Information pertaining to option activity under all plans (including rollover options) during the nine months ending September 30, 2024 and 2023 is as follows:


				Weighted
		Weighted average		average
	Number of	exercise price per		remaining
	options	share		contractual life
Outstanding December 31, 2023	13,032,541	$	15.20	5.7
Granted	4,003,703		24.20
Exercised	(369,905)		4.27
Forfeited	(90,146)		20.39
Outstanding September 30, 2024	16,576,193		17.59	6.1


				Weighted
		Weighted average		average
	Number of	exercise price per		remaining
	options	share		contractual life
Outstanding December 31, 2022	13,123,170	$	15.10	6.6
Granted	160,325		37.20
Exercised	(33,154)		21.21
Forfeited	(232,925)		27.25
Outstanding September 30, 2023	13,017,416		15.14	5.9

The following is a summary of the significant assumptions used in estimating the fair value of options granted the three and nine months ended September 30, 2024 and 2023:


	Three months ended September 30,		Nine months ended September 30,
	2024	2023	2024	2023
Risk free interest rate	N/A	4.31%	3.76% - 4.59%	3.51% - 4.31%
Expected dividend yield	N/A	0%	0%	0%
Expected term of stock award	N/A	5	5.0 - 6.5	1.2 - 5
Expected volatility in stock price	N/A	51.98%	49.62% - 51.89%	51.80% - 55%

The aggregate intrinsic value of options exercised (the difference between the fair market value of our stock on the date of exercise and the exercise price) was approximately $6.7 million and $0.0 million for the three months ended September 30, 2024 and 2023, respectively, and $6.7 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively.

We expect to incur compensation expense of approximately $56.5 million over a weighted average of 3.9 years for all unvested time-based awards outstanding on September 30, 2024.

RSUs

The RSUs granted on June 10, 2024 in conjunction with the IPO were valued at the IPO price. Subsequent RSU grants will be valued using our common stock price as of the grant date based on the publicly traded value per NASDAQ, and are expensed on a straight-line basis over the applicable vesting period. All vesting is contingent on continued service.

The following table summarizes RSU activity during the nine months ended September 30, 2024. There was no RSU activity prior to the initial grant of RSUs on June 10, 2024.


		Weighted
	Number of	average grant
	shares	date fair value
Outstanding December 31, 2023	—	$	—
Granted	2,011,651		21.50
Vested	—		—
Forfeited	(8,259)		21.50
Outstanding September 30, 2024	2,003,392		21.50

We expect to incur compensation expense of $39.9 million over a weighted average of 4.3 years for all unvested RSUs outstanding on September 30, 2024.

Stock-based Compensation

We recorded $7.9 million and $2.2 million of stock-based compensation expense for the three months ended September 30, 2024 and 2023, respectively, and $47.4 million and $6.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Stock-based compensation expense was recorded in the following cost and expense categories in the consolidated statements of operations:


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Cost of revenue	$	300	$	131	$	2,161	$	545
General and administrative		4,832		1,276		27,043		3,629
Sales and marketing		1,587		444		10,958		1,387
Research and development		1,184		356		7,238		944
Total		7,903		2,207		47,400		6,505

Fair Value Measurements and Disclosures - Additional Information (Details) - Recurring basis - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Fair Value Measurements and Disclosures
Transfers in or out of Level 3	$ 0.0
Second lien term loan facility
Fair Value Measurements and Disclosures
Loan value	0.0
Carrying value \| First lien term loan facility
Fair Value Measurements and Disclosures
Loan value	1,166.8	$ 1,730.8
Fair value \| First lien term loan facility
Fair Value Measurements and Disclosures
Loan value	$ 1,168.2	$ 1,735.1

Leases (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
Leases (Details) - USD ($) $ in Millions	Sep. 30, 2024	Sep. 30, 2024	Dec. 31, 2023
Leases
Finance lease right-of-use assets	$ 1.8	$ 1.8	$ 16.0
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property, plant and equipment, net	Property, plant and equipment, net	Property, plant and equipment, net
Related finance lease right-of-use asset and capital lease asset	$ 13.2	$ 13.2
Additional operating lease cost	$ 1.0	$ 1.0

Stock-based Compensation - Stock Options Assumptions (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Significant assumptions
Risk free interest rate		4.31%
Expected dividend yield, percent		0.00%	0.00%	0.00%
Expected term of stock award (in years)		5 years
Expected volatility in stock price		51.98%
Aggregate intrinsic value, options exercised	$ 6.7	$ 0.0	$ 6.7	$ 0.6
Total unrecognized stock-based compensation expense	$ 56.5		$ 56.5
Expected compensation expense, weighted average period (in years)			3 years 10 months 24 days
Minimum
Significant assumptions
Risk free interest rate, minimum		4.31%	3.76%	3.51%
Expected term of stock award (in years)			5 years	1 year 2 months 12 days
Expected volatility in stock price, minimum		51.98%	49.62%	51.80%
Maximum
Significant assumptions
Risk free interest rate, maximum			4.59%	4.31%
Expected term of stock award (in years)			6 years 6 months	5 years
Expected volatility in stock price, maximum			51.89%	55.00%

Unaudited Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Unaudited Condensed Consolidated Statements of Comprehensive Loss
Amounts reclassified out of accumulated other comprehensive income/(loss) into net interest expense	$ 8,788	$ 8,563	$ 26,085	$ 22,659
Income tax effects of amounts reclassified out of accumulated other comprehensive income/(loss)	$ (2,134)	$ (2,013)	$ (6,334)	$ (5,327)

Related Party Transactions

9 Months Ended

Sep. 30, 2024

Related Party Transactions

Related Party Transactions

13. Related Party Transactions

At September 30, 2024 and December 31, 2023, we had $32.5 million and $65.3 million, respectively, of outstanding debt as part of the first lien term loan facility from Bain Affiliated Funds and CPPIB Credit Investments III Inc., affiliates of Bain Capital LP and Canada Pension Plan Investment Board (“Affiliated Debtholders”). Interest expense associated with and paid to Affiliated Debtholders was $0.7 million and $1.7 million for the three months ended September 30, 2024 and 2023, respectively, and $3.4 million and $6.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Canada Pension Plan Investment Board has an ownership interest in us and a significant interest in the landlord that leases us office space under an operating lease agreement in Houston, Texas. For the three months ended September 30, 2024 and 2023, we expensed $0.1 million and $0.1 million, respectively, and for the nine months ended September 30, 2024 and 2023, we expensed $0.2 million and $0.2 million, respectively, for this office space lease in general and administrative expense.

Bain Capital LP has an ownership interest in us and a significant interest in some clients for whom we provide software solutions. For the three months ended September 30, 2024 and 2023, we earned revenue of $0.4 million and $0.4 from four clients, respectively, and for the nine months ended September 30, 2024 and 2023, we earned $1.2 million and $1.2 million from four clients, respectively. They also have an ownership interest in us and a significant interest in a vendor that provides us with software solutions. For the three months ended September 30, 2024 and 2023, we expensed $0.1 million and $0.1 million, respectively, and for the nine months ended September 30, 2024 and 2023, we expensed $0.3 million and $0.2 million, respectively, for software services from this vendor in cost of revenue expense.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Acquisitions (Details) - HealthPay24 - USD ($) $ in Millions		3 Months Ended
	Aug. 03, 2023	Sep. 30, 2023
Acquisitions
Total consideration paid	$ 31.4
Useful lives	12 years 1 month 6 days
General and administrative
Acquisitions
Total acquisition costs		$ 0.9
Customer relationships
Acquisitions
Useful lives	19 years
Developed technology
Acquisitions
Useful lives	8 years
Tradenames and trademarks
Acquisitions
Useful lives	2 years

Acquisitions (Tables)

9 Months Ended

Sep. 30, 2024

Acquisitions

Summary of estimated fair values of assets acquired and liabilities assumed

The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the acquisitions date (in thousands):


Cash and cash equivalents	$	1,374
Accounts receivable		1,772
Prepaid and other current assets		255
Other assets		229
Customer relationships		14,500
Developed technology		800
Tradenames and trademarks		400
Goodwill		13,935
Total acquired assets	$	33,265
Other current liabilities		845
Deferred revenue		821
Other liabilities		225
Total acquired liabilities	$	1,891
Total net assets acquired	$	31,374

Debt - Maturity of Long-term Principal Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt
2024	$ 3,227
2025	12,909
2026	92,909
2027	12,909
2028	12,909
Thereafter	1,111,910
Total outstanding debt	$ 1,246,773	$ 2,248,816

Leases - Supplemental Balance Sheet Information (Details)	Sep. 30, 2024	Dec. 31, 2023
Leases
Weighted average remaining lease term, Operating leases (years)	4 years 3 months 18 days	4 years 10 months 24 days
Weighted average remaining lease term, Financing leases (years)	9 years 3 months 18 days	10 years 1 month 6 days
Weighted average discount rate, Operating leases	4.70%	4.40%
Weighted average discount rate, Financing leases	5.90%	5.90%

Accounts Receivable Securitization

9 Months Ended

Sep. 30, 2024

Accounts Receivable Securitization

Accounts Receivable Securitization

10. Accounts Receivable Securitization

As of September 30, 2024 and December 31, 2023, we had $80.0 million and $70.0 million, respectively, outstanding under a receivables financing agreement with a counterparty as the lender, which provides for a three-year receivables facility with a limit of $80.0 million (the “Receivables Facility”). On September 6, 2024, we drew $10.0 million on the Receivables Facility and used the proceeds to paydown $10.0 million on the First Lien Credit Facility (see Note 11). Pursuant to the Receivables Facility, we sell and/or contribute current and future receivables to Waystar RC, LLC as the Special Purpose Entity (“SPE”). The SPE, in turn, pledges its interests in the receivables to the counterparty, which either makes loans or issues letters of credit on behalf of the SPE. All receivables remain on our balance sheet as they continue to be the property of our consolidated entities under the securitization.

The interest rate under the Receivables Facility is 1.86% per annum above the SOFR rate with a minimum base of 0%. The SOFR is adjusted each thirty-day period to the thirty-day SOFR rate. Interest under the Receivables Facility is paid monthly in arrears. At September 30, 2024, the effective interest rate for the Receivables Facility is 6.71%.

All principal under the Receivables Facility is due on October 31, 2026.

The Receivables Facility contains certain covenants which, among other things, require we maintain certain collection thresholds with respect to our accounts receivable. We were in compliance with all such debt covenants during the periods presented.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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+ Details

Other Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2024

Other Accrued Expenses

Schedule of other accrued expenses

Other accrued expenses consist of the following (in thousands):


	September 30, 2024		December 31, 2023
Other taxes payable	$	4,151	$	3,506
Retirement plan payable		576		497
Accrued self insurance claims		922		993
Accrued interest		461		1,697
Other		5,411		4,230
Total	$	11,521	$	10,923

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Taxes
Income tax expense/(benefit)	$ 3,274	$ (4,709)	$ (17,398)	$ (11,743)
Effective income tax rate	37.70%	23.80%	31.30%	24.10%
Federal Statutory Income tax rate			21.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (i)
-Publisher FASB
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 1
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-Name Accounting Standards Codification
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-Topic 235
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1

+ Details

Property and Equipment, Net

9 Months Ended

Sep. 30, 2024

Property and Equipment, Net

Property and Equipment, Net

6. Property and Equipment, Net

The balances of the major classes of property and equipment are as follows (in thousands):


	September 30, 2024		December 31, 2023
Building	$	19,653	$	19,653
Computer hardware		39,753		35,006
Capitalized internal-use software		37,097		25,567
Purchased computer software		22,785		22,079
Furniture and fixtures		3,413		2,980
Office equipment		232		211
Leasehold improvements		8,385		8,255
Capital lease asset		2,994		2,994
Construction in progress		—		15
Internal-use software in progress		14,228		13,626
		148,540		130,386
Accumulated depreciation		(100,523)		(69,127)
	$	48,017	$	61,259

Depreciation of fixed assets, including the amortization of capitalized software, for the three months ended September 30, 2024 and 2023 was $21.1 million and $3.9 million, respectively. Depreciation of fixed assets, including the amortization of capitalized software, for the nine months ended September 30, 2024 and 2023 was $31.4 million and $11.4 million, respectively.

We capitalized $4.3 million and $12.1 million in software development costs for the three and nine months ended September 30, 2024, respectively. Amortization of capitalized software was $2.7 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively, and was $7.4 million and $3.8 million for the nine months ended September 30, 2024 and 2023, respectively. The net book value of capitalized software development costs was $28.1 million and $23.4 million as of September 30, 2024 and December 31, 2023, respectively.

There were no impairments of property and equipment for the three and nine months ended September 30, 2024 and 2023, respectively. Due to the relocation of one of our office locations, we reduced the useful life of the related finance lease and leasehold improvement assets which represented $15.8 million of incremental depreciation for the three and nine months ended September 30, 2024. The remaining net book value of the aforementioned assets as of September 30, 2024 is $2.1 million, which will fully depreciate in the fourth quarter of 2024.

Fair Value Measurements and Disclosures - Fair Value Hierarchy for Financial Assets and Liabilities Measured at Fair Value (Details) - Interest rate swap - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Financial assets
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets, Current	Other Assets, Current
Financial liabilities
Derivative Liability, Statement of Financial Position [Extensible Enumeration]		Other Liabilities, Noncurrent
Carrying value \| Recurring basis
Financial assets
Interest rate swaps, Financial assets	$ 1,958	$ 23,350
Financial liabilities
Interest rate swaps, Financial liabilities		2,472
Carrying value \| Recurring basis \| Other long-term liabilities
Financial liabilities
Interest rate swaps, Financial liabilities	1,309
Carrying value \| Recurring basis \| Other accrued expenses
Financial liabilities
Interest rate swaps, Financial liabilities	396
Level 2 \| Fair value \| Recurring basis
Financial assets
Interest rate swaps, Financial assets	1,958	23,350
Financial liabilities
Interest rate swaps, Financial liabilities		$ 2,472
Level 2 \| Fair value \| Recurring basis \| Other long-term liabilities
Financial liabilities
Interest rate swaps, Financial liabilities	1,309
Level 2 \| Fair value \| Recurring basis \| Other accrued expenses
Financial liabilities
Interest rate swaps, Financial liabilities	$ 396

Insider Trading Arrangements

3 Months Ended

Sep. 30, 2024

Steven Oreskovich

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

On September 6, 2024, Steve Oreskovich, our Chief Financial Officer, adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Mr. Oreskovich’s plan provides for (i) the exercise of 49,998 vested stock options and the associated sale of up to 49,998 shares of the Company’s common stock and (ii) the sale of up to 30,434 shares of the Company’s common stock issuable upon vesting of time-based vesting restricted stock units (“RSUs”). Mr. Oreskovich’s trading plan will expire on December 31, 2025 or upon the earlier sale of all of the shares subject to the plan.

Name

Steve Oreskovich

Title

Chief Financial Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

On September 6, 2024

Expiration Date

December 31, 2025

vested stock options | Steven Oreskovich

Trading Arrangements, by Individual

Aggregate Available

49,998

Common Stock | Steven Oreskovich

Trading Arrangements, by Individual

Aggregate Available

49,998

Restricted Stock Units (RSUs) | Steven Oreskovich

Trading Arrangements, by Individual

Aggregate Available

30,434

Sell-to-cover arrangement

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

(2) Each of the officers listed below entered into a trading arrangement (a “sell-to-cover arrangement”) that is intended to qualify as an “eligible sell-to-cover transaction” (as described in Rule 10b5-1(c)(1)(ii)(D)(3) under the Exchange Act) and to satisfy the affirmative defense conditions of Rule 10b5-1(c) on the date set forth opposite such officer’s name. Each sell-to-cover arrangement applies to RSUs. Each sell-to-cover arrangement provides for the automatic sale of shares of the Company’s common stock for each settlement date of a covered RSU in an amount necessary to satisfy the applicable withholding obligations. The number of shares that will be sold under the sell-to-cover arrangements is not currently determinable as the number will vary based on the extent to which vesting conditions are satisfied and the market price of our common stock at the time of settlement. These sell-to-cover arrangements will remain in effect until terminated by the participating officer or the Company.


Name and Title		Date of Adoption
Craig Bridge, Chief Transformation Officer		September 5, 2024
Matthew Hawkins, Chief Executive Officer		September 6, 2024
Matthew Heiman, Chief Legal & Administrative Officer		September 5, 2024
Melissa (Missy) Miller, Chief Marketing Officer		September 5, 2024
Steven Oreskovich, Chief Financial Officer		September 5, 2024
Christopher Schremser, Chief Technology Officer		September 5, 2024
Eric (Ric) Sinclair III, Chief Business Officer		September 6, 2024
Kimberly Wittman, Chief People Officer		September 5, 2024

Sell-to-cover arrangement | Craig Bridge, Chief

Trading Arrangements, by Individual

Name

Craig Bridge

Title

Chief Transformation Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 5, 2024

Sell-to-cover arrangement | Matthew Hawkins

Trading Arrangements, by Individual

Name

Matthew Hawkins

Title

Chief Executive Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 6, 2024

Sell-to-cover arrangement | Matthew Heiman

Trading Arrangements, by Individual

Name

Matthew Heiman

Title

Chief Legal & Administrative Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 5, 2024

Sell-to-cover arrangement | Melissa (Missy) Miller

Trading Arrangements, by Individual

Name

Melissa (Missy) Miller

Title

Chief Marketing Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 5, 2024

Sell-to-cover arrangement | Steven Oreskovich

Trading Arrangements, by Individual

Name

Steven Oreskovich

Title

Chief Financial Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 5, 2024

Sell-to-cover arrangement | Christopher Schremser

Trading Arrangements, by Individual

Name

Christopher Schremser

Title

Chief Technology Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 5, 2024

Sell-to-cover arrangement | Eric (Ric) Sinclair III

Trading Arrangements, by Individual

Name

Eric (Ric) Sinclair III

Title

Chief Business Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 6, 2024

Sell-to-cover arrangement | Kimberly Wittman

Trading Arrangements, by Individual

Name

Kimberly Wittman

Title

Chief People Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 5, 2024

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies.

Commitments and Contingencies

19. Commitments and Contingencies

We may be subject to legal proceedings, claims, asserted or unasserted, and litigation arising in the ordinary course of business. We do not, however, currently expect that the ultimate costs to resolve any pending matter will have a material effect on our consolidated financial position, results of operations, or cash flows.

Business

9 Months Ended

Sep. 30, 2024

Business

Business

1.	Business

Waystar Holding Corp. (“Waystar”, “we” or “our”) is a provider of mission-critical cloud technology to healthcare organizations. Our enterprise-grade platform transforms the complex and disparate processes comprising healthcare payments received by healthcare providers from payers and patients, from pre-service engagement through post-service remittance and reconciliation. Our platform enhances data integrity, eliminates manual tasks, and improves claim and billing accuracy, which results in better transparency, reduced labor costs, and faster, more accurate reimbursement and cash flow. The market for our solutions extends throughout the United States and includes Puerto Rico and other U.S. Territories.

Risks and Uncertainties— We are subject to risks common to companies in similar industries, including, but not limited to, our operation in a highly competitive industry, our ability to retain our existing clients and attract new clients, our ability to establish and maintain strategic relationships, the growth and success of our clients and overall healthcare transaction volumes, consolidation in the healthcare industry, our selling cycle of variable length to secure new client agreements, our implementation cycle that is dependent on our clients’ timing and resources, our ability to develop and market new solutions, or enhance our existing solutions, to respond to technological changes or evolving industry standards, the interoperability, connectivity, and integration of our solutions with our clients’ and their vendors’ networks and infrastructures, the performance and reliability of internet, mobile, and other infrastructure, the consequences if we cannot obtain, process, use, disclose, or distribute the highly regulated data we require to provide our solutions, impact of government regulations on our market, and our reliance on certain third-party vendors and providers.

On occasion, we enter into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, we indemnify, hold harmless, and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent, or other intellectual property infringement claim by any third-party with respect to its technology. The terms of these indemnification agreements are generally perpetual any time after the execution of the agreement. The maximum potential future payments we could be required to make under these agreements is not determinable because it involves claims that may be made against us in the future but have not yet been made. Historically, we have not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

We have entered into agreements with our directors or officers that may require us to indemnify them against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from their willful misconduct.

No liability associated with such indemnifications was recorded as of September 30, 2024 and December 31, 2023.

Reverse Stock Split

On May 15, 2024, we effected a 0.605-for-1 reverse stock split of our common stock and a 0.605-for-1 reverse stock split of our Class A common stock. The reverse stock split did not result in an adjustment to the par value of common stock or Class A common stock. The reverse stock split was originally made effective on May 15, 2024 with a 0.62-for-1 ratio and this was retroactively amended on May 22, 2024 which updated the ratio to 0.605-for-1. All references in the accompanying condensed consolidated financial statements and related Note 14, Note 16, and Note 18 have been updated to reflect the effects of the reverse stock split at the amended 0.605-for-1 ratio. The number of shares of common stock, Class A common stock, additional paid-in-capital, options to purchase common stock, and loss per share amounts, which are presented and disclosed in the financial statements and aforementioned footnotes, have been restated on a retroactive basis for all periods presented to reflect the effects of this action.

Initial Public Offering

In June 2024, we completed our initial public offering (“IPO”) in which we issued and sold 45,000,000 shares of our common stock at $21.50 per share. We received total proceeds of $914.3 million after deducting the underwriters’ discounts and commissions of $53.2 million. Deferred offering costs, which consist of direct incremental legal, accounting and other third-party fees that are directly related to the IPO, were capitalized and offset against proceeds upon the consummation of the IPO. Through the date of the IPO, we had capitalized $8.8 million of deferred offering costs, of which $0.1 million were unpaid as of September 30, 2024. These costs were offset against proceeds upon the consummation of the IPO.

As part of the IPO we granted the underwriters an overallotment option, for a period of 30 days from the date of the prospectus, to purchase up to 6,750,000 additional shares of common stock from us at the initial public offering price less the underwriting discount.

On July 5, 2024, the underwriters exercised the overallotment option to purchase 5,059,010 additional shares of common stock, resulting in additional net proceeds of $102.8 million after deducting underwriting discounts and commissions of $6.0 million. The remaining option to purchase additional shares expired unexercised at the end of the 30-day period.

We used the net proceeds from the IPO and the underwriters’ exercise of the overallotment option on July 5, 2024, to repay $909.1 million and $110.9 million, respectively, of outstanding principal indebtedness under our First Lien Credit Facility. See Note 11 below for details.

Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Stock-based compensation
Stock-based compensation expense	$ 7,903	$ 2,207	$ 47,400	$ 6,505
Cost of revenue
Stock-based compensation
Stock-based compensation expense	300	131	2,161	545
General and administrative
Stock-based compensation
Stock-based compensation expense	4,832	1,276	27,043	3,629
Sales and marketing
Stock-based compensation
Stock-based compensation expense	1,587	444	10,958	1,387
Research and development
Stock-based compensation
Stock-based compensation expense	$ 1,184	$ 356	$ 7,238	$ 944

Business - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended	9 Months Ended
	Jul. 05, 2024	Jun. 06, 2024	Jun. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Business
Proceeds from exercise of common stock options				$ 1,488	$ 284
Deferred offering costs capitalized						$ 5,400
First lien term loan facility
Business
Outstanding principal				909,100	$ 110,900
IPO
Business
Additional shares of common stock			45,000,000
Shares issued price per share			$ 21.50
Proceeds from exercise of common stock options			$ 914,300
Underwriters discounts and commission expense			$ 53,200
Deferred offering costs capitalized				8,800
Unpaid deferred offering costs				$ 100
Over allotment option
Business
Additional shares of common stock	5,059,010	6,750,000
Proceeds from exercise of common stock options	$ 102,800
Underwriters discounts and commission expense	$ 6,000

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Leases
Finance lease cost, Amortization of right-of-use assets	$ 13,442	$ 397	$ 14,236	$ 1,190
Finance lease cost, Interest on lease liabilities	186	198	568	602
Operating lease cost	1,978	970	3,752	2,817
Variable lease cost	206	216	357	316
Short-term lease	162	167	526	613
Total lease cost	$ 15,974	$ 1,948	$ 19,439	$ 5,538

Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2024

Property and Equipment, Net

Schedule of balances of the major classes of property and equipment

The balances of the major classes of property and equipment are as follows (in thousands):


	September 30, 2024		December 31, 2023
Building	$	19,653	$	19,653
Computer hardware		39,753		35,006
Capitalized internal-use software		37,097		25,567
Purchased computer software		22,785		22,079
Furniture and fixtures		3,413		2,980
Office equipment		232		211
Leasehold improvements		8,385		8,255
Capital lease asset		2,994		2,994
Construction in progress		—		15
Internal-use software in progress		14,228		13,626
		148,540		130,386
Accumulated depreciation		(100,523)		(69,127)
	$	48,017	$	61,259

Income/ (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2024

Income/ (Loss) Per Share

Schedule of reconciliation of the numerators and the denominators of the basic and diluted per share


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Basic income/(loss) per share:
Net income/(loss)	$	5,413	$	(15,486)	$	(38,204)	$	(36,919)
Net income/(loss) attributable to common shares	$	5,413	$	(15,486)	$	(38,204)	$	(36,919)
Weighted average common stock outstanding–(voting)		171,578,311		121,237,051		142,367,458		121,237,388
Weighted average common stock outstanding–(non-voting)		—		436,801		—		436,801
Basic weighted average common stock outstanding		171,578,311		121,673,852		142,367,458		121,674,189
Basic income/(loss) per share	$	0.03	$	(0.13)	$	(0.27)	$	(0.30)

Diluted income/(loss) per share:
Net income/(loss)	$	5,413		(15,486)	$	(38,204)		(36,919)
Net income/(loss) attributable to common shares	$	5,413	$	(15,486)	$	(38,204)	$	(36,919)
Dilutive effect of stock options – (voting)		4,268,993		—		—		—
Dilutive effect of RSUs – (voting)		334,207		—		—		—
Weighted average common stock outstanding–(voting)		176,181,511		121,237,051		142,367,458		121,237,388
Weighted average common stock outstanding–(non-voting)		—		436,801		—		436,801
Diluted weighted average common stock outstanding		176,181,511		121,673,852		142,367,458		121,674,189
Diluted income/(loss) per share	$	0.03	$	(0.13)	$	(0.27)	$	(0.30)

Subsequent Events

9 Months Ended

Sep. 30, 2024

Subsequent Events

Subsequent Events

20. Subsequent Events

We have evaluated subsequent events through the date of issuance, and there are no significant subsequent events that have occurred through the date of issuance.

Fair Value Measurements and Disclosures

9 Months Ended

Sep. 30, 2024

Fair Value Measurements and Disclosures

Fair Value Measurements and Disclosures

4. Fair Value Measurements and Disclosures

The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	Balance Sheet Classification	Carrying Value		Level 1		Level 2		Level 3
September 30, 2024
Financial assets:
Interest rate swaps	Other current assets	$	1,958	$	—	$	1,958	$	—
Financial liabilities:
Interest rate swaps	Other accrued expenses	$	396	$	—	$	396	$	—
Interest rate swaps	Other long-term liabilities	$	1,309	$	—	$	1,309	$	—
December 31, 2023
Financial assets:
Interest rate swaps	Other current assets	$	23,350	$	—	$	23,350	$	—
Financial liabilities:
Interest rate swaps	Other long-term liabilities	$	2,472	$	—	$	2,472	$	—

The fair values of our interest rate swaps are based on the sum of all future net present value cash flows. The future cash flows are derived based on the terms of our interest rate swaps, as well as considering published discount factors, and projected SOFR curve. The fair value of long-term debt was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities. The carrying value of our first lien term loan facility was $1,166.8 million and $1,730.8 million compared to a fair value of $1,168.2 million and $1,735.1 million at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, there is no balance for our second lien term loan facility given the paydown outlined below in Note 11. The carrying value of our second lien term loan facility approximated fair value at December 31, 2023. There were no transfers in or out of Level 3 during the periods presented.

As of September 30, 2024 and December 31, 2023, the carrying value of cash equivalents, accounts receivable, accounts payable, accrued liabilities, and other current assets and liabilities approximates fair value due to the short maturities of these instruments. Interest rate swaps are Level 2 instruments whose fair value is derived from discounted cash flows adjusted for nonperformance risk.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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+ Details

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The financial statements include the consolidated balance sheets, statements of operations, statements of comprehensive loss, statements of changes in stockholders’ equity, and statements of cash flows of Waystar and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations, changes in stockholders’ equity and cash flows. The results of operations for the nine months ended September 30, 2024 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2023 in the prospectus filed with the SEC on June 6, 2024 (the “Prospectus”).

We operate as a single business unit. As such, we report our results as a single operating segment that encompasses our entire organization.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions are used for, but are not limited to: (1) revenue recognition, including estimated expected customer life; (2) recoverability of accounts receivable and taxes receivable; (3) impairment assessment of goodwill and long-lived intangible assets; (4) fair value of intangibles acquired in business combinations; (5) litigation reserves; (6) depreciation and amortization; (7) fair value of stock options issued to employees and assumed as part of business combinations; (8) fair value of interest rate swaps; and (9) leases, including incremental borrowing rate. Future events and their effects cannot be predicted with certainty, and accordingly, accounting estimates require the exercise of judgment. We evaluate and update assumptions and estimates on an ongoing basis and may employ outside experts to assist in evaluations. Actual results could differ from the estimates used.

Revenue Recognition

We derive revenue primarily from providing access to our solutions for use in the healthcare industry and in doing so generate two types of revenue: (i) subscription revenue and (ii) volume-based revenue, which account for 99% of total revenue for all periods presented. We also derive revenue from implementation fees for our software, as well as hardware sales to facilitate patient payments.

We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), through the following five steps:

●	identification of the contract, or contracts, with a client;

●	identification of the performance obligations in the contract;

●	determination of the transaction price;

●	allocation of the transaction price to the performance obligations in the contract; and

●	recognition of revenue when, or as, we satisfy a performance obligation

Our customers, referred to as clients elsewhere in this report, represent healthcare providers across all types of care settings, including physician practices, clinics, surgical centers, and laboratories, as well as large hospitals and health systems.

We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The length of our contracts vary but are typically two to three years and generally renew automatically for successive one-year terms. Our revenue is reported net of applicable sales and use tax and is recognized as, or when, control of these services or products are transferred to clients, in an amount that reflects the consideration we expect to be entitled to in exchange for the contract’s performance obligations.

Revenue from our subscription services as well as from our volume-based services represents a single promise to provide continuous access (i.e., a stand-ready obligation) to our software solutions in the form of a service. Our software products are made available to our clients via a cloud-based, hosted platform where our clients do not have the right or practical ability to take possession of the software. As each day of providing access to the software solutions is substantially the same and the client simultaneously receives and consumes the benefits as services are provided, these services are viewed as a single performance obligation comprised of a series of distinct daily services.

Revenue from our subscription services is recognized over time on a ratable basis over the contract term beginning on the date that the service is made available to the client. Volume-based services are priced based on transaction, dollar volume or provider count in a given period. Given the nature of the promise is based on unknown quantities or outcomes of services to be performed over the contract term, the volume-based fee is determined to be variable consideration. The volume-based transaction fees are recognized each day using a time- elapsed output method based on the volume or transaction count at the time the clients’ transactions are processed.

Our other services are generally related to implementation activities across all solutions and hardware sales to facilitate patient payments. Implementation services are not considered performance obligations as they do not provide a distinct service to clients without the use of our software solutions. As such, implementation fees related to our solutions are billed upfront and recognized ratably over the contract term. Implementation fees and hardware sales represent less than 1% of total revenue for all periods presented.

Our contracts with clients typically include various combinations of our software solutions. Determining whether such software solutions are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment. Specifically, judgment is required to determine whether access to the Company’s SaaS solutions is distinct from other services and solutions included in an arrangement.

We follow the requirements of ASC 606-10-55-36 through -40, Revenue from Contracts with Customers, Principal Agent Considerations, in determining the gross versus net revenue presentations for our performance obligations in the contract with a client. Revenue recorded where we act in the capacity of a principal is reported on a gross basis equal to the full amount of consideration to which we expect in exchange for the good or service transferred. Revenue recorded where we act in the capacity of an agent is reported on a net basis, exclusive of any consideration provided to the principal party in the transaction.

The principal versus agent evaluation is a matter of judgment that depends on the facts and circumstances of the arrangement and is dependent on whether we control the good or service before it is transferred to the client or whether we are acting as an agent of a third party. This evaluation is performed separately for each performance obligation identified. For the majority of our contracts, we are considered the principal in the transaction with the client and recognize revenue gross of any related channel partner fees or costs. We have certain agency arrangements where third parties control the goods or services provided to a client and we recognize revenue net of any fees owed to these third parties.

Payment terms and conditions vary by contract type, although our standard payment terms generally require payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of payment, we have determined our contracts do not generally include a significant financing component. The primary purpose of our invoicing terms is to provide clients with simplified and predictable ways of purchasing our products and services, not to receive financing from our clients or to provide clients with financing.

Contract Costs

Incremental Costs of Obtaining a Contract

Incremental costs of obtaining a contract primarily include commissions paid to our internal sales personnel. We consider all such commissions to be both incremental and recoverable since they are only paid when a contract is secured. These capitalized costs are amortized on a straight-line basis over the expected period of benefit, which is determined based on the average customer life, which includes anticipated renewals of contracts. As of September 30, 2024 and December 31, 2023, the total unamortized costs reported as deferred costs on our balance sheet amounted to $29.2 million and $22.8 million, respectively, for internal sales commissions. For the three months ended September 30, 2024 and 2023, amortization related to the sales commission asset was $2.8 million and $2.0 million, respectively. For the nine months ended September 30, 2024 and 2023, amortization related to the sales commission asset was $7.8 million and $5.4 million, respectively. The aforementioned amortization amounts are included in sales and marketing in our consolidated statements of operations.

Costs to Fulfill a Contract

We capitalize costs incurred to fulfill contracts that i) relate directly to the contract, ii) are expected to generate resources that will be used to satisfy performance obligations under the contract, and iii) are expected to be recovered through revenue generated under the contract. Costs incurred to implement clients on our solutions (e.g., direct labor) are capitalized and amortized on a straight-line basis over the estimated customer life if we expect to recover those costs. As of September 30, 2024 and December 31, 2023, the total unamortized costs reported as deferred costs on our balance sheet amounted to $51.4 million and $43.0 million, respectively, for fulfillment costs. For the three months ended September 30, 2024 and 2023, amortization related to the fulfillment cost asset was $3.2 million and $2.3 million, respectively. For the nine months ended September 30, 2024 and 2023, amortization related to the fulfillment cost asset was $8.9 million and $6.3 million, respectively. The aforementioned amortization amounts are included in the costs of revenue in our consolidated statements of operations.

There were no impairment losses relating to deferred costs during the periods presented.

Channel Partners

We account for fees paid to channel partners within sales and marketing expenses in the accompanying statements of operations. For the three months ended September 30, 2024 and 2023, we recorded fees to all channel partners of $17.0 million and $13.1 million, respectively. For the nine months ended September 30, 2024 and 2023, we recorded fees to all channel partners of $47.6 million and $38.9 million, respectively. As we are primarily responsible for contracting with and fulfilling contracts for the end user, we record revenue gross of related channel partner fees.

Deferred Offering Costs

We capitalize within other assets certain legal, accounting and other third-party fees that are directly related to our in-process equity financings, including the planned initial public offering, until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction of the proceeds received as a result of the offering. Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses. Through June 6, 2024, the effective date of our Prospectus, we had capitalized $8.8 million of deferred offering costs, which were recorded in shareholders’ equity upon the completion of the IPO (see Note 1). As of December 31, 2023, deferred offering costs capitalized were $5.4 million.

Goodwill

We account for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.

We account for goodwill under the provisions of ASC 350, Intangibles—Goodwill and Other. Goodwill is evaluated for impairment annually on October 1st or whenever there is an impairment indicator. There was no impairment to goodwill during the nine months ended September 30, 2024 and 2023, respectively. Refer to Note 7 for more information on goodwill.

Debt Issuance Costs

Debt issuance costs, net of amortization, are reflected on our balance sheet as a direct reduction in the carrying amount of our long-term debt. In addition, debt issuance costs, net of amortization, related to our revolver debt are included in other assets. Debt issuance costs include fees paid to creditors and third party fees incurred for the issuance of new debt. Debt issuance costs are amortized over the respective term of the debt instruments using the effective interest method, and amortization charges are included in interest expense.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting-Improvements to Reportable Segment Disclosures.” The standard is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. For public business entities, the ASU will be effective for annual periods beginning after December 15, 2023. The guidance will be applied retrospectively unless it is impracticable to do so. Early adoption is permitted. We are currently evaluating the effect of the adoption of this amendment on our consolidated and condensed consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Improvements to Income Tax Disclosures”, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. For public business entities, the ASU will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. We are currently evaluating the effect of the adoption of this amendment on our consolidated and condensed consolidated financial statements.

Summary of Significant Accounting Policies - Deferred Offering Costs (Details) - USD ($) $ in Millions	Sep. 30, 2024	Dec. 31, 2023
Summary of Significant Accounting Policies
Deferred offering costs capitalized		$ 5.4
IPO
Summary of Significant Accounting Policies
Deferred offering costs capitalized	$ 8.8

Goodwill and Other Intangible Assets - Amortization for Definite-lived Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Goodwill and Other Intangible Assets
Gross carrying amount	$ 1,771,200		$ 1,771,200		$ 1,771,200
Accumulated amortization	(701,504)		(701,504)		(584,263)
Net carrying value	1,069,696		1,069,696		1,186,936
Amortization expense	39,100	$ 39,800	117,200	$ 120,400
Customer relationships
Goodwill and Other Intangible Assets
Gross carrying amount	1,429,400		1,429,400		1,429,400
Accumulated amortization	(417,009)		(417,009)		(345,848)
Net carrying value	$ 1,012,391		$ 1,012,391		$ 1,083,552
Weighted-average remaining useful life	11 years 3 months 18 days		11 years 3 months 18 days		12 years 3 months 18 days
Purchased developed technology
Goodwill and Other Intangible Assets
Gross carrying amount	$ 301,100		$ 301,100		$ 301,100
Accumulated amortization	(264,346)		(264,346)		(221,558)
Net carrying value	$ 36,754		$ 36,754		$ 79,542
Weighted-average remaining useful life	4 years		4 years		3 years
Tradenames and trademarks
Goodwill and Other Intangible Assets
Gross carrying amount	$ 40,700		$ 40,700		$ 40,700
Accumulated amortization	(20,149)		(20,149)		(16,857)
Net carrying value	$ 20,551		$ 20,551		$ 23,842
Weighted-average remaining useful life	5 years		5 years		6 years

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Common and Preferred Stock

9 Months Ended

Sep. 30, 2024

Common and Preferred Stock

Common and Preferred Stock

14. Common and Preferred Stock

Prior to the IPO, we authorized the issuance of 225,000,000 shares of common stock, par value $0.01 per share and 2,000,000 shares of Class A common stock, par value $0.01 per share. There were 121,243,101 common stock shares issued and outstanding as of December 31, 2023. There were 436,801 Class A common stock shares issued and outstanding as of December 31, 2023. Both common stock and Class A common stock had the same dividend and liquidation rights. However, each share of common stock was entitled to one vote and each share of the Class A common stock was not entitled to a vote.

In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective on June 10, 2024, which authorizes the issuance of 2,500,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share. The shares of preferred stock have rights and preferences, including voting rights, designated from time to time by the Board of Directors. In connection with the amendment and restatement of the Company’s certificate of incorporation effective on the IPO date, the Class A common stock shares were automatically reclassified as, and became, one share of common stock. There were 172,086,129 common stock shares issued and outstanding as of September 30, 2024. There were no shares of preferred stock issued and outstanding as of September 30, 2024.

- Definition

The entire disclosure for equity.

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+ Details

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Condensed Consolidated Balance Sheets
Accounts receivable, allowance	$ 5,223	$ 5,335
Preferred stock, shares par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000,000	0
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, shares par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	2,500,000,000	227,000,000
Common stock, shares issued (in shares)	172,086,129	121,679,902
Common stock, shares outstanding (in shares)	172,086,129	121,679,902

Revenue Recognition - Deferred Revenue Balances (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Deferred Revenue
Beginning balance	$ 17,108	$ 16,454
Revenue recognized	(10,203)	(9,900)
Additional amounts deferred	8,948	10,554
Ending balance	$ 15,853	$ 17,108

Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue	$ 240,112	$ 197,263	$ 699,447	$ 584,315
Operating expenses
Cost of revenue (exclusive of depreciation and amortization expenses)	80,545	62,922	236,188	182,578
Sales and marketing	38,450	32,114	117,945	93,490
General and administrative	22,704	17,365	88,794	46,524
Research and development	11,082	8,972	37,303	25,548
Depreciation and amortization	60,185	43,675	148,635	131,780
Total operating expenses	212,966	165,048	628,865	479,920
Income from operations	27,146	32,215	70,582	104,395
Other expense
Income/(loss) before income taxes	8,687	(20,195)	(55,602)	(48,662)
Income tax expense/(benefit)	3,274	(4,709)	(17,398)	(11,743)
Net income/(loss)	$ 5,413	$ (15,486)	$ (38,204)	$ (36,919)
Net income/(loss) per share:
Basic (in dollars per share)	$ 0.03	$ (0.13)	$ (0.27)	$ (0.30)
Diluted (in dollars per share)	$ 0.03	$ (0.13)	$ (0.27)	$ (0.30)
Weighted-average shares outstanding:
Basic (in shares)	171,578,311	121,673,852	142,367,458	121,674,189
Diluted (in shares)	176,181,511	121,673,852	142,367,458	121,674,189
Nonrelated Party
Other expense
Interest expense	$ (17,752)	$ (50,755)	$ (122,759)	$ (147,047)
Related Party
Other expense
Interest expense	$ (707)	$ (1,655)	$ (3,425)	$ (6,010)

Summary of Significant Accounting Policies - Channel Partners (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Summary of Significant Accounting Policies
Fees to channel partners	$ 17.0	$ 13.1	$ 47.6	$ 38.9

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2024

Revenue Recognition

Schedule of revenues disaggregated by revenue type and the timing of revenue recognition

The following table presents revenues disaggregated by revenue type and the timing of revenue recognition (in thousands):


		Three months ended September 30,				Nine months ended September 30,
	Recognition	2024		2023		2024		2023
Subscription revenue	Over time	$	117,993	$	101,828	$	336,421	$	297,596
Volume-based revenue	Over time		120,678		94,402		358,723		284,178
Implementation services and other revenue	Various		1,441		1,033		4,303		2,541
Total revenues		$	240,112	$	197,263	$	699,447	$	584,315

Schedule of activity impacting deferred revenue balances

The following table presents activity impacting deferred revenue balances (in thousands):


	September 30,		December 31,
	2024		2023
Beginning balance	$	17,108	$	16,454
Revenue recognized		(10,203)		(9,900)
Additional amounts deferred		8,948		10,554
Ending balance	$	15,853	$	17,108

Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Leases
Cash paid, Operating cash flows for operating leases	$ 1,358	$ 1,381	$ 3,995	$ 4,017
Cash paid, Financing cash flows for financing leases	394	$ 317	1,179	1,160
Right-of-use assets obtained in exchange for new lease liabilities, Operating leases	$ 2,411		$ 3,005	$ 1,768

Leases (Tables)

9 Months Ended

Sep. 30, 2024

Leases

Schedule of components of lease expense

The following table presents components of lease expense for the three and nine months ended September 30, 2024 and 2023, respectively (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Finance lease cost
Amortization of right-of-use assets	$	13,442	$	397	$	14,236	$	1,190
Interest on lease liabilities		186		198		568		602
Operating lease cost		1,978		970		3,752		2,817
Variable lease cost		206		216		357		316
Short-term lease		162		167		526		613
Total lease cost	$	15,974	$	1,948	$	19,439	$	5,538

Schedule of maturity of operating leases

Maturities of lease liabilities as of September 30, 2024 are as follows (in thousands):


	Operating Leases		Finance Leases
2024	$	1,355	$	394
2025		5,900		1,604
2026		5,035		1,641
2027		2,731		1,678
2028		2,479		1,714
Thereafter		2,764		9,309
Total future minimum lease payments		20,264		16,340
Less: Interest		1,971		3,936
Total	$	18,293	$	12,404

Schedule of maturity of finance leases

Maturities of lease liabilities as of September 30, 2024 are as follows (in thousands):


	Operating Leases		Finance Leases
2024	$	1,355	$	394
2025		5,900		1,604
2026		5,035		1,641
2027		2,731		1,678
2028		2,479		1,714
Thereafter		2,764		9,309
Total future minimum lease payments		20,264		16,340
Less: Interest		1,971		3,936
Total	$	18,293	$	12,404

Schedule of supplemental cash flow information related to leases

Supplemental cash flow information related to leases for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,358	$	1,381	$	3,995	$	4,017
Financing cash flows for financing leases		394		317		1,179		1,160
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	$	2,411	$	—	$	3,005	$	1,768

Schedule of supplemental balance sheet information


	September 30, 2024	December 31, 2023
Weighted average remaining lease term (years):
Operating leases	4.3	4.9
Financing leases	9.3	10.1
Weighted average discount rate:
Operating leases	4.7	4.4
Financing leases	5.9	5.9

Derivative Financial Instruments (Details)	Jan. 13, 2023 DerivativeInstrument
Designated as hedging instruments \| Interest rate swap
Derivative financial instruments
Number of additional derivative financial instruments	2

Common and Preferred Stock (Details)	12 Months Ended
Common and Preferred Stock (Details)	Dec. 31, 2023 Vote $ / shares shares	Sep. 30, 2024 $ / shares shares	Jun. 10, 2024 $ / shares shares	May 31, 2024 $ / shares shares
Class of Stock [Line Items]
Shares authorized	227,000,000	2,500,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.01	$ 0.01
Shares issued	121,679,902	172,086,129
Shares outstanding	121,679,902	172,086,129
Preferred stock, shares authorized (in shares)	0	100,000,000
Preferred stock, shares par value (in dollars per share) \| $ / shares	$ 0.01	$ 0.01
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A common stock
Class of Stock [Line Items]
Shares authorized				2,000,000
Common stock, par value (in dollars per share) \| $ / shares				$ 0.01
Shares issued	436,801
Shares outstanding	436,801
Number of votes entitled \| Vote	1
No class common stock
Class of Stock [Line Items]
Shares authorized			2,500,000,000	225,000,000
Common stock, par value (in dollars per share) \| $ / shares			$ 0.01	$ 0.01
Shares issued	121,243,101
Shares outstanding	121,243,101
Preferred stock, shares authorized (in shares)			100,000,000
Preferred stock, shares par value (in dollars per share) \| $ / shares			$ 0.01

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue Recognition
Revenue	$ 240,112	$ 197,263	$ 699,447	$ 584,315
Subscription revenue
Revenue Recognition
Revenue	117,993	101,828	336,421	297,596
Volume-based revenue
Revenue Recognition
Revenue	120,678	94,402	358,723	284,178
Implementation services and other revenue
Revenue Recognition
Revenue	$ 1,441	$ 1,033	$ 4,303	$ 2,541

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
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-Publisher FASB
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 270
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-Section 50
-Paragraph 1
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 4: http://fasb.org/us-gaap/role/ref/otherTransitionRef
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-Section 50
-Paragraph 32
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Reference 5: http://fasb.org/us-gaap/role/ref/otherTransitionRef
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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
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-Name Accounting Standards Codification
-Section S99
-Paragraph 1
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-42

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-22

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-40

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-22

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-4

+ Details

Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2024 shares
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-42125
Entity Registrant Name	Waystar Holding Corp.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-2886542
Entity Address, Address Line One	1550 Digital Drive, #300
Entity Address, City or Town	Lehi
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84043
City Area Code	844
Local Phone Number	492-9782
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	WAY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	172,086,129
Entity Central Index Key	0001990354
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2024

Derivative Financial Instruments

Derivative Financial Instruments

12. Derivative Financial Instruments

To mitigate the risk of a rise in interest rates on the First Lien Credit Facility, we entered into two interest rate swaps on October 13, 2021 and January 13, 2023. We attempt to minimize our interest risk exposure by fixing our rate through the utilization of interest rate swaps, which are derivative instruments. The interest rate swaps mitigate the exposure on the variable component of interest on our First Lien Credit Facility. Our swaps are entered into with financial institutions that participate in the First Lien Credit Facility. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk due to the possible failure of the counterparty to perform under the terms of the derivative contract.

As of September 30, 2024 and December 31, 2023, we have the following interest rate swap agreements designated as a hedging instruments:


Effective Dates	Floating Rate Debt		Fixed Rates
October 29, 2021 through October 31, 2024	$	604.1 million	0.67	%
January 31, 2023 through January 31, 2026	$	506.7 million	3.87	%

The gain or loss on the swaps is recognized in accumulated other comprehensive loss and reclassified into earnings as adjustments to interest expense in the same period or periods during which the swaps affect earnings. Gains or losses on the swaps representing hedge components excluded from the assessment of effectiveness are recognized in current earnings.

The effect of derivative instruments designated as hedging instruments on the accompanying consolidated financial statements is as follows (in thousands):


						Total interest
	Amount of Gain or		Location of Gain or	Amount of Gain or		Expense on
	(Loss) Recognized		(Loss) Reclassified	(Loss) Reclassified		Consolidated
	in AOCI/AOCL on		from AOCI/AOCL	from AOCI/AOCL		Statements of
Derivatives - Cash Flow Hedging Relationships	Derivative		into Income	into Income		Operations
Interest rate swaps:
Three months Ended September 30, 2024	$	(10,934)	Interest expense	$	8,788	$	(18,459)
Three months Ended September 30, 2023	$	(1,936)	Interest expense	$	8,563	$	(52,410)
Nine months Ended September 30, 2024	$	(15,610)	Interest expense	$	26,085	$	(126,184)
Nine months Ended September 30, 2023	$	(1,186)	Interest expense	$	22,659	$	(153,057)

The net amount of accumulated other comprehensive income expected to be reclassified to interest income in the next twelve months is $1.2 million.

Derivative Financial Instruments - Interest Rate Swaps Designated as Hedging Instruments (Details) - Designated as hedging instruments - USD ($) $ in Millions	Sep. 30, 2024	Dec. 31, 2023
October 29, 2021 through October 31, 2024
Derivative financial instruments
Floating Rate Debt	$ 604.1	$ 604.1
Fixed Rates	0.67%	0.67%
January 31, 2023 through January 31, 2026
Derivative financial instruments
Floating Rate Debt	$ 506.7	$ 506.7
Fixed Rates	3.87%	3.87%

Leases

9 Months Ended

Sep. 30, 2024

Leases

Leases

8. Leases

Finance lease right-of-use assets of $1.8 million and $16.0 million as of September 30, 2024 and December 31, 2023, respectively, are included in property and equipment, net on the consolidated balance sheet. Due to the relocation of one of our office locations (see Note 6), we reduced the useful life of the related finance lease right-of-use asset, which represented $13.2 million of incremental depreciation (excluding accelerated depreciation on leasehold improvements) for the three and nine months ended September 30, 2024. We also reduced the useful life of the related operating lease right-of-use asset, which represented $1.0 million of additional operating lease cost for the three and nine months ended September 30, 2024.

The following table presents components of lease expense for the three and nine months ended September 30, 2024 and 2023, respectively (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Finance lease cost
Amortization of right-of-use assets	$	13,442	$	397	$	14,236	$	1,190
Interest on lease liabilities		186		198		568		602
Operating lease cost		1,978		970		3,752		2,817
Variable lease cost		206		216		357		316
Short-term lease		162		167		526		613
Total lease cost	$	15,974	$	1,948	$	19,439	$	5,538

Maturities of lease liabilities as of September 30, 2024 are as follows (in thousands):


	Operating Leases		Finance Leases
2024	$	1,355	$	394
2025		5,900		1,604
2026		5,035		1,641
2027		2,731		1,678
2028		2,479		1,714
Thereafter		2,764		9,309
Total future minimum lease payments		20,264		16,340
Less: Interest		1,971		3,936
Total	$	18,293	$	12,404

Supplemental cash flow information related to leases for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,358	$	1,381	$	3,995	$	4,017
Financing cash flows for financing leases		394		317		1,179		1,160
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	$	2,411	$	—	$	3,005	$	1,768

Supplemental balance sheet information related to leases as of September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024	December 31, 2023
Weighted average remaining lease term (years):
Operating leases	4.3	4.9
Financing leases	9.3	10.1
Weighted average discount rate:
Operating leases	4.7	4.4
Financing leases	5.9	5.9

Retirement Plans

9 Months Ended

Sep. 30, 2024

Retirement Plans

Retirement Plans

15. Retirement Plans

We maintain qualified 401(k) plans which cover substantially all employees meeting certain eligibility requirements. Participants may contribute a portion of their compensation to the plans, up to the maximum amount permitted under Section 401(k) of the Internal Revenue Code. Under these plans, we contribute various percentages of employees’ salaries to the plans. Total expenses included in operating expenses in the accompanying consolidated statement of operations related to the plans were $1.1 million and $1.0 million for the three months ended September 30, 2024 and 2023, respectively, and $3.6 million and $3.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Stock-based Compensation - Stock Options Activity (Details) - $ / shares	9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Dec. 31, 2022
Number of options (in shares)
Beginning balance	13,032,541	13,123,170	13,123,170
Granted	4,003,703	160,325
Exercised	(369,905)	(33,154)
Forfeited	(90,146)	(232,925)
Ending balance	16,576,193	13,017,416	13,032,541	13,123,170
Weighted average exercise price per share (in dollars per share)
Beginning balance	$ 15.20	$ 15.10	$ 15.10
Granted	24.20	37.20
Exercised	4.27	21.21
Forfeited	20.39	27.25
Ending balance	$ 17.59	$ 15.14	$ 15.20	$ 15.10
Weighted average remaining contractual life	6 years 1 month 6 days	5 years 10 months 24 days	5 years 8 months 12 days	6 years 7 months 6 days

Acquisitions - Estimated fair values of assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Aug. 03, 2023
Acquisitions
Goodwill	$ 3,019,826	$ 3,030,013
HealthPay24
Acquisitions
Cash and cash equivalents			$ 1,374
Accounts receivable			1,772
Prepaid and other current assets			255
Other assets			229
Goodwill			13,935
Total acquired assets			33,265
Other current liabilities			845
Deferred revenue			821
Other liabilities			225
Total acquired liabilities			1,891
Total net assets acquired			31,374
HealthPay24 \| Customer relationships
Acquisitions
Finite lived intangible assets			14,500
HealthPay24 \| Developed technology
Acquisitions
Finite lived intangible assets			800
HealthPay24 \| Tradenames and trademarks
Acquisitions
Finite lived intangible assets			$ 400

Accounts Receivable Securitization (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
	Sep. 06, 2024	Sep. 30, 2024	Dec. 31, 2023
Accounts Receivable Securitization
Outstanding amount		$ 1,246,773	$ 2,248,816
Receivables facility
Accounts Receivable Securitization
Outstanding amount		$ 80,000	$ 70,000
Term of receivables facility		3 years	3 years
Maximum borrowing capacity		$ 80,000	$ 80,000
Proceeds from credit facility	$ 10,000
Effective interest rate (in percent)		6.71%
Receivables facility \| SOFR
Accounts Receivable Securitization
Interest rate (in percent)		1.86%
Receivables facility \| Base rate
Accounts Receivable Securitization
Interest rate (in percent)		0.00%
September 2024 First Lien Paydown
Accounts Receivable Securitization
Repayments of credit facility	$ 10,000

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total
Balance at the beginning (shares) at Dec. 31, 2022	121,670,948
Balance at the beginning at Dec. 31, 2022	$ 1,217	$ 2,225,618	$ 29,838	$ (150,441)	$ 2,106,232
Changes in stockholder's equity
Stock-based compensation		6,505			$ 6,505
Settlement of common stock options, net of stock option exercises (shares)	20,218				33,154
Settlement of common stock options, net of stock option exercises	$ 1	283			$ 284
Repurchase of shares (shares)	(17,314)
Repurchase of shares	$ (1)	(687)			(688)
Net Income (Loss)				(36,919)	(36,919)
Other comprehensive income			(1,186)		(1,186)
Balance at the end (shares) at Sep. 30, 2023	121,673,852
Balance at the end at Sep. 30, 2023	$ 1,217	2,231,719	28,652	(187,360)	2,074,228
Balance at the beginning (shares) at Jun. 30, 2023	121,673,852
Balance at the beginning at Jun. 30, 2023	$ 1,217	2,229,512	30,588	(171,874)	2,089,443
Changes in stockholder's equity
Stock-based compensation		2,207			2,207
Net Income (Loss)				(15,486)	(15,486)
Other comprehensive income			(1,936)		(1,936)
Balance at the end (shares) at Sep. 30, 2023	121,673,852
Balance at the end at Sep. 30, 2023	$ 1,217	2,231,719	28,652	(187,360)	2,074,228
Balance at the beginning (shares) at Dec. 31, 2023	121,679,902
Balance at the beginning at Dec. 31, 2023	$ 1,217	2,234,688	15,802	(201,775)	2,049,932
Changes in stockholder's equity
Stock-based compensation		47,867			$ 47,867
Settlement of common stock options, net of stock option exercises (shares)	369,905				369,905
Settlement of common stock options, net of stock option exercises	$ 5	1,483			$ 1,488
Repurchase of shares (shares)	(22,688)
Repurchase of shares	$ (1)	(843)			(844)
Capital distributions		(99)			(99)
Issuance of common stock in initial public offering (inclusive of underwriters' exercise of the overallotment option on July 5, 2024), net of issuance costs (shares)	50,059,010
Issuance of common stock in initial public offering (inclusive of underwriters' exercise of the overallotment option on July 5, 2024), net of issuance costs	$ 500	1,007,717			1,008,217
Net Income (Loss)				(38,204)	(38,204)
Other comprehensive income			(15,610)		(15,610)
Balance at the end (shares) at Sep. 30, 2024	172,086,129
Balance at the end at Sep. 30, 2024	$ 1,721	3,290,813	192	(239,979)	3,052,747
Balance at the beginning (shares) at Jun. 30, 2024	166,659,634
Balance at the beginning at Jun. 30, 2024	$ 1,667	3,178,697	11,126	(245,392)	2,946,098
Changes in stockholder's equity
Stock-based compensation		7,949			7,949
Settlement of common stock options, net of stock option exercises (shares)	367,485
Settlement of common stock options, net of stock option exercises	$ 4	1,517			1,521
Issuance of common stock in initial public offering (inclusive of underwriters' exercise of the overallotment option on July 5, 2024), net of issuance costs (shares)	5,059,010
Issuance of common stock in initial public offering (inclusive of underwriters' exercise of the overallotment option on July 5, 2024), net of issuance costs	$ 50	102,650			102,700
Net Income (Loss)				5,413	5,413
Other comprehensive income			(10,934)		(10,934)
Balance at the end (shares) at Sep. 30, 2024	172,086,129
Balance at the end at Sep. 30, 2024	$ 1,721	$ 3,290,813	$ 192	$ (239,979)	$ 3,052,747

Stock-based Compensation (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended
Stock-based Compensation (Details) - USD ($) $ in Thousands	Jun. 06, 2024	Oct. 22, 2019	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Dec. 31, 2022
Stock-based compensation
Rollover options outstanding (in shares)			16,576,193	13,017,416	16,576,193	13,017,416	13,032,541	13,123,170
Stock-based compensation expense			$ 7,903	$ 2,207	$ 47,400	$ 6,505
Stock Incentive Plan 2019
Stock-based compensation
Maximum shares issuable		9,900,000
Contractual term (in years)		10 years
Vesting period of options with a service condition (in years)		5 years
Vesting percentage of options with a service condition (in percent)		20.00%
Rollover options outstanding (in shares)		3,400,000
Equity Incentive Plan 2024
Stock-based compensation
Maximum shares issuable	10,000,000
Vesting period of options with a service condition (in years)	5 years
Vesting percentage of options with a service condition (in percent)	20.00%
Common stock, capital shares reserved for future issuance			4,700,000		4,700,000
Percentage of outstanding stock maximum	5.00%
Equity Incentive Plan 2024 \| Maximum \| Restricted Stock Units (RSUs)
Stock-based compensation
Vesting period of options with a service condition (in years)	5 years
Vesting percentage of options with a service condition (in percent)	25.00%
Equity Incentive Plan 2024 \| Minimum \| Restricted Stock Units (RSUs)
Stock-based compensation
Vesting period of options with a service condition (in years)	4 years
Vesting percentage of options with a service condition (in percent)	20.00%
Employee Stock Purchase Plan 2024
Stock-based compensation
Common stock, capital shares reserved for future issuance	3,250,000
Shares available for future grant (in shares)	27,000,000
Percentage of outstanding stock maximum	1.00%
Shares issued in period					0

Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Summary of Significant Accounting Policies
Impairment to goodwill	$ 0	$ 0	$ 0	$ 0

Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Property and Equipment, Net
Capital lease asset	$ 2,994		$ 2,994		$ 2,994
Property and equipment, gross including capital lease	148,540		148,540		130,386
Accumulated depreciation	(100,523)		(100,523)		(69,127)
Property and equipment, net	48,017		48,017		61,259
Depreciation of fixed assets, including the amortization of capitalized software	21,100	$ 3,900	31,400	$ 11,400
Capitalization of software development costs	4,300		12,100
Amortization of capitalized software	2,700	1,300	7,400	3,800
Net book value of capitalized software development costs	28,100		28,100		23,400
Impairments of property and equipment	0	$ 0	0	$ 0
Amount of accelerated depreciation	15,800		15,800
Net book value of assets	2,100		2,100
Building
Property and Equipment, Net
Property and equipment, gross	19,653		19,653		19,653
Computer hardware
Property and Equipment, Net
Property and equipment, gross	39,753		39,753		35,006
Capitalized internal-use software
Property and Equipment, Net
Property and equipment, gross	37,097		37,097		25,567
Purchased computer software
Property and Equipment, Net
Property and equipment, gross	22,785		22,785		22,079
Furniture and fixtures
Property and Equipment, Net
Property and equipment, gross	3,413		3,413		2,980
Office equipment
Property and Equipment, Net
Property and equipment, gross	232		232		211
Leasehold improvements
Property and Equipment, Net
Property and equipment, gross	8,385		8,385		8,255
Construction in progress
Property and Equipment, Net
Property and equipment, gross					15
Internal-use software in progress
Property and Equipment, Net
Property and equipment, gross	$ 14,228		$ 14,228		$ 13,626

Summary of Significant Accounting Policies - Revenue Recognition (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Summary of Significant Accounting Policies
Revenue contract renewal term (in years)			1 year
Minimum
Summary of Significant Accounting Policies
Revenue contract term (in years)			2 years
Revenue payment term (in days)			30 days
Maximum
Summary of Significant Accounting Policies
Revenue contract term (in years)			3 years
Revenue payment term (in days)			60 days
Concentration of revenue \| Subscription and volume-based revenue \| Product
Summary of Significant Accounting Policies
Percentage of revenue	99.00%	99.00%	99.00%	99.00%
Concentration of revenue \| Implementation fees and hardware sales \| Product
Summary of Significant Accounting Policies
Percentage of revenue	1.00%	1.00%	1.00%	1.00%

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Other Intangible Assets

Schedule of amortization for definite-lived intangible assets

Amortization for definite-lived intangible assets is as follows (in thousands, except useful life):


							Weighted-
					Net		Average
	Gross Carrying		Accumulated		Carrying		Remaining
	Amount		Amortization		Value		Useful Life
As of September 30, 2024
Customer relationships	$	1,429,400	$	(417,009)	$	1,012,391	11.3
Purchased developed technology		301,100		(264,346)		36,754	4.0
Tradenames and trademarks		40,700		(20,149)		20,551	5.0
Total	$	1,771,200	$	(701,504)	$	1,069,696
As of December 31, 2023
Customer relationships	$	1,429,400	$	(345,848)	$	1,083,552	12.3
Purchased developed technology		301,100		(221,558)		79,542	3.0
Tradenames and trademarks		40,700		(16,857)		23,842	6.0
Total	$	1,771,200	$	(584,263)	$	1,186,936

Fair Value Measurements and Disclosures (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Measurements and Disclosures

Schedule of fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis

The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	Balance Sheet Classification	Carrying Value		Level 1		Level 2		Level 3
September 30, 2024
Financial assets:
Interest rate swaps	Other current assets	$	1,958	$	—	$	1,958	$	—
Financial liabilities:
Interest rate swaps	Other accrued expenses	$	396	$	—	$	396	$	—
Interest rate swaps	Other long-term liabilities	$	1,309	$	—	$	1,309	$	—
December 31, 2023
Financial assets:
Interest rate swaps	Other current assets	$	23,350	$	—	$	23,350	$	—
Financial liabilities:
Interest rate swaps	Other long-term liabilities	$	2,472	$	—	$	2,472	$	—

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 127,125	$ 35,580
Restricted cash	17,222	9,848
Accounts receivable, net of allowance of $5,223 at September 30, 2024 and $5,335 at December 31, 2023	137,893	126,089
Income tax receivable	4,584	6,811
Prepaid expenses	14,294	13,296
Other current assets	4,315	30,426
Total current assets	305,433	222,050
Property, plant and equipment, net	48,017	61,259
Operating lease right-of-use assets, net	10,214	10,353
Intangible assets, net	1,069,696	1,186,936
Goodwill	3,019,826	3,030,013
Deferred costs	80,667	65,811
Other long-term assets	6,694	6,552
Total assets	4,540,547	4,582,974
Current liabilities
Accounts payable	47,840	45,484
Accrued compensation	27,252	23,286
Aggregated funds payable	17,092	9,659
Other accrued expenses	11,521	10,923
Deferred revenue	10,201	10,935
Current portion of long-term debt	12,909	17,983
Current portion of operating lease liabilities	5,412	4,398
Current portion of finance lease liabilities	882	821
Total current liabilities	133,109	123,489
Long-term liabilities
Deferred tax liability	101,294	174,480
Long-term debt, net, less current portion	1,221,755	2,199,678
Operating lease liabilities, net of current portion	12,881	14,278
Finance lease liabilities, net of current portion	11,522	12,194
Deferred revenue-LT	5,652	6,173
Other long-term liabilities	1,587	2,750
Total liabilities	1,487,800	2,533,042
Commitments and contingencies (Note 19)
Stockholders' equity
Preferred stock $0.01 par value - 100,000,000 and zero shares authorized as of September 30, 2024 and December 31, 2023, respectively; zero shares issued or outstanding as of September 30, 2024 and December 31, 2023, respectively
Common stock $0.01 par value - 2,500,000,000 and 227,000,000 shares authorized at September 30, 2024 and December 31, 2023, respectively; 172,086,129 and 121,679,902 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	1,721	1,217
Additional paid-in capital	3,290,813	2,234,688
Accumulated other comprehensive income (loss)	192	15,802
Accumulated deficit	(239,979)	(201,775)
Total stockholders' equity	3,052,747	2,049,932
Total liabilities and stockholders' equity	4,540,547	4,582,974
Nonrelated Party
Current liabilities
Current portion of long-term debt	12,550	17,454
Long-term liabilities
Long-term debt, net, less current portion	1,189,630	2,134,920
Related Party
Current liabilities
Current portion of long-term debt	359	529
Long-term liabilities
Long-term debt, net, less current portion	$ 32,125	$ 64,758

Business (Details)	May 15, 2024
Business
Reverse stock split ratio	0.605
Reverse stock split ratio before amended	0.62
Class A common stock
Business
Reverse stock split ratio	0.605

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Debt (Tables)

9 Months Ended

Sep. 30, 2024

Debt

Schedule of debt instruments

Debt instruments consist primarily of term notes, revolving lines of credit, and a Receivables Facility as follows (in thousands):


	September 30,		December 31,
	2024		2023
First lien term loan facility outstanding debt	$	1,166,773	$	1,730,816
Revolving credit facility		—		—
Second lien term loan facility outstanding debt		—		448,000
Receivables facility outstanding debt		80,000		70,000
Total outstanding debt		1,246,773		2,248,816
Unamortized debt issuance costs		(12,109)		(31,155)
Current portion of long-term debt		(12,909)		(17,983)
Total long-term debt, net	$	1,221,755	$	2,199,678

Schedule of maturity of long-term principal payments (excluding debt discount)

The maturity of long-term principal payments (excluding debt discount) at September 30, 2024 is as follows (in thousands):


2024	$	3,227
2025		12,909
2026		92,909
2027		12,909
2028		12,909
Thereafter		1,111,910
	$	1,246,773

Stock-based Compensation - RSU Activity (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2024 USD ($) $ / shares shares
Weighted average grant date fair value
Expected compensation expense, weighted average period (in years)	3 years 10 months 24 days
Restricted Stock Units (RSUs)
Number of shares
Granted \| shares	2,011,651
Forfeited \| shares	(8,259)
Outstanding, ending balance (in shares) \| shares	2,003,392
Weighted average grant date fair value
Granted \| $ / shares	$ 21.50
Forfeited \| $ / shares	21.50
Outstanding, ending balance \| $ / shares	$ 21.50
Compensation expense \| $	$ 39.9
Expected compensation expense, weighted average period (in years)	4 years 3 months 18 days

Debt - Schedule of Debt Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt
Total outstanding debt	$ 1,246,773	$ 2,248,816
Unamortized debt issuance costs	(12,109)	(31,155)
Current portion of long-term debt	(12,909)	(17,983)
Total long-term debt, net	1,221,755	2,199,678
First lien term loan facility outstanding debt
Debt
Total outstanding debt	1,166,773	1,730,816
Revolving credit facility
Debt
Total outstanding debt	0	0
Unamortized debt issuance costs	(2,000)	(2,400)
Second lien term loan facility outstanding debt
Debt
Total outstanding debt		448,000
Receivables facility outstanding debt
Debt
Total outstanding debt	$ 80,000	$ 70,000

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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-Paragraph 1D
-Subparagraph (c)
-Publisher FASB
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+ Details

Summary of Significant Accounting Policies - Contract Costs (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Contract Costs
Impairment losses			$ 0.0	$ 0.0
Incremental costs of obtaining a contract
Contract Costs
Total unamortized costs	$ 29.2		29.2		$ 22.8
Amortization related to contract costs	2.8	$ 2.0	7.8	5.4
Costs to fulfill a contract
Contract Costs
Total unamortized costs	51.4		51.4		$ 43.0
Amortization related to contract costs	$ 3.2	$ 2.3	$ 8.9	$ 6.3

Acquisitions

9 Months Ended

Sep. 30, 2024

Acquisitions

Acquisitions

5. Acquisitions

HealthPay24 Acquisition

On August 3, 2023, we completed the acquisition of all issued and outstanding membership interests of HealthPay24, which offers patient engagement and payment solutions. We accounted for the acquisition as a business combination using the acquisition method of accounting. The total consideration paid was allocated to the net tangible and identifiable intangible assets acquired based on their fair values at the acquisition date. The excess consideration paid over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. Goodwill for the acquisition primarily represents future customer relationships. The goodwill is not deductible for tax purposes. We have included the financial results of HealthPay24 in the consolidated financial statements subsequent to the date of acquisition. Pro forma results, including the acquired business since the beginning of fiscal 2023, would not be materially different than the reported results. Revenue and net earnings for the three months ended September 30, 2023 since the completion of the acquisition were immaterial. The total consideration paid for HealthPay24 was $31.4 million which entirely consisted of cash consideration.

The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the acquisitions date (in thousands):


Cash and cash equivalents	$	1,374
Accounts receivable		1,772
Prepaid and other current assets		255
Other assets		229
Customer relationships		14,500
Developed technology		800
Tradenames and trademarks		400
Goodwill		13,935
Total acquired assets	$	33,265
Other current liabilities		845
Deferred revenue		821
Other liabilities		225
Total acquired liabilities	$	1,891
Total net assets acquired	$	31,374

The fair values of the tangible assets were determined primarily using the income approach. The fair values of the acquired identifiable intangible assets were determined using Level 3 inputs such as discounted cash flows which are not observable in the market. Intangible assets acquired from the acquisition include customer relationships, developed technologies, and trade names and trademarks which are all amortized on a straight-line basis approximating the use of the assets. The useful lives of the acquired identifiable intangible assets are 19 years for customer relationships, 8 years for developed technology, and 2 years for trade names and trademarks. The weighted-average remaining useful life for all acquired intangibles is 12.1 years.

Total acquisition costs of $0.9 million for the three months ended September 30, 2023 were expensed as incurred and recorded in general and administrative expense in the statement of operations.

Income/ (Loss) Per Share (Details) - shares	3 Months Ended	9 Months Ended
Income/ (Loss) Per Share (Details) - shares	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income/ (Loss) Per Share
Anti-dilutive effect of stock option shares excluded from the diluted earning per share calculation	5,370,263	4,476,403	5,104,769

Income/ (Loss) Per Share - Reconciliation of The Numerators and The Denominators of The Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Basic income/(loss) per share:
Net Income (Loss)	$ 5,413	$ (15,486)	$ (38,204)	$ (36,919)
Net income/(loss) attributable to common shares	$ 5,413	$ (15,486)	$ (38,204)	$ (36,919)
Basic weighted average common stock outstanding	171,578,311	121,673,852	142,367,458	121,674,189
Basic income/(loss) per share	$ 0.03	$ (0.13)	$ (0.27)	$ (0.30)
Diluted income/(loss) per share:
Net Income (Loss)	$ 5,413	$ (15,486)	$ (38,204)	$ (36,919)
Net income/(loss) attributable to common shares	$ 5,413	$ (15,486)	$ (38,204)	$ (36,919)
Diluted weighted average common stock outstanding	176,181,511	121,673,852	142,367,458	121,674,189
Diluted income/(loss) per share	$ 0.03	$ (0.13)	$ (0.27)	$ (0.30)
Voting
Basic income/(loss) per share:
Basic weighted average common stock outstanding	171,578,311	121,237,051	142,367,458	121,237,388
Diluted income/(loss) per share:
Diluted weighted average common stock outstanding	176,181,511	121,237,051	142,367,458	121,237,388
Voting \| Employee Stock Option
Diluted income/(loss) per share:
Dilutive effect	4,268,993
Voting \| Restricted Stock Units (RSUs)
Diluted income/(loss) per share:
Dilutive effect	334,207
Non-voting
Basic income/(loss) per share:
Basic weighted average common stock outstanding		436,801		436,801
Diluted income/(loss) per share:
Diluted weighted average common stock outstanding		436,801		436,801

Revenue Recognition - Transaction Price Allocated to Remaining Performance Obligations (Details) $ in Millions	Sep. 30, 2024 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Revenue Recognition
Period of revenue recognition related to unsatisfied performance obligations	12 months
Revenue to be recognized for unsatisfied performance obligations	$ 59.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Revenue Recognition
Period of revenue recognition related to unsatisfied performance obligations	12 months
Revenue to be recognized for unsatisfied performance obligations	$ 32.9

Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Aug. 03, 2023
Goodwill [Line Items]
Goodwill	$ 3,019,826		$ 3,019,826		$ 3,030,013
Increased deferred tax assets	11,500		11,500
Increased income tax benefit	1,300		1,300
Unrecognized deferred tax asset	10,200		10,200
Additions to goodwill	0	$ 0	0	$ 0
Disposals to goodwill	0	0	0	0
Impairment to goodwill	$ 0	0	$ 0	0
HealthPay24
Goodwill [Line Items]
Goodwill						$ 13,935
Additions to goodwill		$ 13,400		$ 13,400

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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-Paragraph 49
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-Subparagraph (SX 210.9-03(10)(1))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478546/942-210-S99-1

+ Details

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Income/ (Loss) Per Share

9 Months Ended

Sep. 30, 2024

Income/ (Loss) Per Share

Income/ (Loss) Per Share

18. Income/ (Loss) Per Share

A reconciliation of the numerators and the denominators of the basic and diluted per share computations are as follows:


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Basic income/(loss) per share:
Net income/(loss)	$	5,413	$	(15,486)	$	(38,204)	$	(36,919)
Net income/(loss) attributable to common shares	$	5,413	$	(15,486)	$	(38,204)	$	(36,919)
Weighted average common stock outstanding–(voting)		171,578,311		121,237,051		142,367,458		121,237,388
Weighted average common stock outstanding–(non-voting)		—		436,801		—		436,801
Basic weighted average common stock outstanding		171,578,311		121,673,852		142,367,458		121,674,189
Basic income/(loss) per share	$	0.03	$	(0.13)	$	(0.27)	$	(0.30)

Diluted income/(loss) per share:
Net income/(loss)	$	5,413		(15,486)	$	(38,204)		(36,919)
Net income/(loss) attributable to common shares	$	5,413	$	(15,486)	$	(38,204)	$	(36,919)
Dilutive effect of stock options – (voting)		4,268,993		—		—		—
Dilutive effect of RSUs – (voting)		334,207		—		—		—
Weighted average common stock outstanding–(voting)		176,181,511		121,237,051		142,367,458		121,237,388
Weighted average common stock outstanding–(non-voting)		—		436,801		—		436,801
Diluted weighted average common stock outstanding		176,181,511		121,673,852		142,367,458		121,674,189
Diluted income/(loss) per share	$	0.03	$	(0.13)	$	(0.27)	$	(0.30)

Because of their anti-dilutive effect, 5,370,263 common share equivalents, calculated using the treasury stock method, comprised of time-based stock options and RSUs have been excluded from the diluted earnings per share calculation for the three months ended September 30, 2023. Additionally, 4,476,403 and 5,104,769 common share equivalents, calculated using the treasury stock method, comprised of time-based stock options and RSUs have been excluded from the diluted earnings per share calculation for the nine months ended September 30, 2024 and 2023, respectively.

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2024

Derivative Financial Instruments

Schedule of interest rate swap agreements designated as a hedging instruments

As of September 30, 2024 and December 31, 2023, we have the following interest rate swap agreements designated as a hedging instruments:


Effective Dates	Floating Rate Debt		Fixed Rates
October 29, 2021 through October 31, 2024	$	604.1 million	0.67	%
January 31, 2023 through January 31, 2026	$	506.7 million	3.87	%

Schedule of effect of derivative instruments designated as hedging instruments on the accompanying consolidated financial statements

The effect of derivative instruments designated as hedging instruments on the accompanying consolidated financial statements is as follows (in thousands):


						Total interest
	Amount of Gain or		Location of Gain or	Amount of Gain or		Expense on
	(Loss) Recognized		(Loss) Reclassified	(Loss) Reclassified		Consolidated
	in AOCI/AOCL on		from AOCI/AOCL	from AOCI/AOCL		Statements of
Derivatives - Cash Flow Hedging Relationships	Derivative		into Income	into Income		Operations
Interest rate swaps:
Three months Ended September 30, 2024	$	(10,934)	Interest expense	$	8,788	$	(18,459)
Three months Ended September 30, 2023	$	(1,936)	Interest expense	$	8,563	$	(52,410)
Nine months Ended September 30, 2024	$	(15,610)	Interest expense	$	26,085	$	(126,184)
Nine months Ended September 30, 2023	$	(1,186)	Interest expense	$	22,659	$	(153,057)

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References + Details

Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Stock-based Compensation

Schedule of information pertaining to option activity (including rollover options)


				Weighted
		Weighted average		average
	Number of	exercise price per		remaining
	options	share		contractual life
Outstanding December 31, 2023	13,032,541	$	15.20	5.7
Granted	4,003,703		24.20
Exercised	(369,905)		4.27
Forfeited	(90,146)		20.39
Outstanding September 30, 2024	16,576,193		17.59	6.1


				Weighted
		Weighted average		average
	Number of	exercise price per		remaining
	options	share		contractual life
Outstanding December 31, 2022	13,123,170	$	15.10	6.6
Granted	160,325		37.20
Exercised	(33,154)		21.21
Forfeited	(232,925)		27.25
Outstanding September 30, 2023	13,017,416		15.14	5.9

Schedule of the significant assumptions used in estimating the fair value of options granted


	Three months ended September 30,		Nine months ended September 30,
	2024	2023	2024	2023
Risk free interest rate	N/A	4.31%	3.76% - 4.59%	3.51% - 4.31%
Expected dividend yield	N/A	0%	0%	0%
Expected term of stock award	N/A	5	5.0 - 6.5	1.2 - 5
Expected volatility in stock price	N/A	51.98%	49.62% - 51.89%	51.80% - 55%

Schedule of RSU activity


		Weighted
	Number of	average grant
	shares	date fair value
Outstanding December 31, 2023	—	$	—
Granted	2,011,651		21.50
Vested	—		—
Forfeited	(8,259)		21.50
Outstanding September 30, 2024	2,003,392		21.50

Schedule of Stock-based compensation expense


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Cost of revenue	$	300	$	131	$	2,161	$	545
General and administrative		4,832		1,276		27,043		3,629
Sales and marketing		1,587		444		10,958		1,387
Research and development		1,184		356		7,238		944
Total		7,903		2,207		47,400		6,505

Unaudited Condensed Consolidated Statements of Cash Flows $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)
Cash flows from operating activities
Net loss	$ (38,204)	$ (36,919)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities
Depreciation and amortization	148,635	131,780
Stock-based compensation	47,400	6,505
Provision for bad debt expense	1,642	1,614
Loss on extinguishment of debt	20,277
Deferred income taxes	(57,984)	(47,126)
Amortization of debt discount and issuance costs	3,301	7,907
Other	(99)
Changes in:
Accounts receivable	(13,445)	(5,101)
Income tax refundable	2,227	(619)
Prepaid expenses and other current assets	(1,714)	(6,238)
Deferred costs	(14,389)	(10,586)
Other long-term assets	(515)	(33)
Accounts payable and accrued expenses	9,366	231
Deferred revenue	(1,256)	(257)
Operating lease right-of-use assets and lease liabilities	(244)	(1,199)
Other long-term liabilities		45
Net cash provided by operating activities	104,998	40,004
Cash flows from investing activities
Purchase of property and equipment and capitalization of internally developed software costs	(21,044)	(15,726)
Acquisitions, net of cash and cash equivalents acquired		(30,027)
Net cash used in investing activities	(21,044)	(45,753)
Cash flows from financing activities
Change in aggregated funds liability	7,433	458
Proceeds from equity offering, net of underwriting discounts	1,017,074
Payments of third-party IPO issuance costs	(3,372)
Repurchase of shares	(844)	(688)
Proceeds from exercise of common stock options	1,488	284
Proceeds from issuances of debt, net of creditor fees	545,209
Payments on debt	(1,550,002)	(13,487)
Third-party fees paid in connection with issuance of new debt	(1,410)
Finance lease liabilities paid	(611)	(599)
Net cash provided by (used in) financing activities	14,965	(14,032)
Increase in cash and cash equivalents during the period	98,919	(19,781)
Cash and cash equivalents and restricted cash-beginning of period	45,428	72,636
Cash and cash equivalents and restricted cash-end of period	144,347	52,855
Supplemental disclosures of cash flow information
Interest paid	101,189	143,685
Cash taxes paid (refunds received), net	38,558	36,654
Non-cash investing and financing activities
Fixed asset purchases in accounts payable	586	(502)
Unpaid third-party IPO issuance costs	50
Balance sheet
Cash and cash equivalents	127,125	44,450
Restricted cash	17,222	8,405
Total	$ 144,347	$ 52,855

Derivative Financial Instruments - Effect of Derivative Instruments Designated as Hedging Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Derivative financial instruments
Net amount of accumulated other comprehensive income expected to be reclassified			$ 1,200
Designated as hedging instruments \| Interest rate swap
Derivative financial instruments
Amount of Gain or (Loss) Recognized in AOCI/AOCL on Derivative	$ (10,934)	$ (1,936)	(15,610)	$ (1,186)
Amount of Gain or (Loss) Reclassified from AOCI/AOCL into Income	8,788	8,563	26,085	22,659
Total interest Expense on Consolidated Statements of Operations	$ (18,459)	$ (52,410)	$ (126,184)	$ (153,057)

Leases - Lease Liability Maturities (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Operating leases
2024	$ 1,355
2025	5,900
2026	5,035
2027	2,731
2028	2,479
Thereafter	2,764
Total future minimum lease payments	20,264
Less: Interest	1,971
Total	18,293
Finance leases
2024	394
2025	1,604
2026	1,641
2027	1,678
2028	1,714
Thereafter	9,309
Total future minimum lease payments	16,340
Less: Interest	3,936
Total	$ 12,404

Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Retirement Plans (Details) - USD ($) $ in Millions	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Retirement Plans
Total Plan expense	$ 1.1	$ 1.0	$ 3.6	$ 3.1

Debt (Details) $ in Thousands					1 Months Ended	3 Months Ended	9 Months Ended
Debt (Details) $ in Thousands	Sep. 06, 2024 USD ($)	Jul. 05, 2024 USD ($)	Jun. 27, 2024 USD ($)	Feb. 09, 2024 USD ($) installment	Jun. 30, 2024 USD ($)	Sep. 30, 2024 USD ($) installment	Sep. 30, 2024 USD ($) installment	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Debt
Outstanding balance						$ 1,246,773	$ 1,246,773		$ 2,248,816
Loss on extinguishment of debt							(20,277)
Unamortized debt issuance costs						12,109	12,109		31,155
First lien term loan facility
Debt
Outstanding balance						$ 1,166,773	1,166,773		1,730,816
Outstanding principal							$ 909,100	$ 110,900
Interest rate (in percent)				2.75%
Minimum base rate (in percent)				0.00%
30-day SOFR				SOFR
Effective interest rate (in percent)						7.84%	7.84%
Number of quarterly installments \| installment				21
Number of remaining payments \| installment						20	20
February 2024 First Lien Refinancing
Debt
Outstanding balance				$ 2,200,000
Creditor fees capitalized				2,800
Third party fees capitalized				1,400
Third party fees				$ 10,300
Loss on extinguishment of debt							$ (900)
June 2024 First Lien Repricing
Debt
Interest rate (in percent)			2.75%
Minimum base rate (in percent)			0.00%
30-day SOFR			SOFR
Third party fees			$ 2,500
Loss on extinguishment of debt							(300)
June 2024 First Lien Paydown
Debt
Accrued Interest					$ 2,800
Loss on extinguishment of debt							(9,800)
Repayments of credit facility					$ 909,100
July 2024 First Lien Paydown
Debt
Accrued Interest		$ 400
Loss on extinguishment of debt						$ (1,200)	(1,200)
Repayments of credit facility		$ 110,900
September 2024 First Lien Paydown
Debt
Loss on extinguishment of debt						(100)	(100)
Repayments of credit facility	$ 10,000
February 2024 Second Lien Paydown
Debt
Loss on extinguishment of debt							(8,000)
Revolving credit facility
Debt
Outstanding balance						$ 0	$ 0		0
Interest rate (in percent)							2.50%
Minimum base rate (in percent)							0.00%
30-day SOFR							SOFR
Effective interest rate (in percent)						7.35%	7.35%
Unamortized debt issuance costs						$ 2,000	$ 2,000		2,400
Receivables facility
Debt
Outstanding balance						$ 80,000	$ 80,000		$ 70,000
Effective interest rate (in percent)						6.71%	6.71%
Proceeds from credit facility	$ 10,000

Other Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Other Accrued Expenses
Other taxes payable	$ 4,151	$ 3,506
Retirement plan payable	576	497
Accrued self insurance claims	922	993
Accrued interest	461	1,697
Other	5,411	4,230
Total	$ 11,521	$ 10,923

Other Accrued Expenses

9 Months Ended

Sep. 30, 2024

Other Accrued Expenses

Other Accrued Expenses

17. Other Accrued Expenses

Other accrued expenses consist of the following (in thousands):


	September 30, 2024		December 31, 2023
Other taxes payable	$	4,151	$	3,506
Retirement plan payable		576		497
Accrued self insurance claims		922		993
Accrued interest		461		1,697
Other		5,411		4,230
Total	$	11,521	$	10,923

Related Party Transactions (Details) $ in Thousands	3 Months Ended		9 Months Ended
Related Party Transactions (Details) $ in Thousands	Sep. 30, 2024 USD ($) client	Sep. 30, 2023 USD ($) client	Sep. 30, 2024 USD ($) client	Sep. 30, 2023 USD ($) client	Dec. 31, 2023 USD ($)
Related party transactions
Outstanding amount	$ 1,246,773		$ 1,246,773		$ 2,248,816
General and administrative	22,704	$ 17,365	88,794	$ 46,524
Revenue	240,112	197,263	699,447	584,315
Operating lease agreement
Related party transactions
General and administrative	100	100	200	200
Provision of software solutions
Related party transactions
Revenue	$ 400	$ 400	$ 1,200	$ 1,200
Number of clients from whom revenue is earned \| client	4	4	4	4
Receipt of software services
Related party transactions
Cost of revenue expense	$ 100	$ 100	$ 300	$ 200
Related Party
Related party transactions
Interest expense related to First lien term loan facility from Affiliated Debtholders	707	$ 1,655	3,425	$ 6,010
First lien term loan facility from Affiliated Debtholders
Related party transactions
Outstanding amount	$ 32,500		$ 32,500		$ 65,300

Stock-based Compensation - Stock Options (Narratives) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Stock-based compensation
Expected dividend yield, percent		0.00%	0.00%	0.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross			4,003,703	160,325
Total unrecognized stock-based compensation expense	$ 56,500,000		$ 56,500,000
Performance options
Stock-based compensation
Expected dividend yield, percent			0.00%
Weighted average grant date fair value (in dollars per share)		$ 20.63	$ 12.89	$ 19.88
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross	0
Fully vested options outstanding (in shares)	7,000,000.0		7,000,000.0
Fully vested options, weighted average exercise price (in dollars per share)	$ 11.47		$ 11.47
Fully vested options, aggregate intrinsic value	$ 116,200,000		$ 116,200,000
Fully vested options, weighted average remaining contractual term (in years)			4 years 3 months 18 days
Total fair value of options	2,900,000	$ 2,600,000	$ 4,800,000	$ 4,000,000.0
Total unrecognized stock-based compensation expense	33,100,000		33,100,000
Performance options \| Stock Incentive Plan 2019
Stock-based compensation
Total unrecognized stock-based compensation expense	$ 0		$ 0

Debt

9 Months Ended

Sep. 30, 2024

Debt

Debt

11. Debt

On February 9, 2024, we executed the Eighth Amendment to the First Lien Credit Agreement whereby we extended the maturity date of the First Lien Credit Facility to October 22, 2029 and refinanced the outstanding balance of the facility resulting in a new outstanding loan balance of $2.2 billion (“February 2024 First Lien Refinancing”). We utilized proceeds from the amended First Lien Credit Facility to paydown the remaining principal and interest on the Second Lien Credit Facility (“February 2024 Second Lien Paydown”).

In connection with the closing of the IPO in June 2024 (See Note 1), we repaid $909.1 million outstanding principal and $2.8 million accrued interest on our First Lien Credit Facility (“June 2024 First Lien Paydown”). On June 27, 2024, we entered into the Ninth Amendment to the First Lien Credit Agreement whereby the outstanding balance was repriced bearing an interest rate of 2.75% per annum above the SOFR rate with a minimum base of 0.00% (“June 2024 First Lien Repricing”). The Ninth Amendment did not effectuate changes to any other terms of the agreement.

In connection with the underwriters’ exercise of the overallotment option in July 2024 (see Note 1), we repaid $110.9 million outstanding principal and $0.4 million accrued interest on our First Lien Credit Facility (“July 2024 First Lien Paydown”). On September 6, 2024, we utilized the $10.0 million drawn on the Receivables Facility to paydown $10.0 million outstanding principal on our First Lien Credit Facility (“September 2024 First Lien Paydown”).

Debt instruments consist primarily of term notes, revolving lines of credit, and a Receivables Facility as follows (in thousands):


	September 30,		December 31,
	2024		2023
First lien term loan facility outstanding debt	$	1,166,773	$	1,730,816
Revolving credit facility		—		—
Second lien term loan facility outstanding debt		—		448,000
Receivables facility outstanding debt		80,000		70,000
Total outstanding debt		1,246,773		2,248,816
Unamortized debt issuance costs		(12,109)		(31,155)
Current portion of long-term debt		(12,909)		(17,983)
Total long-term debt, net	$	1,221,755	$	2,199,678

The maturity of long-term principal payments (excluding debt discount) at September 30, 2024 is as follows (in thousands):


2024	$	3,227
2025		12,909
2026		92,909
2027		12,909
2028		12,909
Thereafter		1,111,910
	$	1,246,773

As of September 30, 2024 and December 31, 2023, there is no outstanding balance on our revolving credit facility. The interest rate under the revolving credit facility is 2.50% per annum above the SOFR rate with a minimum base of 0.00%. The SOFR is adjusted each thirty-day period to the thirty-day SOFR rate. At September 30, 2024, the effective interest rate for the revolving credit facility is 7.35%.

The interest rate under the amended First Lien Credit Facility is 2.75% per annum above the SOFR rate with a minimum base of 0.00%. The SOFR is adjusted each thirty-day period to the thirty-day SOFR rate. Interest under the First Lien Credit Facility is paid monthly in arrears. At September 30, 2024, the effective interest rate for First Lien Credit Facility is 7.84%.

Principal on the First Lien Credit Facility is payable in 21 equal quarterly installments with the remaining balance to be paid on October 22, 2029. As of September 30, 2024, there are 20 payments remaining. The First Lien Credit Agreement contains certain covenants which, among other things, restrict our ability to incur additional indebtedness. We were in compliance with such debt covenants as of September 30, 2024.

In connection with the February 2024 First Lien Refinancing, we capitalized creditor fees of $2.8 million and $1.4 million of third-party fees in connection with the issuance of new debt. Additionally, we recorded $10.3 million in third party fees that were expensed immediately, which were recorded in general and administrative expense in our condensed consolidated statements of operations. As part of the February 2024 Second Lien Paydown, we recorded a loss on extinguishment of $8.0 million for the nine months ended September 30, 2024. As part of the February 2024 First Lien Refinancing, we recorded a loss on extinguishment $0.9 million for the nine months ended September 30, 2024. In connection with the June 2024 First Lien Paydown, we recorded a loss on extinguishment of $9.8 million for the nine months ended September 30, 2024. As part of the June 2024 First Lien Repricing, we recorded $2.5 million in third party fees that were expensed immediately, which were recorded in general and administrative expenses in our condensed consolidated statements of operations. We recorded a loss on extinguishment of $0.3 million for the nine months ended September 30, 2024 related to the June 2024 First Lien Repricing. We also recorded a loss on extinguishment of $1.2 million and $0.1 million in connection with the July 2024 First Lien Paydown and September 2024 First Lien Paydown, respectively, for the three and nine months ended September 30, 2024. Losses on extinguishment were recorded within interest expense in our condensed consolidated statements of operations.

We had unamortized debt issuance costs of $12.1 million and $31.2 million as of September 30, 2024 and December 31, 2023, respectively.

In connection with the Revolving Credit Facility, unamortized debt issuance costs were $2.0 million and $2.4 million as of September 30, 2024 and December 31, 2023, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481544/470-10-50-6

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Paragraph 6
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-URI https://asc.fasb.org/1943274/2147481544/470-10-50-6

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147477092/405-40-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482925/835-30-45-2

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ 5,413	$ (15,486)	$ (38,204)	$ (36,919)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Unaudited Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Unaudited Condensed Consolidated Statements of Comprehensive Loss
Net income/(loss)	$ 5,413	$ (15,486)	$ (38,204)	$ (36,919)
Other comprehensive income, before tax:
Interest rate swaps	(14,440)	(2,531)	(20,624)	(1,536)
Income tax effect:
Interest rate swaps	3,506	595	5,014	350
Other comprehensive income/(loss), net of tax	(10,934)	(1,936)	(15,610)	(1,186)
Comprehensive income/(loss), net of tax	$ (5,521)	$ (17,422)	$ (53,814)	$ (38,105)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

We operate as a single business unit. As such, we report our results as a single operating segment that encompasses our entire organization.

Use of Estimates

Revenue Recognition

We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), through the following five steps:

●	identification of the contract, or contracts, with a client;

●	identification of the performance obligations in the contract;

●	determination of the transaction price;

●	allocation of the transaction price to the performance obligations in the contract; and

●	recognition of revenue when, or as, we satisfy a performance obligation

Contract Costs

Incremental Costs of Obtaining a Contract

Costs to Fulfill a Contract

There were no impairment losses relating to deferred costs during the periods presented.

Channel Partners

Deferred Offering Costs

Goodwill

Debt Issuance Costs

Recently Issued Accounting Pronouncements

Income Taxes

9 Months Ended

Sep. 30, 2024

Income Taxes

Income Taxes

9. Income Taxes

We recognized income tax expense of $3.3 million and income tax benefit of $4.7 million for the three months ended September 30, 2024 and 2023, respectively, based on the quarter-to-date pre-tax income. We recognized income tax benefit of $17.4 million and $11.7 million for the nine months ended September 30, 2024 and 2023, respectively, based on the year-to-date pre-tax income. The Company’s effective income tax rate was 37.7% and 23.8% for the three months ended September 30, 2024 and 2023, respectively, and was 31.3% and 24.1% for the nine months ended September 30, 2024 and 2023, respectively. Differences in the effective tax and statutory federal income tax rate of 21% are driven by state income taxes, research and development credit claimed, and offset by permanent differences.

- Definition

The entire disclosure for income tax.

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+ Details

Revenue Recognition

9 Months Ended

Sep. 30, 2024

Revenue Recognition

Revenue Recognition

3. Revenue Recognition

Disaggregation of Revenue

The following table presents revenues disaggregated by revenue type and the timing of revenue recognition (in thousands):


		Three months ended September 30,				Nine months ended September 30,
	Recognition	2024		2023		2024		2023
Subscription revenue	Over time	$	117,993	$	101,828	$	336,421	$	297,596
Volume-based revenue	Over time		120,678		94,402		358,723		284,178
Implementation services and other revenue	Various		1,441		1,033		4,303		2,541
Total revenues		$	240,112	$	197,263	$	699,447	$	584,315

Contract Liabilities

We derive our revenue from contracts with clients primarily through subscription fees and volume-based fees. Our payment terms with the client generally comprise an initial payment for implementation services, which includes client enrollment and the setup of contracted solutions on our platform. These implementation fees are due upon contract execution. Additionally, subscription fees are earned on an ongoing basis, which are invoiced monthly.

Client payments received in advance of fulfilling the corresponding performance obligations are recorded as contract liabilities. Implementation fees are recognized over the customer life, with any unrecognized amounts deferred as contract liabilities. These amounts are reported as deferred revenue on our consolidated balance sheet.

The following table presents activity impacting deferred revenue balances (in thousands):


	September 30,		December 31,
	2024		2023
Beginning balance	$	17,108	$	16,454
Revenue recognized		(10,203)		(9,900)
Additional amounts deferred		8,948		10,554
Ending balance	$	15,853	$	17,108

Transaction Price Allocated to Remaining Performance Obligations

At September 30, 2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the next 12 months and greater than 12 months was $59.0 million and $32.9 million, respectively.

The transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) for executed contracts does not include revenue related to performance obligations that are part of a contract with an original expected duration of one year or less. Additionally, the balance does not include variable consideration that is allocated entirely to wholly unsatisfied promises that form part of a single performance obligation comprised of a series of distinct daily services.

Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations and changes in the timing and scope of contracts, arising from contract modifications.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

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+ Details