Healthcare payment software provider Waystar has entered a definitive agreement for the complete acquisition of Iodine Software for an enterprise value of $1.25bn.
The transaction is anticipated to enhance Waystar’s capacity to transform healthcare payments via its cloud-based software platform, enabling more than one million providers with AI functionalities to prevent denials, minimise manual labour, and improve financial outcomes.
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The integration of Iodine, which is known for its AI-powered clinical intelligence software, is expected to reduce the $440bn annual administrative costs faced by providers.
Waystar uses AI across its platform to simplify payment processes while Iodine’s clinical intelligence software will be used to extend Waystar’s leadership in the sector.
Waystar CEO Matt Hawkins said: “Our mission is to simplify healthcare payments by eradicating unnecessary denied claims, automating manual work, and increasing transparency for providers and patients.
“We are committed to transforming healthcare through harnessing the power of AI to tackle the most critical challenges in healthcare payments.”
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By GlobalDataThe addition of Iodine’s technology is anticipated to increase Waystar’s total addressable market by over 15%.
This acquisition will enable Waystar to automate tasks such as utilisation management, clinical documentation integrity, and prebill revenue leakage identification.
Through the integration of Iodine’s clinical data assets and Waystar’s data network, the capabilities of Waystar AltitudeAI are set to expand. This is expected to advance generative AI applications in areas such as prior authorisations and claims management.
Iodine’s AI engine, IodineIQ, will deliver insights by training on patient encounters and clinical data.
The combined entity is projected to cater to 17 of the 20 US News Best Hospitals.
Waystar will also benefit from Iodine’s subscription-based revenue model and potential cross-selling opportunities.
The companies anticipate more than $15m in cost synergies within the first two years after closing.
Funding for the transaction will be split evenly between cash and stock, with Waystar shareholders to own approximately 92% of the new company.
Iodine’s largest shareholder, Advent, will receive Waystar shares and agree to an 18-month lock-up period post-closing.
The transaction is expected to close by the end of 2025, subject to regulatory approvals.
Barclays and Simpson Thacher & Bartlett are advising Waystar while JP Morgan Securities, Weil, Gotshal & Manges, and Queen Saenz + Schultz are advising Iodine on this transaction.
