Waystar acquires Iodine Software for $1.25B to boost AI-driven healthcare payments

Waystar Makes $1.25B Bet on AI for Healthcare Payments

Waystar has signed a definitive agreement to acquire Iodine Software in a $1.25 billion deal aimed at boosting AI capabilities in healthcare payments. This move is expected to enhance automation, reduce manual tasks, and improve financial outcomes for over one million providers.

The acquisition, led by private equity firm Advent International, transfers 100% ownership of Iodine from its shareholders to Waystar. The integration of Iodine's clinical intelligence platform into Waystar's technology stack promises to prevent claim denials and streamline healthcare payment processes.

What is Iodine Software?

Iodine Software, founded in 2010 and based in Austin, Texas, specializes in AI-driven revenue cycle management through clinical intelligence. Its flagship product, IodineIQ, uses a proprietary AI engine that references a clinical condition library and data from millions of patient encounters to support accurate clinical documentation and reduce revenue leakage.

The company offers several solutions:

• IodineCDI – clinical documentation improvement
• IodinePreBill – reimbursement accuracy
• IodineUM – utilization management

More than 1,000 hospitals and health systems, including AdventHealth, use Iodine's technology to automate mid-revenue cycle workflows.

AI to Empower Healthcare Payments

Waystar plans to leverage Iodine's AI-driven clinical documentation integrity, utilization management, and prebill revenue leakage identification to increase automation. This integration is expected to reduce administrative burdens on providers and expand Waystar's total addressable market by over 15%.

Additionally, Waystar will combine its extensive data network with Iodine's clinical data to enhance the reach of its AI platform, Waystar AltitudeAI. Launched in January, AltitudeAI includes generative AI solutions focused on appealing denied claims. Post-acquisition, Waystar intends to broaden generative AI applications to cover prior authorizations, claims management, denials prevention, and appeals.

Together, the companies will serve 17 of the 20 U.S. News Best Hospitals.

Transaction Details

The transaction will be funded equally by cash and stock. After closing, Waystar shareholders will own approximately 92% of the combined company, while Iodine equity holders will own the remaining 8%. Advent International, Iodine’s largest shareholder, will receive Waystar shares and is committed to an 18-month lock-up period post-closing.

The deal values the combined enterprise at $1.25 billion. Waystar expects to benefit financially from Iodine’s subscription-based revenue model and sees potential cross-selling opportunities between their client bases.

Currently, Waystar serves around 30,000 clients representing over 1 million providers and processes more than 6 million healthcare payments annually. The company has identified over $15 million in annual cost synergies expected within 24 months of closing. The transaction is anticipated to close by the end of the year.

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