Healthcare payments firm Waystar shares fall 2% in tepid Nasdaq debut By Reuters

By Arasu Kannagi Basil and Echo Wang

(Reuters) -Shares of Waystar fell 2.3% below their initial public offering price in their Nasdaq Global Select Market debut on Friday, giving the healthcare payments company a valuation of $3.50 billion.

The company’s stock opened at $21, slightly below the IPO price of $21.50, which was at the mid-point of its targeted range of $20 and $23.

Waystar, backed by Swedish private equity firm EQT AB (ST:) and Canadian pension fund giant CPPIB, raised $967.5 million by selling 45 million shares.

The underwhelming debut was in contrast with recent strong listings on U.S. stock exchanges, suggesting investors are being selective despite the unbridled optimism fueled by some high-profile IPOs.

Waystar, formed in 2017 through the merger of Navicure and ZirMed, develops payments software that helps clients like large hospital systems collect bills from patients.

EQT and CPPIB acquired a majority stake in Waystar from alternative investment firm Bain Capital in 2019, valuing the company at $2.7 billion. Bain stayed on as a minority shareholder.

Investment management firm Neuberger Berman and sovereign wealth fund Qatar Investment Authority had indicated an interest in buying up to $225 million worth of shares in the IPO.

PARING DOWN DEBT

Under EQT and CPPIB’s ownership, Waystar has gained scale by acquiring some of its rivals, including eSolutions in 2020, which boosted its presence in the lucrative government health insurance market for the elderly, known as Medicare.

The splurge on mergers and acquisitions, however, saddled the company with over $2 billion in debt, as of March end.

Waystar intends to use the IPO proceeds to repay outstanding debt.

“We are using the proceeds of the IPO to reduce our leverage, exposure and improve our capital structure,” CEO Matt Hawkins (NASDAQ:) told Reuters in an interview.

Goldman Sachs, J.P. Morgan Securities and Barclays Capital were the lead underwriters for the IPO.