All right, I think we're just about at time here. So thank you. Good afternoon, everyone, and thanks for joining us at the Waystar fireside chat. My name is Daniel Grosslight. I'm the Healthcare Technology and Distribution Analyst here at Citi, and I'm very pleased to welcome Steve Oreskovich, the CFO of Waystar. Thank you for making the trip down to Miami.
Yeah, thank you for the time.
Let's maybe, if we can get started with just a little bit of level setting for people who are newer to the Waystar story. You're still relatively new to the public markets. Can you just start by framing the core problem you're solving for healthcare providers, and in particular, the question that I get the most, mostly from people who are newer to the story, is about where you fit within the competitive dynamic, the competitive field, I should say, because it is quite crowded. Can you discuss the importance of being kind of an end-to-end platform and the more modular way you approach that end-to-end platform versus some of the more full-stack outsourcers?
Yeah, definitely, and I appreciate the question. So if you think at its core, our clients, the healthcare providers, for decades now have continued to see various types of pressure on their top-line revenue reimbursement-wise. More recently, maybe the one big beautiful bill and some of the offsets to that, right? Where Waystar comes in is we're helping them with our software platform and the solutions on that hosted platform more efficiently and effectively ensure they're getting paid in full for the services that they do. And where we really go to market from a differentiation standpoint is talking about illustrating and showing them the ROI we believe we can deliver, our software can deliver, and lower their total cost of ownership. So as they're feeling top-line pressures, we're able to help them.
And especially if you think about health systems and hospitals that are working on relatively thin bottom-line margins, we're helping them to maintain or expand those bottom-line margins. If we think about it from a competitive standpoint, I think there's a couple of things that are really resonating versus other legacy incumbents we see in the field out there. The first is the platform approach, right? We're hearing more and more from our clients that they want to work with a single trusted provider, highly cybersecure, and reduce the number of vendors that they have in their ecosystem. I think the second thing is, I had mentioned earlier, the approach of illustrating the ROI and benefit that we can perform and we can deliver for our clients.
I think a tangible way to illustrate that is, as you think about nationally, typically there's still about a 16%-17% denial rate occurring when a claim is being submitted to a payer, right? We typically see a point differentiation in the starting point of that, meaning as a claim is initially delivered, we call it a first pass clean claim rate of almost 99% across all our clients. So if you think about that in terms of the amount of work that's spent in that follow-up and you have a provider that you're or a vendor, sorry, that you're utilizing today that's delivering a low-90s% first pass clean claim rate versus Waystar, you're talking a marked difference in the amount of work that has to occur thereafter to rightfully get paid for the services that our clients are providing.
Got it. So as you go to market, and we'll dig a bit deeper into the competitive dynamic later, but as you go to market, are you mostly replacing kind of these vendors that just haven't performed well, or is it completely, are you replacing very traditional old-school ways of doing things on paper? What are you replacing?
Yeah, a bit of both, right? So we still see homegrown systems and manual effort and work that's being done. I think what we're starting to see more and more is the opportunity, especially as we talked through and I've mentioned earlier, the approach of having all of our software solutions on a single platform. We're starting to see in the RFPs that we're in and in the pipeline, more opportunities to eliminate or to replace several different vendors they may be using today with Waystar because they're seeing the benefits. The clients and potential clients are seeing the benefits of working with a single vendor, again, highly secure, highly cybersecure, sorry, with a good set of existing clients that are referable or can actually be leading and helping us out with that conversations with potential clients on illustrating what Waystar was able to do for them.
So it's a combination of what we commit to, but then also having others speak on our behalf.
Yeah, yeah, makes sense. I want to touch on one of your recent acquisitions, a large acquisition you made, the $1.25 billion acquisition of Iodine. This was really interesting because it kind of got you more into the clinical documentation setting. Can you just maybe talk a little bit about the value that Iodine is bringing to your end-to-end platform? Because I think as I look at your platform, it's pretty robust, but this is kind of a new step for you, and what opportunities does this specifically unlock for you?
Yeah, we've talked about previously the opportunity for us to help our clients be able to submit what we've called the perfect undeniable claim, right? That's our out-year vision. I think Iodine goes a long way to helping that occur. If you think of the Waystar solutions today, we do really well at the outset of when a provider interacts with a patient, meaning helping to look for eligibility, prior authorization, coverage detection, and then obviously mentioned how we have a point step differential between the competition on when it comes to processing the claim for them to be paid, interacting with the payers, and/or interacting with patients.
What Iodine does for us is it helps in that process of as the patient and the physician are having his or her interaction in taking, to your point, the clinical diagnostics and taking those unstructured notes, turning that into the structured information that forms the basis, the codes that form the basis of the claim. So we think by informing and putting together ultimately the Iodine clients and the solutions on the Waystar platform, we can even improve the enhancements and the outcomes that we see today. The other part of it that we see from a more near-term perspective is often certain aspects of that interaction between the payer and the clinician will require some clinical data in order to ensure that we can eliminate back-and-forth processes that occur. One area is in prior authorizations, right?
That is a pain point that has a lot of national coverage and we've heard about lately. We think there's an opportunity to take with the Iodine, not only the algorithms, but the clinical information and allow us to really shorten the timeline of enhancements that we were looking to bring already in certain of the Waystar end solutions that we have today.
Can you talk a little bit about the AI models that Iodine also brings to your tech stack?
Yeah, I mean, they have over 160 different AI modules that are actually helping to take, again, unstructured information, unstructured data, look at it, and help to form the basis of basically reading and helping to form the basis of the clinical codes that ultimately go into the claims. We think there's opportunities to take that base structure and apply them in other areas into the ecosystem as well and continue to enhance and shorten the time to market for other solutions that we already had in our product roadmap.
Yep, yep. Let's talk about a little bit of a near-term dynamic. I think Q4 is typically one of the busier quarters from a sales cycle perspective. Now that we're kind of nearing the end of Q4, how has the sales cycle shaped up this year versus prior years? Are there any solutions that you're seeing kind of outsize demand for? I think you mentioned kind of the pre-auth and I'm assuming denials too are big for you. But any solutions that this year have seen a market change in demand?
Yeah, we mentioned on the last earnings call, we see really good activity on not only from a pipeline perspective and a demand perspective, but also in the RFP side. And those tend to be the larger opportunities out there. I think, probably specific solution, are we seeing a marked differential from what we've historically seen? It's along those same lines. There's obviously, in the areas that you mentioned, Daniel, I think where we're really seeing excitement and significant uptick is in what we would consider multiple sales solutions, platform-type solutions and opportunities with new clients. That earlier comment I made about the opportunity and the desire for potential clients to eliminate or reduce the number of vendors in the ecosystem.
We're starting to see, and we started to see that in the past 12 months or so, starting to really see nice uptick in that specific types of opportunities.
Got it. Okay. And from the RFPs, is that mostly health systems or is it really throughout? You typically are bigger on the ambulatory space, but has the nature of the RFP and who's running an RFP changed as well?
Yeah, it remains largely health system and hospitals, but then those larger enterprise ambulatory companies also do a similar type structured arrangement when they're looking at bringing on a new vendor in their ecosystem as well.
Okay, great. Utilization has been very strong for you guys for the past couple of years. I'm wondering, is this a temporary bump that you're seeing or is this more of a structural shift in the market that is durable for the next few years? And importantly, how does this impact the demand for your platform? And do you think it will intensify providers' focus on revenue capture from that utilization?
Yeah, a couple of things. So in general, our revenue mix is about 50% subscription, 50% volume-based. So we like that mix because it allows us to capture the upside from utilization, whether that's coming from, for the past decades now, continued patient greater utilization of the healthcare system. I'll put myself in this category as we continue to age, right? I think also our solutions allow our clients to become more efficient, more effective, and further increase their capacity as well. So we get to see upside when that occurs. To your point, we've seen continued utilization. We've commented on strong utilization that we've commented on in our prior calls for about the past five, six quarters now, above what we've historically seen. Is that a step-function change to what our expectations would be going forward?
I don't think we've seen anything that would say what we've seen over the past five to six quarters would change at any immediate point in time in the future. Am I ready to sit here as a CFO and try to call the future, at least the next couple of years at this point? Probably not, but feel really good about the totality of our revenue sort of algorithm, whether it's subscription and software or whether it's coming from newer or existing clients and the durability of that to allow us to continue to meet our long-term low double-digit revenue growth rate and continue to reinvest back in the business to help us ultimately exceed that.
Yep, yep. We'll switch over to AI. We already mentioned it with Iodine and what that brings to your platform, but you also have a partnership with Google and you've rolled out several generative AI products, the Altitude product suite, which is really interesting, and I think one of the only ways to play the AI trade right now in healthcare in a real way. A lot of people talk about AI, but you're actually introducing products that have real AI in it. How are you pricing these products and what has the early reception been to these products?
Yeah, maybe I'll hit that in reverse if it's okay. So the early reception has been fantastic, right? And to your point, and we've used this phrase before, we're taking AI hype and turning it into ROI reality. You mentioned two pain point areas earlier being prior authorizations, right? The generative AI solution that we brought so far and the clients that are using it are reporting about a 70% decrease in the time to go ahead and receive and interact with the payers and receive that prior authorization. That's fantastic results if you think of it as you and I as patients of having faster time to understand what our next care path step is, right? In the other area I mentioned in denials, right?
Our denials and appeals management solution, we've seen with the generative AI capabilities enhanced into that, a decrease of 90% of the time it takes to go ahead and not only gather the information, understand why it was denied, but turn around, put the appeals package together and submit that appeals package to the payer, right? That's significant savings that our clients are seeing, right? How are we then in turn looking to monetize those rightfully for the ROI that we are delivering with those solutions? It's in a couple of different ways, right? For those early adopters, we'll look at that helped us formulate these.
We'll look and think through how do we in our annual price increase or uplift program that we've had throughout our entire client base for several years now, how do we look to in the next turn of interacting with that client, price to value there? We've also created new SKUs, you alluded to them. They're the peak product solutions you can see on our website that also allows for those existing clients that have not yet adopted that are looking to adopt or for new clients for us to charge a differentiated price point for those new solutions because of the vast differential in savings that we think they're allowing those clients to achieve.
Yeah. And is there any way to dimensionalize what percent of revenue or percent of clients have adopted some of these newer AI-driven technologies?
Yeah, we haven't stated specifics around it yet. From an adoption perspective, what we did comment on is we're starting to see a healthier and healthier portion of the pipeline and started to see the last couple of quarters a growing portion of the bookings being comprised of these solutions. So we're excited about where we stand today. We still think we're in the early innings of the opportunity in front of us and we're going to continue to, you alluded to it earlier, we're going to continue to look at it on a solution-by-solution basis and continue to bring them to market. So from a CFO perspective, the beauty of that is that it's not going to be a one big bang and done for us from a revenue growth opportunity. It's going to be a long-term continued layering effect.
Remind me, there are typically, I know every contract is a little bit different, but there are typically, even for non-AI products, annual escalators. Can you frame what a typical annual escalator is and then how perhaps the GenAI escalator compares to that?
Yeah. So if you look at our bridge from gross revenue retention to net, it typically starts out with very strong 97% gross revenue retention. We talked about the patient utilization. Annually, we continue to see increases there. It generally drives about a 1-2% uplift. Price increases, the program we've had in place now for seven years generally being 3-4%. And then as we get to the 108-110% net revenue retention rate, 6-8% comes through cross-sell. We haven't yet indicated how much we think we can change that 3-4% dynamic. Obviously, it'll be a change over time, but we think there's opportunity on a client-by-client basis as appropriate to continue to increase that. And then obviously the other place that it will benefit the NRR rate altogether will be in that cross-sell upsell as those new SKUs go in.
Yep. Yeah, makes sense. Okay. And then looking ahead, what do you think is next for GenAI? Do you think you'll move to kind of an agentic AI product at some point? How should we think about the future of that product set?
Yeah. So look, we got a lot of excitement. I don't want to get ahead of our tech folks, I should say. They might not be happy if I start committing us to certain things on this call here today. But I think it's safe to say that we mentioned a while back that at the beginning of the year, we were looking at 16 use cases. We've obviously brought several of those to market. We continue to add to that. We typically have every six months or so what we call our innovation showcase. It's on our websites as well. You can see the one that we recently did and the solutions that we highlighted that we're bringing to bear that have Generative AI as part of that.
Going forward in the future, what I expect agentic AI to be part of the solutions that we bring forward as well, and even things that we haven't thought of yet today, 100%.
Got it. Got it. Okay. Let's switch over to the competitive dynamic. As I alluded to, it's a very crowded field and this is, as I mentioned, probably one of the questions that I get asked most often because you do seem to hear about a new company every week or so that is AI-native revenue cycle management. You hear about what Epic and Cerner are doing on the revenue cycle management side, which has not typically been an area of strength for them, but they do tend to own, at least on the health system side, the tech stack. And then you've got your traditional competitors, which have always been around. How do you differentiate yourself among those different constituencies? And also there's this dynamic too where you're partners with EHR companies. So it's this cooperation dynamic too that is playing out in the market.
How do you maintain those strong relationships while also being a competitor?
Yeah. Several parts of the question, so I'll try to go through them in sort of pieces. So if we look at the existing or what you might call legacy competitive field, I think the differentiation point comes in the marked differential of ROI versus the solutions that they're providing. It also comes in our client experience, right? So we tend to believe and live by that we have a high-touch client experience, right? And by that, I mean, I'll give you an example. For clients of a certain size, we have what we call a client success management team. That team is there to say, are you receiving the benefits and are you gaining the benefits that we said you would get when you first bought the solution? How can I help solve your challenges?
They're also there to identify and look for new opportunities for us to be able to work with that client in other areas where they're having challenges with other, whether it's homegrown systems or other vendors that are not meeting their needs, right? So we think we have a highly differentiated technological and client experience approach. If you look at the new potential upstarts that you mentioned and we see the same splashy announcements as well, I think it comes down to the differential between hype and ROI reality, right? So for instance, I'll take in the area of prior authorizations. A client says we've, or a vendor, a new vendor says, we've solved for and automated prior authorizations.
When you dig under the covers, what you find is for the couple of clients that they have, maybe they're doing it for a few specialties and a few end user payers where when we're bringing something to bear that's a more highly automated approach to prior authorizations, it's for the entirety, that 70% opportunity, that time reduction I had mentioned earlier. It's for the entirety across the continuum of our client base. I'd say the other thing is we believe that we've got a bit of a moat differential both versus those new upstarts and probably the EHR vendors as well in the fact that we have this big database, over 6 billion transactions processed annually for our LLMs to learn from, which means that they can learn faster and they can be more accurate in their output, right?
The other thing is the connectivity within the ecosystem that we have today is a marked differential as well, whether that's with over 500 not only EHR practice management systems, but thousands of end user payers where we have direct connection to as well. So as we're solving problems for our customers in the ecosystem, we're doing it in a way that has mass connectivity and we're solving it on a broader scale, right? We've also, to your point and mentioning, we have good partnerships with Epic, a contractual partnership with Oracle, Cerner, Meditech as well on the health system and hospital side. So they are good partners in whom we work with. I think what we've seen in the past is when they've made certain announcements, they've been more of an effective looking to put the market on hold while they develop something, right?
And what has tended to come out in the past is we've seen that there is still an opportunity for Waystar to partner with those clients that they would say they have a solution to provide because of the marked differential in the ROI that we're still able to deliver versus what they may bring to bear, is more of a minimally viable solution. So not discouraging or disparaging any of the competition out there. We like to compete, but we think we still have ways that we are ahead of the competition in certain areas and obviously looking to continue to maintain that lead, whether it's technologically or in the client experience.
Yep. Makes sense. And I'm wondering though, do you think as AI becomes more prevalent that this dynamic changes at all? And what do I mean by that is I get a lot of questions also on how does, and this isn't just for revenue cycle management, but you can ask this question for any vertical SaaS company. How does vertical SaaS operate in an AI-dominated industry? And I'm thinking maybe we'll have this barbell effect where it does make it easier for health systems and larger ambulatory groups to insource with AI tools. And maybe it does make the EHRs a little bit better in terms of product quality or a little bit faster to market. Do you see that? It's probably not here right now, but looking out a year or two years from now, do you see AI changing the competitive dynamic and that barbell effect?
Yeah. I think what we're seeing today, I won't try to predict the future, but what we're seeing today is, to your point, a lot of interest, right, from our clients, the providers, the healthcare providers, and what I think they're looking at when you talk about, do I want to, as a healthcare provider, start to use generative AI internally to solve problems versus work with a vendor like Waystar? You start to think about the ways in which they're going to have to connect into the healthcare ecosystem, right? They would have to solve that problem to all of their payers. They would have to solve that problem as it connects to multiple of their other systems that they're utilizing internally.
What we see in here more and more is, hey, look, even if they're evaluating a point solution from a new generative AI company out there is we'd rather look and work with a trusted advisor like Waystar that we know and we can see how you're innovating not only today, but how you're looking to innovate into the future rather than to have to not only design that ourselves, but then have to continue to maintain that ourselves in an ever-changing environment. I think that's part of the beauty of where we sit in the healthcare ecosystem and maybe some of from a vertical SaaS provider or vendor as well is that the workflow involved in it, the interconnectivity involved in it with other vendors is significant. So could there be some on the peripheries?
I don't know that I'd necessarily see it as a dumbbell approach, right, or barbell approach, but could there be some improvement opportunities on the peripheries one way or the other that also enhance and help bring forward and help reduce waste in the healthcare ecosystem? Yes. Do I see it being sort of a pressure point on Waystar and our opportunity in front of us? No, not today.
Got it. Okay. And let's talk about some of that connectivity that you do have within the healthcare system. And when you think about you guys, you also have a big clearinghouse business, which has benefited from some competitor disruption. I don't think you've ever really sized the clearinghouse business, but is there any qualitative commentary around the size of that business that you can provide? And then really my question is, with that disruption that came from your competitor, there's obviously a big upsell opportunity. And I think that has been one of the drivers of your very strong dollar-based retention. Can you just comment on the progress that you've made and if there's more juice to squeeze out of those clients?
Yeah. I'll hit it in reverse if that's okay. So yeah, there's definitely more juice to squeeze, more cross-sell opportunity, so to speak. We've talked about it in the past in a couple of phases. Phase one being those clients, potential clients that were hard stop business down that we helped bring on board. Signed them intentionally to standard Waystar agreements, two to three years in contract length with evergreen annual renewals thereafter, right? And mentioned a couple of quarters ago that we've seen about 30% of those clients looking at follow-on sales opportunities in the pipeline, which is right in line with what we see in any new cohort of client that we bring on. So feel really good about the trust we've built with that client base, the opportunities to continue to cross-sell into those client base.
And we've got a go-to-market team that wholly focused on cross-sell, upsell within our existing client base that's highly focused on those and all other clients that we have, right? We also noted that there was a phase two. So those clients that could weather the storm or had contractual obligations that were significant enough, potential clients, sorry, that were significant enough that we thought were going to come up for opportunities here around this time and through the next couple of years. And we're seeing that strength in our commentary and the surrounding RFPs and the pipeline. So we feel really good about that opportunity to continue to win market share. Now, that being said, as we disclosed in our S-1, we have really high win rates against the entirety of the competition, 80% plus, right?
Feel really, really good about where that sits and where the opportunity could go. The first part of your question was around.
Sizing the, how big the clearinghouse is.
Yeah. Sizing how big, sorry. Thank you for the reminder. So if you think about it from a go-to-market perspective, our teams are focused not only on new client and cross-sell opportunities, but also health systems and hospitals and ambulatory, right? Typically, the sale process into an ambulatory client tends to be that we call it the claims management solution suite or solutions in their clearinghouse, right? So if you think about ambulatory from a revenue perspective being about two-thirds of the business, health system and hospital revenue being about a third of the business, you can kind of get a sense of how many ambulatory clients and revenue includes those clearinghouse solutions, right? The health system and hospital opportunity and go-to-market approach tends to be one that is very diagnostic and pretty agnostic, meaning we say, what is the solution that we can help you?
What is the problem area we can help you solve today? Land that, prove ourselves, and then expand and gain other solution sales in there. So it's not focused on it has to start with those clearinghouse solutions. Rather, it has many paths and ways that we can continue to expand, enter into and expand with clients in that area. So hopefully that's helpful sizing to say it is a meaningful portion of the revenue that we derive. And obviously, it's the entry point into most of our ambulatory sales opportunities.
Yeah. Makes sense. One other industry dynamic that has come up this year is kind of an arms race between provider tech and payer tech. And it does seem like provider tech, and maybe this is just a false narrative and me searching for a narrative, but it does seem like provider tech has kind of gotten the upper hand this year at least. And perhaps next year we'll see payers invest more in their technology stacks to combat some of the headwinds they're facing on their MLR side. Are you seeing a similar dynamic? Am I just searching for a narrative here? What's the tension been like between providers and payers as they invest in their technologies?
Yeah. As we speak to our clients, I think what they would say is for years the playing field was heavily tilted towards the payers, right? And vendors like Waystar are now starting to bring an equality or fairness to it. And as we continue to derive generative AI solutions, it's even helping them further and faster identify and get paid rightfully for the work that they're providing. We kind of heard the similar characterization of is it leading up to an arms race?
I mean, I'd look at it and say my hope. I'll speak for Steve. My hope is that it helps us, continues to bring us closer and partner more with the payers in opportunities that we can both derive efficiencies into the ecosystem, whether that's through direct API connectivity or otherwise, that we can help illustrate that the work that the payers and the costs that payers are incurring today with manual or inefficient processes in the background. Hopefully vendors like Waystar can help make them more efficient as well and see goodness in the entirety of the ecosystem as opposed to it kind of building up and trying to be this arms race.
Would you ever consider getting more into payer tech maybe through payment integrity or something like that?
I'd say never say never, right? But today we're clearly focused on who our customer set is. Those are the providers. We look at our $17 billion plus total addressable annual market opportunity and the low penetration we have in that. If you blend between ambulatory and health system and hospitals, it's in the high single digits. So we've got a lot of runway within the area that we're fully focused on today, but I wouldn't close out any opportunity in the future.
Okay. Let's stick to the giant opportunity you have in front of you then. You bought Iodine, which got you into kind of the clinical document management. You acquired a patient payment asset that got you more into patient payments. Looking forward, where do you see the most opportunity? This could be organic or inorganic, but where do you see the most opportunity for either expansion into new products, new markets? What's next there?
Yeah. Yeah. So we're continually looking to listen and understand from our clients' areas of pain points. We think we can bring new solutions to help mitigate, right? A couple of areas that we've talked about in past earnings calls are still relevant. One, potentially, if you look at the front end of where we engage with patients today, the digital front door, the market, well, obviously highly fragmented, but it's an area that we're looking at build, buy, partner that we're studying and understand the opportunity there because our end users, our business people as well, and they know that if they can engage with and maintain a patient for their life cycle, that's millions of dollars of revenue opportunity for them, right? The other area is really adjacent to what we do, and it's actually between the clinical documentation and the claim.
You might have heard it characterized as autonomous coding, right? That's an area where we think it fits really nicely and dovetails nicely into that perfect, undeniable claim, right? It's an area where we think there's opportunity to derive efficiencies and drive accuracy and continue to lower the labor burden of our clients and what occurs even today, and the technologies that we brought to bear, and Waystar and Iodine combined can bring to bear.
Yep. Yep. What about ambient scrubbing? We hear a lot about the hype in that market. Any interest in those solutions?
Yeah. I mean, an area that we're looking at, transparently, we've heard a lot in recently there where it seems to, I don't want to use the word commoditize, but it seems to be getting pretty quick for generative AI to solve there. But the outcome of that is still unstructured clinical notes. So it could be a place to partner, could be a place internally to look at. I think we think that the real benefit is in the ecosystem as it sits today and the future is more on the autonomous coding side.
Got it. Okay. And let's turn to your guide, your 2025 guide, which was strong, but to us, it does seem a bit conservative, maybe prudently conservative. If we assume an increase, a sequential increase in your subscription revenue, it implies kind of a mid-single digit sequential drop in volume. Can you just remind us of the seasonality in the business and some of the building blocks of your 2025 guide?
Yeah. So to your point, the 2025 guide, hopefully full year and inherent in the fourth quarter, you saw a pickup above the beat at the midpoint of our revenue guidance versus the Q3 beat, which we're really pleased with. It continues to signal, as you noted, strength in the business. It implied Waystar's standalone growth rate in the fourth quarter alone of 8% year over year. It's a consideration of a couple of things. One, sort of the rapid time to revenue last year for those clients that we onboarded and the potential impact that Q4 over Q4 might be a tougher quarter just from a percentage of revenue growth opportunity. The other piece is in the 30% of our revenue that comes from patient payments, how those providers interact with and collect from patients. We've seen stronger utilization and payment activity in the earlier half of the year.
And we typically see growth year over year there, stronger in the first half of the year versus second half of the year seasonality. And we're just, to use your word, whether it's a gauge of prudence, we're just trying to, to our best estimate, think about where the outcomes could be. At the midpoint of our guide, we think that stronger utilization we see means less payments that occur in the back half of Q4. Obviously, at the upside on the high side of guidance, it could be a little stronger payment and less patients hitting their deductibles that are on high deductible plans over a broader swath versus what our internal expectation is.
Got it. And we're just about out of time here, but I'd be remiss not to ask about 2026. I know you're not going to give formal guidance unless that is something you want to do. But I would like you to kind of help frame how we should be thinking about growth in 2026. I think margins are pretty safe, but growth I think has been a bigger area of debate, particularly because you have had such, and I'm talking about on an organic basis, such nice organic growth over the past couple of years above your targets. Maybe help decompose kind of the growth and bridge the growth from 2025 to 2026. Are there any temporary or non-recurring items in 2025 we should be thinking about as we model out 2026?
Yeah. I appreciate the question, right? And to your point, look forward to in our next earnings call, digging deep into 2026. I don't think there's anything we see that significantly changes from what our long-term targets that we have talked about have been, right? Low double-digit revenue growth on an annualized basis, 40% plus Adjusted EBITDA margins. Continue to expect strong free cash flow conversion of 70% plus. And then obviously we have a history of, and I mentioned on the last earnings call that we continue to expect to delever one turn annually. So I think those are still, as you're looking at long-term projections and how to think about the business the right way in which to characterize the business.
Great. Well, we are out of time now, Steve. Thank you so much for all your time this afternoon. Super interesting.
Thank you, Daniel. Appreciate it.