The healthcare industry is getting an AI boost — and some players could see big gains.
“Our top pick in 2026 is Waystar,” Bank of America analyst Allen Lutz wrote in a recent report, highlighting the company’s unique position at the intersection of high-growth software and the industry’s massive administrative bottleneck. “The earnings multiple should expand as growth proves to be durable.”
The firm’s bull case for Waystar (WAY) rests on the idea that its growth is “too cheap” to ignore, even as the stock has faced a gauntlet of pressures and has fallen 20% in the past year.
Lutz notes that the company went through a period of “deal purgatory” following its $1.25 billion acquisition of Iodine software in late 2025, which only recently began to see full operational integration.
There’s also the lingering fear that UnitedHealth (UNH) Optum might claw back market share lost during the 2024 Change Healthcare cybersecurity attack — a catastrophic outage that caused severe cash flow problems and delayed patient care for US hospitals.
“Hospitals are looking for new revenue cycle vendors due in part to Change Healthcare’s cybersecurity breach,” Lutz said. “And the rapid growth of AI is also driving hospitals to make changes to its platform.”
This shift is giving “differentiated” players like Waystar an opening to gain ground.
Despite headwinds around utilization and policy uncertainty, Waystar is maintaining an aggressive consolidation strategy. Since its 2017 formation, the company has executed more than 10 acquisitions and now processes over 7.5 billion transactions annually. Lutz estimates the roll-up strategy could unlock 400 to 500 basis points in margin upside as the company integrates AI and scales, leading the firm to issue a Buy rating and a $52 price target.
The AI-centric value proposition is what William Blair analyst Ryan Daniels calls a shift toward an “autonomous revenue cycle.”
“AI has the potential to revolutionize myriad revenue cycle management functions, which could reshape market dynamics,” Daniels said.
Waystar, he argues, is among the key players to benefit from the revolution, specifically citing the company’s “AltitudeAI” tool designed to tackle the industry’s $20 billion denial problem. Management claims the software can generate denial appeals 90% faster, cutting a 38-hour manual process down to just two.
While Waystar stands out, Daniels also pointed to Phreesia (PHR) and Health Catalyst (HCAT) as key players, though they operate on different scales and specialities.
