The healthcare industry is getting an AI boost – and some players could see significant 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 is expected to increase as growth proves sustainable.”
The company’s arguments in favor of Waystar (PATH) is based on the idea that its growth is “too cheap” to ignore, even though the stock has faced plenty of pressure and fallen 20% over the past year.
Lutz noted 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 is also the lingering fear that UnitedHealth (UNH) Optum could recover lost market share during 2024 Change Healthcare Cybersecurity Attack — a catastrophic failure that caused serious cash flow problems and delayed patient care in U.S. hospitals.
“Hospitals are looking for new revenue cycle vendors, in part because of the Change Healthcare cybersecurity breach,” Lutz wrote. “And the rapid growth of AI is also pushing hospitals to make changes to their platform.”
This shift gives “differentiated” players like Waystar an opportunity to gain traction.
Despite headwinds from utilization and political uncertainty, Waystar has maintained an aggressive consolidation strategy. Since its founding in 2017, the company has completed more than 10 acquisitions and now processes more than 7.5 billion transactions per year. Lutz estimated that the deployment strategy could unlock 400 to 500 basis points of margin upside as the company integrates AI and scales, leading the company to issue a Buy rating and a $52 price target.
The AI-centric value proposition is what Ryan Daniels, an analyst at William Blair, called a transition to a “self-sustaining revenue cycle.”
“AI has the potential to revolutionize myriad revenue cycle management functions, which could reshape market dynamics,” Daniels said.
Waystar is among the major players that will benefit from the revolution, he argued, specifically citing the company’s “AltitudeAI” tool designed to solve the industry’s $20 billion denial problem. Management claims the software can generate denial calls 90% faster, reducing a 38-hour manual process to just two.
Although Waystar stands out, Daniels also highlighted Phreesia (PHR) and Health Catalyst (HCAT) as key players, even if they operate at different scales and in different specialties.