[I am Siddharth?] Rangnekar from CDR India and I shall be your host for today.

As a reminder, all attendee lines will be in the listen-only mode and there shall be an opportunity for you to ask questions after the presentation concludes. Please note that this webinar is being recorded.

To introduce the management, we have with us today Mr. Ramesh Gopalan, Managing Director and Group CEO, and Mr.

Srinivas Mattapalli, Executive Vice President and Group Chief Financial Officer. Before we begin, I would like to state that some of the statements made on today's call could be forward-looking in nature and may involve certain risks and uncertainties.

A detailed statement in this regard is available in the Quarter 2 and H1 FY '27 earnings presentation that has been uploaded to the stock exchanges. I would now like to hand over the forum to Mr.

Ramesh Gopalan to begin the proceedings of this webinar. Over to you.

Thank you, Siddharth. Good evening, everyone, and thank you for joining us for our Q2 FY '27 earnings call.

US healthcare is still navigating steep cost increases overall. However, many of the national payers reported a significant improvement in their profitability in the first half of 2026 as a result of right-sizing of membership and decrease in medical utilization rates.

In order to retain these margins, they need to continue to focus on managing medical costs, improving clinical and care outcomes, and driving operational efficiency. To help them achieve these objectives, they turn to large-scale domain specialist players like Sagility that combine deep healthcare expertise with AI capabilities and flexible partnership models and greater accountability for outcomes.

We are pleased with the progress that we have made through the first half of FY '27. The business momentum has been strong.

We are expanding within our existing relationships. The clients we added in FY '26 are growing well, and our pipeline is robust.

Let me start with what we are seeing in the market. Demand remains healthy and clients are more deliberate in how they make decisions.

Clients are prioritizing investments that address immediate business pressures and show a clear path to measurable value. This is creating opportunities across our core business, managed services, and AI.

For larger transformational deals, the buying processes is more rigorous. More senior stakeholders are involved, and clients want a compelling business case, clear evidence of value, and confidence that their partner can execute at scale.

Increasingly, they are choosing partners who combine deep domain expertise with practical AI and a willingness to take accountability for outcomes. Our pipeline reflects this shift.

It includes more managed service deals and a healthy set of opportunities with Blues and other mid-market plans. This quarter, we won a large payment integrity engagement from a top 10 health plan covering over 10 million members.

This win demonstrates our growing ability to secure larger, higher-value engagements. The deal has a minimum potential of over $10 million in ACV and could possibly be much more.

In payment integrity deals, which are contingency-based linked to payment recovery, revenue will build progressively over time. Our other managed services deals are also progressing well.

By their very nature, they take longer to negotiate and close, but they lead to deeper, longer-term relationships. AI is now central to these transformation conversations with clients.

We are seeing this momentum translate into new SOW wins and more solutions moving into production. Our focus is on practical healthcare-specific solutions such as SmarTech Appeals Assist, Nurse Assist, and Claims Assist, which address real client priorities.

We are gradually progressing from narrower AI use cases to a larger end-to-end workflow transformation using agentic AI. For example, for a client, we are implementing Synchroni claims lifecycle, an agentic workflow for claims adjudication where multiple agents working in tandem with human in the loop handle extraction from unstructured inputs, drive workflows basis SOP for each scenario, do reasoning and decisioning, all of this in order to adjudicate a claim adhering to all compliance requirements.

Similarly, in RCM, we are deploying Synchroni RCM lifecycle, an agentic solution to handle denials, including identification, evidence collection, determination of appealability, and writing the appeal letters, again with humans reviewing at distinct checkpoints. We are also leveraging AI in how we go to market.

It's helping us develop solutions faster, align more closely with client priorities, and have more strategic, value-focused conversations with clients. We are making progress on our other strategic priorities as well, broadening our capabilities across the healthcare value chain and expanding our addressable market.

The Careseed acquisition announced last quarter is now integrated into our clinical practice. It strengthens our healthcare quality capabilities, particularly in the Medicare Advantage market, and gives us access to a broader base of mid- and small-sized clients.

Yesterday, we announced the acquisition of Chirag Health, LLC. Providers are a clear growth focus for us, and Chirag fits in line with that strategy.

Chirag's mid-cycle revenue solutions are a natural complement to Sagility's proven front-end and back-end revenue cycle offerings, helping Sagility generate improved financial and operational outcomes for health providers from patient access through final payment. I'll talk about Chirag a little more in detail later.

Along with this, we are also scaling our provider go-to-market team to accelerate growth in the provider segment. With this, let me get into the specifics of our Q2 and H1 performance.

Consolidated revenue for Q2 came in at 20,321 million rupees, or $212.6 million, representing a year-on-year growth of 22.5% in INR terms and 12.2% in constant currency. Excluding the Careseed acquisition, organic revenue growth remained strong at 22.2% in INR terms and 11.9% in constant currency.

Operating profitability remains strong with Q2 adjusted EBITDA at 5,353 million rupees, or $56 million, representing an year-on-year growth of 23% with a margin of 26.3%, the highest in six quarters. Net profitability also remained healthy.

Adjusted PAT for Q2 was 3,254 million rupees, or $34 million, up 8.1% year-on-year with a margin of 16%. Turning to the half-year performance, H1 FY '27 was 39,956 million rupees, or $420.4 million, representing an year-on-year growth of 25% in INR terms and 13.7% in constant currency.

H1 adjusted EBITDA was 10,069 million rupees, or $105.9 million, growing 25.2% year-on-year with a margin of 25.2%, while adjusted PAT was 5,951 million rupees, or $62.6 million, growing 18.9% year-on-year with a margin of 14.9%. Moving to new deal wins, deal ACV increased 18.2% year-on-year to $40.2 million with wins across 31 existing clients and one new client.

I'm also happy to announce that the board has approved an interim dividend of ₹0.15, or 15 paise, per share to be paid in Q3. Before I move on, I'd like to highlight some of the external recognition we received this quarter.

Industry analysts are increasingly recognizing our healthcare depth and our ability to deliver transformation at scale. Sagility received the 2026 Everest Group Elevate Honor for Voice of the Customer in the Healthcare and Life Sciences Service Specialist category.

The Elevate Honors are grounded in Everest Group's independent research and recognize top-performing service providers based on direct client feedback. In addition to this, Avasant named us as leader in the healthcare payer business process transformation.

Our SmarTech Nurse Assist solution won a Stratus Award for Cloud Computing. On the people front, Sagility ranked 57th in the 100 Best Large Workplaces in Asia 2026 by Great Place to Work, and we were also recognized amongst the top 10 India's Best Places for Women in 2026.

Sagility also earned its Great Place to Work certification for a second year in a row. We also won a Bronze Stevie Award for AI Adoption with Headcount Growth in the US.

On sustainability, we are proud to have won the Golden Peacock Award for ESG, which recognizes our commitment to responsible business practices. Together, these awards recognize our healthcare expertise, our progress on AI, and the culture of doing right for all stakeholders that our teams have built.

Moving on to the next slide. In Q2 FY '27, payers accounted for 89.9% of revenue and providers for 10.1%.

Employee strength stood at 51,486 at the end of Q2. Quarterly voluntary attrition improved to 25.7% from 28.6% in Q1 FY '27 and was also lower than in Q2 FY '26.

Moving to the next slide, the annual KPIs. At the end of Q2, we had 105 active client groups, and for the first time, each of our top 10 client groups are now more than $20 million in revenue on a trailing 12-month basis.

Now, let me spend a few minutes on Chirag, right? Moving to the next slide, we closed the Chirag acquisition yesterday.

Chirag is a specialized provider of clinical documentation improvement solutions along with medical coding, risk adjustment, and HEDIS and quality services. As you can see, the trailing 12-month revenue up to September 2026 was $13 million with an adjusted EBITDA margin of 35.8% and a net revenue retention rate of 115%.

They have 750 employees, most of them in India and a few of them in the US, and the consideration was $20 million that was paid upfront with an ability to earn an additional 12.35 million payable subject to achievement of certain revenue targets over CY '27 and CY '28. As Sagility has strong capabilities in the front end and the back end of the revenue cycle operations, and Chirag complements that with its mid-revenue cycle expertise.

They have prestigious clients that include large health systems, physician groups, and value-based care organizations. Like I said, they have a 700-plus strong team of specialized coding staff in India along with a small team in the US.

Moving to the next slide, this shows the complementary nature of our capabilities. Like I said, while Sagility is strong in the front end, which is the patient access, and the back end, which is around denials and AR follow-up, Chirag is strong in the middle office, which is around clinical documentation and coding.

With that acquisition of Chirag, our end-to-end capability in RCM is vastly enhanced. The complementarity of the services means that we have an opportunity to cross-sell each organization's services to the other's clients.

The risk adjustment and HCC capture for risk-bearing providers and VBC companies pairs well with Sagility's care management offerings. The small footprint on the payer side and quality doing chart review can be extended to HEDIS abstraction and care gap closures.

We are very confident that Chirag will help us grow our provider business going forward. Moving to the next slide, a little bit on marketing and our thought leadership.

This slide highlights how we are using marketing and thought leadership to accelerate our go-to-market motion. We are increasing go-to-market velocity.

Our AI-led tools and workflows are helping teams bring together healthcare insights, Sagility capabilities, and relevant proof points faster, improving the speed and quality of solutioning. We are focusing our thought leadership on issues that matter most to our clients.

Our perspectives cover priority areas such as CMS-0057-F compliance, payment accuracy, claims, and the application of intelligence across healthcare operations. This is helping us engage clients around their immediate business priorities.

We are also making our capabilities more visible and easier to understand. Through CoreIQ, Sagility Synchroni, and SmarTech solutions, we are showing the market how Sagility brings together deep healthcare expertise and practical AI to address real operational challenges.

With that, I'll hand it over to MR to walk us through the financials, and then I'll come back for closing comments. Over to you, MR.

Thank you, Ramesh. Good evening, everyone, and thank you for joining us.

Let me begin with the financial highlights for Q2 and H1 FY '27. Q2 revenues was 20,320 million INR, or US dollar 212.6 million.

This represents a year-on-year growth of 22.5% in INR terms and 12.2% in constant currency. Excluding our Careseed acquisition, organic revenue growth was 22.2% in INR terms and 11.9% in constant currency.

Our profitability also remained healthy. Adjusted EBITDA grew 23% year-on-year to 5,353 million with a margin of 26.3%.

Adjusted PAT increased 8.1% to 3,254 million with a margin of 16%. Turning to the first half, H1 FY '27 revenue was 39,956 million representing an year-on-year growth of 25% in INR terms and 13.7% in constant currency.

Adjusted EBITDA was 10,069 million with a margin of 25.2%, while adjusted PAT was 5,951 million. Cash generation also remained robust.

In Q2, we generated operating cash flow of 3,182 million and a free cash flow of 2,760 million. For H1, the same numbers operating cash flow was 6,343 million and free cash flow was at 5,176 million.

This resulted in OCF-to-reported-EBITDA conversion of 64.9%. Collections also improved with our DSO declining from 80 days in Q1 to about 78 days in Q2.

Overall, the first half delivered strong growth, healthy margins, and a robust cash generation. Moving to the next slide, I wanted to let me talk about the sequential revenue movement in the context of our normal seasonality.

The first half is typically the lower half of our annual revenue cycle, with AEP and open enrollment revenues concentrated in Q3 and Q4. Q2 revenues has increased to 212.6 million from 207.8 million in Q1 reflecting continued growth in our steady-state business.

As we move into our second half, AEP and open enrollment volumes will begin to contribute revenue. We are working closely with clients to capture available volumes and grow their steady-state business.

Our focus remains on operational readiness and consistent execution across key programs to help drive growth across our broader portfolio. Turning to our margins, we delivered our highest adjusted EBITDA margins in six quarters, improving from 24% in quarter one to 26.3% in quarter two.

This improvement reflects stronger operating leverage, disciplined cost management, delivery efficiencies, and favorable foreign exchange movements. This was despite the continued impact of statutory wage revisions and our annual compensation increases.

Overall, our steady-state business continues to grow at a healthy rate, supported by the resilience of our operating model. As we execute through the second half, we will remain focused on balancing growth investments with sustainable profitability.

Moving to the next slide, stepping back a little from the quarterly performance, this slide highlights the progress we have made over the past few years. Revenue increased from 47,536 million in FY '24 to 79,910 million on a trailing 12-month basis through September 2026.

Over the same period, adjusted EBITDA grew from 11,436 million to 20,229 million, while adjusted PAT more than doubled from 5,896 million to 12,185 million. Significantly, our profitability has grown faster than revenue, reflecting improved operating leverage, disciplined execution, and lower finance and G&A costs.

This performance demonstrates our ability to scale business while sustaining healthy margins, strengthening our cash generation, and creating greater capacity to invest in our future growth. On this slide, turning to the other indicators, adjusted EPS increased to ₹2.62 on a trailing 12-month basis through September 2026, supported by continued growth in adjusted PAT.

Our adjusted ROCE remains strong at 55.4%, reflecting disciplined capital allocation and the strength of our asset-light business model. For H1 FY '27, operating cash flow conversion was 64.9%, while free cash flow conversion was 52.9%.

This was achieved while continuing to fund growth and acquisition-related commitments. The most significant development in this slide is our continued strengthening of our balance sheet.

We moved from a net debt of 1,962 million at the end of FY '26 to a net cash position of 1,127 million by September 2026. This provides greater flexibility to invest in growth, technology, and selective strategic opportunities.

This slide is a little busy, and it sets out a detailed consolidated profit and loss for Q2 and H1 FY '27. I've already covered the key movements of numbers in the of this slide, I'll just pause a couple a few seconds to allow you to review these numbers.

The only item I would want to highlight at this point is the impact of statutory minimum wage revisions. Quarter two reflects the full quarter impact of about 148 million compared to about 70 million in quarter one.

Moving to the next slide, this slide provides the bridge from our reported EBITDA and reported PAT to our adjusted EBITDA and adjusted PAT for Q2 and H1 FY '27. For quarter two, reported EBITDA of 5,252 million reconciles to adjusted EBITDA of 5,353 million after adjusting for acquisition-related earnouts, share price share-based payment awards, other income, and foreign exchange movements.

Similarly, reported PAT of 2,842 million reconciles to our adjusted PAT of 3,254 million, adjusting for acquisition-related items, share-based payment awards, and amortization of intangible assets. For H1, the bridge also includes exceptional past service costs included in Q1.

There's no corresponding exceptional adjustment in Q2. These adjustments are consistent with our historical presentation and provide a comparable view of the underlying performance.

Moving to next slide, this represents our forward-looking position and summarizes the expected movements relating to debt payment, share-based payment awards, acquisition awards earnouts, and amortization of intangible assets. We continue to remain on track to repay our outstanding debt fully during 2027, which will further strengthen the balance sheet and reduce our finance costs.

The key movement in this slide reflects the Careseed acquisition, scheduled debt repayments, and foreign exchange movements. Turning to our balance sheet, again, the strength and flexibility of our financial position is a key takeaway from this slide.

Our net cash position at the end of September 2026 gives us the capacity to fund our strategic priorities while retaining our flexibility for selective opportunities. We'll continue to take a disciplined approach to cash allocation capital allocation, balancing investment in technology, AI, and domain-led growth with appropriate returns to shareholders.

Finally, let me close with our cash flow state performance in the next slide. In for H1 cash flow performance for H1 FY '27, we generated an operating cash flow of 6,343 million during our first half.

After fixed asset additions of 1,168 million, cash flow free cash flow was 5,176 million. Cash flow for acquisitions was 1,338 million.

Net cash used for financing activities was 3,123 million, primarily reflecting the repayment of promoter borrowings and lease liabilities, as well as the dividend payment. Overall, our cash generation remains healthy and provides the flexibility to continue investing in growth.

With that, I conclude my remarks. Thank you for your time.

I'll now hand over the call back to Ramesh for his closing comments. Ramesh, over to you.

Thanks, MR. As we enter the second half of FY '27, our immediate focus is AEP and open enrollment.

This is a critical season for our payer clients. Across our key programs, our teams have been preparing for the expected increase in activity with a clear focus on capacity, operational readiness, and consistent delivery.

We expect OE and AEP revenue to be slightly lower than last year, but in spite of this, we are continuing with our guidance of low double-digit organic revenue growth in constant currency for FY '27. Building on the strong Q2 execution, including our highest adjusted EBITDA margin in six quarters, despite minimum wage increases in Karnataka and Telangana, we're raising our FY '27 adjusted EBITDA margin guidance from our earlier 24 to 25% to a new 25 to 26%.

With that, I'm happy to take questions, and for now, hand it back to Siddharth.

Thank you. Participants who wish to ask a question, kindly click the raise hand icon at the bottom center of your screen.

We will wait for the questions to assemble. I'll repeat.

Participants who wish to ask a question, kindly click the raise hand icon at the bottom center of your screen. We shall wait for the queues to assemble.

The first question comes from the line of Chirag Kachhadiya from Motilal Oswal. Chirag, your line has been unmuted.

Hi, can you hear me?

Yes, please go ahead.

Yeah. Congrats on a good set of performance in terms of profitability.

Just couple of questions. The margin guidance which you increase, what levers has contributed during the quarter irrespective of the wage hike impact or a wage bill impact?

We're able to post a good set of margins. Also, what gives you confidence that this margin trajectory will continue?

Second, the acquisition which you announce on provider side, how large it can be from next two, three years' perspective?

Yeah. I'll take the question on acquisition and I'll ask MR to talk about the margin guidance in more detail.

Like I said, right, we've mentioned in the previous calls that growing the provider space is a increased focus for us. We've done a couple of things.

We have reorganized our go-to-market in the provider space. We're giving it additional focus by creating a separate go-to-market team in the providers.

The acquisition of Chirag is also in line with that strategy. Like I said, Chirag fits the gap that we had in the mid-revenue cycle, and so with this, it kind of gives us an end-to-end capability in the revenue cycle and pretty strong at all components of that revenue cycle.

We are hoping to grow providers at a much faster clip than we've grown in the past. Chirag, like I said, the trailing 12 months is about 13 million.

Chirag is also growing at a healthy clip. Combined with our capabilities and our ability to cross-sell each other's services, I'm expecting the provider to pick up its growth momentum.

Ramesh, on the margin numbers, yes, it's been a combination of very good operating efficiencies that's kicked in during this quarter, plus a little bit of FX tailwind that we have got from quarter one to quarter two, and we also had a favorable geo mix that happened. I think considering what we have been able to achieve in quarter two, we do feel that the full year we'll be able to continue to leverage those efficiencies and we expect the FX also to remain at broadly the same levels, and that gives us the confidence to be able to raise our guidance to the 25 to 26%.

Thank you, sir.

Thank you. We move to the next question from the line of Rishi Jhunjhunwala from IIFL.

Rishi, your line has been unmuted.

Yes. Thanks for the opportunity.

Just going back to that question around the acquisition of Chirag and just trying to understand a little bit more on the longer-term side, because historically we have been predominantly on the payer side and provider has been around that 10-odd percent. That is a space which has very different dynamics or industry dynamics in terms of being highly fragmented.

You could still make decent margins, but competition also high, and there are a lot of assets which are otherwise available. Just wanted to understand the current acquisition mostly to augment whatever we have, or do you think there could be a thought process to increase the provider segment meaningfully over a period of time?

Sorry, I didn't get the last part, Rishi. Can you repeat the last sentence?

Yes, sir. I just wanted to understand whether the Chirag acquisition is only to augment whatever we have today, or can we potentially think of increasing the provider segment substantially for us over a medium to long term as a proportion?

Like I said, it's exactly to accelerate the growth in the provider segment, right? Like I've always maintained, provider market is also large.

What you said is absolutely right. It's a lot more fragmented.

Having said that, there are enough physician groups which are large in size, and there are a number of health systems which can be a good size in terms of revenue for us. The capability that Chirag brings in, and not just the capabilities and even the current set of clients, like I said, includes certain large health systems, includes some very large physician groups, and very uniquely some value-based care organizations, right?

All of these have tremendous potential for us to cross-sell some of our services, not just on the provider side, but also on the services that we've specialized on the payer side, like care management and quality and so on. Overall, I've been telling all of you that yes, historically, our focus on the provider segment has been lower than the payer because we've been heavily indexed on the payer side.

We wanted to change that and give equal focus on the provider. Along with the Chirag acquisition, like I said, we've also made some changes in the go-to-market structure, created a very focused provider go-to-market engine.

With the combination of these two, the idea is to accelerate the growth in the provider segment so that it's a much larger percentage of our revenues going forward. It'll take some time because we're still, like you said, at 10% of our total revenues, but we want to accelerate that journey.

Got it, sir. The other thing is I think you mentioned that the enrollment season this year the overall impact on growth may be potentially slightly lower.

Yeah.

I think you had mentioned somewhere around six percentage point last year, if I'm not wrong. Any sense of how much lower could that be?

Look, the open enrollment, the AEP season has just started, right? These numbers could change a little bit.

Basis current visibility, we think, like you said, it was 6% of our total revenues last year. We think it may be lower by 100 basis points or so.

All of this could change over the next several weeks because we are staffing to capacity. We may have some flex capacity available.

If there are volumes to pick up, we'll pick up those volumes. This could change.

As we see today, we think it could be about 100 basis points or so lower than last year.

Understood. Not material that ways.

Lastly, on the margin, now that you've upgraded the margin guidance for the year, but slightly from a two-to-three-year perspective, do you think this is where we should structurally be, or do you believe some of it could potentially be utilized to either gain more volumes or business, or offset any kind of AI-related productivity benefits that typically companies have to pass through? Just wanted to understand whether this is more for this year or structurally.

No, historically, our response has been that, look, we've always done between 24 and 26% and we're happy to be in the range while trying to accelerate our top-line growth. Broadly, that's still the sentiment, right?

The improvement in operational efficiency coupled with FX tailwinds has increased our margin performance in Q2. On the AI front, like I said, a lot of the productivity gains that we gain from AI will basically be passed on to our clients.

However, we will still retain some portion of those benefits obviously to fund our investments and to compensate for the operating cost of some of those. That's also likely to improve our margin a little bit.

There is a potential to increase margin, but a large part of the AI-based benefits are things that will flow back to the client. To answer your question more specifically, I think it'll still continue to be in the 24 to 26% range, but over a period of time, it could marginally increase if we manage to retain the benefits of AI.

Understood, sir. Thank you.

All the best.

Thank you. We take the next question from the line of Dipesh Mehta from Emkay Global.

Your line has been unmuted, Dipesh.

Thanks for the opportunity. Sir, couple of questions.

First on provider side, I'm referring to the organic business now. It seems to be slightly weaker even on YoY basis.

Can you help us understand, because earlier we were hopeful about growth returning in that business after four, five quarters of relatively absolute number remaining flat-ish. Just try to understand let's say what is working there.

Second, on that Chirag acquisition, if I look the revenue trajectory over last three years, remain relatively weaker, but TTM revenue showing significant acceleration in growth compared to last calendar number reported. Can you help us understand what led to growth and the sustainability of that growth momentum?

How one should understand medium-term growth profile of that business? Related question on that, we indicated adjusted EBITDA margin of 35.8.

What kind of adjustment we made in that number when we say adjusted EBITDA? Thanks.

Okay.

You asked a whole bunch of questions. I'll leave the adjusted EBITDA question to MR, but I'll try and answer some of your other questions.

Hopefully, I got them all. Yeah.

On the Chirag acquisition, you're right. There was a dip in revenue, I think between 23 and 24, because volumes from one of their clients went down.

Subsequently, growth has been back on track. If you see the difference between CY '25 and the TTM numbers that we've presented, you can see that the growth has been pretty good, right?

We expect Chirag to continue to grow at a healthy clip. I'll possibly give more guidance hopefully towards the end of FY '27.

We just closed the deal yesterday. Overall, from the other question, yes, our provider business has also been in the 10 to 11%.

While we've grown clients and we've grown revenue, we've also had some revenue tapering off from some discrete projects from one of our provider clients. That's offset some part of the growth that we had in the provider business, and that's why you see that the rate of growth in the provider has been lower than that of the payer.

That's what we're trying to reverse going forward with the acquisition of Chirag and the combined capability that Sagility and Chirag now have. Right?

I'll ask MR to answer the adjusted EBITDA question. The adjustments historically we've given you the list of adjustments we make, but it's there in one of the slides.

MR, can you just—

It's there on slide 17, the reconciliation between adjusted EBITDA and reported EBITDA.

It is like us only. There is no other adjustment in their adjusted EBITDA margin.

No, there is no change that we have done this particular quarter. It continues to remain the same.

No, I am asking for the acquired entity adjusted EBITDA margin. The way we defined adjusted EBITDA, they also follow the same way, 35.8?

We have equated what we report to what they do, broadly. There might be minor differences, but broadly, yes, the 35.8 is broadly in line with what we have.

Whether it would be largely linked with kind of revenue they make, or last three years also margin remained within that range, upwards of 30%?

The margin has broadly remained the same.

Thank you.

Thank you. We move to the next question from the line of Rohit Thorat from Axis Capital.

Your line has been unmuted, Ranjeet. Sorry, Rohit, my bad.

Yeah. Thank you for the opportunity.

You mentioned that your endeavor is to grow provider segment much faster than payer going forward. Inherently, see, there is a conflict of interest between payers and providers.

If one entity is benefiting, the other one loses. Do you believe there is any friction from clients for giving business to a outsourcer which is operating in both segments, or are they more comfortable giving RCM business to purely RCM players only?

Could you give some color on that, or that really doesn't matter, like clients usually don't have any issues due to this?

Rohit, the first hypothesis that if one wins, other has to lose, is not true, right? The work that we do is we help clients run their operations more efficiently, right?

That's what we do for payers, that's what we do for providers, right? Each party can run their operations more efficiently without it having to have a negative effect on the other, right?

We've had our provider business for almost 15 years along with the payer business, and there is no inherent conflict because it's not that we bypass the traditional ways of how payers and providers work with each other, right? On the other hand, the fact that we work for both providers and payers have in fact helped us bridge some of the issues between providers and payers in terms of the friction around claims, denials, and delays in payments and so on, right?

We've brought them together and we've devised new ways of working by which both parties could gain efficiency. There's absolutely no reason why we can't grow both of the businesses together.

Like I said, we've run both those businesses for at least 15 years together.

Okay. Second question is regarding Chirag acquisition.

If I look at revenue per headcount for Chirag and if I compare it to the provider-focused player which is listed in India, the revenue per headcount is significantly lower compared to your another listed peer in provider space. What could explain such a significant difference in that metric?

I can't answer that question very specifically at this point in time. We can come back to you once we understand more details.

However, from our diligence, the pricing for their services, when we did our commercial diligence, our understanding is the pricing is at market, right? It's not that they are much lower price for their services compared to competition.

Beyond that, if you say that the revenue per headcount is lower, that's something that I need to look into and come back later.

Thank you for the opportunity.

Thank you. We next move to the line of Vamshi Krishna from Kotak Institutional.

Vamshi, your line has been unmuted.

Sure. Thanks, Ramesh, and really strong execution this quarter.

My first question was on your starting comments that there has been some let-up in the medical cost, at least they have stabilized and not increasing for most of the providers. Then it appears that the star ratings are also favorable for some of the large nationwide payers.

Does that mean that the extent of productivity or the cost pressures that the suppliers would have had to share with the clients, would that be lower compared to what it was in the last couple of years?

Sorry, I understood your question. Is your question will the cost pressures on my clients be lower, is that what you're asking?

No, since the medical costs of clients are stabilizing, or at least coming off slightly, does it mean that the vendors such as you will have lower cost pressures in the engagements? Look,

this is all relative, right? Like I said, while the medical utilization rates have eased off a bit, that's also because of some recalibration of membership and so on.

The focus continues to remain cost take-out from operations, and so that's something that most of our clients are still focused on, right? Their need to take out cost and take the help of partners like us has not gone down.

In terms of pressures on us because of that, those pressures will always be there because now with availability of AI and other transformational opportunities, clients are expecting service providers like us to take out more cost from the work that we do. I don't think that is going to go away.

Like I said, even with that, we still have ways to help clients take out cost while not impacting our margins. As you can see from our numbers, that's not really impacted our margins.

Sure, perfect. Thanks for the response.

Second is on the Chirag Chirag acquisition. Just wanted your thoughts on the mid-cycle RCM space where it appears that there are some elevated pressures of new competition or even disruption from AI appears to be a little elevated compared to the back end or the other parts of the RCM.

Just wanted to get your thoughts on the asset that you have acquired. What led to that?

Is it some commonality in clients which has led you to acquire this asset?

No. Answer to the last question, no, there are no common clients.

The answer to your first question, yes. AI is a disruptor in almost any aspect of operations, right?

When I say disruptor, AI can improve efficiencies in almost every single thing that we do for either a payer client or a provider client, and what Chirag does is no exception. Having said that, even in coding, the areas that are most vulnerable are outpatient coding, whereas clients still today feel that inpatient coding is something that AI is still not very good at, right?

While AI will continue to play a role in terms of improving the efficiency of the work that we do and Chirag does, it is unlikely to eliminate it completely, right? We've had a lot of conversation not only with Chirag, but also some of the clients, and they continue to believe that the services that Chirag provides will continue to be relevant even into the future.

Got it. Last question, have you included Chirag in your guidance of this low double-digit growth guidance entirely

organic? That's organic growth, but yes, Chirag will be Chirag and Careseed will be on top of that.

Got it. Thanks, that's all from me.

Thank you. We move to the next question from the line of Akshat Agarwal from Jefferies.

Akshat, your line has been unmuted.

Thank you, gentlemen. Congratulations on a good set of numbers, Ramesh, Srini.

I had a couple of questions. Firstly, following up on Rishi's question on open enrollment.

If the contribution is going to be 100 basis points lower given that your overall revenue base has expanded year on year, effectively you're talking about flat-ish revenues from open enrollment on a year-on-year basis. Is that understanding correct?

Probably yes, flat-ish, yeah, flat-ish revenues. MR, is that right, or it may be a little less than flat-ish.

Be marginally lower than flat-ish, I would say, at this point of time. As Ramesh said earlier, obviously, it's still the early start of the season.

We might pick up, but at this point, yeah, it is slightly lower.

Perfect. The second bit is last quarter you had talked about minimum wages being raised in Telangana and Karnataka and its impact on your margins.

From what we understand, it's not been fully implemented, right? Or there has been a stay which has been put.

When do you expect this to be implemented, if at all? If it's not going to be implemented, can there be potential upsides to our margin guide?

That's the first question. Second one is, there is a consistent decline in your delivery centers.

Like last year, it was 34 in FY '25. March '26, it fell to 31, and this quarter, we are seeing the number to go down to 28.

Is there any potential upsides to further reduction in delivery centers? If that's the case, what kind of margin expansion could that lead to for you guys?

Can I take that, Ramesh?

Please. Go ahead.

Yeah. On the minimum wage, obviously, the impact has been fully baked in our numbers at this point.

What we have talked about in terms of guidance reflects the impact from end-May and 1st June, respectively, for Karnataka and Telangana. If there is some change in what has been called out, there could be a potential upside of those numbers, but at this point, we have fully baked in those numbers.

On the other point on facilities, some of those change in the numbers is also reflection of the way we are counting our facilities. For example, if there are multiple facilities in one sort of park or one campus, we are now counting that as one.

If you look at the number of seats, that's definitely continued to increase. The number of sites might technically be down more because multiple sites are counted as one now because it's in one campus.

I see. No, the reason I was making this point is because there is a sharp reduction in your lease liabilities and right-of-use assets.

I thought maybe some leased facilities are being let go of, which is driving this, and which shows up in the delivery center numbers as well.

There are a couple of sites that we had closed earlier in place like our Jamaica operations, but again, as I said, it's more from a consolidation perspective and increasing our footprint in the same site. There is also a temporary movement to short-term leases for a few of the sites as we are in the process of consolidating and maybe moving to newer sites.

That would reflect as short-term rent and not be part of the lease assets.

Perfect, sir. That's all from my side.

Thank you so much, and congratulations on a good set of numbers again. Thank you.

Thank you.

Thank you. We move to the next question from the line of Sujay Chavan from Prabhudas Lilladher.

Your line has been unmuted, Sujay. Sujay, you can go ahead.

Your line has been unmuted.

Thank you for the opportunity. Now, most of my questions have been answered.

I'll just focus on the provider segment. Now, we have said that we want to explicitly increase our provider segment.

Now, this has been hovering for about 10% for quite some years. Is there any goal or any internal target that we have said that we want to expand to?

Taking it forward, what are the sort of investments that we would like to make and any impact on the margins if there are any?

Sujay, there's no explicit target that I can give you at this point. Like I said, we want to accelerate the growth in our provider segment, and we want it to be a higher percentage of our total revenue.

Beyond that, there is no explicit two-year or three-year target that I can give you at this point. In terms of investment, investment in Chirag is the big investment, right?

As one of the things in wanting to grow is also to plug any gaps in capability, which is what Chirag will help do for us. That's a big investment that we've already done.

We've also, like I said, basically created a dedicated go-to-market team. The investments in sales and marketing is not going to have a major impact on our margins, right?

All of that is baked into our regular SG&A. To answer your question, no, it's not going to have a direct impact on the margin, but the aim is to accelerate the growth in the provider space.

Thank you. That's it from my side.

Thank you. We move to Vibhor Singhal from Nuvama.

Vibhor, your line has been unmuted.

Hi. Thanks for taking my question, and congrats to the team for a very solid performance.

Ramesh, just a couple of questions from my side. On the ACV number that we have seen, that stands quite solid this quarter.

Just trying to get a hang of this number, does this include deals from the payers as well as the provider segment? If yes, is there any major difference between the kind of deals that we win in payers and provider segment?

Are the provider deals, let's say, longer duration or shorter duration? Are they higher margins?

Do they have a higher GenAI component? Or anything on that, any color on that would be really helpful.

My second question is on the acquisition, as you mentioned, the Chirag Health acquisition that we've done is in the middle cycle of RCM providers that we're looking at. Taking that into account, given that we are not necessarily acquiring revenues, just we are acquiring capabilities, any other white spaces that come to the mind immediately that you would be probably looking for in terms of acquisition in the near to medium term?

I forgot the first question was, sorry?

The deal wins across payers and providers.

Deal wins, right. Look, the deal wins in the payer side, look, is a combination of large and smaller deals.

When you win additional opportunities with existing clients, some of them could be a small tuck-in deal, like the payment integrity deal that I spoke about, over 10 million in ACV. That's a very large deal, right?

However, the deals on the provider side tend to be smaller so far, right, because we either get the front end of the RCM for a mid-sized provider or the back end, they tend to be smaller in size. Having said that, with the new capability, I think we can go for slightly larger deal size on the provider side also.

Historically, the provider deals has been smaller. Margin, I don't think is very different between a payer and provider business, right?

Roughly, I would say the gross margin level plus minus 200, 300 bps would be the difference, and that's very deal-specific, right? We could make slightly higher margin on one deal and lower margin on another.

Structurally, there is not a big difference in the margins between the two segments. The other question that you asked was, sorry?

White spaces in the portfolio that you might want

to— At this point, we continue to look at if there are things in the clinical space that we can continue to fill gaps in, right? Broadly, I would say both payer and provider side, we are reasonably, from a capability point of view, we are at a really good spot, right?

While I'll never say no to another acquisition if it comes with either a specific capability that we don't have or a set of clients that are attractive, at this point, I can't tell you any specific capability that we are still looking to specifically fill.

Got it. Just as a follow-up, bookkeeping question.

In the $40 million TCV, what part would be the payer and provider, if there is a break up, a broad number if we could have?

I don't have that number offhand, but we can get back to you.

Sure, I'll take that offline. Great.

Sure. Thanks for taking my questions and wish you all the best.

Thanks.

Thank you. We move to the line of Madhuchanda Dey from MC Pro.

Your line has been unmuted, Madhuchanda.

Hi, good evening and congratulations on a very solid quarter. My question is on the Chirag acquisition.

I wanted to understand from you qualitatively what are the inefficiencies that Sagility plans to address to start with in Chirag, because the margins of Chirag, as you have mentioned, is already pretty high. It's a very decent margin.

Basically, what are the low-hanging fruits that you plan to address to start with?

The simple answer to your question is this is not an acquisition where we want to try and improve the margins of Chirag, right? That isn't the goal of this acquisition.

The acquisition was to increase our capabilities in the revenue cycle. The main focus of this acquisition is the revenue synergies and how we can use this complementary set of skills to grow the overall business, right?

That's going to be the focus. Along the way, if there are any efficiencies that we can get through shared services and so on, we'll obviously look at those efficiencies.

That's not the prime focus of this acquisition. The like I said, is more on revenue synergies and trying to grow the revenue line.

Got it. In terms of, say, if I may just ask this question, you mentioned that $13 million was a trailing 12 months revenue.

What kind of potential does it have, what kind of scaling-up potential is there for this entity under Sagility?

Look, Sagility, like I said, first, to an earlier question, I had said we don't have any overlapping clients, right? The very first potential is whether we can cross-sell each other's services.

We don't do the set of services that Chirag does today, and Chirag doesn't do most of what we do, right? Is there a potential to cross-sell each other's services to each other's clients, right?

That's the first potential. Two, when you combine the mid-cycle along with the front and the back office, and you have an end-to-end revenue cycle capability, what kind of new opportunities that it presents to us, right?

Can we increase the size of deal wins to the earlier question? If I have an end-to-end capability in RCM, can I leverage that to increase the deal win sizes, right?

Those are the obvious tracks that we'll be working on. Plus, the one thing that I also said is it also comes with some capabilities that are of use in value-based care organization, which is also then transferable to payer organization.

While the focus of Chirag was mainly to accelerate our provider journey, some of the capabilities that Chirag has is also something that we can take to some of our payer clients. That's another track that we'll be working on, right?

All of this has tremendous potential, but like I said, the acquisition closed yesterday. We'll come back and give you a better set of guidance as we go along.

Great. Thank you.

Thank you. We move next to the line of Ruchi Mukhija from ICICI Securities.

Your line has been unmuted, Ruchi.

Many congratulations on a very good execution, Ramesh and team. My question was on the acquisition and your provider business.

Could you help us identify the client characteristics for your provider business, and how for the combined entity the client profile would look, possibly the skew between large hospital systems and clinicians?

Ruchi, it's not that we don't have the nature of the clients that Chirag has, right? Sagility also has large health systems as clients.

Traditionally, we didn't have too many physician groups as clients. Chirag also has physician groups as clients, so that could be one nature of client group that will be new to us.

Sagility has large health systems as clients, it has got ancillary providers like lab companies, durable medical equipment companies, radiology companies as clients, whereas Chirag is more focused, like I said, on large health systems, physician groups, and some value-based care organizations, which is again something that we don't have in our client base. There are a couple of client groups that may be new to us, but then health systems is something that Sagility also has in its portfolio.

Going forward, as we build on our provider practice, do you expect our intensity for solutioning and maybe platform build-up for provider go up?

From a capability point of view, like I said, it gives us more of an end-to-end capability. I spoke to you about the Synchroni lifecycle solutions.

We're also using AI to improve the efficiency of what we do in the RCM space. We will extend those capabilities to the mid-cycle through Chirag.

Both from a service capability as well as from a technology capability, we think as a combined group, we'll have a lot to offer to provider clients.

Got it. Thank you and all the best.

Thank you.

Thank you. That concludes the last of the questions for the day.

On behalf of Sagility, we thank you for your time, and you may now log off the event.

Thank you, everyone.

Thank you, everyone.