Margin beat at 26.3% EBITDA, guidance raised to 25-26%, but PAT growth slows

Q2 delivered ₹2,032.1 Cr (~$212.6M), 22.5% YoY confirmed

Reported OPM 25.2%; adjusted margin higher (EBITDA), no contradiction; margin expansion vs 25% in Q1 confirmed

Reported PAT growth 13.3% YoY; likely due to lower adjustments this quarter vs prior year, or adjusted vs reported definition

Claim stated but no independent verification of ACV metric in delivered results

Stated in call; acquisition closed Oct 22, 2026; near-term revenue contribution modest

From 24-25% to 25-26% for FY27, citing Q2 delivery of 26.3% and confidence in operational leverage despite wage hikes and competitive pressures.

Dedicated go-to-market team created; Chirok acquisition announced to accelerate provider growth from historical ~10% to higher clip (unquantified).

Larger payment integrity deals (>$10M ACV) won (Big Ten health plan); managed service deals with deeper LT value also growing; payment integrity now more material to pipeline.

AEP/open enrolment expected ~100 bps lower than last year; Q2 had higher seasonal contribution than typical H1.

Operating leverage, disciplined cost management, FX tailwinds, and improved clinical/care outcomes are sustaining margins. Q2 showed 26.3% despite wage hikes. FX expected to remain stable; AI productivity retained for margin (partial pass-through to clients).

Primarily to accelerate provider revenue growth (now ~10% of total, historically lower than payer); Chirok's mid-cycle RCM capabilities fill a gap. No margin improvement goal; focus on revenue synergies and cross-sell. Growth journey to scale provider may take time.

Provider segment has had 10-11% growth, some revenue tapering from discrete client projects offset by new wins and existing client growth. Chirok fills gap. Combination of dedicated go-to-market team and Chirok mid-cycle capability expected to accelerate, but no specific 2-3 year target given.

Same adjustments as historical Sagility: acquisition earnouts, share awards, FX, amortization. Broadly in line with Sagility's definitions. Margin has remained stable historically.

No inherent conflict; Sagility helps both run operations more efficiently without zero-sum trade-off. 15+ years of experience serving both. In fact, Sagility bridges friction between payers and providers. No evidence of client concern.

Medical cost stabilization is relative; clients still focused on cost takeout. Sagility's AI tools help reduce costs without margin impact for vendors. Pressure on Sagility not easing. However, star ratings favorable for large payers, showing productivity gains being retained.

Likely ~100 bps lower as % of total revenue than last year (was ~6% prior year, may be 5% this year). Could change in next weeks as early enrollment data emerges. Staffing to capacity; some flex available if volumes pick up.

No explicit 2-3 year target. Focus on acceleration via Chirok and go-to-market. Provider market large and fragmented; Sagility well-positioned. Margin profile broadly similar to payer (200-300 bps spread between payer and provider possible, but structurally no large gap).

Payer deals are mix of large ($10M+ payment integrity) and smaller tuck-ins. Provider deals smaller so far but growing. Gross margin broadly similar (200-300 bps spread). Cannot provide exact payer/provider ACV split; Chirok and CareSeed will be on top of organic growth.

Reaffirmed on call; Q2 delivery at 11.9% CC organic (ex-CareSeed) within guidance. Management notes H2 AEP seasonality may be ~100 bps lower, but remains in low double-digit range.

Upgraded from prior 24-25% guidance. Q2 delivery of 26.3% demonstrates capability; CFO cited operational leverage, disciplined cost management, and FX tailwinds sustaining the range.

Asset-light model; capex for technology and AI tools. Chirok acquisition ₹133M upfront + ₹123.5M earnout over CY27-CY28 (contingent on revenue targets).

AEP/open enrolment expected to contribute ~100 bps lower as % of total H2 FY27 revenue vs prior year. Q2 had higher seasonal boost. H2 guidance muted by this known headwind.

Q2 PAT growth 13.3% YoY lags revenue growth 22.5%, indicating net margin pressure. Adjusted PAT growth 8.1% is even weaker. Wage hikes and cost inflation offsetting operational efficiency gains.

Provider business growth lags payer (10-11% vs 22.5% overall). Chirok acquisition ($20M upfront, mid-cycle RCM) announced to accelerate, but no explicit 2-3 year growth target provided. RCM market highly fragmented, facing AI disruption and new entrants. Chirok's $13M TTM is modest base.

Medical utilization rates stabilized in H1 CY26 among national payers. If trends normalize further, payer client urgency to outsource cost management may ease, impacting Sagility's service demand and pricing power.

Payers are 89.9% of revenue; largest clients not named but power concentrated. Loss of a large payer account (membership, contract cancellation, or reduced scope) would materially impact revenue.

Management acknowledges AI productivity gains mostly pass to clients; Sagility retains only portion for margin. Limits ability to leverage AI tools for dramatic margin expansion.