Sagility Q1 FY27 earnings call

Sagility reported a robust start to FY27, with revenue reaching INR 19,635 million ($207.8 million), marking a 27.6% year-on-year growth (15.2% in constant currency). Organic growth, excluding the CareSeed acquisition, was also strong at 27.3% in INR terms and 14.9% in constant currency. This growth was primarily driven by expansion within existing client relationships and scaling contributions from FY26 client additions, supported by sustained demand across higher-value service lines.

The company delivered healthy profitability with an Adjusted EBITDA of INR 4,716 million ($49.9 million), growing 27.9% year-on-year and achieving a 24% margin. Adjusted PAT increased 35.1% year-on-year to INR 2,697 million ($28.6 million), with a 13.7% margin. This performance was achieved despite implementing annual salary increases and absorbing a significant 120 basis points incremental impact on FY27 adjusted EBITDA from statutory minimum wage revisions in Karnataka and Telangana, which became effective in May 2026.

Sagility successfully closed the CareSeed acquisition in June 2026, investing INR 1,360 million in cash. CareSeed, which reported $5.1 million in CY2025 revenue with a 95% recurring rate and a 31.4% EBITDA margin, strengthens Sagility's capabilities in quality management, particularly for Medicare Advantage plans. The acquisition adds 26 new clients, expanding Sagility's presence in the mid- and small-market segments and offering cross-sell opportunities for abstraction services and broader care management programs through its Forecast and Harvest platforms.

Operating cash flow remained strong at INR 3,161 million, translating into an impressive 70% EBITDA-to-cash conversion. Collections improved, with Days Sales Outstanding (DSO) reducing to 80 days from 87 days in Q4 FY26. The balance sheet continues to strengthen, with net debt reducing to INR 1,110 million and a very low net debt-to-adjusted EBITDA ratio of 0.06x. The company also holds INR 9,674 million in cash and cash equivalents, providing significant financial flexibility.

Sagility reiterated its FY27 guidance of low double-digit organic growth in constant currency. The company also maintained its Adjusted EBITDA margin guidance in the range of 24% to 25%, despite the anticipated 120 basis points impact from minimum wage increases. Management expects to gain greater visibility into the full-year outlook and provide a more narrow margin guidance by the end of Q2, following the open enrollment and AEP season.

In response to client cost pressures and rising utilization, Sagility is focusing on outcome-driven operating frameworks that combine deep healthcare domain expertise, technology, AI, and operational execution. While clients are seeking AI-driven cost reductions, many have not yet seen anticipated benefits from piecemeal implementations. Sagility's strategy involves redesigning end-to-end workflows to deliver measurable cost takeout, aligning with client objectives.