Summary
Sagility Limited - Q3 FY26 Earnings Call Summary Wednesday, January 28, 2026 7:30 PM
Event Participants
Executives 2 Abhishek Kayan (Deputy CFO), Ramesh Gopalan (MD & Group CEO)
Analysts 9 Arvind Arora, Chirag Kachhadiya, Manik Taneja, Nandan Arekal, Ninad Sarpotdar, Raj Vyas, Riddhansh Chandak, Rishi Jhunjhunwala, Vamsi Krishna
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹1,971.2 crores | +35.7% YoY (+29.1% CC); driven by exceptional Open Enrollment (OE) season and BroadPath acquisition. |
| Organic Revenue Growth | 19.9% YoY | +13.9% CC; strong momentum sustained across both Payer and Provider segments. |
| Adjusted EBITDA | ₹512.5 crores | +24.2% YoY; reflects execution excellence and process optimization. |
| Adjusted EBITDA Margin | 26.0% | -20 bps QoQ; favorable forex (+100 bps) and leverage (+100 bps) offset by higher mix of low-margin US delivery (-220 bps). |
| Adjusted PAT | ₹322.9 crores | +23.0% YoY; aided by robust operating margins and declining finance costs from debt repayment. |
| Employees | 48,522 count | Net addition to support AEP/OE seasonal peaks; attrition steady at 22.8%. |
| New Business Wins (ACV) | $30.5 million | Won from 22 existing and 3 new clients; includes a top 10 health insurer. |
| Net Debt | ₹ [Not specified] | Continued decline as company remains on track for full repayment by FY 2027. |
| DSO | 86 days | Increase from 75 days in Q2 due to 17% QoQ revenue growth; billed AR at 51 days and unbilled at 35 days. |
Geographic & Segment Commentary
Payer Segment: Revenue grew 37.3% YoY, contributing 90.4% of total turnover. Growth was fueled by a “near perfect” Medicare Advantage (MA) Open Enrollment season, driving volumes in engagement services, prior authorization, and claims processing. Management noted a strategic shift among payers from pure membership growth to “margin repair” and risk-mix optimization.
Provider Segment: Revenue increased 21.6% YoY, representing 9.6% of the total mix. Performance was recognized by Avasant as an innovator in Revenue Cycle Management (RCM). Strategic focus remains on technology-enabled delivery and repeating outcome-led RCM transformations.
Company-Specific & Strategic Commentary
Medicare Advantage & OE Seasonality: Seasonal OE revenue, historically 3% of annual totals, is projected at 5.5% for FY26 due to the BroadPath acquisition and exceptional seasonal volumes. This higher activity offset lower cross-sell momentum as clients prioritized enrollment execution over new transformation projects during the peak.
Managed Services & Outcome-Based Models: Launched “Sagility Synchrony,” an integrated Medicare Advantage solution. The company is pivoting toward large multi-year transformation-led contracts with committed cost takeouts (150-200 bps annual cannibalization) to counter client pricing pressures.
GenAI & Automation: Deployed 32 distinct AI-driven use cases across 10 clients. A tech/transformation team of 400+ members is currently developing GenAI applications to drive productivity and maintain margins despite labor cost inflation and pricing resets.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth (CC) | 22.5% for FY 2026 | Upgraded from 21% plus due to better-than-expected OE season; includes 13.8% organic growth. |
| Adjusted EBITDA Margin | 25.0% for FY 2026 | Reaffirmed guidance; management expects to balance productivity gains against client pricing pressure. |
| Debt Status | Full Repayment by FY 2027 | Strengthened cash flows and declining finance costs support the deleveraging timeline. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory/CMS Pricing | CMS proposed 2027 Medicare Advantage rate changes may heighten client profitability pressure. Management views this as a volume driver for outsourcing but a headwind for unit pricing. |
| Delivery Mix & Margins | High seasonal growth in the US and offshore (non-India) locations creates margin headwinds. The Q3 US delivery mix doubled QoQ, resulting in a 220 bps negative impact on margins. |
| Concentration Risk | Top 10 clients contribute 84.6% of revenue. While down from 90.5% in FY25, expansion in large accounts often outpaces the rapid scaling of the mid-market segment. |
| New Labor Code (India) | Implementation of the new code on Nov 21, 2025, resulted in a ₹32.8 crore one-time hit. Management expects a persistent 20 bps ongoing impact on future profitability. |
Q&A Highlights
Revenue Seasonality & Q4 Outlook
- Question: How should we think about the ramp-down of OE seasonality in Q4? (Manik Taneja)
- Answer: OE-related revenue will be ~5.5% of FY26 totals. While Q3 was exceptional due to seasonal peaks, the updated 22.5% CC growth guidance for the full year accounts for the expected Q4 normalization (Ramesh Gopalan).
Margin Stability
- Question: Why are margins flat despite high revenue growth? (Manik Taneja)
- Answer: Revenue growth was driven by US-based OE activity. Favorable forex (+100 bps) and operating leverage (+100 bps) were offset by a 220 bps negative impact from a higher share of low-margin US delivery (Abhishek Kayan).
Client Concentration & Growth
- Question: How are you diversifying away from the top 10 clients (84.6% of revenue)? (Raj Vyas)
- Answer: We added 7 new logos from the mid-market in 9M FY26. However, top clients continue to grow in high-single digits as we mine “white spaces” like clinical operations, keeping concentration high but healthy (Ramesh Gopalan).
CMS Rate Pressures
- Question: Will stagnant CMS funding for 2027 impact volumes? (Chirag Kachhadiya)
- Answer: Funding changes for 2027 don’t impact 2026 membership. Historically, profitability pressure on payers increases the urgency for outsourcing and end-to-end managed services to capture admin savings (Ramesh Gopalan).
Key Takeaway
Sagility Limited delivered an exceptional Q3 FY26, with revenue growing 35.7% YoY to ₹1,971.2 crores, significantly bolstered by a robust Medicare Advantage Open Enrollment season and the BroadPath acquisition. While the shift in delivery mix toward the US during the seasonal peak compressed margins by 220 bps, the company offset this through operating leverage and forex gains to maintain an adjusted EBITDA margin of 26.0%. Strategically, the firm is leveraging its 400-member tech team to deploy 32 GenAI use cases and launch “Sagility Synchrony” to transition toward outcome-based managed services. Management remains focused on debt elimination by FY27 and has upgraded full-year CC revenue growth guidance to 22.5%, citing strong Medicare Advantage tailwinds. Despite regulatory uncertainty regarding 2027 CMS rates and a 20 bps headwind from India’s new labor code, Sagility appears well-positioned to convert client cost pressures into long-term outsourcing opportunities.
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