Sagility's Q3 FY26: Strong Growth, Strategic Shifts, and Future Outlook

Sagility Limited, a leading global provider of technology-enabled business solutions in the U.S. healthcare industry, has reported an exceptional performance for the third quarter and nine months ended December 31, 2025 (Q3 FY26 and 9M FY26). The company's consolidated financial results, reported under IndAS, highlight robust growth across key metrics, driven by strong operational execution and strategic initiatives. This quarter's performance builds on the momentum from the first half of the fiscal year, reinforcing Sagility's position as a trusted partner in a rapidly evolving healthcare landscape.

For Q3 FY26, Sagility's revenue from operations stood at 1971.2 crore, marking a significant 35.7% year-on-year growth (29.1% in constant currency). Organic growth was also impressive at 19.9% year-on-year. This growth was fueled by continued expansion within existing clients and increasing contributions from new clients acquired in FY26. The Payer segment was a dominant contributor, accounting for 90.4% of total revenue with 1782.11 crore, while the Provider segment contributed 9.6% with 189.24 crore. Adjusted EBITDA reached 512.5 crore, growing 24.2% year-on-year, maintaining a healthy margin of 26.0%. Adjusted PAT increased by 23.0% to 322.9 crore, reflecting robust operating profitability and declining finance costs. For the nine-month period, revenues were 5168.6 crore, up 29.2% year-on-year, with Adjusted EBITDA at 1316.4 crore and Adjusted PAT at 823.6 crore, growing 25.3% and 44.3% respectively. The company's CSAT score in 2025 surpassed the industry median, underscoring its commitment to operational excellence and deep domain expertise.

Strategic Initiatives and Market Dynamics

Sagility's growth strategy is anchored in three pillars: expanding into white spaces within existing accounts, building large transformation-led and outcome-based managed services, and accelerating expansion into mid and small market segments. The company launched "Sagility Synchrony," an integrated operating solution for Medicare Advantage, which consolidates key lifecycle functions to enhance efficiency and compliance. Furthermore, Sagility is deepening its GenAI adoption, with 32 distinct AI-driven use cases already deployed across 10 clients, aiming to deliver tech-based efficiencies and cost takeouts for clients. The company's focus on mid and small market segments is yielding results, with seven of the 12 new logos won in the first nine months of FY26 coming from this area.

The healthcare market continues to evolve, presenting both opportunities and challenges. CMS's proposed changes for 2027 Medicare Advantage and Part D plans are shifting focus towards clinical safety and patient experience, which is expected to accelerate demand for care coordination and member experience—areas where Sagility is strong. New HEDIS measures and PBM market scrutiny on price transparency also create additional opportunities. However, the expiration of ACA subsidies has led to a decline in enrollments, though Sagility's exposure to the ACA market is negligible. The company anticipates higher administrative throughput and continued cost pressure at the payer side, alongside a heightened emphasis on STAR's recovery, clinical quality, and automation. These trends are supportive for Sagility, as payers seek partners who can deliver operational efficiency and quality.

Financial Health and Outlook

Sagility's financial health remains robust. The company's net debt continues to decrease, strengthening cash flows and enabling continued investment in technology and domain expertise. Management expects the debt to be fully repaid by FY27. Adjusted EPS continues to improve steadily, in line with PAT growth, with Adjusted EPS for trailing 12 months FY26 at 2.27, higher than 1.76 reported for FY25. The Adjusted ROCE remains steady around 50%, reflecting efficient capital utilization. However, operating cash flow conversion was lower year-to-date due to higher DSO in December, higher non-cash expenses, and tax refunds received in the previous year. The DSO is expected to normalize by Q4.

Management has increased its revenue guidance in constant currency to 22.5% for FY26, including an organic growth of 13.8%, and expects adjusted margin guidance to remain at 25% for the full fiscal year. The new Indian labor code, effective November 2025, resulted in a one-time impact of 32.8 crore (328 million INR) on past service costs, with an estimated ongoing impact of 20 basis points on profitability. Despite these pressures, Sagility remains confident in its ability to deliver value to clients through execution excellence, technology-enabled transformation, and a focus on outcome-based models.

Sustaining Momentum

Sagility's Q3 FY26 performance underscores its ability to navigate a dynamic healthcare market with strategic clarity and disciplined execution. The company's focus on expanding into new market segments, leveraging AI, and offering comprehensive managed services positions it well for sustained growth. While challenges like managing cash conversion and adapting to regulatory changes persist, management's proactive approach and strong financial guidance instill confidence. Sagility is committed to delivering long-term value by continually enhancing its capabilities and strengthening client relationships, ensuring it remains at the forefront of healthcare business process transformation.