Sagility Q4 FY26: Strong growth, resilient margins, and a clearer AI-led operating story

Sagility closed Q4 FY26 with a mix investors usually like: fast revenue growth, steady profitability, and a balance sheet that is steadily de-risking. Revenue from operations rose to ₹20,243 million, up 29.1 percent year on year. Adjusted EBITDA came in at ₹5,036 million with a 24.9 percent margin. Adjusted profit after tax was ₹3,069 million, translating to a 15.2 percent margin. The quarter also delivered operating cash flow of ₹5,327 million, with a reported cash conversion of 104.6 percent.

For the full year, Sagility reported revenue of ₹71,929 million, also up 29.1 percent year on year, with constant currency growth of 23.6 percent. Adjusted EBITDA rose to ₹18,200 million and the margin held at 25.3 percent. Adjusted PAT increased to ₹11,306 million with a 15.7 percent margin. The company also announced a final dividend of ₹0.1 per share.

The operating narrative stays consistent with what Sagility has been building over the last few years: a concentrated focus on US healthcare operations, with a growing role for technology and AI to improve outcomes and reduce administrative cost for payers and providers. The company also highlighted brand evolution to position itself as a Tech and AI-led operations partner.

Growth was broad, but healthcare payer work remains the core

Sagility’s revenue mix continues to be dominated by payer work. In Q4 FY26, 90.8 percent of revenue came from payers and 9.2 percent from providers. This is broadly stable versus the prior quarter and slightly higher than Q4 FY25, when payer contribution was 89.7 percent. For FY26, payers contributed 89.7 percent and providers 10.3 percent.

The quarter’s growth was not only acquisition-led. Management called out organic momentum in FY26, with 25.8 percent year-on-year organic growth driven by expansion within existing clients and rising contribution from new client wins. New business and expansion wins in Q4 were quantified at ₹30.7 million of potential steady state ACV. The mix of wins matters too: expansions and new statements of work were signed with 18 existing clients and 2 FY26 new logos during the quarter. The company also onboarded 5 new clients in Q4, taking total new client additions in FY26 to 17.

This kind of growth is meaningful in a business where concentration risk can be a concern. Sagility’s annual KPI trend shows improving diversification. The top 3 clients made up 59.9 percent of revenue in FY26, down from 66.2 percent in FY25 and 72.4 percent in FY23. The top 10 clients fell to 83.9 percent in FY26 from 90.5 percent in FY25. At the same time, the count of larger client groups has been rising, with 9 clients contributing more than US$20 million in FY26, up from 7 in FY25 and 4 in FY23.

The delivery footprint has stayed relatively steady. Sagility reported 31 delivery sites in FY26 versus 33 in FY25. Headcount ended Q4 FY26 at 46,860 employees, up 18.9 percent year on year, but down sequentially from 48,522 in Q3 FY26.

Financial snapshot: Q4 and FY26

The margin picture is best described as stable, not expanding. Q4 adjusted EBITDA margin was 24.9 percent, down from 26.6 percent in Q4 FY25 and 26.0 percent in Q3 FY26. For the full year, margins were 25.3 percent versus 26.4 percent in FY25. That said, profitability still grew at a healthy pace because revenue growth was strong.

Adjusted PAT grew faster than adjusted EBITDA in FY26. The long-term performance snapshot explicitly attributes improved adjusted PAT to declining finance costs and higher forex gains. This is consistent with the trend in net debt, which fell sharply over the last two years and ended FY26 at ₹1,962 million, implying net debt to adjusted EBITDA of 0.09.

Cash flow and balance sheet: strong OCF, but annual conversion dipped

Sagility’s cash flow profile in FY26 shows a split between strong absolute operating cash flow and lower conversion ratios. Net cash generated from operations was ₹12,030 million in FY26, broadly stable versus ₹12,141 million in FY25. But OCF as a percentage of reported EBITDA reduced to 64.7 percent in FY26 from 89.7 percent in FY25.

The company’s explanation is important for interpreting this: FY26 OCF conversion was impacted by higher non-cash unrealized forex gains, lower non-cash expenses, and higher tax payouts. In the cash flow statement, income taxes paid rose to ₹3,735 million in FY26 from ₹1,734 million in FY25. Working capital also consumed cash in FY26 with a negative adjustment of ₹1,895 million.

Free cash flow remained healthy at ₹10,108 million in FY26 versus ₹10,896 million in FY25, but FCF conversion also declined to 54.4 percent from 80.5 percent.

On the balance sheet, total assets increased to ₹126,011 million at March 31, 2026 from ₹110,507 million a year earlier. Trade receivables and unbilled revenue rose to ₹18,390 million from ₹12,668 million. Cash and cash equivalents including investments increased to ₹9,038 million from ₹3,438 million. Borrowings declined to ₹5,776 million from ₹8,170 million.

Sagility also shared a forward view on debt and key non-cash items. It expects debt to be fully repaid by FY27. Interest payments reduce from ₹543 million in FY26 to ₹287 million in FY27 in the stated schedule. Earnout costs tied to acquisitions are expected to taper sharply, with ₹475 million in FY26 and ₹6 million in FY27.

Execution themes: AI orchestration, client co-creation, and a tough healthcare environment

Sagility’s operating context remains tied to US healthcare policy and payer economics. The deck highlighted several Q4 market trends that matter because they shape payer spending priorities.

CMS finalized Medicare Advantage rates with a 2.48 percent year-on-year increase. The company’s framing is that this is a slightly more favorable reimbursement environment versus earlier expectations, but profitability pressures persist due to medical utilization. In this setting, vendors that can support administrative cost takeout and help improve STAR ratings are more relevant. This lines up with Sagility’s messaging around measurable outcomes and tech-enabled efficiency.

The company also noted the House passing a bill to extend and enhance ACA premium subsidies. While Sagility flagged low current exposure to the ACA market, the implication is that stable enrollment supports ongoing operational spend across enrollment, billing, and engagement services. Another theme is the end of state Medicaid expansion incentives effective 2026, which could moderate Medicaid membership growth. Again, Sagility called out low exposure, but expects cost optimization to become a priority and automation-led outsourcing to accelerate.

A more strategic signal is the mention of the CMS ACCESS model for scalable, outcome-based chronic care. While focused on Original Medicare, Sagility positioned it as aligned with its emphasis on analytics-led care management and technology-enabled member engagement.

In parallel, Sagility is trying to make AI more concrete and less buzzword-driven. It described advancing AI orchestration through SmarTec and Synchrony, aiming for smarter end-to-end operations and measurable outcomes. It also quantified its AI posture with 37 AI use cases deployed and a workforce including 4,400 clinicians and technology experts.

Client engagement appears to be moving from vendor delivery to joint solutioning. The company described an Innovation Forum with 80 executive client attendees and themes such as reducing medical costs through clinical context to action, a member pain index, and reducing payer provider friction. The recurring message is that AI deployment decisions are increasingly collaborative between operations and technology leaders, and that outcomes-based decisioning is replacing traditional models.

Operational signals investors should not ignore

Beyond growth, a few operational indicators deserve attention.

First, seasonality remains a feature of the business. Sagility reminded investors that revenues exhibit seasonality, with Q3 and Q4 impacted by open enrollment volumes. The quarterly seasonality slide shows revenue in US dollars rising from $180.4 million in Q1 FY26 to$222.1 million in Q4 FY26, alongside headcount moving from 39.9 thousand to 46.9 thousand.

Second, attrition moved sharply in Q4 FY26. Voluntary attrition rate was 38.1 percent in Q4 FY26 versus 22.8 percent in Q3 FY26 and 32.5 percent in Q4 FY25. For the full year, attrition was 29.4 percent versus 27.5 percent in FY25. The deck did not provide commentary on the quarter’s spike, so investors will likely watch whether it normalizes.

Third, the new labor code in India became effective November 21, 2025, which changes the definition of wages used for computing benefits such as gratuity and leave encashment. Sagility reported past service costs earlier in FY26 and noted an ongoing impact on overall margins likely to be 0.2 percent of revenues.

Finally, client concentration continues to trend in the right direction, but it is still high in absolute terms. A top 3 contribution of 59.9 percent is a meaningful risk factor even if improving. The counterbalance is long client tenure, stated as an average of 18 years, and growing counts of mid-sized and large accounts.

Takeaways: Sagility is building a steadier, less leveraged growth model

Sagility’s FY26 story is clear. Demand remained strong, revenue grew 29.1 percent for both Q4 and the full year, and margins stayed resilient around the mid-20s at the EBITDA level. Profit growth outpaced EBITDA, helped by lower finance costs and forex movements. Net debt declined to ₹1,962 million and the company expects full debt repayment by FY27.

The strategic direction is also becoming easier to track. The company is anchoring its positioning in healthcare operations, with AI orchestration through SmarTec and Synchrony and a focus on outcomes. Market trends in Medicare Advantage, chronic care models, and cost pressure across payers support the case for automation-led operating models, which is exactly where Sagility wants to lean.

For investors, the near-term watch list is practical: attrition after the Q4 spike, working capital discipline with receivables rising, and whether margin pressure from wage and labor code changes stays contained. If those remain manageable, Sagility enters FY27 with a stronger balance sheet, improving client diversification, and a clearer narrative around tech-enabled healthcare operations.