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Sagility is a technology enabled, pure-play healthcare focused solutions and services provider that supports US based payers, providers, and their partners. Sagility India IPO looks to raise Rs 2,106.6 crores. The issue is entirely an offer for sale.

About Sagility India:

• The company was incorporated in July 2021, and it acquired the healthcare services business of the predecessor company -Hinduja Global Solutions in January 2022.
• Earlier the company commenced providing services to Payer clients in the year 2000 and gradually increased the scope of services provided to Payers and Providers.
• Company’s clients include Payers (U.S. health insurance companies, which finance and reimburse the cost of health services) and Providers (primarily hospitals, physicians, and diagnostic and medical devices companies).
• Sagility’s services to Payers cater to various aspects of their operations, including
  • (i) core benefits administration functions such as claims management, enrollment, benefits plan building, premium billing, credentialing, and provider data management
  • (ii) clinical functions such as utilization management, care management, and population health management.
• The company’s services to Providers include revenue cycle management functions such as financial clearance, medical coding, billing, and accounts receivable follow-up services.
• Sagility also provides some of the services that it provides to Payers to pharmacy benefit managers (PBMs) that manage prescription drugs for Members (insured persons) under health insurance plans.

Financials : Sagility India IPO

Anchor: Sagility India IPO

Sagility India Ltd. raised Rs 945.4 crore from anchor investors on Monday ahead of its initial public offering. The company allotted 31.51 crore shares at Rs 30 apiece to 52 anchor investors. ICICI Prudential Innovation Fund, Nomura Funds Ireland Public Ltd., Nomura Funds Ireland-India Equity Fund, and Government Pension Fund Global got the highest allocation of 7.88% each. .

Salient Points:Sagility India IPO

• The U.S. economy is the highest spender on healthcare among leading economies
• The U.S. healthcare market, valued at $4.7 trillion in 2023, is projected to grow at a CAGR of 5.5%, reaching $6.1 trillion by 2028. The U.S. healthcare operations expenditure is expected to rise from $201.1 billion in FY23 to $258.9 billion by FY28, with the outsourced market growing at a CAGR of 8.7%.
• The company was formed from Hinduja Global’s healthcare business in Jan 2022.
• Baring Private Equity Asia (BPEA) purchased Hinduja Global Solutions’ BPM business in 2021, at Rs 9,000 crore enterprise value. BPEA was acquired by EQT (current owner of Sagility) the next year in a $7.5-billion deal.
• This is the second time EQT is planning a partial exit from Sagility.
• It enjoys a 1.23% market share in the US healthcare operations outsourcing market.
• Sagility BV raised ₹366 crore through the sale of a 2.61 per cent stake holding in Sagility India Ltd, on November 3. Nine institutional investors picked up a stake in Sagility India. 360 ONE (through Special Opportunities Fund – Series 8, and Monopolistic Market Intermediaries Fund) were the two largest buyers among the nine investors. They acquired a 1.07 per cent stake for 150 crore. Avendus Future Leaders Fund II picked up 0.9 per cent stakeholding for ₹126 crore. Adani Group-owned Adani Properties picked up 0.14 per cent shares for ₹20 crore. Elpro International, Jasub Property Holdings, Jaya Chandrakant Gogri and Rashesh Chandrakant Gogri, PAM Family Trust, Shradha Family Trust, Unmaj Ventures, and Uma Priyadarshini Kollareddy and Kollareddy Ranganayakamma were the other shareholders buying in 0.5 per cent shares worth ₹70 crore, as per media reports.
• The company uses a multi-shore service delivery model with 31 locations in five countries which include the U.S., Colombia, Jamaica, India, and the Philippines.
• The customer contracts are serviced by its employees from these locations and are executed by the subsidiaries in the U.S.
• Over the last 2 years, Sagility has successfully executed two acquisitions. In April 2023, Sagility acquired Devlin Consulting Inc. (DCI), to enhance its payment integrity capabilities. In March 2024, Sagility acquired BirchAI, a healthcare technology company offering cloud-based, generative AI call technology.
• Shares of promoter Sagility BV remain pledged to finance the buy-out.
• The firm has high attrition of over 25%..
• The emergence of artificial intelligence has created an uncertainty over the BPM business.
• It had a credit rating of BBB- (in 2023). This moved upto BBB in 2024 but still reflects concerns on promoter level debt.   
• The company serves reputed clientele in the health insurance sector, including Humana, Aetna, and Cigna.
• It has more than a decade-long relationship with many clients.
• As of January 2024, the company served 5 of the top 10 Payers  in the U.S.
• During FY 2024 and 2023 and the quarter ended June 30, 2024, the company has added 22 new clients. In FY 2024, the company helped its Payer clients process 105 million claims and handle over 75 million Member and Provider interactions.
• Recognized as a Leader by Avasant in the 2023 Clinical Services Business Process Transformation RadarView report and as a Leader in Everest’s 2023 Healthcare Payer Operations PEAK Matrix Assessment, the company. .
• Peers: None
• Within the healthcare operations outsourced market in USA, Sagility had a share of approximately 1.18% and approximately 1.23% in FY22 and FY23 respectively.
• I have a neutral view on Sagility India IPO. There has been good response from anchor investors and there are good names in pre ipo placement of shares. Sagility operates in worlds largest and lucrative market, the U.S. healthcare services market, characterized by significant growth in healthcare expenditure. Valations are quite rich and so it may fall as a long term play with uncertainty on short term gains.
• GMP as reported on social media is quite low.
• This post is exploratory and educational purposes only.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.