Inventurus Knowledge Solutions (NSE:IKS) Q2 2026 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the IKS Health Limited q two FY twenty seven earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Seema Nayed from ICICI Securities. Thank you, and over to you. Thank you. Good morning, everyone. Thank you for joining us today on the q two f y twenty seven earnings call of IKS.

0:45 On behalf of IKS security, I would like to thank the management of IKS Health for giving us the opportunity to host this call. Today, we have with us mister Sachin Gupta, founder and CEO, miss CFO, and mister head of investor relations. I turn it over to mister for his brief statement and to take the proceedings forward. Thank you, and over to you, Saranj. Hi. Hi, everyone. Good morning. Welcome to our investor call. So it's a big one... The first one after our two week acquisition. Before I hand over to Sachin Nathya, just a disclaimer. As part of our prepared remarks, we may make certain statements which are forward looking in nature. We take no responsibility to update such forward looking statements, and your discretion is warranted while making any missing decisions.

1:34 Over to you, Sachin and Tata. Hi. Thank you, Saran. Shai, everyone. Good morning. Good evening. Depending on where you are, earnings release for our eighth quarter since we've been public is now with you. It came out last night. I hope you have had a chance to go through it and glance through it at least a little bit. I'll... Without further ado, I will kick things off. I know this is a busy festive season for everybody, but happy to report that we have continued strong momentum in the fiscal q two of fiscal year twenty twenty seven or twenty twenty six, twenty seven. And what I'll do is I'll kick it off with a few remarks the state of the union of the business, and then we will start digging to the financial. I'll provide a little bit of financial summary that they will provide some more details, and we'll turn it into QA.

2:29 So with that, I think given that this is the eighth quarter of public company earnings, I don't need to introduce IKS to you all. You know, we're in the business of enabling providers to deliver better, safer care, predominantly impacting their cost of care, quality of care, and access to care positively. So that's the business that we're in. As you all know, we had started in the ambulatory physician space. We're we're starting to build an offering in the hospital acute market. And then with the acquisition of TruBridge and the integration that is underway, we are now firmly across the continuum of care ambulatory to acute.

3:14 So excited to report that evolution. We will... You know, again, I think you guys are all familiar with the TAM and and stuff like that. One of the things that we continue to take pride in, we believe that the ultimate care enablement platform will be the right combination of AI and human in the loop. And I think the way IKS and the new IKS has come together, I think we have the best combination of those two key levers for success within the care and even more... With world and also in an approach that is a true end to end platform based approach versus a point solution based approach. So with that, I will just move on to really talking about how the business is trending. And you're aware of the five pillars of our strategy.

4:06 We've spoken about that extensively. So I'll leave that on the screen for you all to read. But I think the most interesting part of that that everybody is interested in is the two major integration. So really happy to note that the two major integration is well underway and going well. I I measure the Trubridge integration across five or six dimensions, and what I'll try to do is give you all some color. First, I'll say that for the last three or months since we closed TruBridge, I've had the privilege of being on the road and meeting more than 50 TruBridge customers. In fact, we're just coming off a conference two weeks ago where we had 75 of the senior executives of some of the largest IKS and brokerage customers in a room for two and a half days.

4:53 And so it's been a very interesting set of conversations. Big headline I have for you all is that I think our message around the only company in the world that is a two deep integration between a system of record and a platform system of action, that message is resonating dramatically. Certainly, with the TruBridge installed base, which is where that value proposition will primarily manifest itself, and then with the legacy IKS installed base, that platform system of action manifest is really starting to come through well. So the dimensions on TruBridge that I think about from a integration perspective, you know, when you acquire a large asset like this, you know, you're you're obviously looking at it outside in, hence, you have certain hypothesis.

5:40 And then, you know, three and a half, four months later, you... You're able to truly have a view of how that's trending. So I'll start with the people and culture dimension first because no matter whether it's AI or not, it's the people that make everything happen. Happy to note that we went in knowing that the people and culture dimension of TruBridge was a scenario where this is a company that was moving from a lifestyle company to truly a execution oriented, intense organization. That transition was underway but not complete. I think looking in, I think that has gotten validated. And I think there's also been some very interesting developments as we started integrating three of the top five executive leaders of Bluebridge have now assumed executive leadership roles in the combined entity. Chris Fowler, who's one of their senior most executives, was CEO of TruBridge, has been there twenty five plus years, now is the chief strategy officer of the combined IKS, but also continues to mentor the TruBridge book that is now part of the acute business unit or the hospital business unit within IKS.

6:57 He certainly believes in our vision. Many of you got a chance to meet with him when we did our last quarter's earnings release. He was in India, and so continues to be a key pillar for driving success in the joint platform. Amaris, who now is our global CHRO, was the CHRO of TruBridge. And so that was a very important decision to make her global CHRO of the combined entity. As you can imagine, that gives the TruBridge people tremendous confidence on their representation and importance in the combined entity. And then David Harsh, who used to run the TruBridge EHR business, which I think is the crown jewel of this acquisition for many reasons, it has continued to resume the role of the GM of the EHR business, which also sits in our acute business unit. So three of the top five executives have committed to the long term, are now part of the larger executive leadership team at the combined IKS.

7:55 And I think that's gonna overwhelm for this continued transformation of the legacy TruBridge business and its integration into IKS. One of the other key dimensions that we had as an assumption going in was that the HR business is highly sticky. Very happy to report that I think the business is even stickier than we had imagined. Through these 50 plus conversations and through which EHR customers, I have to say that they are almost pleading for us to both modernize that EHR and to really start to integrate our system of action to make it even more functional and accretive for them. So beats expectations on that stickiness front from an EHR perspective. The next one was, I think, a very key strategic dimension of acquiring TruBridge was the fact that with TruBridge, we would get access to a whole bunch of data that we could then that we could then convert into a context there and make it an AI training mode. And we have gone in with the assumption that we will have access to about 5,000,000 patient records. Very happy to note that actually the access to patient records is even greater. I think the number is 3.5 to four x of that. With that kind of treasure trove of data, our ability to accelerate the training of our own models and build up proprietary AI mode is significantly enhanced.

9:11 So certainly beats expectations on that front. And then the other dimension was that we had a thesis around margins and the potential synergies that existed in the two bridge book. I have to say that we firmly beat expectations on that front. Our initial review reveals that there is a whole bunch of opportunity, certainly without compromising any of the customer satisfaction needs of TruBridge. So our ability to drive synergies while improving the performance of the TruBridge financial health business appears to be stronger than we saw from the outside. And then last but not the least, the resonance of our system of action message in the TruBridge customer base. Remember, there are 600 plus hospitals on the EHR, and probably not more than 200 of them have the financial health offering in there. So there's a huge white space.

10:04 And in our conversations over the last few months, it's apparent that there is a robust demand environment in that installed base for our financial health offering, which is the RCM offering, but then also our larger system of action. So I think our thesis that we will be able to transform TruBridge from a steady to declining revenue asset to eventually a highly profitable growth asset still has merit, and, you know, there's more to follow on that front. So all in all, good learnings. Obviously, there's a lot of work to do as it relates to modernizing the EHR and building that integrated system record and system of action. But I think the initial report for... From our perspective seems to be solid. And as I think about what we are really going to do with everything that we are learning, I'd like to lay out a little bit of a thesis that will define what we're going to do. Also, this will serve as sort of the AI update, the dimension of AI update that I think everybody is looking for. And so if you really think about the logical architecture, not the physical architecture, but the logical architecture of what the care enablement platform will look like once it's truly AI first and human in the loop. The way to think about it is you'll always have the EHR, which is a system record, which is a longitudinal data repository and the single source of truth. Now remember, the data in that system of record is transactional and somewhat disconnected.

11:33 So while it captures what is happening in the patient journey, it is transactional, and hence, you can't just take that data and have these highly sophisticated LLMs start to reason with that data. The data is not organized. It does not have the context built in. And so no matter how you do it, you have to transform that data into a context there, which is what we call the system of intelligence. And that essentially starts to bring semantic interoperability in the data. That's where you start to then build the knowledge graphs and the ontologies that enable the semantic interoperability, and then you can start to really use the AI, ML, and cognitive compute for predictive insights. So that layer, that system intelligence layer is a very important alpha.

12:20 And, of course, the system intelligence layer cannot be built meaningfully without the system of record data. But what we're doing is we're starting to build the system of intelligence layer in a relatively agnostic manner. By that, I mean, obviously, there's millions of patient records that will be used to build the system intelligence there from the... Through rich data. But also, there's all these in our legacy IKS business. We get access to data as we are delivering the care enabled platform across other EHRs. And so we're building the system intelligence such that it can receive data across EHRs, including Two Bridge, and become that context layer that then enables the system of action platform that we have, which really then sort of does all the workflow optimization, automation, orchestration, and includes the human in the loop for the safety and oversight and the complex transactions or the nondeterministic outcome transactions that the AI cannot process autonomously. So I think it's very important to sort of internalize this architecture and know that we now have already begun the effort of building the system intelligence in a manner where the system of record...

13:26 Where we're agnostic to the system of record that is driving the system of intelligence. And then that system of intelligence is really what is feeding AI agentic autonomy into the IKS platform system of action. And that essentially leads to two offerings, one for the legacy IKS market and the other for the rural community market that we now have access to through TrueBridge. If you look at the existing IKS legacy market, that's the one that we will continue to build on the existing architecture where there'll always be the EHR system of record at the base. It could be true which or anybody else. We even have our proprietary system of intelligence that is constantly getting trained largely to do the data, but also data that's coming off our other EHR that we integrate with. And then that's feeding the platform system of action that we built over the last twenty years. So that's gonna be the platform system of action offering for our traditional IKS large physician group market, both health system owned as well as large single and multi specialty groups. And then for the actual rural and community market, that's where we're really going to be building this game changing future operating system of health care. And that's a true AI native platform that will what it will essentially do is it'll physically integrate the system of record and the system intelligence there such that that becomes that of that AI native substrate that we will build from the ground up.

14:51 Right? So now you have a truly integrated versus a transactional database from a legacy EHR. We will actually combine that system intelligence and system of record into an AI native substrate, and that then integrates deeply in the native workflows with the system of action that then leads to whole... This whole zero latency data flows with no middleware interfaces needed and allows true real time without context switching end to end clinical and financial automation. So these are the two parallel paths that we will be pursuing to truly AI enable the scale able platform that I think is gonna be a significant opportunity for us and for the industry going forward. You already know that, you know, these are the 16 odd features of our platform on the ambulatory side and five features of our system of action platform in the acute side. By the way, with the acquisition of TruBridge, we have now launched already two extensive customer assessments of legacy TruBridge customers where they have indicated interest to to take our full platform system of action. So excited to report that. As a part of that, what will happen is you'll see that this bottom row of the system of action for the... In acute settings, the features of that will get expanded. Because, obviously, in the hospital setting, there are additional tasks that the providers and the administrators should not be doing.

16:18 We will now start putting those tasks into the acute platform system of action. And so, obviously, these five features that you see for the in acute settings will grow and that will continue to expand our TAM for the in acute setting. Now as we are going about building this AI native operating system for the rural and community care market, what became evident as we met these 50 odd customers over the last few months is that there are certain features of our current platform system of action that have very high appeal today to the two bridge customer base. So what we did is after a whole bunch of survey, we prioritized these three broad offerings from our IKS legacy system of action, and we are now bringing these offerings first, integrating them into the current two bridge EHR.

17:11 Think about it like a... It's like a smelting process. Right? We're building that system of intelligence layer. Through that system of intelligence, first, focus on the system intelligence layer for these three features, denial, prediction, and prevention, coding, and then all things that drive clinical productivity or time back to providers, including clinical documentation and virtual care assistant. So for these three features, we're prioritizing building that system of intel. And through that system of intel, we will first bring these three features into the TrueBridge customer base. Because these two features have the maximum demand and the maximum ROI in the TruBridge customer base. Our objective is that these two features will be live in the legacy TruBridge EHR.

17:58 The the old cobalt based legacy TruBridge EHR through the smelting process, you know, in in in the in the TruBridge customer base sometime by q one of FY twenty eight. So by q one of FY twenty eight, these two features are integrated into the TruBridge EHR and are available for, you know, release to the TruBridge customer base. And that's what we are prioritizing. And by that time, in parallel, we would have launched the effort of what we call project endeavor, which is building from the ground up. This AI meeting operating system will be an absolute one of a kind for the entire industry. So that's going to be our strategy on how we... Even as we are stabilizing the current churn in the TruBridge financial health customer base, we start to build the engines that will actually drive growth going into f y twenty eight and beyond.

18:57 So that's generally the strategy that we have. That's an update on the two bridge integration and the strategy that we have to both stabilize the two bridge customer base from an FH delivery perspective, but then also starts to integrate growth in that customer base. And to do it in a way where whatever we build through the system of intelligence is applicable in an EHR agnostic manner into the legacy IKS customer base as well. So that's a brief update on on the TruBridge integration. Obviously, any quarter like this is exciting because while we were doing the TruBridge integration, we were still able to drive a whole bunch of deal wins and customer expansions into the legacy IKS business.

19:43 And generally, forward, at least for the next few quarters, when I say legacy IKS, think of legacy IKS as the original combined business of IKS and Accruity. Right? So if you remember, when we sort of announced the deal, when we closed the deal, I had said that the way to think about it from a revenue run rate perspective is that the legacy IKS business is give or take about a 385,000,000 run rate business, and the legacy TruBridge business after eliminating the things that we don't wanna keep is about the run rate, $300,000,000 business. So when I say legacy TruBridge, I'm referring to that $300,000,000 annualized run rate business. And when I say legacy IKS, I'm referring to that 385 odd million dollar legacy IKS business. So happy to report four wins in the legacy IKS business, one of which was a major cross sell into Augusta Health, which is part of the broader Mayo Clinic network.

20:41 So it was a nice cross sell win in the security customer base. The other three are new logos that we have added within the IKS business, the traditional IKS business. White Wilson being... White Wilson and Evolve being multi specialty and single specialty freestanding medical groups. And then, of course, UMass Knowledge being the big health system in the Greater Massachusetts area. So... And then, of course, Two Ridge added a new customer called Mish, which is a specialty surgical hospital. And so I guess the other question in your mind is how should you think about combined growth in the business? I think while you have seen the numbers and we've come into a strong quarter as it relates to our overall performance with 1,592 crores odd in revenue and about 442 crores odd in EBITDA, which, right, coming out of the gate is already a 28% EBITDA.

21:40 So... Which is right in line with our expectations. So we have had no leakages either on the IKS... Legacy IKS EBITDA side, where if you remember q one FY twenty seven, legacy IKS has hit an EBITDA of about 34 and a half percent. I'm happy to report that we're able to maintain those margins in spite of significant acquisition expenses, which... Of which they were about nearly 25 crores of acquisition expenses in this quarter. And then on the legacy Turbid side, the EBITDA continues to be right in line with what we had expected, which was some of that annualized $68,000,000 run rate. This is obviously the pre synergy EBITDA. And so all that resulted in, like I was saying, 1,592 crores of revenue, which is about a 104% year on year growth in rupee terms. Now, obviously, at at about a 78% growth q on q in rupee terms. But, obviously, you all are interested in the constant currency growth and want the breakup.

22:44 The way to think about it is the constant currency revenue or US dollar revenue was about $169,000,000. And the way to think about it is, of that, the IKS business grew a little bit better than it did in q one. Year on year, the growth in the IKS business was a little over 13% in US dollar terms, coming in at about a $101,000,000. So better than growth... Improved growth over q one on a year on year basis. And then on the legacy two business, we came in right around $68,000,000. So give or take, you know, like I've said, the run rate of the legacy two business is about $75,000,000 a quarter, 300,000,000 a year. We had eighty two days of consolidation in this quarter. So when you do 82 by 90 odd or 91, you come right around that $68,000,000.

23:32 So that's the way to think about the constant currency growth. How do you think about growth going forward in revenue? The way to think about it is this. Look, we continue to believe that in spite of the fact that our execution bandwidth is now spread across a much larger book. We feel like we can continue to drive better than industry growth in the legacy two... In the legacy IKS business. So I've always said that business... The industry is growing at 12%. We will continue to do better than that on a constant currency basis. We feel like in spite of our bandwidth being stretched, we'll be bold enough to say that we should be able to maintain that, you know. Of course, it's not always exact, but we feel optimistic about our ability to do that. And then the legacy TruBridge business, the way to think about it is this is a year of consolidation and stabilization.

24:20 So we already had almost a full quarter. We have two more full quarters left. This year, we will focus on truly integrating the TruBridge business and stemming and stabilizing the customer base. So if I were you, I would not be modeling any significant growth in the Drubridge business this fiscal year. But starting fiscal twenty eight, I think you should start to see significant green shoots of growth. And I'm talking about net growth in the TruBridge business, which then went into late f y twenty eight and early f y twenty nine. That two bridge... Legacy two bridge business should really start to edge towards... In the system of action component, you know, the industry growth, that 10 to 12% that the industry is growing at, the one WD market for system action is growing at that. I would say that that our aspiration, and I'm not giving guidance again at all, but my... Our aspiration is that we get to that 10 to 12% growth in the two big system of action business.

25:25 Obviously, the two big system of record business, our ambition is to keep it relatively flat. So I wouldn't model too much growth at least for FY twenty eight and FY twenty nine in the two big system of record business because the idea is that's the platinum mine. That's what helps us build our AI system of intelligence layer and eventually a system of action. That is also that platinum mine that allows us to cross sell our system of action into their installed base. Our ambition is to keep that relatively flat. And then once Project Endeavor is launched, where we have this two operating system of health care, which is the truly integrated system of record and system of action for the rural community market, which probably is gonna be FY '29 onwards. Hopefully, we can drive some moderate growth at that point in the two bridge EHR business.

26:11 So that's the way to broadly think about growth. I know everybody's wondering. I will repeat that we are not giving guidance at all as it relates to growth. So please please please be mindful of that. This is the ambition. And, obviously, you know, we want to be the best company in the business. I feel like we've put together the right assets to be the best company in the business, and now it's about executing to those assets going forward. Obviously, the other question is, so what should we think about EBITDA? We've already come in at 28% EBITDA this quarter. I've always maintained that at the other side of this acquisition, we should be able to get back to our traditional margins of early to mid thirties. I reiterate that we should be able to get that. Whether that happens sooner rather than later, time will tell. I already mentioned to you all that our early analysis on synergies is that we have the opportunity to beat our own expectations on synergies from the acquisition that need them. So so optimistic about margin. And at the confluence of all that, I feel like we feel while there is a lot of execution ahead of us, that general two north target of 3,000 crores that we've given for FY thirty. We continue to be optimistic about that while continuing to reduce our leverage. You must have seen that on 442 crores of EBITDA, our net leverage is already under three x EBITDA,

27:41 and hence, we feel optimistic about taking that leverage down to near zero levels by the end of FY thirty. So that's a broad summary of our q one performance, the true bridge update, how we're thinking about growth going forward, and our ability to continue to deliver to our true North objectives for FY thirty. All this while building for the rural and community market, the most exciting and relevant operating system of the future, and for the legacy IKS market, which is a large physician group market, a true AI enabled human in the loop system of action that is the HR agnostic. With that, I will pause, and I will turn it to turn it over to Nithya to talk through other aspects of our financials.

28:28 Thank you, Katchen. Good morning, everyone, and advance the evaluations. Sachin, you don't mind going to the details. So PPT in this quarter came in at 273 crores, which represents almost a 20% year on year growth. That in the quarter was 217 crores. Our just expect that where we have removed the noncash items including ESOP as well as amortization of intangibles came in at 273 crores, which is about 17% of revenues. Again, representing a very healthy 36% year on year. One comment I just wanted to make,, is that if if you see our EBITDA of 442 crores, when we adjust that EBITDA for our ESOP expenses, it actually comes to about 459 crores. So there's really about 17.5 crores of ESOP expenses in this quarter. One thing I do want to note is as as you can now see, you know, we're we're nearly a a $700,000,000 annual run rate company, and we've gone to this number from what will be just three years ago in October 2023.

29:40 Prior to our IPO, we were about a $150,000,000 run rate company. Right? So we go nearly five x in three years. Of course, a significant part of that has been inorganic, but also remember we've achieved that inorganic growth with absolutely no dilution of equity. And it's also created post IPO, pretty large employee base and to execute on the vision of the future. I think it's really important that we align some of our key leaders towards the success of the future financially. So in line with that, as it was approved by the shareholders in the AGM, by all of you, you should anticipate that there will be about an ESOP grant to about the top sixty sixty five leaders of the company that amounts to, give or take, 4% of the total equity of the company. And so as that gets granted, we will give you specific model to impact... To to... Specific impact to model on the noncash part of the EBITDA, and hence, that adjusted EBITDA number will continue to become more and more relevant.

30:42 And we'll give you the specifics, but I did wanna say that that that four percent ESOP grant is going to obviously impact this adjustment of expenses in arriving at the adjusted EBITDA. Thank you, Raj. If you can By the way, I I do wanna say... Sorry. One more thing that on that ESOP, nearly 80% of that ESOP is attached to performance targets that are linked to our 320,000,000 or 3,000 crore EBITDA to north target. So this ESOP grant is essentially geared towards aligning the entire organization to achieve and beat our true north of FY thirty. Sorry. Yeah. Thank you. Thank you. Talking about cash flow, cash generation continues to remain very, very strong.

31:34 I do wanna call out two items that are appearing in OCF and FCF this quarter. If you look at the adjusted OCF that came in at 393 crores, which represents a very healthy of up to 90% of EBITDA. The act... The numbers you will see reported in the cash flow are about 96 crores lower, and this 96 crores went towards two bridges acquisition expense. Of course, we got commensurate cash as well when we acquired the company. But since the payment was made after the cutoff for consolidation, the 96 crores appeared in my operating cash cash flow. As you can imagine, this this is fully covered by the cash that we got, which is sitting in my financing activities, and this is, of course, a nonrecurring item.

32:24 If you look at FCS, other than the item that I already mentioned, we also ended up paying slightly higher tax to the tune of about 50 crores this quarter. Again, this is only a timing issue. When we acquired TrueBridge, we took a rather conservative view on tax. We paid slightly higher tax than what's necessary, and this additional tax that we paid will anyway be consumed towards the tax that is owed to the rest of the two quarters in the year, and therefore, this also is a onetime impact this quarter. Quarter. I just think for both of these items, convert... Cash conversion remains at 90%, and this we hope will only keep going up in the future as well. If you look at net debt, we had assumed the gross debt of about $611,000,000 at the time of two bridge acquisition.

33:12 The net debt number at the end of the quarter stands at 5,280 crores and approximately $550,000,000 And with continued extraction of synergies and cash generation, we hope to be able to continue to pay this down in the future quarters. EPS came in at 13 rupees in the quarter, and growth was in line with the bad growth that was discussed earlier at about 20% year on year. I do want to call out that this deal, as discussed in the last quarter, is EPS accretive. You will find that the past growth quarter on quarter is stronger than the underlying IKS IKS revenue growth.

33:57 It's... And this is bad at this quarter and will continue to remain so as we continue to work and improve on the two business model. Return on equity was at 27%, again, continues to remain healthy, and we hope to remain around these levels. A lot of these numbers have been discussed. I'll just call out a few highlights. Employee benefit expense, other expense, all these numbers on the slide do include eighty two days worth of coverage expenses as well... Expenses and revenue as well. The underlying employee count for IKS remains rather flattish quarter on quarter, and the increased number of the total employees that you see are the new employees that we inherited as we closed the transaction.

34:48 EBITDA came in at 442 crores or almost 28 percent. The finance cost of 101 crores in the quarter includes about $9,000,000 of interest expense, which is only for the period that was accounted for. You should expect about $10,000,000 of interest expense every quarter going forward at the current interest rates. Of course, as our leverage goes down, which we hope it will, our interest expense will be coming up. Depreciation and amortization is again higher because, again, looking at the balance sheet, you will find that we have booked about $123,000,000 in intangibles and about $50,000,000 in technology. And this amount on the balance sheet will continue to get amortized over a period of time, and you should again assume a proportionate number for the next quarter as well.

35:41 That came in at sixty sixty growth. The ETR for the quarter was 22.1. For the combined two bridge and IKS entity, ETR should remain in the 22 to 23% range in q three and q four as well. There was also losses that are attributable to minority shareholders of the WWMG MSO, which is about 4 crores that you see on the face of the p and l. Net of that, our profit came in at 217 crores. The MSO MSO is loss making. However, the losses continue to shrink as we scale up our implementation of the platform and the productivity of the doctors'.

36:32 That's it on this slide. If we can maybe quickly look at the next slide. Our adjusted EBITDA per employee is now a very healthy 1.29 high and a million in the quarter. This represents the incremental revenue and the and the additional employees that we are now now inherited from TruBridge. Revenue from top 10, revenue top five, all of this obviously now includes TruBridge revenue in the base as well. Our vintage with top 10 and top five continues to remain very, high. Sachin, back back to you. Thank you, Liz. Yeah. And so, again, just to round it off, you know, you you can see this. The business model continues to be solid, and I think in the process, we've built this really unique care enablement platform for The US health care market that transcends the ambulatory in the acute setting and has the right optimized mix of global human in the loop execution in an AI first model that we are building based on proprietary data and proprietary models that we are creating based on that data.

37:46 And all that to bring to a relatively sticky customer base across both our traditional market of large physician groups as well as the rural and community hospital market. So all in all, excited about where we are and look forward to everybody's questions. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Session. The first question is from the line of from ICICI Securities. Please go ahead. Thank you. And congratulations on.

38:38 Two questions for yourself., you mentioned that that... On examination of of the. I'm sorry to interrupt. You're not coming through clearly, Ruchi. So sorry to interrupt. You're not coming through clearly. Is it better? Yeah. This is much better. Thank you. Yeah. So on two bridge, when you got that the scope for margin improvement looks better, could you help us what are the labor and the cost areas we are thinking for margin improvement in Bluebridge? Yeah. Obviously. So so there's there's several areas, but I would say that there are areas within operating costs, and, obviously, there's been areas within the overhead cost, the SG and A.

39:28 On operating costs, the two prime levers are to leverage our technology first, human in the loop model within their financial health customer base. You know, as you know, that's nearly two thirds of the TruBridge book. And one of the challenges and opportunities of TruBridge's execution was that they were not necessarily being totally successful in optimizing the use of the global model and driving the technology interventions. I think that continues to be the biggest area of opportunity across both traditional back office rev cycle as well as medical coding related execution. And then, of course, you know, you know, to which has a a very significant technology footprint, you know, and so there continues to be opportunity to sort of right size and more than right size, right locate that technology investment in a manner where we can get more bang for the buck. So we we don't intend to necessarily reduce the technology investments, but we will we will cost optimize how they are spent in a way that we can get more bang for the buck on that front. And then I'm just purely on the SG and A. One, of course, with the public company expenses that are now already gone, but there's a whole bunch of other SG and A synergies that we are working through as well as we integrate the two organizations holistically.

40:51 There was obviously some redundancy leadership, which is why of their top five executive leaders, three have actually made it into the integrated organization. So that... And then there's redundancies like that in SG and A across several levels that have been channeled as well. Got it. Second on the growth, organic growth, Rajat. Now this is a fourth quarter where we are in the early teams or very close to the industry growth versus our target to be ahead materially ahead of industry growth of 12%. So how should we think about organic growth going ahead? Now the base also becomes favorable for a few quarters as the base was, I would say, high.

41:45 So going forward, how should we think about the organic growth trajectory for IKS native business? Yeah. So like I said, I think I tried to lay that out in my... In the original commentary. I think we continue to feel confident that we will drive better than industry growth in the legacy IKS book, which we have done consistently over the last eight quarters of being a public company. Outside of that, as it relates to the legacy two bridge book, I I was saying earlier that this fiscal year is a year of integration and consolidation. So I will not model any significant net growth in the Two Bridge book this year. We will... As we go into f y twenty eight, we're starting to expect some growth coming from the system of action within the Two Bridge customer base.

42:36 You saw the three features that we are rolling out first into the TrueBridge customer base, integrating them into the EHR. There's obviously the traditional RCM offering that still has white space in the EHR installed base. So we'll start to see early signs of growth in the TrueBridge customer base in FY twenty eight. And then towards the end of f y twenty eight, our ambition would be that that $300,000,000 book of which 200,000,000 is system of action and 100,000,000 is system of record. That 200,000,000 starts to go towards industry leading growth. Right? So that same sort of... In the rural market, that 12% is maybe 10 odd percent. So somewhere in that 10 to 12% would be our ambition starting towards the end of f y twenty eight and then going into FY '29 and beyond. And, again, on the EHR book, which is about the $100,000,000, we don't have an ambition of trying to grow that. That is the platinum mine that we continue to mine.

43:28 And, you know... But once we've rolled out the new integrated AI first operating system, perhaps going into FY '29 and beyond, there might be some moderate growth in the HR business. So those are the three ways to think about growth. Again, this is not a guidance, but this is an ambition that we think if we execute well, we should be able to achieve. Okay. Thank you, and all the best. Thank you. Thank you. Next question is from the line of Mayank Babla from Carnelian Capital. Congratulations on a good set of numbers and a successful integration of Two Bridge to the team. My first question is towards Anithya.

44:16 I'm not sure if you've, given a split. If I... If you have already earlier, then apologies. But if you could give us a split between, IKS and TruBridge for the quarter on the revenue front? So how much is from IKS and TruBridge in this 1 $5.09 2.5 crores? And on the EBITDA front, if you could give us a split policy. The revenue, Sachin did talk about this earlier. So we had guided that Bluebridge is at a run rate of 75,000,000 for the full quarter. However, we have only eighty two days this quarter, so that represents about 68,000,000 from Bluebridge. And the rest is across from IKS, and that represents a little more than 13% organic growth for IKS year on year.

45:09 In terms of EBITDA, again, we came came right alongside what we had guided, which is two bridges EBITDA run rate is at about $68,000,000 for the year, and that's what you will see proportionately reflected in the numbers as well. And IKS' underlying margins remain at very similar healthy levels as you saw in Q1 around the 34.5%, 35% mark. Sure. That's nice. And you have onetime integration expenses of 25 crores, which you should adjust for. Okay. 25. Okay. Got it. Thank you. And second question is towards Sachin. You know, Sachin, you did mention this in the opening remarks about the transactional database and how you want to stack up the system of intelligence over that. So if you could just double click on that and give us a little more detail on what you intend to do over here, please.

46:09 Yeah. So, you know, I think the way to think about it... That's a great question. I think that's my... Appreciate it. So, you know, the best way to illustrate it is through an example, and I won't... I'll try not to get too technical. I'll keep it simple. So think about it. If there is a orthopedic injury that a patient has. Right? And there is prior... The the orthopedist orders an MRI to investigate that orthopedic injury as a precursor to the surgery from the payer. What will happen is you have to apply for a prior auth from the insurance company to be able to do the MRI to make sure that they will actually pay for the MRI. Now what you'll do is you will go to the rules in the payer prior auth, and you will understand that the rules are that the payer says you should have gone through six weeks of some conservative treatment before you go down a surgical intervention path. So they will not pay for the MRI unless there's been some conservative treatment. Because every treatment or something like that is physical therapy. And so now the physician orders physical therapy. The patient starts the physical therapy.

47:19 Eight weeks later, the pain still hasn't subsided. So you would think that eight weeks later, if it says pain has subsided, you... The patient has gone through the therapy. You've got to a point where you are able to now apply for the prior auth for the MRI and get it successfully. Successfully. Now the reality is all of these data points, some of them are lying in the EHR in disconnected encounters. Some, you know, in... Would would be available. A very simple pitfall could be that the patient did start physical therapy, but after two sessions, the patient fell off. They didn't go for the other physical therapy sessions. And the attendance tables for the physical therapy are not available in the EHR. And so if you've not built that AI substrate, that the system of intelligence layer that truly interprets which all data sources to tap to get a comprehensive view of what is needed as evidence to to pass the payers' prior auth request, you might have a system that tries to take what's in the EHR, submit it, thinking that it will get a highly confident authorization, but you'll actually get a rejection because the attendance log was not factored in. So this is a very simple example of the type of relationships that the system intelligence builds for tasks like prior auth, which will never be available in the EHR or in just in the...

48:42 If you just built an agentic system of action. And it's those type of relationships between the data entities by task that are called knowledge graphs that bring the context and drive. So, again, it comes back to the EHR captures what happens, what actually happened. The system intelligence makes sense of it, interprets it, and prioritizes what needs to do... What needs to happen, and then the system of action actually orchestrates it. I don't know. Hopefully, this illustrates it better, Mark. No. That was amazing and insightful. Thank you so much, and best of luck for the future. A great service. Thanks. Thank you. Next question is from the line of Chirag Kacharya from Motilal Oswal.

49:36 Sachin and team. Yes. Can you hear Yeah. Please go ahead. Yeah. I just want to know what the debt repayment trajectory on quarter on quarter and annually as he stated that we went to... We want to reach to December 25 in terms of connected by by 30. So just... Can you share that with us? Yeah. I'm sorry,. You have to repeat it. You didn't come through clearly. So I'm asking what is the debt repayment plan annually and quarterly, if you can do some light on that part. Yeah. So what we have in the facility agreement is it's a five year loan. Interest payment, as I mentioned earlier, at the current prevailing interest rate level, they're likely to be around 10,000,000 per quarter.

50:26 We have an eighteen month moratorium on the principal repayment, so that should start end of next calendar year. And the current interest rate at the existing leverage levels is so far plus 2.75, which is slide down to so far plus 1.75 as my leverage comes down to 1.7 x less. Okay. And second, you mentioned about performance linked to reach a target of 10,000 crore EBITDA. So from which quarter the impact is would be there in P and L? Second half of this quarter.

51:14 Okay. Okay. So possibly from quarter. Right? Come out. There'll be a... Sorry. Q three. Q Second half of q three. Q three. And there'll be a disclosure that will come out when the grant is actually approved. Okay. And third question, in this integration of two bridge, I mean, for about eighty two days, I just want to know what immediate synergy in terms of margin has played out since we took the charge of the entity? Yeah. Yeah. So,, honestly, other than the removal of the public company cost that was actually already factored into the $68,000,000 run rate, our ambition was to not touch anything for the first at least three months. So to be honest, our idea was first, let's absorb.

52:03 Now there might have been some nonmaterial synergies that have gone realized as result of some natural rationalization of staff that left in the SG and A side or in the operating side that might be slightly higher than anticipated. Some reduction in costs associated with advisers that were being used, but nothing material has been realized yet. The bulk of the synergies lie ahead of us. And that is why Should we expect from... Should we expect that in q three and q four, we see gradual improvement in that this acquired asset? Absolutely, Gerard. Absolutely. Oh, okay. Okay. And the near term, could be like a ample cost rationalization.

52:48 Right? Near term triggers will be around, you know, restructuring their operating model on the financial health RCM business to, you know, the right operating model of global execution plus the technology interventions that we have, the similar interventions on the medical coding side. And then, obviously, as we integrate the two g and a organizations, there'll be some synergies realized for that. So all those three vectors will start playing out second half of Q3 onwards. Okay. Thank you all the best. Thank you, Chirag. Thank you. Next question is from the line of Vibhor Singhal from Nuvama Equities.

53:39 Congrats, Sachin, Vijaya and the team for a very successful integration and solid performance. So two questions from my side. On the growth part, Prasoon, you mentioned that we should look at the growth as basically our legacy IKS business which you're calling out to continue to grow at higher than the industry average when industry grows at 12%. So we'll probably grow at 13% to 14% is what we can look at. And the two business to be kind of flattish till, let's say, next year end. And thereafter, we'll probably try to pick up growth in that business. Is that the right way to look at it? Think you're right on the legacy IKS business. On the two business, flattish till the end of this fiscal. Next fiscal onwards, start to see moderate growth. And by the end of next fiscal and going into FY '27 and FY '29, get to a point where we are starting to hopefully drive industry leading growth in that...

54:31 In the system of action part of the book, not in the system of record. So remember, it's one third system of record, two third system of action. The system of action part of the book going into late f y twenty eight, early f y twenty nine start to edge towards industry leading growth there as well. Got it. So in f y twenty nine, we can probably expect the two business, though it will be very much integrated, two business to come close to the legacy I guess, the number? Yes. But only two thirds of it. Because remember, one third of it is the system of record, and that we would intend to go back all the way even towards FY thirteen, maybe later by '20 Got it. Got it. Yes, I think that's very clear. Just one more question for Mitra. Mitra, if I just look at the numbers that we mentioned, dollars 68,000,000 of revenue from brokerage in this quarter and around 34.5% EBITDA margins for the legacy IKS business. If I back calculate the margin for the coverage business in this quarter comes out to be around 17.5% EBITDA margin. And I'm talking about adjusted EBITDA, removing the ease of cost. So how to look at this number? I think from when we acquired, we were probably looking at 14% margins. It's already at 17.5%.

55:42 Do we expect a gradual ramp up in this margin going forward in the next coming quarters? Or is it going to be slightly long tail and maybe flattish at these levels for the next few quarters and then probably pick up from there? Actually, the number is even better. Why why we take that up? The number is gonna be number is gonna be 21, 22. So So the two bridge margins are higher. I think the first thing you should do is adjust the one time integration expenses that we call now, add it back to EBITDA, and then use the guidance I've given you in terms of $68,000,000 annual run rate for two bridge, and IKS coming in at $3.34.5 25. Why don't we take this offline? We'll walk you through the split on the numbers. Got it. That that would be helpful. Sure. Okay. That's all from my side.

56:29 But your other question, we do expect more synergies in the next couple of quarters and going into FY 2019. Got it. So any margin level that you're target... Targeting for the two bridge business? Let's say, one year down the line, FY '28? I don't think you're talking about specific margin guidance in FY '28, '29. I think what we had said was by FY '30, we hope to bring both books of business to healthy margin levels, which is the early to mid thirties. Got it. Sure. I think that number has still stayed from. Got it. Great. Thank you so much for taking my question. I'll take this math offline. Wish you all the best. Thank you so much. Thank you.

57:15 Next question is from the line of Madhu Chandana from MCPROP. Please go ahead. Good morning, and congratulations on Hugebridge integration. I have a question on this revenue from top clients. While I understand that the percentage would have declined because of COVID in the denominator, but why is there a decline from, say, INR $4.80 crore in Q1 to INR $3.42 crore in Q2? If you could search... That is the same pattern for top five and top 10. If you could please help me understand that number. Thank you. So the top 10 in the last few quarters, we had a short term project from one of our top five customers, and that's why you see the decline quarter on quarter.

58:13 However, that has been effectively replaced by other customers, which are not in the top 10, which is why you find that the overall growth remains at a healthy level. And, actually, what we should expect is that there are certain areas in which we are anticipating more and more onetime work that will be relevance to certain quarters, and it will be at the confluence of using some of our technology and our human capital to drive some short term short term alleviation for them. And so you might see some spikes like that going forward of onetime revenue in the upcoming quarters. Okay. So that must have been quite a substantial onetime contribution.

58:58 Right? Because the decline is quite meaningful. Is it from one client or two client if you could quantify that? I don't think we are guiding for it guiding for it. I think as in when these projects materialize, we'll talk to you in future focus about it. No. No. I understand that fully. My question is, like, you mentioned that the spike was because of some short term project. Was it pertaining to one particular client or multiple clients? That's my question. Multiple clients. Okay. Thank you. Thank you. Next question is from the line of Hiren Desai, an individual investor. Please go ahead.

59:47 Yeah. Actually, my question was... My understanding, I don't know if it is correct or not, but we will try and acquire or cross sell our IKS solutions to to bridge guys, and that sounds pretty intuitive. Will we be able to do the other way around? I mean, because I'm sure the stickiness of records may be higher, and every customer may be already in some some database somewhere.

1:00:34 Yeah. I would not... That is not part of the plan. The EHR market, as you know, The US is highly saturated. Also, the... Through which EHR is a specialized EHR for the rural and community market. And so its applicability to our legacy IKS customer base, which is a physician group market, large physician group market, is somewhat limited. So I wanna take the cross sell of the TruVidge EHR business into the legacy IKS physician group market. Having said that, TruBridge's hospital RCM capabilities, those are definitely translatable into the hospital owners of our large health system owned physician groups. So to that extent, there might be some cross sell opportunity that will come about, which is why what we've done is we've taken all of that hospital market, rural and community, as well as large health system owned hospitals as one segment from a go to market perspective. So no cross sell of EHR into the legacy customer base, but acute RCM could sell into the legacy customer, I guess, customer base that own the hospitals. So in addition to... Just to add to that, in addition to acute RCM, TrueBridge also has a fantastic product called Encoder, which is an automated coding tool.

1:01:53 We do believe that there is significant cross sell potential into the IKS customer base because that is not specific to the rural or the acute market. We... This is a product where we will be investing behind it and taking it to a larger customer. You. Next question is from Varun Gandhi from Fin Avenue. Please go ahead. Hi, Sachin and Nithya. Thanks for the opportunity. And, Sachin, my question is to you. You know, this... To set the stage, you know, I find the acquisition really fascinating, and I'm enamored by the story you're presenting. But from a business standpoint and and, you know, if you could just walk me through the next immediate steps in trying to extract the most possible synergies from this acquisition. Right?

1:02:43 We... I I I I heard the earlier comments on the margin efficiencies, but we could put the margins aside for a minute, and we could just talk on the business and the revenue growth and, you know, extracting synergies from both products. So the biggest strategic synergy really is the treasure trove of the millions of patient records that are in the two page EHR that we have the ability to translate into the AI training mode. Actually, the biggest driver of this acquisition has been that ability so that then we can train our proprietary models, leveraging the context layer that we will build from this data and not be dependent on external frontline commercial models for everything. Right? So that's the biggest strategic rationale.

1:03:34 And then from a revenue growth perspective, like I said, the rationale is the system of action that we have built over the last twenty years is pretty directly translatable into the TruBridge customer base. So it creates a pretty significant revenue growth opportunity, and that's why we are looking at this TruBridge acquisition not just as something that creates very significant margin synergies, but eventually, it's a it's a growth acquisition that we want to drive growth and industry leading growth of that into the true rich customer base through the IKS system of action. And then like, we just said, they also have a couple of other interesting products. For example, the encoder product, which really has applicability across both the customer bases. We'll obviously wanna put that gold market on steroid and harness its true potential.

1:04:21 So, Sachin, as a follow-up, what would be the immediate steps in trying to, you know, extract those synergies? From a revenue growth perspective? Revenue growth perspective and just a general business standpoint, how do you wish to proceed with... Yeah. So like I said, we are... There's three categories of our system of action, and you can still see the slides, that we have initially decided to take from the IKS system of action and integrate it into the true with EHR. So these will become the three big areas in addition to the traditional RCM offering that we will bring into the true with customer base. These are the ones along with Encoder that will drive the initial phase of growth of the IKS system of action into the TruBridge customer base. And then, obviously, we are transforming their operating model on the revenue cycle side to our technology and our global execution model that will drive a lot of the financial synergies or the operating margin opportunity. So revenue growth coming from driving these three, denial prevention and prediction, direct rather denial prediction and prevention, medical coding, which parts of it will become autonomous, and then clinical documentation, ambient legal documentation, and virtual critical system. These are the three that will drive initially. Eventually, what we are learning is the entire IKS system of action will be applicable, which is why I also said there are two two two bridge clients that have already begun assessments of what it

1:05:52 will take to bring the entire IKS system of action to their rural communities. I hear you. So on the system intelligence bit where you mentioned that you want to train your proprietary models, where exactly are we today? Are we still in the ideation stage, or are we in the development development phase? Phase? And when do you think the product would be ready for commercialization? No. Like I said, you know, we are we are building this system intelligence layer in a manner where it's somewhat EHR agnostic. So we've come up with a data architecture that actually brings the data from the EHR into a a staging area. That that staging area starts to be leveraged to start to create the system intelligence. And that system of intelligence, as you can imagine, is being created by task. Right? So the system of intelligence in prior auth is different than the system intelligence for denial prevention and prediction. And then eventually, we are going to build an interconnected system intelligence because there are cross synergies across these tasks.

1:06:53 So at this point, we are in the process of building that system intelligence for certain tasks. And those, for example, there's a system intelligence being built for coding. There are a lot of knowledge graphs that already been built. Even for that coding, there are different knowledge graphs for different specialties that we are in the process of building. We're building the system intelligence for prior auth. We're building the system intelligence for denial, prediction, and prevention. So it's a journey. The entire comprehensive system of intelligence for an entire ambulatory system of action will be a good one year journey. And as we keep building that up, we can make more and more of those systems of actions reliably agentic so that the human in the loop keeps coming down. Thank you.

1:07:43 Next question is from the line of Dev Thakkar from Ithorpe. Please go ahead. Yeah. Thank you for the opportunity, sir, and congratulations on the integration. Sir, I just wanted to understand that with TruBridge, we also now get Clearinghouse as well. So could you just walk us through, like, are we planning to integrate TruBridge Clearinghouse into IKS new clients or into the MSO deals? Absolutely. I think that we are in the process of examining how well the Two Bridge Clearinghouse works. It's called Two Bridge RCM is what they call the product. And we are in the process of examining. Now there are some legacy IKS clients or many legacy IKS clients that are already committed to other clearing house relationships for the medium to long term. So we won't be able to replace those because they have already made those commitments. But for all our new deals, we are absolutely considering leveraging the two wish clearing house. And in fact, there are at least two or three proposals out where the two wish clearinghouse is included as a part of our proposal.

1:08:51 Got it. Got it. So given that this is apart from our the RCM vertical, can we expect, like, more growth coming from it and becoming it, like, more margin accretive as well? Look. The clearing house is a very integral part of RCM. Yeah. Maybe it expands the TAM of it because traditionally, our clients were contracting directly for an industrial clearinghouse, and then we were working with that clearinghouse to drive the outcomes. Now in some cases, we'll be able to include clearing house in our offering, which obviously makes the TAM somewhat better. But again, you know, those are... These are very incremental numbers and between what you're going to face in incremental price compression, competitive intensity, it's very hard to model that out as an additional significant growth vector. But, yes, I think it... The fact that we will be able to use our own clearing house that is deeply integrated into our RCM workflow, which we call Optimix, will drive efficiency for sure for margin.

1:09:57 Got it. Thank you so much, and all the best for the future. Thank you. Thank you. Next question is from Pranaya Jain from Banyan Tree Advisors. Please go ahead. Hello? You're audible. Am I audible? Okay. Hi. Good morning. Thank you for the opportunity. I had two questions. Is, so when we listen to IT services companies, they say that they've been have... They are being having to pass on AI productivity benefits to the clients. Are we also sort of facing any pressure on those lines? I understand that on the productivity side, we've done reasonably well, but is there any bit of pass... Passing on those benefits that is also playing out? That is question number one. And question number two was related to the onetime projects that you spoke about for the top clients. Can you just give us some more clarity on what is the nature of these projects?

1:11:00 Yeah. That would be my two questions. So the second part was to think about, you know, there are seasonal projects that come up around value based scares. For example, HCC coding and retrospective review of patient charts before you submit them to CMS with a certain code. So, you know, typically, those projects come up between calendar q three and q four of any fiscal year. So that could be a big driver of one time projects for it just as an example. To your question number one, as we've always said, look, one of our biggest differentiators is we are an outcome based pricing model. So the bulk of what we pick up in productivity comes to a bottom line, which is why we have been able to drive industry leading margins over all these years.

1:11:50 And so that generally is the outcome of the product. Become... Now over a period of time, I've always said that as we make our model more and more AI led and agentic, we are going to see that there will be in general incremental price compression. And we are bracing ourselves for that price compression, and that but that price compression is more than offset by our ability to drive productivity benefits and keep the bulk of those benefits so that we are able to retain our margins. So our our biggest differentiator from an IT services perspective is that we are an outcome driven company, and our customers pay us for the outcome of what we're doing versus paying us for the effort that traditional IT services companies get paid. Right. That's helpful. Thank you, and all the best.

1:12:40 Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to mister Saranj for closing comments. Over to you, sir. Thank you, everyone, for joining the conference. So please do reach out if you have any more additional questions. Thank you. Thank you, everyone. Good luck. Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.