Inventurus Knowledge Solutions Ltd (NSE: IKS) Q4 2025 Earnings Call dated May. 16, 2025
Corporate Participants:
Unidentified Speaker
Saransh Mundra — Investor Relations
Sachin Gupta — Chief Executive Officer, Whole Time Director
Nithya Balasubramanian — Chief Financial Officer
Analysts:
Unidentified Participant
Ruchi Mukhija — Analyst
Sameer Shah — Analyst
Srivathsan Ramachandran — Analyst
Nilesh Jain — Analyst
Chetan Shah — Analyst
Siddharth Misra — Analyst
Seema Nayak — Analyst
Presentation:
operator
Sam. It. Sam. It. It. It. Sam. Foreign. Ladies and gentlemen, good morning and welcome to the IKS Health Q4FY25 earnings conference call hosted by ICICI Securities Limited. This conference call may contain four statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements do not guarantee the future performance of the company and it may involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will remain in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing Star then zero on your touchstone telephone.
Please note that this conference is being recorded. I now hand the conference over to Ms. Luchi Mukija from ICSA Securities Ltd. Thank you. And over to you Ruchi. Please go ahead.
Ruchi Mukhija — Analyst
Am I audible?
Sachin Gupta — Chief Executive Officer, Whole Time Director
Yes, you’re audible.
Saransh Mundra — Investor Relations
Yes, you’re audible.
Ruchi Mukhija — Analyst
Good morning ladies and gentlemen. Thank you for joining us today on. Q4FY25 earnings call of ICASE Health. On behalf of ICICI Securities, I would like to thank management of ICASE Health. For giving us opportunity to host this call. Today we have with us Mr. Sachin Gupta, Founder and CEO, Ms. Nitya Subramaniam, CFO and Mr. Saaransh Mudra, ABP Investor Relations. I’ll turn over to Saransh for safe. Harbor and to take the proceedings forward. Thank you. And over to you, Saraj.
Saransh Mundra — Investor Relations
Hi. Hi everyone. Welcome to our second earnings call at the public company on. So I’d like to begin with a safe harbor statement before I hand over to Sachin Nitya for the remarks. As part of the prepared statements and. During Q and A we may make. Certain statements which are forward looking and. May involve significant uncertainty. We don’t take any responsibility to update such forward looking statements and your discretion is advised by making any investment decisions. Over to you Sachin.
Sachin Gupta — Chief Executive Officer, Whole Time Director
Hi. Thank you Saraj. Good morning. Good evening everyone. Depending on where you are excited to discuss our performance for Q4 fiscal 25 as well as the full year fiscal 25. On today’s call I have with me of course in addition to Saranj who leads the industrial division Nipka Alexander. To get the name right, our CFO and I will kick it off with some remarks that I have on the overall health of the business and the performance and at a high level the financial performance. And then I would invite Nitya to dive into the financial performance in a little bit more detail.
After which we will open it up for Some questions. So with that, I wanted to start off again, at the risk of repetition, with a recap of our business. It’s only our second earnings call, some of you might still be new shareholders. So I’ll just give a quick recap of the business and our strategy and then talk through how we’re executing on that strategy and the resulting financial performance from that strategy. So just to obviously we’re in niche business, I think that will be best for everyone. So just as you know, we’re operating in the US healthcare provider market and specifically given its cost, quality and access challenges, one of the things that we have seen that is happening is this transformation from reactive hospital centric medicine to physician led patient centric and proactive medicine.
And so we believe that the physician setting becomes a new fulcrum of care delivery as a result of that. That physician setting in the U.S. as you will remember, is about a $1.5 trillion market. And that has undergone a tremendous amount of consolidation over the years. And hence it has created this enterprise scale market segment that its operates in. Our fundamental thesis is that when a cottage industry like the original physician market was also highly fragmented in the US with 900 odd company positions, most of which existed in groups of five or less. When a market like that consolidates into enterprise scale and it needs to become the new fulcrum of care delivery, they go through some fundamental transformation.
And one such transformation is what we call this transformation from where they rediscover their core versus chore equation within their task continuum. And the smart enterprises figure out that they should focus all their energies on the few core tasks where they create the most differentiated value. And then a lot of the chores that are important to run the business but might be happy when they create differentiated value typically get delegated to some platform or entity that can do these chores better, cheaper fasters. Now, obviously, given the size of the US healthcare market and the facility of the mission market itself being 1.5 trillion, there are the chores that we have identified which cut across the entire spectrum.
From the exam room that essentially feeds the patients all the way through the back office, those chores are almost 15%. The costs are almost 15% of their revenue, which makes for about a $225 billion TAM just for the chores that we have identified. And what we saw over the last 50 years with the business is that the phenomenon of consolidation and hence the delegation of chores really started to pay out. And hence about 35 billion of that 225 billion had already been delegated. And so this $225 billion odd dam is actually growing at maybe 8%.
But the outsourced dam, which is around $35 billion right now, is growing at 12%. And that really, that outsourced stam or the concentrated or the consolidated segment of that outsourced stam is really what we are addressing. One of the points obviously to remember is our risk to them now in a market which is as large as $225 billion growing at 8% or $34 billion growing at 12%, obviously a lot of players come in because they want to show up that pie. Now what happened though, unfortunately, is because the size of the dam is so large, a lot of players that have come in are really point solution lenders, as I call them.
So they’ve decided to focus on one or two or maybe in some cases four or five of these chores. And our thinking was as the market matures, buyers will realize that they can’t be in the business of buying 10, 12, 14 point solutions, integrating them. And so our vision was we will create a platform that has the full breadth of these 16 odd chores and eventually buying behavior will graduate more and more to that platform buying behavior. And so having said that, because that buying behavior is a sort of graduation curve today we have to live in the duality of certain buyers that still are buying more point solution and then early innovators that are starting to demonstrate the platform buying behavior.
And that becomes a very important strategic execution predicament for us. Just in a couple of minutes I lay out five key strategic execution pillars. One of those pillars as a result of this dynamic of buying behavior, that some are buying point solutions and expanding, whereas others are now starting to buy platform. We have to execute in a way that we are leaders in each of the features of the platform, so we can bring in the point solutions buying behavior as well. As we are of course the only company in the world perhaps today that has a full benefit platform.
So you can go back to the paper slide, that’s a high level overview of the marketplace. Let me now talk a little bit about the five key strategic pillars in which we are executing in this business. And so the first and foremost enough is that we are moving through AI LED AI native manifest of this platform. And so, you know, I’ve always spoken in the past about we started in a human LED tech in the loop model and we’ve gone from human LED tech in the loop, now starting to go to tech led human in the loop.
But with the pragmatic use of Genai we now have another set of evolution happening rapidly which is going from tech led human in to fully autonomous technologies of certain features. So that going from human led tech in the loop in some cases to jet led, but in many cases to fully autonomous gen AI enabled execution of features is one of the most important strategic execution pillars for our strategy going forward. That’s number one. Number two, as many of you will remember, we acquired a significant size business called acuity in the third quarter of FY24. And when we acquired a QG we had to execute on that acquisition in four key dimensions.
One of course given the size of their business, which is almost similar to our business at that time, we have to integrate this into one core organization that came across as a platform in the market. So that I’m happy to note we executed really well on that mostly through FY25. That was one of the big focus areas of FY25. The second piece was as you remember, accuracy was a very human led us based headbound execution model. And hence it presented a huge margin optimization opportunity. And one of our key vectors of execution within the acute acquisition was getting their margins.
If you remember our pro forma margins in FY24 when the acquired acuity had gone to about 24%. And the idea was that as we transform operating model we’ll be able to get our blended margins to the early 30s over a period of time. So that was something that we would execute on through most of FY25 and then of course some bringing to FY26 as well. The third key sector was achieved 450 plus large enterprise scale clients. There was a big opportunity to cross sell the various features of the IPS platform. Seems to be achieved in store base.
Remember we had 16 features in our platform, Acuity rarely had about three. So created a whole custom opportunity that obviously that execution had to be started in late FY25 and really will start manifesting most of FY26 onwards. And then last but not the least, another important was in addition to 450 clients that had, they had another nearly 250 clients that were not those consolidators enterprise scale clients. And as you know the cost of servicing small clients is almost as much of servicing large clients and they don’t yield as good margins. So the idea was through FY25 and FY26 we would cut a lot of that scale opportunity customers, which I haven’t before.
Also something that we’ve executed fairly well on in FY25 from the time of our acquisition where we had 850 plus customers, now we are down to as of March 2025 out 700 odd customers. Still some ways to go in FY26, but that’s a vector that we have executed well on in FY25. So that’s the strategic pillar number two. Pillar number one, take the platform from human led to autonomous in some cases and tech led in some cases. Pillar two, get all the elements of the activity acquisition correct. Pillar three, execute on this thesis of being number one or two or three in each of our testing features even as we are executing on building the platform that requires us to establish leadership in each of the features and prove that leadership through ambitious rankings.
We are typically focused on class, black book, evalist and betters. And so I think we’ve made significant progress along those lines in FY25. And I will talk to that third pillar. The first pillar obviously is the growth strategy. On the growth strategy, I just want to clarify. There are essentially three market segments that we are operating in. Large health systems, mid sized health systems and independent physician groups that could be private equity owned or sometimes they are public companies as well as. And even though we have differentiated go to market strategy large health systems, the binary is still very very rigid on point solutions.
So there are strategies. We will continue to orchestrate a land and expand strategy. We will establish leadership in our features and sell those features as the point of onslaught to those large health systems and then expand from that. In mid sized health systems. I think we’re already starting to see a graduation of from point solution buying to platform buying. So there our strategy will be Google market will be much more platform oriented. And then very interestingly in the platforms or even publicly traded platforms, we’re starting to see more and more appetite for the platform buying.
So just keep this in mind. Two of the three market segments, mid sight health systems and independent physician groups, we will see more and more of a platform driven go to market in large health crystals. We’ll still have a more land and expand type of strategy. That’s our fourth key strategic pillar which is our growth strategy. And the fifth one is that slowly but surely we will continue to move more and more to an outcome company. Now this is a really important area because most of the healthcare IT ecosystem that exists in the US has been in the world of we will provide you a piece of technology and leave you with the challenge of figuring out how to deliver economic or clinical value for it.
We believe that one of our hopes going forward. Based on the history of our company over the last 18 years and the genetics that we have built, with a little bit of fine tuning, we will be able to be in the business of taking more and more accountability for driving outcomes for our platform rather than just providing them the widgets. And that is a gene pool that we are now starting to hone and build. And that becomes the fifth key strategic pillar of our execution approach. And so I wanted to lay this out for you all because every earnings call having now referred to these five pillars of execution so that we can relate to them and understand what is working.
And if you have to visit from any of them, we will talk about that. So with that said, let me just quickly talk about our execution across these five pillars and put it in the context of numbers very quickly. First, of course, let’s just go to our feature cluster platform view and I’m happy to note that we actually made significant progress in that transformation from both human led to tech led, but in some cases tech led to autonomous gen AI enabled. If you look at the chart that’s flashing, you’ll see Scribble is now we have a variant of Scribble called Scribble now, which is a fully autonomous ambient listing Scribble technology built on GPT4 and in the market now with Skrillnow.
We now have the most comprehensive range of clinical documentation solutions for physicians in the us Meeting physicians where they are in their journey of using clinical documentation all the way from transcription decision oriented transcription solutions to fully autonomous ambient listing technology. We also made significant GENAID progress in our coding feature, which is a very large feature in our platform. We already have the autonomous coding figured out for at least two very significant specialties, medical specialties, and we’ll continue to progress that rapidly having figured out how that technology works and having the access to mature that technology based on all the data and all the problems.
So significant progress towards autonomy in coding, massive progress towards autonomy. And another very important feature which is patient credential clearance, which is essentially built around prior authorization. Many of you must have heard prior authorization for care that patients need is a very big challenge in the us Often prior to lack of prior authorization leads to care not being allowed for patients, critical care not being allowed in some cases for patients. And so it’s a huge burden for physicians to prove that the care that they are about to provide to the patient or recommend to the patients is actually needed for their condition.
So we’ve actually built a very exciting autonomous technology called EVE that actually addresses that problem. And then there’s been a whole bunch of progress from a DAI perspective in certain features of our revenue cycle feature cluster within our platform where a lot of progress has been made in the denial prediction and prevention dimension because revenue cycle is garbage in, garbage out. The more we prevent at the front end, the less work we have to do at the back end. And our denial prevention strategy is a very very important part of that. And then of course we’ve also been able to make some progress from our technology perspective, gen AI perspective in predicting patient behavior and differentially nudging patients both to improve clinical outcomes and potential outcomes.
So that’s been some of the progress on that key vector of moving from human led to both tech led and autonomous enabled 2 gen AI. What does it do for us? It does two things. It fundamentally improves the scalability of our solution. It improves the velocity at which we would scale. Because imagine a platform deal that we would do in a pure human oriented model it might take us six months to implement the platform. In an AI oriented model we might be able to implement the platform in three months across all the features. So scalability velocity and then of course margins continue to improve as a result of more and more gap deployment.
Health trend is progress in that strategic vector. I will talk about our progress in the other four strategic vectors more in the context of our actual financial numbers. So let me provide a high level overview of our financial performance for the fiscal quarter four or fiscal year FY25. I have to say that I think we’ve had a tremendous performance quarter that gives us a lot of excitement going into the future. For fiscal quarter four we’re happy to report a 17% year on year growth in revenue coming in at about 724 crore rupees. In addition to this performance, it’s important to Note that this 17% growth is in spite of the headwind of cutting the acuity customer base.
Remember we’ve taken back from 850 total customers to now 700 odd. Also it also withstands the loss in revenue per customer that happens as we transform the activity margins because obviously we incentivize customers to transform the model From a pure US based TechCount model to a tech led, in some cases a autonomous tech model supplemented by offshore human capital India. So in spite of those headwinds in revenue, 17% year on year revenue growth. Absolutely tremendous execution of margins. Our EBITDA came at 226 crores for Q4 fiscal 25 which represents a 68% year on year growth from Q4 or FY24.
So tremendous execution on the margins I will say and Nity will perhaps provide a bit more details if needed. Some There are some one off in the FY Q4 24 numbers that were deflating the margin. So that has partly contributed to the 68% but irrespective a very tremendous growth. And then of course that resulted in a massive bad growth about 133%. So tremendous execution across the top line and the bottom line in Q4 leading to a successful quarter. EBITDA margins have gone from the 24% pro forma that we had in FY24 to now Q4. FY25 has come in a little off of 31% EBITDA.
So I think that’s been a tremendous progress in this quarter as well as we stay on track for margin optimization endeavors that we had spoken about when we started introducing the business to you. So this starts to speak to excellence, which is the security acquisition, the second strategic vector. We are fully integrated as we talk on acuity. The margin optimization is in full flow which has led to this 31% EBITDA in FY25 Q4. And of course there’s a little bit more to come in FY26. I will talk about the cross sell. I’m happy to report that we’ve been able to cross sell features of the IP platform to four significantly large health system customers in the Acadian store base.
We’re not at liberty to reveal their names, but super excited to see that early green shoots of cross sell play out. And then I already said the right sizing of their customers has happened from total customer base of 850 to 700. So that second strategic vector, its execution strongly reflected in our numbers. One other thing I want to say about our Q4 numbers is I said it on our last call as well. In our business, due to quarterly seasonality, typically it’s not necessarily a good idea to look at Q1Q growth, but I realize that you guys are used to looking at Q1Q growth in addition to year on year growth.
So we put those numbers here as well. If you look at the graph Saraj quickly and the Q1Q growth on a quarter basis for FY25 is 10% Q1Q on revenue, nearly 13% Q1Q on EBITDA and 14% Q1 Q1 CAT margin. So not only a strong quarter of execution from a year on year perspective, but a very strong quarter of execution from a consecutive quarter basis as well. All of this, if you Google customer slide is essentially being labeled with strong transformation of margins in the legacy customer base but then also some tremendous customer additions that we had that we are happy to announce and I’ll put them in perspective of our market segments.
The first one I’d like to talk about is Skylake. This falls into that mid sized health system marketplace. When I spoke about our growth strategy pillar, I spoke about the market segment and I said mid sized health systems. Mid sized health systems are showing more and more of a proclivity to the platform construct and so happy to report that Skybase has actually committed to the entire its care enablement platform for that employee solution base. Super exciting. It’s a mid sized system in the Pacific Northwest. Our definition of a mid size health system is one that has revenues south of about a billion dollars. So $253 hundred million to billion dollar health system range in how we think about these mid size health systems.
Also excited about Skylakes is if you Remember we have 16 features that enable the physician business but we were also being pulled by the health system the hospital ownerships of these solution businesses in the market segment of the health system. Saying why don’t you apply the same core versus sure discipline to our hospital business as well. And we were just sort of dabbling in it. But the way IPS typically works is when we want to really launch in a particular space, we like to take on ownership of the function end to end. So it’s highly super exciting.
They also given us ovision of their entire hospital revenue cycle. Now you’ll see that in the hospital RCM space there are many vendors that do one solution even within RCM, whether it’s just between AR follow up or patient AR. With SkyLakes we have responsibility for an entire hospital lifecycle in addition to the manifest of the full care enablement platform in their employees position base. Important to note that if they’re able to manifest and grow this business effectively in the hospital RCM space that actually expands that $225 billion dam by another maybe 50 odd billion which is the hospital RCM dam.
So super excited about silhe reflects that strategy that we have around mid size health systems for clarity to buy more and more of platform use. Second of Saudi Western Washington Medical Group, already an RCM customer of ours, Independent Medical Group in the Pacific Northwest also has embraced the full manifest of the its care enablement platform. Again well in sync with our strategy to segue into the market showing proclivity to platform constructs. Mid sized health systems and independent medical groups. Private equity or publicly traded Western Washington fine example of that third super exciting wing platform there.
Another private equity owned dermatology platform India number two largest platform for dermatology in America also with an RCN customer visually. And now they embrace the full depth of the ICARE platform that will be implemented there. A very important win. Also Ortho New York that really starts to put up in the orthopedic specialty which is also going to massive consolidation and they’ve embraced our memory cycle platform and are also doing some innovative things there without inductation engagement feature of our platform. And then last but not the least a massive, massive win for us with GI Alliance.
This is a $2.5 billion plus company that employs thousand plus digestive health physicians. Again 2.5 billion plus in revenue. The world’s largest digestive health physician roll up. They were recently acquired by Carmen Health which is a Fortune 50 company for a cash consideration of nearly $3.9 billion. With that acquisition, Parmel has also announced that they will be expanding BI Alliance’s capabilities into other specialties like urology. And the idea there really is for us to become the de facto RCM execution platform for all of their endeavors across all of their specialties. So really, really marquee and expand.
I think some of these that again talk to the strategy that we have for growth where mid sized systems and independent groups are showing more and more capability to buy platform. Large health systems still continue to show more point solutions which is why I was happy to report like I was saying earlier, that 4 of our customer links have been really able to cross sell our RTS platform to four of your two customers. Last but not the least in my remarks is if you go to the execution that we’re having around being a leader in each of the future versus building the whole platform and that really happy to announce that BlackBook has recognized us.
BlackBook has recognized us as the number one player in AI driven RCN solutions, data documents issue and medical coding. And then in addition to that class continues to recognize us as the number one player in transcription. But they also indicated that they would collapse all of the variants of clinical documentation into one category. And if they did that, I think we emerged naturally as one of the leaders in that space. And then of course from a hygiene perspective we continue to advance all our security related control through the High Trust RP certification. So all in all a very very exciting and successful execution quarter that I think encapsulates all the hard work that the teams have been doing at a very high level.
I will touch upon FY25 before I turn over to Nithya. FY25 if you could go to that last slide. FY25 a year of strong execution, 47% year on year growth in revenue that led to nearly 50% year on year growth in EBITDA. Revenue came over 2,664 crores resulting in a 791 odd crore EBITDA that then created a 486 crore PAT which was 31.2% year on year growth for FY25. Obviously the PAT growth is a little muted relative to the EBITDA growth because of two reasons. One is the interest that came on the debt that they’ve taken on required acuity and secondly the amortization of the intangible assets that came with the acuity transaction.
So again to sum it up, strong quarter of execution FY25Q4 resulting in a pretty strong year good execution across each of those five strategic pillars that we will keep talking about. With that I will turn it over to Vidya. I have one other remark to make after Ritya finishes right at the end but with that,
Nithya Balasubramanian — Chief Financial Officer
thank you Sachin Saran. If we can flash slide 15. So. We have I think Satin provided you enough color on revenue so I’ll talk. A little bit about the expenses. If you look at I’ll start with Q4 commentary and then give you a. Bit more color on the figure as well. If you look at employee benefit expenses which tends to be our expense items, you would actually realize that we have been able to reduce that significantly both. Year on year as well as quarter on quarter. It is compared to Q3 this number was 57.3% as a percentage of revenue from where we have been able to bring it down to 51.8%. As we compare it to Q4 of last year that number was 60.8%. We have actually been able to grow revenues despite reduction in headcount. Headcount you will note that we were at 13,241 at the end of last year. From there in Q4FY25 we’ve ended the year at 12,661. If you look at adjusted EBITDA which excludes ESOP cost that still at 32.8% for the quarter EBITDA as Cecil had mentioned still at 31.2% compared with in Q3 a 70bps margin expansion.
As you compare it to Q4 of last year that number was 21.7%. The significant expansion compared to last year it’s been driven by two three different factors. One was of course there was a little bit of a one off in the base which was towards the integration and acquisition cost when we were acquiring equity last year. But even excluding for that margins have expanded very significantly driven by one realization of cost in the administrative expenses but more importantly the transformation of Activity’s business model where we have been able to do both the combination of deployment of IPS’s tech as well as changing the midterm onshore to offshore.
And of course there’s been a ramp. Up of the new customers as well. Looking at finance cost, we had about 20 crores of finance costs in the quarter and DNA was a 28 crore. Year on year you’ll actually see a meaningful reduction in finance cost and that has been driven by our strong cash generation and therefore our ability to pay down debt. If you look at ETR for the quarter it was about 18% but for the full year it was about 19%. This took back to 148 crores or 20.4% in terms of margins. The ETR for the full year as I mentioned before was 19%. The teams expect ETR for the next year to be around 21 to 22% because we will be using some tax breaks on one of our SAP units.
A few more commentary on the full year numbers. The full year revenue growth as you will note is 26.5%. But do remember that the base FY24 includes five months of equity. We ended the year with an EBITDA of 29.7%. And you will note that the pro forma EBITDA of IKS and Equity combined for 12 months in FY24 was so a significant margin expansion compared to FY24. Finance cost has increased to 89 crores to the full year. But this is due to the full year impact of the debt that we have accumulated. When we acquired assets earlier PAT was 18.2% as against the 20.4% last year.
Please note that the pro forma pat was actually 12%. So again comparing like to like has also expanded quite significantly. Sarash, if you can go to the cash flow slide so our cash flow remains very very healthy. If you look at the operating cash flow we ended the year at 434 crores. If you look at free cash flow it ended at 275crores both of which represent very very strong growth year on year. This is despite 139 crore performance guarantee that we had extended to Palomar Health, one of the marquee clients. We had discussed this with you in the last call.
If you look at our net debt position again, we have been able to pare it down quite significantly. If you look at FY24, we ended. The year at 850 crores. From there we have been able to bring it down to 560 crores again despite performance guarantee we have extended if. You can go back one slide up. So EPS for the full year was 29 rupees and return on equity remains healthy at 27.2%. The gap between FY24 and FY20 is 25 is largely explained by the fact that some of our strategic investments were revalued at a higher number. Therefore the equity expanded without any commensurate expansion. I will stop my remarks here and. Hand it over to Sachin.
Sachin Gupta — Chief Executive Officer, Whole Time Director
Thank you Riddhya. I appreciate all the details. So as you saw a very strong quarter of execution and really a strong fiscal year of execution that has now resulted in us being one platform that is ready to execute in this mission of creating pretty much what is a new market. And you can move to slide 5 for myself comments I want to end with saying that it’s really important to also recognize what’s happening in the market. In addition to talking through the numbers, my other two objectives from this call was to lay out the five pillars of our execution strategy formula so that we can continue to refer to those pillars and build a consistency in the dialogue.
And the second was this whole conversation around making sure we calibrate on what’s happening in our market from a competitive perspective. Just to put it in perspective, there’s been $45 billion of equity investment from 2021 to 2024 in this larger health care IT landscape, this $222 billion TAM, or now the $275 billion TAM with acute RCN coming in as well as the $35 to $40 billion TAM that’s already outsourced, that’s growing at 12%. Important to note, what are the key characteristics of this investment of $35 billion? Most of it has gone towards what I call Point Solution companies, a lot of it specifically within Point Solutions revenue cycle Point Solutions.
So when you look at the big boy R1 that was taken private from being public by CDNR and Travel Book for a valuation of $9 billion even when they were barely making any net income, $3 million net income, or when you look at some of the marquee private equity Indian arms of market global directly from investing in more India based staff RCM vendors that are trying to graduate and go upstream in working directly healthcare providers in the US for example the GEBs, DNA accessories and infinixes of the world or the UGs of the world. Or when you start looking at the US based venture capital type, you start to think about the money raised by an abridge, which as you know is actually one of our strategic investments as well.
We had invested just about 18 months ago perhaps at a pre money valuation of maybe $100 million and they just raised $400 million at a valuation of 2.75 billion. So within 18 months the valuation has gone from 100 million to 2.75 billion. Of course they don’t yet make money and they’re predominantly upon solution vendors, specifically in the ambient Genai clinical documentation space or Suki for that matter where Zoom made a strategic investment there also a form solution for clinical documentation of all that matter, an innovator where they recently raised a big chunk of capital at the valuation of 3.5 billion.
All this to say that there’s a lot of investment happening in this space. And in my mind that investment signals three things. First, it is an imminent recognition of the massive opportunity in this space. So that is really important. The type of players that are investing and the quantum of capital that is being invested is massive. Second, naturally that’s going to create competitive intensity. And so yes, we should expect significant competitive intensity backed by lot of capital in these spaces. But what’s exciting for us is really, if you think about it, most of these companies are still very point solution oriented.
Especially after some of our wins of this quarter and last quarter, we feel like our strategy of where there will be recognition by the buyers of the value of the whole being greater than the sum of the individual parts and the graduation towards the platform approach, I think is going to be a very, very important cornerstone of our strategy. And hopefully if we can translate that to also really making sure we deliver outcomes on the platform, it starts to create a mode that in spite of all this capital going into these point solution companies, we will be able to withstand the competitive intensity that is coming our way without compromising margins.
And then last but not the least humbly, I want us to think a little bit about the capital efficiency with which we are building the business. As you can see, so much capital is going into each of these point solution companies and here we are building the full breadth of the platform essentially through the internal accruals and the power of our own organic balance sheet. So I wanted to bring that to conclusion, in conclusion of my remarks. Again, a strong order of execution. Hopefully through this dialogue we’ll continue to calibrate more and more on the strategic execution pillars and continue to report our performance against them.
One last remark. Obviously given that this is still a market that is being discovered platform level, I do want to highlight that we’re not yet in our market at the level of maturity where you can model out exactly what the growth curve will look like. And hence I’m humbling in saying, look, I believe we will grow faster than the TAM is growing. The TAM is growing, the outsourced TAM is growing at 12%. I do believe fundamentally, if you model about in the long term, we will continue to grow faster than the 12% and our earnings growth will continue to be faster than the revenue growth.
But it’s impossible for me to provide any guidance as it relates to what will happen next quarter and next quarter after that. So I know many of you are anxious for that. Many of you are wondering if it was 225 crore of EBITDA in Q4, FY25, how much can we lock in from that for FY26? I just want to highlight that it’s not a mature enough market that I can give you that type of guidance. Which is why I, I will continue to refrain from giving guidance about future performance. And if you could please keep that in mind as you ask questions with that, thank you for your time and attention.
I will turn it back to the operator for questions.
Questions and Answers:
operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and Q. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of ruchi Mukita from ICICI securities Ltd. Please go ahead. Ruchi, if you can please unmute your line and ask your question.
Since there is no response, we move on to our next question. This is from the line of Sameer Shah from Valuequest. Please go ahead.
Sameer Shah
This Congress has great numbers. First question is if you would like to address the United Healthcare news flow and the impact that it would have on our company. And second, you know these large deals that we have signed, typically when do they, when do they, what is the kind of ramp up time that they would take.
Sachin Gupta
Right. Thank you for the question and your compliments. Appreciate it. First, United Healthcare. Look guys, difficult time for them. They have been hammered with three macro issues that have hit themselves back to back, right? One of course is the HTC version 28 that is compressing their margins on the Medicare Advantage contracts that they have, which is a big part of their business.
Second, as you know, the CEO of their insurance business got saturated just a few months ago. And third, they have this big third issue with Change Healthcare. So I will tell you that there are not many other companies in the world that can withstand three such back to back events that come at them in such dramatic fashion. Having said that, they are still the world’s largest commercial health insurer. They I think have something like 60 million American lives insured. Just to put that in perspective. And you know, the reality is its relationship with United healthcare is through OptumHealth, which is about $110 billion subsidiary of UnitedHealthcare, which employs 50,000 plus physicians, the world’s largest physician employer.
And we obviously are building our care enablement platform for Optum Health. And remember, our care enablement platform works on the non discretionary spend on the OpEx. And so our platform is all about creating more financial value from the OPEX that they’re already recurring. So if you look at what’s happening with us over the last 18 months where they’ve been hit by these three dramatic events, I think our business with optimal health has grown at least 25, 30% if not more over that duration. So without going into any speculative thinking about what might happen, their CEOs choose.
Look, the business isn’t going anywhere. It’s the world’s largest commercial health insurer. It has too many lives and anything going to go wrong. It’s not like they don’t make money anymore. They make money, but they make less money than they used to because of industry headwinds that they are facing. And so there has been a big valuation decline. And in a country like America, big valuation decline means CEOs have to take the hit. And so that’s really what is happening. Our relationship has only grown over this period and we have more reason to believe based on the nature of our relationship that this headwind that we are facing create anything but pain for us.
Now again, I don’t want to be speculative, but I will tell you that from everything I am able to see, rationally taking the emotion out, the optimal health relationship looks very, very strong for us going forward. The same question you Have Sameer is as it relates to the ramp up of the new strategic customer that we assign. I will say typically what happens is full platform execution takes somewhere between four to seven months, give or take, depending on the size of the customer. And if it is one feature that they are implementing, typically that can come through in about three to four months.
So that is the way to think about how these ramp ups happen. And you know, obviously depending on which feature it is, how much tech intervention there is or not, some of this. Timeline will be accelerated or not. So generally those are sort of good benchmarks to keep in mind as it relates to ramp science due to implementations.
Sameer Shah
Super, thanks. I’ll join the Q. Thank you.
operator
Thank you. The next question comes from the line of Sri Watson Ramachandran from Avendis Park. Please go ahead.
Srivathsan Ramachandran
You mentioned about the changes that are. Happening in the industry with some of the private equity capital and changes, right? This coupled with AI, how do you see. Because the biggest difference from a business. Model point of view is the outcome. Output based pricing model you’ve had. Do you see customers or competition kind of changing this, offering other options which the benefits of technology and technology improvement stays with the clients. Any big market changes you change because. Of these two changes that’s happening in the market.
Sachin Gupta
So thank you for your question, I appreciate it. Look, as I was saying, when there is this much capital being put behind point solutions and there is a democratization and acceleration of the development cycles due to something like AI, obviously at a point solution level, the competitive intensity is going to go up. Which is why if you remember, one of our key pillars of our strategy is that we want to continue to strive to be number one or two or three in each of our features while we are the only company in the world building the full breadth of the platform.
And I think that really is addressing that issue. Right? The reality is that Gen AI is commoditizing. The rapid advancement of these features is a reality. Our alpha from that perspective is deep customer relationships that give us access to data and context to mature the Genai faster than some of these new competitors even no matter how much capital they have. That continues to be an advantage for us is the think about it right now, GI Alliance. It’s the world’s largest installation of GI doctors by a long way. The number two player is probably not more than 300 or 350 doctors.
These guys have more than thousand doctors. Now think about our ability to build the care enablement platform for GI better than no matter anybody else that comes in with A more large amounts of capital, we naturally have an advantage whether it is at a feature level for the platform level. So I think absolutely we should expect more competitive intensity. We should expect more players at a point solution level. Our strategy to win at the point solution level is the deep customer relationships we already have that allow us to mature the data and our strategy obviously largest strategy to win against the point solution members is this whole graduation towards platform buying behavior.
Having said that, I think we live in a very, very disruptive world. And so one of our biggest opportunities is to stay extremely alert from a competitive perspective and track the implications of competition in the marketplace day to day.
Srivathsan Ramachandran
Sure. Thanks. I just have one quick question. The runoff of revenues on the equity. Revenue we have more or less done. Goes to the bottom of it. I just want to get it.
Sachin Gupta
No, like I said when I was articulating the sub vectors of that faculty strategic pillar that that tail cutting will continue through FY25 and the larger part of FY26. And so it is not done yet. And we will see because remember I said that we went from 850 total customers to 700. Our end objective is to be ending up somewhere between the 550 to 600 range. And so there’s still some work to be done and there’s still some customers left to be transformed from a US based headcount operating model to a tech led offshore headcount enabled model.
So those two things will continue to work on basics.
Srivathsan Ramachandran
Thank you.
operator
The next question comes from the line of Nilesh Jain from Astute Investment Management. Please go ahead.
Nilesh Jain
Hi, thank you for the opportunity. Great set of numbers. My first question is I wanted to understand your strategy on your top 10 clients. If you look at your top five clients they do average revenue of around $15 million. Want to understand the potential for those top five clients and you know, what is our strategy to further cross sell or increase our wallet share there and then on the next top five clients wherein we do around 8 million average revenue. So how do we plan to grow these clients?
Sachin Gupta
Okay, great. Thank you for the question, Nilesh. So the reality, Nilesh, if you see is when you take our top five clients or top 10 clients, all of our top 10 clients have a valid possibility of at least $100 million a year ACV with us. So for none of our top 10 clients today we can say that we are anywhere close to the full wallet potential that they have. Our largest customer with a wallet potential is north of $300 million. So the simple math, whether you look at top five or top 10 is to continue to manifest the land and expand play that we have with them.
And the fact that the top five and the top 10 are growing is actually demonstrating the fact that that land and expand play is continuing to work out. Now the other thing that’s happening in that mix is we are now starting because we are getting mid sized customer and independent medical groups that are manifesting the full platform. That list of top five or top ten is rapidly changing. And that’s why you see some of those vintages of those customers changing in the deck is that there are some new customers coming in with a full platform manifest that they want to become a top 10.
And so I think the software top 10 is still a little bit immature. The way to think about it is we are nowhere close to full wallet share in any of our top 10 customers. Some we have more headroom, some we have lesser headroom, but there’s headroom across all. And then the top five top ten list, hopefully if we execute well on our strategic vectors, is actually likely going to change over the next say two, three years. Because if we keep lending more and more platform customers, they naturally graduate to that top 10 that’s faster than the other customers.
Nilesh Jain
Okay, given some, you know, it’s dynamic. If you acquire, you might like last year you acquired Panama type, you know, that would change the top 10 clients. You know, given the. So what, what how should we look at the growth on that side for your top 10 clients and then obviously on the the rest of the clients obviously depending how you cross sell them.
Sachin Gupta
It’S very hard for me to give you a way to model that. What I would model is every year 80% plus of our growth will come through expansion of existing customers and under 20% will come through the addition of new customers. That I can tell you. But it’s very hard for me right now in this relatively immature marketplace. There are so many dynamics. Graduation from point solution behavior to platform behavior in certain market segments, full adoption of features by large health systems that we have traditionally not seen. It’s very hard for me to give you how to model our top five top 10.
I would just say 80% growth, 80% plus from existing customer expansion and under 20% for new customer expansion.
Nilesh Jain
Okay, my second question is we have seen a good amount of reduction in your employee count by almost 400, 450 employees on the previous quarter. So what is driving this efficiency? And you know, how do we see the employee count grow for the next FY26?
Sachin Gupta
So the way to think about it is I’ll ask her to tell the specifics of it. Where for FY20 to 24 our revenue grew significantly faster than our headcount. That nonlinearity demonstrates the power of our technology LED disruption. And there are two vectors in our technology LED disruption. Where we go human led to tech led which is incremental reduction of headcount for the same solution. And then there’s human led to fully autonomous where the disruption of headcount is significant. And that is also being manifested predominantly in the acuity customer base where we dramatically transformed equity margins from where we had acquired them.
So that’s the way to think about it. We will continue to drive non linearity. We have a member now, I think what 460 odd technologists that are racing a lot of this supply chain technology. We have a genius of excellence that is producing all of this technology. And so that trend is going to continue to happen. If you have that.
Nithya Balasubramanian
So the employee comes reduction you’re seeing English is predominantly driven by the fact. That we have been able to deploy. Both ICA technology as well as the transition between onshore and offshore. If you look at Legacy iCare, what we have been able to demonstrate in the past is non linearity between revenue and employee count growth. If you go back and look at FY20 through 24, our revenue grew about 25% and in the same time frame our employee count grew only 10%. So as we test technology and I. Think Sachin mentioned several times before, it. Remains a very high priority for us and we continue investing there and therefore we hope to do as much or better in terms of our ability to. Drive faster revenue growth with lower employee count growth in the future as well.
Nilesh Jain
All right, just last question or broader question on the industry. Like you mentioned, majority of the private equity players have been acquiring point solution based companies and focusing on the RCM side. So while you know these companies have not been able to make profit, as you know ikiss has been able to generate, so what, what do you think why these companies have been able to, you know, have been facing such challenges? Given you are the leader making top 30% margins and they have been not able to even make double digits, what do you think is the challenge they are facing and what we are not facing?
Sachin Gupta
So I will try to keep saying, commenting on what they are not doing right, I can tell you what we are trying to do and what we are trying to do is I think this is a business model where our pricing was outcome based. We get paid as A percentage of the customer’s revenue. And so when you combine that with our ability, demonstrated ability, drive nonlinearity by reducing the headcount required for a particular task at the unit task level, that naturally creates a margin accretive business model in which the customer wins because we’re actually collecting more and more for them and we win because we are able to collect that at a lower cost in case a question was asked focusing on that.
So it’s based on the inherent structure of the business model that we built from the get go that perhaps we are able to drive margin superiority. And that is also one of the other reasons why I said that we will continue to make that outcomes orientation one of the five strategic pillars that we will execute on now, not just for rtm but for the entire platform. Because I actually fundamentally believe when I talk to buyers across the country finding that there is a fatigue emerging in buyers of buying next best AI point solution and then figuring out whether it delivers value or not.
And if they find models where their outcomes are aligned to the right there outcomes, I think there is a different level of proximity to that construct. So again, I will refrain from commenting on what they are not doing right because you know, I’m sure they’re very smart comedians will figure it out. But my best guess is that the fundamental structure of our business model and our execution around it is what has given our margin superiority.
Nilesh Jain
Okay, thank you so much and all the best. I’ll join back in the queue.
Sachin Gupta
Thank you.
operator
Thank you. The next question comes from the line of seema Nayak from ICICI securities Ltd. Please go ahead.
Seema Nayak
Your question is more towards the sector. So what percentage of our revenue is. From Medicaid and how does the shift. How does the reduction in the Medicaid spending impact the provider ecosystem?
Sachin Gupta
Great question. Thank you. So you know, please understand that our customers tend to have a fairly healthy payer mix. Depending on specialty, some of them have no Medicaid at all. And depending on specialty they do have Medicaid. And so I don’t know that I can give you the Medicaid percentage of our revenue across our entire customer base. If I were to hazard a guess, it’s probably less than 10% across our entire customer base. Having said that, again, I keep reiterating this. Look, we are in the non discretionary OPEX business. So when reinvestment per unit of care is cut, which could be first of all to understand the Medicaid policy, they are not cutting the.
Let’s say that today the government reimburses hundred dollars per unit of care for Medicaid that grows every year based on a certain rate of inflation. What the government is saying is if it was growing at 4% a year, they are going to reduce that growth from 4% to 2%. So first of all, on an absolute basis that the reimbursement per unit of care is still going to grow, the growth will contract. And second, when the reimbursement per unit of care is not growing as fast and their costs are still growing dramatically, it actually puts more pressure on the customers to adopt our model further.
So from my perspective, I don’t look at the Medicare growth contraction, not Medicaid contraction, but the Medicaid growth contraction. I don’t look at it as a headwind for us. And of course it’s a small percentage of our overall payer mix. But nevertheless, tomorrow the same phenomena is being faced in Medicare physician fee schedules as well. And in my opinion that’s a imminent tailwind. Yeah, thanks.
Seema Nayak
And one more question. Recently there is a news that ECMA. Is leaving the US Healthcare race. So does that affect us in any view?
Sachin Gupta
I’m sorry, I couldn’t catch that question, ma’ am. Can you, can you repeat that slowly? Sorry.
Seema Nayak
So ACNA is going to leave the US healthcare insurance space. So does that affect us?
Sachin Gupta
No, not really.
Seema Nayak
Okay, thanks. I’ll get that in the queue.
operator
Thank you. The next question comes from the line of Chetan Shah from Jeet Capital. Please go ahead.
Chetan Shah
Hi, thank you for Cheetah team and congratulations for a great set of performance over the years. Just a quick question. In your opening remark you mentioned about intensifying competitive scenario. And also in one of the questions you said that it is still a, still a premature stage because the competition is in an investment mode and they are not exactly providing the full fledged service the way what we are doing the business. So my, my question is how do you see this, this thing evolving over a period of time and in terms of business model and margin, how will this impact us? That is the first part of question and second part of question is the kind of cash flow what we generate.
Do we have any plan apart from reducing our debt from the books and in terms of any kind of inorganic small or large opportunities, something what we did in last six to eight quarters. These are the two broad questions. Thank you so much and once again, conversation.
Sachin Gupta
Thank you for your kind remarks and thank you for the question. See look in terms of what the future might hold in terms of growth of revenue and margins. Like I was saying earlier sir, because of the relative immaturity of this market. Remember, only 35 odd billion of now over $270 billion TAM is outsourced so far.
So it’s highly mature, it’s very fragmented. Competitive intensity is increasing. So it’s very hard for me to hazard a guess by which you can model. But I understand you guys have to model. So which is why I always maintain, look, if the outsourced stand is growing at 12%, my point is if I’m growing faster than 12%, I’m gaining market share. If I’m going slower than 12%, I’m losing market share. All I’m able to say is if the outsourced stamp is going at 12%, I think we will grow faster than that outsourced stamp. Now that growth accelerates to 15% and we gain market share, it will be faster than 15.
If that growth deaccelerates, which I don’t see deaccelerating, it might be lower. And then the other thing I want to tell you is based on everything I am seeing, I have confidence that for the next seven years our margin growth will be faster than that revenue growth that I am talking about. So our focus is on gaining market share versus trying to predict the exact trajectory of growth. And our focus is on continuing to prove the superiority of our model by having industry leading margins that continue to grow faster than the revenue growth. So we’re trying to keep our team off that.
Sir, very hard to tell you what the revenue growth and profit growth will exactly look like. That’s number one on cash flows. Great question. Look, I think if you see our 18 years of history, we are not a natural acquirer type of company. We are a very organic growth based company. We did a very significant acquisition in acuity. We have taken a good 18 months to digest, integrate. That’s why we laid out the four key vectors within acuity that we are executing on. We have perhaps complete execution of two of the four vectors. Two are still ongoing.
I think our stated strategy is not too quiet. Our stated strategy is to go organically. We might have some uses of capital periodically in these type of unique outcome orientation deals where we might be able to participate in the outcomes that we create for our customers, thereby demonstrating skill in the game and driving that type of platform behavior. So those might be smaller uses of cash that are typically large acquisitions. Also, just genetically, our leadership team is not very comfortable with debt. Even today our debt is, I don’t know, 0.6 times, something like that EBITDA and we would like to operate conservatively in a manner that eventually there is little to no leverage in the business.
So stated strategy, acquisition oriented, never say never. But there might be some use of capital in outcome oriented deal with customers.
Chetan Shah
Thank you so much Sachin for this. I’ll come back in the queue. Thank you so much.
Sachin Gupta
Thank you.
operator
Thank you. The next question is from the line on LA chain from Asuit Investment Management. Please go ahead.
Nilesh Jain
So you know, like last year we did Paloma type of deal wherein we made an upfront amount. Are we looking for any such more type of deals for FY26 or you know, FY27 as well?
Sachin Gupta
Great question. Thank you for the question. If you think about the Paloma deal, shortly after the Palomar deal we did another deal that I just announced called Skylakes which is in that mid sized health system segment. And that Palomar deal, by upfronting the intensive, we created a precedent of a large mid sized health system embracing the full platform which has already paid dividends not only in Talamar but now paying dividends in the construct of Skylake as well. Because they got the confidence that another peer health system was able to embrace the full platform successfully. And of course in Skylix we did not have to incentivize them with any sort of outcome orientation.
So Nish, I think the short answer is in each of these market segments, smartly and strategically, we might do one or two example deals that might play out over FY26 and FY27, but it is not the way we are going to continue. So yes, it’s possible that there might be two, three more deals for different market segments that might emerge over the next 12 to 18 months. But we feel very confident about our strategy. And the other thing I want to lay out is we are very, very disciplined about tracking our return on capital in scenarios like that.
And so not only will those deals obviously create traditional margins by the full manifest of our platform, but but we are very clear that to the extent there has been capital deployed there to incent those deals for the creation of those deals, we will be religiously tracking our return on capital on that as well. So in the end our simple thesis is we produce superior return on capital for our shareholders or we give them the capital back.
Nilesh Jain
All right, all right. Just bookkeeping question for Nitya. The on the balance sheet, the other financial asset has gone up from you know, 21 crores to almost 111 crores. What exactly would be that?
Nithya Balasubramanian
Other financial assets, the Palomar upfront guarantee that we had Paid out, that is. Booked in other financial assets.
Nilesh Jain
Okay, sure. Thank you.
operator
Thank you. We have the next question from the line of Siddharth Mishra from Fidelity International. Please go ahead.
Siddharth Misra
Yeah, hi. I had just one question. Could you talk about your pipeline and the details around the pipeline?
Sachin Gupta
Hello, can you hear us?
Siddharth Misra
Yeah, I can hear you.
Sachin Gupta
Hi, can you hear me? Yeah. So I think traditionally. Thank you for the questions. Traditionally we haven’t published our pipeline. Of the details I can say confidently that when we look at all of these three market segments that we are focused on the mid sized health systems, the large health systems and the independent medical groups that might be single specialty or multi specialty, might be publicly traded or private equity owned. We are obviously tracking pipeline by each of those market segments and the pipeline seems to suggest that we are at an all time high in terms of where the pipeline stands.
Now I will say that the buying cycles are still a little immature. So I’m not in a position to predict the conversion rate. The reason I’m not publishing the pipeline is because I see so much immaturity still in the buying behavior in the conversion cycle. And, and so as we start to get data that I think starts to make a little bit more sense that can allow you to model conversion timelines and rates, we’ll be able to talk a little bit more about it. But I will say that activity for us right now is at an absolute all time high.
Siddharth Misra
Okay, thank you.
operator
Thank you ladies and gentlemen. With that, we conclude the question and answer session. I now hand the conference over to Sarangsh Mundra, AVP investor relations. Please go ahead.
Saransh Mundra
Thank you everyone. Thank you for joining the call. In case of any further questions, please feel free to reach out to us. My email ID and the investor relations email ID is there on the press release and the link for the call. Thank you.
Sachin Gupta
Thank you.
Nithya Balasubramanian
Thank you.
operator
On behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.