Inventurus Knowledge Solutions Ltd Management Discussions

Company Overview

Inventurus Knowledge Solutions Limited is a leading technology- enabled healthcare solutions provider, primarily serving the US healthcare market. We offer a comprehensive care enablement platform that supports healthcare enterprises across outpatient and inpatient care settings. It is a global leader in Care Enablement, empowering healthcare organizations to deliver high-quality care efficiently and sustainably through an integrated platform that combines leading-edge technology and deep human expertise. Founded in 2006, we partner with over 700 clients, including some of the largest hospitals, health systems, and specialty groups across the United States. We serve around 18% of all US physicians and support the full patient journey from outpatient to inpatient care.

With a global workforce of over 12,000 professionals, including over 450 technologists and 2,200+ clinical staff, we deliver scalable solutions recognized for excellence in clinical documentation, medical coding, value-based care and revenue cycle management. Headquartered in Mumbai, with operations spanning the US and India and a limited presence in Canada and Australia, we are committed to relentless innovation, collaboration, and a customer-centric approach. Our mission is to enable the efficient delivery of excellent care, create transformative value, and ensure financial sustainability for our partners, delivering healthier communities, happier clinicians, and successful healthcare for all. Our solutions help clinicians and healthcare organizations reduce administrative burdens, enhance clinical outcomes, and achieve financial sustainability.

Integrated Care Enablement Solutions

Revenue Optimization Services

Our purpose-built Revenue Optimization Services reduce administrative burden, maximize revenue and enable growth at scale, while using a variable cost model. Delivered using a technology-led platform, we transform revenue cycle management, prevent denials, facilitate the patient-provider care journey and maximize contract utilization.

Clinical Support Solutions

Our Clinical Support Solutions help providers deliver better clinical outcomes, more efficient care, reduce clinician burnout and lower medical costs, resulting in improved physician and patient satisfaction, as well as increased enterprise value. All of this, while restoring the primacy of the physician-patient relationship in the exam room & beyond.

Value-Based Care

As insurance reimbursement models move towards paying for outcomes, managing population health holistically becomes more important for provider enterprises. Our value-based care solutions allow provider enterprises to succeed across the spectrum of risk by building a patient-centric, provider-led delivery model that coordinates care across continuum and delivers better clinical, operational and financial outcomes.

US Health Industry Overview

(All industry and market data in this section are based on the Zinnov Report, “Tech-enabled Solutions for U.S. Healthcare Providers: Market Overview," November 2024, commissioned by us.)

Market Size and Economic Fundamentals

The United States continues to lead the global economy, contributing 26.1% of worldwide GDP in 2023, with its economic influence projected to remain strong throughout the decade. According to the Zinnov Report, commissioned by IKS Health, the US economy is expected to reach a GDP of $33.5 Trillion by 2028, supported by a resilient per capita GDP of $80,980 in 2023. Healthcare remains a central pillar of this economic strength, with national health expenditures rising sharply to $4.2 Trillion in 2020, and projected to grow from $4.8 Trillion in 2023 to $6.2 Trillion by 2028, reflecting a 5.3% compound annual growth rate (CAGR).

This sustained growth is driven by demographic shifts, notably the expansion of the elderly population and the increasing prevalence of chronic conditions, alongside greater health insurance coverage and ongoing advances in medical technology. With healthcare spending expected to reach $7.2 Trillion by 2031, or $20,425 per capita, the sectors growing scale underscores both its economic importance and the urgent need for innovative, efficient solutions to manage costs and deliver better outcomes in a rapidly evolving landscape.

Growth Drivers and Market Opportunity Expanding Market Opportunity: The US healthcare provider solutions market represents a total addressable market of over $260 Billion, with overall industry growth projected at 7.8% annually. Within this market, the outsourcing segment is expanding even faster, with a projected CAGR of 11.7%, reflecting strong demand for scalable, efficient solutions that address rising costs and operational complexity.

Demographic and Health Trends: An aging population, increased life expectancy, and the rising prevalence of chronic diseases are fueling sustained demand for healthcare services, specialized care, and ongoing management.

Insurance Coverage and Access: The increase in health insurance coverage has led to higher patient volumes and frequent healthcare interactions, further fueling industry growth.

Socioeconomic and Policy Factors: The sector continues to adapt to the impacts of the COVID-19 pandemic, deferred care, workforce shortages, and evolving regulatory requirements, all of which shape operational priorities and investment.

Technology and Digital Transformation: The rapid adoption of digital solutions, including EHRS, AI, automation, and telehealth, is transforming care delivery, streamlining administration, and enabling providers to focus on patient-centred care, while improving efficiency and outcomes.

U.S. Health Provider Industry - Segments:

IKS Health Presence

IKS Health delivers integrated solutions across the full spectrum of the U.S. health provider segments, supporting our clients operational, clinical, and financial objectives.

• Single-Specialty Practices: Medical groups focused on specific medical areas (e.g., cardiology, dermatology, orthopedics), enabling streamlined operations and deep clinical expertise. They are traditionally physician-owned but have seen consolidation through private equity investment. This model is common in suburban and rural areas especially in specialties like dermatology (Platinum Dermatology Partners), orthopedics (OrthoNY), gastroenterology (GI Alliance) and radiology (e.g. Radiology partners).

• Multi-Specialty Practices: Medical Groups offering multiple specialties (primary care and specialties) in one location and under one organization (e.g. Privia Health) reducing patient fragmentation. They are best positioned to deliver coordinated care in a cost-effective manner. These are common in urban settings and as part of Accountable Care Organizations (ACOs) focused on value based care and can be physician-owned, health system-owned, or corporate-owned.

• Health Systems / Integrated Delivery Networks (IDNs):

Hospital-led or corporate systems which combine hospitals, outpatient centres and physician groups under centralized governance. Include large systems (e.g., Kaiser Permanente, HCA), academic medical centers and community health systems. Health systems are expanding by hospitals acquiring medical practices and payers becoming providers (e.g., Optum, CVS, Humana). Dominant in urban markets where their scale gives them advantages in payer negotiation, data integration, and population health management.

By maintaining a strong presence across these segments, supported by a global delivery model and strategic investments, IKS Health is well-positioned to capture growth opportunities and deliver sustainable value in a rapidly evolving healthcare landscape.

Regulatory and Policy Landscape

The U.S. healthcare industry operates within a highly regulated environment shaped by a complex framework of federal and state laws. Key regulations such as HIPAA, the Affordable Care Act, and the 21st Century Cures Act govern data privacy, insurance coverage, and technology adoption. Both federal and state governments play pivotal roles in cost control, quality assurance, and expanding access to care. Ongoing policy reforms continue to drive the shift toward value-based care, health equity, and greater interoperability across the healthcare system. This evolving landscape requires healthcare organizations to remain agile and compliant, as they navigate regulatory changes and pursue innovation.

Financial Overview Result of Operations

IKS Health acquired Aquity Solutions on 27th October, 2023. FY24 financials therefore include five months of Aquity while FY25 financials include the combined financials of both entities for the entire year. This context is crucial for understanding the changes in revenue, expenses, and overall financial performance between the two periods.

	FY
Particulars	2025		2024
	(Rs. Million)	Percentage of Total Income	(Rs. Million)	Percentage of Total Income
Income
Revenue from operations	26,639.94	98.56%	18,179.28	97.85%
Other income	389.98	1.44%	400.1	2.15%
Total income	27,029.92	100.00%	18,579.38	100.00%
Expenses
Changes in inventories of stock-in-trade	7.47	0.03%	7.14	0.04%
Employee benefit expenses	14,946.06	55.29%	9,618.86	51.77%
Finance cost	897.65	3.32%	600.94	3.23%
Other expenses	3,989.29	14.76%	3,350.31	18.03%
Depreciation and amortisation expenses	1,126.63	4.17%	585.45	3.15%
Total expenses	20,967.10	77.57%	14,162.70	76.23%
Profit before tax	6,062.82	22.43%	4,416.68	23.77%
Tax expenses
Current tax	1,247.55	4.62%	905.74	4.87%
Deferred tax	-45.32	-0.17%	-193.92	-1.04%
Profit for the year	4,860.59	17.98%	3,704.86	19.94%
Other comprehensive income
Items that may be reclassified to profit or loss
Gains/ (losses) on cash flow hedges (net)	-39.42	-0.15%	86.49	0.47%
Exchange differences on translation of financial statements of foreign operations	217.59	0.80%	66.9	0.36%
Income tax relating to above items	6.88	0.03%	-12.96	-0.07%
Total	185.05	0.68%	140.43	0.76%
Items that will not be reclassified to profit or loss
Re-measurement of post-employment benefit obligations	-18.15	-0.07%	-19.11	-0.10%
Changes in the fair value of equity investments at FVOCI	691.4	2.56%	1,333.98	7.18%
Income tax relating to above items	-176.69	-0.65%	-329.87	-1.78%
Total	496.56	1.84%	985.00	5.30%
Other comprehensive income for the year, net of tax	681.61	2.52%	1,125.43	6.06%
Total comprehensive income for the year	5,542.20	20.50%	4,830.29	26.00%

Drivers of Revenue Growth

Substantial expansion with existing clients, onboarding of new clients, and the full-year integration of Aquitys revenue drove the significant increase in revenue from operations. We also strategically refined Aquitys client portfolio, focusing on high-value accounts and phasing out less aligned customers to drive sustainable, long-term growth.

Other Income

Other income declined primarily due to a reduction in interest income from fixed deposits, as cash reserves were utilized for the Aquity acquisition. This decrease was partially offset by a gain on the fair valuation of contingent consideration.

Expenses

Particulars	2025		2024		Change Increase / (Decrease) (%)
	(Rs. Million)	% of Revenue	(Rs. Million)	% of Revenue
Changes in inventories of stock-in-trade	7.47	0.03%	7.14	0.04%	4.62%
Employee benefit expenses	14,946.06	56.10%	9,618.86	52.91%	55.38%
Finance cost	897.65	3.37%	600.94	3.31%	49.37%
Other expenses	3,989.29	14.97%	3,350.31	18.43%	19.07%
Depreciation and amortisation expenses	1,126.63	4.23%	585.45	3.22%	92.44%
Total expenses	20,967.10	78.71%	14,162.70	77.91%	48.04%

Employee Benefit Expenses

Particulars	2025		2024		Change Increase / (Decrease) (%)
	(Rs. Million)	% of Revenue	(Rs. Million)	% of Revenue
Salaries, allowances and bonus	13,523.54	50.76%	8,814.91	48.49%	53.42%
Contribution to provident and other funds	379.66	1.43%	288.49	1.59%	31.60%
Employee benefit insurance	682.47	2.56%	363.3	2.00%	87.85%
Gratuity	39.29	0.15%	21.36	0.12%	83.94%
Share based compensation	277.31	1.04%	85.6	0.47%	223.96%
Staff welfare	43.79	0.16%	45.20	0.25%	-3.12%
Total expenses	14,946.06	56.10%	9,618.86	52.91%	55.38%

Drivers of Employee benefit expenses increase

The rise in employee benefit expenses reflects the full-year impact of the Aquity acquisition and our continued investment in expanding our sales and technology teams. The notable increase in share-based compensation supports our strategy to attract and retain top talent as we scale.

Other Expenses

Other expenses increased in absolute terms due to business expansion and the full-year consolidation of Aquity. However, as a percentage of revenue, these expenses declined, highlighting our success in optimizing administrative costs and achieving operational synergies. Key factors included vendor consolidation, increased technology adoption, and leveraging our global talent pool to replace higher-cost contract workers in North America. These efforts demonstrate our disciplined cost management and commitment to operational efficiency.

Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA)

( Million, except percentages)

Particulars	FY25	FY24
Profit before tax	6,062.82	4,416.68
Add: Finance cost	897.65	600.94
Add: Depreciation and amortization expenses	1,126.63	585.45
Less: Other income	389.98	400.10
Add: DAP reversal*	175.63	72.81
Add: Foreign exchange gain/(loss)	37.97	11.01
EBITDA	7,910.72	5,286.79
Revenue from operations	26,639.94	18,179.28
EBITDA margin	29.69%	29.08%

(* DAP Reversal refers to change in fair value of contingent consideration payable for past acquisitions)

EBITDA

• EBITDA for FY25: 7,910.72 Million

• Reported EBITDA Margin: 29.7% (up from 29.1% in FY24)

• Pro Forma EBITDA Margin: Improved from 24% to 29.7% after fully integrating Aquity Operational Transformation and Margin Expansion

This growth reflects our focus on operational efficiency, disciplined cost management, and the successful transformation of Aquitys operating model using our technology and global talent. The significant margin improvement demonstrates the positive impact of integration and our ongoing efforts to drive sustainable profitability.

Finance Costs

Drivers of Finance Cost Increase

Finance costs increased in FY25, primarily due to higher interest expenses on borrowings related to the acquisition and lease liabilities. The interest on borrowings rose by 49.97% to 780.19 Million, reflecting a full-year recognition compared to only five months in the previous fiscal year. Similarly, the interest on lease liabilities grew by 53.81% to 105.65 Million, as we added two new facilities to support our growth. During the year, our net debt reduced from 8,507 Million to 5,627 Million, as we continue to prepay our debt. This reflects our strong cash generation and financial discipline.

Depreciation and Amortisation Expenses

Particulars	FY25		FY24		Change Increase / (Decrease) (%)
	(Rs. Million)	% of Revenue	(Rs. Million)	% of Revenue
Depreciation on property, plant and equipment	236.61	0.89%	153.69	0.85%	53.95%
Depreciation on right-of-use assets	247.08	0.93%	175.21	0.96%	41.02%
Amortisation of intangible assets	642.94	2.41%	256.55	1.41%	150.61%
Total expenses	1,126.63	4.23%	585.45	3.22%	92.44%

Drivers of Depreciation and Amortisation Increase

The depreciation expense mainly consists of amortization on intangible assets, including 540.43 Million from customer relationships acquired through Aquity. This amortization is expected to remain steady throughout the assets useful life. Conversely, depreciation on PPE and ROU assets will be influenced by business operations and investment activity.

The increase in depreciation and amortisation expenses was mainly driven by higher amortisation of intangible assets, which rose from 256.55 Million to 642.94 Million. This reflects the recognition of intangible assets related to customer relationships acquired through the Aquity transaction.

Tax Expenses

• Tax Expenses for FY25: 1,202.23 Million

• Tax Expenses for FY24: 711.82 Million

• Effective Tax Rate for FY25: 19.83%

• Effective Tax Rate for FY24: 16.12%

Drivers of Tax Expense Increase

The increase in tax expenses was primarily due to a higher share of profits from our US-based entities, which are subject to higher tax rates, as Aquity was included for the full period in FY25. Additionally, one of our SEZ units in India moved to a lower exemption category, further contributing to the rise in overall tax expenses.

Other Comprehensive Income

Other comprehensive income primarily includes gain on increase in fair value of strategic investments of 691.40 Million made in our strategic equity investments. This is in addition to the gains of 1,333.98 Milllion in FY24, recorded on such investments. We have recorded significant gains on our strategic investments in the last two years, which is reflected in our other comprehensive income. To mitigate potential fluctuations in reported net income and provide a more stable financial presentation, we have elected, in accordance with IND AS 109, the one-time option to recognize changes in the fair value of strategic equity instruments directly within Other Comprehensive Income.

CASH FLOWS

(Rs. Million)

Particulars	FY25	FY24
Cash generated from operations	4,340.30	3,030.13
Less: Income taxes paid, including tax deducted at source)/ refund received, net	-1,161.42	-932.42
Less: Payments for property, plant and equipment	-246.91	-264.29
Less: Payment for intangible assets	-176.87	-62.78
Free cash flows	2,755.10	1,770.64
Free cash flow yield	56.68%	47.79%

Drivers of Free Cash Flow Performance

Free cash flow for FY25 increased to 4,340.31 Million, compared to 3,030 Million in FY24. Reported cash flow in FY25 was impacted by an upfront performance guarantee payment of 1,390 Million, representing an investment in economic value add for a new client, Palomar Inc. This amount is anticipated to be recovered through bonus payments as we generate economic value for the client in the forthcoming years. After adjusting for this strategic investment, free cash flow for FY25 stands at 4,145.10 Million, demonstrating strong underlying cash generation and an improved free cash flow yield of 85.3%.

Key Financial Ratios

Particulars	FY25	FY24	Change (%)	Reason for Variance (if more than 25%)
Current ratio	1.50	1.14	32.35%	A lower current ratio resulted from a larger reduction in current liabilities, driven by debt repayment
Interest coverage ratio	8.82	9.44	6.48%
Trade receivable turnover days	62.77	52.81	18.84%	An elevated Trade Receivable Turnover Days figure is driven by the full-year consolidation of Aquity, characterized by its longer receivable cycle. Furthermore, the substantial revenue increase in the final quarter due to new account ramp-up led to a higher year-end trade receivable balance, as these amounts are due for collection in the next period. This timing dynamic resulted in an increased Days Sales Outstanding (DSO)
Debt-Equity ratio	0.42	1.03	-59.07%	The Debt-Equity ratio decreased primarily due to repayment of borrowings and increase in equity balance due to profits generated during the year
Return on Equity(%)	27.16%	32.00%	-4.84%	Gains from strategic investments bypassed the Profit & Loss (P&L), positively impacting equity without a corresponding increase in net income, and increased amortization charges on acquired intangible assets lowered net income, both contributing to the reduction in Return on Equity (ROE). However, the ROE still remains very robust and compares very favorably to industry averages
Adjusted EBITDA per employee ()	0.63	0.54	16.67%	The increase in Adjusted EBITDA per employee reflects margin improvements achieved through the operational transformation of Aquity and the optimization of employee headcount
Net Profit Margin(%)	18.25%	20.38%	-2.13%	The decrease in net profit margin is primarily due to increased amortization and finance costs, coupled with a higher effective tax rate

Adjusted for ESOP cost

Internal Control Systems and their Adequacy

The CEO & CFO certification provided on page 109 of this Annual Report discusses the adequacy of internal control systems and procedures in place.

Risk Management

Risk / Challenge	Description	Possible Impact	Mitigation Measures
Technological disruption & innovation pressure	Rapid advances in AI and machine learning require ongoing updates and improvements to IKS solutions/products. Breakthroughs in areas like virtual scribing and autonomous coding, could reduce the utility of current offerings.	Reduced competitiveness; client dissatisfaction; product obsolescence	Continuous innovation; regular product updates; monitoring emerging technologies
Data security & privacy concerns	Handling sensitive healthcare data across platforms exposes IKS to risks of data breaches and evolving privacy regulations.	Data breaches; regulatory penalties; reputational harm	Invest in security measures; compliance with privacy laws; regular audits
Integration & interoperability challenges	Evolving healthcare IT standards require IKS solutions to integrate with legacy and new systems. Lack of interoperability can limit adoption and effectiveness.	Limited adoption; client dissatisfaction	Design for interoperability; adapt to evolving standards; support seamless system transitions
Quality & accuracy of AI/ML algorithms	Inaccurate AI/ML outputs can cause errors in claims, compliance issues, patient safety risk or lower clinician and patient satisfaction.	Suboptimal outcomes; compliance risk; loss of trust	Robust algorithm performance monitoring; AI Ethics Board to oversee AI initiative, continuous improvement; regular reviews
Regulatory & compliance risks	Frequent changes in healthcare regulations and reimbursement models require ongoing adaptation. Non-compliance can result in penalties or operational disruption.	Penalties; operational disruption; loss of business	Dedicated compliance team; regular reviews and updates; staff training
Market competition & differentiation	Competition from specialized IT vendors, EHR companies, and new entrants pressures IKS to differentiate and innovate.	Margin pressure; loss of market share	Focus on innovation, clientcentric design, and strategic collaborations
User adoption & behavioral resistance	Clinician and staff resistance to new technology can slow implementation and reduce effectiveness.	Slow adoption; reduced solution effectiveness	Comprehensive onboarding, training, and support; change management
Talent acquisition & retention	Attracting and retaining skilled professionals is essential for innovation and service quality. Workforce shortages or high turnover could disrupt operations.	Disrupted operations; hindered growth	Invest in workforce development; competitive benefits; culture of continuous learning

Human Capital at IKS Health

At IKS Health, our people are the driving force behind our mission to transform healthcare. As of March 31, 2025, our total headcount stands at 12,661 with a gender diversity ratio of 51%, with 26% of our leadership roles (above Director level) held by women. This reflects our strong commitment to diversity, inclusion and equal opportunity. Our commitment to continuous development and growth of our people is evidenced by our 22,600 learning hours and 1820 promotions and role rotations in FY25.

Our Talent Philosophy

We see our people as catalysts of impact in the healthcare ecosystem, not just employees. By fostering an inclusive, high- performance culture, we empower every individual to grow, lead, and succeed. Targeted initiatives in engagement, learning, and talent development help our people perform at their best, while our robust CSR programs enable them to give back through active volunteering and social impact.

Embedding Culture as a Strategic Differentiator

In 2024, we embarked on a transformational journey to embed Culture as a Strategic Differentiator, building on the integration of IKS Health and Aquity. By combining the strengths of both organizations, we launched a series of culture and values initiatives that position IKS Health as a truly global healthcare technology enterprise. Our focus remains on making IKS Health an exceptional place to work and the leading Care Enablement Platform ? driven by customer advocacy, technological innovation, operational excellence, and human transformation.

We define culture as "how our colleagues, customers, stakeholders, and partners experience us" and have brought this philosophy to life through the IKS Values & Behaviors, embedded in our daily interactions. In 2024, we launched a series of thoughtfully designed initiatives ? from instructor-led workshops and experiential campaigns to engaging digital microgames and scenario-based gamification ? to help our people internalize and demonstrate these values consistently. Supporting tools like playbooks, peer-to-peer recognition eCards, activity guides, and immersive experiences using Augmented Reality have reinforced our values across the organization.

By aligning our values with how we work and interact, we continue to strengthen our position as a trusted, people-centered healthcare technology enterprise and deepen our connection with all those we serve.

Enhancing the Employee Experience

We are committed to creating an exceptional employee experience, from a seamless candidate journey and industryleading onboarding to ongoing recognition and care. Our robust infrastructure, holistic wellbeing programs, and meaningful rewards, foster a culture of belonging where employees feel confident, connected, and valued.

Our leadership philosophy emphasizes connection over command, fostering strong relationships, cohesive teams, and a supportive community that creates a sense of belonging and shared purpose. We build engagement through initiatives like RHYTHM Connect, which inspire teams and gather feedback, and Empower Connect, where line managers maintain consistent, trust-based dialogues with their teams. Senior leaders engage directly with employees through Skip Level and Express Connect, building trust, transparency, and morale, while townhalls provide a platform to share strategic priorities and celebrate achievements. HRBP Connect strengthens the bond between employees and HR, offering guidance on workplace concerns, policies, and career development. Together, these connections cultivate collaboration, commitment, and enhance the employee experience.

Our Al-powered Chief Listening Officer - Amber keeps the line managers and HR continuously attuned to employee sentiment, enabling timely and empathetic interventions that strengthens engagement and alignment with our values.

Nurturing Growth and Internal Mobility

Continuous learning underpins our organizational agility and long-term success. Our Learning & Development (L&D) strategy goes beyond skill-building to equip our people to lead change, drive innovation, and create impact at scale. Tailored leadership programs address the diverse learning needs across levels, empowering employees on their journey toward impactful managerial and leadership roles.

Building Industry Expertise

At IKS Health, we build deep domain expertise through business-specific interventions that combine structured learning, client- focused training, and a robust talent management framework. Our layered leadership development ensures that every team member? whether a new hire or a seasoned professional?gains the knowledge and skills to deliver measurable impact, enhance client outcomes, and support strategic objectives.

Through targeted learning initiatives and dynamic talent mobility programs, we continually strengthen our teams expertise, reduce attrition, boost productivity, and maintain high levels of client satisfaction.

Talent Mobility: Building a Future-Ready Workforce

Our Talent Management Framework reflects a strategic, transparent, and merit-driven approach to career growth and development. By aligning individual aspirations with organizational goals, we empower high performers, promote internal mobility, and uphold a culture of accountability and excellence.

Career progression is anchored in merit, guided by clear criteria of tenure, performance, and behavioral integrity, with structured timelines and unbiased evaluations ensuring fairness and consistency. Employee growth is strategically aligned to workforce planning, enabling mobility that supports business priorities while fostering cross-functional opportunities and leadership aspirations. Designed to be responsive and flexible, the framework allows talent to adapt to evolving business needs, creating meaningful internal movements and growth opportunities.