Indian firm IKS Health thrives in U.S. healthcare outsourcing
MUMBAI, INDIA — Outsourcing has significantly fueled the growth of India-based healthcare solution provider IKS Health.
Since its incorporation in 2006, Mumbai-based IKS Health has become a key player in the healthcare outsourcing sector, primarily serving physician enterprises in the United States.
Expanding client base and revenue growth
By September 2024, the company had secured over 775 healthcare organizations as clients, with 94% of its revenue coming from repeat customers. This high retention rate highlights IKS Health’s reliability and effectiveness in managing healthcare operations.
IKS Health has demonstrated strong financial growth, with revenues increasing at a compound annual growth rate (CAGR) of 54.3% from ₹764 crore (US$90 million) in FY22 to ₹1,818 (US$214 million) crore in FY24.
The company’s net profit rose at a CAGR of 26%, reaching ₹370 crore (US$$43.6 million) in FY24. Additionally, the EBITDA margin for FY24 was 28.6%, and the return on capital employed (ROCE) stood at an impressive 31.5%.
Opportunities in the U.S. healthcare market
The U.S. healthcare market, with an annual spending of $4.8 trillion, offers vast opportunities for outsourcing services. This market is currently valued at $34 billion and is projected to grow at a CAGR of 12% from 2023 to 2028. Factors such as complex regulatory requirements, increased administrative burdens on physicians, and a shift toward AI-driven automation are driving this growth.
Strategic acquisitions boost market position
The strategic acquisition of Aquity Holdings, a U.S. firm specializing in tech-enabled clinical documentation and medical coding, has significantly enhanced IKS Health’s market presence. This move added over 800 clients to its portfolio, offering new opportunities for cross-selling its comprehensive healthcare solutions.
With a global workforce of more than 13,528 employees, including 2,612 clinically trained professionals, IKS Health is well-equipped to meet the growing demands of the healthcare sector across the U.S., Canada, and Australia.
IPO and investment potential
To leverage its growth momentum, IKS Health is launching an offer for sale worth ₹2,498 crore (US$$294.5 million), which will reduce the promoter holding from 69.7% to 65.8%. Although the proceeds from this sale will not directly benefit the company financially, it reflects confidence in IKS Health’s long-term potential within the world’s largest healthcare market.
With an implied market cap of approximately ₹22,802 crore (US$$2.68 billion), the IPO is priced at 53.8 times its annualized earnings for FY25. While there are no directly listed peers in India for comparison, investors interested in the expanding outsourcing sector may find this offering appealing for long-term investment.
Through strategic acquisitions and robust financial performance, IKS Health continues to address operational challenges faced by U.S. physicians with efficient outsourcing solutions, maintaining its trajectory of success in the competitive healthcare market.
