Good day, ladies and gentlemen, and welcome to the Second Quarter 2019 EXLService Incorporated Earnings Conference Call. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to introduce your host for today's conference, Steve Barlow, Vice President, Investor Relations. Sir, please begin..

Thank you, Norma. Hello, and thanks, everyone, for joining our call today, the second quarter 2019 financial results. I'm Steve Barlow, EXL's Vice President of Investor Relations. With me today in New York are Rohit Kapoor, our Vice Chairman and Chief Executive Officer; and Vishal Chhibbar, our Chief Financial Officer.

We hope you've had an opportunity to review our second quarter earnings release we issued this morning. We've also updated our investor fact sheet in the Investor Relations section of EXL's website. As you know, some of the matters we'll discuss on this call are forward-looking.

Please keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties include, but are not limited to, general economic conditions, those factors set forth in today's press release, discussed in the company's periodic reports and other documents filed with the Securities and Exchange Commission from time to time. EXL assumes no obligation to update the information presented on this call.

During our call today, we may reference certain non-GAAP financial measures, which we believe provide useful information for investors. Reconciliation of these measures to GAAP can be found in our press release as well as on the investor fact sheet. I will now turn the call over to Rohit Kapoor, EXL's Chief Executive Officer.

Rohit?.

the expansion of our strategic partnerships with large Insurance clients; and our focus on technology-enabled solutions to accelerate our growth in Healthcare. Our largest business vertical, Insurance, continues to grow and develop very nicely.

While we are seeing strength across multiple service lines in Insurance, I want to highlight our Operations Management business, which has grown by more than 10% annually since 2017.

We now work with over 250 clients across the U.S., U.K., Europe and Australia, which includes many of the top-tier insurers in the property and casualty and life disability and annuity sectors.

Our market-leading positioning and our ability to deliver superior outcomes across the complete value chain, allows us to win a variety of new clients globally as well as to deepen our strategic partnerships. We continue to see significant opportunities to penetrate new product lines and business functions within our existing Insurance accounts.

We currently provide three or more service offerings to 60% of our top-25 Insurance clients. One such example of how we are able to broaden and deepen our partnership is our long-standing relationship with the Fortune 50 insurer.

Despite being a mature relationship, we have successfully increased our share of wallet across multiple business lines because of our strong understanding of the clients' business, the credibility we had earned by delivering strategic business outcomes and by employing the EXL Digital Intelligence framework.

We were recently named the chosen partner for the end-to-end servicing of this client's life insurance business. We initiated this pursuit more than two years ago when the client began looking for a partner to manage their life Insurance operations.

We were able to dislodge significant competition because of our domain expertise and the ability to align with the clients long-term transformational goals. The clients recognized the benefit of consolidating multiple vendors to enable the transformation of their end-to-end life insurance operations with a trusted partner such as EXL.

This is a significant win for us, not just due to the size of the engagements, but also because of the significance of the long-term value we will be able to generate for the client by managing their entire life block operations. During the same period, we also penetrated another key buying center within this client, the CFO's the office.

We have recently been named their Finance & Accounting services transformation partner for an engagement that includes some of the most complex insurance, finance and accounting work being done in the market.

Once again, we were able to unseat a large incumbent based on the strength of our additional capabilities toolkit and the clients' confidence in our ability to deliver complex transformation in an optimal cost-effective manner.

This engagement also underscores the growth trajectory of our Insurance M&A practice and the majority of our service offerings. Moreover, we are currently pursuing multiple large deals across different buying centers within the same client.

We are seeing similar traction across many of our large insurance clients, and we expect continued momentum from these accounts. Overall, our ability to expand into new geographies, product lines and buying centers within existing clients continues to be a significant source of growth for our Insurance business.

The second area I would like to focus on today is our healthcare business. The appointment of Samuel Meckey as our new Healthcare Leader and the integration of SCIO Health Analytics within EXL has allowed us to focus on our growth strategy in healthcare.

With capabilities across clinical and back office operations, data and analytics and technology platforms, such as CareRadius, EXL has a unique value proposition in the healthcare market.

Since the SCIO acquisition, we have now integrated our capabilities to develop technology-enabled solutions, that's aligned with key challenges across payers, providers, PPMs and life sciences companies.

We are seeing evidence that this combination of our capabilities is resonating in the market through recent deal wins that leverage this targeted approach.

In one example, an emerging and disruptive health insurer was looking for end-to-end utilization management support and to establish a single integrated platform that supports all care management needs.

EXL introduced a new delivery processes to support the clients' overarching need and delivered a single platform on CareRadius, that supports their comprehensive care management workflow.

We were able to leverage successfully a hybrid delivery model of both offshore, nonclinical and clinical resources, combined with onshore clinical functions to optimize utilization management cost and provide URAC accredited services.

This solution will allow our clients to better collaborate with their members and care partners to deliver a seamless and best-in-class healthcare experience. In another example, EXL has been selected to provide advanced natural language processing solutions for a large healthcare provider, focused on military and veteran communities.

This is a great example of how we are integrating our deep domain expertise in the healthcare space, with our advanced analytics capabilities and the robust technological infrastructure that SCIO offers to create a powerful, technology-enabled healthcare solution.

This engagement marked our first combined SCIO-EXL win, leveraging our capabilities from our Digital consulting group, our population health solutions team, our CareRadius platform, SCIO and our advanced analytics products team.

We won this deal because the client trusted EXL to deliver on a complex problem and the creativity that we demonstrated in crafting a solution that integrated tightly within the overall business workflow.

This trust is a testament to the relationships we have developed and our ability to orchestrate the full suite of digital capabilities and domain experts to deliver superior outcomes. This win demonstrates the best of the one EXL approach to serve our clients with innovative, secure and scalable solutions. Finally, in Healthcare.

The wind down of Health Integrated is proceeding according to plan and will be substantially complete by the end of the year. We are exiting the business with professionalism and in a responsible manner. Our estimates for Health Integrated remained unchanged from our previous guidance and the rest of our core business continues to perform very well.

Looking ahead, our pipeline is robust and continues to evolve beyond traditional Operations Management and Analytics deals. Increasingly, we are orchestrating our domain expertise and digital capabilities to deliver strategic business outcomes across multiple C-suite buying centers, product lines and geographies.

We continue to see strong growth in Insurance and an increasing share of wallet in existing clients, and we are winning new clients globally. With the transition of Health Integrated, we have been able to focus on our core Healthcare strategy and are seeing good growth as a result of recent wins and the development of a strong pipeline.

Finally, our Analytics business continues to build on its market leadership and is growing nicely with the pipeline being a healthy mix of data management, data-enabled solutions and advanced analytics solutions across business verticals. Overall, we are positioned well for growth in the second half of the year and beyond.

With that, I will hand it over to Vishal..

Thank you, Rohit, and thanks, everyone, for joining us this morning. I would like to start by providing insight into our financial performance for the second quarter, the first half of 2019, followed by updated guidance.

We had a strong quarter with revenues of $243.5 million, up 16.8% year-over-year on a constant-currency basis and delivered adjusted EPS of $0.74, up 10.4% year-over-year. As you are aware, we are winding down the Health Integrated business substantially by December 31.

By discussions of the financial results, encompassing the revenues and expenses, we'll be excluding the impact of Health Integrated in order to underscore the performance of the core business. I will discuss Health Integrated separately later in my remarks. All revenue growth numbers mentioned hereafter are on a constant-currency basis.

We had a strong quarter with revenues of $240.6 million, up 17.3% year-over-year. Sequentially, revenues grew 2.3%. For the quarter, revenues from our Operations Management business, as defined by five reportable segments, excluding Analytics, were $152.7 million, up 4.9% year-over-year.

This growth was primarily driven by clients from Insurance, Finance & Accounting, Healthcare segments. Insurance continued its double-digit revenue growth performance with 12.6% year-over-year growth. This growth was driven by expansion in the existing client relationships and ramp-up of 2018 wins.

Finance & Accounting for the sixth consecutive quarter continued its double-digit growth momentum and grew 10.3% year-over-year. This growth was driven by ramp ups of 2018 wins.

Healthcare showed signs of improved growth trends with revenues up 4.9% year-over-year compared to 1.7% in Q1, due to new client wins in 2018 and new business expansion in 2019. Analytics continues to perform strongly, with revenues of $87.9 million, up 47.9% year-over-year, including revenues of $18.8 million from SCIO Health Analytics.

On an organic basis, Analytics grew 6.4% year-over-year. This broad-based organic growth rate was driven by new client wins and expansion in existing client relationships in Healthcare, Insurance and Banking and Finance verticals. Sequentially, Analytics grew 1.3%.

Gross margin for the quarter declined 40 basis points year-over-year to 34.2% due to investments in new deal wins expansions. Adjusted operating margin for the quarter was 14.6%. Our adjusted EBITDA for the quarter was $42.2 million compared to $38.7 million last year, up 9% year-over-year.

Our GAAP tax rate for the quarter was 17.5%, but excluding the impact of discrete items, namely an excess tax benefit recognized on stock compensation and reevaluation of our deferred tax -- taxes, our normalized tax rate for the quarter was 27.5%. We expect our normalized tax rate for the year to be in the range of 27% to 28%.

We had $253 million of cash and short-term investments and a borrowing of $252.3 million. Excluding Health Integrated, our adjusted diluted EPS for the quarter was $0.80, up 9.6% year-over-year. Now moving to our first half performance, excluding Health Integrated.

In the first half, our revenues grew 18.3% year-over-year to $476.3 million, an increase 9% year-over-year on an organic basis. This growth was broad based, driven by expansion in existing client relationships and ramp-up of 2018 and 2019 wins. Operations Management grew 5.4% and Analytics 50.5% year-over-year.

On an organic basis, Analytics grew 18% year-over-year. Our revenue per employee was $32,400, up 9% year-over-year. Gross margin for the period improved 40 basis points year-over-year to 34.8% due to operating efficiencies. Adjusted operating margin for the period declined 40 basis points to 14.6%.

This decline was driven by increased investments and digital capabilities, solutions and investments in new deals and ramp-up of new deals. Our adjusted EBITDA for the period was $84.2 million compared to $74.2 million last year, up 13% year-over-year. Adjusted EPS for the first 6 months was $1.59, up 12% year-over-year.

We generated strong cash flow from operations of $47.7 million in the first half of 2019 compared to $13.8 million in the same period last year. This increase was due to higher EBITDA, better working capital driven by DSO reduction to 59 days from 61.

During the first half of the year, we spent $22.3 million on capital expenditures and repurchased 438,000 shares for $26.1 million under the share repurchase program. Now I would like to discuss the Health Integrated business. Revenues for Health Integrated were $2.9 million in Q2 compared to $3.5 million in Q2 2018.

Health Integrated had a dilutive impact of 140 basis points on adjusted operating margin, leading to an adjusted EPS loss of $0.06 for the quarter. In addition, we recorded impairment and restructuring charges of $5.6 million for the quarter, which is excluded from our EPS -- from our adjusted EPS.

As the business winds down, we expect revenues of $10 million to $14 million, which was our expectation in April, with $6.8 million of revenue generated in the first half of the year. In terms of adjusted EPS, there has been a $0.14 loss in the first half, and we remain on track to incur a loss of $0.23 to $0.27 for 2019.

Our July 16 8-K/A filing, stated that we expect to incur pretax impairment and restructuring charges in the range of $8.5 million to $10 million to wind down the Health Integrated business.

Of that amount, we took a charge of $1.2 million in the first quarter and $5.6 million in the second quarter, totaling to a -- or to an amount of $6.8 million for the period. The balance charge of $1.7 million to $3.2 million will be taken in the second half of the year.

As the exits costs are onetime cost, they are excluded from adjusted EPS and not part of our guidance. Cash expenditures in connection with the wind down are estimated to be in the range of $7 million to $8 million. Now moving to our guidance for 2019.

We are increasing our revenue guidance to $976 million to $996 million from $969 million to $996 million, based upon our first half performance and our increased visibility for the rest of the year. This includes $10 million to $14 million of Health Integrated revenues as mentioned earlier.

This guidance represents our year-on-year growth of 11% to 13% on a constant-currency basis and 8% to 10% on organic basis, excluding Health Integrated. Our adjusted EPS guidance is increased to $2.86 to $2.98 from $2.83 to $2.98. Excluding Health Integrated, our adjusted EPS range is increased to $2.13 to -- $3.13 to $3.21.

As Rohit mentioned, the business is healthy in our larger segments of Insurance, Finance & Accounting and Analytics. In addition, Healthcare has generated positive revenue growth this year. We have achieved 9% organic revenue growth for the first half of the year and have made the financial goals we set out to achieve at the beginning of the year.

And now Rohit and I would be happy to take questions..

[Operator Instructions] Our first question comes from Maggie Nolan of William Blair..

Can you give us an updated outlook for adjusted operating margin this year? But then also, how you're kind of expecting that margin to trend in the medium term with Health Integrated behind you?.

Thanks. As I stated in my prepared remarks, the OPM for first half is 14.6%. In the second half, we expect that adjusted operating margins will expand, and we expect that to be in the range of 15.4% to 15.6%, that's an improvement of 90 to 100 basis points in the second half.

That will be driven primarily by gross margin expansion, due to more productive ramps in -- of first half becoming more productive, in the -- in our areas of Insurance, Healthcare and improving utilization in Analytics and Consulting, coupled with operating leverage, which we'll get in the second half as revenue expense.

In terms of long-term trends, we do have said before that our expectation is that we will be for the year with this profile in the second half end up at between 15.1% to 15.2% adjusted operating margin. And we think in the long term, the expansion of margins will continue, but we're not giving any specific ranges and amounts at this time..

Okay. And then -- so you've obviously had some strong growth within Insurance and Finance & Accounting with an ops management. But that has been offset by some weaker verticals.

So can you talk through what's been going on may be in Travel, Transportation & Logistics and the other vertical? And how you expect those to kind of perform over time as well?.

Yes. Sure, Maggie. So the growth of our business actually is pretty broad-based across the industry verticals. Obviously, we report out in five different industries and analytics separately. And there will be a periods of time when one particular industry may not grow in a particular quarter.

I think the overall demand environment as well as our ability to serve clients and grow our business with existing clients as well as win new clients remains quite healthy across industry verticals and across geographies.

In a number of these industry verticals, we are creating very effective digital solutions that are helpful to the clients to solve some of their biggest and most complex problems. And therefore, the engagement takes a little bit of time. But our expectation is that the growth will be pretty broad based.

Certainly, in Insurance and Finance & Accounting, we've been able to demonstrate that leadership. We're also seeing that traction buildup in Healthcare and in Banking. And our expectation is that the same will be true for Travel, Transportation & Logistics and the other industry verticals..

And our next question comes from Mayank Tandon with Needham & Company..

Rohit, at a high level, could you talk about the automation opportunity or threat, how do you view that in terms of impacting your business over time? What percentage of deals are automation today? And maybe also the financial profile of these types of deals as you go about scaling them over time..

Yes. Sure, Mayank. So automation, for us, I think in the past couple of years, it was certainly something that was a headwind to our growth rate. And we expect -- we saw a headwind of about 2% to 3% on the overall company's growth rate because of automation. But today, automation is actually turning into a strong opportunity set for us.

And what we're finding is with our demonstrated capability of being able to embed digital technologies and digital capabilities into our clients' operations and deliver Digital Intelligence to them.

We have being sought out by our clients and by our prospects to come in and do this work across different business units, across multiple buying centers and across geographies.

So if you take a look at our pipeline today, the activities and then the clients names and the prospects that are there in the pipeline, the complexion of that pipeline is heavily weighted towards a lot of automation, advanced analytics and digitization being part of the agenda.

And I think we are in a very strong and fortunate position to have developed this competency in this capability. And we are very attractive partner to these clients that are seeking these types of transformational changes to be made to their operations.

So the way we see it is, most of the clients are looking to digitize their existing legacy operations and invest in new digital capabilities to expand their market. And we can actually help them in both sides of that equation..

And Mayank, just to add that such deals in pipeline are usually outcome based or transaction based and that creates a different margin and outcome profile for us..

Great. That's helpful color. If I can just ask one quick one on attrition. I think that's probably the highest attrition we've seen in a long time.

If you could just comment on what the drivers were, is it Health Integrated or is there something else systemic to the business that is impacting attrition this quarter?.

number one is a reduction in workforce in Health Integrated, which had an impact in the second quarter; and the second is some structural changes that we have made to our workforce, particularly as we engage with a lot more automation, digitization and using the right location for providing services to our clients.

So a combination of this has basically resulted in a onetime structural change and that has led to the attrition rate going up in Q2..

And our next question comes from Joseph Foresi with Cantor Fitzgerald..

So I wanted to start by asking about Health Integrated and its impact on 2020. So I figured I would give it a shot. The numbers are going to -- obviously, you're going start to face better comps next year, and I just don't want to get ahead of what you think is realistic to build into the model on top line margin and EPS side.

So maybe can you just give us a little bit of an early color on what you think that impact of Health Integrated not being in the numbers next year would be?.

Sure, Joe. So as we stated in our prepared remarks, we expect the wind down of Health Integrated to be substantially complete by December 31 of this year. And therefore, we really don't expect there to be any revenue that would kick in for the next year.

But please keep in mind that we are doing the wind down of Health Integrated in a extremely professional and responsible manner. And we want to make sure that the transition for our clients of Health Integrated, they land in a safe and secure place.

So whatever we need to do to make sure that, that transition is as smooth as possible and whatever we need to do to make sure that we wind this down in a responsible manner, we're going to do that. But our expectation is that we would be substantially complete from a business standpoint by the end of December this year.

From a margin perspective, certainly, that headwind that we've been facing with Health Integrated would largely, again, get consummated in calendar year 2019. There are some wind down costs which we have clearly specified in our 8-K/A that we expect to incur.

$7 million to $8 million of these wind down costs are cash costs, and some of that cost will actually take place in 2020 because of those costs only being possible to be incurred once the business is completely shut down. So we don't really expect there to be any material impact in 2020 as well.

However, there may be some cash expense that does get spilled over from 2019 to 2020..

Okay.

And then, I think you said in your prepared remarks that there's going to be multiple -- where you're talking about multiple large deals, and I wonder if you could talk a little bit more about what those deals look like versus what the deals look like before? I know Mayank asked about attrition, will you need to be hiring for those deals? Are -- is there a re-badging associated with them? And how they flow through to numbers as we look at next year?.

Sure. So first of all, we are seeing that our pipeline is increased in value and it's strong. And that's because we're seeing some larger deals enter into the pipeline.

As our clients gain confidence in EXL providing digitization to them, the size of the deals is actually expanding and actually the work complexity is becoming a lot better where we can add a lot more value to these clients. So we're seeing that trend take place.

We're also winning a number of deals and in the past two quarters, we've been able to successfully win a number of these deals. I just gave examples of two such deals that we won in Healthcare and a couple of expansions that we saw in the Insurance market in my prepared remarks.

We're also seeing that same trend play out in some of the other verticals. We're also seeing larger-sized deals in Analytics, where the data play and the data management play is allowing us to start new client relationships on a much bigger size and scale than what we did previously.

So currently, we think that the demand environment is healthy, our capability set is resonating very well in the marketplace. On the attrition question, yes, we had a spike in Q2. But you would notice that we've also added to our headcount quite significantly in Q2.

And that's in response to some of the deals that we have won and to be able to manage the growth expectations from these newer deals that we won. So all in all, we feel that we are in a very good place as far as our growth of our business is concerned, and this trend is playing out very favorably for us..

And our next question comes from Vincent Colicchio of Barrington Research..

Yes, Rohit.

I'm curious, are any of the clients added in the quarter? Do any of them have the potential to become top-10 clients?.

So Vincent, we've added a number of new clients in the past several quarters that have a potential to become our top-10 client. I think you're going to see -- and see how this thing develops. Certainly, some of the new clients want to test us out in delivering the digital capabilities to them. Our existing clients have already seen that.

And therefore, they're a lot more confident about expanding their work with us much more -- in a much more accelerated manner. So I think we're going to see the opportunity set both from existing clients as well as from new clients. In this particular quarter, we've certainly seen a number of deals kind of come through.

I don't know if there's any that's going to be in the top 10 going forward. But I think, certainly, over the last two or three quarters, we've signed several deals, where these clients will have opportunities to be top-10 client for us..

And curious, the Consulting business, which has been trending in a better direction, does that continue to perform well? And what's the outlook for the rest of the year?.

Yes. The Consulting business, as you know, is always going to be based on discretionary spending. And it's going to be something which -- it's going to be volatile in terms of how that progresses.

What we are seeing is because of new regulatory changes that are being brought about, particularly around the management of data, we saw that with GDPR, we see that with CCPA in California and we're seeing that across multiple client situations.

So we're seeing a lot of opportunity in terms of helping our clients deal with some of these regulatory challenges. We're also seeing a lot of opportunity in Consulting around robotics as well as digital and that's something which is playing to our strength.

And finally, we do see our Consulting engagements as a precursor to some of the large deals that we've got in the pipeline. And therefore, as we engage with clients on these large deals pursuits and we develop creative solutions for them to be able to solve some of their more complex challenges, that's playing out nicely for us.

So all in all, I think there's adequate opportunity for us to be able to play out here and be able to leverage our skill sets..

And our next question comes from Bryan Bergin of Cowen..

Wanted to ask on SCIO.

Within the quarter, do -- the $18.8 million revenue contributions, do that come in line within your expectations? And then just broader Analytics growth outlook post the SCIO integration on a larger overall base, how should we be thinking about that going forward?.

Yes, Bryan. The SCIO revenue for us at $18.8 million for the quarter was a bit soft. And -- but keep in mind that the payment integrity revenue portion of the business within SCIO is usually lower in the first half of the year as compared to the second half of the year.

And so we think -- and also the SCIO revenue is outcome based, so it can be a lot more bearable. We think that for the full year, the SCIO revenues are going to play out fine.

And the place where we are most heartened with is the new deal that we just announced that we won which was leveraging the capabilities of SCIO and combining that with the advanced analytics capabilities of EXL and bringing together a very creative solution and a very nice win for us in the Healthcare space.

So I think, overall, in summary, we're pleased with SCIO's performance. And the outlook for that business and the demand for future years continues to remain very good. On your broader question on Analytics, we've shared in the past that we would expect our Analytics business to grow in the midteens.

And combined with SCIO, our expectation is that the Analytics business will grow at about 12% to 15% going forward. So that's something which is going to be a strong double-digit growth for us and is clearly going to be a differentiator as compared to many of our peers, and we think that this is going to be an advantage for us going forward..

Okay. And then on the Healthcare. So you have a new leader in place, it looks like the Operations Management business, obviously, ex Health Integrated is starting to recover.

Can you comment on what's being done differently going forward in that business? And how you see normalized growth profile in that part of the business?.

Sure. So in Healthcare, we're really delighted that Sam Meckey is leading all of our Healthcare business today. And Sam has got a tremendous amount of experience and knowledge about the Healthcare business and has operated a business at scale.

Fundamentally, what we're doing out there is creating technology-enabled Healthcare solutions for our clients, which is what was the need of the hour today. And we've been able to expand our client footprint to payers, providers, PPMs and life sciences companies. So that's given us a much larger footprint to play in.

We've also chosen some very targeted and specific service offerings and solutions that we're bringing to market.

And when you combine the data analytics capabilities that we have, the CareRadius technology platform that we've got, the strong onshore and offshore clinical expertise that we've got, these are very, very powerful and unique differentiated Healthcare solutions that are there.

So that's something which was always our core thesis for building up our Healthcare business. And now the building blocks are in place, and we think that this is working very well and some of the early client wins that we've had, certainly seems to validate that strategy..

And our next question comes from Puneet Jain of JPMorgan..

So it seems like based on your prior comments, Healthcare without Health Integrated is doing well, but Travel, Transportation & Logistics and the other verticals continue to beat.

Can you talk about like what's driving weakness there and what do you expect for those verticals going forward?.

Yes, Puneet. I would say that our business is performing well throughout. There are areas and pockets of weakness, which is in utilities. The utilities business for us, as you know, is largely U.K. based. And in the U.K., there's been a fair amount of activity in the utilities industry.

And there, we're driving a lot more automation and a lot more digitization, and that's resulting in a lower headcount and a lower revenue stream associated with that business. So this is something which you're going to find that's going to happen from time to time.

That when we introduced greater amount of automation and we've greater amount of digitization, we might be able to create a greater amount of efficiency. And therefore, there may be periods of time when the work will actually shrink, and that's something which you're seeing it.

But when you take a look at it on a broader time frame and you take a look at what that capability does with other cards in the same industry verticals, it basically attracts more new clients to come towards us, because we can actually deliver a greater amount of benefits to them..

Got it. And what do you expect for Health Integrated impact on margins this year? I know you said, like, about Health Integrated....

Yes. So we expect the Health Integrated to be a headwind of 140 basis to 160 basis points. In the first half, that impact was about 140 basis points..

[Operator Instructions] Our next question comes from Edward Caso of Wells Fargo..

This is Justin Donati on for Ed.

As you talked about the Analytics business continuing to grow faster, can you talk about how much that could incrementally add to the margins going forward?.

Sure, Justin. So right now, we're focusing on growing that business as quickly as possible. The current margins of our Analytics business are about the same as the corporate average for us.

We do think that as we go into more advanced analytics capabilities as well as we start to leverage our proprietary data sets and get into data management, that's going to give us an opportunity to be able to expand margins within Analytics.

So that's something which I think is a longer-term trend that will play out, but for right now, I think we're focusing on growing this business as quickly as we can and establishing very, very strong relationships with our clients and developing new capabilities in the space..

And Justin, as I mentioned in -- that the margin for first half -- gross margin for Analytics business was 34.6% in the first -- in Q2. We do expect that to improve in the second half, and that's one of the drivers for OPM margin expansion as we get a better utilization and productivity in Analytics business..

Ladies and gentlemen, this concludes the program. You may now disconnect. Every one, thank you for attending. Have a great day..