Persistent Systems tanks as big client suspends 2025 forecast; key details

Shares of Persistent Systems Ltd took a beating on Thursday's trade after UnitedHealth Group, a big client, suspended its 2025 forecast as it believes medical expenditures would be higher than anticipated. Its CEO Andrew Witty’s decided to step down abruptly from his post for personal reasons, with the stock crashing 18 per cent in a single day.

Persistent Systems fell 3.58 per cent to hit a low of Rs 5,553.95. The stock has risen 3.29 per cent in 2025 so far against a 14.36 per cent drop in the BSE IT index. 

On outlook withdrawal, UnitedHealth Group said care activity continued to accelerate while also broadening to more types of benefit offerings than seen in the first quarter, and the medical costs of many Medicare Advantage beneficiaries new to UnitedHealthcare remained higher than expected.

Witty exit comes only a few weeks after UnitedHealth cut its annual forecast and reported its first earnings miss since the 2008 financial crisis. UnitedHealth  had last suggested EPS of $24.65 to $25.15 per share and adjusted earnings of $26 to $26.50 per share in April. 

Add to that a Reuters report suggested that the US Department of Justice is carrying out a criminal investigation into UnitedHealth Group for possible Medicare fraud, the Wall Street Journal reported on Wednesday. 

A total of 60 per cent of Persistent Systems' FY25 incremental revenue came from healthcare segment. For the March quarter, Persistent System's total contract value (TCV) came in at $517 million, with TCV of new bookings at $329 million. Its top five clients accounted for 32.7 per cent of the IT firm's revenue, the IT firm said in an investor presentation in April. It had only four $75 million-plus clients in Q4. 

"Higher quantum of renewals are envisaged. The sequential decline reflects seasonality. Persistent reported healthy growth across clients and did not face any cancellations," Nuvama said in April post the IT major's Q4 results.

In its earnings call, the Persistent Systems' management said it was bullish on the healthcare sector, given how the healthcare segment grew very well towards the last two quarters. 

"Within healthcare we are pretty confident that we will have a decent trajectory. There maybe a few quarters here or there because of all these macroeconomic and DOGE and USAID impacts to our customers. But overall, both healthcare and the company should do well," the management said last month.