Tech

Cognizant Buys Health-care IT Provider

To shore up its declining health-care business, Cognizant scores its biggest deal yet.
Iris DorbianSeptember 15, 2014

In its biggest deal ever, New Jersey-based Cognizant Technology Solutions has agreed to buy Colorado health-care IT services provider TriZetto for $2.7 billion.

An information technology, consulting and business process outsourcing company, Cognizant also provides claims processing, billing solutions and call center operations to insurers, hospital and health-care exchanges established under the Affordable Care Act.

Cognizant’s acquisition of TriZetto from private equity firm Apax Partners could boost revenue for the company’s sluggish health-care business. According to Reuters, TriZetto, whose services include care management and administration of benefits,  reaches 245,000 health-care providers, “representing more than half of the insured population in the United States.”

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The newswire notes that Cognizant’s revenue for its healthcare division dropped considerably in the last three quarters. In fact, in August, the company forecast its slowest full-year sales growth in its 20-year-history.

Cognizant CEO Francisco D’Souza said: “Healthcare is undergoing structural shifts due to reform, cost pressure and shifting responsibilities between payers and providers. This creates a significant growth opportunity, which TriZetto will help us capture.”

Investors initially greeted the news positively as Cognizant’s shares jumped almost 3% in Monday’s pre-market trading session. But by 4 p.m. on Monday the stock was down 1% from Friday’s close.

Cognizant anticipates revenue synergies of $1.5 billion the next five years as a result of the deal, which is expected to close in December. The company has secured $1 billion in financing and will pay a combination of cash and debt for TriZetto.

Source: Reuters Cognizant to buy TriZetto to boost healthcare business