Cognizant Buys US-based TriZetto To Drive Healthcare Biz
Cognizant plans to acquire TriZetto for $2.7 billion in order to strengthen its position in the healthcare industry. Englewood CO-based TriZetto is an IT software and solutions specialist for healthcare industry and comprises approximately 3,700 employees. Cognizant, which now garners over 26 percent of its revenues, expects the acquisition to “significantly accelerate” its market position.
Until recently, healthcare was the second-largest source of revenue, behind only financial services, for Cognizant, followed by TCS, Infosys, HCL and Wipro. According to the company, the deal will give the firm access to multiple software platforms, roughly $1.5 billion of potential revenue synergies over the next five years, and will also enhance the firm’s overall competitiveness in the healthcare space.
With more than $3 billion in combined healthcare revenue, Cognizant and TriZetto will serve nearly 245,000 healthcare providers, as well as approximately 350 payers with over 180 million covered lives in the U.S, said the company release. The deal is likely to position Cognizant to address the rapidly-changing healthcare marketplace–currently 17 percent of U.S. GDP- with next-generation solutions that increase efficiency, reduce costs and improve healthcare outcomes.
“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,” Francisco D’Souza, CEO of Cognizant, said in a statement.
He added that the integrated portfolio of capabilities across technology and operations will uniquely position Cognizant to help clients drive higher levels of operational efficiency, while re-imagining care for the future. We look forward to welcoming the TriZetto team into the Cognizant family and creating a truly differentiated and sustainable foundation for healthcare.
Under the terms of the deal, TriZetto’s team will become part of Cognizant’s existing healthcare business, which serves over 200 clients in the United States. The acquisition will be funded through a combination of cash and debt, including $1 billion secured through financing. The deal is expected to close in Q4 2014.
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