IT Services Provider Cognizant Says Healthcare to Drive Growth

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IT Services Provider Cognizant Says Healthcare to Drive Growth
Cognizant Technology Solutions Corp expects its healthcare business to drive growth this year, helped by its acquisition of healthcare IT services provider TriZetto Corp and the implementation of the U.S. Affordable Care Act.

Shares of Cognizant, which reported higher-than-expected quarterly revenue on Monday, rose as much as 11 percent to a record high in late morning trading.

Revenue from the company's healthcare business surged about 43 percent to $879.1 million in the first quarter, accounting for nearly a third of its total revenue.

"The pharma segment is experiencing a spending recovery while the healthcare providers seems to be spending more, reflecting increased clarity on Affordable (Healthcare) Act," Cowen & Co analyst Moshe Katri told Reuters in an email.

Barclays analyst Darrin Peller said companies that have more exposure to healthcare and financial industries, and also have strong digital offerings, are expected to enjoy "solid growth".

Cognizant's digital technologies and services help customers improve their online and mobile businesses.

The company expanded its digital offerings last year when it acquired Cadient Group, a provider of digital marketing services for the healthcare industry, and Odecce, which provides online and mobile services to companies in Australia and New Zealand.

Cognizant Chief Financial Officer Karen McLoughlin said on Monday that the adoption of digital services was notably strong in the financial services business, mainly banking.

The company was also seeing strong demand for its digital offerings from retail and manufacturing clients.

Cognizant raised its forecast for full-year adjusted profit to at least $2.93 per share from $2.91 and for revenue to at least $12.24 billion from $12.21 billion.

Cognizant's net profit rose 9.7 percent to $382.9 million, or 62 cents per share, in the quarter ended March 31.

Excluding items, Cognizant earned 71 cents per share.

Revenue rose 20.2 percent to $2.91 billion.

Analysts on average had expected a profit of 70 cents per share and revenue of $2.89 billion, according to Thomson Reuters I/B/E/S.

Cognizant's shares were up 9.4 percent at $64.73 on the Nasdaq, after hitting a record high of $65.55 earlier in the session.

© Thomson Reuters 2015

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