Cognizant Is Buying TriZetto for $2.7 Billion Because Delivery Models Are Changing

NEW YORK (TheStreet) –– Cognizant's (CTSH) plan to acquire TriZetto for $2.7 billion would create a healthcare technology company poised to capitalize on a sector that is undergoing massive changes as providers and consumers adjust their demands to changes in federal and state laws as well as consumer preferences.

"The acquisition was driven by two large factors," Malcolm Frank, Cognizant Executive Vice President, Strategy and Marketing said in a phone interview with TheStreet. "We think there's tremendous change and opportunity over next decade plus, and from tech standpoint, social and mobile and big data are changing delivery models. We saw those two coming together and the strength that we have in healthcare, there was a unique opportunity to bring the two together."

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Frank explained that the methods of sending software and IT infrastructure to clients are changing, so it made sense to have a partner with "deep industry knowledge" that could a leader in the healthcare space. "There's lots of opportunity in the here and now, and it sets up well for evolution of heathlcare market going forward," he said.

Based in Englewood, CO, privately-held TriZetto is a leading provider of healthcare IT software and solutions. If the deal is approved by federal regulators, TriZetto would add $1.5 billion in revenue to Cognizant over the next five years as well as additional non-linear software revenue. In the press release, Cognizant said the deal would be "immediately accretive to Cognizant's non-GAAP EPS, excluding one-time transaction costs and adjustments." 

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