Cognizant has reaffirmed its 2015 fiscal revenue guidance despite one of its large healthcare clients, Health Net, being acquired by US-based Centene Corporation. The IT major has a five-year contract valued at $520 million with Health Net. The US-based software firm had given a revenue guidance of $12.24 billion for 2015, in May.
Cognizant entered into the master services agreement with Health Net in August 2014 that was scheduled for mid-2015 and going up to 2020. The company said it is being deferred, even as Health Net and Centene complete the merger review and approval process.
“Cognizant expects if the merger of Health Net and Centene is completed, the existing master services agreement will not be implemented as there will likely be overlaps in services and capabilities planned to be provided by Cognizant,” it said in a statement.
“Despite the anticipated loss of approximately $100 million in incremental revenues in the second half of 2015, we are pleased to reaffirm our guidance for the year due to continued strong demand and projected over-performance in other parts of our business. Today’s announcement by Health Net will not impact our ability to achieve our goals for the year,” said Karen McLoughlin, chief financial officer, Cognizant.
Cognizant has negotiated the right to licence certain Health Net intellectual property for incorporation into its healthcare management solutions and as-a-service platforms.
“Announcement by Health Net and Centene is an example how the healthcare landscape is changing with increasing focus on costs, consumerisation and changing regulatory environment driving consolidation and ongoing search for solutions that fundamentally change the business model of healthcare management,” said Gordon Coburn, president, Cognizant.
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