Cognizant inks $2.7 billion deal to buy health IT firm TriZetto

Cognizant, a global, publicly traded technology consulting and business process outsourcing firm, plans to acquire TriZetto Corp., a privately held health information technology company that serves the health insurance industry and healthcare providers, for $2.7 billion, the companies announced Monday.

News of the deal comes less than a month after word leaked on Aug. 19 that U.K.-based private-equity firm Apax Partners was shopping TriZetto, headquartered in Englewood, Colo., a Denver suburb.

TriZetto claims as clients 350 health plan and third-party benefits administrators that cover more than 180 million people and connects with 245,000 physicians in 30,000 practices, according to the company website.

Cognizant, based in Teaneck, N.J., draws 26% of its revenues from its healthcare unit, serving 16 of the top 20 U.S. health plans and four of the top five pharmacy benefit managers, the company said.

"Cognizant and TriZetto have had a long-term relationship, having jointly served a number of healthcare clients to date," Cognizant President Gordon Coburn said in a release. "This acquisition is a natural fit for us. It represents a great opportunity to integrate services across our three horizons—traditional IT services; high-growth businesses such as management consulting, business process services and IT infrastructure services; and emerging delivery models—and provide even greater value to our clients."

Apax acquired then publicly traded TriZetto in 2008 for a reported $1.4 billion. TriZetto customers Blue Cross and Blue Shield of Tennessee and the Regence Group, a not-for-profit affiliation of Blues plans in Idaho, Oregon, Utah and Washington, reportedly helped fund the transaction as equity investors.

Cognizant intends to pay for TriZetto using cash on hand and debt, having arranged for $1 billion in financing for the deal, it said. The transaction is expected to close this year.

Follow Joseph Conn on Twitter: @MHJConn