Cognizant Technology Solutions, which carries out a major part of its global operations from India, has said that it may witness some losses due to uncertainty over continuation of $520 million contract with US-based healthcare services firm Health Net.
Another US healthcare major Centene on Thursday said it had decided to buy Health Net in a cash and stock deal worth $6.3 billion. The acquisition is expected to be completed by early 2016.
"The planned implementation of a seven-year master services agreement for end-to-end administrative services between Cognizant and Health Net, first announced in August 2014 and scheduled to begin in mid-2015, is being deferred while Health Net and Centene complete the merger review and approval process," Cognizant said in a statement.
Cognizant still remains positive about achieving its revenue guidance of $12.24 billion in 2015, despite seeing losses due to Centene's acquisition of Health Net.
"Despite the anticipated loss of approximately $100 million in incremental revenues during 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 reported 20% growth in revenues for the first quarter ending March, while its top Indian rivals posted disappointing earnings during the same period.
Cognizant recorded 9.7% increase in profit at $382.9 million during the quarter, strengthening the view that it remains insulated from the concerns that plague Indian firms such as Tata Consultancy Services (TCS) and Infosys.
The company, which employs a major chunk of its global workforce of 211,700 in India, raised its revenue growth outlook for 2015 to 19.3%.