* Sees 2nd-qtr revenue $2.50 bln-$2.53 bln vs est. $2.54 bln
* Demand for healthcare services down as clients adjust to
* Shares fall as much as 7 pct
(Adds investor comments, updates shares)
By Sruthi Ramakrishnan
May 7 Technology outsourcing company Cognizant
Technology Solutions Corp said growth in its North
America healthcare business would remain slow this quarter due
to lower spending by customers adjusting to U.S. healthcare
Cognizant's shares fell as much as 7 percent after the
company also forecast revenue for the quarter below analysts'
The company, which has grown at a blistering pace in the
last few years, said it expects revenue to grow by at least 16.5
percent in 2014, its slowest in five years.
"They are doing all the right things, it's a question of the
end-markets they are selling to," Ralph Bassett, a portfolio
manager at Aberdeen Asset Management, told Reuters.
Aberdeen held 1.5 million shares in Cognizant at the end of
The company provides services such as claims processing,
billing and call center operations to insurers, hospitals and
some state-run healthcare exchanges set up under President
Barack Obama's Affordable Care Act, also known as Obamacare.
Users have been slow to adapt to the changes as the
exchanges, including the federal HealthCare.gov site, have been
plagued by glitches that stymied access for millions of people.
"True consumption of healthcare services was down in January
and February as people adjusted to the evolving healthcare
reimbursement structure," Cognizant President Gordon Coburn said
on a call.
Revenue growth in North America, Cognizant's largest market,
slowed to 16.1 percent in the first quarter ended March 31 from
16.3 percent a year earlier.
"We do not expect a significant rebound in the second half
in healthcare," Coburn told Reuters in an interview.
Revenue from the company's global healthcare business grew
20.8 percent, accounting for a quarter of the total revenue.
Revenue from Europe rose 35 percent, the strongest growth
since the company started breaking out revenue by region two
years ago. Europe contributed about 20 percent to total revenue.
India-based rivals Tata Consultancy Services Ltd
and Infosys Ltd also reported better-than-expected
profit for the period.
Cognizant forecast revenue of $2.50 billion to $2.53 billion
for the current quarter, slightly below the average analyst
estimate of $2.54 billion, according to Thomson Reuters I/B/E/S.
Net income rose 23 percent to $348.9 million, or 57 cents
per share, in the first quarter. Revenue increased about 20
percent to $2.42 billion.
Analysts on average had expected earnings of 55 cents per
share on revenue of $2.43 billion.
Shares of Teaneck, New Jersey-based Cognizant, most of whose
employees are based in India, were down 4.4 percent at $47.03 in
afternoon trading on the Nasdaq on Wednesday.
(Additional reporting by Soham Chatterjee in Bangalore; Editing
by Kirti Pandey and Saumyadeb Chakrabarty)