Cognizant profit increases 86%; company raises revenue forecast

BENGALURU: Cognizant Technology Solutions Corp raised the lower end of its 2017 revenue forecast, easing concerns of tighter spending from its healthcare clients amid uncertainty surrounding the US healthcare policy.

The healthcare sector’s worry has been taking a toll on IT services providers lately, forcing them to give bleak forecasts.

The Republican quest to scrap Obamacare, a major campaign vow by US President Donald Trump, failed last week, after the Senate failed to dismantle the healthcare law.

Cognizant gets a large chunk of its revenue from financial services and healthcare clients.

However, chief executive Francisco D’Souza told Reuters the heavy investments in healthcare have been paying off and the company expected to see continued demand from the sector.

Revenue from healthcare services rose 9.5% to $1.05 billion in the second quarter.

Cognizant raised its lower-end of full-year revenue forecast to $14.70 billion from 14.56 billion.

The IT service provider expects its 2017 revenue to be between $14.70 billion and $14.84 billion. Analysts were expecting revenue of $14.76 billion, according to Thomson Reuters.

Cognizant’s net income rose 86.5% to $470 million in the second quarter ended 30 June, as the IT services provider benefited from lower income tax compared with the year-ago period. Revenue rose nearly 9% to $3.67 billion, slightly above the average analysts’ estimate of $3.66 billion.