Teaneck-based IT services provider Cognizant is projecting revenue growth of 16.5 percent in 2014 as demand for its business grow, aided partly by continuing implementation of the Affordable Care Act.
Cognizant is forecasting revenue to reach $10.3 billion in 2014, up from $8.8 billion this year, a level that marked a 20 percent increase from 2012. The company also announced a 2-for-1 stock split Wednesday in effort to appeal to investors.
Chief Financial Officer Karen McLoughlin said the company's health care segment saw growth last year from large customers, generally insurance companies, who ramped up their information technology capabilities in preparation for Obamacare. That trend is expected to continue in 2014 as businesses implement requirements under the ACA. Cognizant expects more demand from government clients including states that run their own exchanges.
"With the ACA, there is so much work to do, "McLoughlin said. "Not just with the exchanges but how it gets managed and then there is the ultimate conversation of how we transform the delivery of health care going forward."
Cognizant said it is seeing growth across business categories including financial services, its largest segment responsible for 42 percent of revenue. Health care and life sciences is the company's second largest segment of business, responsible for 25.6 percent of revenue in 2013.
McLoughlin said Cognizant expects to grow in accordance with the expansion of health care technology as more companies adopt mobile platforms, embrace social media, and delve further into analytics in order to improve communication with patients.
This year's revenue forecast is less than the 20 percent revenue growth Cognizant reported in 2013, though McLoughlin added that the company at this time last year projected about 16 percent growth in 2013. That figure was surpassed and helped by four acquisitions, she said.
Asked about company strategy for 2014, McLoughlin said, "We are always very active in the market looking to acquire companies that fit our strategy at a reasonable price."
Cognizant issued the guidance Wednesday as part of its fourth-quarter earnings report. Net income rose to $324.3 million, or $1.06 per share, in the quarter ended Dec. 31, up from $278.8 million, or 92 cents a share, in the fourth quarter of 2012. Quarterly revenue rose 21 percent to $2.36 billion.
Cognizant also announced a two-for-one stock split on its Class A common stock in the form of a 100 percent stock dividend. Stockholders as of February 21 will be entitled to one additional share for each share held on that date. The stock dividend distribution is expected to occur about March 7.
Cognizant expects the stock to begin trading on a post-split basis the business day after the distribution date.