Accenture Wins Healthcare Deal - Analyst Blog

Technology services and outsourcing company Accenture Inc. (ACN) announced that it has been awarded a contract by the Singapore Ministry of Health. Financial details were not provided.

As per the terms of the contract, Accenture will implement the National Electronic Health Record (“NEHR”) system across Singapore to help the country’s government achieve an integrated healthcare structure, thereby marking Singapore as one the initial countries, worldwide, to use an NEHR system. The system is expected to initialize by April 2011.

The system, designed by the Accenture team, will enhance the quality of healthcare services as well as lower service costs and facilitate service providers to bring out effective healthcare policies for residents. Accenture will be teaming up with technology majors such as Oracle Corp. (ORCL), Hewlett-Packard Co. (HPQ), Orion Health and Initiate Systems Inc., among others to set up the system.

Electronic Health Record (“EHR") helps doctors and hospitals to organize medical records of patients more conveniently, so that clinical histories of patients can be tracked from anywhere in the world, without the hassle of storing hard copies.

We believe that the successful implementation of EHR will create new business opportunities for Accenture.

The system has been recognized by the U.S. Government as a core component to national healthcare reform. The federal government has passed a bill, granting around $19.0 billion in incentives to medical practitioners and hospitals for buying and using EHR systems.

We believe that Accenture has the potential to capitalize on emerging healthcare deals. However, Accenture may have to face stiff competition from Dell Inc. (DELL), the key player in the healthcare industry.

Accenture’s third-quarter revenue increased 8% year over year to $5.57 billion. Bookings in the quarter were $6.43 billion, fuelled by increasing demand for its services. However, fourth-quarter revenue guidance was seasonally weak.

Despite improving trends noticed in Accenture’s businesses, we prefer to remain cautious until the revenue growth rate accelerates. Moreover, we believe that the recent economic turmoil in Europe will considerably rationalize Accenture’s growth prospects.

We currently have a short-term Hold rating (Zacks #3 Rank) on Accenture.