Systems integrator DXC Technology is selling its healthcare software provider business to an Italian company for $525 million, the latest step in a strategy put in place last year by President and CEO Mike Salvino to put the company’s focus on its enterprise technology stack.
The Lowdown: The sale of the business to Dedalus Group, a privately held healthcare and diagnostic software provider, has been approved by DXC’s board of directors and is expected to close by March 2021.
The Details: The deal, announced this week, will strengthen Dedalus’ capabilities in such clinical IT areas as hospital information systems (HIS), primary and social care, integrated care, and diagnostics, which in turn will improve the effectiveness of healthcare systems in Europe.
According to DXC, its healthcare software business maintains more than 100 million electronic health records, has more than a million users, and counts 80% of the top 15 Fortune 500 healthcare organizations in the United States as customers. It includes a digital health platform designed to improve outcomes by providing actionable insights into the healthcare ecosystem.
For DXC, shedding the healthcare business will accelerate the company’s narrower strategy stressing its enterprise technology offerings. Salvino, a former Accenture executive, took over the top spot at DXC in September, assuming control of a company he said had a complex operating model that, despite strengths in such areas as cloud, analytics, and security, was struggling with delayed revenue, low margins, and slow bookings caused in part by problems with executing on programs for larger customers.
Two months later, he said the company would reinvest in the enterprise technology stack, which includes IT operations, cloud and security services, application and industry IP, data analytics and engineering services, and advisory services. The CEO said at the time that the IT operations business was foundational to the strategy; if done well, customers would return to DXC for additional IT services.
Background: DXC, based in Tysons, Virginia, was created in 2017 with the merger of Hewlett Packard Enterprise’s Enterprise Services unit with CSC.
The Buzz: “The sale of our healthcare provider software business to Dedalus is consistent with our strategy of focusing on the Enterprise Technology Stack and rationalizing our portfolio,” Salvino said. “The transaction promises to be beneficial to all our key stakeholders, including our customers and our people.”
“The addition of DXC’s healthcare software business will accelerate our growth initiatives that started three years ago and benefit the more than 3 million healthcare professionals who use our technology to treat more than 200 million patients every year,” said Giorgio Moretti, executive chairman of the Dedalus Group.
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