Perot Systems Wins $550 Million Contract Extension

Consulting and systems-integration firm Perot Systems Corp. said Thursday that it has won a 10-year, $550 million contract extension with Tenet Healthcare Corp., the No. 2 U.S. hospital chain. The agreement extends an existing seven-year contract, under which Perot will provide software and systems to Tenet, with a focus on building Web-based interfaces between employees, physicians, and other health-care providers. The new contract will expire in July 2011.

The renewal represents Perot's growing emphasis on the health-care market. It now focuses on the health-care, financial, and manufacturing industries. "It's one of their strong verticals," says Barrington Research analyst Michael Hutchison. "Health care is now very close to the size of their financial vertical."

On Monday, Perot revealed a 10-year, $600 million contract to provide IT services to Catholic Healthcare West, another major hospital chain.

Hutchison says Perot Systems is poised for significant growth. The company has been smart to sign long-term contracts, he says, and it should show increasing profits in the coming quarters. "I've got a lot of confidence in their numbers," he says. "When you look at Perot compared to its peer group, it looks very strong."