CACI Set to Acquire Emergint

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A professional services and information technology provider CACI International Inc. (CACI) recently entered into a definitive agreement to purchase Emergint Technologies, Inc. The acquisition, which is expected to be completed by December 1, 2012, is likely to be accretive to the company’s bottom line in the first twelve months.

Emergint, based in Louisville, Kentucky, is mainly engaged in the distribution of a range of healthcare-focused IT-related solutions, which include health data integration and analysis services, data analytics, management and IT consulting, and data and records management solutions to fulfill the requirement of its federal and state level clients. Emergint is expected to earn revenue of $42 million in 2012.

The acquisition appears to be quite a profitable one for CACI International as it will enhance the company’s potential in the healthcare IT industry. Management stated that with the support of Emergint’s data analytics services and its strong associations with national health organizations, the company is likely to solidify its foothold in the growing healthcare IT arena. The acquisition of Emergint will pave new growth opportunities for the company in the critical healthcare IT market.

Previously, CACI International acquired Delta Solutions and Technologies Inc. for expanding its business system solutions and government transformation arenas. The company believes the acquisition of Delta Solutions will be vital in the long run as the federal government continually focuses on achieving clean audit opinions while making better spending decisions.

However, the company needs to be wary of its formidable competitors who include big names such as, CGI Group, Inc. (GIB) and ManTech International Corporation (MANT). CGI Group’s operating unit CGI Federal Inc. (CGI), recently entered into a partnership agreement with Centers for Medicare & Medicaid Services (CMS). Per the contract, CGI Group will be involved in recreating and introducing the official U.S. Government website, namely, Medicare.gov, under the Medicare program. Hence, the company should not become complacent with its contract win spree.

The current Zacks Consensus Estimates for CACI International Inc. are $1.64 and $6.60 per share for the second quarter of fiscal 2013 and fiscal 2013 (ending June 30, 2013), respectively. The estimates represent a year-over-year growth of 8.70% for the second quarter and 11.07% for fiscal 2013. At present, we have a ‘Neutral’ recommendation on CACI International Inc. The stock currently carries a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

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