Jeff Margolis, the former wunderkind CIO of the HMO world, is now CEO of Trizetto. As this somewhat fawning piece in the business section of the NY Times explains, Trizetto has grown to be a $300m revenue company, providing administrative IT outsourcing for health plans. Far be it from me to suggest that there was anything missing from this piece, and I do have admiration for anyone who can grow that big a company in under ten years; however, it might not have tested the NYT’s Melinda Ligos’ investigative powers too much to do the odd Google search and let the casual reader know a few other things about Trizetto.
For instance, while Trizetto may have been growing its revenue since 1998, it’s still managed to lose huge amounts of money over that time, and only just made its first profit. It’s lost over $280m in the last three years alone. Now that includes some fake losses (presumably write-downs from acquisitions) but even so, stripping out those write-downs, it looks like Trizetto lost $30m on $90m revenue from operations in 2000, made less than $3m on $218m in 2001 and made $13m on $265m revenue in 2002. However, these numbers are indeterminate because so much was written off that it’s impossible to tell accurately what was going on. The past quarter they made an official profit in terms of GAAP of just under $1m, although they guided down their revenues for the future. Still, you’ve got to wonder how well they would have done over time if they hadn’t been lucky enough to get out in the eHealth IPO window of 2000, and have a big reserve of cash to sit on.
Even more interestingly, there was no mention of the huge spike in Trizetto’s stock price immediately after its IPO which priced at $9 in 1999 but was up at over $80 at the height of the bubble in March 2000. If you had bought in then (as one reader who did lamented to me) you’d have seen your money drop by over 95% over three years. OK that may not be Trizetto’s fault alone, but the event that started the plunge was a very wierd announcement that they were going to take over IMS Health, the much bigger health care data company. That may not have been the best strategic move that Margolis ever made, although they ended up getting the Erisco unit from IMS as part of the deal.
I assume that Trizetto’s customers are happy and that the company will go onto be a big player. But the average NYT reader might want to know a little more about its background than Jeff Margolis’ health problems and that he used to hold company meetings in a local phone booth.