About Newkirk Products, Inc.

Financial firms and health institutions focus on making clients wealthy and healthy, respectively. So, they might be wise to turn to DST Systems to handle their information processing tasks. The company provides information processing software and services to the mutual fund, insurance, retirement, and healthcare industries. The company's financial services segment offers software and systems used to handle a wide range of tasks including shareowner recordkeeping, investment management, and business process management. Among the healthcare offerings are claims adjudication and benefit and care management. DST makes most of its sales to customers in the US. The company was acquired by SS&C Technologies Holdings in 2018.

Change in Company Type

In 2018, SS&C Technologies Holdings, a financial services software company, paid about $5.4 billion for DST. The transaction significantly increased SS&C's scale, boosting its revenue to from $1.6 billion to a combined $3.9 billion. The deal SS&C into the US retirement and wealth management markets while adding more than 110 million investor positions across DST's client base. DST become a wholly owned SS&C subsidiary.

Operations

DST Systems' Domestic Financial Services business produces about 55% of revenue. The segment supports direct and intermediary sales of mutual funds, alternative investments, securities brokerage accounts, and retirement plans. Its software also handles reports to investors for confirmations, statements and tax forms, web access, and electronic delivery of documents. Systems include TA 2000 and TRAC. The company offers its AWD workflow software to clients and licenses it to third parties.

The International Financial Services segment, which accounts for almost a quarter of its revenue, offers investor and policyholder administration and technology services on a Remote and BPO basis in the UK and in Canada, Ireland, and Luxembourg through the IFDS joint venture.

The Healthcare Services segment, which provides medical and pharmacy claims administration, generates about a fifth of sales. The segment provides healthcare organizations with pharmacy and healthcare administration software and health outcomes optimization services. Specific tasks handled by DST software include claims adjudication, benefit management, care management, and business intelligence.

DST sold its North American Customer Communications business in 2016 for about $410 million, followed by the sale of its UK counterpart in 2017 for about $45 million.

DST operates its own data centers that provide secure infrastructure for its products and services.

Geographic Reach

The US is DST Systems' largest market, accounting for about 75% of sales. The UK is its largest international market with about 25% of sales. The Kansas City, Missouri-based company also has customers in Australia, Canada, and several other geographic markets.

Sales and Marketing

DST Systems markets its products directly and through subsidiaries, joint venture affiliates, and strategic alliances. The Domestic Financial Services business works in some areas through joint ventures with State Street Corp. In the US, the companies work through Boston Financial Data Services and through International Financial Data Services overseas.

DST's five largest customers overall account for about 25% of its revenue. The healthcare business is the more heavily concentrated with its five largest customers generating almost half of revenue, including nearly 20% from one customer. International Financial Services' five largest customers supply almost 55% of the segment's revenue with the largest customer generating nearly 25%.

Primary customers for Financial Services are mutual fund managers, insurers, and platform providers. The main healthcare customers are managed care organizations, preferred provider organizations, third-party administrators, dental, vision, and behavioral health organizations. The company also works with government sponsored programs such as the Health Insurance Exchanges that operate under the Patient Protection and Affordable Care Act, Medicare Advantage, Medicare Part D, and Medicaid.

Financial Performance

Charting DST Systems' five-year revenue record shows a dip to about $1.4 billion in 2015 before rebounding in 2015 and 2016, following a series of divestments and acquisitions.

In 2017 revenue jumped about 42% to $2.2 billion, which include reimbursements for out-of-pocket expenses (about 6% of total revenue). A good chunk of the increase came from BFDS and IFDS UK, in which DST took controlling interest in 2017.

Net income increased about 6% to $451 million in 2017 from 2016 due to the acquired interests in BFDS and IFDS UK. The company also recorded a gain on the sale of securities in 2017.

DST's cash fell to about $80 million in 2017 from $199 million in 2016. A difference was that the company had about $248 million from discontinued operations that it didn't have in 2017.

Strategy

The acquisition by DST Systems by SS&C Technologies unites two major players in financial software. The combined product portfolios cover a wide range of financial services and it provides SS&C with DST's healthcare component. The deal doesn't do much, however, to expand their geographic reach other than to deepen their UK business. The companies are not strangers. SS&C bought DST's Global Solutions subsidiary in 2014.

Mergers and Acquisitions

DST Systems has been active on the acquisition front to complement its product line and expand into new geographic areas. DST has balanced its acquisition strategy by purchasing technology providers and service providers, with an emphasis on business process outsourcing concerns and consulting firms.

In 2017 DST acquired the remaining interests in IFDS UK and BFDS that it didn't own for about $330 million. The businesses have been strategically important to DST, which intends to make enhancements as full owner.

In 2016 DST bought Kaufman Rossin Fund Services , a provider of administration services to the investment community, for $95 million. This acquisition provides DST with products for the alternative investment market.

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Newkirk Products, Inc.

15 Corporate Cir
Albany, NY 12203-5177
Phone: 1 (518) 862-3200
Fax: 1 (518) 862-3399

Stats

  • Employer Type: Public
  • Employees: 270

Major Office Locations

  • Albany, NY