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LexisNexis Exploits Adjacent Markets

Over the last few years, LexisNexis has been steadily expanding from its core legal and financial solutions into lucrative adjacent markets such as healthcare, insurance, and law enforcement.  It has done this by making a series of acquisitions of companies that combine content and data with analytics and technology.

Last month, LexisNexis announced that it was expanding its risk division by acquiring two companies: Enclarity Inc, a healthcare provider data and information solutions company; and Mapflow, a provider of location and risk intelligence solutions to the global insurance industry.  The two companies will be integrated into LexisNexis Risk Solutions, a  division that was split from LexisNexis Legal & Professional    in January 2011.

LexisNexis Risk Solutions serves the risk information industry with services including data and analytics, fraud detection and prevention, identity verification and authentication, investigation, receivables management, and screening. Users include law enforcement, government agencies, financial services firms, collection agencies, insurance and healthcare providers, hiring managers, and other professionals.

The acquisition of Enclarity will enable LexisNexis Risk Solutions to strengthen its healthcare business, a market segment it has been actively pursuing. In September 2012, it acquired EDIWatch Inc, a provider of fraud, waste, and abuse technology solutions exclusively for the healthcare industry. Then in July 2013, Reed Elsevier, parent company of LexisNexis, transferred MEDai, a clinical analytics company it bought in January 2008, to the LexisNexis Risk Solutions’ healthcare division.

The decision to expand its healthcare business was driven by the need for healthcare organizations to improve access and efficiencies following President Obama’s introduction of the Affordable Care Act. LexisNexis has identified this adjacent market as an opportunity to sell healthcare organizations enterprise technology and information.

The purchase of Mapflow will strengthen LexisNexis Risk Solutions products for the insurance market. It will bolster a strategic relationship that LexisNexis entered into in November 2012 with BuildFax, a service that provides insurance companies with building permit information to enhance their ability to identify, assess, and manage risks.

LexisNexis Risk Solutions has also significantly invested in the law enforcement, identity management, and fraud detection markets in recent years. In April 2013, it bought identity authentication technology from RSA [2], the security division of EMC. The technology is used to verify a person’s identity in real time using dynamic knowledge-based authentication.

In August 2013, LexisNexis Risk Solutions acquired the remaining 55 percent of WorldCompliance [3], a provider of global anti-money laundering and compliance services and technology. This complements a previous acquisition in 2011 of Accuity and enhances LexisNexis Anti-Money Laundering Solutions.

Hugh Logue, Sr. Market Analyst (Legal) of Outsell writes in his latest Insight:  “These acquisitions highlight LexisNexis’ successful and focused market diversification strategy, a strategy that is essential for legal information providers to grow when the core legal market remains flat.

Early indications show that the strategy has been a success.  Between 2007 and 2011, while LexisNexis’ compound annual growth rate was -0.2%, LexisNexis Risk Solutions grew by 2.5% over the same period. Although Risk Solutions has already made a return on investment, this is likely to increase over the next few years as it has selected markets with strong long-term growth potential.

Source:  Outsell Inc.

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