The TriZetto Group, Inc. was incorporated in Delaware on May 27, 1997 as MC Health Holdings, Inc. On October 1, 1997, TriZetto exchanged shares of its common stock for all of the equity interests in Margolis Health Enterprises, Inc., a company under common control with TriZetto providing information technology consulting services to healthcare organizations, and Croghan & Associates, Inc., a company that pioneered on-line Electronic Funds Transfer (EFT) technology. As a result of the transaction, Margolis Health Enterprises, Inc. and Croghan & Associates, Inc. became wholly owned subsidiaries of TriZetto. On March 18, 1998, MC Health Holdings, Inc. changed its name to The TriZetto Group, Inc.

On February 5, 1999, concurrently with the acquisition of CBS, TriZetto acquired all of the partnership interests in HealthWeb Systems, Ltd., an innovator in web-based technology for delivering customizable healthcare applications designed for health plan administrators, insurance providers, patients and hospitals. TriZetto acquired HealthWeb in exchange for: (i) $40,488.31 (net of certain company payment obligations) cash; (ii) $9,924 in promissory notes; and (iii) 83,000 shares of TriZetto common stock (20% of which shares were held in escrow for two years to secure certain indemnification obligations under the purchase agreement). All of the assets and liabilities of HealthWeb were later transferred to CBS and HealthWeb Systems, Ltd. was dissolved in March 1999.

On November 29, 1999, TriZetto acquired all of the issued and outstanding capital stock of Novalis Corporation, a healthcare application services provider offering management, technology and administrative solutions for provider groups and managed care organizations. TriZetto acquired Novalis in exchange for: (i) $5,001,515.41 cash; and (ii) 549,786 shares of TriZetto common stock (366,524 shares of which were held in escrow for one year to secure certain indemnification and offset obligations under the purchase agreement). As a result of the transaction, Novalis became a wholly owned subsidiary of TriZetto.

On October 2, 2000, TriZetto acquired from IMS Health Incorporated all of the issued and outstanding capital stock of Erisco Managed Care Technologies, Inc., a leading provider of administrative software for healthcare payer organizations. Erisco's solutions are used by more than 125 payer organizations serving over 70 million lives globally. TriZetto acquired Erisco in exchange for 12,142,857 shares of TriZetto common stock. In connection with the acquisition, TriZetto issued an aggregate of 231,404 restricted shares of TriZetto common stock, and granted options to purchase an aggregate of 1,200,000 shares of TriZetto common stock, to Erisco employees. As a result of the transaction, Erisco became a wholly owned subsidiary of TriZetto.

On December 1, 2000, TriZetto acquired all of the issued and outstanding capital stock of Resource Information Management Systems, Inc. ("RIMS"), the nation's largest provider of automated claims processing technology for healthcare benefits administrators. TriZetto acquired RIMS in exchange for: (i) $3,000,000 cash; and (ii) 2,588,427 shares of TriZetto common stock (20% of which shares were held in escrow for one year to secure certain indemnification obligations under the purchase agreement). In connection with the acquisition, TriZetto issued an aggregate of 82,553 restricted shares of TriZetto common stock to RIMS employees. TriZetto also assumed RIMS' stock option plan and the vested options under the plan were converted into options to purchase an aggregate of 300,099 shares of TriZetto common stock. As a result of the transaction, RIMS became a wholly owned subsidiary of TriZetto.

On April 12, 2001, TriZetto acquired from Trustco Holdings, Inc. all of the issued and outstanding capital stock of INFOTRUST Company, a technology company providing hosted application services and outsourcing of essential administrative processes to healthcare payer organizations. TriZetto acquired INFOTRUST in exchange for 923,077 shares of TriZetto common stock (15% of which shares were held in escrow for one year to secure certain indemnification obligations under the purchase agreement). As a result of the transaction, INFOTRUST became a wholly owned subsidiary of TriZetto.

On April 26, 2004, the Company acquired all of the issued and outstanding shares of Diogenes, Inc. a provider of transaction-messaging software that provides EDI-class transaction processing across the Internet. This software is used for handling healthcare claims and other business transactions. The final purchase price as of December 31, 2004 was approximately $5.4 million, which consisted of cash payments of $2.2 million, assumed liabilities of $433,000, deferred payments of $2.3 million, and acquisition-related costs of $458,900. The acquisition was accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed on the basis of their estimated fair market values on the acquisition date. The excess of the purchase price over the estimated fair market value of the assets purchased and liabilities assumed was $4.9 million and was allocated to goodwill and other intangible assets. Other intangibles are being amortized over a period of 60 months from the date of acquisition.

On December 22, 2005, the Company acquired all of the issued and outstanding shares of CareKey, Inc. ("CareKey") for cash. The company's products, now re-labeled the CareAdvance Enterprise� suite of advanced care management solutions, address traditional utilization, case and disease management, as well as provide secure, portable and personalized health records to facilitate proactive population management. By improving patient wellness, these solutions better control the total usage of healthcare resources and reduce payers' aggregate usage-driven costs of care for members. While these applications are architecturally engineered to most easily integrate with other TriZetto products such as Facets�, they are also of high value to customers who run enterprise administration systems not developed by TriZetto.

The acquisition was accounted for using the purchase method of accounting. As of December 31, 2005, the excess of the purchase price over the preliminary fair market value of the assets purchased and liabilities assumed was $47.7 million and was allocated to goodwill.

On December 22, 2006, the Company acquired all of the issued and outstanding shares of Plan Data Management, Inc. ("PDM"). PDM is a business solutions company focused on providing software and services to the healthcare industry primarily for payers that service members in Medicare Advantage, Medicare Part D and Medicaid plans. The Company believes that the acquisition of PDM will significantly accelerate its solutions portfolio with new revenue enhancement, Medicare administration and fraud and abuse products.

Because the acquisition was completed on December 22, 2006, there was not sufficient time to finalize the fair market valuation of assets and liabilities acquired as of December 31, 2006. Once the Company receives a final valuation, the estimated purchase price will be adjusted and the allocation between goodwill and identifiable intangible assets will be recorded. The estimated purchase price as of December 31, 2006 was approximately $19.6 million, which consisted of 491,488 shares of the Company's common stock with a value of $16.28 per share, cash payments of $8.0 million, assumed liabilities of $3.1 million and estimated acquisition-related costs of $500,000. The issuance of 491,488 shares of common stock and cash payments of $8.0 million to PDM stockholders and option holders were not completed prior to December 31, 2006, but the amounts were properly accrued for as of December 31, 2006. The acquisition was accounted for using the purchase method of accounting. The acquisition of PDM was not significant to the Company's results of operations and therefore is not required to present pro forma information for the periods prior to acquisition.

On January 10, 2007, the Company announced that it had completed the acquisition of privately held Quality Care Solutions, Inc. ("QCSI"). As previously announced, the definitive agreement for the acquisition was executed on September 13, 2006 and the Company received regulatory clearance for the transaction on December 29, 2006.

QCSI is a provider of healthcare claims administration platforms and consumer-directed health solutions for payers. Enterprise applications include the QNXT product family, the QMACS product family and the web-based MyHealthBank suite of products. These software products are complementary to TriZetto's other products. The Company believes that the combined payment technology footprint will create a broader array of integrated administration and cost and quality of care solution choices for payers. Further, the Company expects to leverage the combined companies' greater scale to accelerate the development and delivery of the next generation of consumer-retail healthcare solutions.

Under the merger agreement, the Company paid to QCSI stockholders, warrant holders and option holders approximately $130.0 million, net of cash received in the merger.

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