UPDATE 2-MEDecision to be bought by insurer for $121 mln

(Adds analyst comment, updates shares)

BANGALORE, June 18 (Reuters) - Healthcare technology company MEDecision Inc (MEDE.O: Quote, Profile, Research) said on Wednesday it agreed to be bought by insurer Health Care Service Corp for about $121 million, or $7 a share.

The price was more than four times the closing price of the stock on Tuesday. The shares, which were halted prior to the announcement, jumped to $6.65 in morning trade on Nasdaq.

Before Wednesday's gains, the shares had fallen more than 40 percent this year, and plummeted 70 percent last year.

"MEDecision had a difficult time being a public company that relied on only a few deals to close per year at very little visibility, but companies that operate in a longer term aspect can view this technology as a lot more valuable," Pacific Growth Equities analyst Derrick Wood said.

MEDecision provides healthcare information technology services under its brands Alineo and Nexalign. Privately held Health Care Service operates the Blue Cross and Blue Shield insurance plans in Illinois, New Mexico, Oklahoma and Texas.

The deal is expected to close late in the third quarter or early in the fourth quarter of 2008, Wayne, Pennsylvania-based MEDecision said in a news release.

Lazard advised MEDecision on the deal, the company said. (Reporting by Varsha Tickoo in Bangalore; Editing by Bernard Orr)