Shares in Serco (LSE: SRP) lifted in early trade, following the news that it has secured a major new contract to support US healthcare eligibility, which could be worth around $1.25bn.
The international services company will provide processing support for new health benefit exchanges, providing and managing “labour to review, verify and process applications on a ‘cost-plus-fixed-fee’ basis”, and will manage approximately 1,500 US-based staff.
The contract will initially run for one year, valued at $115m, with four further one-year options — including all potential option periods and optional tasks, the contract has a potential total value of around $1.25bn.
Chief executive Christopher Hyman commented:
“We are delighted to be awarded such an important contract to support the Affordable Care Act in the United States and our Americas division looks forward to working with the Centers for Medicare & Medicaid Services.
“We have extensive experience in records management and processing for the US Government, and following the award of the Virginia transport management contract earlier this year we are making excellent progress in our strategy to further broaden the portfolio.”
The news is a boost for Serco following last month’s news that the Serious Fraud Office was launching an investigation into allegations that the company, along with G4S, overcharged the British government by “tens of millions of pounds”.
One of Serco’s biggest supporters during its troubled times has been Invesco Perpetual’s Neil Woodford, who also holds G4S among his market-beating funds.
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> Sam does not own shares in any company mentioned.
