July 17, 2015 / 12:59 PM / in 2 years

Xerox to revamp healthcare business, book charge

(Reuters) - Xerox Corp said it would revamp its healthcare IT business and record a related impairment charge of about $145 million in the second quarter.

The company said it would discontinue sales of its integrated eligibility system, a software system which can support operations in call centers and document imaging.

The healthcare business provides administrative and care management solutions to state Medicaid programs and government healthcare programs.

“Going forward, Xerox will focus on managing and completing the current Health Enterprise implementations, and will be highly selective in responding to new Medicaid Management Information System opportunities,” the company said on Friday.

The healthcare business contributes “$2 billion plus” to total revenue, a company spokeswoman said. The company reported total revenue of $19.54 billion for 2014.

“Basically, they are focusing their government healthcare business away from less profitable initiatives that they were pursuing. I see it as a positive,” Cross Research analyst Shannon Cross said.

“From a long-term stand point, it (Medicaid) is a profitable business,” Cross said.

Xerox, which has been shifting its focus to IT services from making printers and copiers, adjusted its earnings estimate for the quarter ended June to reflect the charge.

The company said it now expects earnings from continuing operations of 9-11 cents per share, below its prior guidance of 17-19 cents per share.

Shares of Xerox, which is expected to report second-quarter results on July 24, were up 1.6 percent at $10.79 in afternoon trading.

Reporting By Arathy S Nair in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel

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