Xerox Provides Update on Government Healthcare Business Strategy14 Oct, 2015
“Today’s announcement builds on the change in strategy from last quarter,” said Ursula Burns, Xerox chairman and chief executive officer. “We are taking additional steps to improve our financial performance and significantly reduce the volatility of our results going forward.”
Late in the third quarter, discussions took place with clients in California and Montana regarding the status and scope of current Health Enterprise platform projects, which evolved to include options to not fully complete the projects. Based on those discussions, Xerox believes it is probable that it will not fully complete the implementation of the platform in these states. Xerox expects to continue to process Medicaid claims using the existing legacy systems, thus providing uninterrupted service for the states’ healthcare providers and constituents.
Xerox remains committed to the implementation and ongoing operation of the Health Enterprise platform for its other state clients. In addition, the company will continue to provide other innovative government healthcare solutions to the 35 states and their citizens whom it serves. Xerox has a diverse portfolio of healthcare solutions and will focus on the more profitable market segments from which it derives over two thirds of its current government healthcare revenues.
As a result of these developments, Xerox is recording a pre-tax charge of approximately $385 million (approximately $240 million after-tax or 22 cents per share) in its third-quarter 2015 results reflecting estimated settlement costs and other impacts from these changes. The charge reflects approximately $130 million for the write-off of receivables and other related assets as well as approximately $30 million of non-cash impairment charges, with the remainder of the charge expected to be cash outflows in future quarters.
Xerox now expects a third-quarter 2015 GAAP loss from continuing operations of 3 to 5 cents per share. Adjusted earnings per share, excluding this charge, is expected to be in line with our guidance of 22 to 24 cents.
Conference Call Details for Third-Quarter 2015 Financial Results
Xerox will report its third-quarter financial results and discuss its 2015 guidance on Monday, October 26, 2015. A conference call to discuss these results will take place that day at 10:00 a.m. ET. The live event can be accessed online at http://edge.media-server.com/m/p/bvuwgwi7/lan/en.
An archived audio webcast of this event will be available shortly following the conference call.
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Non- GAAP Measures
This release refers to the non-GAAP financial measure “adjusted earnings per share” for third quarter 2015 guidance, which excludes the amortization of intangible assets of 5 cents and the Government Healthcare charge of 22 cents.