Xerox Corp (NYSE:XRX) Disappoints Hewlett-Packard Company (NYSE:HPQ) In $500 Million Medicaid Contract

Boston, MA 05/30/2014 (wallstreetpr) – Xerox Corp (NYSE:XRX), bidding against Hewlett-Packard Company (NYSE:HPQ) and other Medicaid providers, has won a major contract from the state of New York. The contract involves replacing the state’s Medicaid management system.

The contract spans five years and has an estimated value of $500 million. According to New York Health Department spokesman Bill Schwarz, the contract awaits the approval of the state comptroller.

If the contract wins the approval of the comptroller, Xerox Corp (NYSE:XRX) will take over the management of the system from Computer Sciences Corp that currently runs the platform. Computer Sciences did not bid to retain its contract.

Changing business tact

Xerox Corp (NYSE:XRX) is gradually moving away from its legacy document printing business into Medicaid management system. Competition and change in consumer preferences are some of the reasons that have made document printing a less profitable business, which means that Xerox must look elsewhere to keep generating good profits.

Hewlett-Packard, which fell to Xerox in the latest Medicaid contract in New York, is also looking into the business of providing Medicaid services to offset the troubles in its legacy business of computers and printers. HPQ is currently undergoing a turnaround as the company tries to adjust its operations mainly by lowering costs and channeling resources to promising businesses. The HPQ provides Medicaid management services in 19 states.

Xerox in Medicaid

Xerox Corp (NYSE:XRX) is fast-expanding its presence in the Medicaid service provision. The company is already in charge of the service in at least 12 states in addition to the U.S. Labor Departments and the District of Columbia.

Although Xerox has registered numerous successes in its Medicaid management service provision, Xerox Corp (NYSE:XRX) has also had its fair share of challenges in the segment. It lost a major contract in Texas earlier this month, and the state is even suing the company to recover costs related to some irregularities.

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Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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