- Serco’s initial contract with the US ends this month
- Group’s share price rose by 4% earlier and is now up over 3%
Outsourcing group Serco has seen its share price edge up over 3 per cent after securing a contract to continue providing health insurance eligibility support in the US.
As part of the deal, worth around £671million, Serco will continue to help verify insurance claimant eligibility for health insurance benefits through the Federal Health Insurance Exchanges.
The US Department of Health and Human Services has appointed Serco for up to a further five years when its current contract ends in June.
The government contractor will process applications at three sites in the US, verify documents and provide customer services to those buying health insurance.
Serco’s update comes weeks before its existing-five year contract on former President Barack Obama’s signature healthcare bill was due to expire. Current US president Donald Trump has vowed to repeal Obama’s healthcare reforms.
Rupert Soames, Serco’s chief executive, said: ‘Serco has developed a strong working partnership with CMS to provide it with vital consumer eligibility services.
‘Over the past five years we have assisted millions of Americans by adjudicating their health insurance applications, using a combination of skilled staff and process automation to drive down costs and protect programme integrity.
‘We look forward to delivering additional innovation and continued transformation of the operations, as we further develop the automated processing platforms and staff expertise to provide even better value and efficiency to citizens.’
After the announcement was made, the group’s share price rose by around 4 per cent, but is currently up 3.09 per cent or 2.98p to 99.43p.
FTSE 250 listed Serco said revenues from its existing contract with the US came in at £157million over the last year.
Robin Speakman, an analyst at Shore Capital, said: ‘Given rolling uncertainties over US healthcare provision, this contract renewal provides some welcome certainty to our eyes for Serco.’