The company added it will continue to process Medicaid claims in California and Montana using existing legacy systems in place.
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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.
Medicaid is a state- and federally funded program that provides health coverage for the poor and people over 65.
Xerox recently announced a contract win to handle Medicaid processing for the state of New York. Earlier this year, the company said it would refocus its government health care business after a review.
Xerox remains committed to the implementation and ongoing operation of the Health Enterprise platform for its other state clients.
Montana officials released a statement from Ron Baldwin, the state’s chief information officer.
“Montana is engaged in intense negotiations with Xerox to ensure that Montana taxpayers receive a state-of-the-art system, do not pay for any services not delivered, and are fairly compensated for any delays”. Shares were down less than a fraction of a percent on Tuesday to $10.41.
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On an adjusted basis, Xerox said Tuesday its forecast for earnings is unchanged at 22 cents to 24 cents. The loss would be Xerox’s first since the company ended its March 2010 quarter in the red, according to FactSet data.
