Obamacare Website Developer Sees Profits Soar

Image: Obamacare Website Developer Sees Profits Soar Cheryl Campbell, Senior vice president of CGI, testifies before the House Energy and Commerce Committee on Oct. 24.

Thursday, 14 Nov 2013 08:50 AM

 

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CGI Group Inc, the Canadian software company partially blamed for the flawed launch of the website of President Barack Obama's new healthcare program, posted a better-than-expected adjusted profit for the fourth quarter.

CGI said its results were helped by its acquisition of Anglo-Dutch rival Logica Plc and strong growth in its U.S. business, mainly due to contracts in the government and health sectors.

CGI is at the center of a political storm in Washington over the rollout of the healthcare.gov website, through which uninsured Americans can sign up for health insurance.

The company is the main contractor for the website.

Contractors have described healthcare.gov as one of the most complicated large-scale information technology systems.

Because of technical glitches since the launch of healthcare.gov on Oct. 1, just a tiny fraction of the hoped-for millions have signed up for insurance on the website, the U.S. government said on Wednesday.

CGI said in October that months of testing would have been preferable, but the testing schedule for healthcare.gov was determined by a federal agency.

However, U.S. Health Secretary Kathleen Sebelius said in October that the private contractors for the website had not requested a delay to its launch.

Excluding items, CGI's profit was 67 Canadian cents per share for the quarter ended Sept. 30, higher than the average analyst estimate of 62 Canadian cents, according to Thomson Reuters I/B/E/S.

The company's net income was C$141 million ($135 million), or 44 Canadian cents per share, compared with a loss of C$168 million, or 58 Canadian cents per share, a year earlier.

CGI's loss in the fourth quarter of 2012 was due to costs associated with its acquisition of Logica Plc.

The company completed its acquisition of Logica in August last year, becoming the world's fifth-largest independent IT services firm.

Montreal-based CGI's revenue rose 53 percent to C$2.5 billion in the fourth quarter.

The company's shares closed at C$37.62 on the Toronto Stock Exchange. The stock has risen 64 percent this year to Wednesday's close, including a 4 percent rise since Oct. 1.

© 2014 Thomson/Reuters. All rights reserved.

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