Serco Group PLC (LON:SRP) saw its shares jump in early morning trading Wednesday after it secured a contract from the US Department of Health and Human Services to help determine healthcare eligibility of citizens on Federal Health Insurance Exchanges.
The FTSE 250 outsourcer said the contract with the department’s Center for Medicare & Medicaid Services (CMS) had a one-year base period and four one-year option periods, with an estimated value of around US$900mln if all option years are exercised.
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The focus of Serco’s role will be to verify applicant’s eligibility for health insurance benefits as US citizens enrolled or renewed Qualified Healthcare Plans on the federal exchanges.
Serco added that the new contract was forecast to deliver cost savings for CMS against a previous contract, which is scheduled to end on June 30, as the company developed further process efficiencies and technological improvements; the proportion of the contract delivered on a fixed price basis had also been increased.
The group has been providing processing support to the CMS since July 2013, with the last 12 months generating US$210mln for Serco through the existing contract.
Serco shares were up 3.6% at 100p.
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