Computer Sciences Corporation (CSC) recently announced that it has won a contract from The Maryland Department of Health and Mental Hygiene (MD DHMH), whereby it will be responsible to replace the state’s Medicaid Management Information System (MMIS). Additionally, CSC is also expected to provide fiscal agent services for selected DHMH programs. The five-year base period contract has three two-year renewal options, with the estimated total contract value of $297 million.
The contract includes activities such as developing and implementing new enterprise MMIS solution for healthcare administration that supports MD DHMH. To execute this job, CSC has joined hands with CNSI, of Gaithersburg, Md., which will help in forming a Medicaid Information Technology Architecture (MITA) framework. This system is expected to improve the operations of the company, while at the same time it will also reduce fraud and abuse, and will also provide flexibility to support healthcare mandates.
CSC has never found much difficulty in attracting deals. Apart from Government orders, the company has also won some big ticket private orders in the recent past. Additionally, CSC has a large project pipeline and continues to augment it at regular intervals.
Previously, the company won a $874.0 million contract from the department of Defense. Per the contract, CSC will offer an unmanned aircraft system intelligence surveillance system and investigation services to the Naval Air Systems Command.
The recent deal marks the company’s eighth consecutive government contract win over the past six months. The company reported modest third quarter 2012 results, with EPS exceeding our expectation. Although revenues declined on a year over year basis, the flow of new business improved substantially from the year-ago period.
Despite the intense competition in the IT and cloud computing space from both small and big players such as Accenture plc (ACN) and Hewlett-Packard Company (HPQ), the European exposure and strained federal budgets; we believe that things are beginning to look up given the new business wins.
Currently, CSC holds a Zacks #3 Rank (implying a short-term Hold rating).
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