Dell (DELL) announced that WellPoint, Inc. (WLP) has signed a five-year outsourcing agreement for field support and help desk services through Dell Global Services.
Dell will provide technical support to nearly all WellPoint employees in more than 200 U.S. locations as well as its mobile work force. WellPoint employees can now experience a consistent support program across all locations while Dell resolves technical issues in a timely manner.
We remain positive with management’s efforts to increase operational efficiencies, which include outsourcing as in the case of the Dell deal and divestment of non-core division as in the recent sale of its PBM division to Express Scripts the second-largest pharmacy benefits manager in the U.S. based on prescriptions.
WLP is the largest publicly traded commercial health benefits company, and the largest of the Blue Cross Blue Shield (BCBS) plan providers, in terms of membership in the US. The stock has gained approximately 20% since posting a better than expected 1Q09 financial result which was characterized by a sharp decrease in the company’s benefit cost ratio. We are currently reviewing our Buy recommendation based on valuation targets.
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