Affiliated Computer Services Inc., a subsidiary of Xerox Corp. (XRX), entered into a definite agreement to buy Nashville, Tennessee-based CredenceHealth Inc.
This is the fifth acquisition by ACS, since it is acquired by Xerox in February 2010. The other four acquisitions by ACS include the Europe-based Unamic/HCN in February 2011 and Spur Information Solutions in November 2010 and U.S.-based TMS Health in October 2010 and ExcellerateHRO in August 2010.
CredenceHealth is a clinical software developer whose products help collect and analyze patient data to assist hospitals, physicians, nurses, case managers and support core measures and health plans. The software enables users to employ patient information to predict and prevent complications, in turn improving the quality of care.
The addition of CredenceHealth to ACS will allow the former’s clinical surveillance tools to combine with the latter’s Midas software brand that is engaged in improving staff efficiency, providing patient safety and enhancing profitability of hospitals.
The new solution will be named Midas+ Live which will allow ACS to offer a cloud-based solution that actively keeps tab of patients throughout its clinical trial, starting from original diagnosis, laboratory and radiology reports to medications, vital signs and others. Hospital staffs can access these data through a secure password-protected system using any Internet browser.
The attempt is surely going to enhance the quality of healthcare services, thereby generating sufficient demand in the face of growing consciousness over health issues. Consequently, ACS can reap the benefits out of the growing demand, in turn strengthening Xerox’s financial performance in the coming quarters.
Last year proved to be quite fruitful for Xerox with revenues of $21.6 billion, up by 42% from the year-ago level. The company’s net earnings were recorded at $1.30 billion or 94 cents per share compared with $613 million or 70 cents per share in the previous year.
The company expects to see better performance in the near future based on its attempt to grow and expand its business, particularly the BPO. Thus Xerox projects adjusted earnings in the range of $1.05 and $1.10 per share for full year 2011.
However, intensifying competition and availability of sufficient substitutes for Xerox products have limited the company’s prospects to some extent. Thus the shares of Xerox hold a Zacks #3 Rank (Hold rating) in the short term and we maintain a Neutral recommendation in the long term.
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