Serco wins £570m contract to run US public health insurance schemes
British outsourcing giant Serco has won a $690m (£573m) contract from the US government to administer the country’s public health insurance schemes.
Serco will run back-office delivery of America’s public health insurance initiatives in determining whether US citizens are eligible to buy coverage through the government-backed schemes.
Serco’s renewed contract, which it first won back in 2013, will run for four years and seven months from 1 July 2023, where it is expected to generate revenues of around $690m.
Serco chief executive Mark Irwin said today that the firm was “grateful” to the US government for renewing the contract.
More than 35m Americans now receive coverage under America’s various federal insurance schemes that were expanded dramatically under president Barack Obama’s Affordable Care Act (ACA).
The 2010 ACA, which is often referred to as Obamacare, expanded coverage under the country’s existing public health insurance programmes by boosting eligibility for the schemes.
Serco became one of the USA’s most highly paid government contractors after being awarded the $1.25bn contract to run the ACA initiative in 2013.
Peel Hunt’s analysts noted that the $151m per annum revenues from the US government contract equal around three per cent of Serco’s annual income.
Shares in London-listed Serco traded slightly lower in today’s morning session, however, as analysts from Peel Hunt said the weakness is likely the result of concerns around the renewal of its Australian immigration contract.