Xerox Sees Q3 In The Red?

(RTTNews) - Document technology and business process services provider Xerox Corp. (XRX) will publish its third-quarter results before the bell on Monday, October 26.

The company is intensely focused on improving its Services margin and is implementing restructuring actions and prioritizing investments to accelerate benefits from its new operating model.

The company expects to incur a loss from continuing operations of $0.03 - $0.05 per share. The company's third-quarter 2015 results will reflect an after-tax charge of about $240 million related to Health Enterprise Medicaid platform implementations.

Third-quarter adjusted earnings per share, excluding charge, is expected to be in line with its guidance of $0.22 - $0.24, while 10 analysts, polled by Thomson Reuters, have a consensus earnings estimate of $0.23 per share for the quarter.

Xerox said, late in the third quarter, discussions took place with clients in California and Montana regarding the status and scope of current Health Enterprise platform projects, which evolved to include options to not fully complete the projects. Based on the discussions, Xerox believes it is probable that it will not fully complete the implementation of the platform in these states.

The company is recording a pre-tax charge of about $385 million (approximately $240 million after-tax or 22 cents per share) in its third-quarter 2015 results reflecting estimated settlement costs and other impacts from these changes.

FY15 Outlook

For full-year 2015, Xerox expects earnings of $0.69 - $0.75 per share and adjusted earnings at the lower end of the $0.95 - $1.01 per share range. Analysts expect the company to report earnings per share of $0.95.

Xerox said it is adjusting 2015 capital allocation plans, increasing share repurchases by $300 million - $1.3 billion and reducing acquisition investments.

Q2 Results

In the last quarter, the company reported net income of $12 million or $0.01 per share compared to $266 million or $0.22 per share last year.

Net income from continuing operations declined to $107 million or $0.09 per share from $255 million or $0.21 per share a year ago. The latest results included $0.05 related to the amortization of intangibles and $0.08 for non-cash software impairment charges.

Adjusted earnings per share were $0.22 for the quarter, versus the previous year's $0.25 per share. On average, 10 analysts polled by Thomson Reuters expected earnings of $0.22 per share. Analysts' estimates typically exclude certain special items.

Total revenue fell 7% to $4.59 billion from $4.94 billion last year. Analysts expected revenue of $4.64 billion for the quarter.

Ursula Burns, Xerox chairman and CEO, said, "We delivered adjusted earnings in line with our guidance, met our Services and Document Technology margin expectations and delivered solid operating cash flow of $349 million in the quarter."

Recent Happenings

Mid-September, Xerox introduced two printed electronic labels to help businesses and government better secure products as they are distributed. The printed electronic labels - also known as "printed memory" - can collect and store information about the authenticity and condition of products.

Xerox Printed Memory is a highly secure, printed label containing up to 36 bits of rewritable memory which can store up to 68 billion points of data. The labels, for example, can be used to determine if a product is genuine and to track how it's been handled during distribution.

The second product, Xerox Printed Memory with Cryptographic Security includes a unique, encrypted printed code (such as a QR bar code) to the memory It can only be read by authorized personnel using a reader which interfaces with a secure smartphone application.

September 1, Xerox announced its acquisition of inVentiv Patient Access Solutions (iPAS), an inVentiv Health company, to expand Xerox's pharmacy solutions portfolio with an offering to help pharmaceutical companies drive product adoption and support patients in minimizing or eliminating financial and reimbursement hurdles.

August 24, Xerox agreed to acquire RSA Medical, a provider of health assessment and risk management, for undisclosed terms. The acquisition, once closed, will expand Xerox's portfolio of healthcare service offerings to payers and life insurers using predictive analytics to enhance member outreach services aimed at improving overall population health.