Xerox Beats HP for Estimated $500 Million N.Y. Medicaid Deal

Xerox Corp. (XRX) won an estimated $500 million contract to replace New York’s Medicaid management system, the biggest in the U.S.

The five-year computer-services agreement must still be approved by the state comptroller, according to an e-mail from Bill Schwarz, a spokesman for the New York Health Department. Computer Sciences Corp. (CSC), which runs the current system, didn’t bid.

Xerox, based in Norwalk, Connecticut, was vying against Hewlett-Packard Co. (HPQ) for the deal as they battle for dominance in the market for Medicaid, the joint state-federal health insurance program for the poor.

Jennifer Wasmer, a spokeswoman for Xerox, said in an e-mail that the company doesn’t comment on “pending business opportunities.”

Sarah Pompei, a Hewlett-Packard spokeswoman, said the company has a record spanning 45 years in health-care internal technology. “As the nation’s largest provider of Medicaid services in 19 states, HP is well equipped to effectively manage this program for New York,” Pompei said in an e-mailed statement.

Xerox gained 0.75 percent to $12.15 as of 4:15 p.m. in New York trading, while Palo Alto, California-based HP fell 1.8 percent to $33.10.

Xerox performs Medicaid work for at least 12 states, the District of Columbia and the U.S. Labor Department. It’s expanded into the field to offset losses and slower growth in its core document-printing segment.

To contact the reporter on this story: Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net Jeffrey Taylor, Michael Shepard

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