CGI chief says reputation intact despite ‘Obamacare’ woes

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CGI Group Inc.'s role in building the problem-plagued U.S. health-insurance website known as Obamacare has not had any impact on the company's reputation, says the company's chief.

Montreal-based CGI was a key contractor in the roll-out of the U.S. Affordable Care Act's healthcare.gov site, which was plagued by delays, errors and slow speeds for weeks after its launch and proved to be a major embarrassment for President Barack Obama and a field day for political opponents.

CGI's contract with the federal government has not been renewed.

"We are confident this has not affected our ability to conduct or grow our business," GCI president and chief executive officer Michael Roach said on a conference call Wednesday after the company announced strong first-quarter results.

CGI co-founder and chairman Serge Godin told shareholders at the annual meeting later on Wednesday: "We ended up in the eye of a storm between two political parties."

Mr. Roach said on the call that CGI will one day be vindicated when the full story is known.

"We remain confident that in the fullness of time our role, contribution and responsibility in these initiatives will become clearer."

CGI customers around the world have faithfully stuck with the company through the difficulties, he added.

The information-technology giant's bookings certainly do not appear to have been hurt.

CGI said it booked $2.8-billion worth of contracts in the first quarter, 45 per cent of it new business.

Bookings in the previous quarter were $2.5-billion.

"Bookings in the [first] quarter were up, which should allay some investor concerns given the recent negative publicity surrounding the company," Desjardins Securities analyst Maher Yaghi said in a research note Wednesday.

"During the quarter, CGI continued to experience political fallout. Recall that CGI was replaced as the primary contractor of Healthcare.gov, and several state contracts for local healthcare exchanges remain under review. We are not overly concerned with the financial impact this will have on CGI's total annual revenue of [$10-billion plus], and maintain that the greatest risk will be to CGI's reputation and to its ability to win new business and prevent the ending of more government contracts."

CGI's backlog of signed orders at the end of last year stood at $19.3-billion, up $972-million.

First-quarter profit was $189.8-million or 60 cents per share, up from $22.4-million or 7 cents in the year-earlier period.

Excluding integration costs of $22.6-million related to the 2012 acquisition of Logica PLC, net earnings in the first quarter were $207.9-million or 65 cents per share, compared with $137.8-million or 44 cents.

Earnings per share of 65 cents missed the analysts' estimate of 70 cents.

Revenue in the first quarter was $2.64-billion, up 4.4 per cent from $2.53-billion in the year-earlier period.

Mr. Roach said on the call that the federal website for U.S. health care enrollment has been "significantly improved.

"The system we contracted to build works," he said.

He also emphasized that CGI was not fired by the U.S. government.

"CGI's contract was not terminated. Our current contract is ending on schedule" next month, he said.

Mr. Roach also said CGI is poised for strong growth after booking $2.8-billion in contract awards in the first quarter.

"We are well positioned to grow as the market gradually improves as demonstrated by our strong bookings of $2.8-billion in the quarter, which was balanced across all geographies and was composed of 45 per cent new business," Mr. Roach said in a news release.