Beleaguered IT services provider CSC delivered its Lorenzo care management software to three NHS Trusts in the UK in its latest financial quarter, the company revealed yesterday.
By delivering the software, CSC said it reached a "key milestone" in its engagement with the NHS. "And as a result of making that milestone, NHS has agreed to pay us," said CEO Mike Lawrie. "So that’s very good news as we continue to move forward with NHS."
The combined tally of NHS Trusts to have adopted the software is now 13, based on a statement in March in which CSC said that ten NHS Trusts had adopted Lorenzo.
Also in March, CSC and the Department of Health signed a ‘letter of intent’ establishing new principles for the way in which NHS Trusts might buy CSC’s Lorenzo software. "The Letter of Intent reflects a new approach, moving toward a construct of more localized initiatives, reflecting the shift to more devolved decision-making and budgetary control within the NHS."
At the time, the two parties said they would reach a formal agreement by the end of that month. However, they are still in negotiations and no agreement has been reached. "We are, I think, pretty close to getting towards a tenant agreement with NHS," said Lawrie yesterday. "Now once that gets done, we still have to have the government approval. We do not have any approval at that level."
"I’m optimistic that we’ll be able, at some point in time, to conclude. But we have not concluded as of today."
This means that CSC currently has a team of 200 people working on Lorenzo in the UK who may or may not have work to do in future. "I have been reluctant to disband that UK team until we get to some conclusion because once you disband them, you don’t get them back together," said Lawrie.
"I don’t anticipate that we have any large cash charges associated with disbanding those people if that would be the point that we got to," he added.
In Feburary, CSC wrote off $1.5 billion that it had expected to recoup from Lorenzo contracts in the NHS. This is equal to all the money it invested in the contract up to then.
In May, it announced a $1 billion cost cutting drive that included job cuts to its Lorenzo team in the UK.
CSC overall revenue for the latest quarter fell 2% to $3.96 billion. Its net income was $40 million, down from $183 million in the same period of last year.