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Obamacare Website Contractor Sees Profits Soar

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OBAMACARE WEBSITE
The Healthcare.gov website is displayed on laptop computers arranged for a photograph in Washington, D.C., U.S., on Monday, Nov. 4, 2013. The race to construct an online insurance exchange by Oct. 1 spurred the Obama administration to use an expedited bidding system that limited its choice of a builder to just four companies, including CGI Group Inc. Photographer: Andrew Harrer/Bloomberg via Getty Images | Bloomberg via Getty Images


* Adjusted profit C$0.67/share vs analysts' view C$0.62

* Revenue rises 53 pct to C$2.5 bln

By Alastair Sharp

TORONTO, Nov 14 (Reuters) - CGI Group Inc, the main contractor for the flawed website of President Barack Obama's healthcare program, said its pipeline of orders was strong despite the negative publicity from the project.

Shares in the Canadian software company jumped 7 percent after CGI posted a better-than-expected adjusted quarterly profit on Thursday.

CGI is at the center of a political storm in Washington over the rollout of the HealthCare.gov website, through which uninsured Americans can sign up for health insurance.

Because of technical glitches since the launch of HealthCare.gov on Oct. 1, just a tiny fraction of the hoped-for millions have signed up for insurance on the website, the Obama administration said on Wednesday.

CGI said bookings in its U.S. government business were strong, despite the website issues and the 17-day partial government shutdown in October.

In congressional testimony, contractors have described HealthCare.gov as one of the most complicated large-scale information technology systems ever, a line repeated by CGI Chief Executive Michael Roach on a call with analysts on Thursday.

"This is not a simple website but rather a very complex integrated technology platform that for the first time combines the process of selecting, enrolling in insurance, and determining insurance eligibility for government subsidies, all in one place and in real time," Roach said.

He said many customers had said they understood the difficulty of the task, and the company's pipeline of new business continues to expand.

CGI said in October that months of testing of the HealthCare.gov website would have been preferable, but the testing schedule was determined by a federal agency.

U.S. Health Secretary Kathleen Sebelius said last month that the private contractors for the website had not requested a delay in the launch.

Excluding one-time items, CGI's profit was 67 Canadian cents per share for the fiscal fourth quarter, ended Sept. 30, topping analysts' average estimate by 5 Canadian cents, according to Thomson Reuters I/B/E/S.

CGI said results were helped by its acquisition of Anglo-Dutch rival Logica Plc and strong growth in its U.S. business, mainly due to contracts in the government and health sectors.

Net income was C$141 million ($135 million), or 44 Canadian cents per share, compared with a loss of C$168 million, or 58 Canadian cents per share, a year earlier.

CGI's loss in the year-earlier quarter was due to costs associated with the acquisition of Logica Plc. CGI completed the acquisition in August 2012, becoming the world's fifth-largest independent IT services firm.

Montreal-based CGI's revenue rose 53 percent to C$2.5 billion.

The company's shares rose 7 percent to C$40.30 in morning trade on the Toronto Stock Exchange. Through Wednesday, the stock had risen 64 percent this year, including a 4 percent rise since Oct. 1.

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