Wipro sees challenges in US healthcare biz amid Obamacare uncertainties

Mumbai: Indian software services exporter Wipro Ltd has recently announced that its healthcare services business in the United States as a challenge as uncertainties over Obamacare meant insurers are holding off on big technology expenditure.

The healthcare market accounts for nearly 13 per cent of Wipro's IT sales and reform of the sector in the United States, its biggest market, remains in prospect given the hostility of President Donald Trump and many Republicans to the Affordable Care Act, commonly known as Obamacare, despite a failed 2017 push to repeal it.

Bengaluru-headquartered Wipro has previously said uncertainty around Obamacare has pushed healthcare insurance clients to defer major investments.

The company, which posted a 13.8 per cent fall in quarterly profit after taking a hefty one-off charge, will get more clarity around the business of HealthPlan Services (HPS), its unit proving technology solutions to insurance firms, as people in the United States enrol for insurance towards year-end, Chief

Executive Abidali Z. Neemuchwala said.

"In the health segment, we continue to see a challenge, primarily driven by the uncertainty of the HPS business due to the Affordable Care Act," Neemuchwala told a news conference, adding that the company was also looking at other opportunities in the healthcare sector.

However, he did not give any details on the scale of the impact of these uncertainties.

STEADY PERFORMANCES

All other main vertical markets of Wipro, including banking, financial services and insurance (BFSI), the company's biggest revenue stream, were showing steady performances, Chief Financial Officer Jatin Dalal told Reuters.

For the quarter to end-September, Wipro posted a net profit of 18.89 billion rupees ($258 million) after taking a one-time charge due to the settlement of a legal dispute, compared with 21.92 billion a year earlier.

That was below analysts' average estimate of 21 billion rupees, according to Refinitiv Eikon data.

Wipro had warned in August that its September-quarter profit was likely to be affected by a $75 million settlement with National Grid US over a legal dispute.

Wipro also said on Wednesday that from the December quarter it would not count sales from its unit providing services to the Indian government and state-run firms in its key IT services revenue, as part of a business reorganisation.

After accounting for that exclusion, Wipro said it expected its IT services revenue for the December quarter to be in the range of $2.03 billion to $2.07 billion.

It posted IT services revenue of $2 billion in three months to September.