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Computer Sciences' Management Hosts U.K. NHS Contractual Relationship Update Call (Transcript)

Stocks in this article: CSC

I can report that the dialogue with the NHS is fundamentally going well. Both parties continue to see considerable merit in the revised structure we agreed in the LOI. I would say that the delay reflects the complexity of the change being undertaken and the need for very detailed agreements. The backdrop to this, and much of it is driven by the extent to which the NHS itself is changing and the government's, with the NHS, moving to much more devolved [ph] power in the trusts and therefore the need to consult very widely on this agreement. I can confirm that both parties really want this agreement to work, and no specific roadblocks have been accounted. It's rather just the detail and the length of time it's taking to put the four agreements together. I can also confirm that our discussions only relate to the re-scoping of Lorenzo and that the ongoing service provision that we provide to other -- 2,000-odd other systems that we've installed continue as before, as does the revenue stream we enjoy.

CSC has written off its investment in the Lorenzo product. Over 80% of that product is complete. And we've also got the 2 years experience in the early adopter process that we've been undertaking.

Our revenue objective for Lorenzo in the near term is a modest component of our health care business mix. As we said in the past, we expect our U.K. health care revenues to be approximately 2% to 3% of CSC's overall revenues. And within that, Lorenzo will not be taking a significant part of that revenue for next year. So in this context, our go-forward risk really should be seen as modest. Nonetheless, looking to the longer term, we remain confident in Lorenzo, its technical platform, the extent to which it really answers the NHS efficiency needs, plus the very positive feedback that we get from the field in the U.K. And additionally, we do see significant potential in applying this experience to other country health markets. There isn't a market, I think, globally that still doesn't have considerable interest in the learning from the U.K. NHS, both good and bad.

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