Science Applications International Corp. [SAIC] late last Thursday afternoon reported strong first quarter results driven in part by an acquisition a year ago and solid organic growth, despite continued impacts from the pandemic, and profits improved on higher operating margin.

SAIC also said it has agreed to acquire Halfaker and Associates, LLC, a provider of federal health information technology (IT) solutions, giving it a presence in this area and also bolstering its capabilities in digital services, data analytics, cybersecurity and cloud solutions. SAIC is paying $250 million for Halfaker.

“We’ve often talked about our strategic interest in profitably growing our business in the public sector health market, further expanding opportunities for long-term value creation,” Nazzic Keene, SAIC’s CEO, said on the company’s earnings call last Thursday evening. “The acquisition of Halfaker & Associates does exactly that.”

Halfaker’s customers include the Departments of Veterans Affairs, Defense, and Health and Human Services, and the Centers for Medicare and Medicaid services, and others.

Halfaker, which is based in Arlington, Va., and has an agile delivery center in Florida, has more than 550 employees and generated about $166 million in sales in 2020. SAIC expects the deal to accelerate growth, and be accretive to adjusted per share earnings and free cash flow in the current fiscal year.

SAIC expects the transaction to close before the end of July.

Net income in the quarter increased 125 percent to $81 million, $1.38 earnings per share (EPS), from $36 million (62 cents EPS) a year ago. Excluding acquisition and integration costs, adjusted earnings in the quarter of $1.94 EPS handily beat consensus estimates of $1.51 EPS.

SAIC attributed higher profit to improvements across its contracts, the acquisition a year ago of the federal business of Unisys [UIS], and a favorable settlement, more than offsetting a $4 million headwind related to the COVID-19 pandemic.

Sales in the quarter increased 6.9 percent to $1.9 billion from $1.8 billion a year ago, with organic growth accounting for 2.6 percent of the gain and the Unisys deal the remainder. SAIC estimates that impacts from the pandemic lowered sales by about $33 million, specifically citing the supply chain business and Federal Aviation Administration training.

Orders in the quarter were exceptionally strong at $4.2 billion and total backlog stood at about $23.9 billion, up nearly 11 percent from $21.5 billion at the end of SAIC’s fiscal year 2021 in January. Free cash flow was $164 million.

For FY ’22, SAIC raised its adjusted earnings outlook by 15 cents EPS to between $6.15 and $6.40 per share, reflecting the strong first quarter and lower than expected impacts from COVID this year. The guidance for sales was increased by $50 million on the low end of the range to between $7.15 billion and $7.3 billion due to lower than expected COVID impacts.

The pending Halfaker transaction isn’t included in guidance but SAIC expects the deal to add between $90 million and $100 million to the top line this year.