Biopharmaceutical services provider Parexel International Corp. (PRXL: Quote) reported Tuesday a profit for the second quarter that surged from last year, reflecting improved operating margins and strong double-digit revenue growth.
Both adjusted earnings per share and quarterly revenues topped analysts’ expectations. The company also provided earnings guidance for the third quarter, in line with Street view, and raised earnings and revenue forecast for the full-year 2013.
“During the second quarter we delivered robust revenue growth, achieved our short-term operating margin target, further reduced days sales outstanding, and generated strong operating cash flow. We achieved these results despite a high level of hiring and continued elevated use of contract staff, which negatively impacted the gross margin in our Clinical Research Services business,” Chairman and CEO Josef von Rickenbach said in a statement.
The Waltham, Massachusetts-based clinical research, medical communications and consulting services provider reported net income of $21.34 million, or $0.36 per share for the second quarter, higher than $12.94 million, or $0.21 per share in the prior-year quarter.
Excluding items, adjusted net income for the quarter was $24.50 million or $0.41 per share, compared to $13.87 million or $0.23 per share in the year-ago quarter.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share for the first quarter. Analysts’ estimates typically exclude special items.
Consolidated service revenue for the quarter increased 26.7 percent to $422.07 million from $331.17 million in the same quarter last year, and topped nine Wall Street analysts’ consensus estimate of $414.79 million by a whisker.
Excluding the negative impact from foreign exchange movements, revenue increased 27.5 percent. Meanwhile, total revenue, including reimbursement revenue, grew to $483.14 million from $387.81 million in the prior-year quarter.
On a segment basis, service revenue for the second quarter was $320.6 million in clinical research services, $49.3 million in Parexel consulting and medical communications services, and $52.2 million in Perceptive Informatics, Inc.
Operating margin for the quarter improved 60 basis points to 7.4 percent from last year’s 6.8 percent, while gross margin contracted 290 basis points to 28.6 percent from last year’s 31.5 percent.
Backlog at the end of the second quarter stood at about $4.54 billion, an year-over-year increase of 21.4 percent.
Looking ahead to the third quarter, the company anticipates earnings in a range of $0.38 to $0.42 per share on projected consolidated service revenue between $435 million and $440 million. Analysts currently expect earnings of $0.38 on revenue of $428.07 million for the quarter.
For fiscal 2013, the company now expects adjusted earnings in the range of $1.48 to $1.564 per share on anticipated consolidated service revenue between $1.695 billion and $1.71 billion. Previously, the company projected adjusted earnings in the range of $1.36 to $1.43 per share on consolidated service revenue between $1.675 billion and $1.695 billion.
Street is currently looking for full-year 2013 earnings of $1.41 per share on annual revenue of $1.68 billion.
“Looking forward, we expect hiring levels to moderate, enabling us to convert high cost contract staff to full-time employees. Combined with increasing productivity from our recently hired employees, this should lead to improved gross margins,” Von Rickenbach added.
PRXL closed Tuesday’s regular trading session at $33.86, down $0.10 or 0.29% on a volume of 0.60 million shares. However, the stock gained $1.14 or 3.37% in after-hours trading.
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by RTT Staff Writer
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