The Advisory Board Company
) reported first quarter fiscal 2014 operating earnings of 23
cents per share which missed the Zacks Consensus Estimate of 24
cents per share by 4.2%. Results were also lower than the
year-ago quarter's earnings of 25 cents by 8%.
Including equity in loss of unconsolidated entity, amortization
of acquisition related intangibles, fair value adjustments to
acquisition related intangibles and share-based compensation
expense, Advisory Board reported net income of 10 cents per share
in the first quarter of fiscal 2014. The reported were 9.1% below
the year-ago net income of 11 cents per share.
Quarterly Operational Update
Revenues in the first quarter escalated 18.3% year over year to
$123.2 million. Results also surpassed the Zacks Consensus
Estimate of $121 million. Contract value was $475.8 million at
Jun 30, 2013, up 15.6% year over year.
Cost of services excluding depreciation and amortization in the
quarter was $65.95 million, up 13% year over year. Higher expense
for new and growing programs including acquisitions during the
last fiscal year (ActiveStrategy and 360Fresh) and liabilities
led to the increase.
Member relations and marketing expense increased 16% year over
year to $22.2 million. General and administrative expenses
increased 33.4% year over year to $17.99 million. Higher
investment in the IT infrastructure of the company and in new
product development and corporate development groups led to the
Adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) for the reported quarter were $22.5
million, up 11.4% year over year.
Share Repurchase Update
During the first quarter of fiscal 2014, Advisory Board
repurchased approximately 0.12 million shares for $6.2 million.
This amounts to a total repurchase of 15.7 million shares for
$347 million since 2004. As of Jun 30, 2013, the company is left
with shares worth $103 million under this program.
As of Jun 30, 2013, Advisory Board had cash and cash equivalents
of $29.1 million, down 49.8% from $57.8 million as of Mar 31,
Total assets of Advisory Board as of Jun 30, 2013, were $909.6
million, up 1.5% from $896.4 million as of Mar 31, 2013.
Cash used in operating activities as of Jun 30, 2013, was $3.6
million, up 49.2% year over year.
On Jul 8, 2013, Advisory Board entered into an agreement to
acquire MRS, an Ariz.-based technology firm for $11.5 million to
strengthen its existing physician referral programs. The deal is
expected to be accretive to company revenues in calendar year
2013. EBITDA dilution is expected to be around $2.5 million for
the remainder of the year.
On Jul 31, 2013, Advisory Board introduced the Student Success
Performance Program. This marks the launch of the company's first
renewable software-based program for the higher education market.
For calendar year 2013, Advisory Board revised up its revenue
expectations in the range of $500-$505 million from the previous
guidance of $495-$505 million based on the strong performance of
Advisory Board expects adjusted EBITDA to be between $87.5
million and $92.5 million, down from the previous guidance of
$90-$95 million. Operating earnings for calendar year 2013 is
expected to be between $1.15 and $1.25, down from the previous
guidance of $1.18-$1.28. The downward revision in adjusted EBITDA
and operating earnings reflect the impact of the recent
acquisition of MRS.
Management anticipates share-based compensation expense to be
around $17.5 million. Amortization and acquisition-related
intangible assets are expected to be in the range of $7-$8
For fiscal year 2014, Advisory Board expects the effective tax
rate to be in the range of 38%-39%.
Performance of Other Medical Care Industry
On Jul 30, 2013,
) reported adjusted earnings per share of 78 cents in the second
quarter of 2013. The results beat the year-ago figure by 19.9%
and was ahead of the Zacks Consensus Estimate by a penny.
The upside was driven by higher top line and margin expansion.
On Jul 24, 2013, provider of drugs to long-term care facilities
and nursing homes,
), posted second quarter 2013 adjusted earnings per share of 90
cents. The result surpassed the Zacks Consensus Estimate of 87
cents as well as the year-ago earnings of 83 cents.
On Jul 31, 2013,
Charles River Laboratories International Inc.
) reported second quarter 2013 earnings of 73 cents per share,
above the Zacks Consensus Estimate of 71 cents, but down 2.7%
year over year.
Advisory Board currently carries a Zacks Rank #2 (Buy).
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