PARAXEL International Corporation
) first-quarter fiscal 2014 adjusted earnings per share surged
55.2% year over year to 45 cents per share from 29 cents in the
year-ago quarter. Earnings were on par with the Zacks Consensus
Estimate. Adjusted net earnings grew 47.7% from the prior-year
quarter to $25.8 million from $17.5 million in the prior-year
On a reported basis, net income of this biopharmaceutical
outsourcing services company was $26.0 million or 45 cents per
share, compared with $15.1 million or 25 cents per share recorded
in the year-ago quarter. Improved gross margin across all
business lines, coupled with operating efficiency propelled
strong results during the quarter.
Revenues increased 14.4% to $529.1 million, comfortably beating
the Zacks Consensus Estimate of $449 million. Service revenues
climbed 13.8% (13.9% at constant exchange rate or CER) to $449.2
million. Recent acquisitions (HERON and Liquent) contributed
roughly $11.5 million to revenues in the quarter. On the other
hand, Reimbursement revenues rose 14.5% to $79.8 million.
Gross margin improved 270 basis points (bps) to 27.6% from 24.9%
in the prior-year quarter. Adjusted selling, general and
administrative (SG&A) expenses increased 21.7% to $84.8
million. However, adjusted operating margin grew 150 bps to 7.9%
in the quarter.
Quarter in Details
On a geographic basis, The Americas; Europe, Middle East &
Africa (EMEA) and Asia/Pacific contributed 50%, 35.2% and 14.8%
to service revenues, respectively. Service gross margin grew
impressively by 330 bps to 32.5% from 29.2% in the prior-year
Service revenues from
Clinical Research Services
(CRS) rose 11.9% to $332.6 million, while service gross margin
from this segment climbed 250 bps to 28.4%. Year-over-year
revenue growth was driven partly by strong performance in the
Strategic Partnership accounts.
PAREXEL Consulting & Medical Communications
(PCMS) service revenues increased 10.7% to $53.5 million, while
its gross margin improved 300 bps to 41.6%. The outperformance
was led by the acquisition of HERON, which contributed 4.9% to
Service revenues from the
(PI) segment escalated 28.2% year over year to $63.1 million and
gross margin surged 650 bps to 46.5% in the quarter. Growth was
particularly strong in PRXL's platform solution business, which
includes MyTrials offering, as well as robust performance in
eClinical data services.
PAREXEL's backlog was approximately $4.6 billion at the end of
Sep 2013, up 2.2% from $4.5 billion at the end of Sep 2012. The
reported backlog included gross new business wins of $563.7
million, cancellations of $169.7 million, and a positive impact
from foreign exchange rates of $80.6 million during the quarter.
Net new business win was $394.0 million, which was below the
company's expectations due to delayed contract signature and soft
win rate. The net book-to-bill ratio was 0.88 in the quarter.
PRXL ended the first quarter of fiscal 2014 with cash and
marketable securities of $304.6 million, up 22.3% from $249.1
million as of Sep 30, 2013. The company's long-term debt
increased to $495.0 million from $267.5 million as of Sep 30,
PAREXEL divulged its outlook for the second quarter of fiscal
2014 and reaffirmed its outlook for the full fiscal year.
Management expects fiscal second-quarter revenues and reported
EPS in the range of $475-$480 million and 46 to 50 cents,
For fiscal 2014, PRXL continues to anticipate revenues in the
range of $1.890-$1.920 billion. Both reported and adjusted EPS
are forecasted in the band of $1.95-$2.11 for the fiscal year.
Shares of PRXL have been declining ever since it reported its
fiscal first-quarter results. On Oct 30, the company's shares
plunged 15% and the declining trend is still continuing. Although
the company posted a healthy first quarter, sluggish new business
wins in the reported period has raised investor concerns
regarding the future trend of the stock.
Management blamed delays in finalizing contract deals, soft new
business flows from partners and lesser-than-anticipated win
rates as reasons responsible for the disappointing outcome.
However, they are confident that fiscal second-quarter results
will improve on the back of several pending proposals closed and
solid wins achieved in the month of October.
Currently, PAREXEL has a Zacks Rank #3 (Hold). While we choose to
remain on the sidelines regarding PRXL, other medical services
stocks that are worth considering include
Charles River Laboratories International, Inc.
ICON Public Limited Company
). All these stocks carry a Zacks Rank #2 (Buy).
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PAREXEL INTL CP (PRXL): Free Stock Analysis
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