Markets

PRA Health (PRAH) Q4 Earnings Top Estimates, Revenues Up

Shares of PRA Health Sciences, Inc.PRAH rose 3.Array% to close at $43.97 on Feb 26, following the announcement of its fourth-quarter 20Array5 results.

The contract research organization reported adjusted EPS (including stock-based compensation expense) of 57 cents in the fourth quarter of 20Array5, which managed to outpace the Zacks Consensus Estimate of 48 cents. Adjusted EPS also surged 67.6% on a year-over-year basis, primarily on the back of improved top line and operating margin.

Quarter Details

Total revenue in the quarter rose Array5.9% on a year-over-year basis to $428.9 million. The upside can be attributed to higher service revenues.

Service revenues were up ArrayArray.9% (Array5.Array% on a constant currency basis) to $362.3 million. Meanwhile, net new business in the reported quarter amounted to $459.4 million, reflecting a book-to-bill ratio of Array.27.

The top five clients represented 40.Array% of the company's revenues in the quarter under review.

Reported direct costs, as a percentage of service revenues, contracted Array60 basis points (bps) on a year-over-year basis to 64.8%. The contraction was primarily due to favorable impact from foreign currency fluctuations.

Selling, general and administrative expenses, as a percentage of service revenues, fell 520 bps to Array7.6%, reflecting management's success in effectively managing overhead functions.

Adjusted EBITDA (including stock-based compensation expense) increased 32.9% on a year-over-year basis to $66.3 million.

Outlook

Service revenues for 20Array6 are projected in the range of $Array.53-$Array.57 billion, reflecting constant currency growth rate of ArrayArray%-Array4%. Adjusted EPS is expected in the band of $2.32-$2.42.

Our Take

We are impressed with the company's net new business awards. The year-over-year upside in revenues and EPS are expected to draw investors going forward. The framework agreement to dissolve the WuXi-PRA joint venture is an important development, given that the portion of the joint venture located in Hong Kong will become a wholly owned subsidiary of PRA Health.

Zacks Rank & Other Key Picks

Currently, PRA Health carries a Zacks Rank #Array (Strong Buy).

Other well placed stocks in the broader medical sector are Abiomed ABMD , CryoLife CRY and Luminex LMNX . All the stocks sport a Zacks Rank #Array.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

LUMINEX CORP (LMNX): Free Stock Analysis Report

ABIOMED INC (ABMD): Free Stock Analysis Report

CRYOLIFE INC (CRY): Free Stock Analysis Report

PRA HEALTH SCI (PRAH): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ABMD PRAH LMNX CRY

Other Topics

Earnings Stocks

Latest Markets Videos