Irish contract research organisation (CRO) ICON raised its full-year guidance after delivering another strong set of results in the third quarter ended 30 September 2007.
Net revenues for the quarter were $166.9 million, 38.3% more than in the same period last year. Operating income, after taking into account a non-cash stock compensation charge of $1.4 million, was 48.3% higher at $18.7 million. ICON maintained and improved on its solid performance in the second quarter of 2007, when net revenues were up by 36.9% and operating income by 41.6%.
Operating margins for the third quarter were 11.2% compared with 10.4% in the equivalent period of 2006. Net income came in at $14.5 million, up by 43.7% and giving diluted earnings per share (EPS) of $0.49 versus $0.35 in last year’s quarter.
The rest of the year is also shaping up well. Net bookings of $230 million during the third quarter generated a book-to-bill ratio of 1.4 (1.6 in the second quarter of 2007). Calculated by dividing net new business by revenue, the book-to-bill ratio gives an insight into the likely revenue trend in quarters ahead. Ratios of more than 1.0 suggest the CRO is winning new business over and above revenues in the current report period.
A recent CRO Update by William Blair & Company noted that ICON had the highest average quarterly book-to-bill ratio of any contract research organisation tracked by analysts at the US financial services firm.
Accordingly, ICON has increased its revenue guidance for 2007, to $615-$625 million from a previous estimate of $560-$580 million. EPS guidance has been adjusted to $1.82-$1.85 from $1.70-$1.80 previously.
ICON derives around 60% of its revenues from clinical trial management, monitoring and pharmacovigilance, 13% from data management and statistical consulting, 9% from its central laboratory business, 8% from early-phase support provided by ICON Development Solutions, 5% from interactive technologies, 3% from contract staffing and 2% from its central imaging laboratory.