Parexel International has ended its financial year on a high note, with compelling growth in service revenues and profits despite continued weakness in the company’s Consulting and Medical Communications Services (PCMS) business.
Consolidated service revenues for the fourth quarter and year ended 30 June, 2007, were $205.2 million, up by 21.1% on the same quarter last year, and $742.0 million (+20.7%), respectively. Operating income for the quarter rose 29.3% to $16.9 million, while in the full year it was 44.4% higher at $57.6 million.
The revenue performance was slightly ahead of Parexel’s expectations. In June, the US-based contract research organisation (CRO) updated its financial guidance to project service revenues of $200-203 million for the fourth quarter and $737-US$740 million for fiscal 2007.
Earnings per diluted share were forecast at $0.35-$0.37 for the quarter and $1.30-US$1.32 for the full year. In the event, they came in at the higher end of these expectations, ie. $0.37 and $1.33, respectively.
Parexel’s core Clinical Research Services (CRS) unit was the main driver of growth in the fourth quarter, with revenues climbing 25.9% to $152.7 million and accounting for 74.4% of overall service revenues in the quarter (71.6% in Q4 2006). Gross profit in the CRS segment was up by 32.9% to $54.2 million.
In the PCMS business, where there were some redundancies early this year in a bid to turn around a below-par performance, service revenues improved slightly by 1.6% to $33.3 million in the quarter. Gross profit, however, was 11.1% down to $9.93 million.
Perceptive Informatics, Parexel’s technology division with a portfolio ranging from medical imaging to clinical trial management systems, web-based portal solutions and tracking tools, delivered fourth-quarter service revenues of $19.2 million, a 24.6% increase over the same period last year. Gross profit jumped 24.7% to $8.54 million.
In geographical terms, Europe and the US still make up the bulk of Parexel’s revenues, with Europe generating 56.6% of the total in the fourth quarter and the US accounting for 34.5%. There was a substantial increase in service revenues from Asia and other non-US, non-European regions, which grew by 35.7% over the final quarter of fiscal 2006. Asia and other markets generated 8.9% of Parexel’s overall service revenues for Q4 2007, compared with 8.0% in the equivalent period last year.
$1.5 billion backlog
The company reported a year-end backlog of around $1.5 billion, 38% more than at the end of fiscal 2006. “Demand for our services is growing, and we have many opportunities in the new proposal pipeline,” said chairman and chief executive officer Josef von Rickenbach.
During the current year, he added, Parexel will “continue to focus on revenue growth and further improvements in operating performance. At the same time, we plan to make carefully selected strategic investments to add depth to the products and services that we provide to biopharmaceutical clients around the world.”
Consolidated service revenue for fiscal 2008 is expected to be in the range of $855-$885 million, based on recent exchange rates, with earnings per diluted share projected at $1.56-$1.66.