Contract research organisation Parexel International appears to have weathered the storm caused by its ill-fated clinical trial at Northwick Park Hospital in the UK, posting strong revenue growth and a return to profit in the fourth quarter of fiscal 2006.
Net income at the firm came in at $8.4 million, or 31 cents per share, turning around a loss of $51.5 million, or $1.98 per share, a year earlier. Overall revenues grew by 20% to $214 million, and service revenue increased 18% to $166 million, something the company said was a result of a strong performance by operations outside the USA, which now account for two-thirds of its business.
This year's results were flattered by restructuring and special charges that affected to company in the year-earlier quarter, but even in their absence the pro forma performance marked a significant improvement on fourth-quarter 2005.
There was progress on the firm’s margins, rising from 7.1% a year ago to 7.7%, although still lagging behind some of its peers in the CRO sector, including Kendle, ICON and Covance which are reporting margins in the mid-teens.
Chief executive Josef von Rickenbach said Parexel achieved its target in boosting revenue growth, especially for its US operations which returned to form with a 13% sales increase. The company ended the quarter with a backlog of $1.1 billion, up 49% from the previous year.
On a segment basis, consolidated service revenue was $121 million for Parexel’s Clinical Research Services division, $33 million for Parexel Consulting and Marketing Services, and $15 million for Perceptive Informatics, which offers clinical trial management systems, interactive voice response systems and imaging services.
Looking ahead, the company expects fiscal first-quarter earnings per share of between 22 cents and 24 cents on sales of $164 million to $169 million. And for the full fiscal year, Parexel boosted its earnings projection to between $1.12 and $1.22 per share on sales of $700 million to $720 million.