Parexel International started its new financial year with operating income up by 40.8% year on year for the first quarter and service revenues 13.8% ahead of the same period last year.

However, analysts polled by Thomson Reuters were expecting revenues of US$458.94 million on average, against the US$449.2 reported by Parexel for the opening quarter.

Adjusted earnings per diluted share (EPS) for the three months ended 30 September 2013 were US$0.45, 55.2% ahead of the same period in fiscal year 2013 and in line with the analyst consensus.

Unadjusted income from operations was US$41.9 million compared with US$29.7 million in Q1 of FY 2013, giving diluted earnings per common share of US0.45 (+80%).

The difference in adjusted and unadjusted EPS growth was down to a number of special items during both the FY 2014 and FY 2013 quarters, most notably one-off tax expenses in the year-before quarter.

Signature delays

Josef von Rickenbach, chairman and chief executive officer of the US-based biopharmaceutical services organisation, acknowledged that first-quarter revenues were “slightly lower than expected”, blaming “contract signature delays” during the quarter as well as “typical seasonality patterns”.

Recent acquisitions, which have included life-sciences consultancy Heron Group during the third quarter of FY 2013 and regulatory specialist Liquent towards the end of the last calendar year, contributed around US$11.5 million to revenues in the latest quarter.

New business during the quarter was also below expectations, noted von Rickenbach, who cited “lower new business flow from some strategic partners, delayed client decisions with regard to some of our pending proposals, and a win rate that was lower than expected”. 

Positive outlook

The outlook for new business remains “very positive”, nonetheless, he stressed.  “We entered the second quarter with a high level of pending proposals, and have had a good start with respect to wins thus far in the month of October. Our long-term book-to-bill target of 1.2 remains unchanged.”

Net new business wins during the first quarter of FY 2014 were US$394.0 million, giving a net book-to-bill ratio of 0.88. Parexel’s backlog at the end of the quarter was US$4.63 billion.

The company’s financial guidance for the whole of fiscal year 2014 remains unchanged from the forecasts issued in the fourth quarter of FY 2013.

Revenues are expected to come in at US$1.890-US$1.920 billion, while both adjusted and unadjusted earnings per share are projected at US$1.95 to US$2.11.