PRA's profits will soon be private

By Kirsty Barnes

- Last updated on GMT

Related tags: Quarter

PRA International continues to see its profits ebb away but will
soon face less financial scrutiny as it nears a handover of
ownership into private hands.

The contract research organisation's (CRO's) pre-tax profit and operating income both fell around 12 per cent year-over-year to settle at just under $11m (€7.5m) during the third quarter. This is despite a sales increase of 19 per cent to come in just short of $100m. A 32 per cent jump in costs were blamed for the profit dip, although contract cancellations for the quarter were more than double that of the comparable 2006 period, to the tune of $48.2m. However, the reasons behind this are unclear - the company is in the process of moving from being publicly to privately owned, and did not hold a quarterly investor conference call. During the second quarter PRA signed an agreement with equity firm Genstar Capital to be bought back by the firm for around $790m. The acquisition is due to close during the fourth quarter. ​At the time of the announcement, the firm's chief executive Terry Bieker remained tight-lipped about the reasons behind PRA's decision to go private and the specific factors taken into account by the special committee to consider the Genstar acquisition but said that "at this time they assessed the situation and decided it was the right thing to do". ​ Asked during a conference call at the time whether one of the reasons behind the buyout decision was to ease the process for potential future acquisitions, since it is generally more straight-forward to integrate an acquired company to a private firm compared to when the company is publicly listed, Bieker said: "More acquisitions are on the horizon and we are confident that Genstar would provide the capital to do so."​However, the announcement came on the same day as the company posted a 95 per cent drop in operating income in its second quarter financial results - the latest in a series of profit dives. PRA's operating income was $374,000, compared with $7.0m in the same quarter of 2006; a drop due to a $6.7m restructuring charge related to the closure of two offices in Eatontown, New Jersey and Ottawa, Canada, and $682,000 related to the Pharma Bio-Research acquisition in July last year. ​A tale of financial woe was also told in the company's first quarter results when PRA saw its profits slashed by more than half from the comparable 2006 period to just above $4.1m. These results were reminiscent of the CRO's fourth quarter profits, which also more than halved - at the time the firm announced a major restructure was about to be undertaken in a bid to stem the bleed.​Meanwhile, PRA recently announced plans to relocate its headquarters from the Washington area to North Carolina and create 500 jobs. The CRO, which is currently based in Reston, Virginia, said it was planning to invest $2.9m for the upgrade, however, the company stressed that the plans to relocate the headquarters were "independent of the merger transaction."

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