Icon Beats Expectations in Q1, Sees Unexpected Uptick in Revenue Growth

By Zachary Brennan

- Last updated on GMT

Related tags Bristol-myers squibb

Icon Beats Expectations in Q1, Sees Unexpected Uptick in Revenue
Icon’s first quarter FY2013 revenue increased 26% year on year, besting analysts’ expectations and resulting in a nearly 7% increase in the company’s stock price.

The company “had a strong ‘triple play’ quarter, beating estimates on the top line, bottom line, and on bookings​,” Tim Evans of Wells Fargo said in an analyst note. “The stock’s strong reaction, however, was probably driven as much by qualitative comments about the status of partnerships as by the strong quarter​.” 

This is the second straight quarter that Icon has exceeded analysts’ expectations​. 

The future of this year for Icon may also end up being just as strong as the CRO’s first quarter in 2013. CEO Ciaran Murray said, “We reported net new business of $422 million, a book to bill of 1.3, giving us a solid foundation upon which to build during the remainder of 2013​.” 

Icon’s 24% growth in its central labs business also seemed to quell any scepticism concerning Icon’s relationship with Bristol-Myers Squibb​, which is up for renewal this year. BMS recently announced preferred central labs provider relationships with both Quintiles and LabCorp. 

Speaking directly on the deals, without citing any of the company’s names, Murray said, “I saw those press releases, as well, that were really very specifically in relation to the lab, which is sort of a different business and ultimately, not a particularly significant part of our business​.” 

He added that the company has a couple of contracts up for renewal this year and that he’s “optimistic” those negotiations are proceeding as would be expected, noting the company is “very close​” to finalizing one of those contracts. 

Murray also announced Icon signed three new preferred provider agreements in Q1 of this year.

The addition of 200 new staffers in Q1 was another reflection of the company’s confidence in its growing revenue. The acquisition of the clinical trials division of Cross Country Healthcare for $52mn​ in February, which is “proceeding to plan​” according to Murray, added another 500 employees. 

But the company also has seen a higher concentration of top clients accounting for its revenue. Icon’s top 25 clients represented 81% of the company’s revenue, which was up from 76% in 2012, CFO Brendan Brennan said in the conference call. 

While we agree with the market that the risk around deal renewals seems to have been overstated, we highlight that concentration has now reached record levels​,” Evans said. 

Struggles in the pre-clinical sector have forced the company to close a pre-clinical facility in Omaha, Nebraska. The closure on Tuesday comes as the company says it will centralise its clinical pharmacology unit in San Antonio and add 70 new beds there.

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