Parexel: Increased revenue, increased staff in robust Q3
For the three months ending March 31, 2014, Parexel reported service revenue increased by 8.3% to $492.4m, compared with $454.5m in the same period last year. On a segment by segment basis, service revenue for Q3 of FY 2014 was $373.2 million in Clinical Research Services (CRS), $51.9m in consulting, and $67.3m in the newly branded Parexel Informatics.
Commenting on the results of the quarter, chairman and CEO Josef von Rickenbach, said, “In the third quarter, we delivered revenue in line with guidance, solid operational improvements, earnings that exceeded our expectations, and positive new business results... We are pleased that the productivity and efficiency-related investments we have made, particularly in the Clinical Research Services business, have continued to pay off.”
The company added 230 employees in the quarter as the concentration of the company’s top clients decreased when compared to last quarter.
Von Rickenbach continued, “We are experiencing positive momentum in the marketplace, especially with mid and small clients, and we have successfully captured new business from all market segments.”
Backlog at the end of March 2014 was $4.93bn, an increase of 9.4% year-over-year. The reported backlog included gross new business wins in the quarter of $781.6m and cancellations of $208.7m.
Equity analysts sounded upbeat on the conference call. Citi Research analyst Garen Sarafian praised the results, noting that they offer “a high quality beat on the top and bottom line, followed by increasing guidance beyond the beat with one remaining quarter.”
The company’s acquisition of Heron also contributed approximately $2.5m to revenue in the quarter. Parexel acquired Heron last year for $24m.
Future Outlook
Parexel seems to continue to remain upbeat about future prospects as it increased guidance for FY 2014.
Von Rickenbach added that the company is looking to have a higher share of projects in low-cost countries, particularly in India where the company has a strong presence, and especially as the company sees “better results coming out of our early phase units.”
“The company came out of a period of hyper growth and now we’re seeing more standard growth,” Von Rickenbach added, echoing sentiments he previously told us in an exclusive interview last June.
