Icon has added biotech customers and entered new sectors through Aptiv say execs
Executives made the comments during Icon's third quarter conference call today, explaining that new business with such firms had played a part in the 14.1% hike in revenue, to $388m, and 15.3% growth operating income seen in the period.
Icon CEO Ciaran Murray said the contract research organisation (CRO) had expanded its customer base, explaining that now large pharmaceutical companies represent 55% of its contracts with the remaining 45% coming from mid-sized and small biotech customers.
This he said contrasted with previous years when the split was closer to 65/35 or even 70/30.
Murray also cited $468m in new business wins - both pharma and biotech - as a key driver, explaining that they illustrate “the continuing healthy level of demand we are seeing across all segments.”
He also pointed to two recently added but unnamed strategic customers with which relationships are building, although he said the deals would not result in significant bookings before next year.
However, while Icon’s customer mix may have changed, the firm’s biggest customer still provides around 31% of the contract research organisation’s (CRO) revenue according to CFO Brendan Brennan.
Brennan said Icon is seeing “encouraging signs” adding that larger accounts are maturing. He also said that the acquisition of Aptiv in April allowed it to enter a few new segments, even though the $200m worth of work added is still only a small percentage of the firm’s backlog.
The optimism about Aptiv – which provides adaptive trial design services – was echoed by COO Steve Cutler who said Icon had seen “a lot of interest adaptive trial interest from customers” adding that such studies are a “watchword for industry.”
He also cited drug device trials as an area of business that is developing for Icon as a result of the Aptiv acquisition.
The Aptiv deal – which at $144m is Icon’s largest ever acquisition – also resulted in a slight drop in headcount according to Murray who said ongoing integration had resulted in the elimination of some duplicate positions.
Icon’s figures were generally well received, although some observers pointed to the impact the strong US dollar had had on performance.
Ross Muken from ISI group said Icon revenues were a “bit light,” attributing the shortfall to currency effects.
Similarly, John Kreger from William Blair said revenue was “$4.2m below our estimate and below consensus by about $3.5m.”
Blair also suggested currencies would continue to have a negative impact on Icon revenues for some time to come that: “We believe foreign exchange rates represent a 1%-2% headwind to revenue growth over the next four quarters.”