Parexel CFO talks earnings, new business

By Melissa Fassbender contact

- Last updated on GMT

The complexity of clinical trials makes converting new business into revenue challenging. (Image: iStock/AndreyPopov)
The complexity of clinical trials makes converting new business into revenue challenging. (Image: iStock/AndreyPopov)

Related tags: New business, Revenue

Parexel has announced its financial results for the third quarter of FY16, which remained strong in spite of the complexities associated with smaller clinical trials.

The company performed well​,” Ingo Bank, Parexel's CFO, told “The quarter was one of our best ever for new business wins​.”

As a result of new business, the company’s book-to-bill ratio improved sequentially to 1.33, with gross new business reaching $999m. Additionally, service revenues were $527.1m, up 5.0%, compared to $502m in the prior year’s period.

Revenues meeting our expectations, led by our informatics and consulting businesses, and continued margin improvement drove diluted EPS growth of over 30% year over year​,” said Bank.

However, despite strong new business growth, Bank explained that the company is “seeing a lag in converting new business into revenue​.” 

According to Bank, the reason for this is that most of the company’s clinical trials are small and complex, which results in longer site initiation and start-up times, and challenges with patient accrual. 

We think this prolongation of trials will have reached steady state sometime in Fiscal Year 2017​,” added Bank. “At that point, revenue growth may begin to come more in line with recent backlog growth​.”

The company’s backlog, as of March 31, 2016, was $5.7bn, which is an increase of 9.1% year-over-year.

Our pipeline of new business opportunities to drive future backlog growth remains strong​,” said Bank, who added that to company expects to see continuing growth in biopharma R&D spending and outsourcing penetration. “We believe we are well-positioned​,” he said.

Our goal is to compete effectively with other biopharmaceutical services companies by continuing to build our leadership position in our core businesses and by investing in adjacent areas to serve more of our customers’ needs​.”

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