PAREXEL International (PRXL) reported adjusted earnings per share of 65 cents in the first quarter of fiscal 2015, which beat both the Zacks Consensus Estimate of 58 cents and the year-ago earnings of 45 cents.
Quarter Details
Revenues increased 9.4% (9.2% at constant currency) on a year-over-year basis to $491.7 million. However, it lagged the Zacks Consensus Estimate of $500 million. Lower conversion of revenues from backlog primarily led to the lower-than-expected top-line growth. Fluctuations in foreign exchange rates also acted as a headwind.
Revenues from the Clinical Research Services (CRS) segment increased 11.2% (11.1% at constant currency) to $369.8 million.
PAREXEL Consulting (PC) revenues declined 1 % (1.2% at constant currency) to $56.4 million owing to the cancellation of a major contract.
PAREXEL Informatics (PI) revenues were $65.5 million, up 9.7% (8.8% at constant currency) from the year-ago quarter. The increase in the revenues was primarily driven by improved growth in the company’s Medical Imaging, RTSM and EDC businesses.
Gross margin expanded 270 basis points (bps) year over year to 35.2%.
Selling, general and administrative expenses increased 14.1% on a year-over-year basis to $99 million.
Adjusted operating margin expanded 140 basis points (bps) on a year-over-year basis to 10.7% on margin expansion and revenue growth.
Financial Details
Cash and cash equivalents, as of Sep 30, 2014, were $281.4 million, compared with $188.2 million in the last quarter. Long-term debt in the quarter amounted to $370 million, compared with $337.5 million in the previous quarter.
Guidance
Management expects second-quarter fiscal 2015 revenues in the range of $495–$508 million. GAAP EPS for the second quarter is expected between $0.56-0.62.
Meanwhile, non-GAAP EPS for the fiscal year is expected to range between $2.56 and $2.75, while management expects revenues to lie in the range of $2.070 – $2.110 billion.
Our Take
PAREXEL had a mixed first quarter of fiscal 2015. Volatility in foreign exchange rates, are expected to adversely affect the company’s top line in the second quarter and the full-year 2015 as well.
Currently, PAREXEL carries a Zacks Rank #3 (Hold). Better-ranked medical services stocks include BioTelemetry, Inc. (BEAT), ICON Public Limited Co. (ICLR) and BG Medicine, Inc. (BGMD). While BioTelemetry and ICON Public carry a Zacks Rank #1 (Strong Buy), BG Medicine sports a Zacks Rank #2 (Buy).
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