Parexel cuts revenue forecasts as earnings dip

Contract research organisation Parexel posted a 26 per cent hike in first quarter revenues to $263m but still failed to meet its own internal sales targets and saw net profits slide.

Parexel also cut its revenue guidance for the year to $1.1-$1.3bn from $1.22-$1.25bn, blaming the shortfall on currency effects and specifically the strength of the US dollar, as well as “headwinds in the marketplace,” said CEO Josef von Rickenbach.

“We anticipated a slowdown during the summer months, and then expected an acceleration of activity in September as has been typical in the past,” he added.

“Ultimately, however, sales performance for the quarter turned out to be short of target.”

Parexel’s shares suffered on the back of the results, dropping almost 28 per cent on the day the figures were announced and dipping below $9 for the first time in three years. Since then the shares have staged something of a recovery and were trading at around $10.40 as this article went to press, still well short of the 52-week high of over $36.

Service revenue for the first quarter were was made up of $202.8m in Clinical Research Services (CRS) sales, $30.1m from Parexel Consulting and Medical Communications Services (PCMS), and $30.1 million from the eClinical business Perceptive Informatics, boosted recently from the acquisition of UK-based company ClinPhone.

Backlog was $2.061bn at the end of September, with new business wins of $347m and a contribution of $117m from ClinPhone acquisition. Cancellations amounted to around $83m, and exchange rates pegged the figure back by $116m.

Discussing the impact of the ClinPhone acquisition, von Rickenbach noted that “some short-term acquisition-related challenges prevented us from achieving the expected quarterly results in the Perceptive Informatics business segment.”

“However, we are pleased with the most recent progress of the business unit, and look forward to improved performance as we move ahead," he added.

Award provides a lift

There was more positive news for Parexel late last week when it was recognized by the Good Clinical Practice Journal (GCPj) as the winner of its Most Innovative Patient Recruitment Strategy Award alongside partner Glenmark Pharmaceuticals.

The firms won the award for an early phase development programme for a diabetes medication. Phase I studies were followed by a 60-patient proof of concept study in at sites in the UK and South Africa.

The approach allowed Glenmark to make a go/no-go decision seven months earlier and the programme was completed 30 per cent faster than is typical during early phase drug development, said the firms.