Parexel grows revenue, op income in Q4 & full fiscal year

09-Aug-2010 - Last updated on 10-Aug-2010 at 09:16 GMT

Parexel recorded growth in the fourth quarter, contributing to a 10 per cent increase in full year GAAP operating income and an improved backlog.

Total service revenue growth of 19 per cent in the quarter was driven by improvements in all business units and geographies. This growth contributed to slight upturn in operating income under generally accepted accounting principles (GAAP), which totalled $20.1m (€15.2m).

For the full fiscal year Parexel reported total revenues of $1.3bn, up from $1.2bn, and GAAP operating income of $83.1m, compared to $75.6m last year. Parexel expects this positive trend to continue and has raised its guidance for fiscal 2011.

Josef von Rickenbach, CEO of Parexel, attributed the performance to the firm’s ability to win business in an environment where sponsors are concentrating “their outsourced clinical development activities with fewer providers”.

Parexel reported record quarterly gross new business wins of $723.8m, up year-on-year from $316.6m, but cancelations also increased, totalling $78.8m in the latest results. Although this is up on the fourth quarter of 2009 it is considerably lower than the corresponding period of 2008.

Backlog now totals $2.7bn, up 23 per cent on last year, and the net book-to-bill ratio was 2.18 for the fourth quarter and 1.53 for fiscal 2010. Parexel has begun to hire and train new employees to support the increased backlog and this process will continue into the first half of fiscal 2011.

“As a consequence of this recruitment activity and the nature of strategic partnerships, we expect a slower ramp of revenue and earnings in the first half of the fiscal year, and an acceleration in the second half", said von Rickenbach.

Sector performance

After a challenging fourth quarter of fiscal 2009 all business units returned to year-on-year growth. Quarterly revenue from clinical research services rose from $200.8m to $225.4m. Revenues from consulting and medical communications services increased slightly to $31.6m.

Perceptive Informatics posted the biggest quarterly increase in service revenue, up to $38.3m from $16.0m. Service revenue and gross profit were both higher than the corresponding period of fiscal 2008.

For the full fiscal year, clinical research services and Perceptive Informatics both grew service revenues, up eight per cent and 11 per cent respectively. Full year service revenue from the consulting business dipped slightly to $121.7m.

Fourth quarter and full year service revenue increased in all geographies. This reversed the year-on-year downturn seen in some regions in the fourth quarter of 2009. The most dramatic full year increase occurred in Asia Pacific, where service revenues grew by 39 per cent to $133.2m.