In 2010 ERT says it turned down business worth $10m (€7m) over concerns it lacked capacity to do the respiratory work. Since then the clinical trial services and technology business has named a new CEO and adopted a new approach.
“It’s hard to be a revenue growth company if you walk away from business”, Jeffrey Litwin, and CEO of ERT, told investors. After being appointed CEO in May and tasked with driving sales growth Litwin abandoned the policy of ‘walking away’ from work, even if it means taking a near-term margin hit.
Adopting this policy helped ERT post double-digit fourth quarter and full year sales growth. Cost of revenue also jumped but ERT still managed to grow its full year and fourth quarter operating profits.
Having pursued the policy, implementation of which involved cross-training to help handle demand spikes, ERT will continue accepting work it used to turn down. “We haven’t turned away any business since the first quarter of 2011, so I’m confident that we can continue in that vein”, Litwin said.
Continued growth
By building on the approach taken in 2011 ERT expects to record full year revenues of close to $200m in 2012, a high single-digit increase. ERT also expects earnings per share to increase year-on-year.
Sales in 2012 will benefit from strong fourth quarter bookings, the first time they have topped $80m, which drove backlog up to $357m. Large pharma companies accounted for two-thirds of bookings and demand from these clients is growing as they try to centralise clinical trial work, Litwin said.
Improving business in 2011 helped ERT grow its cash reserves. With close to $40m in reserve ERT has its “eye on the marketplace for potential acquisitions”, Litwin said, but and deal has to make strategic and financial sense.