The company reported a strong quarterly book-to-bill of 1.5 for the three months ended December 31, 2014, but it’s seen a pretty volatile mix over the last few quarters, with a book-to-bill of about 0.5 in Q2 of 2014, and 1.2 for the full year.
At the end of the quarter, backlog was $1.6bn, an increase of 6.6% from 2013. Backlog was negatively impacted by foreign currency fluctuations during 2014 of approximately $44.5m.
CEO Jamie Macdonald told investors the company had a “solid quarter all around” with strong proposal volume earlier in the year, with one customer who signed a $50m deal with different compounds. Net service revenue growth resulted primarily from the increase in new business awards in the past 18 months and a lower cancellation rate during 2014, the company said.
Macdonald also noted in the call that a major contract renewal, referencing the company’s work with Astellas Pharma, is “a quarter or two away.”
The company said its growth in revenue in 2014 was particularly strong in the CNS (central nervous system), oncology and other complex therapeutic areas and with one strategic Functional Service Provider customer. INC also completed the acquisition of MEK Consulting in the first half of 2014, which allowed the company to expand its footprint in Greece, Turkey and the MENA (Middle East and North Africa) region.
Macdonald added that the company continues to expand its diverse client base of over 300, and saw new work from 58 customers. The mix of customers is also shifting with two of the company’s top five clients in 2014 were not in the top five in 2013. Still, the top five clients only accounted for 37% of the company’s annual revenue.
As far as pricing, Macdonald said it’s “been consistent,” though “some of the smaller CROs are aggressive and opportunistic to make sure they’re filling up their backlog.”
In terms of the future, INC is predicting in 2015 it will bring in between $870m and $900m in net service revenue, which would be a nearly $100m increase from 2014, when the company saw just over $800m in revenue.