PRA Health Sciences CEO Colin Shannon said the industry backdrop remains quite robust, with revenue for the third quarter (Q3) at approximately $718m, representing an increase of approximately 23% year-over-year.
Net new business increased approximately 10% when compared to the third quarter of 2017 with $657m in net new business awards, the company reported.
The Numbers
- Net new business of $657.2m; Net book-to-bill of 1.28
- $717.6m of revenue; 23.3% growth at actual foreign exchange rates and 24% growth on a constant currency basis
- $572.9m of revenue excluding the impact of ASC 606; 15.8% growth at actual foreign exchange rates; 16.3% growth on a constant currency basis
- GAAP net income per diluted share of $0.02 and GAAP net income of $1.5m
- Adjusted net income per diluted share was $1.13 and adjusted net income was $74.8m
“Regarding revenue concentration for the third quarter of 2018, we derived 54% of our revenue from large pharmaceutical companies, 12% from small to mid-sized pharmaceutical companies, 17% from large biotechnology companies and 17% from all other biotechnology companies,” said Mike Bonello, chief financial officer, on the earnings call.
The company’s top five clients represented approximately 37% of revenue, with its largest client representing approximately 9%.
As it pertains to adding to the business, Shannon said there is “a few things” it has been looking at overseas and “contemplating,” though the company is not yet ready to do anything.
“We see some market opportunities that we might want to take advantage of; and there could potentially be tuck-in acquisitions [that] would give us the capability to take advantage of some of our data solutions,” he said.
Shannon explained that PRA is looking to expand its capabilities in other markets, a lot of which can be done organically.
“We're still building out some areas in Asia, and we're still [seeing] a lot of room to expand that significantly and we're working through that just now. I don't see that as being acquisitions, I do see that as more organic growth,” he added.
PRA recently “shuffled some staff,” Shannon noted: “What we've been noticing is that there has a trend of some of our new opportunities that have been awarded, that we are getting into some more detailed discussions with clients about just the modification of the program and our protocol, and we're seeing a lot of these projects slip a little bit.”
Consequently, the typical start time from award to “actual immediate start is definitely elongating.”
Shannon said the company has been “careful and cautious” about the way it is hiring. As some of its projects move forward, it will start to hire aggressively again, he explained.
Symphony Health
Shannon reiterated the potential for synergies going forward between PRA and Symphony Heath, the PA-based data, analytics, and technology solution provider it purchased in August 2017.
“We see a lot of opportunities, working closely with a lot of our therapeutic expertise and the infrastructure that we have built,” he said. “We intend to take advantage of that, and over the next coming months, we'll be starting to look at planning for that almost immediately.”
There also will be new opportunities to support the Symphony Group, Shannon said, including additional sales using PRA’s own teams. “We're starting to get closer collaboration as part of the integration process, and we see a lot of really good opportunities,” he added.
Part of this includes moving into new markets as well, Shannon said, adding, “We’re looking at and assessing various opportunities using real-world data and various things like that, that we've not really participated that strongly in, in the past.”
Shannon explained, “We've become very reliant on data as part of our whole clinical process.” This was one of the reasons the company decided to acquire a source of data, he noted.
“It's become established in our culture that we based on evidence and we make decisions based on evidence, and we use supporting data to make sure that we understand the data appropriately and put into context,” said Shannon. “So, we've been working hard at applying that and it's certainly been helpful in growing the company.”
