Parexel dims its revenue expectations despite a solid quarter

Parexel ($PRXL) lowered its fiscal-year revenue projections by about 2% despite posting modest growth in the last quarter, working through a sizable restructuring program designed to boost profits.

The Massachusetts CRO came through with $518.5 million in service revenue in its fiscal second quarter, good for 3.8% growth. The company's banner clinical business grew 3.4% to $407.1 million, while its consulting operation ticked up 4% to $41.4 million and its informatics unit grew 6% to $70 million. The company's net income rose 1.5% to $39.4 million.

But Parexel is slightly reducing its full-year sales guidance, expecting about $2.1 billion for fiscal 2016 compared with the roughly $2.2 billion it predicted in October. At the same time, the CRO is dialing up its profit projection by 2% at midpoint to around $3.02 per share, reflecting its "updated overall outlook," the company said.

Parexel CEO Josef von Rickenbach

Parexel recorded a $10.4 million restructuring charge on the quarter that reflects its ongoing efforts to slash costs, which includes shedding about 850 jobs through this year. As that process progresses, Parexel remains on pace to meet its profitability targets for the year, CEO Josef von Rickenbach said.

"Our margin acceleration program remained on track, and our labor mix and geographic footprint leverage both improved," von Rickenbach said in a statement. "Demand for outsourced biopharmaceutical R&D services remained robust, and we believe that Parexel's expertise, service offerings and footprint are well-aligned with client requirements."

The company closed its second quarter with a $5.5 billion backlog, 7.5% larger than in the same period last year, and is carrying a 1.24 book-to-bill ratio.

- read the results