Pharmaceutical services company PRA Health Sciences reported yet another quarter of double-digit growth in revenue and adjusted net income. The Raleigh company’s performance also outpaced Wall Street’s expectations.
Despite results that one analyst declared “impressive” and prompted another to write that the company had generated “solid momentum” with its recent partnership wins, PRA shares fell 4 percent Wednesday.
The reason for the stock’s decline is unclear.
“Our best explanation is that expectations had simply gotten too hot, and sentiment on the pharma services group has deteriorated,” Wells Fargo Securities analyst Tim Evans wrote in a research note.
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PRA’s revenue in the first quarter totaled $427.1 million, up 15 percent from a year ago. Analysts polled by Bloomberg News were anticipating $419.5 million.
In addition, the company’s net new business for the quarter was $564.8 million, boosting the company’s backlog 20 percent from a year ago.
PRA “has avoided the declining fundamentals of the CRO market ... and is posting double-digit revenue growth in the face of industry headwinds,” noted Jefferies & Co. analyst David Windley. The declining fundamentals he referred to are indications that large pharmaceutical companies are decelerating their outsourcing efforts to contract research organizations such as PRA that help them conduct clinical trials and analyze the results.
CEO Colin Shannon told analysts during a conference call that the company’s “win rate” when competing for new business is “higher than historical normal.”
A large part of the credit for that, he added, was the preparation and expense that goes into the company’s proposals.
“We use our medical informatics to try and give different views of what’s going on with patient populations, providing insights to our clients. We try to help them look at better ways of actually conducting their trials. More importantly, though, we want to make sure that when they pick us as a partner, that they know we’ll do everything in our power to get their work executed and completed on time.”
Recruiting sufficient numbers of patients willing to test an experimental drug can be a major bottleneck in conducting clinical trials. Every day that a blockbuster drug is delayed from winning regulatory approval can mean millions of dollars in lost sales.
Adjusted net income was $40.4 million, up 16 percent. Adjusted net income per share was 62 cents, up 13 percent and 2 cents better than analysts’ projections.
PRA has more than 13,000 employees globally, including 900-plus in North Carolina and 580 in Raleigh. Its shares closed Wednesday at $62.47, down $2.95. The company’s shares have risen 13 percent this year.