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PRA Health's (PRAH) Q2 Earnings Top, Revenues Lag Estimates
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PRA Health Sciences, Inc. posted second-quarter 2018 adjusted earnings per share (EPS) of $1, which surpassed the Zacks Consensus Estimate of 95 cents. EPS rose 26.6% from the prior-year quarter’s tally. Notably, the company had an unfavorable impact of $5.3 million owing to fluctuation in foreign currency exchange rates.
PRA Health registered revenues of $658.3 million in the second quarter, up 23.3% year over year.
In first-quarter 2018, the company had adopted the new ASC 606 accounting standard for calculating revenues using the modified retrospective method. Accordingly, the metric was $722.8 million in the reported quarter, up 35.4% (up 34.2% at constant currency [cc]) from the year-ago quarter. The figure however missed the Zacks Consensus Estimate for revenues of $735.5 million.
Q2 in Detail
Segmental Analysis
The company is managed through two reportable segments — the Clinical Research segment and the Data Solutions segment
Net new business for the Clinical Research segment came in at $670 million in the second quarter. Through this segment, the company receives contracts from customers to provide clinical research services with payments based on fixed-fee or fee-for-service arrangements.
PRA Health Sciences, Inc. Price, Consensus and EPS Surprise
Revenues in the Data Solutions segment amounted to $58.1 million in the quarter under review. The company provides weekly, monthly or quarterly data reports and analytics to its customers.
Direct Costs
Direct costs totaled $381.7 million in the quarter, up 27% year over year.
For the Clinical Research segment, direct costs consist primarily of labor-related charges. Notably, labor-related costs rose $36.4 million in the segment.
At the Data Solutions segment, direct costs consist primarily of data costs. The segment witnessed $41.6 million of incremental direct costs year over year.
Margin Trend
Gross profit, after excluding direct costs, came in at $341.1 million, up 46.3% from the prior-year quarter. Gross margin, as a percentage of revenues, came in at 47.2%.
Net income from operations, after excluding selling, general and administrative expenses from gross profit, came in at $249.9 million, up 59.3% from the year-ago quarter. Adjusted operating margin, as a percentage of revenues, came in at 34.6%
Guidance Raised
PRA Health raised its 2018 revenue guidance to the range of $2.87-$2.92 billion from $2.84-$2.95 billion stated previously. The Zacks Consensus Estimate is currently pegged at $2.92 billion, which is below the guidance.
Adjusted earnings per diluted share are expected between $4.13 and $4.23 compared with the previously provided range of $4 to $4.15. The Zacks Consensus Estimate is currently pegged at $4.13, coinciding with the low end of the guidance.
Our Take
PRA Health exited second-quarter on a mixed note. We are upbeat about the company seeing a year-over-year increase in earnings and revenues. Also, the raised guidance for full-year 2018 adjusted EPS is indicative of brighter prospects for the company in the near term. We are also looking forward to the company’s ongoing integration of the $530-million Symphony Health acquisition. With this buyout, PRA Health expects to enhance its ability in the field of data and analytics.
On the flip side, escalating direct cost is a cause of worry.
Q2 Earnings of MedTech Majors at a Glance
PRA Health carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the broader medical space, which reported solid earnings this season, are Intuitive Surgical (ISRG - Free Report) , Chemed Corporation (CHE - Free Report) and Align Technology, Inc. (ALGN - Free Report) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Align Technology carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical reported second-quarter 2018 adjusted EPS of $2.76, which beat the Zacks Consensus Estimate of $2.48. Revenues totaled $909.3 million, also surpassing the consensus estimate of $870 million.
Align Technology posted second-quarter 2018 adjusted EPS of $1.30, steering past the Zacks Consensus Estimate of $1.09. Revenues came in at $490.3 million, beating the consensus estimate of $462.9 million.
Chemed reported second-quarter 2018 adjusted EPS of $2.81, which trumped the Zacks Consensus Estimate of $2.68. Revenues of $441.8 million edged past the Zacks Consensus Estimate of $432.3 million.
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PRA Health's (PRAH) Q2 Earnings Top, Revenues Lag Estimates
PRA Health Sciences, Inc. posted second-quarter 2018 adjusted earnings per share (EPS) of $1, which surpassed the Zacks Consensus Estimate of 95 cents. EPS rose 26.6% from the prior-year quarter’s tally. Notably, the company had an unfavorable impact of $5.3 million owing to fluctuation in foreign currency exchange rates.
PRA Health registered revenues of $658.3 million in the second quarter, up 23.3% year over year.
In first-quarter 2018, the company had adopted the new ASC 606 accounting standard for calculating revenues using the modified retrospective method. Accordingly, the metric was $722.8 million in the reported quarter, up 35.4% (up 34.2% at constant currency [cc]) from the year-ago quarter. The figure however missed the Zacks Consensus Estimate for revenues of $735.5 million.
Q2 in Detail
Segmental Analysis
The company is managed through two reportable segments — the Clinical Research segment and the Data Solutions segment
Net new business for the Clinical Research segment came in at $670 million in the second quarter. Through this segment, the company receives contracts from customers to provide clinical research services with payments based on fixed-fee or fee-for-service arrangements.
PRA Health Sciences, Inc. Price, Consensus and EPS Surprise
PRA Health Sciences, Inc. Price, Consensus and EPS Surprise | PRA Health Sciences, Inc. Quote
Revenues in the Data Solutions segment amounted to $58.1 million in the quarter under review. The company provides weekly, monthly or quarterly data reports and analytics to its customers.
Direct Costs
Direct costs totaled $381.7 million in the quarter, up 27% year over year.
For the Clinical Research segment, direct costs consist primarily of labor-related charges. Notably, labor-related costs rose $36.4 million in the segment.
At the Data Solutions segment, direct costs consist primarily of data costs. The segment witnessed $41.6 million of incremental direct costs year over year.
Margin Trend
Gross profit, after excluding direct costs, came in at $341.1 million, up 46.3% from the prior-year quarter. Gross margin, as a percentage of revenues, came in at 47.2%.
Net income from operations, after excluding selling, general and administrative expenses from gross profit, came in at $249.9 million, up 59.3% from the year-ago quarter. Adjusted operating margin, as a percentage of revenues, came in at 34.6%
Guidance Raised
PRA Health raised its 2018 revenue guidance to the range of $2.87-$2.92 billion from $2.84-$2.95 billion stated previously. The Zacks Consensus Estimate is currently pegged at $2.92 billion, which is below the guidance.
Adjusted earnings per diluted share are expected between $4.13 and $4.23 compared with the previously provided range of $4 to $4.15. The Zacks Consensus Estimate is currently pegged at $4.13, coinciding with the low end of the guidance.
Our Take
PRA Health exited second-quarter on a mixed note. We are upbeat about the company seeing a year-over-year increase in earnings and revenues. Also, the raised guidance for full-year 2018 adjusted EPS is indicative of brighter prospects for the company in the near term. We are also looking forward to the company’s ongoing integration of the $530-million Symphony Health acquisition. With this buyout, PRA Health expects to enhance its ability in the field of data and analytics.
On the flip side, escalating direct cost is a cause of worry.
Q2 Earnings of MedTech Majors at a Glance
PRA Health carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the broader medical space, which reported solid earnings this season, are Intuitive Surgical (ISRG - Free Report) , Chemed Corporation (CHE - Free Report) and Align Technology, Inc. (ALGN - Free Report) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Align Technology carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical reported second-quarter 2018 adjusted EPS of $2.76, which beat the Zacks Consensus Estimate of $2.48. Revenues totaled $909.3 million, also surpassing the consensus estimate of $870 million.
Align Technology posted second-quarter 2018 adjusted EPS of $1.30, steering past the Zacks Consensus Estimate of $1.09. Revenues came in at $490.3 million, beating the consensus estimate of $462.9 million.
Chemed reported second-quarter 2018 adjusted EPS of $2.81, which trumped the Zacks Consensus Estimate of $2.68. Revenues of $441.8 million edged past the Zacks Consensus Estimate of $432.3 million.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>