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PRA Health (PRAH) Stock Down 2.8% Despite Q4 Earnings Beat
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PRA Health Sciences, Inc. declines 2.8% on Feb 24, despite reporting strong earnings.
The company reported fourth-quarter 2020 adjusted EPS of $1.55, beating the Zacks Consensus Estimate by 5.4%. The bottom line, also, rose from the prior-year quarter’s tally by 0.6%.
For 2020, adjusted EPS came in at $4.75, falling 8.1% year over year.
Revenues
For the quarter, revenues came in at $873.5 million, beating the Zacks Consensus Estimate by 5.4%. The topline grew 9.1% year over year.
For 2020, the company recorded revenues of $3.18 billion in the quarter under review, up 3.8% year over year and 3.7% at cc.
Results in Detail
Segmental Analysis
Net new business at the Clinical Research segment came in at $872.4 million. Through the segment, the company receives contracts to provide clinical research services, with payments based on fixed-fee or fee-for-service arrangements.
Revenues at the Clinical Research segment amounted to $797.5 million, up 10% year over year, while revenues at the Data Solutions segment amounted to $75.9 million, up 1.1% year over year.
Direct Costs
Direct costs totaled $437.7 million in the quarter, up 13.4% from the prior-year quarter. Per management, the increase was primarily driven by a rise in labor-related costs in the Clinical Research segment and higher data costs in the Data Solutions segment.
PRA Health Sciences, Inc. Price, Consensus and EPS Surprise
Gross profit came in at $435.7 million, up 5.2%. Gross margin came in at 49.9%, highlighting a contraction of 187 basis points (bps).
Adjusted operating profit in the quarter grossed $315 million, up 1.4% from the year-ago quarter. Adjusted operating margin in the quarter was 36.1%, down 275 bps.
Financial Update
The company exited the fourth quarter of 2020 with cash and cash equivalents of $506.3 million, up from $236.2 million at the end of the year-ago period.
Cumulative net cash provided by operating activities totaled $427.2 million compared with $253.6 million in the year-ago period.
Our Take
PRA Health ended the fourth quarter on a strong note. Solid performance by both Clinical Research and Data Solutions segments is a major positive. PRA Health continues to gain from large pharmaceutical companies and is also well-poised on CRO market prospects.
On the flip side, direct costs shot up in the quarter under review. Contraction in both margins is a concern as well.
Zacks Rank and Key Picks
PRA Health currently carries a Zacks Rank #5 (Strong Sell).
Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Further, fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.
AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny. The Zacks Consensus Estimate was pegged at a loss of two centsper share. Additionally, revenues of $72.8 million beat the consensus mark by 8%.
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PRA Health (PRAH) Stock Down 2.8% Despite Q4 Earnings Beat
PRA Health Sciences, Inc. declines 2.8% on Feb 24, despite reporting strong earnings.
The company reported fourth-quarter 2020 adjusted EPS of $1.55, beating the Zacks Consensus Estimate by 5.4%. The bottom line, also, rose from the prior-year quarter’s tally by 0.6%.
For 2020, adjusted EPS came in at $4.75, falling 8.1% year over year.
Revenues
For the quarter, revenues came in at $873.5 million, beating the Zacks Consensus Estimate by 5.4%. The topline grew 9.1% year over year.
For 2020, the company recorded revenues of $3.18 billion in the quarter under review, up 3.8% year over year and 3.7% at cc.
Results in Detail
Segmental Analysis
Net new business at the Clinical Research segment came in at $872.4 million. Through the segment, the company receives contracts to provide clinical research services, with payments based on fixed-fee or fee-for-service arrangements.
Revenues at the Clinical Research segment amounted to $797.5 million, up 10% year over year, while revenues at the Data Solutions segment amounted to $75.9 million, up 1.1% year over year.
Direct Costs
Direct costs totaled $437.7 million in the quarter, up 13.4% from the prior-year quarter. Per management, the increase was primarily driven by a rise in labor-related costs in the Clinical Research segment and higher data costs in the Data Solutions segment.
PRA Health Sciences, Inc. Price, Consensus and EPS Surprise
PRA Health Sciences, Inc. price-consensus-eps-surprise-chart | PRA Health Sciences, Inc. Quote
Margin Trend
Gross profit came in at $435.7 million, up 5.2%. Gross margin came in at 49.9%, highlighting a contraction of 187 basis points (bps).
Adjusted operating profit in the quarter grossed $315 million, up 1.4% from the year-ago quarter. Adjusted operating margin in the quarter was 36.1%, down 275 bps.
Financial Update
The company exited the fourth quarter of 2020 with cash and cash equivalents of $506.3 million, up from $236.2 million at the end of the year-ago period.
Cumulative net cash provided by operating activities totaled $427.2 million compared with $253.6 million in the year-ago period.
Our Take
PRA Health ended the fourth quarter on a strong note. Solid performance by both Clinical Research and Data Solutions segments is a major positive. PRA Health continues to gain from large pharmaceutical companies and is also well-poised on CRO market prospects.
On the flip side, direct costs shot up in the quarter under review. Contraction in both margins is a concern as well.
Zacks Rank and Key Picks
PRA Health currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader medical space that already announced quarterly results are Hologic, Inc. (HOLX - Free Report) , Abbott Laboratories (ABT - Free Report) and AngioDynamics, Inc. (ANGO - Free Report) , each presently carrying a Zacks Rank#2 (Buy). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Further, fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.
AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny. The Zacks Consensus Estimate was pegged at a loss of two centsper share. Additionally, revenues of $72.8 million beat the consensus mark by 8%.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>