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PRA Health (PRAH) Stock Down 0.3% Despite Q1 Earnings Beat

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Shares of PRA Health Sciences, Inc. have declined 0.3% as of May 3 following its first-quarter 2021 earnings announcement.

The company reported first-quarter adjusted EPS of $1.35, beating the Zacks Consensus Estimate by 0.8%. The bottom line also rose 28.6% from the prior-year quarter’s level.

Revenues

For the quarter, revenues came in at $933.8 million, beating the Zacks Consensus Estimate by 9.2%. The top line also grew 19.1% year over year.

Results in Detail

Segmental Analysis

Net new business at the Clinical Research segment totaled $797.2 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 $866.6 million, up 19.3% year over year while revenues at the Data Solutions segment amounted to $67.1 million, up 16.6% year over year.

Direct Costs

Direct costs totaled $472 million in the quarter, up 16.9% from the prior-year quarter. Per management, the increase was primarily induced by a rise in labor-related costs in the Clinical Research segment and escalated data costs in the Data Solutions segment.

Margin Trend

Gross profit came in at $461.8 million, up 21.6%. Gross margin came in at 49.5%, highlighting an expansion of 98 basis points (bps).

Adjusted operating profit in the quarter grossed $338.9 million, up 24.2% from the year-ago quarter. Adjusted operating margin in the quarter was 36.3%, up 148 bps.

 

PRA Health Sciences, Inc. Price, Consensus and EPS Surprise

PRA Health Sciences, Inc. Price, Consensus and EPS Surprise

 

PRA Health Sciences, Inc. price-consensus-eps-surprise-chart | PRA Health Sciences, Inc. Quote

 

Financial Update

The company exited the first quarter of 2021 with cash and cash equivalents of $690.3 million, up from $506.3 million at the end of the fourth quarter of 2020.

Net cash provided by operating activities totaled $192.2 million compared with $60.6 million in the year-ago period.

Our Take

PRA Health ended the first quarter on a strong note. Solid performance by both Clinical Research and Data Solutions segments is a major positive. Further, PRA Health continues to gain from large pharmaceutical companies and is also well-poised on (Contract Research Organization) CRO market prospects. Expansion in both margins is encouraging as well.

On the flip side, direct costs shot up in the quarter under review.

Zacks Rank and Key Picks

PRA Health currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Boston Scientific Corporation (BSX - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and HCA Healthcare, Inc. HCA, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific posted adjusted earnings per share (EPS) of 37 cents for the first quarter of 2021, which exceeded the Zacks Consensus Estimate by 23.3%. Revenues of $2.75 billion in the first quarter also exceeded the Zacks Consensus Estimate by 5.3%.

Integer Holdings reported first-quarter 2021 adjusted EPS of 97 cents, which outpaced the Zacks Consensus Estimate by 12.8%. Revenues of $290.5 million also beat the Zacks Consensus Estimate by 2.6%.

HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion too trumped the Zacks Consensus Estimate by 2.2%.

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