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PRA Health (PRAH) Q4 Earnings and Revenues Beat Estimates

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PRA Health Sciences, Inc. PRAH reported fourth-quarter 2019 adjusted earnings per share (EPS) of $1.54, which outpaced the Zacks Consensus Estimate of $1.48. The bottom line rose 17.6% from the prior-year quarter tally.

The Zacks Rank #2 (Buy) company registered revenues of $800.2 million in the quarter under review, up 10% year over year and 10.2% on a constant currency (cc) basis. The figure also surpassed the consensus estimate of $794 million.

2019 at a Glance

PRA Health’s revenues totaled $3.07 billion in 2019, up 6.8% year over year and 7.8% at cc. Adjusted EPS was $5.17, up 20.8%.

Results in Detail

Segmental Analysis

Net new business at the Clinical Research segment came in at $658.9 million. Through the segment, the company receives contracts 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. price-consensus-eps-surprise-chart | PRA Health Sciences, Inc. Quote

Revenues at the Clinical Research segment and Data Solutions segment amounted to $725.1 million and $75.1 million, respectively. The company provides weekly, monthly or quarterly data reports and analytics to customers.

Direct Costs

Direct costs totaled $386.1 million in the quarter, up 5.6% year over year. Per management, the increase was primarily driven by a rise in labor-related costs at the Clinical Research and Data Solutions segment.

Margin Trend

Operating profit in the quarter grossed $101.4 million, up 4.8% from the year-ago quarter. Operating margin in the quarter was 12.7%, down 60 basis points.

Financial Update

Cash and cash equivalents came in at $236.2 million, up from $144.2 million at 2018-end.

Guidance

For 2020, PRA Health expects revenues within $3.23-$3.36 billion, indicating growth of 5-9.5% at cc. The Zacks Consensus Estimate for the same is pegged at $3.30 billion.

Adjusted EPS is expected within $5.77-$5.97, suggesting a rise of 12-15% at cc. The Zacks Consensus Estimate for the same stands at $5.86.

For the first quarter, PRA Health expects revenues within $765-$787 million, suggesting an upside of 6-9% at cc. The Zacks Consensus Estimate for the metric is pegged at $782.5 million.

Adjusted EPS is projected between $1.05 and $1.15. The Zacks Consensus Estimate for the same is pinned at $1.27.

Our Take

PRA Health ended the fourth quarter on a strong note. A solid view for 2020 instills optimism. Strong performance by the Clinical Research segment is another positive. PRA Health continues to gain from large pharmaceutical companies, which has contributed substantially to its top line in recent times. Management is optimistic about the integration of Symphony Health. With this buyout, PRA Health expects to enhance ability in the field of data and analytics. The company is also poised well on CRO market prospects.

On the flip side, direct costs shot up in the quarter under review. Contraction in operating margin is worrisome as well.

Earnings of Other MedTech Majors at a Glance

Other top-ranked companies, which also reported solid results this earnings season, include Stryker Corporation SYK, Accuray Incorporated ARAY and IDEXX Laboratories, Inc. IDXX. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker reported fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Revenues of $4.13 billion surpassed the consensus estimate by 0.7%. The company carries a Zacks Rank #2.

Accuray reported second-quarter fiscal 2020 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1.

IDEXX Laboratories reported fourth-quarter 2019 adjusted EPS of $1.04, which beat the Zacks Consensus Estimate of 91 cents by 14.3%. Revenues were $605.4 million, surpassing the Zacks Consensus Estimate by 0.9%. The company carries a Zacks Rank of 2.

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