PRA Health Sciences, Inc. PRAH reported second-quarter 2020 EPS of 86 cents, beating the Zacks Consensus Estimate of 82 cents by 4.9%. The bottom line fell from the prior-year quarter tally by 29.5%.
The company registered revenues of $729.9 million in the quarter under review, down 4.4% year over year and 3.8% at cc.The figure surpassed the Zacks Consensus Estimate of $718 million by 1.7%.
Results in Detail
Net new business at the Clinical Research segment came in at $701.6 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 $667.3 million, down 4.9% year over year while revenues at the Data Solutions segment amounted to $62.6 million, up 2.5% year over year.
Direct costs totaled $395.3 million in the quarter, up 2.4% from the prior-year quarter. Per management, the increase was primarily driven by a rise in labor-related costs at the Clinical Research and higher data costs in Data Solutions segments.
Gross profit came in at $334.6 million, down 11.2%.
Gross margin came in at 45.8%, highlighting a contraction of 356 basis points (bps).
Adjusted operating profit in the quarter grossed $224.6 million, down 19.3% from the year-ago quarter. Adjusted operating margin in the quarter was 30.8%, down 569 bps.
PRA Health Sciences, Inc. Price, Consensus and EPS Surprise
PRA Health Sciences, Inc. price-consensus-eps-surprise-chart | PRA Health Sciences, Inc. Quote
The company exited the second quarter of 2020 with cash and cash equivalents of $168.2 million, up from $150.8 million at the end of the first quarter.
Cumulative net cash provided by operating activities in the second quarter totaled $86.5 million against net cash used of $4.8 million in the year-ago period.
For 2020, PRA Health expects revenues within $3.07-$3.13 billion. The Zacks Consensus Estimate for the same stands at $3.06 billion.
Adjusted EPS for 2020 is expected within $4.35-$4.55. The Zacks Consensus Estimate for the same stands at $4.40.
For the third quarter of 2020, the company’s total revenues are estimated between $754 million and $784 million.The Zacks Consensus Estimate for the same stands at $752.6 million.
Adjusted EPS for the third quarter is projected between $1.09 and $1.19.The Zacks Consensus Estimate for the same stands at $1.10.
PRA Health ended the second quarter on a strong note. Solid performance by the Data Solutions segment 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. Revenue decline in the Clinical Research segment during the quarter is also worrisome.
Zacks Rank and Key Picks
PRA Health currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. TMO, PerkinElmer, Inc. PKI and OPKO Health, Inc. OPK. While PerkinElmer sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher reported second-quarter 2020 adjusted EPS of $3.89, beating the Zacks Consensus Estimate by 45.7%. Revenues of $6.92 billion outpaced the consensus mark by 0.1%.
PerkinElmer reported second-quarter 2020 adjusted EPS of $1.57, surpassing the Zacks Consensus Estimate by 68.8%. Revenues of $811.7 million outpaced the consensus mark by 1.3%.
OPKO Health reported second-quarter 2020 EPS of 5 cents against the Zacks Consensus Estimate of a loss of 7 cents per share. Revenues of $301.2 million surpassed the consensus estimate by 28.4%.
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