CRO Giant PAREXEL Explores $4 Billion Sale, Stock Jumps
May 9, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Waltham, Mass.-based contract research organization Parexel International has partnered with investment banks in apparent plans to broker a sale.
The Wall Street Journal reported that anonymous sources indicated that Parexel was up for sale. The CRO currently has a market cap of about $3.8 billion, but if up for sale, would likely go for more than $4 billion.
In response to the story, Parexel took a jump. Shares traded on April 19 for $61.81 and are currently trading for $73.97.
There are suggestions that a group of activist investors, including Corvex Management, are considering acquiring the company. Corvex already has a significant stake in Parexel.
On May 3, Parexel released its third-quarter financials. The quarter ended on March 31, 2017.
For the third quarter, the company’s revenue grew 0.4 percent to $529.3 million, compared to $527.1 million in the same period in 2016. Income from operations were $29.9 million, or 5.6 percent of service revenue. GAAP net income for the third quarter was $17.8 million, or $0.35 per diluted share, compared to $47.9 million, or $0.89 per diluted share, for the previous year’s third quarter.
“Parexel’s financial results for the third quarter of Fiscal Year 2017 were in line with our expectations,” said Josef von Rickenbach, Parexel’s chairman and chief executive officer, in a statement. “We are encouraged by our outlook for revenue and overall operational performance in the fourth quarter.”
Rickenbach went on to say, “In response to revenue shortfalls earlier in this fiscal year, we are right-sizing the organization. In January, we announced a restructuring program, and we are now expanding that program. All in, we expect total annual savings of $75-$85 million from our restructuring activities in Fiscal Year 2018. We remain committed to our longer-term goal of 14-16 percent adjusted operating margin.”
In February, Parexel acquired contract medical affairs services provider, The Medical Affairs Company (TMAC). Financial terms were not disclosed. TMAC is a full-service contract medical organization that offers strategic and tactical medical science liaison (MSLs) and clinical nurse educator support services, as well as medical affairs consulting, medical communications support, and direct placement services. TMAC had about 200 employees in the U.S. Parexel has about 2,000 employees worldwide.
“The commercialization-outsourcing market continues to grow as biopharmaceutical clients increasingly require medical affairs solutions to optimize awareness and understanding of their products in development or already on the market,” Rickenbach said in a statement in February. “As a company, we are focused on opportunities within commercialization, market access, regulatory, pharmacovigilance, and medical outsourcing. With TMAC, Parexel will gain new and distinct medical affairs outsourcing capabilities that will strengthen and expand our commercialization and market access offerings.”
Parexel has three segments, Clinical Research Services, Parexel Consulting and Medical Marketing, and Perceptive. The Clinical Research Services unit provides clinical trials management and biostatistics, data management, and clinical pharmacology in addition to related medical advisory and investigator site services. The services are conducted in cardiology, oncology, infectious diseases, neurology, allergy/immunology, endocrinology/metabolism, gastroenterology, obstetrics/gynecology, orthopedics, pediatrics, psychiatry, and transplantation.
The Consulting and Medical Marketing segment provides drug development, regulatory, manufacturing compliance, business process consulting, staffing solutions, and marketing expertise. Perceptive offers a portfolio of products and services including medical imaging services, interactive voice response systems, clinical trials management systems, Web-based portals, systems integration, and patient diary applications.
The company was founded in 1983 by Rickenbach.