PharmaNet’s Turnaround Right on Time
PharmaNet Development Group’s turnaround, from the ashes of the contract research organization (CRO) formerly known as “troubled SFBC,” is right on track as predicted in this space last August.
The latest encouraging news came on March 1 when PharmaNet shares jumped 19% to $24.21 after investors liked what the company reported in its fourth quarter.
PharmaNet CEO Jeff McMullen was talking turnaround in its earnings conference call. He had predicted the company’s turnaround would come just about now and he delivered.
He added a note of caution, however, saying that PharmaNet was still in a “transition” period and could be subject to the ups and down of the CRO business.
McMullen came to SFBC in December 2004 when the company bought PharmaNet as SFBC moved out of early clinical research into phase II-IV. At the time, PharmaNet was an up-and-coming CRO just going global. He took over after SFBC’s leadership resigned amidst a series of scandals reported on by the general media and scrutiny from regulators...
Last week, PharmaNet’s fourth quarter loss narrowed to $12 million compared with $16.5 million in the year ago period. Fourth-quarter revenue was up $500,000 to $103.6 million. Direct revenue for 2006, which does not include reimbursed out-of-pocket expenses, increased 12.2% to $302.4 million.
PharmaNet attributed its turnaround to strong growth in the late stage segment, which was offset by lower direct revenue in the early stage segment. For 2007, the company expects earnings of 93 cents to $1.08 a share, adjusted earnings of $1.06 to $1.21 a share, and direct revenues to be in the range of $334 to $339 million.
The turnaround at PharmaNet is going well enough that McMullen is talking of acquisitions in areas such as bioimaging and clinical trials material management. And PharmaNet is getting back into global expansion, planning to open offices in Milan, Taiwan, Romania and Brazil in 2007.
PharmaNet is back where it was headed in 2004 as a global CRO before SFBC bought it. PharmaNet is back on track once again.