BOSTON (AP) — Pharmaceutical research contractor Parexel International Corp. said Monday it will restructure the early-stage part of its clinical research service business in response to disappointing results, and it cut its profit and revenue forecasts for fiscal 2011.
Parexel shares plunged as much as 22 percent in aftermarket trading.
Parexel said revenue from the early-stage business fell short of its expectations. It also said some clients delayed the start of large projects and a significant number of projects are still in the start-up stage, which brings the company less revenue.
In the fiscal third quarter, profit rose 23 percent to $15.7 million, or 26 cents per share, from $12.8 million, or 22 cents per share. Excluding one-time items, the company said it earned 27 cents per share for the three months ended March 31. Revenue increased 3 percent to $301.4 million from $291.2 million.
Analysts expected a larger profit of 30 cents per share in profit and revenue of $309.5 million, according to FactSet.
The company said it booked $566.5 million in new business during the quarter, while cancellations totaled $132.4 million. Its backlog rose to $3.19 billion, up 34 percent from a year ago.
Parexel plans to begin a restructuring program during the current quarter. Total expenses are forecast at about $15 million, with $4 million spent in the fourth quarter and the rest spread out over the following two quarters. The company said it expects to save 15 to 20 cents per share in fiscal 2012 as a result of the changes.
Parexel is now expecting a profit of 84 cents to 88 cents per share in fiscal 2011, or 90 cents to 94 cents per share excluding the restructuring costs and other one-time items. The company is projecting $1.2 billion to $1.21 billion in revenue.
Previously Parexel had estimated a profit of $1.17 to $1.23 per share on revenue of $1.22 billion to $1.24 billion. The new forecast is well below the $1.22 per share and revenue of $1.23 billion that analysts had forecast.
Shares of Parexel fell 74 cents, or 2.7 percent, to $27.02 on Monday. The stock dropped $5.26 to $21.76 in aftermarket trading.