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US - CTG reports EMR delays, revenue below expectations

July 23 2013

Second-quarter revenue at CTG (NASD: CTG) rose 0.4 percent year over year to $107.1 million, but was below guidance of between $111 million and $113 million. The Buffalo, N.Y.-based information technology service company also lowered its full-year 2013 revenue forecast.

In a press release, Chairman and CEO James Boldt said lower-than-expected revenue was caused by a reduction in technical resource requirements at a large staffing customer and delays in the start-ups of electronic medical records projects.

“Healthcare revenue was down slightly from last year as many hospital clients are deferring system investments as a result of the U.S. federal budget sequestration,” Boldt said. “Long term, we remain optimistic in our healthcare opportunities in EMR and others areas such as post-implementation EMR production support, application management outsourcing and medical data analytics.”

CTG also lowers its projection of full-year 2013 revenue to between $428 million and $436 million; down from a projection of $450 to $460 million made in the first quarter earnings announcement.

“Our earnings growth in 2013 will be less than we initially expected as our hospital clients deal with reimbursement reductions caused by the U.S. federal budget sequestration,” Boldt said. However, he added that health providers and payers still have significant long-term information technology needs.

Looking back at the second-quarter, staffing revenue rose 2.9 percent year over year to $64.8 million while solutions revenue fell 3.3 percent to $42.3 million.

CTG’s European revenue rose 11.0 percent to $18.6 million, including its acquisition of etrinity in February 2013. etrinity provides IT services to the healthcare market in Belgium and the Netherlands; it posted 2012 revenue of $3 million.

Second-quarter gross margin narrowed to 21.1 percent from 21.5 percent.

Net income fell 1.6 percent year over year to $4.1 million in the second quarter; however, the year-ago quarter included a nonoperational gain of $400,000.

CTG (NASD: CTG)
 For the second quarter ended June 28, 2013, compared with the same period in the previous year.
 Revenue: $107.1 million, +0.4 percent
 Net income: $4.1 million, -1.6 percent

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