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Computer Task Group (NASD: CTGX) reported that higher volume and profitability of information technology solutions work in its healthcare business fueled growth in margin and earnings. Revenue from solutions work at the Buffalo, N.Y.-based IT services firm rose even as revenue growth in its staffing business remained relatively flat.
Total third-quarter revenue at CTG rose 5.2 percent on a year-over-year basis to $106.4 million.
Third-quarter solutions revenue rose 13 percent to $44.2 million. IT staffing revenue was $62.2 million in the third quarter, roughly flat compared to the $62.0 million in the same period last year. The company said softness in the economy muted growth in its staffing business.
“Growing our healthcare IT business remains the major focus of CTG’s growth strategy and our success in that effort is reflected in healthcare revenue growth of 20 percent thus far in 2012,” said Chairman and CEO James Boldt. “This year’s growth in our healthcare business is coming from both the provider and payer markets in a variety of areas including electronic medical records and other system implementations, application management outsourcing and consulting work.”
CTG’s third-quarter gross margin improved to 21.7 percent from 20.7 percent in the year-ago quarter.
Second-quarter net income rose 27.5 percent to $3.8 million.
CTG estimates fourth-quarter revenue of between $108 million and $ 110 million, an increase of 8 percent at the midpoint of the range.
Computer Task Group Inc. (NASD: CTGX)
For the third quarter ended Sept. 28, 2012, compared with the same period in the previous year. Revenue: $106.4 million, +5.2 percent
Net income: $3.8 million, +27.5 percent