Parexel, a provider of life science company services such as clinical trial management, is cutting 850 jobs across the company.
Parexel (Nasdaq: PRXL), which recently agreed to take on some 450 workers from GlaxoSmithKline where they faced layoffs, would have some 900 Triangle employees assuming all the GSK workers were employed.
The company did not specify where cuts would be made other than to say “across the company.”
If cuts are made in the Triangle, they would be the latest in a series that have hit GSK, Hospira, Salix and Merck as well as technology firms such as Lenovo and NetApp.
Chairman and CEO Josef von Rickenbach announced the plan during meetings with investors at the company’s Boston headquarters on Tuesday.
The “Margin Acceleration Program as described by Rickenbach and the company:
Rickenbach’s statement:
“As we finish Fiscal Year 2015 and look ahead to Fiscal Year 2016, we believe that we have good momentum, a strong and diversified backlog, and a healthy business development pipeline. Our priorities for the new year include solid revenue growth, as well as improved operating profitability and double-digit growth in earnings per share. In conjunction with our new guidance we are also raising our long-term adjusted operating margin target from 12%-14% of service revenue to 13%-15% of service revenue. We are accelerating a number of our ongoing improvement plans, and as a result of these efforts, plan to restructure certain activities. We believe that this will strengthen the Company by increasing our competitiveness in the marketplace, and will help us to deliver long-term sustainable growth in revenue and margins.”
“Margin Acceleration Program” overview:
The Company plans to record pre-tax charges in the range of $35 to $45 million in conjunction with restructuring activities it is undertaking. The restructuring activities are company-wide, and are designed to improve the productivity and efficiency of the Company, to simplify the organization, and to streamline decision-making, thereby enhancing client engagement. Parexel expects to record a pre-tax charge in the fourth quarter in the range of $20 to $30 million, with the remainder of the charge to be incurred over the course of Fiscal Year 2016. The Company anticipates completing restructuring activities by June 30, 2016.
“The charge will include approximately $30 to $40 million in employee separation benefits related to the elimination of up to 850 positions, with the remainder of the charge related to other one-time costs. The Company expects that approximately $33 to $43 million of these charges will result in future cash expenditures. The impact of the restructuring charge on Q4 and full year FY 2015 guidance is expected to be approximately $0.27 per diluted share when taking the mid-point of the range. The Company expects to achieve annual pre-tax savings as a result of this charge of between $20 to $30 million over the course of Fiscal Year 2016 (which equates to an estimated benefit of between $0.25 to $0.37 per diluted share), and expects to achieve annual pre-tax savings of approximately $50 to $60 million once the Program is fully completed.”
