Strong demand from the health care industry, especially for electronic medical records projects, helped Computer Task Group's third-quarter profits jump 48 percent, the Buffalo-based information technology company said Monday.
The profits were in line with analyst expectations, and the company issued a revised outlook for the rest of the year that was slightly lower than analyst forecasts.
"We look for the fourth quarter to be our most profitable of the year, as our new, larger electronic medical records projects ramp up and as we continue to market our new data analytics solutions," said James Boldt, CTG's chairman and chief executive officer.
CTG said the big jump in profits was due to continued rapid growth in its health care business, where revenues grew 32 percent during the quarter. Much of that health care growth was due to a 23 percent increase in revenues from the 17 electronic medical records projects the company is working on.
CTG's profits jumped to $3 million, or 18 cents per share, from $2 million, or 13 cents per share, a year earlier, matching analyst forecasts.
The company's revenues grew 20 percent to $101.1 million from $84.5 million, with health care accounting for 30 percent of its total sales, the highest percentage ever. CTG's staffing business, which is less profitable than the solutions business that includes the health care work, saw an 11 percent increase in revenues to $62.3 million.
"Health care clearly remains the best place to be focusing CTG's growth efforts and investments," Boldt said in a statement.
"Health care is a significant part of the economy that is also far less vulnerable than most other domestic industries to economic downturns," he said. "Health care reform and the new federal mandates covering the industry are all requiring significant technology expenditures and investments."
CTG said it expects profits to rise 19 percent to between 18 cents and 20 cents per share during the current quarter, slightly less than the 21 cents that analysts were forecasting. It predicted that sales would rise 16 percent to between $100 million and $102 million, which is in line with analyst forecasts.
CTG said it repurchased 187,000 shares of its stock during the quarter at an average price of $11.33 per share. It has authorization to buy back another 900,000 shares. Shares closed up 95 cents, or 8.28 percent, at $12.42 on Monday.