The push toward electronic medical records is being very good to Computer Task Group.
The Buffalo-based information technology company's fourth-quarter profits jumped by 24 percent, largely because its electronic medical records business continued to rapidly expand.
CTG said Monday its profits rose to $3.3 million, or 20 cents per share, from $2.7 million, or 16 cents per share, a year ago, matching analyst forecasts.
The company's revenues grew by 16 percent to $100.9 million from $87.3 million, fueled by a 33 percent jump in revenues from contracts to provide electronic medical records services.
The company ended the quarter with 18 active electronic medical records projects, up one from the end of September. The company has since started work on another electronic medical records contract and is waiting to hear on bids it has made on seven others, said James R. Boldt, CTG's chairman and chief executive officer.
While the company wrapped up work on several electronic medical records projects last year, CTG executives said those are being replaced by new contracts that are significantly bigger -- a trend that Boldt said he expects to continue.
"You can see why we remain very optimistic about our [electronic medical records] business," Boldt said during a conference call, predicting that health care revenues will jump by 25 percent this year. "We're currently seeing tremendous opportunities in health care."
Most of CTG's previous electronic medical records projects were from hospitals with fewer than 1,000 beds. Now, some of the nation's bigger hospitals are launching electronic medical records projects, Boldt said.
Such a project from a 1,000-bed hospital typically generates about $10 million in revenue, Boldt said. A project from a 2,000-bed hospital generally would yield about $20 million in sales.
CTG's staffing business, which accounts for 60 percent of the company's overall sales, increased its revenues by 8 percent during the quarter.
CTG said it expects its growth to continue this year, although at a slower pace than in 2011.
The company said it expects its profits to range between 81 cents and 91 cents per share, which would be up about 21 percent from the 71 cents per share that CTG earned during 2011.
Revenues are expected to rise by about 9 percent to between $425 million and $435 million, up from $396 million in 2011, as slower growth in its staffing business offsets continued expansion in its health care solutions business. Boldt said the slower staffing growth stems from concerns by its customers over the potential fallout from the European financial crisis. As a result, the company forecast a 2 percent increase in its staffing revenues this year.
The company said it expects its first-quarter profits to range between 19 cents and 21 cents per share, up about 18 percent from 17 cents per share a year ago. Revenues are forecast to range between $102 million and $104 million, up about 7 percent from $96 million during the first quarter of last year.
CTG also said it has signed a new, three-year deal with IBM Corp. to extend its arrangement to be a primary supplier of staffing resources for the technology giant's National Technical Services program. That program is CTG's single largest source of revenues.
CTG's staffing business is far less profitable than its solutions work. Staffing contracts typically yield operating profits of about 3 cents for every dollar of revenue, while health care work generally generates earnings of about 10 cents on the dollar, Boldt said.