Computer Task Group said Monday that first-quarter profits rose 18.8 percent, driven by higher revenues, particularly from electronic medical records and other health care technology solutions.
The Buffalo-based information technology staffing and services firm reported net income of $3.36 million, or 20 cents per share, up from $2.83 million, or 17 cents per share, in the same period a year ago.
Total revenues rose 7.8 percent to $103.4 million, led by 19 percent growth in the company's health care business, while operating income soared 21.7 percent to $5.6 million.
The profit margin rose by more than half a percentage point to 5.4 percent, marking the second straight quarter in which the operating margin exceeded 5 percent. The company's goal is to achieve margins between 6 percent and 7 percent.
"This quarter's robust increases in margins and earnings primarily reflect continued growth in our health solutions business," said CTG Chairman and CEO James R. Boldt. "Client demand remains very strong in the health care division, our most profitable business unit."
At the end of the quarter, the firm was working on 18 large electronic medical records projects, with four more bid proposals awaiting decisions from potential clients. As a result, Boldt said, the firm expects revenue growth for health care and electronic medical records "to continue at a robust pace in 2012."
Computer Task Group, historically more of a technology staffing firm, has been pushing more into the solutions side, paying special attention to the health care field. In particular, it has pursued the growing business for electronic medical records, as the federal government pushes health care providers to move patient information from paper records to a more portable electronic format that can be more easily shared.
Revenues from the company's solutions businesses -- which is geared toward software and programming, as opposed to manpower -- rose 22 percent in the first quarter to $41.2 million and comprised 40 percent of total revenues for the second straight quarter. That's up from 35 percent a year ago. Staffing revenues, which still comprise the majority of all income at 60 percent, were flat from a year ago at $62.2 million.
More specifically, health care revenues rose to 31 percent of total revenues. And within that category, electronic medical record revenues rose 12 percent, contributing half of all health care revenues and 16 percent of companywide revenues.
Geographically, European revenues totaled $17.2 million, or 17 percent of all revenues -- about flat from a year ago.
Selling, general and administrative expenses rose 7.2 percent to $16.3 million, or 15.7 percent of revenues, from $15.2 million, or 15.8 percent of revenues, a year ago. The company used $2.4 million in cash for operations during the quarter, down 66 percent from $7.2 million a year ago, and had no outstanding debt.
During the quarter, the company bought back 59,000 shares, for an average price of $14.47 per share, with another 800,000 shares available for repurchase under the board of directors' current authorization.
The company's shares lost 34 cents, or 2.24 percent, to finish at $14.83 Monday.