Computer Task Group executives expected the first quarter to be rough – and it was.
The Buffalo-based information technology company said its earnings plunged by 60 percent during the first three months of the year – in line with their forecast from February – as cash-strapped hospitals continued to put off installing the electronic medical record systems that have been the core of CTG’s business in recent years.
Cliff Bleustein, CTG’s new president and chief executive officer, said he is planning to make changes to the company’s staffing and solutions business as revenues continue to sag.
“While I believe CTG’s basic fundamentals are sound, I plan to review and modify the business unit strategies as necessary during the next few months to ensure the company is properly positioned to take advantage of the appropriate market opportunities and improve profitable growth and value creation,” he said.
During the first quarter, CTG’s profits fell to $1.3 million, or 8 cents per share, from $3.2 million, or 19 cents per share, a year earlier. Sales fell less than 1 percent to $97.5 million from $97.9 million as 10 percent sales growth in its less lucrative staffing business offset a 16 percent drop in revenue in its health care-dominated solutions business.
“Ultimately, you have a solid staffing business that is already growing, that continues to add resources to enhance the capacity to grow further as that market overall continues to grow,” Bleustein said during a conference call Tuesday.
“We still have a very solid electronic medical records business, and that solid EMR business is migrating towards what the market is showing to be more optimization work and process improvement work as these EMRs continue to be running and need us in both cutting costs as well as building the efficiencies around that,” he said.
“I’ve only been at the company for three weeks, so I’m looking at each of the other business units from oil and gas to European operations to our medical analytics and products groups to see what additional changes and strategy, if we need to, can be done to either decrease the costs that we have or improve the revenues associated with it,” Bleustein said. “But that’s a process that takes some time in order to go through that thoroughly.”
CTG also slightly narrowed its forecast for the entire year, honing its revenue forecast to between $375 million and $389 million, which would be down about 3 percent from last year.
It also narrowed its earnings forecast for 2015 to between 36 cents and 44 cents per share, down 38 percent from a year ago, after shaving a penny off both ends of the range.