Continued weakness in its healthcare solutions business, coupled with costs stemming from job cuts in Europe and the elimination of a once-promising patient treatment management software product, caused Computer Task Group’s profits to plunge by 83 percent during the second quarter.
CTG also warned that its sales and profits would weaken during the current quarter, with revenues expected to drop by 2 percent and profits projected to plunge by 35 percent.
Cliff Bleustein, who took over earlier this year as CTG’s CEO following the death of James R. Boldt, said the company is in the process of reshaping its business, putting more resources into its staffing business while launching a review of a solutions business that has been hurt by declining investment in electronic medical records projects by hospitals.
“It’s been an interesting and challenging four months,” Bleustein said during a conference call Tuesday. “These were steps that had to be taken to position CTG for a return to improved profitability.”
Under Bleustein, CTG is adding recruiters for its staffing business in the United States, with the expectation that revenues will grow by 5 percent. CTG also is allowing poorly performing contracts to expire so it can focus its resources on more profitable business.
The company also has added four additional salespeople for its health solutions and life sciences business, aimed at expanding a technology consulting practice that has grown by 40 percent during the first half of this year. The company also cut 13 jobs in Europe in a cost-cutting move. CTG also is changing some of its borrowing practices to reduce interest expenses.
CTG also has put its headquarters building at 800 Delaware Ave. up for sale, with an asking price of $3.95 million. About 35 employees work in the historic former Knox Mansion, and Bleustein said they can easily be moved to CTG’s nearby office at 700 Delaware Ave.
CTG said it earned $554,000, or 3 cents per share, during the second quarter, down from $3.2 million, or 20 cents per share, a year ago. The European job cuts and write off of its software to manage the treatment with severe kidney disease reduced earnings by 8 cents per share, Bleustein said. The earnings were a penny better than analysts were expecting.
The company’s revenues fell by 6 percent to $94.7 million from $100 million, roughly in line with analyst forecasts, as solutions sales declined.