Computer Task Group reported flat earnings for the third quarter, as operating expenses fell but so did revenues because of a slowdown in its health care business.
The Buffalo-based information technology programming and staffing company reported net income of $3.86 million, or 23 cents per share, just 1 percent higher than $3.81 million, or 23 cents per share, a year ago.
Revenues fell 5 percent to $100.69 million, while operating income fell 4 percent to $6.05 million, as hospital clients held off on investing in new technology and systems until they could figure out how to deal with lower federal reimbursements resulting from budget sequestration.
Still, officials touted the achievement of a 6 percent operating profit margin – the highest in almost 15 years – which Chairman and CEO James R. Boldt attributed to cost control that “enabled us to generate earnings that met guidance despite lower than expected revenue.”
And despite the effects of sequestration in the short term, Boldt noted in a press release that hospitals must still invest in electronic medical records systems to meet new federal requirements from health care reform and to reduce their costs so they can stay competitive. In particular, he said the company has experienced a surge in demand for outsourcing work that enables hospitals to reduce costs without spending a lot of money.
The board also approved a new stock buyback for 1 million shares of common stock, after repurchasing 225,000 shares in the third quarter at an average price of $18.41 per share.
CTG reported solutions revenue from software work of $40 million and staffing revenue of $60.7 million. European revenue rose 12 percent to $18.2 million, as the firm won its first European electronic medical records contract.
Selling, general and administrative expenses fell 10 percent to $15.1 million.