Pharma-Bio Services Inc (OTC:PBSV)

GeoTeam® Note: 2011 vs. 2010 Fourth Quarter EPS was $0.04 vs. $0.01

During fiscal year 2011, we have seen a contraction of the pharmaceutical industry, consequently various competitors are no longer active and industry resources are more readily available. Furthermore, we believe the additional regulatory oversight of the pharmaceutical industry as imminent. To date, we have been able to capitalize on the related challenges and opportunities in the United States and Puerto Rico consulting markets, in which revenues have increased by $4.4 million and $2.6 million, respectively, as compared to last fiscal year. Accordingly, for fiscal year 2012 we have aligned and increased our business development and operations support to follow the consulting business favorable revenue trend. For fiscal year 2011, other Company divisions sustained minor revenue gains or remained constant, when compared to last year.

 Looking forward to our challenges for fiscal year 2012, in December 2011, a customer vendor management program administrator, who is also a competitor of ours, for a major customer of Pharma-IR which represented 15% of the Company’s total consolidated revenue for fiscal year 2011, communicated its intent to place Pharma-IR in a probation/review period of approximately eight weeks starting at some point of time on January 2012. Among others, the administrator requested the decrease of billable margins to an already reduced billing structure and the level of service be improved. The final outcome and the eventual financial impact to the Company, if any, are uncertain at this point of time.

In addition, weak economies where we do business and worldwide industry consolidations will continue to be unfavorable factors going forward. These factors, and the impact on the industry, if any, of the recently enacted US health care reform (Patient Protection and Affordable Care Act) and Puerto Rico Act 154 which imposed temporary excise taxes to the industry we serve, remain as industry uncertainties that might adversely affect our future performance. We believe that our future profitability and liquidity will be highly dependent on the effect the global economy, changes in tax laws and worldwide lifescience manufacturing industry consolidations will have over our operations, and our ability to seek service opportunities and adapt to the current industry trends.

GeoTeam® Note: Fiscal Third Quarter  2011 vs. 2010 Tax Adjusted EPS was $0.04 vs. $0.005.  This quarter marks the third consecutive quarter of impressive EPS growth and appears to be a record. The stock broke out to a new 52 week high during yeterday's trading session.

Mostly triggered by favorable gains in the United States and Puerto Rico consulting markets, our nine-month period ended July 31, 2011 experienced a positive turnaround when compared to the same period last fiscal year. Other Company divisions sustained minor revenue gains or remained constant. During the nine-month period ended July 31, 2011, total net revenues increased by approximately $5.4 million, when compared to the same period last year. We continued our strategies to adjust our pricing and gross margin structure, and aligned/increased our operations support to follow the favorable revenue trend. In addition, we continued our efforts to broaden the Lab’s customer base. These factors, and the favorable adjustments on income tax savings related to the new Act 73 Grant, have led our nine months ended July 31, 2011 net income to be approximately $2.3 million, an increase of $2.1 million or an increase in profit margin of 14.8 percentage points when compared with the same period last year.

Caveats to this story:

1. We are not certain that this quarter will set the new EPS barometer for the company, where quarterly EPS had been hovering between break even and $0.02 for over three years.

2. "Weak economies where we do business and worldwide industry consolidations were unfavorable factors which affected fiscal year 2010. These factors and the potential impact over the industry of the recently enacted US health care reform (Patient Protection and Affordable Care Act) and Puerto Rico Act 154, which imposed temporary excise taxes to the industry we serve, remain as industry uncertainties that might adversely affect our future performance. We believe that our future profitability and liquidity will be highly dependent on the effect the global economy, changes in tax laws, US health care reform and worldwide industry consolidations will have over our operations, and our ability to seek service opportunities and adapt to current industry trends."