Advisory Board ABCO reported fiscal second-quarter results that were in line with our expectations, and we are keeping our fair value estimate unchanged. Overall revenue increased 1.2% from the year-ago quarter and 3% sequentially. This is along expected lines, as the selling environment continues to be hindered by the economy. Contract value, which is the company's best leading indicator of future growth, grew at a faster pace in the second quarter (3% year over year) than revenue, which augurs well for the company. Membership programs with a financial focus are getting better traction from clients, as these programs help clients improve their financial performance. This also holds true for the analytical tools programs, which normally deliver measurable results soon after implementation. However, the same cannot be said about nonfinancially focused programs such as those tied to leadership development and nursing, since it's difficult to quantify the return on investments from these programs. Although it is too early to comment about the changes that are likely to come from the proposed health-care reform, Advisory Board stands to benefit, provided the legislation goes through. The company's programs should come in handy as health-care institutions try to comply with the changes.The company reported an operating loss of $3.8 million in the second quarter compared with income of $7 million in the same period last year. A vast majority of this loss was due to two one-time noncash charges that totaled $9.3 million. Of these charges, $1.9 million corresponded to a cancellation of stock options given to the executive management team while the other $7.4 million came from an accelerated write-down of capitalized software-development costs associated with some of the nursing-related programs. Management indicated that there won't be further write-downs related to capitalized software-development costs.
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Analyst Notes
08-06-09 | 4:25PM Advisory Board Reports 1Q Results
05-06-09 | 11:28AM Advisory Board Reports 4Q Results
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