Segment Information

3 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We have three reporting segments: Clinical Research Services (“CRS”), PAREXEL Consulting Services (“PC”), formerly known as PAREXEL Consulting and Medical Communication Services, and PAREXEL Informatics, Inc. (“PI”), formerly known as Perceptive Informatics, Inc.

• CRS constitutes our core business and includes all phases of clinical research from Early Phase (encompassing the early stages of clinical testing that range from first-in-man through proof-of-concept studies) to Phase II-III and Phase IV, which we call Peri/Post-Approval Services, formerly known as Peri Approval Clinical Excellence. Our services include clinical trials management and biostatistics, data management and clinical pharmacology, as well as related medical advisory, patient recruitment, clinical supply and drug logistics, pharmacovigilance, and investigator site services. We aggregate Early Phase with Phase II-III and Peri/Post-Approval Services due to economic similarities in these operating segments.

• PC provides technical expertise and advice in such areas as drug development, regulatory affairs, product pricing and reimbursement, commercialization and strategic compliance. It also provides a full spectrum of market development, product development, and targeted communications services in support of product launch. Our PC consultants identify alternatives and propose solutions to address client issues associated with product development, registration, and commercialization.

• PI provides information technology solutions designed to help improve clients’ product development and regulatory submission processes. PI offers a portfolio of products and services that includes medical imaging services, ClinPhone^® randomization and trial supply management (“RTSM”), IMPACT^® clinical trials management systems (“CTMS”), DataLabs^® electronic data capture, web-based portals, systems integration, electronic patient reported outcomes, and LIQUENT InSight® Regulatory Information Management solutions. These services are often bundled together and integrated with other applications to provide eClinical solutions for our clients.

In February 2014, we announced the launch of PAREXEL Regulatory Outsourcing Services (“PROS”), a service line designed to provide a focused, market-driven approach to regulatory outsourcing services in the life science industry, with a primary emphasis on post-approval regulatory activities. Effective July 1, 2014, the operating results of PROS are included in the PC segment. This service line offering was previously included within LIQUENT RIM solutions and reported within the PI segment. For the three months ended September 30, 2014, we included the operating results of PROS within the PC segment and retroactively restated the three months ended September 30, 2013 to reflect this presentation change.

We evaluate our segment performance and allocate resources based on service revenue and gross profit (service revenue less direct costs), while other operating costs are allocated and evaluated on a geographic basis. Accordingly, we do not include the impact of selling, general, and administrative expenses, depreciation and amortization expense, other income (expense), and income tax expense in segment profitability. We attribute revenue to individual countries based upon the revenue earned in the respective countries; however, inter-segment transactions are not included in service revenue. Furthermore, we have a global infrastructure supporting our business segments, and therefore do not identify assets by reportable segment.

Our segment results are as follows:

(in thousands)	Three Months Ended
	September 30, 2014		September 30, 2013
Service revenue
CRS	$	369,811	$	332,592
PC	56,395		56,948
PI	65,490		59,705
Total service revenue	$	491,696	$	449,245
Direct costs
CRS	$	253,329	$	238,188
PC	31,426		33,449
PI	34,064		31,557
Total direct costs	$	318,819	$	303,194
Gross profit
CRS	$	116,482	$	94,404
PC	24,969		23,499
PI	31,426		28,148
Total gross profit	$	172,877	$	146,051