- Published: 06 November 2008
- Written by Editor
inVentiv Health Reports Financial Results for Third Quarter 2008
* Third Quarter Total Revenues Up 13% to $289.2mm; Net Revenues Up 14% to $243.4mm * Third Quarter Adjusted EPS of $0.41; GAAP EPS of $0.40 * Strong Cash Flow from Operations of $28.1 mm for the Quarter
inVentiv Health, Inc. (Nasdaq:VTIV), a leading provider of commercialization services to the global pharmaceutical and healthcare industries, today announced financial results for the third quarter 2008.
Third Quarter 2008 Results from Continuing Operations:
* Total revenues increased 13% to $289.2 million for the third
quarter of 2008, compared to $254.9 million for the third
quarter of 2007. Net revenues increased 14% to $243.4
million, compared to $212.7 million for the third quarter
of 2007. Adjusted for the impact of acquisitions, pro-forma
organic net revenue growth for the trailing twelve-month
period ended September 30, 2008 was 10%, and was 22% on an
as reported basis.
* Adjusted EBITDA increased slightly to $37.3 million for the
third quarter of 2008, compared to $36.9 million for the
third quarter of 2007. GAAP operating income was $27.6
million for the third quarter of 2008, as compared to $28.8
million for the third quarter of 2007.
* Adjusted operating income decreased 3% to $27.8 million for
the third quarter of 2008, compared to $28.8 million for the
third quarter of 2007.
* Adjusted income from continuing operations was $13.6 million
for the third quarter of 2008, compared to $14.3 million for
the third quarter of 2007. GAAP income from continuing
operations was $13.3 million for the third quarter of 2008,
compared to $14.1 million for the third quarter of 2007.
* Adjusted diluted earnings per share (EPS), including stock
compensation expense, was $0.41 for the third quarter of
2008, compared to $0.44 for the third quarter of 2007.
GAAP diluted EPS was $0.40 for the third quarter of 2008,
compared to $0.43 for the third quarter of 2007.
Segment Results:
* inVentiv Clinical reported total revenues of $56.0 million
during the third quarter of 2008, up 10% from $50.7 million
during the third quarter of 2007. While the division was
impacted by some temporary softening in its staffing
business, inVentiv Clinical continued to see strong client
demand and growing momentum in its functional outsourcing
business.
* inVentiv Communications reported total revenues of $84.1
million during the third quarter of 2008, up 14% from $73.8
million during the third quarter of 2007. This segment had
numerous new business wins in the third quarter, but
performance continued to be affected by budget cutbacks and
decisions by clients to delay marketing spend.
* inVentiv Commercial reported total revenues of $117.3
million during the third quarter of 2008, up 12% from
$104.4 million during the third quarter of 2007, reflecting
the initial ramp up of the nine new sales teams announced in
September.
* inVentiv Patient Outcomes reported total revenues of $31.8
million during the third quarter of 2008, up 22% from $26.1
million during the third quarter of 2007. The strong
performance included several new wins in the patient
compliance businesses, as well as the inclusion of results
from Patient Marketing Group (PMG) for part of the quarter.
"Our third quarter results were very consistent with our expectations. While we are pleased with our performance, we recognize that we continue to operate in a challenging environment, and as a result, we are taking steps to build additional flexibility and efficiency into our model. We remain confident that, as outsourcing trends in the healthcare industry continue to grow and clients increasingly seek broader and more integrated solutions, no company is positioned better than inVentiv to capitalize on the opportunity in the mid- to long-term," said Mr. Blane Walter, Chief Executive Officer of inVentiv Health.
2008 Financial Targets Update
The Company is at this time reconfirming its 2008 revenue targets of $1.05-$1.15 billion and reconfirming the second half 2008 adjusted earnings per share targets of $0.90 to $0.95.
Adjusted target figures exclude derivative interest income or expense related to the Company's interest rate hedge on its term loan facility, and assumes no additional impairment charges from marketable securities or non-recurring tax adjustments.
Conference Call Information
Thursday, November 6, 2008, 9:00 a.m. Eastern Time Call in number: (800) 358-8448 (Domestic) or (706) 902-2979 (International) Live and archived webcast: www.inVentivHealth.com
A replay of the call will be available immediately following the call through November 13, 2008 at (800) 642-1687 or (706) 645-9291. The conference ID number for the replay is 67662939.
In concert with the call, information regarding inVentiv Health's historical and recent operational and financial performance will be available at http://www.inventivhealth.com/about_us/ir_investor_decks.aspx. Non-GAAP financial information also can be found in the investor relations section of the web site.
About inVentiv Health
inVentiv Health, Inc. (Nasdaq:VTIV) is an insights-driven global healthcare leader that provides dynamic solutions to deliver customer and patient success. inVentiv delivers its customized clinical, sales, marketing and communications solutions through its four core business segments: inVentiv Clinical, inVentiv Communications, inVentiv Commercial, and inVentiv Patient Outcomes. inVentiv Health's client roster is comprised of more than 350 leading pharmaceutical, biotech, life sciences and healthcare payer companies, including all top 20 global pharmaceutical manufacturers. For more information, visit www.inVentivHealth.com.
(1) USE OF NON-GAAP FINANCIAL MEASURES
This press release contains non-GAAP financial measures. The Company's objectives in presenting non-GAAP financial measures are:
* To present the financial statements on a more comparable
period-to-period basis;
* To enhance investors' overall understanding of the Company's
past financial performance and its planning and forecasting
of future periods; and
* To allow investors to assess the Company's financial
performance using management's analytical approach.
Table 3 below contains reconciliations of the non-GAAP financial measures contained in this press release to the most directly comparable GAAP financial measures. The "adjusted" non-GAAP financial measures discussed in this press release are related to the following two factors:
* Derivative Interest: In October 2005, the Company engaged in
an interest rate hedge of its $175 million term loan facility,
which the Company did not designate for hedge accounting until
July 2006. In July 2006, the Company employed a hypothetical
derivative model to assess ineffectiveness. For the three-months
ended September 30, 2008 and 2007, the Company recorded $0.3
million of interest expense (approximately $0.2 million, net
of taxes), respectively, relating to the ineffectiveness of the
hedge for each quarter. Net interest expense was adjusted to
exclude these adjustments in their respective periods.
* Other than Temporary Impairment on Marketable Securities:
During the third quarter of 2008, the Company recorded $0.2
million ($0.1 million net of taxes) related to an other than
temporary impairment of the Company's Columbia Strategic Cash
Portfolio ("CSCP"), which held certain asset-backed securities.
Consistent with the company's investment policy guidelines,
the vast majority of holdings within CSCP held by the company
had AAA/Aaa credit ratings at the time of purchase. With the
liquidity issues experienced in the global credit and capital
markets, the CSCP experienced other than temporary losses
resulting in a change in the net asset value per share from
its $1 par value. The other than temporary impairment loss
was adjusted to exclude this charge for third quarter 2008
results.
In addition, this press release contains non-GAAP financial measures related to the pro-forma organic net revenue growth rate for 2008. This growth rate is calculated as if all companies acquired by the Company as of September 30, 2008 were owned by it as of January 1, 2007. Finally, this release contains the non-GAAP financial measure Adjusted EBITDA, which is defined as adjusted operating income before depreciation and amortization and excludes minority interest and equity investments.
These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP and these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. Management believes that the non-GAAP financial measures included herein, when shown in conjunction with the corresponding GAAP measures, is useful to investors for the reasons discussed above. Management uses these non-GAAP financial measures in assessing the performance of the Company's operations on a consistent basis from period to period.
Forward-Looking Information
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks that may cause inVentiv Health's performance to differ materially. Such risks include, without limitation: our ability to sufficiently increase our revenues and maintain or decrease expenses and cash capital expenditures to permit us to fund our operations; our ability to continue to comply with the covenants and terms of our credit facility and to access sufficient capital to fund our operations; our ability to grow our existing client relationships, obtain new clients and cross-sell our services; our ability to successfully operate new lines of business; our ability to manage our infrastructure and resources to support our growth; our ability to successfully identify new businesses to acquire, conclude acquisition negotiations and integrate the acquired businesses into our operations; any disruptions, impairments, or malfunctions affecting software as well as excessive costs or delays that may adversely impact our continued investment in and development of software; the potential impact of government regulation on us and on our clients base; our ability to comply with all applicable laws as well as our ability to successfully implement from a timing and cost perspective any changes in applicable laws; our ability to recruit, motivate and retain qualified personnel, including sales representatives; the actual impact of the adoption of certain accounting standards; our ability to maintain technological advantages in a variety of functional areas, including sales force automation, electronic claims surveillance and patient compliance; changes in trends in the healthcare and pharmaceutical industries or in pharmaceutical outsourcing; and our inability to determine the actual time at which the liquidation of the Columbia Strategic Cash Portfolio will be completed or the total losses that we will actually realize from that investment vehicle. Readers of this press release are referred to documents filed from time to time by inVentiv Health, Inc. with the Securities and Exchange Commission for further discussion of these and other factors.
INVENTIV HEALTH, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)
For the For the
Three-Months Ended Nine-Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2007 2008 2007
---------------------- ----------------------
Net revenues $ 243,383 $ 212,650 $ 703,964 $ 582,496
Reimbursed
out-of-pockets 45,790 42,263 132,572 126,807
---------------------- ----------------------
Total revenues 289,173 254,913 836,536 709,303
Operating expenses:
Cost of services 153,427 131,575 441,001 371,475
Reimbursable
out-of-pocket
expenses 48,649 42,977 139,083 128,779
Selling, general
and
administrative
expenses 59,498 51,515 180,983 146,545
---------------------- ----------------------
Total operating
expenses 261,574 226,067 761,067 646,799
---------------------- ----------------------
Operating income 27,599 28,846 75,469 62,504
Interest expense (6,443) (6,574) (19,134) (14,020)
Interest income 438 727 1,684 2,068
---------------------- ----------------------
Income from
continuing
operations before
income tax
provision,
minority interest
in income of
subsidiary
and (loss) income
from equity
investments 21,594 22,999 58,019 50,552
Income tax
provision (8,125) (8,711) (22,518) (18,569)
---------------------- ----------------------
Income from
continuing
operations before
minority
interest in
income of
subsidiary and
(loss) income
from equity
investments 13,469 14,288 35,501 31,983
Minority interest
in income of
subsidiary (130) (246) (1,022) (736)
(Loss) income from
equity investments (13) 92 (47) 438
---------------------- ----------------------
Income from
continuing
operations 13,326 14,134 34,432 31,685
---------------------- ----------------------
Income from
discontinued
operations:
(Losses) gains
on disposals
of
discontinued
operations,
net of taxes (3) 90 104 266
---------------------- ----------------------
Net (loss) income
from discontinued
operations (3) 90 104 266
---------------------- ----------------------
Net income $ 13,323 $ 14,224 $ 34,536 $ 31,951
====================== ======================
Earnings per Share:
Continuing
operations:
Basic $0.40 $0.44 $1.04 $1.01
Diluted $0.40 $0.43 $1.03 $0.99
Discontinued
operations:
Basic $0.00 $0.00 $0.01 $0.01
Diluted $0.00 $0.00 $0.00 $0.00
Net income:
Basic $0.40 $0.44 $1.05 $1.02
Diluted $0.40 $0.43 $1.03 $0.99
Weighted average
common shares
outstanding:
Basic 33,215 32,232 32,969 31,331
Diluted 33,498 32,876 33,429 32,114
inVentiv Health, Inc.
Selected Financial Data
($'s in 000's)
(unaudited)
September 30, December 31,
2008 2007
-------------------------------
Cash $86,880 $50,973
Restricted Cash and Marketable
Securities (1) $17,870 $47,164
Accounts Receivable, Net $148,301 $162,198
Unbilled Services $105,653 $89,384
Total assets $1,135,177 $1,110,856
Client Advances & Unearned
Revenue $73,691 $76,696
Working Capital (2) $182,041 $130,852
Long-term debt (3) $325,875 $328,350
Capital Lease Obligations (3) $44,186 $38,409
Depreciation (4) $15,196 $18,169
Amortization (4) $11,302 $10,939
Days Sales Outstanding (5) 74 79
(1) Includes $5.1 million long term marketable securities currently
classified as Deposits and Other Assets.
(2) Working Capital is defined as total current assets less total
current liabilities.
(3) Liabilities are both current and noncurrent.
(4) Depreciation and amortization are reported on a year-to-date
basis.
(5) Days Sales Outstanding ("DSO") is measured using the combined
amounts of Accounts Receivable and Unbilled Services (excluding
work-in-progress, which does not affect calculation) outstanding
as of the Balance Sheet date, against Revenues for the trailing
3-month period then ended, excluding the PMG acquisition for the
September 30, 2008 calculation.
inVentiv Health, Inc.
---------------------
Non-GAAP Income Statement Reconciliation
-----------------------------------------
For the Three Months Ended September 30, 2008 and 2007
------------------------------------------------------
(unaudited)
----------
Reconciliation of Adjusted Three-Months Ended
Operating Income and Adjusted EBITDA September 30,
-------------------------------------- --------------------
(in millions) 2008 2007
--------------------
Operating income, as reported $27.6 $28.8
Other than temporary impairment of
marketable securities 0.2 --
--------------------
Operating income, as adjusted $27.8 $28.8
Add: Depreciation 5.7 4.7
Add: Amortization 3.8 3.4
--------------------
Adjusted EBITDA * $37.3 $36.9
--------------------
* before minority interest in income of subsidiary and income
from equity investments
Reconciliation of Income from
Continuing Operations
----------------------------- Three-Months Ended
(in millions) September 30,
-------------------
(Subtract) Add 2008 2007
-------------------
Income from continuing operations,
as reported $13.3 $14.1
Other than temporary impairment of
marketable securities, net of taxes 0.1 --
Derivative interest, net of taxes 0.2 0.2
-------------------
Income from continuing operations,
as adjusted $13.6 $14.3
-------------------
Reconciliation of Earnings per Share
------------------------------------ Three-Months Ended
September 30,
-------------------
(Subtract) Add 2008 2007
-------------------
Diluted earnings per share from
continuing operations, as reported $0.40 $0.43
Derivative interest, net of taxes 0.01 0.01
-------------------
Diluted earnings per share from
continuing operations, as adjusted $0.41 $0.44
-------------------
2008 Financial Targets Reconciliation
(unaudited) Targets
------------------------------------- -------------------
2nd Half of 2008
-------------------
Diluted earnings per share from
continuing operations $0.88 - $0.93
Derivative interest, net of taxes 0.02
-------------------
Diluted earnings per share from
continuing operations, as adjusted $0.90 - $0.95
-------------------
Proforma Growth Rate on a Net
Revenue Basis Twelve-Months
----------------------------- Ended September 30,
-------------------
(unaudited) 2008 vs 2007
----------- -------------------
Growth rate, as reported 22%
Less: Acquisition Growth Rate (12%)
-------------------
Growth rate, proforma 10%
-------------------
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: inVentiv Health, Inc.
inVentiv Health, Inc. Investors / Corporate: David S. Bassin, CFO (732) 537-4804 This email address is being protected from spambots. You need JavaScript enabled to view it. Media: Marcia Frederick (614) 543-6281 This email address is being protected from spambots. You need JavaScript enabled to view it.
