Spin-Off and Acquisition of Walsh International Completed
WESTPORT, Conn., July 21 /PRNewswire/ -- IMS HEALTH (NYSE: RX), the
world's leading provider of information solutions to the pharmaceutical and
healthcare industries, today reported basic earnings per share growth from
recurring operations of 38 percent to $0.33 per share for the quarter ended
June 30, 1998. Diluted earnings per share from recurring operations increased
33 percent to $0.32 per share. Reported revenue and operating income from
recurring operations rose 8 percent and 41 percent, respectively, in the 1998
second quarter. On a constant-dollar basis, revenue increased 10 percent.
"The spin-off of IMS HEALTH from Cognizant Corporation was successfully
completed in the second quarter," said Robert E. Weissman, IMS HEALTH Chairman
and CEO. "This strategic action, combined with acquiring Walsh International,
squarely positions IMS HEALTH as the leading healthcare information partner to
the pharmaceutical industry."
"IMS HEALTH produced strong results this quarter, building on the IMS
record of sustained, consistent growth," said Victoria R. Fash, IMS HEALTH
President and COO. "We now expect to be at, or above, the high end of our
21-to-24 percent EPS growth target for 1998."
Financial Reporting Basis
Based on the financial structure of the Cognizant Corporation spin-off,
IMS HEALTH is the accounting successor to Cognizant. Securities and Exchange
Commission regulations require IMS HEALTH to report Nielsen Media Research as
a discontinued operation through the end of 1998, and to itemize one-time
charges and gains. These financial statements are presented in
Tables 4 and 5.
To provide investors with financial statements which reflect the
performance of on-going business operations of IMS HEALTH, results of
recurring operations are presented for 1997 and 1998, by quarter. Recurring
operations exclude the results of Nielsen Media Research, which became an
independent company on July 1, 1998, and one-time charges and gains (Tables 1,
2 and 3). Basic and diluted earnings per share for 1997 and 1998, by quarter,
are disclosed on Table 3.
Second-Quarter Results
For the quarter ended June 30, 1998, revenue increased to $270.5 million,
8 percent above the year-earlier quarter. Constant-dollar revenue grew 14
percent excluding the impact of the Pilot Software divestiture in August 1997.
Operating income from recurring operations rose 41 percent to $55.4 million
(Table 1).
Net income from recurring operations totaled $54.3 million, or $0.33 basic
earnings per share, compared with $40.1 million, or $0.24 basic earnings per
share in the 1997 second quarter, an increase in basic earnings per share of
38 percent. Diluted earnings per share from recurring operations increased 33
percent to $0.32 per share (Table 1).
First-Half Results
For the six months ended June 30, 1998, revenue increased 7 percent to
$511.5 million. Constant-dollar revenue, excluding the impact of the Pilot
Software divestiture, rose 14 percent. Operating income from recurring
operations grew 46 percent to $89.0 million (Table 2).
Net income from recurring operations for the 1998 first half totaled $93.0
million, or $0.57 basic earnings per share, compared with $69.4 million, or
$0.41 basic earnings per share in the 1997 first half, an increase of 39
percent. Diluted earnings per share from recurring operations in the 1998
first half increased 34 percent to $0.55 per share (Table 2).
IMS Constant-Dollar Results
IMS HEALTH maintains a hedging program to protect a portion of committed
IMS revenue from the impact of currency fluctuations. IMS is the principal
operating unit of IMS HEALTH. On a constant-dollar basis, IMS revenue
increased 12 percent in the 1998 second quarter and first half. Reported
revenue grew 9 percent to $249.4 million in the 1998 second quarter, and
8 percent in the 1998 first half. Constant-dollar operating income for IMS
rose 17 percent in the 1998 second quarter and first half. Reported operating
income rose 11 percent to $62.4 million in the 1998 second quarter and
10 percent in the 1998 first half.
Operating Unit Results
IMS growth resulted from strong performance of sales management products
in North America, and from increased usage of the Global Services' MIDAS
database by international pharmaceutical companies. IMS Japan launched the
delivery of weekly, improved over monthly, pharmaceutical market data to
clients, after securing agreements to receive daily sales data from 135
pharmaceutical wholesalers representing virtually the entire prescription drug
market in Japan.
Walsh International, acquired June 24, 1998, was merged with IMS's Sales
Technologies unit to create the global leader in sales force automation for
the pharmaceutical industry. More than 35,000 pharmaceutical executives
worldwide depend on Sales Technologies/Walsh solutions to improve sales force
performance and enhance sales and marketing decision-making.
Cognizant Technology Solutions (CTS) (Nasdaq: CTSH) completed its initial
public offering of 2,917,000 shares of Class A Common Stock at a price of
$10.00 per share on June 19, 1998. In the 1998 second quarter, CTS revenue
increased 138 percent to $12.7 million, and operating income grew five-fold to
$1.6 million. Demand for CTS's software application and development services,
which include year 2000 and Eurocurrency compliance services, remains very
strong. Several new customer accounts were gained during the quarter, and
expanded services were provided to existing customers.
Erisco, a provider of software-based administrative and analytical
solutions to the healthcare industry, continues to generate excellent sales
growth. During the quarter, Lifeguard, a leading West Coast managed care
organization which serves 300,000 people, signed a multi-year contract to use
Erisco's Facets(TM) as its information system solution.
Corporate
IMS HEALTH corporate overhead costs totaled $8.7 million in the 1998
second quarter and $16.9 million in the 1998 first six months.
Balance Sheet Highlights
IMS HEALTH's balance sheet at June 30, 1998 reflects cash and cash
equivalents of approximately $675 million, and shareholders' equity totaling
approximately $1 billion. Additional balance sheet information reflecting the
spin-off and Walsh acquisition transactions will be available in mid-August.
At June 30, 1998, IMS HEALTH actual shares outstanding totaled 166.8
million.
IMS HEALTH is the world's leading provider of information solutions to the
pharmaceutical and healthcare industries. With more than $1 billion in 1997
revenue, IMS HEALTH operates in over 90 countries. IMS HEALTH is the largest
pharmaceutical manufacturer information partner, with over 40 years'
experience in the industry. Key products and services integral to customer
day-to-day operations include: market research for prescription and
over-the-counter pharmaceutical products; sales management information to
optimize sales force productivity; technology enabled selling solutions for
sales and marketing decision-making; and technology systems and information
services that support managed care organizations.
Additional information is available at http://www.imshealth.com.
This press release includes statements which may constitute
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although IMS HEALTH
believes the expectations contained in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove
correct. This information may involve risks and uncertainties that could
cause actual results of IMS HEALTH to differ materially from the forward-
looking statements. Factors which could cause or contribute to such
differences include, but are not limited to (i) the risks associated with
operating on a global basis, including fluctuations in the value of foreign
currencies relative to the U.S. dollar, and the ability to successfully hedge
such risks, (ii) the extent in which IMS HEALTH seeks growth through
acquisitions, and the ability to identify and consummate acquisitions on
satisfactory terms, (iii) the ability to develop new or advanced technologies
and systems for their businesses on a cost-effective basis, (iv) regulatory
and legislative initiatives, particularly in the area of medical privacy, and
(v) deterioration in economic conditions, particularly in the pharmaceutical,
healthcare, information technology or other industries in which IMS HEALTH's
customers operate.
Table 1
IMS HEALTH
Income from Recurring Operations(a)
Three Months Ended June 30
(unaudited, in millions except per share)
1998 1997 %Change Constant
$Growth
Revenue $270.5 $251.1 8% 10%
Operating Income 55.4 39.4 41
Interest Income 4.6 1.5 197
Gartner Equity Income 17.3 15.1 14
Other Income (Expense) (2.5) (1.3) (86)
Income Before Provision
for Income Taxes 74.8 54.7 37
Provision for
Income Taxes (2O.5) (14.6) (40)
Net Income from
Recurring Operations $54.3 $40.1 36%
Basic Earnings Per
Share from
Recurring Operations $0.33 $0.24 38%
Diluted Earnings Per Share
from Recurring
Operations $0.32 $0.24 33%
Average Shares Outstanding,
YTD
Basic 162.8 167.6 (3%)
Diluted 168.2 167.9 -- %
(a) Recurring operations exclude results of Nielsen Media Research and
one-time charges and gains identified on Table 4. These financials
exclude pro forma interest income related to the spin-off, in conformance
with SEC requirements.
Table 2
IMS HEALTH
Income from Recurring Operations(b)
Six Months Ended June 30
(unaudited, in millions except per share)
1998 1997 %Change Constant
$Growth
Revenue $511.5 $480.4 7% 11%
Operating Income 89.0 61.0 46
Interest Income 8.5 4.7 80
Gartner Equity Income 35.9 30.7 17
Other Income (Expense) (5.3) (2.2) (150)
Income Before Provision
for Income Taxes 128.1 94.2 36
Provision for
Income Taxes (35.1) (24.8) (41)
Net Income from
Recurring Operations $93.0 $69.4 34%
Basic Earnings
Per Share from
Recurring Operations $0.57 $0.41 39%
Diluted Earnings
Per Share from
Recurring Operations $0.55 $0.41 34%
Average Shares Outstanding,
YTD
Basic 162.8 167.6 (3)%
Diluted 168.2 167.9 -- %
(b) Recurring operations exclude results of Nielsen Media Research and
one-time charges and gains identified on Table 5. These financials
exclude pro forma interest income related to the spin-off, in conformance
with SEC requirements.
Table 3
IMS HEALTH
Historical Income Statement by Quarter(c)
(unaudited, in millions except per share)
1997 1998
Qtr. 1 Qtr. 2 Qtr.3 Qtr. 4 Full Year Qtr 1
Revenue $229.3 $251.1 $251.1 $328.1 $1,059.6 $241.0
Operating Income 21.6 39.4 59.1 107.5 227.6 18.7
Interest Income, Net 3.2 1.5 3.1 2.7 10.5 3.9
Gartner Equity Income15.5 15.1 13.8 20.7 65.1 18.6
Gartner SAB 51 Gains -- -- 0.7 14.0 14.7 8.0
Gartner R&D Write-off -- -- -- -- -- (3.0)
Gains from
Dispositions, Net 5.4 -- 4.0 -- 9.4 10.4
Other Income (Expense)(0.7) (1.3) (0.3) (2.5) (4.8) (2.8)
Income Before
Provision for
Income Taxes 45.0 54.7 80.4 142.4 322.5 53.8
Provision for
Income Taxes (11.6) (14.6) (23.2) (39.O) (88.4) (14.7)
Net Income from
Continuing
Operations $33.4 $40.1 $57.2 $103.4 $234.1 $39.1
Basic Earnings
Per Share from
Continuing
Operations $0.20 $0.24 $0.35 $0.63 $1.42 $0.24
Diluted Earnings
Per Share
from Continuing
Operations $0.20 $0.24 $0.34 $0.61 $1.39 $0.23
Average Shares Outstanding,
YTD
Basic 169.8 167.6 166.1 165.2 165.2 162.4
Diluted 170.0 167.9 167.7 167.5 167.5 167.3
Recurring Operations (d)
Operating Income $21.6 $39.4 $59.1 $107.5 $227.6 $33.6
Income Before
Provision for
Taxes 39.5 54.7 75.8 128.4 298.4 53.3
Provision for
Income Taxes (10.2) (14.6) (21.8) (35.2) (81.8) (14.6)
Net Income $29.3 $40.1 $54.0 $93.2 $216.6 $38.7
Basic Earnings
Per Share $0.17 $0.24 $0.33 $0.57 $1.31 $0.24
Diluted Earnings
Per Share $0.17 $0.24 $0.33 $0.55 $1.29 $0.23
(c) IMS HEALTH, shown on a continuing operations basis, excludes results
of Nielsen Media Research. These financials exclude pro forma
interest income related to the spin-off, in conformance with SEC
requirements.
(d) Recurring operations exclude results of Nielsen Media Research and
one-time charges and gains. 1997 one-time charges and gains include:
Gartner SAB 51 gains, gains from dispositions of Enterprise venture
fund investments, and the non-cash write-off related to the
divestiture of Pilot Software. 1998 one-time charges and gains
include: year 2000 expense; spin-related expense; Gartner SAB 51
gains; a write-off of in-process research and development costs
associated with a Gartner acquisition, and gains from dispositions of
Enterprise venture fund investments.
Table 4
IMS HEALTH
(Accounting Successor to Cognizant)
Three Months Ended June 30
(unaudited, in millions except per share)
1998 1997
Revenue $270.5 $251.1
Operating Income Before
One-Time Charges and Gains 55.4 39.4
Year 2000 Expense (e) (12.3) --
Spin-Related Expense (30.1) --
Acquisition R&D Write-Off(e) (57.0) --
Acquisition Integration Charge(e) (5.0) --
Total Operating Income (49.0) 39.4
Interest Income 4.6 1.5
Gartner Equity Income 17.3 15.1
Gartner SAB 51 Gains(e) 5.4 --
Gains from Dispositions, Net(e) 12.8 5.4
Other Income (Expense) (2.5) (1.3)
Income from Continuing Operations
Before Provision for Income Taxes (11.4) 54.7
Provision for Income Taxes (22.1) (14.6)
Income from Continuing Operations $(33.5) $40.1
Income from Discontinued Operations,
Net of Income Taxes(e) $21.0 $20.0
Net Income $(12.5) $60.1
Basic Earnings Per Share
Continuing Operations $(0.21) $0.24
Discontinued Operations $0.13 $0.12
Total $(0.08) $0.36
Diluted Earnings Per Share
Continuing operations $(0.20) $0.24
Discontinued Operations $0.13 $0.12
Total (O.07) $0.36
Average Shares Outstanding, YTD
Basic 162.8 167.6
Diluted 168.2 167.9
(e) Items excluded from recurring operations. One-time charges and gains
in the 1998 second quarter include: year 2000 expense of $12.3
million; expense related to spin-off of IMS HEALTH from Cognizant
Corporation of $30.1 million; a write-off of in-process research and
development associated with the Walsh International acquisition of
$57.0 million; an integration charge related to the Walsh
International acquisition of $5.0 million; Gartner SAB 51 gains of
$5.4 million; and a $12.8 million gain from the Cognizant Technology
Solutions (CTS) initial public offering.
Table 5
IMS HEALTH
(Accounting Successor to Cognizant)
Six Months Ended June 30
(unaudited, in millions except per share)
1998 1997
Revenue $511.5 $480.4
Operating Income Before One-Time Charges
and Gains 89.0 61.0
Year 2000 Expense(f) (22.3) --
Spin-Related Expense(f) (35.0) --
Acquisition R&D Write-Off(f) (57.0) --
Acquisition Integration Charge(f) (5.0) --
Total Operating Income (30.3) 61.0
Interest Income 8.5 4.7
Gartner Equity Income 35.9 30.7
Gartner SAB 51 Gains(f) 13.4 --
Gartner R&D Write-Off(f) (3.0) --
Gains from Dispositions, Net(f) 23.2 5.4
Other Income (Expense) (5.3) (2.1)
Income from Continuing Operations Before
Provision for Income Taxes 42.4 99.7
Provision for Income Taxes (36.9) (26.3)
Income from Continuing Operations $5.5 $73.4
Income from Discontinued Operations, Net of
Income Taxes(f) $42.1 $39.6
Net Income $47.6 $113.0
Basic Earnings Per Share
Continuing Operations $0.03 $0.44
Discontinued Operations $0.26 $0.23
Total $0.29 $0.67
Diluted Earnings Per Share
Continuing Operations $0.03 $0.44
Discontinued Operations $0.25 $0.23
Total $0.28 $0.67
Average Shares Outstanding, YTD
Basic 162.8 167.6
Diluted 168.2 167.9
(f)Items excluded from recurring operations. One-time charges and gains
in the 1998 first six months include: year 2000 expense of $22.3 million;
expense related to spin-off of IMS HEALTH from Cognizant Corporation of $35.0
million; a write-off of in-process research and development associated with
the Walsh International acquisition of $57.0 million; an integration charge
related to the Walsh International acquisition of $5.0 million; Gartner SAB 51
gains of $13.4 million; a $3.0 million write-off of in-process research and
development associated with a Gartner acquisition; and net gains from
dispositions of $23.2 million from proceeds for the Cognizant Technology
Solutions (CTS) initial public offering and dispositions of Enterprises
venture fund investments. A net gain of $5.4 million from dispositions of
Enterprises venture fund investments was recorded in the 1997 first six
months.
SOURCE IMS HEALTH
 back to top
Related links:
http://www.imshealth.com
CONTACT:
Michael Gury of IMS HEALTH, 203-222-4230
|
