- Record reported backlog of $2.8 billion
- $1.1 billion in net new business wins for 1st half 2005
- 26% net revenue increase
RESEARCH TRIANGLE PARK, N.C., Aug. 12 /PRNewswire/ -- Quintiles
Transnational Corp. today announced financial results for the quarter ended
June 30, 2005. Net revenue for second quarter 2005 was $537.4 million, an
increase of 26% from net revenue of $425.8 million for second quarter 2004.
Contribution from Quintiles' Product Development and Commercial Services
groups totaled $243.0 million in second quarter 2005, up 28% from $189.7
million for second quarter 2004.
Net loss for second quarter 2005 was $44.2 million, after $72.0 million in
non-cash impairment charges and $10.7 million of charges relating to the
company's previously announced restructuring program, compared to a net loss
of $10.1 million in second quarter 2004. The 2005 impairment charges
primarily relate to Quintiles' pending sale, as previously announced, of its
Preclinical Services, Pharmaceutical Sciences and Clinical Trial Supplies
businesses to Aptuit Inc. for approximately $125 million. An agreement has
been reached and the transaction is expected to close in third quarter 2005.
The net loss in second quarter 2004 included gains of $34.7 million when
Mitsui & Co., Ltd., (Mitsui) became a 20% shareholder in Quintiles
Transnational Japan K.K. (Quintiles Japan) in June 2004.
Excluding the restructuring and impairment charges, second quarter 2005
earnings before interest, taxes, depreciation and amortization (EBITDA)
totaled $60.5 million. Second quarter 2004 EBITDA was $17.9 million,
excluding the impairment charges and the gains of $34.7 million related to
Mitsui's investment in Quintiles Japan. Including the restructuring and
impairment charges, second quarter 2005 EBITDA was a loss of $22.2 million.
Second quarter 2004 EBITDA was $51.8 million, including the impairment charges
and Mitsui gains. See Schedule 3 for a reconciliation of the above amounts to
net loss. A reconciliation of EBITDA to net loss is also included in the
company's form 10-Q on file with the Securities and Exchange Commission.
For the first half of 2005, net new business totaled approximately $1.1
billion versus $954.5 million for the same period in 2004. Total backlog as
of June 30, 2005, was approximately $2.8 billion, compared with approximately
$2.2 billion at June 30, 2004.
"These strong results illustrate our success in advancing Quintiles'
strategic priorities -- understanding customer needs, improving processes,
making our organizational structure more efficient, and empowering employees,"
said Quintiles Transnational Chairman and Chief Executive Officer Dennis
Gillings, CBE. "The Aptuit agreement is a winning strategic move for
Quintiles. By working with Aptuit to address customers' early development
services needs, Quintiles can focus more resources on our core clinical
development and commercial services.
"I'd like to congratulate our employees for their hard work and focus in
helping Quintiles and our customers succeed."
Quintiles Transnational Executive Vice President and Chief Financial
Officer John Ratliff said: "We achieved 26% net revenue growth and ended the
quarter with a record reported backlog of $2.8 billion. Our SG&A (sales,
general and administrative) expenses declined to 31% of net revenue from 37%
year-over-year. We continue to hire billable staff as our project workload
grows while we reduce non-billable positions.
"All of our efforts have contributed to substantially improved operating
profits in our contract research and contract sales services groups and our
PharmaBio Development strategic investment group. Our business model is
working and I'm very pleased with our solid second quarter performance."
As of June 30, 2005, Quintiles had cash and cash equivalents of $298.3
million. As of June 30, 2005, Quintiles had 17,736 full-time equivalent
employees versus 16,660 on the same date in 2004.
As part of Quintiles' normal closing process for second quarter 2005, the
company determined that assets of its Early Development and Packaging (EDP)
business, composed of the company's Preclinical, Pharmaceutical Sciences and
Clinical Trials Supplies businesses, were impaired. The determination of the
impairment in June 2005 resulted from the increased probability of selling the
assets of the EDP business prior to the end of the assets' estimated useful
life. As a result, the company recognized a $65.8 million impairment on the
EDP long-lived assets during second quarter 2005.
Quintiles Transnational's second quarter 2005 financial briefing will be
held at 1:00 p.m. EDT on Friday, Aug. 12, and will be broadcast live over the
Web. The webcast or replay, which will be available through 5:00 p.m. EDT
Friday, Sept. 2, can be accessed at
http://www.quintiles.com/corporate_info/broadcast_center.
Quintiles helps improve healthcare worldwide by providing a broad range of
professional services, information and partnering solutions to the
pharmaceutical, biotechnology and healthcare industries. Headquartered near
Research Triangle Park, North Carolina, Quintiles has offices in 50 countries
and is the world's leading pharmaceutical services organization. For more
information visit the company's Web site at http://www.quintiles.com.
The schedules attached to this release are an integral part of this
release. Information in this press release contains "forward looking
statements" about Quintiles. These statements involve risks and uncertainties
that could cause actual results to differ materially, including, without
limitation, the ability to maintain large customer contracts or to enter into
new contracts, changes in trends in the pharmaceutical industry, the risk that
the market for our products and services will not grow as we expect, the risk
that our PharmaBio transactions will not generate revenue or profit at the
rate or levels we anticipate or that royalty revenues under the PharmaBio
agreements may not be adequate to offset Quintiles' upfront and ongoing
expenses in providing sales and marketing services or in making milestone and
marketing payments, our ability to fulfill our obligations under our financing
arrangements and the potential impact on our operations, our ability to
efficiently distribute backlog among project management groups and match
demand to resources, actual operating performance, variation in the actual
savings and operating improvements resulting from previous restructurings, the
ability to operate successfully in new lines of business, and the possibility
that the sale of the EDP business may be delayed or fail to close. Additional
factors that could cause actual results to differ materially are discussed in
the company's recent filings with the Securities and Exchange Commission,
including but not limited to its Annual Report on Form 10-K, its Form 8-Ks,
and its other periodic reports, including Form 10-Qs.
Schedule 1 of 3
Condensed Consolidated Statements of Income
(Unaudited)
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
In thousands
Net revenues $537,447 $425,766 $1,029,803 $848,960
Add: reimbursed service costs 131,298 82,306 241,983 164,765
Gross revenues 668,745 508,072 1,271,786 1,013,725
Costs, expenses and other:
Costs of revenues 468,973 372,062 905,606 728,664
Selling, general and
administrative 167,959 159,027 322,437 314,688
Interest expense (income),
net 12,175 14,576 29,614 29,195
Other expense (income),
net 2,764 318 2,888 (2,873)
Restructuring 10,676 - 19,679 -
Impairments 72,033 881 72,467 881
Transaction expense, net - - (2,666) -
Gain on sale of portion of
an investment in a
subsidiary - (24,688) - (24,688)
Non-operating gain on
change of interest
transaction - (10,030) - (10,030)
734,580 512,146 1,350,025 1,035,837
Loss before income taxes (65,835) (4,074) (78,239) (22,112)
Income tax (benefit) expense
(includes $31,521 of income
tax benefit related to
American Jobs Creation Act of
2004 for the six months ended
June 30, 2005 (22,996) 14,133 (56,016) 13,408
Loss before minority interests
and equity in (losses)
earnings of unconsolidated
affiliates (42,839) (18,207) (22,223) (35,520)
Equity in (losses) earnings of
unconsolidated affiliates (329) 45 (528) (23)
Minority interests (995) (246) (2,068) (433)
Loss from continuing operations (44,163) (18,408) (24,819) (35,976)
Income from discontinued
operation - 8,280 - 10,141
Net loss $(44,163) $(10,128) $(24,819) $(25,835)
Consolidated Balance Sheet Data
(Unaudited)
June 30, December 31,
2005 2004
In millions
Cash, cash equivalents and debt
investments $311 $548
Investments in marketable equity
securities 33 24
Investments in non-marketable equity
securities and loans 56 56
Investments in unconsolidated
affiliates 120 121
Working capital 175 316
Total assets 1,773 2,048
Debt including current portion 639 795
Shareholders' equity 519 568
Schedule 2 of 3
Segment Information
(Unaudited)
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
In thousands
Service revenues:
Product development $331,925 $268,363 $642,203 $531,047
Commercial services 193,280 158,859 377,383 305,846
Eliminations (25,333) (8,596) (51,644) (14,879)
Total net service revenues 499,872 418,626 967,942 822,014
PharmaBio Development
Commercial rights and
royalties 38,458 15,155 64,702 30,741
Investment (883) (8,015) (2,841) (3,795)
Total PharmaBio Development 37,575 7,140 61,861 26,946
Total net revenues 537,447 425,766 1,029,803 848,960
Reimbursed service costs 131,298 82,306 241,983 164,765
Gross revenues $668,745 $508,072 $1,271,786 $1,013,725
Contribution (revenues less
cost of revenues excluding
depreciation and amortization
expense except as noted
below):
Product development $164,757 $128,353 $314,403 $256,415
Commercial services 78,158 61,310 145,758 115,865
PharmaBio Development
(includes amortization
and depreciation expense
noted below) (13,954) (21,497) (36,043) (22,156)
Total contribution $228,961 $168,166 $424,118 $350,124
Depreciation and amortization
expense (excluded from
contribution except as noted
below):
Product development $20,405 $21,182 $40,476 $42,772
Commercial services 7,611 7,823 15,144 16,007
PharmaBio Development
(included in
contribution) 3,556 1,015 4,233 1,819
Corporate 1,173 3,151 2,318 6,284
Total depreciation and
amortization expense $32,745 $33,171 $62,171 $66,882
Schedule 3 of 3
EBITDA Reconciliation
(Unaudited)
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
In millions
Net revenues $537.4 $425.8 $1,029.8 $849.0
Add: reimbursed service costs 131.3 82.3 242.0 164.8
Gross revenues 668.7 508.1 1,271.8 1,013.7
Costs, expenses and other:
Costs of revenues (469.0) (372.1) (905.6) (728.7)
Selling, general and
administrative (168.0) (159.0) (322.4) (314.7)
Other (expense) income, net (2.8) (0.3) (2.9) 2.9
Transaction expense, net 0.0 0.0 2.7 0.0
Depreciation and amortization 32.7 33.2 62.2 66.9
Equity in earnings (losses) of
unconsolidated affiliates (0.3) 0.0 (0.5) (0.0)
Minority interests (1.0) (0.2) (2.1) (0.4)
Income from discontinued operation 0.0 8.3 0.0 10.1
EBITDA, excluding impairments,
restructuring charges and Mitsui gains 60.5 17.9 103.1 49.8
Impairments (72.0) (0.9) (72.5) (0.9)
Restructuring (10.7) 0.0 (19.7) 0.0
Gain on sale of portion of an
investment in a subsidiary 0.0 24.7 0.0 24.7
Non-operating gain on change of
interest transaction 0.0 10.0 0.0 10.0
EBITDA (22.2) 51.8 11.0 83.7
Depreciation and amortization (32.7) (33.2) (62.2) (66.9)
Interest expense, net (12.2) (14.6) (29.6) (29.2)
Income tax benefit (expense) 23.0 (14.1) 56.0 (13.4)
Net loss $(44.2) $(10.1) $(24.8) $(25.8)
SOURCE Quintiles Transnational Corp.
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Related links:
http://www.quintiles.com
http://www.quintiles.com/corporate_info/broadcast_center
CONTACT:
Pat Grebe, Media Relations,
media.info@quintiles.com, or Greg Connors, Investor Relations,
invest@quintiles.com, of Quintiles Transnational Corp.,
+1-919-998-2000
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