- $1,911 million GAAP revenue; $1,917 million before merger-related deferred revenue adjustment
- $467 million Adjusted EBITDA
- GAAP Diluted Earnings per Share $0.31; Adjusted Diluted Earnings per Share $1.01
- $1.3 billion in share repurchases completed during the first quarter
- Full-year guidance reaffirmed for Revenue and Adjusted EBITDA; raised for Adjusted Diluted Earnings Per Share
Quintiles IMS Holdings, Inc. (NYSE: Q), a leading global provider of information, technology services and contract research to the healthcare and life sciences industries, today reported financial results for the quarter ended March 31, 2017. On October 3, 2016, the merger of Quintiles Transnational Holdings Inc. and IMS Health Holdings, Inc. was completed. To aid investors and analysts with year-over-year comparability for the merged business, we are including company financial information that combines the stand-alone Quintiles and IMS Health financial information for revenue and Adjusted EBITDA as if the merger had taken place on January 1, 2016, with conforming adjustments to the current year presentation.
First-Quarter 2017 Operating Results
Revenue for the first quarter of $1,911 million increased 74.4 percent on a constant currency basis and 72.5 percent on a reported basis, compared to the first quarter of 2016. Under purchase accounting rules, a portion of IMS Health’s deferred revenue, which would have otherwise been realized as revenue in future periods, must be eliminated. Excluding this $6 million of deferred revenue adjustment, and on a combined company basis, revenue for the first quarter of $1,917 increased 3.1 percent on a constant currency basis and 2.0 percent at actual FX rates.
Combined company Research & Development Solutions revenue of $866 million grew 4.3 percent on a constant currency basis and 3.0 percent at actual FX rates. Growth was offset by the closing of an early clinical development facility in Europe during 2016. Research & Development Solutions contracted net new business totaled $4.08 billion for the 12 months ended March 31, 2017. Contracted backlog was $9.66 billion at March 31, 2017. The company expects approximately $2.9 billion of this backlog to convert to revenue in the next twelve months.
Combined company Commercial Solutions revenue of $854 million grew 2.4 percent in the first quarter at constant currency and 1.3 percent at actual FX rates. Growth was offset by a more than 50 percent year-over-year decline in the Encore business, a legacy Quintiles provider business that was acquired in 2014.
Combined company Integrated Engagement Services revenue of $198 million was down 0.2 percent at constant currency and down 0.9 percent reported.
"We continue to deliver on our targets, with another quarter of steady financial performance," said Ari Bousbib, chairman and CEO, QuintilesIMS. "We are pleased with our progress in R&D Solutions as the Next-Gen clinical offering is gaining traction and driving significant client wins."
First-quarter 2017 Adjusted EBITDA was $467 million. GAAP net income was $74 million and GAAP diluted earnings per share was $0.31. Adjusted Net Income was $238 million. Adjusted Diluted Earnings per Share of $1.01 in the first quarter was above the company’s previous guidance, driven by operational performance. Share repurchases and financings completed during the quarter had no net impact on first-quarter Adjusted Diluted Earnings per Share.
Recent Events
During the first quarter, QuintilesIMS issued €1.425 billion of senior notes due 2025 with an interest rate of 3.25 percent. In addition, the company also refinanced its term B loan in which the maturity was extended to 2024.
Financial Position
As of March 31, 2017, cash and cash equivalents were $862 million and the principal amount of debt was $8,383 million, resulting in net debt of $7,520 million. At the end of the first quarter, QuintilesIMS’s Gross Leverage Ratio was 4.3 times, and Net Leverage Ratio was 3.8 times trailing 12-month combined company Adjusted EBITDA.
Share Repurchase
On March 3, 2017, QuintilesIMS settled a transaction to rep...
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