IMS Health Announces 2009 Third-Quarter Results

  • Revenues of $541 million, up 3% over second quarter
  • GAAP EPS of $(0.05) reflects previously announced restructuring charge
  • Non-GAAP EPS of $0.40
  • Strong preliminary cash flow from operations

NORWALK, Conn.--(BUSINESS WIRE)--Oct 22, 2009 - IMS Health (NYSE: RX), the world's leading provider of market intelligence to the pharmaceutical and healthcare industries, today announced third-quarter 2009 revenue of $540.8 million, down 6 percent or 4 percent constant dollar, compared with $573.7 million in the year-earlier period. Net loss for the 2009 third quarter was $9.3 million and diluted earnings per share was $(0.05) compared with net income of $75.9 million and EPS of $0.41 in the third quarter of 2008. After adjusting for a $106.3 million charge related to the previously announced restructuring and certain other items, net income on a non-GAAP basis for the third quarter of 2009 was $72.3 million compared with $79.4 million in the year-earlier period, and non-GAAP EPS was $0.40 compared with $0.43 in the 2008 third quarter (See Note c to the financial tables).

“Our results for the third quarter reflect improved performance across all regions and solid execution by our teams,” said David R. Carlucci, IMS chairman and CEO. “We're moving out on our plans to lower our cost structure and accelerate operational efficiencies, and we continue to generate excellent cash flow. In addition, our clients are seeing better market growth as indicated in our updated global pharmaceutical industry forecast, and we remain focused on addressing their priorities.”

Operating loss in the third quarter of 2009, including the restructuring charge, was $5.5 million compared with $124.0 million in operating income in the year-earlier period. When adjusted for the restructuring charge and a third-quarter 2008 charge related to the company's Government Solutions subsidiary, operating income on a non-GAAP basis for this year's third quarter would have been $100.8 million, compared with $127.7 million in the 2008 third quarter (See Note c to the financial tables).

Preliminary net cash provided by operating activities on a GAAP basis for the third quarter of 2009 was $153.2 million, and $347.5 million in the first nine months of 2009. Third-quarter 2009 preliminary free cash flow on a non-GAAP basis was $155.2 million, bringing the total in the first nine months of 2009 to $405.1 million (See Note d to the financial tables).

Year-to-Date Results

Revenues for the first nine months of 2009 were $1,590.6 million, down 9 percent or 5 percent constant dollar, compared with revenues of $1,748.6 million for the 2008 first nine months. For the first nine months of 2009, net income was $186.9 million and diluted earnings per share was $1.02 compared with net income of $212.8 million and EPS of $1.16 in the year-earlier period. After adjusting for the $106.3 million restructuring charge, certain asset impairments and other charges, certain tax benefits, the Government Solutions charge and phasing of tax benefits in 2008, and foreign exchange hedge-related items, net income on a non-GAAP basis for the first nine months of 2009 was $220.5 million compared with $221.1 million in the year-earlier period, and non-GAAP EPS was $1.21 compared with $1.20 in the 2008 first nine months (See Note c to the financial tables).

Including the restructuring charge, certain asset impairments and other charges, and the 2008 Government Solutions charge, operating income in the 2009 first nine months was $164.6 million, compared with $371.7 million in the year-earlier period. When adjusted for these items, operating income on a non-GAAP basis for the first nine months of 2009 would have been $296.4 million, compared with $375.5 million in the year-earlier period (See Note c to the financial tables).

Balance Sheet Highlights

IMS's cash and cash equivalents as of September 30, 2009 totaled $301.7 million, compared with $215.7 million on December 31, 2008. Total debt as of September 30, 2009 was $1,344.9 million, down from $1,404.2 million at year-end 2008.

Share Repurchase Program, Shares Outstanding

No IMS shares were repurchased during the third quarter of 2009. A total of 9.5 million shares remain authorized and available to repurchase under the current Board of Directors' authorization.

The number of shares outstanding as of September 30, 2009 was approximately 182.4 million, equal to the number of shares outstanding as of June 30, 2009.

About IMS

Operating in more than 100 countries, IMS Health is the world's leading provider of market intelligence to the pharmaceutical and healthcare industries. With $2.3 billion in 2008 revenue and more than 50 years of industry experience, IMS offers leading-edge market intelligence products and services that are integral to clients' day-to-day operations, including product and portfolio management capabilities; commercial effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve productivity and the delivery of quality healthcare worldwide. Additional information is available at http://www.imshealth.com.

Conference Call and Webcast Details

IMS will host a conference call at 8:00 a.m. ET today to discuss its third-quarter results. To participate, please dial 1 800 734-4208 (U.S. and Canada) or 1 212 231-2902 (outside the U.S. and Canada) approximately 15 minutes before the scheduled start of the call. The conference call also will be accessible live on the Investor Relations section of the IMS Website at www.imshealth.com. Prior to the conference call, a copy of this press release and any other financial or statistical information presented during the call will be made available in the “Investors” area of IMS's Website. A replay of the conference call will be available online on the “Investors” section of the IMS Website and via telephone by dialing 1 800 633-8284 (U.S. and Canada) or 1 402 977-9140 (outside the U.S. and Canada), and entering access code 21439822 beginning at 10:30 a.m. ET today.

Forward-looking Statements

Reported numbers are preliminary and not final until the filing of our Form 10-Q with the Securities and Exchange Commission and, therefore, remain subject to adjustment. This press release contains statements that 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 its 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 that could cause or contribute to such differences include, but are not limited to (i) uncertainties associated with the outcome of IMS Health's exploration of strategic alternatives, (ii) regulatory, legislative and enforcement initiatives, particularly in the areas of data access and utilization and tax, (iii) 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, (iv) to the extent unforeseen cash needs arise, the ability to obtain financing on favorable terms, (v) to the extent IMS Health seeks growth through acquisitions and joint ventures, the ability to identify, consummate and integrate acquisitions and joint ventures on satisfactory terms, (vi) the ability to develop new or advanced technologies and systems for its businesses on time and on a cost-effective basis, (vii) deterioration in economic conditions, particularly in the pharmaceutical, healthcare or other industries in which IMS Health's customers operate, and (viii) uncertainties associated with completion of IMS Health's restructuring plans and the impact of the restructuring activities on IMS Health's business and financial results, including the timing of the activities and the associated costs and the ability to achieve projected cost savings. Additional information on factors that may affect the business and financial results of the company can be found in the filings of the company made from time to time with the Securities and Exchange Commission.

IMS Health undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.

 
Table 1

 

IMS Health

 

GAAP Income Statement

 

Three Months Ended September 30

 

(unaudited, in millions except per share)

 

                         
      2009
GAAP

 

    2008 GAAP

 

    % Fav (Unfav)

 

    Non-GAAP Constant $

Growth %

 

Revenue (a)                          
Commercial Effectiveness     $ 270.0       $ 279.8       (4 ) %     (3 )
Product and Portfolio Management       168.8         174.6       (3 )       (2 )
New Business Areas       101.9         119.3       (15 )       (11 )
Total       540.8         573.7       (6 )       (4 )
                           
Revenue Detail:

 

                         
Information & Analytics (“I&A”) Revenue       425.2

 

        445.7       (5 )       (3 )
Consulting & Services (“C&S”) Revenue       115.6         128.1       (10 )       (7 )
Total Revenue       540.8         573.7       (6 )       (4 )
                           
Operating Expenses (b)                          
Operating Costs of I&A       (182.0 )       (190.1 )     4          
Direct and Incremental Costs of C&S       (58.8 )       (62.2 )     5          
External-use Software Amortization       (9.8 )       (12.3 )     20          
Selling and Administrative       (166.9 )       (161.9 )     (3 )        
Depreciation and Other Amortization       (22.5 )       (23.2 )     3          
Accelerated Depreciation and Amortization       (2.0 )       0.0       NM          
Severance, impairment and other charges       (104.3 )       0.0       NM          
Total       (546.3 )       (449.7 )     (21 )        
                           
Operating Income (a)       (5.5 )       124.0       NM

 

 

 

 

 

    NM

 

 

 

                           
Interest expense, net       (8.8 )       (9.0 )     3          
Gains (losses) from investments, net       (0.6 )       0.4       NM

 

 

 

       
Other Income (Expense), net       (7.8 )       (3.0 )     (161 )        
Pretax Income       (22.7 )       112.4       NM

 

 

 

       
                           
Provision for Income Taxes       13.5         (35.0 )     NM

 

         
Net Income       (9.3 )       77.3       NM

 

 

 

       
                           
Less: Net Income Attributable to Non-Controlling Interests       0.0         1.4       NM

 

         
                           
Net Income Attributable to IMS Health, Inc. (c)       (9.3 )       75.9       NM

 

 

 

       
                           
Diluted EPS:                          
Total Diluted EPS (c)     $ (0.05 )     $ 0.41       NM

 

 

 

       
                           
Shares Outstanding:                          
Weighted Average Diluted       182.8         183.1                
End-of-Period Actual       182.4         181.9                
Weighted Average Basic       182.5         182.2                
                                   
The accompanying notes are an integral part of these financial tables.

 

 
Table 2

 

IMS Health

 

GAAP Income Statement

 

Nine Months Ended September 30

 

Posted: October 2009


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