inVentiv Health Reports Financial Results for 2011 Second Quarter
Published: Aug 31, 2011
BURLINGTON, Mass., Aug. 30, 2011 /PRNewswire/ -- inVentiv Health, Inc., offering best-in-class clinical, commercial and consulting services to the healthcare industry, today announced financial results for the second quarter ended June 30, 2011.
- Net revenues as reported for the second quarter of 2011 grew 25.1% to $309 million
- Pro forma net revenues for the second quarter of 2011 grew 8.7% to $384.6 million
- Pro forma adjusted EBITDA for the 12-month period ended June 30, 2011, totaled $250.5 million
- Completed the acquisition of i3 Global (June 2011) and PharmaNet (July 2011)
- Completed the integration of Campbell Alliance into our Consulting Segment
Pro Forma Financial Results:
The following discussion of second quarter financial results includes the pro forma effects of certain transactions, including the i3 Global acquisition, and excludes certain expenses and charges related to recent acquisitions and the related integrations. In the attached supplementary information tables, these items are reconciled to the most directly comparable financial measures computed in accordance with Generally Accepted Accounting Principles (GAAP). inVentiv Health pro forma results do not include the results of PharmaNet, which was acquired in July 2011. See "Use of Non-GAAP Financial Measures" for a detailed definition of the pro forma financial measures.
Pro forma net revenues for the second quarter of 2011 rose 8.7% to $384.6 million, compared with $353.9 million in the corresponding period of 2010. Pro forma adjusted EBITDA in the second quarter of 2011 was $54.6 million, compared with $55 million in the second quarter of 2010. The results reflect increased strategic investments, including strengthening the management team, improving systems for internal financial controls and IT infrastructure, increasing business development activities, and rolling out new brand and marketing initiatives. Quarterly and segment pro forma EBITDA do not include the impact of pro forma synergies.
"During the second quarter, we continued to make strategic investments in our people, in our infrastructure and in our global scale furthering our goal of being the leading service provider in every market we serve," said Paul Meister, Chief Executive Officer of inVentiv Health. "The recent acquisitions of i3 Global and PharmaNet strengthen our market position by expanding our global footprint, enabling us to more effectively address our clients' needs anywhere in the world. We continue to pursue options to strengthen our presence in established and emerging markets, including Japan, and in high-priority countries such as China and India. Additionally, we remain focused on improving efficiencies and executing on our strategic objectives in all three of our segments: Clinical, Commercial and Consulting."
Business Segment Results:
In the second quarter of 2011, inVentiv Clinical pro forma net revenues increased 3.3% to $144.7 million, compared with $140.1 million in the corresponding period of 2010. Segment pro forma adjusted EBITDA was $16.7 million, compared with $17.2 million in the second quarter of 2010. Revenues in inVentiv Clinical increased in 2011 mainly due to new projects and increased personnel placements. EBITDA was impacted by timing of the offshoring of a large customer project as well as a mix shift between services.
In the second quarter of 2011, inVentiv Commercial pro forma net revenues increased 14.4% to $220.5 million, compared with $192.8 million in the corresponding period of 2010. Segment pro forma adjusted EBITDA increased 10.7% to $44.6 million, compared with $40.3 million in the second quarter of 2010. Growth in the commercial services and communications businesses was offset partially by lower patient outcomes revenues.
In the second quarter of 2011, inVentiv Consulting pro forma net revenues were $19.5 million, compared with $20.9 million in the corresponding period of 2010. Segment pro forma adjusted EBITDA was $0.5 million, compared with $3.3 million in second quarter of 2010. Consulting segment performance included strong growth at Campbell Alliance for the quarter, but was more than offset by the continued decline in the legacy inVentiv Advanced Insights business. During the second quarter the Company successfully completed the integration of Advanced Insights into Campbell Alliance.
Pro Forma Adjusted EBITDA for the LTM Period Ended June 30, 2011:
For the 12-month period ended June 30, 2011, the Company's pro forma adjusted EBITDA totaled $250.5 million. Pro forma adjusted EBITDA for the 12-month period ended June 30, 2011, excludes the results of PharmaNet, which was acquired in July 2011. A reconciliation of pro forma adjusted EBITDA to net income (loss), the most directly comparable financial measures computed in accordance with GAAP, is included in the attached supplementary information tables.
On a GAAP basis, revenues for the second quarter of 2011 were $352.4 million, compared with $284.5 million during the second quarter of 2010. Net revenues, or revenues excluding reimbursable expenses, were $309 million during the second quarter of 2011 versus $246.9 in the prior year period. Income from operations for the second quarter of 2011 was $16.5 million, compared with $22.1 million for the second quarter of 2010. Net loss for the second quarter of 2011 totaled $3.7 million, compared with net income of $9.6 million in the prior year period. The second quarter of 2011 reflects the February 11, 2011, acquisition of Campbell Alliance for the full quarter, and the results of i3 Global from June 11, 2011.
Pro forma unlevered free cash flow was $46.6 million for the second quarter of 2011, versus $49.5 million for second quarter of 2010. The change was primarily driven by increased capital expenditures on infrastructure investments and capital leases.
On July 13, 2011, inVentiv Health completed the acquisition of PharmaNet for approximately $592.9 million. PharmaNet offers comprehensive drug development capabilities and strong therapeutic expertise in Phase 1 through Phase 4 clinical trials, bioanalytical services, pharmaceutical and regulatory consulting. With the addition of PharmaNet, inVentiv extends its global presence to nearly 40 countries and greatly enhances both its early- and late-stage clinical development capabilities. With i3 Global and PharmaNet, inVentiv Health is one of the world's top contract research organizations (CRO).
On June 10, 2011, inVentiv Health acquired i3 Global for approximately $376.4 million. i3 Global is an industry-leading, global CRO that provides a broad range of clinical development services that can be deployed on any scale from complex, multinational trials to smaller, early-phase studies in specialized patient populations. i3 Global's integrated businesses combine a deep understanding of therapeutic, scientific and functional proficiency in product development and strategic resourcing, including functional outsourcing and staffing solutions.
Use of non-GAAP Financial Measures
This press release and the preceding discussion of our results use non-GAAP financial measures.
EBITDA, adjusted EBITDA, pro forma adjusted EBITDA and consolidated EBITDA per Credit Agreement are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. We believe that the presentation of these supplemental measures enhances readers' of these financial statements understanding of our financial performance. We view these measures as useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. The inclusion of these supplementary adjustments is appropriate to provide additional information to readers of these financial statements about certain material noncash items; unusual or nonrecurring items that we do not expect to continue in the future; and other adjustments. Specifically, consolidated EBITDA per Credit Agreement is based on adjustments permitted in calculating covenant compliance in accordance with the indentures governing our Senior Notes and our Senior Secured Credit Facilities. Our use of these terms may vary from others in our industry. These measures are not defined under GAAP, and do not substitute for measures of net income, operating income or any other performance measure derived in accordance with GAAP, and are subject to limitations.
EBITDA is defined as net income before net interest expense, income tax provision, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude certain unusual or nonrecurring items and other adjustments. These adjustments include the impact of acquisition accounting, acquisition expenses, management fees and stock-based compensation, as well as other items. Pro forma adjusted EBITDA and pro forma net revenues are defined as adjusted EBITDA and net revenues, respectively, of inVentiv presented on a pro forma basis to give effect to the Aug. 4, 2010 acquisition of inVentiv by an entity controlled by affiliates of Thomas H. Lee Partners, L.P., Liberty Lane IH LLC and other investors, and the acquisitions of Campbell Alliance and i3 Global as if all such transactions occurred on Jan. 1, 2010. Pro forma adjusted EBITDA excludes certain nonrecurring items and other adjustments related to the pro forma period on a basis consistent with our adjusted EBITDA. Pro forma adjusted EBITDA for the last 12-month period ended June 30, 2011, also includes synergies related to action taken or to be implemented.
About inVentiv Health
inVentiv Health, Inc. is a leading global provider of best-in-class clinical, commercial and consulting services to companies seeking to accelerate performance. inVentiv's client roster includes more than 550 pharmaceutical, biotech and life sciences companies. With 13,000 employees in 40 countries, inVentiv rapidly transforms promising ideas into commercial reality. inVentiv Health, Inc. is privately owned by inVentiv Group Holdings Inc., an organization sponsored by affiliates of Thomas H. Lee Partners, L.P., Liberty Lane Partners and members of the inVentiv management team. For more information, visit www.inventivhealth.com.
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: the impact of our substantial level of indebtedness on our ability to generate sufficient cash to fulfill our obligations under our existing debt instruments or our ability to incur additional indebtedness; the impact of the consummation of any announced acquisitions, and any additional leverage we may incur in connection with the financing thereof, on the ratings of our debt securities; 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; the impact of any default by any of our credit providers or swap counterparties; our ability to accurately forecast costs to be incurred in providing services under fixed price contracts; our ability accurately forecast insurance claims within our self-insured programs; the potential impact of pricing pressures on pharmaceutical manufacturers from future healthcare reform initiatives or from changes in the reimbursement policies of third-party payers; our ability to grow our existing client relationships, obtain new clients and cross-sell our services; the potential impact of financial, economic, political and other risks, including interest rate and exchange rate risks, related to conducting business internationally; 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, including the acquisitions of i3 Global and PharmaNet Development Group, Inc., 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 client 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 possibility that client agreements will be terminated or not renewed; consolidation in the pharmaceutical industry; changes in trends in the healthcare and pharmaceutical industries or in pharmaceutical outsourcing, including initiatives by our clients to perform services we offer internally; the potential liability associated with bringing new drugs to market, including potential liability from injury to clinical trial participants; and 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. 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.