SHANGHAI, May 13, 2015 /PRNewswire/ -- WuXi PharmaTech (Cayman) Inc. (NYSE: WX), a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China and the United States, today announced its financial results for the first quarter of 2015.
First-Quarter 2015 Highlights
- Net Revenues Increased 22.7% Year Over Year to $180.0 Million
- Net Revenues for Laboratory Services Grew 20.6% Year Over Year to $114.3 Million
- Net Revenues for Small-Molecule Manufacturing Services Increased 14.8% Year Over Year to $45.5 Million
- Net Revenues for Biologics Services Grew 74.6% Year Over Year to $14.4 Million
- Net Revenues for New Businesses and Other Grew 44.6% Year Over Year to $5.8 Million
- GAAP Diluted Earnings Per ADS Grew 1.9% Year Over Year to $0.25
- Non-GAAP Diluted Earnings Per ADS Increased 17.5% Year Over Year to $0.36
Management Comment
“WuXi achieved strong revenue growth in the first quarter and continued to invest aggressively to seize opportunities and sustain long-term revenue growth,” said Dr. Ge Li, Chairman and CEO. “Total company revenue grew 22.7% year over year. Laboratory Services revenue grew 20.6%, led by strong performances in chemistry, toxicology, and analytical development in China and in cell therapy manufacturing in the United States. We have invested behind these businesses with our acquisition of XenoBiotic last year and ongoing construction of two cell therapy manufacturing facilities.
“While we expect continued strong growth from Laboratory Services, small-molecule manufacturing and biologics will be our key growth businesses over the next few years, and both performed very well in the quarter. Small-molecule manufacturing revenue grew 14.8%, driven by a solid pipeline of research and commercial manufacturing projects. Biologics revenue grew 74.6% in the quarter due to increasing demand for both development and manufacturing services. We are building major new facilities for long-term growth in these two businesses.
“Our success over the past 14+ years has come from aggressively investing where we see significant market opportunities and favorable trends,” Dr. Li concluded. “Today we continue to make aggressive investments in exciting new areas such as genomics and bioinformatics, mobile technologies, and China healthcare initiatives. We are encouraged by the long-term potential of these investments, although we may not see returns from them quickly.”
First-Quarter 2015 GAAP Results
Note: In connection with a change in the structure of our internal organization, we have revised our disclosure to reflect four reportable segments: Laboratory Services, Small-Molecule Manufacturing Services, Biologics Services, and New Businesses and Other.
First-quarter 2015 net revenues increased 22.7% year over year to $180.0 million. Laboratory Services revenue grew 20.6%, driven by our comprehensive and integrated drug discovery and development services. Revenue growth of 14.8% in Small-Molecule Manufacturing Services resulted from strong demand in both research manufacturing and commercial manufacturing. Biologics Services revenue increased 74.6% from strong growth in both development and manufacturing. Revenue growth of 44.6% in New Businesses and Other related to the ramp-up of new services in genomics and bioinformatics.
First-quarter 2015 GAAP gross profit increased 17.1% year over year to $62.8 million due to 22.7% revenue growth, partially offset by increased labor costs in China and investments in business expansion. Gross margin decreased year over year to 34.9% from 36.6% mainly due to increased labor costs in China and investments in business expansion. Gross margin in Laboratory Services decreased year over year to 38.2% from 39.9% due to increased labor costs in China and investments in business expansion. Gross margin in Small-Molecule Manufacturing Services increased year over year to 36.9% from 32.8% because of changes in business mix. The decrease in gross margin in Biologics Services year over year to 14.3% from 19.8% was caused by investments in biomanufacturing, which is in an early stage of its ramp-up. Gross margin in New Businesses and Other decreased year over year to 5.1% from 27.7% as a result of investments in genomics and bioinformatics, mobile technologies, and China healthcare initiatives.
First-quarter 2015 GAAP operating income decreased 27.4% year over year to $17.0 million due to increased selling and marketing expenses, higher general and administrative expenses including compensation cost of management due to business expansion, and increased research and development expenses in biologics, discovery biology, genomics, and other areas, partially offset by the 17.1% increase in gross profit. Operating margin declined to 9.4% from 16.0% due to higher selling and marketing expenses, general and administrative expenses, and research and development expenses, including increased share-based compensation expenses and amortization of acquired intangible assets.
First-quarter 2015 GAAP net income decreased 0.2% year over year to $17.8 million mainly due to the 27.4% year-over-year decrease in operating income, an adverse change in realized gains on settled foreign-exchange forward contracts (losses of $0.2 million in the first quarter of 2015 compared to gains of $1.8 million in the first quarter of 2014), larger equity-method investment losses from our joint ventures with PRA and MedImmune and other equity-method investments, and lower gains on the sale of investments by the corporate venture fund (gains of $2.6 million in the first quarter of 2015 compared to gains of $5.0 million in the first quarter of 2014), partially offset by a favorable change of $15.0 million in mark-to-market gains and losses on foreign-exchange forward contracts (gains of $1.1 million in the first quarter of 2015 compared to losses of $13.9 million in the first quarter of 2014).
First-quarter 2015 GAAP diluted earnings per ADS increased 1.9% to $0.25 due to a lower number of outstanding ADSs as a result of share purchases during 2014, partially offset by the 0.2% decrease in net income. First-quarter 2015 GAAP comprehensive income increased 35.6% year over year to $16.0 million mainly due to a favorable change in currency translation adjustments, partially offset by the 0.2% decrease in GAAP net income and higher unrealized losses on available-for-sale securities.
First-Quarter 2015 Non-GAAP Results
Non-GAAP financial results exclude the impact of share-based compensation expenses and the amortization of acquired intangible assets and the associated deferred tax impact.
First-quarter 2015 non-GAAP gross profit increased 20.2% year over year to $65.8 million due to 22.7% revenue growth, offset by increased labor costs in China and investments in business expansion. Non-GAAP gross margin decreased year over year to 36.5% from 37.3% for the same reasons.
First-quarter 2015 non-GAAP operating income decreased 9.3% year over year to $25.3 million due to increased selling and marketing expenses, higher general and administrative expenses including compensation cost of management due to business expansion, and increased research and development expenses in biologics, discovery biology, genomics, and other areas, partially offset by the 20.2% increase in non-GAAP gross profit. Non-GAAP operating margin decreased to 14.0% from 19.0% due to increased selling and marketing expenses, general and administrative expenses, and research and development expenses.
First-quarter 2015 non-GAAP net income increased 15.1% year over year to $25.6 million mainly due to a favorable change of $15.0 million in mark-to-market gains and losses on foreign-exchange forward contracts (gains of $1.1 million in the first quarter of 2015 compared to losses of $13.9 million in the first quarter of 2014), partially offset by the 9.3% year-over-year decrease in operating income, lower gains on the sale of investments by the corporate venture fund (gains of $2.6 million in the first quarter of 2015 compared to gains of $5.0 million in the first quarter of 2014), larger equity-method investment losses from our joint ventures with PRA and MedImmune and other equity-method investments, and an adverse change in realized gains on settled foreign-exchange forward contracts (losses of $0.2 million in the first quarter of 2015 compared to gains of $1.8 million in the first quarter of 2014).
First-quarter 2015 non-GAAP diluted earnings per ADS increased 17.5% year over year to $0.36 due to the 15.1% increase in non-GAAP net income and a lower number of outstanding ADSs as a result of share purchases during 2014.
Full-Year 2015 Financial Guidance
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