- Net new business of $587.3 million in the fourth quarter; Net book-to-bill of 1.42
- $413.6 million of service revenue in the fourth quarter; 14.2% growth at actual foreign exchange rates and 14.6%
constant currency growth compared to the fourth quarter of 2015
- Fourth quarter GAAP Net Income per diluted share was $0.22 and GAAP Net Income was $14.0 million
- Fourth quarter Adjusted Net Income per diluted share was $0.71 per share and Adjusted Net Income was $45.9
million
RALEIGH, N.C., Feb. 22, 2017 (GLOBE NEWSWIRE) -- PRA Health Sciences, Inc. (“PRA” or the “Company”) (NASDAQ:PRAH) today reported
financial results for the quarter ended December 31, 2016.
For the three months ended December 31, 2016, service revenue was $413.6 million, which represents growth of 14.2%, or $51.3
million, compared to the fourth quarter of 2015 at actual foreign exchange rates. On a constant currency basis, service revenue
grew $52.9 million, an increase of 14.6% compared to the fourth quarter of 2015.
Net new business for the quarter ended December 31, 2016 was $587.3 million, representing a net book-to-bill ratio of 1.42 for
the period. This net new business contributed to an ending backlog of $2.9 billion at December 31, 2016.
“We are pleased to have delivered another quarter with double-digit revenue, earnings and net new business growth
year-over-year,” said Colin Shannon, PRA’s Chief Executive Officer. “We are well-positioned to deliver at least mid-teens growth
during the coming year, as evidenced by our record level of new business awards and backlog. We continue to stay focused on our key
strategic objectives, our client deliverables and developing our people, and we look forward to delivering strong results in
2017.”
Direct costs were $274.4 million during the three months ended December 31, 2016 compared to $234.9 million for the fourth
quarter of 2015. Direct costs were 66.3% of service revenue during the fourth quarter of 2016 compared to 64.8% of service revenue
during the fourth quarter of 2015. The increase in direct costs as a percentage of service revenue is due to the continued hiring
of billable staff to support our current projects and the hiring of additional staff to ensure appropriate staffing levels to
support our future growth.
Selling, general and administrative expenses were $70.2 million during the three months ended December 31, 2016 compared to
$63.6 million for the fourth quarter of 2015. Selling, general and administrative costs were 17.0% of service revenue during the
fourth quarter of 2016 compared to 17.6% of service revenue during the fourth quarter of 2015. The decrease in selling, general and
administrative expenses as a percentage of revenue is attributable to our ability to continue to effectively manage our sales and
administrative functions as the Company continues to grow.
For the three months ended December 31, 2016, we incurred transaction-related expenses of $13.0 million. The costs consist
of $12.7 million of one-time stock-based compensation expense related to the release of transfer restrictions on vested options and
the vesting of certain performance-based stock options in connection with the November secondary offering. In addition, we incurred
$0.3 million of third-party fees associated with the secondary offering.
During the fourth quarter of 2016, we also incurred a loss on extinguishment of debt of $16.7 million. This loss is associated
with our refinancing on our first lien term debt, which included the write-off of $15.8 million of unamortized debt issuance costs
and $0.9 million of other costs associated with the transaction.
GAAP net income was $14.0 million for the three months ended December 31, 2016, or $0.22 per share on a diluted basis, compared
to GAAP net income of $28.5 million for the three months ended December 31, 2015, or $0.45 per share on a diluted basis. Our GAAP
net income for the three months ended December 31, 2016 included transaction-related expenses and the loss on extinguishment
discussed above.
EBITDA was $54.3 million for the three months ended December 31, 2016, representing a decrease of 22.0% compared to the fourth
quarter of 2015. Adjusted EBITDA was $73.9 million for the three months ended December 31, 2016, representing growth of 8.8%
compared to the fourth quarter of 2015.
Adjusted Net Income was $45.9 million for the three months ended December 31, 2016, representing 22.3% growth compared to the
fourth quarter of 2015. Adjusted Net Income per diluted share was $0.71 for the three months ended December 31, 2016, representing
20.3% growth compared to the fourth quarter of 2015.
A reconciliation of our non-GAAP measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share
and our 2017 guidance, to the corresponding GAAP measures is included in this press release.
Full Year 2016
For the twelve months ended December 31, 2016, service revenue was $1,580.0 million, which represents growth of 14.8%, or $204.2
million, compared to the twelve months ended December 31, 2015 at actual foreign exchange rates. On a constant currency
basis, service revenue grew $209.5 million, representing growth of 15.2% compared to the twelve months ended December 31, 2015.
GAAP income from operations was $162.3 million, GAAP net income was $68.2 million and GAAP net income per diluted share was
$1.06 for the twelve months ended December 31, 2016.
Adjusted Net Income was $162.3 million for the twelve months ended December 31, 2016, an improvement of 28.6% compared to the
same period in 2015. Adjusted Net Income per diluted share was $2.52 for the twelve months ended December 31, 2016, up 26.0%
compared to the same period in 2015.
Q1 2017 and Full Year 2017 Guidance
For Full Year 2017, the Company expects to achieve service revenues between $1.795 billion and $1.835 billion, representing
constant currency growth of 14% to 16%, GAAP net income per diluted share between $2.46 and $2.56 per share, representing growth of
132% to 142%, Adjusted Net Income per diluted share between $3.08 and $3.18 per share, representing growth of 22% to 26%, and
annual effective income tax rate estimates at approximately 27%.
For Q1 2017, the Company expects to achieve service revenues between $415 million and $425 million, representing constant
currency growth of 11% to 14%, GAAP net income per diluted share between $0.41 and $0.46 per share, Adjusted Net Income per diluted
share between $0.57 and $0.62 per share, and annual effective income tax rate estimates at approximately 27%.
All financial guidance assumes a EURO rate of 1.11 and a GBP rate of 1.35. All other foreign currency exchange rates are as of
January 31, 2017.
Conference Call Details
PRA will host a conference call at 9:00 a.m. ET on February 23, 2017, to discuss the contents of this release and other relevant
topics. To participate, please dial (877) 930-8062 within the United States or (253) 336-7647 outside the United States
approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 66572766. The conference call
will also be accessible, live via audio broadcast, on the Investor Relations section of the PRA website at www.prahs.com/investors. A replay of the conference call will be available online at www.prahs.com/investors. In addition, an audio replay of the call will be available for one week
following the call and can be accessed by dialing (855) 859-2056 within the United States or (404) 537-3406 outside the United
States. The replay ID is 66572766.
About PRA Health Sciences
PRA (NASDAQ:PRAH) is one of the world’s leading global contract research organizations, or CROs, by revenue, providing
outsourced clinical development services to the biotechnology and pharmaceutical industries. PRA’s global clinical development
platform includes approximately 70 offices across North America, Europe, Asia, Latin America, South Africa, Australia and the
Middle East and over 13,000 employees worldwide. Since 2000, PRA has performed approximately 3,500 clinical trials worldwide. In
addition, PRA has participated in the pivotal or supportive trials that led to U.S. Food and Drug Administration or international
regulatory approval of more than 70 drugs.
PRA has therapeutic expertise in areas that are among the largest in pharmaceutical development, including oncology, central
nervous system, inflammation and infectious diseases. PRA believes that it provides its clients with one of the most flexible
clinical development service offerings, which includes both traditional, project-based Phase I through Phase IV services, as well
as embedded and functional outsourcing services. The Company has invested in medical informatics and clinical technologies designed
to enhance efficiencies, improve study predictability and provide better transparency to clients throughout their clinical
development processes. To learn more about PRA, please visit www.prahs.com.
Internet Posting of Information: The Company routinely posts information that may be important to investors in the ‘Investor
Relations’ section of the Company’s website at www.prahs.com. The Company encourages investors and potential investors to consult the Company’s
website regularly for important information about the Company.
Forward-Looking Statements
This press release contains forward-looking statements that reflect, among other things, the Company’s current expectations and
anticipated results of operations, all of which are subject to known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements, market trends or industry results to differ materially from those expressed or
implied by such forward-looking statements. For this purpose, any statements contained herein that are not statements of historical
fact may constitute forward-looking statements. Without limiting the foregoing, words such as “anticipates,” “believes,”
“estimates,” “expects,” “guidance,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and the negative thereof and
similar words and expressions are intended to identify forward-looking statements. Actual results may differ materially from the
Company’s expectations due to a number of factors, including that most of the Company’s contracts may be terminated on short notice
and that the Company may be unable to maintain large customer contracts or to enter into new contracts; the historical indications
of the relationship of backlog to revenues may not be indicative of their future relationship; the market for the Company’s
services may not grow as the Company expects; the Company may under price contracts or overrun its cost estimates, and if the
Company is unable to achieve operating efficiencies or grow revenues faster than expenses, operating margins will be adversely
affected; the Company may be unable to maintain information systems or effectively update them; customer or therapeutic
concentration could harm the Company’s business; the Company’s business is subject to risks associated with international
operations, including economic, political and other risks; the Company is also subject to a number of additional risks associated
with its business outside the United States, including foreign currency exchange fluctuations and restrictive regulations, as well
as the risks and uncertainties associated with the United Kingdom’s expected withdrawal from the European Union; government
regulators or customers may limit the scope of prescription or withdraw products from the market, and government regulators may
impose new regulations affecting the Company’s business; the Company may be unable to successfully develop and market new services
or enter new markets; the Company’s failure to perform services in accordance with contractual requirements, regulatory standards
and ethical considerations may subject it to significant costs or liability, damage its reputation and cause it to lose existing
business or not receive new business; the Company’s services are related to treatment of human patients, and it could face
liability if a patient is harmed; the Company has substantial indebtedness and may incur additional indebtedness in the future,
which could adversely affect the Company’s financial condition; and other factors that are set forth in the Company’s filings with
the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed with the SEC on February 25,
2016. The Company undertakes no obligation to update any forward-looking statement after the date of this release, whether as a
result of new information, future developments or otherwise, except as may be required by applicable law.
Use of Non-GAAP Financial Measures
This press release includes EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share, each of which are
financial measures not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
Management believes that these measures provide useful supplemental information to management and investors regarding our operating
results as they exclude certain items whose fluctuation from period- to period do not necessarily correspond to changes in the
operating results of our business. As a result, management and our board of directors regularly use EBITDA and Adjusted EBITDA as a
tool in evaluating our operating and financial performance and in establishing discretionary annual bonuses. Adjusted EBITDA is
also the basis for covenant compliance EBITDA, which is used in certain covenants in the credit agreement governing our senior
secured credit facilities and the indenture governing the senior notes. In addition, management believes that EBITDA, Adjusted
EBITDA and Adjusted Net Income (including diluted adjusted net income per share) facilitate comparisons of our operating results
with those of other companies by backing out of GAAP net income items relating to variations in capital structures (affecting
interest expense), taxation, and the age and book depreciation of facilities and equipment (affecting relative depreciation
expense), which may vary for different companies for reasons unrelated to operating performance. We believe that EBITDA, Adjusted
EBITDA and Adjusted Net Income (including diluted adjusted net income per share) are frequently used by securities analysts,
investors, and other interested parties in the evaluation of issuers, many of which also present EBITDA, Adjusted EBITDA and
Adjusted Net Income (including diluted adjusted net income per share) when reporting their results in an effort to facilitate an
understanding of their operating results.
These non-GAAP financial measures have limitations as analytical tools, and you should not consider these measures in isolation,
or as a substitute for analysis of our results as reported under GAAP. Additionally, because not all companies use identical
calculations, these presentations of EBITDA, Adjusted EBITDA and Adjusted Net Income (including diluted adjusted net income per
share) may not be comparable to similarly titled measures of other companies.
EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA and Adjusted Net Income
(including diluted adjusted net income per share) represent EBITDA and net income (including diluted net income per share),
respectively, adjusted to exclude stock-based compensation expense, loss (gain) on disposal of fixed assets, loss on
modification or extinguishment of debt, foreign currency losses and gains, other (expense) income, equity in (gains) losses of
unconsolidated joint ventures, transaction-related cost, acquisition-related costs, severance costs and restructuring charges,
prior year foreign research and development credits, lease termination costs, non-cash rent adjustments and other charges.
Adjusted Net Income is also adjusted to exclude amortization of intangible assets, amortization of terminated interest rate swaps,
and amortization of deferred financing costs. EBITDA, Adjusted EBITDA and Adjusted Net Income are not measurements of our financial
performance under GAAP and should not be considered as alternatives to net income or other performance measures derived in
accordance with GAAP or as alternatives to cash flow from operating activities as measures of our liquidity. EBITDA, Adjusted
EBITDA and Adjusted Net Income have limitations as analytical tools, and you should not consider such measures either in isolation
or as substitutes for analyzing our results as reported under GAAP.
Some of these limitations are:
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
- EBITDA and Adjusted EBITDA do not reflect our interest expense, or the cash requirements necessary to service interest or
principal payments, on our debt;
- EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;
- EBITDA and Adjusted EBITDA do not reflect historical capital expenditures or future requirements for capital expenditures or
contractual commitments;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and
- other companies in our industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as
comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to
reinvest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.
Constant Currency
Constant currency comparisons are based on translating local currency amounts in the current year period at actual foreign
exchange rates for the prior year. The Company routinely evaluates its financial performance on a constant currency basis in order
to facilitate period- to- period comparisons without regard to the impact of changing foreign currency exchange rates.
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, |
|
Year Ended
December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Revenue: |
|
(Unaudited)
|
|
|
|
|
|
|
Service revenue |
|
$ |
413,613 |
|
|
$ |
362,265 |
|
|
$ |
1,580,023 |
|
|
$ |
1,375,847 |
|
Reimbursement revenue |
|
|
58,773 |
|
|
|
66,682 |
|
|
|
231,688 |
|
|
|
238,036 |
|
Total revenue |
|
|
472,386 |
|
|
|
428,947 |
|
|
|
1,811,711 |
|
|
|
1,613,883 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
Direct costs |
|
|
274,355 |
|
|
|
234,882 |
|
|
|
1,032,688 |
|
|
|
886,528 |
|
Reimbursable out-of-pocket costs |
|
|
58,773 |
|
|
|
66,682 |
|
|
|
231,688 |
|
|
|
238,036 |
|
Selling, general and administrative |
|
|
70,245 |
|
|
|
63,586 |
|
|
|
269,893 |
|
|
|
246,417 |
|
Transaction-related costs |
|
|
13,049 |
|
|
|
— |
|
|
|
44,834 |
|
|
|
— |
|
Depreciation and amortization |
|
|
17,260 |
|
|
|
19,735 |
|
|
|
69,506 |
|
|
|
77,952 |
|
Loss on disposal of fixed assets |
|
|
463 |
|
|
|
201 |
|
|
|
753 |
|
|
|
652 |
|
Income from operations |
|
|
38,241 |
|
|
|
43,861 |
|
|
|
162,349 |
|
|
|
164,298 |
|
Interest expense, net |
|
|
(12,388 |
) |
|
|
(15,683 |
) |
|
|
(54,913 |
) |
|
|
(61,747 |
) |
Loss on extinguishment of debt |
|
|
(16,693 |
) |
|
|
— |
|
|
|
(38,178 |
) |
|
|
— |
|
Foreign currency gains, net |
|
|
14,765 |
|
|
|
5,251 |
|
|
|
24,029 |
|
|
|
14,048 |
|
Other income (expense), net |
|
|
692 |
|
|
|
73 |
|
|
|
607 |
|
|
|
(1,434 |
) |
Income before income taxes and equity in gains (losses) of unconsolidated joint
ventures |
|
|
24,617 |
|
|
|
33,502 |
|
|
|
93,894 |
|
|
|
115,165 |
|
Provision for income taxes |
|
|
10,625 |
|
|
|
5,663 |
|
|
|
28,494 |
|
|
|
30,004 |
|
Income before equity in gains (losses) of unconsolidated joint ventures |
|
|
13,992 |
|
|
|
27,839 |
|
|
|
65,400 |
|
|
|
85,161 |
|
Equity in gains (losses) of unconsolidated joint ventures, net of tax |
|
|
33 |
|
|
|
665 |
|
|
|
2,775 |
|
|
|
(3,396 |
) |
Net income |
|
$ |
14,025 |
|
|
$ |
28,504 |
|
|
$ |
68,175 |
|
|
$ |
81,765 |
|
Net income per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.23 |
|
|
$ |
0.47 |
|
|
$ |
1.12 |
|
|
$ |
1.36 |
|
Diluted |
|
$ |
0.22 |
|
|
$ |
0.45 |
|
|
$ |
1.06 |
|
|
$ |
1.29 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
61,294 |
|
|
|
60,108 |
|
|
|
60,759 |
|
|
|
59,965 |
|
Diluted |
|
|
65,001 |
|
|
|
63,581 |
|
|
|
64,452 |
|
|
|
63,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES |
|
CONSOLIDATED BALANCE SHEETS |
|
(in thousands, except share
amounts) |
|
|
|
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
144,623 |
|
|
$ |
121,065 |
|
|
Restricted cash |
|
|
4,715 |
|
|
|
5,060 |
|
|
Accounts receivable and unbilled services, net |
|
|
439,053 |
|
|
|
415,077 |
|
|
Prepaid expenses and other current assets |
|
|
35,367 |
|
|
|
30,175 |
|
|
Income taxes receivable |
|
|
979 |
|
|
|
2,399 |
|
|
Total current assets |
|
|
624,737 |
|
|
|
573,776 |
|
|
Fixed assets, net |
|
|
87,577 |
|
|
|
80,691 |
|
|
Goodwill |
|
|
971,980 |
|
|
|
1,014,798 |
|
|
Intangible assets, net |
|
|
473,976 |
|
|
|
533,938 |
|
|
Deferred tax assets |
|
|
6,568 |
|
|
|
3,069 |
|
|
Investment in unconsolidated joint ventures |
|
|
284 |
|
|
|
1,288 |
|
|
Deferred financing fees |
|
|
1,762 |
|
|
|
2,490 |
|
|
Other assets |
|
|
23,507 |
|
|
|
18,693 |
|
|
Total assets |
|
$ |
2,190,391 |
|
|
$ |
2,228,743 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
31,250 |
|
|
$ |
— |
|
|
Accounts payable |
|
|
51,335 |
|
|
|
57,096 |
|
|
Accrued expenses and other current liabilities |
|
|
123,589 |
|
|
|
119,893 |
|
|
Income taxes payable |
|
|
25,524 |
|
|
|
19,262 |
|
|
Advanced billings |
|
|
332,501 |
|
|
|
333,729 |
|
|
Total current liabilities |
|
|
564,199 |
|
|
|
529,980 |
|
|
Deferred tax liabilities |
|
|
73,703 |
|
|
|
81,691 |
|
|
Long-term debt, net |
|
|
797,052 |
|
|
|
889,514 |
|
|
Other long-term liabilities |
|
|
26,185 |
|
|
|
24,836 |
|
|
Total liabilities |
|
|
1,461,139 |
|
|
|
1,526,021 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 100,000,000 shares authorized, 0 shares issued
and outstanding at December 31, 2016 and 2015, respectively |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.01 par value, 1,000,000,000 authorized shares at December 31, 2016
and December 31, 2015; 61,597,705 and 60,245,009 issued and outstanding at December 31, 2016 and December 31, 2015,
respectively |
|
|
616 |
|
|
|
602 |
|
|
Additional paid-in capital |
|
|
879,067 |
|
|
|
828,347 |
|
|
Accumulated other comprehensive loss |
|
|
(224,686 |
) |
|
|
(132,307 |
) |
|
Retained earnings |
|
|
74,255 |
|
|
|
6,080 |
|
|
Total stockholders' equity |
|
|
729,252 |
|
|
|
702,722 |
|
|
Total liabilities and stockholders' equity |
|
$ |
2,190,391 |
|
|
$ |
2,228,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES |
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(in thousands) |
|
|
|
|
|
Years Ended December
31, |
|
|
|
2016 |
|
|
2015 |
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income |
|
$ |
68,175 |
|
|
$ |
81,765 |
|
|
Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
69,506 |
|
|
|
77,952 |
|
|
Amortization of debt issuance costs and discount |
|
|
4,433 |
|
|
|
5,983 |
|
|
Amortization of terminated interest rate swaps |
|
|
4,961 |
|
|
|
731 |
|
|
Stock-based compensation expense |
|
|
7,067 |
|
|
|
5,276 |
|
|
Non-cash transaction related costs |
|
|
42,166 |
|
|
|
— |
|
|
Unrealized foreign currency gains |
|
|
(24,499 |
) |
|
|
(16,464 |
) |
|
Loss on modification or extinguishment of debt |
|
|
38,178 |
|
|
|
— |
|
|
Loss on disposal of fixed assets |
|
|
753 |
|
|
|
652 |
|
|
Change in acquisition-related contingent consideration |
|
|
(527 |
) |
|
|
89 |
|
|
Equity in (gains) losses of unconsolidated joint ventures |
|
|
(2,775 |
) |
|
|
3,396 |
|
|
Unrealized loss on derivatives |
|
|
47 |
|
|
|
1,787 |
|
|
Other reconciling items |
|
|
(652 |
) |
|
|
443 |
|
|
Excess tax benefit from stock-based compensation |
|
|
(846 |
) |
|
|
— |
|
|
Deferred income taxes |
|
|
(10,469 |
) |
|
|
(3,219 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable and unbilled services |
|
|
(31,313 |
) |
|
|
(83,211 |
) |
|
Prepaid expenses and other assets |
|
|
(10,071 |
) |
|
|
(11,675 |
) |
|
Accounts payable and other liabilities |
|
|
(1,474 |
) |
|
|
36,135 |
|
|
Income taxes |
|
|
7,308 |
|
|
|
9,958 |
|
|
Advanced billings |
|
|
79 |
|
|
|
42,830 |
|
|
Net cash provided by operating activities |
|
|
160,047 |
|
|
|
152,428 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchase of fixed assets |
|
|
(33,143 |
) |
|
|
(32,814 |
) |
|
Cash paid for interest on interest rate swap |
|
|
(913 |
) |
|
|
(302 |
) |
|
Cash paid to terminate interest rate swaps |
|
|
— |
|
|
|
(32,907 |
) |
|
Acquisition of Nextrials, Inc., net of cash acquired |
|
|
(4,268 |
) |
|
|
— |
|
|
Acquisition of Value Health Solutions, Inc., net of cash
acquired |
|
|
— |
|
|
|
(543 |
) |
|
Payment of ClinStar, LLC working capital settlement |
|
|
— |
|
|
|
(1,693 |
) |
|
Distributions from unconsolidated joint ventures |
|
|
3,700 |
|
|
|
19,529 |
|
|
Contributions to unconsolidated joint ventures |
|
|
— |
|
|
|
(23,000 |
) |
|
Proceeds from the sale of fixed assets |
|
|
10 |
|
|
|
44 |
|
|
Net cash used in investing activities |
|
|
(34,614 |
) |
|
|
(71,686 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
625,000 |
|
|
|
— |
|
|
Proceeds from accounts receivable financing agreement |
|
|
120,000 |
|
|
|
— |
|
|
Repayment of long-term debt |
|
|
(822,559 |
) |
|
|
(40,000 |
) |
|
Borrowings on line of credit |
|
|
110,000 |
|
|
|
90,000 |
|
|
Repayments of line of credit |
|
|
(110,000 |
) |
|
|
(90,000 |
) |
|
Payment of debt prepayment and debt extinguishment costs |
|
|
(17,824 |
) |
|
|
— |
|
|
Payment for debt issuance costs |
|
|
(7,713 |
) |
|
|
— |
|
|
Payment of common stock issuance costs |
|
|
— |
|
|
|
(525 |
) |
|
Excess tax benefit from stock-based compensation |
|
|
846 |
|
|
|
— |
|
|
Proceeds from stock option exercises |
|
|
655 |
|
|
|
81 |
|
|
Payment of acquisition-related contingent consideration |
|
|
— |
|
|
|
(2,000 |
) |
|
Net cash used in financing activities |
|
|
(101,595 |
) |
|
|
(42,444 |
) |
|
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash
|
|
|
(625 |
) |
|
|
(3,702 |
) |
|
Change in cash, cash equivalents, and restricted cash |
|
|
23,213 |
|
|
|
34,596 |
|
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
126,125 |
|
|
|
91,529 |
|
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
149,338 |
|
|
$ |
126,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES |
|
RECONCILIATION OF NON-GAAP
MEASURES |
|
(in thousands, except per share
amounts) |
|
(unaudited) |
|
|
|
|
|
Three Months Ended
December 31, |
|
Year Ended
December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
Net income |
|
$ |
14,025 |
|
|
$ |
28,504 |
|
|
$ |
68,175 |
|
|
$ |
81,765 |
|
|
Depreciation and amortization |
|
|
17,260 |
|
|
|
19,735 |
|
|
|
69,506 |
|
|
|
77,952 |
|
|
Interest expense, net |
|
|
12,388 |
|
|
|
15,683 |
|
|
|
54,913 |
|
|
|
61,747 |
|
|
Provision for income taxes |
|
|
10,625 |
|
|
|
5,663 |
|
|
|
28,494 |
|
|
|
30,004 |
|
|
EBITDA |
|
|
54,298 |
|
|
|
69,585 |
|
|
|
221,088 |
|
|
|
251,468 |
|
|
Stock-based compensation expense (a) |
|
|
2,127 |
|
|
|
1,642 |
|
|
|
7,067 |
|
|
|
5,276 |
|
|
Loss on disposal of fixed assets, net (b) |
|
|
463 |
|
|
|
201 |
|
|
|
753 |
|
|
|
652 |
|
|
Loss on extinguishment of debt (c) |
|
|
16,693 |
|
|
|
— |
|
|
|
38,178 |
|
|
|
— |
|
|
Foreign currency gains, net (d) |
|
|
(14,765 |
) |
|
|
(5,251 |
) |
|
|
(24,029 |
) |
|
|
(14,048 |
) |
|
Other non-operating (income) expense, net (e) |
|
|
(692 |
) |
|
|
(73 |
) |
|
|
(607 |
) |
|
|
1,434 |
|
|
Equity in (gains) losses of unconsolidated joint ventures, net of tax |
|
|
(33 |
) |
|
|
(665 |
) |
|
|
(2,775 |
) |
|
|
3,396 |
|
|
Foreign research and development credits (f) |
|
|
(197 |
) |
|
|
150 |
|
|
|
(197 |
) |
|
|
(8,346 |
) |
|
Transaction-related costs (g) |
|
|
13,049 |
|
|
|
— |
|
|
|
44,834 |
|
|
|
— |
|
|
Acquisition-related costs (h) |
|
|
2,192 |
|
|
|
49 |
|
|
|
2,434 |
|
|
|
233 |
|
|
Lease termination expense (i) |
|
|
33 |
|
|
|
354 |
|
|
|
(415 |
) |
|
|
3,270 |
|
|
Severance and restructuring charges (j) |
|
|
— |
|
|
|
(220 |
) |
|
|
33 |
|
|
|
1,569 |
|
|
Non-cash rent adjustment (k) |
|
|
746 |
|
|
|
1,419 |
|
|
|
2,923 |
|
|
|
4,273 |
|
|
Other charges (l) |
|
|
— |
|
|
|
743 |
|
|
|
— |
|
|
|
2,416 |
|
|
Adjusted EBITDA |
|
$ |
73,914 |
|
|
$ |
67,934 |
|
|
$ |
289,287 |
|
|
$ |
251,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
14,025 |
|
|
|
28,504 |
|
|
|
68,175 |
|
|
|
81,765 |
|
|
Amortization of intangible assets |
|
|
11,113 |
|
|
|
14,179 |
|
|
|
45,368 |
|
|
|
56,751 |
|
|
Amortization of deferred financing costs |
|
|
919 |
|
|
|
1,161 |
|
|
|
4,433 |
|
|
|
5,983 |
|
|
Amortization of terminated interest rate swaps |
|
|
1,627 |
|
|
|
731 |
|
|
|
4,961 |
|
|
|
731 |
|
|
Stock-based compensation expense (a) |
|
|
2,127 |
|
|
|
1,642 |
|
|
|
7,067 |
|
|
|
5,276 |
|
|
Loss on disposal of fixed assets, net (b) |
|
|
463 |
|
|
|
201 |
|
|
|
753 |
|
|
|
652 |
|
|
Loss on extinguishment of debt (c) |
|
|
16,693 |
|
|
|
— |
|
|
|
38,178 |
|
|
|
— |
|
|
Foreign currency gains, net (d) |
|
|
(14,765 |
) |
|
|
(5,251 |
) |
|
|
(24,029 |
) |
|
|
(14,048 |
) |
|
Other non-operating (income) expense, net (e) |
|
|
(692 |
) |
|
|
(73 |
) |
|
|
(607 |
) |
|
|
1,434 |
|
|
Equity in (gains) losses of unconsolidated joint ventures, net of tax |
|
|
(33 |
) |
|
|
(665 |
) |
|
|
(2,775 |
) |
|
|
3,396 |
|
|
Foreign research and development credits (f) |
|
|
(197 |
) |
|
|
150 |
|
|
|
(197 |
) |
|
|
(8,346 |
) |
|
Transaction-related costs (g) |
|
|
13,049 |
|
|
|
— |
|
|
|
44,834 |
|
|
|
— |
|
|
Acquisition-related costs (h) |
|
|
2,192 |
|
|
|
49 |
|
|
|
2,434 |
|
|
|
233 |
|
|
Lease termination expense (i) |
|
|
33 |
|
|
|
354 |
|
|
|
(415 |
) |
|
|
3,270 |
|
|
Severance and restructuring charges (j) |
|
|
— |
|
|
|
(220 |
) |
|
|
33 |
|
|
|
1,569 |
|
|
Non-cash rent adjustment (k) |
|
|
746 |
|
|
|
1,419 |
|
|
|
2,923 |
|
|
|
4,273 |
|
|
Other charges (l) |
|
|
— |
|
|
|
743 |
|
|
|
— |
|
|
|
2,416 |
|
|
Total adjustments |
|
|
33,275 |
|
|
|
14,420 |
|
|
|
122,961 |
|
|
|
63,590 |
|
|
Tax effect of total adjustments (m) |
|
|
(1,420 |
) |
|
|
(5,406 |
) |
|
|
(28,829 |
) |
|
|
(19,097 |
) |
|
Adjusted net income |
|
$ |
45,880 |
|
|
$ |
37,518 |
|
|
$ |
162,307 |
|
|
$ |
126,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding |
|
|
65,001 |
|
|
|
63,581 |
|
|
|
64,452 |
|
|
|
63,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per diluted share |
|
$ |
0.71 |
|
|
$ |
0.59 |
|
|
$ |
2.52 |
|
|
$ |
2.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES |
|
RECONCILIATION OF GAAP TO NON-GAAP
GUIDANCE |
|
(in millions, except per share
amounts) |
|
(unaudited) |
|
|
|
|
|
FY 2017 |
|
|
|
Adjusted net
income |
|
Adjusted Diluted
Earnings Per Share |
|
|
|
Low |
|
High |
|
Low |
|
High |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income and net income per diluted share |
|
$ |
162.0 |
|
|
$ |
168.0 |
|
|
$ |
2.46 |
|
|
$ |
2.56 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
36.0 |
|
|
|
36.0 |
|
|
|
0.55 |
|
|
|
0.55 |
|
|
Amortization of deferred financing costs |
|
|
2.0 |
|
|
|
2.0 |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
Amortization of terminated interest rate swaps |
|
|
6.0 |
|
|
|
6.0 |
|
|
|
0.09 |
|
|
|
0.09 |
|
|
Stock-based compensation expense (a) |
|
|
8.0 |
|
|
|
8.0 |
|
|
|
0.12 |
|
|
|
0.12 |
|
|
Non-cash rent adjustment (k) |
|
|
4.0 |
|
|
|
4.0 |
|
|
|
0.06 |
|
|
|
0.06 |
|
|
Total adjustments |
|
|
56.0 |
|
|
|
56.0 |
|
|
|
0.85 |
|
|
|
0.85 |
|
|
Tax effect of total adjustments (m) |
|
|
(15.0 |
) |
|
|
(15.0 |
) |
|
|
(0.23 |
) |
|
|
(0.23 |
) |
|
Adjusted net income and adjusted net income per diluted share
|
|
$ |
203.0 |
|
|
$ |
209.0 |
|
|
$ |
3.08 |
|
|
$ |
3.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2017 |
|
|
Adjusted net
income |
|
Adjusted Diluted
Earnings Per Share |
|
|
Low |
|
High |
|
Low |
|
High |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income and net income per diluted share |
|
$ |
27.0 |
|
|
$ |
30.0 |
|
|
$ |
0.41 |
|
|
$ |
0.46 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
9.0 |
|
|
|
9.0 |
|
|
|
0.14 |
|
|
|
0.14 |
|
Amortization of deferred financing costs |
|
|
0.5 |
|
|
|
0.5 |
|
|
|
0.01 |
|
|
|
0.01 |
|
Amortization of terminated interest rate swaps |
|
|
1.5 |
|
|
|
1.5 |
|
|
|
0.02 |
|
|
|
0.02 |
|
Stock-based compensation expense (a) |
|
|
2.0 |
|
|
|
2.0 |
|
|
|
0.03 |
|
|
|
0.03 |
|
Non-cash rent adjustment (k) |
|
|
1.0 |
|
|
|
1.0 |
|
|
|
0.02 |
|
|
|
0.02 |
|
Total adjustments |
|
|
14.0 |
|
|
|
14.0 |
|
|
|
0.22 |
|
|
|
0.22 |
|
Tax effect of total adjustments (m) |
|
|
(4.0 |
) |
|
|
(4.0 |
) |
|
|
(0.06 |
) |
|
|
(0.06 |
) |
Adjusted net income and adjusted net income per diluted share
|
|
$ |
37.0 |
|
|
$ |
40.0 |
|
|
$ |
0.57 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Stock-based compensation expense represents the amount of recurring non-cash expense related to the Company’s equity
compensation programs, excluding transaction-related stock-based compensation discussed in footnote (g).
(b) Loss on disposal of fixed assets represents the costs incurred in connection with the sale or disposition of fixed assets,
primarily IT equipment and furniture and fixtures. We exclude these losses from Adjusted EBITDA and Adjusted Net Income because
they result from investing decisions rather than from decisions made related to our ongoing operations.
(c) Loss on extinguishment of debt relates to costs incurred in connection with changes to our long-term debt. We exclude these
losses from Adjusted EBITDA and Adjusted Net Income because they result from financing decisions rather than from decisions made
related to our ongoing operations.
(d) Foreign currency (gains) losses, net primarily relates to gains or losses that arise in connection with the revaluation of
short-term inter-company balances between our domestic and international subsidiaries. In addition, this amount includes gains or
losses from foreign currency transactions, such as those resulting from the settlement of third-party accounts receivable and
payables denominated in a currency other than the local currency of the entity making the payment. We exclude these gains and
losses from Adjusted EBITDA and Adjusted Net Income because they result from financing decisions rather than from decisions made
related to our ongoing operations and because fluctuations from period- to- period do not necessarily correspond to changes in our
operating results.
(e) Other non-operating (income) expense, net represents income and expense that are non-operating and whose fluctuations from
period- to -period do not necessarily correspond to changes in our operating results.
(f) The foreign research and development credits are the result of a comprehensive analysis we have been performing across the
organization to determine whether expenditures incurred qualify as research and development as defined by the respective
jurisdiction. The amounts recorded in this line item represent amounts recorded in the current period that related to a prior
period.
(g) Transaction-related costs primarily relate to costs incurred in connection with the March, May and November 2016 secondary
offerings and receivables financing agreement. These costs include $32.0 million of non-cash stock-based compensation expense
related to the vesting and release of the transfer restrictions of certain performance-based stock options and $10.1 million of
stock-based compensation expense associated with the release of the transfer restrictions on a portion of service-based vested
options in connection with the announcement of our March, May and November 2016 secondary offerings. In addition, we incurred $2.7
million of third-party fees associated with the secondary offerings and the closing of our accounts receivable financing agreement.
(h) Acquisition-related costs primarily relate to costs incurred in connection with purchase of the assets of Value Health
Solutions, Inc., the acquisition of Nextrials, Inc., and the integration cost for the Takeda joint venture, as well as costs
related to other potential acquisitions to enhance our strategic objectives.
(i) Lease termination expenses represent charges incurred in connection with the termination of leases at locations that are no
longer being used by the Company.
(j) Severance and restructuring charges represent amounts incurred in connection with the elimination of redundant positions within
the organization, including positions eliminated in connection with the KKR Transaction and the acquisitions of ClinStar, RPS and
CRI Lifetree.
(k) We have escalating leases that require the amortization of rent expense on a straight-line basis over the life of the lease.
The non-cash rent adjustment represents the difference between rent expense recorded in the consolidated statement of operations
and the amount of cash actually paid.
(l) Represents charges incurred that are not considered part of our core operating results.
(m) Represents the tax effect of the total adjustments at our estimated effective tax rate.
Contacts: Helen O’Donnell Solebury Communications Group Managing Director 203.726.1372 InvestorRelations@PRAHS.com or hodonnell@soleburyir.com Christine Rogers PRA Health Sciences, Inc. Director, Public Relations 919.786.8463 rogerschristine@prahs.com
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