PRA Health Sciences, Inc. (“PRA” or the “Company”) (NASDAQ:PRAH)
today reported financial results for the quarter ended March 31,
2017.
For the three months ended March 31, 2017, service revenue was
$427.1 million, which represents growth of 14.7%, or $54.8 million,
compared to the first quarter of 2016 at actual foreign exchange
rates. On a constant currency basis, service revenue grew $56.2
million, an increase of 15.1% compared to the first quarter of
2016.
Net new business for the quarter ended March 31, 2017 was $564.8
million, representing a net book-to-bill ratio of 1.32 for the
period. This net new business contributed to an ending backlog of
$3.1 billion at March 31, 2017.
“2017 is off to a solid start, and I am pleased with our first
quarter financial results, which demonstrate a continuation of our
momentum from 2016,” said Colin Shannon, PRA’s Chief Executive
Officer. “We continue to execute consistently across our business,
as evidenced by our double-digit revenue growth and a very strong
book-to-bill ratio. We continue to stay focused on our key
strategic objectives and our client deliverables, and we look
forward to continuing to deliver strong results for the remainder
of 2017.”
Direct costs were $287.5 million during the three months ended
March 31, 2017 compared to $243.5 million for the first quarter of
2016. Direct costs were 67.3% of service revenue during the first
quarter of 2017 compared to 65.4% of service revenue during the
first quarter of 2016. The increase in direct costs as a percentage
of service revenue is due to an increase in salaries and related
benefits as we continue to hire billable staff to support our
current projects and hire additional staff to ensure appropriate
staffing levels for our future growth.
Selling, general and administrative expenses were $74.3 million
during the three months ended March 31, 2017 compared to $64.0
million for the first quarter of 2016. Selling, general and
administrative costs were 17.4% of service revenue during the first
quarter of 2017 compared to 17.2% of service revenue during the
first quarter of 2016. The slight increase in selling, general and
administrative expenses as a percentage of revenue is primarily
attributable to increased facility costs as the Company continues
to grow.
For the three months ended March 31, 2016, we incurred
transaction-related expenses of $28.9 million. The costs consist of
$26.8 million of 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
March 2016 secondary offering. In addition, we incurred $2.1
million of third-party fees associated with the secondary offering
and the closing of our accounts receivable financing agreement.
There were no transaction-related expenses during the three months
ended March 31, 2017.
For the three months ended March 31, 2016, we also incurred a
loss on extinguishment of debt of $21.5 million. This loss is
associated with our cash tender offer on our 9.5% senior notes due
2023, which included $17.4 million of early tender premium, the
write-off of $3.7 million of unamortized debt issuance costs and
$0.4 million of other costs associated with the transaction. There
was no loss of extinguishment of debt during the three months ended
March 31, 2017.
GAAP net income was $25.2 million for the three months ended
March 31, 2017, or $0.39 per share on a diluted basis, compared to
GAAP net loss of $16.0 million for the three months ended March 31,
2016, or $0.27 per share on a diluted basis. Our GAAP net loss for
the three months ended March 31, 2016 included transaction-related
expenses and the loss on extinguishment of debt discussed
above.
EBITDA was $57.8 million for the three months ended March 31,
2017, representing an increase of 421.6% compared to the first
quarter of 2016. Adjusted EBITDA was $69.3 million for the three
months ended March 31, 2017, representing growth of 2.9% compared
to the first quarter of 2016.
Adjusted Net Income was $40.4 million for the three months ended
March 31, 2017, representing 15.9% growth compared to the first
quarter of 2016. Adjusted Net Income per diluted share was $0.62
for the three months ended March 31, 2017, representing 12.7%
growth compared to the first quarter of 2016.
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.
Guidance
The Company is reaffirming its full year 2017 service revenue
guidance of 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, Adjusted Net Income per diluted
share between $3.08 and $3.18, and an annual effective income tax
rate estimated 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 April 26,
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 10245299. The conference call
will also be accessible, live via audio broadcast, on the Investor
Relations section of the PRA website at investors.prahs.com. A
replay of the conference call will be available online at
investors.prahs.com. 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 10245299.
Additional Information
A financial supplement of first quarter 2017 results, which
should be read in conjunction with this press release, may be found
on the home page of the Investors portion of the Company’s website
in a document titled “Q1 2017 Earnings.”
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 more than 70 offices across North America,
Europe, Asia, Latin America, South Africa, Australia and the Middle
East and over 13,300 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 23, 2017. 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
(gains), other non-operating 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 adjustment 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
SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS (in thousands, except per share
amounts)(unaudited) |
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|
2017 |
|
|
2016 |
|
|
Revenue: |
|
|
|
|
|
|
|
Service
revenue |
|
$ |
427,080 |
|
|
$ |
372,320 |
|
|
Reimbursement revenue |
|
|
60,680 |
|
|
|
57,903 |
|
|
Total
revenue |
|
|
487,760 |
|
|
|
430,223 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Direct
costs |
|
|
287,512 |
|
|
|
243,487 |
|
|
Reimbursable out-of-pocket costs |
|
|
60,680 |
|
|
|
57,903 |
|
|
Selling,
general and administrative |
|
|
74,268 |
|
|
|
63,990 |
|
|
Transaction-related costs |
|
|
— |
|
|
|
28,916 |
|
|
Depreciation and amortization |
|
|
15,192 |
|
|
|
16,953 |
|
|
Loss on
disposal of fixed assets, net |
|
|
82 |
|
|
|
28 |
|
|
Income
from operations |
|
|
50,026 |
|
|
|
18,946 |
|
|
Interest expense,
net |
|
|
(9,527 |
) |
|
|
(15,366 |
) |
|
Loss on extinguishment
of debt |
|
|
— |
|
|
|
(21,485 |
) |
|
Foreign currency
losses, net |
|
|
(7,254 |
) |
|
|
(2,790 |
) |
|
Other expense, net |
|
|
(180 |
) |
|
|
— |
|
|
Income (loss) before
income taxes and equity in income (loss) of unconsolidated joint
ventures |
|
|
33,065 |
|
|
|
(20,695 |
) |
|
Provision for (benefit
from) income taxes |
|
|
7,883 |
|
|
|
(5,264 |
) |
|
Income (loss) before
equity in income (loss) of unconsolidated joint ventures |
|
|
25,182 |
|
|
|
(15,431 |
) |
|
Equity in income (loss)
of unconsolidated joint ventures, net of tax |
|
|
42 |
|
|
|
(538 |
) |
|
Net income (loss) |
|
$ |
25,224 |
|
|
$ |
(15,969 |
) |
|
Net income (loss) per
share attributable to common stockholders: |
|
|
|
|
|
|
|
Basic |
|
$ |
0.41 |
|
|
$ |
(0.27 |
) |
|
Diluted |
|
$ |
0.39 |
|
|
$ |
(0.27 |
) |
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
61,578 |
|
|
|
60,199 |
|
|
Diluted |
|
|
65,439 |
|
|
|
60,199 |
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIESCONSOLIDATED CONDENSED BALANCE
SHEETS(in thousands, except share
amounts)(unaudited) |
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
123,465 |
|
|
$ |
144,623 |
|
|
Restricted cash |
|
|
1,608 |
|
|
|
4,715 |
|
|
Accounts
receivable and unbilled services, net |
|
|
497,128 |
|
|
|
439,053 |
|
|
Other
current assets |
|
|
40,831 |
|
|
|
36,346 |
|
|
Total
current assets |
|
|
663,032 |
|
|
|
624,737 |
|
|
Fixed assets, net |
|
|
88,894 |
|
|
|
87,577 |
|
|
Goodwill |
|
|
976,907 |
|
|
|
971,980 |
|
|
Intangible assets,
net |
|
|
467,853 |
|
|
|
473,976 |
|
|
Other assets |
|
|
32,581 |
|
|
|
32,121 |
|
|
Total
assets |
|
$ |
2,229,267 |
|
|
$ |
2,190,391 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Current
portion of long-term debt |
|
$ |
35,156 |
|
|
$ |
31,250 |
|
|
Accounts
payable |
|
|
53,388 |
|
|
|
51,335 |
|
|
Accrued
expenses and other current liabilities |
|
|
156,930 |
|
|
|
149,113 |
|
|
Advanced
billings |
|
|
326,830 |
|
|
|
332,501 |
|
|
Total
current liabilities |
|
|
572,304 |
|
|
|
564,199 |
|
|
Long-term debt,
net |
|
|
785,726 |
|
|
|
797,052 |
|
|
Other long-term
liabilities |
|
|
96,454 |
|
|
|
99,888 |
|
|
Total
liabilities |
|
|
1,454,484 |
|
|
|
1,461,139 |
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders'
equity: |
|
|
|
|
|
|
|
Preferred stock, $0.01
par value, 100,000,000 shares authorized; 0 shares issued and
outstanding at March 31, 2017 and December 31, 2016,
respectively |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.01 par
value, 1,000,000,000 authorized shares at March 31, 2017 and
December 31, 2016; 62,253,243 and 61,597,705 issued and outstanding
at March 31, 2017 and December 31, 2016, respectively |
|
|
623 |
|
|
|
616 |
|
|
Additional paid-in
capital |
|
|
882,039 |
|
|
|
879,067 |
|
|
Accumulated other
comprehensive loss |
|
|
(207,358 |
) |
|
|
(224,686 |
) |
|
Retained earnings |
|
|
99,479 |
|
|
|
74,255 |
|
|
Total
stockholders' equity |
|
|
774,783 |
|
|
|
729,252 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
2,229,267 |
|
|
$ |
2,190,391 |
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS(in
thousands)(unaudited) |
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|
2017 |
|
|
2016 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
25,224 |
|
|
$ |
(15,969 |
) |
|
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
15,192 |
|
|
|
16,953 |
|
|
Amortization of debt issuance costs and discount |
|
|
482 |
|
|
|
1,195 |
|
|
Amortization of terminated interest rate swaps |
|
|
1,528 |
|
|
|
899 |
|
|
Stock-based compensation |
|
|
1,930 |
|
|
|
1,504 |
|
|
Non-cash
transaction-related costs |
|
|
— |
|
|
|
26,827 |
|
|
Unrealized foreign currency losses |
|
|
6,067 |
|
|
|
3,888 |
|
|
Loss on
extinguishment of debt |
|
|
— |
|
|
|
21,485 |
|
|
Deferred
income taxes |
|
|
(3,614 |
) |
|
|
(13,820 |
) |
|
Other
reconciling items |
|
|
562 |
|
|
|
567 |
|
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts
receivable, unbilled services, and advanced billings |
|
|
(63,659 |
) |
|
|
(17,384 |
) |
|
Other
operating assets and liabilities |
|
|
5,492 |
|
|
|
(5,746 |
) |
|
Net cash
(used in) provided by operating activities |
|
|
(10,796 |
) |
|
|
20,399 |
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchase
of fixed assets |
|
|
(7,972 |
) |
|
|
(8,138 |
) |
|
Cash paid
for interest on interest rate swap |
|
|
(341 |
) |
|
|
(302 |
) |
|
Proceeds
from the sale of fixed assets |
|
|
24 |
|
|
|
— |
|
|
Acquisition of Nextrials, Inc., net of cash acquired |
|
|
— |
|
|
|
(4,147 |
) |
|
Net cash
used in investing activities |
|
|
(8,289 |
) |
|
|
(12,587 |
) |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Proceeds
from accounts receivable financing agreement |
|
|
— |
|
|
|
120,000 |
|
|
Repayment
of long-term debt |
|
|
(7,813 |
) |
|
|
(133,559 |
) |
|
Borrowings on line of credit |
|
|
— |
|
|
|
110,000 |
|
|
Repayments on line of credit |
|
|
— |
|
|
|
(110,000 |
) |
|
Payment
of debt prepayment and debt extinguishment costs |
|
|
— |
|
|
|
(17,824 |
) |
|
Proceeds
from stock option exercises |
|
|
1,049 |
|
|
|
40 |
|
|
Net cash
used in financing activities |
|
|
(6,764 |
) |
|
|
(31,343 |
) |
|
Effects of foreign
exchange changes on cash, cash equivalents, and restricted
cash |
|
|
1,584 |
|
|
|
482 |
|
|
Change in cash, cash
equivalents, and restricted cash |
|
|
(24,265 |
) |
|
|
(23,049 |
) |
|
Cash, cash equivalents,
and restricted cash, beginning of period |
|
|
149,338 |
|
|
|
126,125 |
|
|
Cash, cash equivalents,
and restricted cash, end of period |
|
$ |
125,073 |
|
|
$ |
103,076 |
|
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP
MEASURES(in thousands, except per share
amounts)(unaudited) |
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|
2017 |
|
|
2016 |
|
|
Net income
(loss) |
|
$ |
25,224 |
|
|
$ |
(15,969 |
) |
|
Depreciation and
amortization |
|
|
15,192 |
|
|
|
16,953 |
|
|
Interest expense,
net |
|
|
9,527 |
|
|
|
15,366 |
|
|
Provision for (benefit
from) income taxes |
|
|
7,883 |
|
|
|
(5,264 |
) |
|
EBITDA |
|
|
57,826 |
|
|
|
11,086 |
|
|
Stock-based
compensation expense (a) |
|
|
1,930 |
|
|
|
1,504 |
|
|
Loss on disposal of
fixed assets, net (b) |
|
|
82 |
|
|
|
28 |
|
|
Loss on extinguishment
of debt (c) |
|
|
— |
|
|
|
21,485 |
|
|
Foreign currency
losses, net (d) |
|
|
7,254 |
|
|
|
2,790 |
|
|
Other non-operating
expense, net (e) |
|
|
180 |
|
|
|
— |
|
|
Equity in (income) loss
of unconsolidated joint ventures, net of tax |
|
|
(42 |
) |
|
|
538 |
|
|
Transaction-related
costs (f) |
|
|
— |
|
|
|
28,916 |
|
|
Acquisition-related
costs (g) |
|
|
1,380 |
|
|
|
— |
|
|
Lease termination
expense (h) |
|
|
26 |
|
|
|
25 |
|
|
Non-cash rent
adjustment (i) |
|
|
650 |
|
|
|
987 |
|
|
Adjusted
EBITDA |
|
$ |
69,286 |
|
|
$ |
67,359 |
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
|
25,224 |
|
|
|
(15,969 |
) |
|
Amortization of
intangible assets |
|
|
8,825 |
|
|
|
11,320 |
|
|
Amortization of
deferred financing costs |
|
|
482 |
|
|
|
1,195 |
|
|
Amortization of
terminated interest rate swaps |
|
|
1,528 |
|
|
|
899 |
|
|
Stock-based
compensation expense (a) |
|
|
1,930 |
|
|
|
1,504 |
|
|
Loss on disposal of
fixed assets, net (b) |
|
|
82 |
|
|
|
28 |
|
|
Loss on extinguishment
of debt (c) |
|
|
— |
|
|
|
21,485 |
|
|
Foreign currency
losses, net (d) |
|
|
7,254 |
|
|
|
2,790 |
|
|
Other non-operating
expense, net (e) |
|
|
180 |
|
|
|
— |
|
|
Equity in (income) loss
of unconsolidated joint ventures, net of tax |
|
|
(42 |
) |
|
|
538 |
|
|
Transaction-related
costs (f) |
|
|
— |
|
|
|
28,916 |
|
|
Acquisition-related
costs (g) |
|
|
1,380 |
|
|
|
— |
|
|
Lease termination
expense (h) |
|
|
26 |
|
|
|
25 |
|
|
Non-cash rent
adjustment (i) |
|
|
650 |
|
|
|
987 |
|
|
Total adjustments |
|
|
22,295 |
|
|
|
69,687 |
|
|
Tax effect of total
adjustments (j) |
|
|
(7,075 |
) |
|
|
(18,831 |
) |
|
Adjusted net
income |
|
$ |
40,444 |
|
|
$ |
34,887 |
|
|
|
|
|
|
|
|
|
|
Shares used in
computing GAAP net income (loss) per diluted
share |
|
|
65,439 |
|
|
|
60,199 |
|
|
Effect of
certain securities considered anti-dilutive under GAAP (k) |
|
|
— |
|
|
|
3,669 |
|
|
Shares used in
computing adjusted net income per diluted share |
|
|
65,439 |
|
|
|
63,868 |
|
|
|
|
|
|
|
|
|
|
Adjusted net income per
diluted share |
|
$ |
0.62 |
|
|
$ |
0.55 |
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIESRECONCILIATION 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 (i) |
|
|
4.0 |
|
|
|
4.0 |
|
|
|
0.06 |
|
|
|
0.06 |
|
Total
adjustments |
|
|
56.0 |
|
|
|
56.0 |
|
|
|
0.85 |
|
|
|
0.85 |
|
Tax
effect of total adjustments (j) |
|
|
(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 |
|
(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) Transaction-related costs primarily relate to costs incurred
in connection with the March 2016 secondary offering and
receivables financing agreement. These costs include $26.8 million
of one-time non-cash stock-based compensation expense primarily
related to the accelerated vesting of certain performance-based
stock options in connection with the announcement of our secondary
offering. In addition, we incurred $2.1 million of
third-party fees associated with the secondary offering and the
closing of our accounts receivable financing agreement.
(g) Acquisition-related costs primarily relate to costs incurred
in connection with the integration cost for the Takeda joint
venture, as well as costs related to other potential acquisitions
to enhance our strategic objectives.
(h) Lease termination expenses represent charges incurred in
connection with the termination of leases at locations that are no
longer being used by the Company.
(i) 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.
(j) Represents the tax effect of the total adjustments at our
estimated effective tax rate.
(k) Adjustment represents the weighted average number of
equity-based awards issued under the Company’s equity incentive
plans calculated using the treasury stock method that were excluded
from shares used in computing GAAP diluted net loss per share due
to reporting a net loss under GAAP for the period.
Contacts:
Helen O’Donnell
Solebury Communications Group
Managing Director
203.428.3213
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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