PRA Health Sciences, Inc. (“PRA,” "we," "us" or the “Company”)
(NASDAQ: PRAH) today reported financial results for the quarter
ended September 30, 2020.
"I am very appreciative of the effort and focus of all of our
employees despite the difficult health circumstances in the world
today. As a result of this commitment, I am very pleased to report
revenue and earnings that were significantly better than the
guidance we provided in August and an increase to our 2020
guidance. I am also happy to report another quarter of record level
gross and net new business awards," said Colin Shannon, PRA's
President and Chief Executive Officer. "Although we continue to
experience challenges with the pandemic, we believe we will finish
2020 strong and are well-positioned for 2021."
Net new business for our Clinical Research segment for the three
months ended September 30, 2020 excluding reimbursement revenue was
$737.9 million, representing a net book-to-bill ratio of 1.28 for
the period. Net new business for our Clinical Research segment for
the three months ended September 30, 2020 including reimbursement
revenue was $986.0 million, representing a net book-to-bill of 1.35
for the period. Consistent with the prior quarters, we did not
experience any material COVID-19 related cancellations during the
third quarter. Net new business, excluding reimbursement revenue,
contributed to an ending backlog at September 30, 2020 of
$5.1 billion, an increase of 11.0% year over year and 3.7%
sequentially.
For the three months ended September 30, 2020, revenue was
$796.3 million, which represents an increase of 2.0%, or $15.6
million, compared to the three months ended September 30, 2019 at
actual foreign exchange rates. On a constant currency basis,
revenue increased $10.3 million, an increase of 1.3% compared to
the third quarter of 2019. By segment, the Clinical Research
segment generated revenues of $732.1 million, while the Data
Solutions segment generated revenues of $64.2 million. The
increase in revenue for the quarter was attributable to increased
billable hours offset by a decrease in the reimbursable portion of
revenue, which was impacted by the continued disruption from the
COVID-19 pandemic.
Direct costs, exclusive of depreciation and amortization, were
$412.1 million during the three months ended September 30, 2020
compared to $389.3 million for the three months ended September 30,
2019 at actual foreign exchange rates. On a constant currency
basis, direct costs increased $21.4 million compared to the third
quarter of 2019. The increase in direct costs continues to be
driven by increased labor costs in our Clinical Research segment
and increased data costs in our Data Solutions segment. Direct
costs were 51.7% of revenue during the third quarter of 2020
compared to 49.9% of revenue during the third quarter of 2019.
Selling, general and administrative expenses were $115.4 million
during the three months ended September 30, 2020 compared to $95.5
million for the three months ended September 30, 2019. Selling,
general and administrative costs were 14.5% of revenue during the
third quarter of 2020 compared to 12.2% of revenue during the third
quarter of 2019.
GAAP net income was $91.3 million for the three months ended
September 30, 2020, or $1.41 per share on a diluted basis, compared
to GAAP net income of $83.0 million for the three months ended
September 30, 2019, or $1.25 per share on a diluted basis.
EBITDA was $148.3 million for the three months ended September
30, 2020, representing an increase of 15.3% compared to the three
months ended September 30, 2019. Adjusted EBITDA was $132.3 million
for the three months ended September 30, 2020, representing a
decrease of 4.0% compared to the three months ended September 30,
2019.
Adjusted net income was $84.1 million for the three months ended
September 30, 2020, representing a decrease of 3.6% compared to the
three months ended September 30, 2019. Adjusted net income per
diluted share was $1.30 for the three months ended September 30,
2020, representing a decrease of 1.5% compared to the three months
ended September 30, 2019.
Nine Months Ended September 30, 2020 Financial
Highlights
For the nine months ended September 30, 2020, revenue was
$2,309.9 million, which represents an increase of 1.9%, or $43.9
million, compared to the nine months ended September 30, 2019 at
actual foreign exchange rates. On a constant currency basis,
revenue increased $48.5 million, representing an increase of 2.1%
compared to the nine months ended September 30, 2019.
Reported GAAP income from operations was $231.0 million,
reported GAAP net income was $145.8 million and reported GAAP net
income per diluted share was $2.26 for the nine months ended
September 30, 2020.
Adjusted Net Income was $206.7 million for the nine months ended
September 30, 2020, a decrease of 14.7% compared to the same period
in 2019. Adjusted Net Income per diluted share was $3.20 for the
nine months ended September 30, 2020, down 12.1% compared to the
same period in 2019.
Guidance
The full extent of the COVID-19 pandemic and its impact on our
fourth quarter operations continues to remain uncertain.
Specifically, the duration of the pandemic, the geographic location
of specific outbreaks, and the length and scope of travel
restrictions and business closures imposed by the governments of
impacted countries could impact our financial results in the fourth
quarter of 2020. These uncertainties could impact the assumptions
used in the Company’s 2020 guidance if they result in business
interruptions, such as the closure of our Phase I clinics, a
slowdown in recruitment activities, or limited access to sites
worldwide. However, the Company has used its best efforts to
estimate the impact of COVID-19 on its business and the resulting
impact on financial performance for the remainder of the year.
For full year 2020, the Company expects to achieve total
revenues between $3.120 billion and $3.150 billion, GAAP net income
per diluted share between $3.23 and $3.35 and adjusted net income
per diluted share between $4.61 and $4.71, with an expected
effective income tax rate of 23%.
Our actual effective tax rate may differ from our estimate due
to, among other things, changes in the geographic allocation of our
pre-tax income as well as changes in interpretations, analysis, and
additional guidance that may be issued by regulatory agencies.
Our guidance assumes a EURO rate of 1.15 and a GBP rate of 1.30.
All other foreign currency exchange rates are as of September 30,
2020.
A reconciliation of our non-GAAP measures, EBITDA, adjusted
EBITDA, adjusted net income, adjusted net income per diluted share
and our full year guidance to the corresponding GAAP measures is
included in this press release.
Conference Call Details
PRA will host a conference call at 9:00 a.m. ET on
November 5, 2020, 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 6797898. The conference
call will also be accessible, live via audio broadcast, on the
Investor Relations section of the PRA website at
investor.prahs.com. A replay of the conference call will be
available online at investor.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 6797898.
Additional Information
A financial supplement with third quarter 2020 results,
which should be read in conjunction with this press release, may be
found in the Investor Relations section of our website at
investor.prahs.com in a document titled “Q3 2020 Earnings
Presentation.”
About PRA Health Sciences
PRA (NASDAQ: PRAH) is a full-service global contract research
organization, providing a broad range of product development and
data solution services to pharmaceutical and biotechnology
companies around the world. PRA’s integrated services include data
management, statistical analysis, clinical trial management, and
regulatory and drug development consulting. PRA’s global
operations span more than 90 countries across North America,
Europe, Asia, Latin America, Africa, Australia and the Middle East,
and more than 17,500 employees. Since 2000, PRA has participated in
more than 4,000 clinical trials. 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 95
products. 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.
Contacts:
Helen O’Donnell Solebury TroutManaging Director 203.428.3213
InvestorRelations@prahs.com or hodonnell@soleburytrout.com
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 the current COVID-19 pandemic has adversely affected
and may continue to affect adversely our business and results of
operations; 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 Company may
underprice contracts, overrun its cost estimates, or fail to
receive approval for, or experience delays in, documenting change
orders; the historical indications of the relationship of backlog
to revenues may not be indicative of their future relationship; the
Company may be unable to attract suitable investigators and
patients for its clinical trials; the Company could be subject to
employment liability with its embedded and functional outsourcing
solutions as it places employees at the physical workplaces of its
clients; the Company may lose key personnel or be unable to recruit
and retain experienced personnel; the Company may be unable to
maintain information systems or effectively update them; a failure
or breach of the Company’s IT systems could result in customer
information being compromised or otherwise significantly disrupt
the Company’s business operations; client or therapeutic
concentration or competition among clients could harm the Company’s
business; if the Company does not keep pace with rapid
technological changes, its services may become less competitive or
obsolete; the Company may be unable to successfully identify,
acquire and integrate businesses, services and technologies or to
manage joint ventures; the Company’s business is subject to
economic, political and other risks associated with international
operations, including foreign currency exchange rate fluctuations;
the Company may be exposed to liabilities under anti-corruption
laws due to the global nature of its business; the Company’s
failure to perform services in accordance with contractual
requirements, certain laws and 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’s relationships with existing or
potential clients who are in competition with each other may
adversely impact the degree to which other clients or potential
clients use its services; the Company may be unable to compete
effectively with other players in the biopharmaceutical services
industry; changes in accounting standards may adversely affect the
Company’s financial statements; the Company’s effective income tax
rate may fluctuate which may adversely affect its operations,
earnings, and earnings per share; the Company may not realize the
full value of its goodwill and intangible assets, and may be unable
to use net operating loss carry-forwards; the Company’s suppliers
may increase its costs to obtain, restrict its use of or refuse to
license its data, or the Company may otherwise be unable to
continue to obtain products, services and licenses from third
parties; the Company may be unable to protect its intellectual
property; patent and other intellectual property litigation could
be time-consuming and costly; biopharmaceutical industry
outsourcing trends could change and adversely affect the Company’s
operations and growth rate; government regulators or customers may
limit the scope of prescriptions or withdraw products from the
market; the U.S. and international healthcare industry is subject
to political, economic and/or regulatory influences and changes,
such as healthcare reform; current and proposed laws and
regulations regarding the protection of personal data could result
in increased risks of liability or increased cost or could limit
the Company’s service offerings; the Company has substantial
indebtedness, some of which have interest rates pricing using a
spread over LIBOR, and may incur additional indebtedness in the
future, which could adversely affect the Company’s financial
condition; circumstances beyond the Company’s control could cause
industry-wide reduction in demand for its services; and other
factors that are set forth in the Company’s filings with the
Securities and Exchange Commission, including its most recent
Annual Report on Form 10-K filed with the SEC on February 21, 2020.
The forward-looking statements in this release speak only as of the
date hereof, and the Company undertakes no obligation to update any
such 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 diluted 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. In addition, management believes that EBITDA,
adjusted EBITDA and adjusted net income (including adjusted net
income per share on a diluted basis) 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 adjusted net
income per share on a diluted basis) 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 adjusted net income per
share on a diluted basis) 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 adjusted net income per share on a diluted basis)
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 adjusted net income per share on a diluted basis)
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 costs, acquisition-related costs, severance
costs and restructuring charges, prior year foreign research
and development credits, lease termination expense, non-cash
rent adjustment, adjustment to reflect amounts attributable to
noncontrolling interest 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 CONDENSED
STATEMENTS OF OPERATIONS (in thousands,
except per share amounts) (unaudited)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
$ |
796,307 |
|
|
$ |
780,691 |
|
|
$ |
2,309,907 |
|
|
$ |
2,266,022 |
|
Operating expenses: |
|
|
|
|
|
|
|
Direct costs (exclusive of depreciation and amortization
expense) |
412,076 |
|
|
389,304 |
|
|
1,211,278 |
|
|
1,153,441 |
|
Reimbursable expenses |
156,389 |
|
|
169,965 |
|
|
481,497 |
|
|
471,682 |
|
Selling, general and administrative expenses |
115,409 |
|
|
95,542 |
|
|
332,346 |
|
|
291,439 |
|
Transaction-related costs |
(45,074 |
) |
|
572 |
|
|
(44,465 |
) |
|
572 |
|
Depreciation and amortization expense |
33,315 |
|
|
29,264 |
|
|
98,078 |
|
|
85,462 |
|
Loss on disposal of fixed assets, net |
32 |
|
|
256 |
|
|
207 |
|
|
900 |
|
Income from operations |
124,160 |
|
|
95,788 |
|
|
230,966 |
|
|
262,526 |
|
Interest expense, net |
(10,721 |
) |
|
(12,974 |
) |
|
(36,102 |
) |
|
(37,834 |
) |
Loss on modification or
extinguishment of debt |
— |
|
|
(1,855 |
) |
|
— |
|
|
(1,855 |
) |
Foreign currency (losses)
gains, net |
(9,128 |
) |
|
5,408 |
|
|
(12,036 |
) |
|
1,864 |
|
Other (expense) income,
net |
(1 |
) |
|
15 |
|
|
(1 |
) |
|
(66 |
) |
Income before income
taxes |
104,310 |
|
|
86,382 |
|
|
182,827 |
|
|
224,635 |
|
Provision for income taxes |
13,058 |
|
|
3,375 |
|
|
37,041 |
|
|
56,317 |
|
Net income |
91,252 |
|
|
83,007 |
|
|
145,786 |
|
|
168,318 |
|
Net income attributable to
noncontrolling interest |
— |
|
|
— |
|
|
— |
|
|
(99 |
) |
Net income attributable to PRA
Health Sciences, Inc. |
$ |
91,252 |
|
|
$ |
83,007 |
|
|
$ |
145,786 |
|
|
$ |
168,219 |
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
Basic |
$ |
1.44 |
|
|
$ |
1.28 |
|
|
$ |
2.31 |
|
|
$ |
2.58 |
|
Diluted |
$ |
1.41 |
|
|
$ |
1.25 |
|
|
$ |
2.26 |
|
|
$ |
2.53 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
63,447 |
|
|
64,771 |
|
|
63,184 |
|
|
65,096 |
|
Diluted |
64,874 |
|
|
66,213 |
|
|
64,558 |
|
|
66,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE
SHEETS (in thousands, except share
amounts) (unaudited)
|
September 30, |
|
December 31, |
|
2020 |
|
2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
336,228 |
|
|
$ |
236,232 |
|
Restricted cash |
— |
|
|
38 |
|
Accounts receivable and unbilled services, net of allowance for
credit losses of $3,236 at September 30, 2020 |
708,810 |
|
|
658,517 |
|
Other current assets |
89,261 |
|
|
90,780 |
|
Total current assets |
1,134,299 |
|
|
985,567 |
|
Fixed assets, net |
191,798 |
|
|
180,716 |
|
Operating lease right-of-use
assets |
178,514 |
|
|
186,343 |
|
Goodwill |
1,672,409 |
|
|
1,502,756 |
|
Intangible assets, net |
613,023 |
|
|
638,577 |
|
Other assets |
49,171 |
|
|
50,471 |
|
Total assets |
$ |
3,839,214 |
|
|
$ |
3,544,430 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Current portion of borrowings under credit facilities |
$ |
— |
|
|
$ |
88,800 |
|
Current portion of long-term debt |
25,000 |
|
|
25,000 |
|
Accounts payable |
31,873 |
|
|
55,293 |
|
Accrued expenses and other current liabilities |
324,082 |
|
|
304,799 |
|
Current portion of operating lease liabilities |
38,627 |
|
|
37,603 |
|
Advanced billings |
580,158 |
|
|
505,714 |
|
Total current liabilities |
999,740 |
|
|
1,017,209 |
|
Long-term debt, net |
1,255,969 |
|
|
1,140,178 |
|
Long-term portion of operating
lease liabilities |
161,309 |
|
|
172,370 |
|
Deferred tax liabilities |
47,794 |
|
|
78,511 |
|
Other long-term
liabilities |
49,136 |
|
|
46,171 |
|
Total liabilities |
2,513,948 |
|
|
2,454,439 |
|
Commitments and
contingencies |
|
|
|
Stockholders' equity: |
|
|
|
Preferred stock (100,000,000
authorized shares; $0.01 par value) |
|
|
|
Issued and outstanding --
none |
— |
|
|
— |
|
Common stock (1,000,000,000
authorized shares; $0.01 par value) |
|
|
|
Issued and outstanding -- 64,100,349 and 63,491,550 at September
30, 2020 and December 31, 2019, respectively |
641 |
|
|
635 |
|
Additional paid-in
capital |
1,089,115 |
|
|
1,006,182 |
|
Accumulated other
comprehensive loss |
(153,558 |
) |
|
(160,108 |
) |
Retained earnings |
389,068 |
|
|
243,282 |
|
Total stockholders' equity |
1,325,266 |
|
|
1,089,991 |
|
Total liabilities and stockholders' equity |
$ |
3,839,214 |
|
|
$ |
3,544,430 |
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS (in thousands)
(unaudited)
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
Cash flows from operating
activities: |
|
|
|
Net income |
$ |
145,786 |
|
|
$ |
168,318 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization expense |
98,078 |
|
|
85,462 |
|
Amortization of debt issuance costs |
1,266 |
|
|
1,364 |
|
Amortization of terminated interest rate swaps |
4,559 |
|
|
4,960 |
|
Stock-based compensation expense |
50,613 |
|
|
30,407 |
|
Change in fair value of acquisition-related contingent
consideration |
(44,500 |
) |
|
— |
|
Unrealized foreign currency losses (gains), net |
17,413 |
|
|
(7,773 |
) |
Deferred income tax benefit |
(32,067 |
) |
|
(25,408 |
) |
Other reconciling items |
8,221 |
|
|
792 |
|
Changes in operating assets and liabilities, net of acquired assets
and assumed liabilities: |
|
|
|
Accounts receivable, unbilled services and advanced billings |
20,890 |
|
|
(104,589 |
) |
Other operating assets and liabilities |
(3,156 |
) |
|
(4,289 |
) |
Payment of acquisition-related contingent consideration |
— |
|
|
(83,249 |
) |
Net cash provided by operating activities |
267,103 |
|
|
65,995 |
|
Cash flows from investing
activities: |
|
|
|
Purchase of fixed assets |
(54,024 |
) |
|
(61,210 |
) |
(Cash paid) proceeds received for interest on interest rate swap,
net |
(6,414 |
) |
|
1,076 |
|
Distributions from unconsolidated joint ventures |
— |
|
|
418 |
|
Proceeds from the sale of fixed assets |
29 |
|
|
26 |
|
Acquisition of Care Innovations, Inc., net of cash acquired |
(158,824 |
) |
|
— |
|
Net cash used in investing activities |
(219,233 |
) |
|
(59,690 |
) |
Cash flows from financing
activities: |
|
|
|
Repurchase and retirement of common stock |
— |
|
|
(300,000 |
) |
Borrowings on accounts receivable financing agreement |
— |
|
|
30,000 |
|
Borrowings on line of credit |
100,000 |
|
|
40,000 |
|
Proceeds from issuance of long-term debt |
— |
|
|
300,000 |
|
Repayments of line of credit |
(55,000 |
) |
|
(40,000 |
) |
Repayments of long-term debt |
(18,750 |
) |
|
(25,000 |
) |
Acquisition of noncontrolling interest |
— |
|
|
(4,138 |
) |
Proceeds from stock issued under employee stock purchase plan and
stock option exercises |
29,741 |
|
|
30,180 |
|
Payments for debt issuance costs |
(470 |
) |
|
— |
|
Net cash provided by financing activities |
55,521 |
|
|
31,042 |
|
Effects of foreign exchange
changes on cash, cash equivalents, and restricted cash |
(3,433 |
) |
|
(266 |
) |
Change in cash, cash
equivalents, and restricted cash |
99,958 |
|
|
37,081 |
|
Cash, cash equivalents, and
restricted cash, beginning of period |
236,270 |
|
|
144,709 |
|
Cash, cash equivalents, and
restricted cash, end of period |
$ |
336,228 |
|
|
$ |
181,790 |
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES RECONCILIATION OF NON-GAAP
MEASURES (in thousands, except per share
amounts) (unaudited)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income attributable to PRA Health Sciences,
Inc. |
$ |
91,252 |
|
|
$ |
83,007 |
|
|
$ |
145,786 |
|
|
$ |
168,219 |
|
Depreciation and amortization
expense |
33,315 |
|
|
29,264 |
|
|
98,078 |
|
|
85,462 |
|
Interest expense, net |
10,721 |
|
|
12,974 |
|
|
36,102 |
|
|
37,834 |
|
Provision for income
taxes |
13,058 |
|
|
3,375 |
|
|
37,041 |
|
|
56,317 |
|
EBITDA |
148,346 |
|
|
128,620 |
|
|
317,007 |
|
|
347,832 |
|
Stock-based compensation
expense (a) |
19,343 |
|
|
11,244 |
|
|
50,613 |
|
|
30,407 |
|
Loss on disposal of fixed
assets, net (b) |
32 |
|
|
256 |
|
|
207 |
|
|
900 |
|
Foreign currency losses
(gains), net (c) |
9,128 |
|
|
(5,408 |
) |
|
12,036 |
|
|
(1,864 |
) |
Other non-operating expense
(income), net (d) |
1 |
|
|
(15 |
) |
|
1 |
|
|
66 |
|
Transaction-related costs
(e) |
(45,074 |
) |
|
572 |
|
|
(44,465 |
) |
|
572 |
|
Acquisition-related costs
(f) |
332 |
|
|
654 |
|
|
1,577 |
|
|
4,334 |
|
Lease termination expense
(g) |
— |
|
|
— |
|
|
— |
|
|
(266 |
) |
Non-cash rent adjustment
(h) |
(650 |
) |
|
16 |
|
|
(70 |
) |
|
322 |
|
Loss on modification or
extinguishment of debt (j) |
— |
|
|
1,855 |
|
|
— |
|
|
1,855 |
|
Other charges (i) |
891 |
|
|
— |
|
|
2,641 |
|
|
— |
|
Non-operating income
attributable to noncontrolling interest |
— |
|
|
— |
|
|
— |
|
|
190 |
|
Adjusted
EBITDA |
$ |
132,349 |
|
|
$ |
137,794 |
|
|
$ |
339,547 |
|
|
$ |
384,348 |
|
|
|
|
|
|
|
|
|
Net income
attributable to PRA Health Sciences, Inc. |
$ |
91,252 |
|
|
$ |
83,007 |
|
|
$ |
145,786 |
|
|
$ |
168,219 |
|
Provision for income
taxes |
13,058 |
|
|
3,375 |
|
|
37,041 |
|
|
56,317 |
|
Amortization of intangible
assets |
19,032 |
|
|
17,090 |
|
|
57,190 |
|
|
51,433 |
|
Amortization of deferred
financing costs |
424 |
|
|
462 |
|
|
1,266 |
|
|
1,364 |
|
Amortization of terminated
interest rate swaps |
1,432 |
|
|
1,671 |
|
|
4,559 |
|
|
4,960 |
|
Stock-based compensation
expense (a) |
19,343 |
|
|
11,244 |
|
|
50,613 |
|
|
30,407 |
|
Loss on disposal of fixed
assets, net (b) |
32 |
|
|
256 |
|
|
207 |
|
|
900 |
|
Foreign currency losses
(gains), net (c) |
9,128 |
|
|
(5,408 |
) |
|
12,036 |
|
|
(1,864 |
) |
Other non-operating expense
(income), net (d) |
1 |
|
|
(15 |
) |
|
1 |
|
|
66 |
|
Transaction-related costs
(e) |
(45,074 |
) |
|
572 |
|
|
(44,465 |
) |
|
572 |
|
Acquisition-related costs
(f) |
332 |
|
|
654 |
|
|
1,577 |
|
|
4,334 |
|
Lease termination expense
(g) |
— |
|
|
— |
|
|
— |
|
|
(266 |
) |
Non-cash rent adjustment
(h) |
(650 |
) |
|
16 |
|
|
(70 |
) |
|
322 |
|
Loss on modification or
extinguishment of debt (j) |
— |
|
|
1,855 |
|
|
— |
|
|
1,855 |
|
Other charges (i) |
891 |
|
|
— |
|
|
2,641 |
|
|
— |
|
Non-operating income
attributable to noncontrolling interest |
— |
|
|
— |
|
|
— |
|
|
190 |
|
Adjusted pre-tax income |
109,201 |
|
|
114,779 |
|
|
268,382 |
|
|
318,809 |
|
Adjusted tax expense (j) |
(25,116 |
) |
|
(27,546 |
) |
|
(61,729 |
) |
|
(76,515 |
) |
Adjusted net
income |
$ |
84,085 |
|
|
$ |
87,233 |
|
|
$ |
206,653 |
|
|
$ |
242,294 |
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares outstanding |
64,874 |
|
|
66,213 |
|
|
64,558 |
|
|
66,607 |
|
|
|
|
|
|
|
|
|
Adjusted net income per
diluted share |
$ |
1.30 |
|
|
$ |
1.32 |
|
|
$ |
3.20 |
|
|
$ |
3.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP
GUIDANCE (in millions, except per share
amounts) (unaudited)
|
FY 2020 |
|
|
|
Low |
|
High |
|
|
|
|
Total Revenue |
$ |
3,120.0 |
|
|
$ |
3,150.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2020 |
|
Adjusted Net Income |
|
Adjusted Diluted Earnings Per Share |
|
Low |
|
High |
|
Low |
|
High |
|
|
|
|
|
|
|
|
Net income and net income per diluted share |
$ |
209.0 |
|
|
$ |
217.0 |
|
|
$ |
3.23 |
|
|
$ |
3.35 |
|
Adjustments: |
|
|
|
|
|
|
|
Provision for income taxes |
56.0 |
|
|
58.0 |
|
|
0.86 |
|
|
0.90 |
|
Amortization of intangible assets |
76.0 |
|
|
76.0 |
|
|
1.17 |
|
|
1.17 |
|
Amortization of deferred financing costs |
2.0 |
|
|
2.0 |
|
|
0.03 |
|
|
0.03 |
|
Amortization of terminated interest rate swaps |
4.0 |
|
|
4.0 |
|
|
0.06 |
|
|
0.06 |
|
Stock-based compensation expense (a) |
69.0 |
|
|
69.0 |
|
|
1.07 |
|
|
1.07 |
|
Foreign currency losses, net (c) |
12.0 |
|
|
12.0 |
|
|
0.19 |
|
|
0.19 |
|
Transaction-related costs (e) |
(45.0 |
) |
|
(45.0 |
) |
|
(0.70 |
) |
|
(0.70 |
) |
Acquisition-related costs (f) |
2.0 |
|
|
2.0 |
|
|
0.03 |
|
|
0.03 |
|
Other charges (i) |
3.0 |
|
|
3.0 |
|
|
0.05 |
|
|
0.05 |
|
Adjusted pre-tax income |
388.0 |
|
|
398.0 |
|
|
5.99 |
|
|
6.15 |
|
Adjusted tax expense (j) |
(89.0 |
) |
|
(93.0 |
) |
|
(1.38 |
) |
|
(1.44 |
) |
Adjusted net income
and adjusted net income per diluted share |
$ |
299.0 |
|
|
$ |
305.0 |
|
|
$ |
4.61 |
|
|
$ |
4.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Stock-based compensation expense represents the amount of
recurring non-cash expense related to the Company’s equity
compensation programs.(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) 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.(d) Other non-operating
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.(e)
Transaction-related costs include fees associated with costs
associated with acquisition related earn-out liabilities, our
secondary offerings, stock-based compensation expense related to
the transfer restrictions on vested options, the amendment to our
accounts receivable financing agreement, and expenses associated
with our acquisitions.(f) Acquisition-related costs primarily
consist of professional fees, rebranding costs, the elimination of
redundant facilities and any other costs incurred directly related
to the integration of these acquisitions.(g) Lease termination
expense represents charges incurred in connection with the
termination of leases at locations that are no longer being used by
the Company.(h) 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.(i)
Represents charges incurred that are not considered part of our
core operating results.(j) Represents the tax effect of adjusted
pre-tax income at our estimated effective tax rate.
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