Syneos Health (Nasdaq:SYNH), a leading biopharmaceutical solutions
organization combining a Contract Research Organization and a
Contract Commercial Organization, today reported financial results
for the three months ended March 31, 2020.
“From the onset of the COVID-19 pandemic, we’ve taken decisive
actions to help ensure the well-being of our employees, customers
and patients, including implementing rapid virtual engagement and
remote monitoring. I am pleased that we maintained that important
focus, while delivering solid first quarter results and strong net
new business awards, sustaining our recent momentum and reaffirming
the long-term strength of our model,” said Alistair Macdonald,
Chief Executive Officer, Syneos Health. “We remain committed to
advancing our customers’ complex therapies in creative ways that
adhere to all safety and regulatory protocols, respect the
guidelines of our site partners and proactively mitigate the impact
to our business and customers’ timelines.”
First Quarter 2020 Results
Please refer to the “Use of Non-GAAP Financial Measures” and
“Reconciliation of GAAP to Non-GAAP Measures” included in this
press release and accompanying tables for important disclosures
about non-GAAP measures and a reconciliation of these measures to
the nearest GAAP measures.
For the three months ended March 31, 2020, GAAP revenue
increased 4.0% to $1,163.4 million and increased 3.8% compared to
the adjusted revenue from the same period in the prior year. On a
constant currency basis, revenue increased 4.4% compared to the
adjusted revenue from the same period in the prior year. This
increase was driven by revenue growth in Clinical Solutions, as
discussed below.
For the three months ended March 31, 2020, Clinical Solutions
GAAP revenue increased 8.7% to $874.8 million, and increased 8.5%
compared to the adjusted revenue from the same period in the prior
year. On a constant currency basis, revenue increased 9.2% compared
to the adjusted revenue from the same period in the prior year.
This increase was primarily due to higher revenue from net new
business awards and faster growth in reimbursable out-of-pocket
expenses, partially offset by the negative impact of fluctuations
in foreign currency exchange rates.
For the three months ended March 31, 2020, Commercial Solutions
GAAP revenue decreased 8.1% to $288.5 million from the same period
in the prior year. On a constant currency basis, revenue decreased
8.0%. This decrease was primarily due to an unfavorable revenue mix
and slower growth in reimbursable out-of-pocket expenses.
GAAP net income for the three months ended March 31, 2020 was
$33.6 million, resulting in diluted earnings per share of $0.32,
compared to GAAP net loss of $30.0 million, or diluted loss per
share of $0.29, for the three months ended March 31, 2019. The
increases in GAAP net income and diluted earnings per share were
primarily due to a higher operating margin and lower interest
expense.
Adjusted net income for the three months ended March 31, 2020
was $71.5 million, resulting in adjusted diluted earnings per share
of $0.68, compared to adjusted net income of $62.1 million, or
adjusted diluted earnings per share of $0.59 for the three months
ended March 31, 2019. The increases in adjusted net income and
adjusted diluted earnings per share were primarily due to lower
interest expense and growth in adjusted EBITDA.
Adjusted EBITDA for the three months ended March 31, 2020
increased 1.8% to $137.4 million from the prior year period,
representing a decrease in adjusted EBITDA margin from 12.0% to
11.8%. This decrease in adjusted EBITDA margin was driven primarily
by the Commercial Solutions margin contraction, partially offset by
the Clinical Solutions margin growth.
Net new business awards were $5,724.7 million for the twelve
months ended March 31, 2020, representing a book-to-bill ratio of
1.21x. Clinical Solutions net new business awards were $4,451.3
million for the twelve months ended March 31, 2020, representing a
book-to-bill ratio of 1.27x. Commercial Solutions net new
business awards were $1,273.4 million for the twelve months ended
March 31, 2020, representing a book-to-bill ratio of 1.04x. These
net new business awards contributed to an ending backlog of
$9,207.5 million as of March 31, 2020, consisting of $8,549.4
million for Clinical Solutions and $658.1 million for the
Deployment Solutions offering within Commercial Solutions.
COVID-19 Update
Update on Operations
As a result of the impacts of the COVID-19 pandemic, Syneos
Health implemented contingency planning to protect employee health
and well-being during the first quarter of 2020. The Company has
instructed employees to work remotely where possible and has also
implemented travel restrictions as well as visitor protocols. The
Company's response is led by a dedicated Business Continuity
Transition Management Office (or “TMO”), which combines the project
management discipline of the Company’s Trusted Process, with its
well-established transition management leadership. The TMO manages
and monitors employee safety, along with the rapid and seamless
transition to remote operations, while ensuring consistent business
performance.
Within Clinical Solutions, the Company is experiencing
limitations accessing investigative sites due to the impact from
COVID-19. As of mid-April, approximately 10% of the Company’s
clinical trial sites were inaccessible. Of the sites that remain
accessible, 80% to 90% are allowing at least some level of virtual
activity.
Accordingly, the Company has implemented remote monitoring
activities to help mitigate the impact in Clinical Solutions. The
Company has also partnered with the Association of Clinical
Research Organizations to create a harmonized risk-based monitoring
approach that is aligned with regulatory agencies. The Company
currently expects to convert 70% to 80% of its site visits to
remote monitoring during the second quarter, using a highly
tailored approach.
Within Commercial Solutions, the Deployment Solutions field
teams are facing limitations on their abilities to physically visit
healthcare providers (“HCP”s), delays of existing projects, and
travel restrictions. However, these teams made a rapid transition
to virtual operations, and by mid-March, 90% of field teams had
been successfully transitioned to a work from home environment. The
Company believes its integrated Deployment Solutions services
remain essential for customers in the current environment given the
business currently derives over 60% of its revenue from top 50
pharma, over 80% of field teams support chronic care therapies
where total prescription volume remains stable, and approximately
90% of current call activity is outside of the hospital
setting.
In light of the current situation, the Company has initiated
proactive cost management strategies to enhance its operational and
financial flexibility. To minimize the margin impact from the
short-term revenue headwinds, the Company has taken a number of
actions, including the following:
- accelerated ForwardBound margin enhancement initiative,
- delayed hiring of non-billable headcount,
- reduced or eliminated third party costs and non-essential
contractors,
- implemented temporary salary reduction for the Board of
Directors, executives, and highly compensated individuals,
- suspended 401k match,
- executed voluntary furloughs, and
- rationalized portfolio of services
The above cost management strategies are being appropriately
balanced with the Company's continued commitment to maintain
excellent delivery quality and quickly re-accelerate work
activities for the benefit of its customers.
Liquidity and Capital Management Update
The Company remains confident in its liquidity position, which
includes cash on hand and access to its revolving credit facility.
During the three months ended March 31, 2020, the Company drew
$300.0 million on its revolving credit facility to supplement cash
reserves, leaving a remaining capacity of $280.8 million as of
March 31, 2020.
During the three months ended March 31, 2020, the Company
repurchased 600,000 shares of common stock, representing a total
purchase price of approximately $32.0 million, before pausing
repurchases to preserve liquidity. As of March 31, 2020, the
Company had remaining repurchase authorization of $136.3
million, which is available through the end of 2020. However, the
Company does not intend to repurchase any additional shares during
the second quarter and will continue to evaluate the program on a
quarterly basis as market conditions evolve.
During the three months ended March 31, 2020, the Company also
executed additional interest rate swaps with a notional value of
$549.2 million to further reduce variable rate debt cost. The
execution of these swaps increased the fixed rate portion of debt
from 36% at December 31, 2019, to 54% at March 31, 2020.
Webcast and Conference Call Details
Syneos Health will host a conference call at 8:00 a.m. ET on
April 30, 2020, to discuss its first quarter 2020 financial
results. The live webcast will be available in listen-only mode in
the Events section of the Company's Investor Relations website at
investor.syneoshealth.com. To participate via phone, please dial +1
877 930 8058 within the United States or +1 253 336 7551 outside
the United States approximately 15 minutes before the scheduled
start of the call. The conference ID for the call is 2042879.
An archived replay of the conference call is expected to be
available online at investor.syneoshealth.com after 1:00 p.m.
ET on April 30, 2020. In addition, an audio replay will be
available for one week following the call and will be accessible by
dialing +1 855 859 2056 within the United States or +1 404 537 3406
outside the United States. The audio replay ID is 2042879.
About Syneos Health
Syneos Health® (Nasdaq:SYNH) is the only fully integrated
biopharmaceutical solutions organization. The Company, including a
Contract Research Organization (CRO) and Contract Commercial
Organization (CCO), is purpose-built to accelerate customer
performance to address modern market realities. Syneos Health
brings together approximately 24,000 clinical and commercial minds
with the ability to support customers in more than 110 countries.
The Company shares insights, uses the latest technologies, and
applies advanced business practices to speed its customers’
delivery of important therapies to patients. To learn more about
how Syneos Health is shortening the distance from lab to
life® visit syneoshealth.com.
Forward-Looking Statements
Except for historical information, all of the statements,
expectations, and assumptions contained in this press release are
forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995, including the expected
impact of the COVID-19 pandemic on our business, financial results
and financial condition, anticipated financial results for the full
year 2020 and plans for cost savings and capital deployment. Actual
results might differ materially from those explicit or implicit in
the forward-looking statements. Important factors that could cause
actual results to differ materially include, but are not limited
to: reliance on key personnel; principal investigators and
patients; general and international economic, political, and other
risks, including currency and stock market fluctuations and the
uncertain economic environment; risks related to the COVID-19
pandemic; the Company's ability to adequately price its contracts
and not overrun cost estimates; any adverse effects from the
Company's customer or therapeutic area concentration; the Company's
ability to maintain or generate new business awards; the Company's
ability to increase its market share, grow its business, and
execute its growth strategies; the Company's backlog not being
indicative of future revenues and its ability to realize the
anticipated future revenue reflected in its backlog; fluctuations
in the Company's operating results and effective income tax rate;
risks related to the Company's information systems and
cybersecurity; changes and costs of compliance with regulations
related to data privacy; risks related to the United Kingdom’s
withdrawal from the European Union; risks related to the Company's
transfer pricing policies; failure to perform services in
accordance with contractual requirements, regulatory requirements
and ethical considerations; risks relating to litigation and
government investigations; risks associated with the Company's
early phase clinical facilities; insurance risk; risks of liability
resulting from harm to patients; success of investments in the
Company's customers’ business or drugs; foreign currency exchange
rate fluctuations; risks associated with acquired businesses,
including the ability to integrate acquired operations, products,
and technologies in our business; risks related to the Company's
income tax expense and tax reform; risks relating to the Company's
intellectual property; risks associated with the Company's
acquisition strategy; failure to realize the full value of goodwill
and intangible assets; restructuring risk; potential violations of
anti-corruption and anti-bribery laws; risks related to the
Company's dependence on third parties; downgrades of the Company's
credit ratings; competition in the biopharmaceutical services
industry; changes in outsourcing trends; regulatory risks; trends
in the Company's customers’ businesses; the Company's ability to
keep pace with rapid technological change; risks related to the
Company's indebtedness; fluctuations in the Company's financial
results and stock price; and other risk factors set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 as updated by the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2020, and other SEC
filings, copies of which are available free of charge on the
Company's website at investor.syneoshealth.com. The Company assumes
no obligation and does not intend to update these forward-looking
statements, except as required by law.
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance
with U.S. Generally Accepted Accounting Principles (“GAAP”), this
press release contains certain non-GAAP financial measures,
including adjusted revenue, segment adjusted revenue, adjusted net
income (including adjusted diluted earnings per share), EBITDA,
adjusted EBITDA, adjusted EBITDA margin, and non-GAAP effective tax
rate. We also present adjusted revenue growth in constant currency.
Constant currency revenue growth is defined as revenues for a given
period restated at the comparative period's foreign currency
exchange rates measured against the comparative period's adjusted
revenues.
A “non-GAAP financial measure” is generally defined as a
numerical measure of a company’s financial performance that
excludes or includes amounts from the most directly comparable
measure calculated and presented in accordance with GAAP in the
statements of operations, balance sheets, or statements of cash
flows of the Company.
The Company defines adjusted revenue and segment adjusted
revenue as GAAP revenue and segment revenue, respectively, adjusted
to include revenue eliminated as a result of purchase
accounting.
The Company defines adjusted net income (including adjusted
diluted earnings per share) as net income (including diluted
earnings per share) excluding acquisition-related deferred revenue
adjustments; acquisition-related amortization; restructuring and
other costs; transaction and integration-related expenses;
share-based compensation expense; gain or loss on extinguishment of
debt; other income (expense), net; the income tax effect of the
above adjustments; and the impact of the base erosion and
anti-abuse tax.
EBITDA represents earnings before interest, taxes, depreciation
and amortization. The Company defines adjusted EBITDA as EBITDA,
further adjusted to exclude expenses and transactions that the
Company believes are not representative of its core operations,
namely: acquisition-related deferred revenue adjustments;
restructuring and other costs; transaction and integration-related
expenses; share-based compensation expense; other income (expense),
net; and gain or loss on extinguishment of debt. The Company
presents EBITDA and adjusted EBITDA because it believes they are
useful metrics for investors as they are commonly used by
investors, analysts and debt holders to measure the Company's
ability to fund capital expenditures and meet working capital
requirements.
Each of the non-GAAP measures noted above are used by management
and the Board to evaluate the Company's core operating results
because they exclude certain items whose fluctuations from
period-to-period do not necessarily correspond to changes in the
core operations of the business. Adjusted net income (including
adjusted diluted earnings per share) and adjusted EBITDA are used
by management and the Board to assess the performance of the
Company's business.
Non-GAAP measures have limitations in that they do not reflect
all of the amounts associated with the Company's results of
operations as determined in accordance with GAAP. Also, other
companies might calculate these measures differently. Investors are
encouraged to review the reconciliations of the non-GAAP financial
measures to their most directly comparable GAAP measures included
in this press release and the accompanying tables.
Investor Relations Contact: |
Press/Media
Contact: |
|
|
Ronnie Speight |
Danielle DeForge |
Senior Vice President, Investor Relations |
Executive Director, External Communications |
Phone: +1 919 745 2745 |
Phone: +1 781 425 2624 |
Email: Investor.Relations@syneoshealth.com |
Email: danielle.deforge@syneoshealth.com |
Syneos Health, Inc. and
SubsidiariesConsolidated Statements of
Operations(in thousands, except per share
data)(unaudited)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
Revenue |
$ |
1,163,355 |
|
|
$ |
1,119,006 |
|
|
|
|
|
Costs and operating
expenses: |
|
|
|
Direct costs (exclusive of depreciation and amortization) |
924,014 |
|
|
886,802 |
|
Selling, general, and administrative expenses |
117,970 |
|
|
113,117 |
|
Restructuring and other costs |
8,720 |
|
|
14,413 |
|
Transaction and integration-related expenses |
7,577 |
|
|
16,658 |
|
Depreciation |
17,225 |
|
|
19,571 |
|
Amortization |
38,882 |
|
|
41,629 |
|
Total operating expenses |
1,114,388 |
|
|
1,092,190 |
|
Income from operations |
48,967 |
|
|
26,816 |
|
|
|
|
|
Other (income) expense,
net: |
|
|
|
Interest income |
(336 |
) |
|
(1,502 |
) |
Interest expense |
26,458 |
|
|
34,630 |
|
Loss on extinguishment of debt |
— |
|
|
4,355 |
|
Other (income) expense, net |
(18,930 |
) |
|
8,921 |
|
Total other expense, net |
7,192 |
|
|
46,404 |
|
Income (loss) before provision
for income taxes |
41,775 |
|
|
(19,588 |
) |
Income tax expense |
8,201 |
|
|
10,416 |
|
Net income (loss) |
$ |
33,574 |
|
|
$ |
(30,004 |
) |
|
|
|
|
Earnings (loss) per share
attributable to common shareholders: |
|
|
|
Basic |
$ |
0.32 |
|
|
$ |
(0.29 |
) |
Diluted |
$ |
0.32 |
|
|
$ |
(0.29 |
) |
Weighted average common shares
outstanding: |
|
|
|
Basic |
104,265 |
|
|
103,365 |
|
Diluted |
105,642 |
|
|
103,365 |
|
Syneos Health, Inc. and
Subsidiaries Consolidated Balance
Sheets(in thousands, except par value)(unaudited)
|
March 31, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash, cash equivalents, and restricted cash |
$ |
335,960 |
|
|
$ |
163,689 |
|
Accounts receivable and unbilled services, net |
1,340,648 |
|
|
1,303,641 |
|
Prepaid expenses and other current assets |
97,929 |
|
|
94,834 |
|
Total current assets |
1,774,537 |
|
|
1,562,164 |
|
Property and equipment,
net |
195,620 |
|
|
203,926 |
|
Operating lease right-of-use
assets |
218,437 |
|
|
218,531 |
|
Goodwill |
4,323,436 |
|
|
4,350,380 |
|
Intangible assets, net |
925,389 |
|
|
973,081 |
|
Deferred income tax
assets |
34,239 |
|
|
37,012 |
|
Other long-term assets |
118,634 |
|
|
108,701 |
|
Total assets |
$ |
7,590,292 |
|
|
$ |
7,453,795 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
112,312 |
|
|
$ |
136,686 |
|
Accrued expenses |
504,351 |
|
|
568,911 |
|
Deferred revenue |
689,672 |
|
|
696,907 |
|
Current portion of operating lease obligations |
40,130 |
|
|
38,055 |
|
Current portion of finance lease obligations |
17,044 |
|
|
17,777 |
|
Current portion of long-term debt |
77,500 |
|
|
58,125 |
|
Total current liabilities |
1,441,009 |
|
|
1,516,461 |
|
Long-term debt |
2,831,722 |
|
|
2,550,395 |
|
Operating lease long-term
obligations |
215,375 |
|
|
218,343 |
|
Finance lease long-term
obligations |
32,077 |
|
|
36,914 |
|
Deferred income tax
liabilities |
8,989 |
|
|
11,101 |
|
Other long-term
liabilities |
83,198 |
|
|
90,927 |
|
Total liabilities |
4,612,370 |
|
|
4,424,141 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Shareholders'
equity: |
|
|
|
Preferred stock, $0.01 par
value; 30,000 shares authorized, 0 shares issued and outstanding at
March 31, 2020 and December 31, 2019 |
— |
|
|
— |
|
Common stock, $0.01 par value;
600,000 shares authorized, 104,161 and 103,866 shares issued and
outstanding at March 31, 2020 and December 31, 2019,
respectively |
1,042 |
|
|
1,039 |
|
Additional paid-in
capital |
3,430,740 |
|
|
3,441,471 |
|
Accumulated other
comprehensive loss, net of taxes |
(131,111 |
) |
|
(71,593 |
) |
Accumulated deficit |
(322,749 |
) |
|
(341,263 |
) |
Total shareholders' equity |
2,977,922 |
|
|
3,029,654 |
|
Total liabilities and shareholders' equity |
$ |
7,590,292 |
|
|
$ |
7,453,795 |
|
Syneos Health, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows(in thousands)(unaudited)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Cash flows from
operating activities: |
|
|
|
Net income (loss) |
$ |
33,574 |
|
|
$ |
(30,004 |
) |
Adjustments to reconcile net
income (loss) to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
56,107 |
|
|
61,200 |
|
Share-based compensation |
15,998 |
|
|
14,267 |
|
Provision for doubtful accounts |
271 |
|
|
1,302 |
|
Provision for deferred income taxes |
8,159 |
|
|
1,544 |
|
Foreign currency transaction gains |
(15,019 |
) |
|
(77 |
) |
Fair value adjustment of contingent obligations |
(4,095 |
) |
|
724 |
|
Loss on extinguishment of debt |
— |
|
|
4,355 |
|
Other non-cash items |
1,104 |
|
|
(643 |
) |
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable, unbilled services, and deferred revenue |
(53,078 |
) |
|
(25,471 |
) |
Accounts payable and accrued expenses |
(66,426 |
) |
|
(26,682 |
) |
Other assets and liabilities |
(15,202 |
) |
|
(13,821 |
) |
Net cash used in operating activities |
(38,607 |
) |
|
(13,306 |
) |
Cash flows from
investing activities: |
|
|
|
Purchases of property and
equipment |
(11,870 |
) |
|
(11,445 |
) |
Investments in unconsolidated
affiliates |
(6,750 |
) |
|
— |
|
Net cash used in investing activities |
(18,620 |
) |
|
(11,445 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds from issuance of
long-term debt, net of discount |
— |
|
|
183,195 |
|
Payments of debt financing
costs |
— |
|
|
(184 |
) |
Repayments of long-term
debt |
— |
|
|
(216,136 |
) |
Proceeds from accounts
receivable financing agreement |
6,600 |
|
|
26,500 |
|
Repayments of accounts
receivable financing agreement |
(6,600 |
) |
|
— |
|
Proceeds from revolving line
of credit |
300,000 |
|
|
— |
|
Payments of contingent
consideration related to business combinations |
(26,592 |
) |
|
(8 |
) |
Payments of finance
leases |
(4,674 |
) |
|
(1,274 |
) |
Payments for repurchases of
common stock |
(32,029 |
) |
|
(26,616 |
) |
Proceeds from exercises of
stock options |
12,358 |
|
|
19,724 |
|
Payments related to tax
withholdings for share-based compensation |
(19,145 |
) |
|
(11,539 |
) |
Net cash provided by (used in) financing activities |
229,918 |
|
|
(26,338 |
) |
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash |
(420 |
) |
|
3,078 |
|
Net change in cash, cash equivalents, and restricted cash |
172,271 |
|
|
(48,011 |
) |
Cash, cash
equivalents, and restricted cash - beginning of
period |
163,689 |
|
|
155,932 |
|
Cash, cash
equivalents, and restricted cash - end of period |
$ |
335,960 |
|
|
$ |
107,921 |
|
Syneos Health, Inc. and
SubsidiariesReconciliation of GAAP to Non-GAAP
Measures(in thousands)(unaudited)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Adjusted
revenue: |
|
|
|
Revenue, as reported |
$ |
1,163,355 |
|
|
$ |
1,119,006 |
|
Acquisition-related deferred revenue adjustment (a) |
— |
|
|
1,594 |
|
Adjusted
revenue |
$ |
1,163,355 |
|
|
$ |
1,120,600 |
|
|
|
|
|
Segment adjusted
revenue: |
|
|
|
Clinical Solutions revenue, as
reported |
$ |
874,826 |
|
|
$ |
804,958 |
|
Acquisition-related deferred revenue adjustment (a) |
— |
|
|
1,594 |
|
Clinical Solutions
adjusted revenue |
$ |
874,826 |
|
|
$ |
806,552 |
|
|
|
|
|
Commercial Solutions revenue,
as reported |
$ |
288,529 |
|
|
$ |
314,048 |
|
Acquisition-related deferred revenue adjustment (a) |
— |
|
|
— |
|
Commercial Solutions
adjusted revenue |
$ |
288,529 |
|
|
$ |
314,048 |
|
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
EBITDA and adjusted
EBITDA: |
|
|
|
Net income, as reported |
$ |
33,574 |
|
|
$ |
(30,004 |
) |
Interest expense, net |
26,122 |
|
|
33,128 |
|
Income tax expense |
8,201 |
|
|
10,416 |
|
Depreciation |
17,225 |
|
|
19,571 |
|
Amortization (b) |
38,882 |
|
|
41,629 |
|
EBITDA |
124,004 |
|
|
74,740 |
|
Acquisition-related deferred revenue adjustment (a) |
— |
|
|
1,594 |
|
Restructuring and other costs (c) |
8,720 |
|
|
14,413 |
|
Transaction and integration-related expenses (d) |
7,577 |
|
|
16,658 |
|
Share-based compensation (e) |
15,998 |
|
|
14,267 |
|
Other (income) expense, net (f) |
(18,930 |
) |
|
8,921 |
|
Loss on extinguishment of debt (g) |
— |
|
|
4,355 |
|
Adjusted
EBITDA |
$ |
137,369 |
|
|
$ |
134,948 |
|
Adjusted EBITDA
margin |
11.8 |
% |
|
12.0 |
% |
Syneos Health, Inc. and
SubsidiariesReconciliation of GAAP to Non-GAAP
Measures(in thousands, except per share
data)(unaudited)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Adjusted net
income: |
|
|
|
Net income, as reported |
$ |
33,574 |
|
|
$ |
(30,004 |
) |
Acquisition-related deferred revenue adjustment (a) |
— |
|
|
1,594 |
|
Amortization (b) |
38,882 |
|
|
41,629 |
|
Restructuring and other costs (c) |
8,720 |
|
|
14,413 |
|
Transaction and integration-related expenses (d) |
7,577 |
|
|
16,658 |
|
Share-based compensation (e) |
15,998 |
|
|
14,267 |
|
Other (income) expense, net (f) |
(18,930 |
) |
|
8,921 |
|
Loss on extinguishment of debt (g) |
— |
|
|
4,355 |
|
Income tax adjustment to normalized rate (h) |
(14,364 |
) |
|
(17,262 |
) |
Impact of base erosion and anti-abuse tax (i) |
— |
|
|
7,527 |
|
Adjusted net
income |
$ |
71,457 |
|
|
$ |
62,098 |
|
|
|
|
|
Diluted weighted
average common shares outstanding: |
|
|
|
Diluted weighted average
common shares outstanding, as reported |
105,005 |
|
103,365 |
Effect of certain securities considered anti-dilutive under
GAAP |
— |
|
|
1,438 |
|
Diluted weighted
average common shares outstanding |
105,642 |
|
104,803 |
|
|
|
|
Adjusted diluted
earnings per share |
$ |
0.68 |
|
|
$ |
0.59 |
|
- Represents non-cash adjustments resulting from the
revaluation of deferred revenue and the subsequent elimination of
revenue in purchase accounting in connection with business
combinations.
- Represents the amortization of intangible assets associated
with acquired customer relationships, backlog, and trademarks.
- Restructuring and other costs consist primarily of: (i)
severance costs associated with a reduction/optimization of our
workforce in line with our expectations of future business
operations; (ii) termination costs in connection with abandonment
and closure of redundant facilities and other lease-related
charges; and (iii) consulting costs incurred for the continued
consolidation of legal entities and restructuring of our contract
management process to meet the requirements of accounting
regulation changes.
- Represents fees associated with business combinations, stock
repurchases and secondary stock offerings, debt placement and
refinancings, and other corporate transactions costs.
- Represents non-cash share-based compensation expense related to
awards granted under equity incentive plans.
- Other expense (income) is comprised primarily of foreign
currency exchange gains and losses.
- Loss on extinguishment of debt is associated with debt
prepayments and refinancing activities.
- Represents the income tax effect of the non-GAAP adjustments
made to arrive at adjusted net income using an estimated effective
tax rate of approximately 24.0% for the three months ended March
31, 2020, and 24.5% for the three months ended March 31, 2019.
These rates have been adjusted to exclude tax impacts related to
valuation allowances recorded against deferred tax assets.
- Represents the net income tax expense recorded as a result of
the base erosion and anti-abuse tax.
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