- Revenue up 23 percent at constant
currency
- Adjusted EBITDA up 8.6 percent at
constant currency
- Adjusted Net Income up 10.6 percent
at constant currency
- Adjusted Diluted Earnings per Share:
$0.38
- Guidance reaffirmed for Revenue and
at upper end of Adjusted Net Income and Diluted EPS ranges
IMS Health Holdings, Inc. (“IMS Health”) (NYSE:IMS), a
leading global provider of information and technology services to
the healthcare and life sciences industries, today announced
results for the quarter ended September 30, 2015.
Third-Quarter 2015 Operating Results
Revenue for the third quarter of $735 million was up 23.0
percent on a constant currency basis and 12.0 percent on a reported
basis compared with the third quarter of 2014. Excluding the impact
of Cegedim’s CRM and Strategic Data businesses (“the Cegedim
Acquisition”), revenue was up 4.1 percent on a constant currency
basis and down 4.4 percent on a reported basis, with the difference
entirely due to the year-over-year strengthening of the U.S. dollar
versus key currencies in which the company transacts business.
The company’s revenue growth in the third quarter included a
42.4 percent increase in technology services revenue on a constant
currency basis, up 31.9 percent on a reported basis, versus the
same period last year. Information offerings revenue was up 8.9
percent on a constant currency basis and down 2.3 percent reported.
Emerging markets revenue increased 30.5 percent in the third
quarter on a constant currency basis and 11.2 percent on a reported
basis. Developed markets revenue grew 21.5 percent on a constant
currency basis and 12.2 percent reported.
Excluding the Cegedim Acquisition, technology services revenue
increased 10.1 percent at constant currency and 3.6 percent
reported. Information offerings revenue was flat on a constant
currency basis and declined 10.1 percent on a reported basis.
Adjusted EBITDA of $218 million improved 8.6 percent at constant
currency and decreased 1.5 percent reported compared with the third
quarter of 2014.
“We had another quarter of strong financial and operating
performance; this marks our 19th consecutive quarter of revenue and
Adjusted EBITDA growth at constant currency,” said Ari Bousbib,
chairman and CEO, IMS Health. “We are making excellent progress
integrating the Cegedim acquisition and are especially pleased with
the traction that the NexxusTM Suite of applications and the newly
integrated Mobile Intelligence CRM platform are gaining in the
marketplace, as well as the continued strong growth in our
Real-World Evidence offerings.”
Third-quarter 2015 net income was $43 million compared with $47
million in last year’s third quarter. Adjusted Net Income for the
third quarter was $129 million, up 10.6 percent on a constant
currency basis and 3.0 percent on a reported basis.
Diluted earnings per share was $0.13 in the third quarter,
compared with $0.14 per share in the third quarter of 2014.
Adjusted Diluted Earnings per Share increased 12.6 percent at
constant currency and 4.9 percent on a reported basis to $0.38 in
the third quarter.
Year-to-date 2015 Operating Results
Revenue for the nine months ended September 30, 2015 of $2,109
million increased 18.3 percent on a constant currency basis and 7.4
percent reported, compared with the first nine months of 2014.
Excluding the impact of the Cegedim Acquisition, revenue for the
nine months ended September 30, 2015 was up 5.4 percent on a
constant currency basis and down 3.7 percent on a reported basis.
Adjusted EBITDA of $654 million increased 9.3 percent at constant
currency and declined 1.5 percent reported, compared with the first
nine months of 2014. Net income for the nine months ended September
30, 2015 was $388 million, compared with a net loss of $197 million
in the prior-year period, which included one-time IPO-related
charges. Adjusted Net Income was $390 million, up 29.5 percent at
constant currency and 18.6 percent reported, from the prior-year
period. Diluted Earnings per Share was $1.14 in the first nine
months of 2015, compared with a loss of $0.63 per share in the
prior-year period. Adjusted Diluted Earnings per Share increased
22.9 percent on a constant currency basis and 12.6 percent on a
reported basis to $1.15 in the first nine months, compared with
$1.02 in the prior-year period.
Financial Position
As of September 30, 2015, cash and cash equivalents were $394
million and the principal amount of debt was $4,296 million,
resulting in net debt of $3,902 million. At the end of the third
quarter of 2015, IMS Health’s Gross Leverage Ratio was 5.0 times
trailing 12 month Adjusted EBITDA, compared with 4.3 times at
December 31, 2014.
Cash Flow
Net cash provided by operating activities was $111 million in
the third quarter and capital expenditures and additions to
deferred software were $38 million. Unlevered Free Cash Flow for
the third quarter was $141 million, or 65 percent of Adjusted
EBITDA.
2015 Full-Year Guidance
IMS Health expects constant currency results for 2015 as
follows: Revenue growth of 19 to 20 percent, Adjusted EBITDA growth
of approximately 11 percent, Adjusted Net Income growth of 22 to 23
percent and Adjusted Diluted Earnings per Share growth of 17 to 18
percent.
Assuming current foreign exchange rates hold constant through
the end of the year, IMS Health expects reported revenue growth of
approximately 10 percent, Adjusted EBITDA growth of approximately 1
percent, Adjusted Net Income growth of 10 to 11 percent and
Adjusted Diluted Earnings per Share growth of 5 to 6 percent.
Constant Currency
IMS Health reports results in U.S. dollars, but does business on
a global basis. Exchange rate fluctuations affect the U.S. dollar
value of foreign currency revenue and expenses and may have a
significant effect on reported results. The discussion of IMS
Health’s financial results in this release includes comparisons
with the prior year in constant currency terms, using consistent
exchange rates. Management believes this information facilitates
comparison of underlying results over time.
Non-GAAP Measures
This release presents certain “non-GAAP Measures” and other
statistical measures, including Adjusted EBITDA, Adjusted Net
Income, Adjusted Diluted Earnings per Share, Gross Leverage Ratio
and Unlevered Free Cash Flow, because management believes these
measures provide additional information regarding the company’s
performance and its ability to service debt. In addition,
management believes that these measures are useful to assess the
company’s operating performance trends because they exclude certain
material non-cash items, unusual or non-recurring items that are
not expected to continue in the future, and certain other items.
The non-GAAP Measures are not presented in accordance with U.S.
GAAP, and IMS Health’s computation of these non-GAAP Measures may
vary from those used by other companies. These measures have
limitations as an analytical tool, and should not be considered in
isolation or as a substitute or alternative to net income or loss,
operating income or loss, cash flows from operating activities,
total indebtedness or any other measures of operating performance,
liquidity or indebtedness derived in accordance with GAAP.
Reconciliations of these non-GAAP Measures to the most directly
comparable GAAP Measures and related notes are presented at the end
of this release.
The non-GAAP Measures used in our full-year guidance will differ
from U.S. GAAP net income, earnings per share and net cash used in
operating activities, respectively, in ways similar to those
described in the reconciliations at the end of this press
release.
Conference Call and Webcast
IMS Health’s management team will host a conference call and
webcast to discuss the company’s third-quarter 2015 results at 9:00
a.m. Eastern Time on Thursday, October 29, 2015. The audio and
slide presentation for the call can be accessed live by webcast on
IMS Health’s Investor Relations website at http://ir.imshealth.com.
The discussion also will be available by dialing +1-800-926-9175 in
the U.S. and Canada, or +1-212-231-2920 for international callers.
A replay of the webcast will be available on the company’s Investor
Relations site at http://ir.imshealth.com following the live
call.
Forward-looking Statements
Reported numbers are preliminary and not final until the filing
of IMS Health’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2015 with the Securities and Exchange Commission and,
therefore, remain subject to adjustment. This press release
includes “forward-looking statements” including statements
regarding future financial and operating results, especially those
set forth under the heading “Full-Year Guidance.” The words
“guidance,” “ongoing,” “believes,” “expects,” “may,” “will” and
similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. Forward-looking statements are not
guarantees that the future results, plans, intentions or
expectations expressed or implied will be achieved. Matters subject
to forward-looking statements involve known and unknown risks and
uncertainties, including regulatory, competitive and other factors,
which may cause actual financial or operating results or the timing
of events to be materially different than those expressed or
implied by forward-looking statements. Important factors that could
cause or contribute to such differences include, but are not
limited to: imposition of restrictions on our use of data by data
suppliers or their refusal to license data to us; failure to meet
our productivity objectives; failure to successfully invest in
growth opportunities; imposition of restrictions on our current and
future activities under data protection and privacy laws; breaches
or misuse of our or our outsourcing partners’ security or
communications systems; hardware and software failures, delays in
the operation of our computer and communications systems or the
failure to implement system enhancements; consolidation in the
industries in which our clients operate; our ability to protect our
intellectual property rights and our susceptibility to claims by
others that we are infringing on their intellectual property
rights; the risks associated with operating on a global basis,
including fluctuations in the value of foreign currencies relative
to the U.S. dollar, and the ability to successfully hedge such
risks; general economic conditions in the markets in which we
operate, including financial market conditions; our ability to
successfully integrate Cegedim’s Customer Relationship Management
and Strategic Data businesses, and the other factors set forth in
the “Risk Factors” section of our Annual Report on Form 10-K for
the year ended December 31, 2014 on file with the SEC and any
subsequent SEC filings. We undertake no obligation to publicly
update any forward-looking statements whether as a result of new
information, future developments or otherwise.
About IMS Health
IMS Health is a leading global information and technology
services company providing clients in the healthcare industry with
end-to-end solutions to measure and improve their performance. Our
7,500 services experts connect configurable SaaS applications to
10+ petabytes of complex healthcare data in the IMS One™ cloud
platform, delivering unique insights into diseases, treatments,
costs and outcomes. The company’s 15,000 employees blend global
consistency and local market knowledge across 100 countries to help
clients run their operations more efficiently. Customers include
pharmaceutical, consumer health and medical device manufacturers
and distributors, providers, payers, government agencies,
policymakers, researchers and the financial community.
As a global leader in protecting individual patient privacy, IMS
Health uses anonymous healthcare data to deliver critical,
real-world disease and treatment insights. These insights help
biotech and pharmaceutical companies, medical researchers,
government agencies, payers and other healthcare stakeholders to
identify unmet treatment needs and understand the effectiveness and
value of pharmaceutical products in improving overall health
outcomes. Additional information is available at
www.imshealth.com.
IMSFIN
Table 1
IMS Health Holdings, Inc.
Income Statement
(Preliminary and unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, (in millions, except
per share data) 2015 2014 2015
2014 Revenue $ 735 $
656 $ 2,109 $ 1,963 Information
373 382 1,101 1,149 Technology services 362 274
1,008 814 Operating costs of information, exclusive
of depreciation and amortization 167 164 493 502 Direct and
incremental costs of technology services, exclusive of depreciation
and amortization 195 147 528 423 Selling and administrative
expenses, exclusive of depreciation and amortization 181 139 498
557 Depreciation and amortization 87 109 264 331 Severance,
impairment and other charges 16 4 50 29
Operating Income 89 93
276 121 Interest income — 1 1 3 Interest
expense (44 ) (43 ) (124 ) (181 ) Other income (loss), net 6
7 16 (281 )
Non-Operating Loss, Net
(38 ) (35 )
(107 ) (459 ) Income (loss)
before income taxes 51 58 169 (338 ) (Provision for) benefit from
income taxes (8 ) (11 ) 219 141
Net
Income (Loss) $ 43 $ 47 $
388 $ (197 ) Earnings (Loss) per
Share Attributable to
Common Shareholders:
Basic
$
0.13 $ 0.14 $ 1.17 $ (0.63 ) Diluted
$
0.13 $ 0.14 $ 1.14 $ (0.63 )
Weighted-Average Common Shares
Outstanding: Basic 328.5 332.1 331.9 314.1 Diluted 336.1
342.3 340.4 314.1
Table 2
IMS Health Holdings, Inc.
Condensed Balance Sheet
(Preliminary and unaudited)
September 30, December 31,
(in millions) 2015 2014 Assets: Cash
and cash equivalents $ 394 $ 390 Restricted cash 22 24 Accounts
receivable, net 449 330 Property, plant and equipment, net 169 153
Computer software, net 292 258 Goodwill & other identifiable
intangibles, net 5,828 5,559 Other current & long-term assets
502 436
Total Assets $ 7,656
$ 7,150 Liabilities and Shareholders’
Equity: Liabilities: Accounts payable, accrued &
other current liabilities, & deferred revenues $ 924 $ 735
Postretirement and postemployment benefits 111 95 Long-term
deferred tax and other liabilities 757 985 Debt 4,275
3,793
Total Liabilities 6,067
5,608 Shareholders’ Equity:
Total Shareholders’ Equity 1,589
1,542 Total
Liabilities and Shareholders’ Equity $ 7,656
$ 7,150
Table 3
IMS Health Holdings, Inc.
Condensed Statement of Cash
Flows
(Preliminary and unaudited)
Nine Months Ended September 30, (in
millions) 2015 2014 Cash Flows from
Operating Activities: Net Income (Loss) $ 388 $ (197 )
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities: Depreciation and
amortization 264 331 Deferred income taxes (286 ) (197 ) Non-cash
stock-based compensation charges 19 52 Loss on Venezuela
remeasurement 7 49 Other (25 ) 101 Change in assets and
liabilities, excluding effects from acquisitions and dispositions:
Changes in current assets and liabilities (35 ) (137 ) Changes in
long-term assets and liabilities (6 ) (39 )
Net
Cash Provided by (Used in) Operating Activities
326 (37 ) Cash Flows from
Investing Activities: Capital expenditures (29 ) (59 )
Additions to computer software (87 ) (70 ) Payments for
acquisitions of businesses, net of cash acquired (466 ) (58 ) Other
— (20 )
Net Cash Used in Investing Activities
(582 ) (207 )
Cash Flows from Financing Activities:
Proceeds from initial public offering, net of costs — 987
Other financing activities 283 (1,052 )
Net Cash
Provided by (Used in) Financing Activities 283
(65 ) Effect of Exchange Rate Changes on Cash
and Cash Equivalents (23 ) (62 )
Increase
(Decrease) in Cash and Cash Equivalents 4 (371 )
Cash and
Cash Equivalents, Beginning of Period 390 725
Cash and Cash Equivalents, End of Period $ 394
$ 354
Table 4
IMS Health Holdings, Inc.
Net Income (Loss) to Adjusted EBITDA
Reconciliation
(Preliminary and unaudited)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30, (in millions)
2015 2014 2015 2014
Net Income (Loss) $ 43 $ 47
$ 388 $ (197 ) Provision for
(benefit from) income taxes 8 11 (219 ) (141 ) Other (income) loss,
net (6 ) (7 ) (16 ) 281 Interest expense 44 43 124 181 Interest
income — (1 ) (1 ) (3 ) Depreciation and amortization 87 109 264
331 Deferred revenue purchase accounting adjustments 3 1 6 3
Stock-based compensation related charges(1) 7 6 21 52 Restructuring
and related charges(2) 18 5 53 34 Acquisition-related charges(3) 14
7 33 19
Sponsor monitoring termination /
fees(3)
— — — 74 Non-executive phantom stock compensation(4) — — — 30
Secondary offering expenses — —
1 —
Adjusted EBITDA $ 218
$ 221 $ 654
$ 664 Depreciation and amortization (34 ) (32
) (103 ) (94 ) Interest expense, net (44 ) (42 ) (123 ) (178 )
Royalty hedge gains 7 1 20 1 Cash tax payments, net of refunds
(18 ) (23 ) (58 ) (64 )
Adjusted Net
Income $ 129 $ 125
$ 390 $ 329
(1)
Stock-based compensation related charges are included in
Operating costs of information, Direct and incremental costs of
technology services and Selling and administrative expenses as
follows:
Three Months Ended Nine
Months Ended September 30, September 30, (in
millions) 2015 2014 2015
2014 Operating costs of information $ 1 $ 1 $
2 $ 6 Direct and incremental costs of technology services 1 1 2 5
Selling and administrative expenses 5 4 17 41
(2)
Restructuring and related charges includes severance and
impairment charges and the cost of employee and third-party charges
related to dual running costs for knowledge transfer activities.
Dual running costs for knowledge transfer activities of $1 million
and $2 million for the three and nine months ended September 30,
2015 and $2 million and $4 million for the three and nine months
ended September 30, 2014, respectively, are primarily included in
Operating costs of information.
(3)
Acquisition-related charges and Sponsor monitoring fees are
included in Selling and administrative expenses.
(4)
Non-executive phantom SARs compensation
expense of $10 million and $20 million for the nine months ended
September 30, 2014 are included in Operating costs of information
and Selling and administrative expenses, respectively.
Table 5
IMS Health Holdings, Inc.
Net Income (Loss) to Adjusted Net
Income Reconciliation
(Preliminary and unaudited)
Three Months EndedSeptember 30, Nine
Months EndedSeptember 30, (in millions, except per
share data) 2015 2014 2015
2014 Net Income (Loss) $ 43 $
47 $ 388 $ (197 )
Provision for (benefit from) income taxes 8 11 (219 ) (141 )
Amortization associated with purchase accounting 53 77 161 230
Deferred revenue purchasing accounting adjustments 3 1 6 3
Stock-based compensation related charges(1) 7 6 21 52 Restructuring
and related charges(2) 18 5 53 41 Acquisition-related charges(3) 14
7 33 19 Sponsor monitoring termination / fees(3) — — — 74
Non-executive phantom stock compensation(4) — — — 30 Secondary
offering expenses — — 1 — Other (income) loss, net (6 )
(7 ) (16 ) 281
Adjusted Pre Tax Income
$ 140 $ 147 $ 428
$ 392 Royalty hedge gains 7 1 20 1 Cash tax payments,
net of refunds (18 ) (23 ) (58 ) (64 )
Adjusted Net Income $ 129 $ 125
$ 390 $ 329 Adjusted Earnings
per Share Attributable to Common Shareholders: Basic $
0.39 $ 0.38 $ 1.18 $ 1.05 Diluted $ 0.38 $ 0.37 $ 1.15 $ 1.02
Weighted-Average Common Shares Outstanding: Basic
328.5 332.1 331.9 314.1 Diluted 336.1 342.3 340.4 323.1
(1)
Stock-based compensation related charges are included in
Operating costs of information, Direct and incremental costs of
technology services and Selling and administrative expenses as
follows:
Three Months Ended Nine
Months Ended September 30, September 30, (in
millions) 2015 2014 2015
2014 Operating costs of information $ 1 $ 1 $
2 $ 6 Direct and incremental costs of technology services 1 1 2 5
Selling and administrative expenses 5 4 17 41
(2)
Restructuring and related charges includes severance and
impairment charges and the cost of employee and third-party charges
related to dual running costs for knowledge transfer activities.
Dual running costs for knowledge transfer activities of $1 million
and $2 million for the three and nine months ended September 30,
2015 and $2 million and $4 million for the three and nine months
ended September 30, 2014, respectively, are primarily included in
Operating costs of information. Nine months ended September 30,
2014 includes accelerated depreciation and amortization of $7
million related to a real estate transaction in the three months
ended June 30, 2014.
(3)
Acquisition-related charges and Sponsor monitoring fees are
included in Selling and administrative expenses.
(4)
Non-executive phantom SARs compensation
expense of $10 million and $20 million for the nine months ended
September 30, 2014 are included in Operating costs of information
and Selling and administrative expenses, respectively.
Table 6
IMS Health Holdings, Inc.
Net Cash Provided by (Used in)
Operating Activities
to Unlevered Free Cash Flow
(Preliminary and unaudited)
Three Months EndedSeptember 30, Nine
Months EndedSeptember 30, (in millions)
2015 2014 2015 2014
Net Cash Provided by (Used in) Operating Activities
$ 111 $ 191 $ 326
$ (37 ) Capital expenditures (4 ) (14 ) (29 )
(59 ) Additions to computer software (34 ) (26 )
(87 ) (70 )
Free Cash Flow $ 73
$ 151 $ 210 $ (166
) Cash interest payments 31 26 106 196 Cash tax payments,
net of refunds 18 23 58 64 Acquisition-related charges(1) 14 7 33
19 Sponsor monitoring termination / fees(1) — — — 74 Non-executive
phantom stock compensation(2) — — — 30 Secondary offering expenses
— — 1 — Debt extinguishment make-whole payments — — — 151
Severance, transaction & other payments 12 8 29 19 FX hedge
(receipts) payments (7 ) 1 (20 ) 7
Unlevered Free Cash Flow $ 141 $
216 $ 417 $ 394
(1)
Acquisition-related charges and Sponsor monitoring fees are
included in Selling and administrative expenses.
(2)
Non-executive phantom SARs compensation
expense of $10 million and $20 million for the nine months ended
September 30, 2014 are included in Operating costs of information
and Selling and administrative expenses, respectively.
Table 7
IMS Health Holdings, Inc.
Calculation of Gross Leverage
Ratio
as of September 30, 2015
(Preliminary and unaudited)
(in millions) Gross Debt as of September
30, 2015 $ 4,296 Adjusted EBITDA for the year
ended December 31, 2014 878 Less: Adjusted EBITDA for the nine
months ended September 30, 2014 (664 ) Add: Adjusted EBITDA for the
nine months ended September 30, 2015 654
Adjusted
EBITDA for the twelve months ended September 30, 2015 $
868 Gross Leverage Ratio (Gross Debt/LTM Adjusted
EBITDA) 5.0x
Table 8
IMS Health Holdings, Inc.
Non-GAAP Adjustments
By Income Statement Line Items
(Preliminary and Unaudited)
Three Months EndedSeptember 30, Nine
Months EndedSeptember 30, (in millions)
2015 2014 2015 2014
Non-GAAP adjustments included in: Operating costs of
information, exclusive of depreciation and amortization $ 1 $ 2 $ 3
$ 19 Direct and incremental costs of technology services, exclusive
of depreciation and amortization 1 — 2 5 Selling and administrative
expenses, exclusive of depreciation and amortization 20 12 53 156
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version on businesswire.com: http://www.businesswire.com/news/home/20151029005402/en/
IMS Health Holdings, Inc.Tom Kinsley, +1-203-448-4691Investor
Relationstkinsley@imshealth.comTor Constantino,
+1-484-567-6732Media Relationstconstantino@us.imshealth.com
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