- Revenue up 28.3 percent for the
fourth quarter and 21.0 percent for the full year at constant
currency
- Adjusted EBITDA up 16.8 percent for
the fourth quarter and 11.2 percent for the full year at constant
currency
- Adjusted Net Income up 11.8 percent
in the fourth quarter and 24.6 percent for the full year at
constant currency
- Adjusted Diluted EPS of $0.37 in the
fourth quarter and $1.52 for the full year
- High teens cash tax rate guidance
extended by two years through mid-2023
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 and full year ended December 31, 2015.
Fourth-Quarter 2015 Operating Results
Revenue for the fourth quarter of $812 million was up 28.3
percent on a constant currency basis and 19.7 percent on a reported
basis compared with the fourth quarter of 2014. Excluding the
impact of the acquisition of Cegedim’s CRM and Strategic Data
businesses (“Cegedim Acquisition”), revenue was up 6.8 percent on a
constant currency basis and up 0.7 percent on a reported basis,
with the difference entirely due to the year-over-year
strengthening of the U.S. dollar versus currencies in which the
company transacts business.
The company’s revenue growth in the fourth quarter included a
47.3 percent increase in technology services revenue on a constant
currency basis, up 37.9 percent on a reported basis, versus the
same period last year. Information offerings revenue was up 12.4
percent on a constant currency basis and up 4.2 percent reported.
Emerging markets revenue increased 32.0 percent in the fourth
quarter at constant currency and 14.8 percent reported. Developed
markets revenue grew 27.7 percent at constant currency and 20.6
percent reported.
Excluding the Cegedim Acquisition, technology services revenue
increased 12.3 percent at constant currency and 7.2 percent
reported. Information offerings revenue grew 2.1 percent on a
constant currency basis and declined 4.8 percent on a reported
basis.
Adjusted EBITDA of $232 million improved 16.8 percent at
constant currency and 8.4 percent reported compared with the fourth
quarter of 2014.
“We delivered another year of steady performance in our core IMS
business, including our tenth consecutive quarter of double-digit
constant currency revenue growth in technology services, continued
resilience of our information business, and strong operating
results,” said Ari Bousbib, chairman and CEO, IMS Health. “We are
pleased with the progress of the Cegedim Acquisition integration
and expect sustained top- and bottom-line growth in 2016 and
beyond.”
Fourth-quarter 2015 net income was $29 million, compared with $8
million in last year’s fourth quarter. Adjusted Net Income for the
fourth quarter was $125 million, up 11.8 percent on a constant
currency basis and flat on a reported basis.
Diluted earnings per share was $0.09 in the fourth quarter,
compared with $0.03 per share in the fourth quarter of 2014.
Adjusted Diluted Earnings per Share increased 14.6 percent at
constant currency and 2.5 percent reported to $0.37 in the fourth
quarter.
Full-Year 2015 Operating Results
Revenue for the year ended December 31, 2015 of $2,921 million
increased 21 percent on a constant currency basis and 10.6 percent
reported compared with 2014. Excluding the impact of the Cegedim
Acquisition, revenue was up 5.8 percent on a constant currency
basis and down 2.6 percent on a reported basis. Adjusted EBITDA of
$886 million increased 11.2 percent at constant currency and 0.9
percent reported compared with 2014. Net income was $417 million,
compared with a net loss of $189 million in the prior-year period,
which included one-time IPO-related charges. Adjusted Net Income
was $515 million, up 24.6 percent at constant currency and 13.5
percent reported from 2014. Diluted Earnings per Share was $1.23
for 2015, compared with a loss of $0.59 per share in 2014. Adjusted
Diluted Earnings per Share increased 21.3 percent on a constant
currency basis and 10.5 percent on a reported basis to $1.52,
compared with $1.37 in the prior-year period.
Financial Position
As of December 31, 2015, cash and cash equivalents were $396
million and the principal amount of debt was $4,266 million,
resulting in net debt of $3,870 million.
Cash Flow
Net cash provided by operating activities was $164 million in
the fourth quarter, and $490 million for full-year 2015. Capital
expenditures and additions to deferred software were $67 million in
the quarter and $183 million for full-year 2015, up $16 million
versus the prior year. Unlevered Free Cash Flow for the fourth
quarter was $211 million, or 91 percent of Adjusted EBITDA.
Full-year 2015 Unlevered Free Cash Flow was $628 million, or 71
percent of Adjusted EBITDA.
Share Repurchase
IMS Health repurchased $17 million of its stock during the
fourth quarter of 2015, which brings the year-to-date total to $317
million. The company has a total of $233 million remaining for
repurchase under the existing share repurchase authorization.
Cash Tax Guidance
IMS Health extends its high teens cash tax rate guidance by two
additional years. The company now expects its cash tax rate to
remain in the high teens through mid-2023.
2016 Full-Year Guidance
IMS Health expects constant currency results for full-year 2016
as follows: Revenue growth of 10 to 12 percent, Adjusted EBITDA
growth of 7.5 to 9.5 percent, Adjusted Net Income growth of 6.5 to
8.5 percent and Adjusted Diluted Earnings per Share growth of 8.5
to 10.5 percent.
Assuming foreign exchange rates hold at current levels through
the end of 2016, IMS Health expects reported revenue growth of 7.5
to 9.5 percent, Adjusted EBITDA growth of 6 to 8 percent, Adjusted
Net Income growth of 0.5 to 2.5 percent and Adjusted Diluted
Earnings per Share growth of 2.5 to 4.5 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 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 fourth-quarter and full-year 2015
results at 9:00 a.m. Eastern Time on Wednesday, February 3, 2016.
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 +1-800-926-7891 in the U.S. and Canada, or +1-212-231-2903
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 Annual Report on Form 10-K for the year ended
December 31, 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 included in Part I, Item 1A of our most
recent annual report on Form 10-K 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 Twelve Months Ended
December 31, December 31, (in millions, except per
share data) 2015 2014 2015
2014 Revenue $ 812 $ 678
$ 2,921 $ 2,641 Information 382 366
1,483 1,515 Technology services 430 312 1,438
1,126
Operating costs of information, exclusive
of
depreciation and amortization
173 163 666 665
Direct and incremental costs of technology
services,
exclusive of depreciation and
amortization
222 150 750 573
Selling and administrative expenses,
exclusive of
depreciation and amortization
214 164 712 721 Depreciation and amortization 77 110 341 441
Severance, impairment and other charges 38 4
88 33
Operating Income 88
87 364 208 Interest income 2 1 3
4 Interest expense (45 ) (40 ) (169 ) (221 ) Other income (loss),
net 3 5 19 (276 )
Non-Operating
Loss, Net (40 ) (34 )
(147 ) (493 ) Income
(loss) before income taxes 48 53 217 (285 ) (Provision for) benefit
from income taxes (19 ) (45 ) 200
96
Net Income (Loss) $ 29
$ 8 $ 417 $ (189 )
Earnings (Loss) per Share Attributable
to
Common Shareholders:
Basic $ 0.09 $ 0.03 $ 1.26 $ (0.59 ) Diluted $ 0.09 $ 0.03 $ 1.23 $
(0.59 )
Weighted-Average Common Shares
Outstanding:
Basic 328.7 333.8 331.0 319.0 Diluted 336.1 344.4 339.3 319.0
Table 2
IMS Health Holdings, Inc.
Condensed Balance Sheet
(Preliminary and unaudited)
December 31, December 31, (in millions)
2015 2014 Assets: Cash and cash equivalents $
396 $ 390 Restricted cash 10 24 Accounts receivable, net 508 330
Property, plant and equipment, net 167 153 Computer software, net
309 258 Goodwill & other identifiable intangibles, net 5,781
5,559 Other current & long-term assets 288 382
Total Assets $ 7,459 $ 7,096
Liabilities and Shareholders’ Equity:
Liabilities:
Accounts payable, accrued & other
current liabilities, and
deferred revenues
$ 974 $ 735 Postretirement and postemployment benefits 109 95
Long-term deferred tax and other liabilities 609 985 Debt
4,195 3,739
Total Liabilities 5,887
5,554 Shareholders’ Equity:
Total Shareholders’ Equity
1,572 1,542
Total Liabilities and Shareholders’ Equity $
7,459 $ 7,096
Table 3
IMS Health Holdings, Inc.
Condensed Statement of Cash
Flows
(Preliminary and unaudited)
Twelve Months Ended December 31, (in
millions) 2015 2014 Cash Flows from
Operating Activities: Net Income (Loss) $ 417 $ (189 )
Adjustments to Reconcile Net Income
(Loss) to Net Cash
Provided by Operating
Activities:
Depreciation and amortization 341 441 Deferred income taxes (294 )
(189 ) Non-cash stock-based compensation charges 25 58 Loss on
Venezuela remeasurement 7 49 Other (10 ) 108
Change in assets and liabilities,
excluding effects from
acquisitions and dispositions:
Changes in current assets and liabilities 9 (130 ) Changes in
long-term assets and liabilities (5 ) (38 )
Net
Cash Provided by Operating Activities 490
110 Cash Flows from Investing Activities:
Capital expenditures (52 ) (72 ) Additions to computer software
(131 ) (95 ) Payments for acquisitions of businesses, net of cash
acquired (541 ) (58 ) Other 8 (16 )
Net Cash Used
in Investing Activities (716 )
(241 ) Cash Flows from Financing
Activities: Proceeds from initial public offering, net of costs
— 987 Other financing activities 262 (1,110 )
Net
Cash Provided by (Used in) Financing Activities
262 (123 )
Effect of Exchange Rate Changes on Cash
and CashEquivalents
(30 ) (81 )
Increase (Decrease) in Cash and Cash
Equivalents 6 (335 ) Cash and Cash
Equivalents, Beginning of Period 390 725
Cash
and Cash Equivalents, End of Period $ 396
$ 390
Table 4
IMS Health Holdings, Inc.
Net Income (Loss) to Adjusted EBITDA
Reconciliation
(Preliminary and unaudited)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, (in millions)
2015 2014 2015 2014
Net Income (Loss) $ 29 $ 8
$ 417 $ (189 ) Provision for
(benefit from) income taxes 19 45 (200 ) (96 ) Other (income) loss,
net (3 ) (5 ) (19 ) 276 Interest expense 45 40 169 221 Interest
income (2 ) (1 ) (3 ) (4 ) Depreciation and amortization 77 110 341
441
Deferred revenue purchase accounting
adjustments
4 1 10 4 Stock-based compensation related charges(1) 7 6 28 58
Restructuring and related charges(2) 38 5 91 39 Acquisition-related
charges(3) 18 5 51 24 Sponsor monitoring fees(3) — — — 74
Non-executive phantom SARs
compensation
expense(4)
— — — 30 Secondary offering expenses — —
1 —
Adjusted EBITDA
$ 232 $ 214 $
886 $ 878 Depreciation and
amortization (33 ) (36 ) (136 ) (130 ) Interest expense, net (43 )
(39 ) (166 ) (217 ) Royalty hedge gains 3 5 23 6 Cash tax payments,
net of refunds (34 ) (19 ) (92 ) (83 )
Adjusted Net Income $ 125 $
125 $ 515 $ 454
(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 Twelve Months
Ended December 31, December 31, (in
millions) 2015 2014 2015
2014 Operating costs of information $ — $ — $
2 $ 6 Direct and incremental costs of technology services — — 2 5
Selling and administrative expenses 7 6 24 47
(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 $3 million for the three and twelve
months ended December 31, 2015 and $2 million and $6 million for
the three and twelve months ended December 31, 2014, respectively,
are primarily included in Operating costs of information. Twelve
months ended December 31, 2014 excludes 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 primarily in Selling and
administrative expenses.
(4)
Non-executive phantom SARs compensation
expense of $10 million and $20 million for the twelve months ended
December 31, 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 EndedDecember 31, Twelve
Months EndedDecember 31, (in millions, except per
share data) 2015 2014 2015
2014 Net Income (Loss) $ 29 $
8 $ 417 $ (189 ) Provision for
(benefit from) income taxes 19 45 (200 ) (96 ) Amortization
associated with purchase accounting 44 74 205 304
Deferred revenue purchasing accounting
adjustments
4 1 10 4 Stock-based compensation related charges(1) 7 6 28 58
Restructuring and related charges(2) 38 5 91 46 Acquisition-related
charges(3) 18 5 51 24 Sponsor monitoring fees(3) — — — 74
Non-executive phantom SARs
compensation
expense(4)
— — — 30 Secondary offering expenses — — 1 — Other (income) loss,
net (3 ) (5 ) (19 ) 276
Adjusted Pre Tax Income $ 156 $
139 $ 584 $ 531 Royalty Hedge
Gains 3 5 23 6 Cash tax payments, net of refunds (34 )
(19 ) (92 ) (83 )
Adjusted Net Income
$ 125 $ 125 $ 515
$ 454
Adjusted Earnings per Share
Attributable to
Common Shareholders:
Basic $ 0.38 $ 0.37 $ 1.56 $ 1.42 Diluted $ 0.37 $ 0.36 $ 1.52 $
1.37
Weighted-Average Common Shares
Outstanding:
Basic 328.7 333.8 331.0 319.0 Diluted 336.1 344.4 339.3 330.3
(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 Twelve Months
Ended December 31, December 31, (in
millions) 2015 2014 2015
2014 Operating costs of information $ — $ — $
2 $ 6 Direct and incremental costs of technology services — — 2 5
Selling and administrative expenses 7 6 24 47
(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 $3 million for the three and twelve
months ended December 31, 2015 and $2 million and $6 million for
the three and twelve months ended December 31, 2014, respectively,
are primarily included in Operating costs of information. Twelve
months ended December 31, 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 primarily in Selling and
administrative expenses.
(4)
Non-executive phantom SARs compensation
expense of $10 million and $20 million for the twelve months ended
December 31, 2014 are included in Operating costs of information
and Selling and administrative expenses, respectively.
Table 6
IMS Health Holdings, Inc.
Net Cash Provided by Operating
Activities
to Unlevered Free Cash Flow
(Preliminary and unaudited)
Three Months EndedDecember 31, Twelve
Months EndedDecember 31, (in millions)
2015 2014 2015
2014 Net Cash Provided by Operating Activities
$ 164 $ 147 $ 490
$ 110 Capital expenditures (23 ) (13 ) (52 ) (72 )
Additions to computer software (44 ) (25 )
(131 ) (95 )
Free Cash Flow $ 97
$ 109 $ 307 $ (57
) Cash interest payments 52 47 158 243 Cash tax payments,
net of refunds 34 19 92 83 Acquisition-related charges(1) 18 5 51
24 Sponsor monitoring fees(1) — — — 74
Non-executive phantom SARs
compensation
expense (2)
— — — 30 Secondary offering expenses — — 1 — Debt extinguishment
make-whole payments — — — 151 Severance, transaction & other
payments 14 6 43 26 FX hedge (receipts) payments (4 )
(4 ) (24 ) 2
Unlevered Free Cash Flow $
211 $ 182 $ 628 $
576
(1)
Acquisition-related charges and Sponsor
monitoring fees are included primarily in Selling and
administrative expenses.
(2)
Non-executive phantom SARs compensation
expense of $10 million and $20 million for the twelve months ended
December 31, 2014 are included in Operating costs of information
and Selling and administrative expenses, respectively.
Table 7
IMS Health Holdings, Inc.
Non-GAAP Adjustments
By Income Statement Line Items
(Preliminary and Unaudited)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, (in millions)
2015 2014 2015 2014
Non-GAAP adjustments included in:
Operating costs of information, exclusive
of
depreciation and amortization
$ 1 $ 2 $ 4 $ 21
Direct and incremental costs of
technology
services, exclusive of depreciation
andamortization
2 1 4 5
Selling and administrative expenses,
exclusive of
depreciation and amortization
23 10 76 165
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version on businesswire.com: http://www.businesswire.com/news/home/20160203005514/en/
IMS Health Holdings, Inc.Investor RelationsTom Kinsley,
+1-203-448-4691tkinsley@imshealth.comorMedia RelationsTor
Constantino, +1-484-567-6732tconstantino@us.imshealth.com
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