Quintiles IMS Holdings Continues to Execute
Quintiles IMS Holdings (NYSE: Q), a leading service provider to the healthcare and life sciences industries, reported its second-quarter results on Aug. 3. While year-over-year comparisons continue to be heavily impacted by last year's merger between Quintiles Transnational and IMS Health, the results show that the company was able to meet or exceed its financial targets yet again.
Let's go over the company's results to see what happened during the period.
Quintiles IMS Holdings Q2: The raw numbers
| Metric |
Q1 2017 |
Q1 2016 |
Year-Over-Year Change |
|---|---|---|---|
| Revenue |
$1.97 billion |
$1.17 billion |
72.5% |
| Adjusted EBITDA |
$486 million |
$466 million |
4.2% |
| Adjusted net income |
$242 million |
N/A |
N/A |
| Adjusted EPS |
$1.09 |
$0.93 |
17% |
What happened with Quintiles this quarter?
- Excluding the impact of the merger and currency fluctuations, revenue grew 1.1% when compared to the year-ago period.
- Research and Development Solutions revenue grew 0.4% to $896 million. The sluggish results were blamed on a European facility closure last year and a decline in the company's early clinical development business. On the bright side, the company's backlog now stands just shy of $10 billion.
- Commercial Solutions revenue grew 0.6% to $871 million. Management blamed the slow growth on a drop in the company's legacy Encore and advisory consulting business. The company reminded investors that the Encore business was recently sold and that an impairment charge of $40 million was recorded.
- Integrated Engagement Services revenue of fell 3.7% to $204 million. However, management reminded investors that this business segment benefited from $9 million in accelerated revenue in the year-ago period.
- Adjusted EBITDA was $486 million. This metric was in line with management's guidance range.
- Adjusted EPS of $1.09 was $0.02 better than guidance and $0.04 ahead of Wall Street's estimate.
- $378 million worth of stock was repurchased during the quarter.
What management had to say
Quintiles IMS's CEO Ari Bousbib kept his commentary brief:
On the call with investors, Bousbib noted that the company signed "significant deals" with two of the top 10 pharmaceutical companies for the company's new social media technology platform. This new offering tracks hundreds of thousands of social media outlets to identify adverse events on the company's products.
Finally, Bousbib said that it is already making good progress on its recently announced partnership with salesforce.com. The company plans on accelerating its investment in the partnership with the hope of launching its new SaaS product called Orchestrated Customer Engagement before the end of the year.
Looking forward
Turning to guidance, management projected results that were in line with what market watchers wanted to see. Specifically, the company is forecasting the following for the upcoming quarter:
| Revenue | Adjusted EBITDA | Adjusted EPS |
|---|---|---|
| $2 billion to $2.03 billion | $500 million to $515 million | $1.10 to $1.15 |
Zooming out to the full year, management reaffirmed its revenue guidance and raised its adjusted EPS guidance by $0.05 to a range of $4.50 to $4.65
Quintiles stock didn't move much in the wake of this report, which makes sense since given that it was largely a ho-hum quarter. However, the growing backlog of projects should give investors confidence that the company is still capable of winning more than its fair share of new business while it simultaneously works to realize the benefits of its merger.
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Brian Feroldi has no position in any stocks mentioned. The Motley Fool recommends Quintiles IMS Holdings and Salesforce.com. The Motley Fool has a disclosure policy.