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Aug. 6, 2019, 6:15 a.m. EDT

Syneos Health Reports Second Quarter 2019 Results

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MORRISVILLE, N.C., Aug 06, 2019 (GLOBE NEWSWIRE via COMTEX) -- Highlights

-- GAAP revenue of $1,166.8 million for the three months ended June 30, 2019, representing growth of 8.8% compared to the same period in 2018.

-- Adjusted revenue of $1,168.4 million for the three months ended June 30, 2019, representing growth of 8.6%, or 9.6% on a constant currency basis, compared to the same period in 2018.

-- Net new business awards of $5,265.2 million for the trailing twelve months (TTM) ended June 30, 2019, representing a TTM book-to-bill ratio of 1.16x.

º Clinical Solutions segment net new business awards of $3,967.0 million for the TTM period ended June 30, 2019, representing a TTM book-to-bill ratio of 1.20x.

º Commercial Solutions segment net new business awards of $1,298.2 million for the TTM period ended June 30, 2019, representing a TTM book-to-bill ratio of 1.04x.

-- GAAP diluted earnings per share of $0.11 for the three months ended June 30, 2019.

-- Adjusted diluted earnings per share of $0.74 for the three months ended June 30, 2019.

-- Repaid $40.0 million of term loan debt and repurchased $23.1 million of common stock during the three months ended June 30, 2019.

-- Updating full-year 2019 guidance: adjusted revenue of $4,640.0 million to $4,750.0 million, adjusted EBITDA of $630.0 million to $660.0 million, and adjusted diluted earnings per share of $3.08 to $3.26.

Syneos Health /zigman2/quotes/207981284/composite SYNH -0.61% , a leading biopharmaceutical solutions organization combining a Contract Research Organization and a Contract Commercial Organization, today reported financial results for the second quarter and six months ended June 30, 2019.

"Our solid second quarter results reflect strong year-over-year growth in both segments, and growing market interest in our ability to deliver comprehensive, integrated solutions to customers of all sizes," said Alistair Macdonald, Chief Executive Officer, Syneos Health. "Our unmatched breadth of integrated capabilities, shared insights, and unique Syneos One product development offering are key differentiators for customers looking to accelerate development and commercialization timelines. We believe we are well positioned to drive growth throughout the remainder of 2019 with a robust backlog, pipeline and RFP flow, and look forward to continuing to solve our customers' most complex challenges."

Second Quarter 2019 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 June 30, 2019, GAAP revenue increased 8.8% to $1,166.8 million and adjusted revenue increased 8.6% to $1,168.4 million from the same period in the prior year. On a constant currency basis, adjusted revenue increased 9.6%. This increase was driven by revenue growth in both Commercial Solutions and Clinical Solutions, as discussed below.

For the three months ended June 30, 2019, Clinical Solutions GAAP revenue increased 8.4% to $849.9 million, and adjusted revenue increased 8.2% to $851.5 million from the same period in the prior year. On a constant currency basis, adjusted revenue increased 9.4%. This increase was primarily due to net new business growth, favorable revenue mix, and higher growth in reimbursable expenses, partially offset by the impact of fluctuations in foreign currency exchange rates.

For the three months ended June 30, 2019, Commercial Solutions GAAP revenue increased 9.8% to $316.9 million and adjusted revenue increased 9.6% to $316.9 million from the same period in the prior year. On a constant currency basis, adjusted revenue increased 10.3%. This increase was primarily due to net new business growth and the Company's acquisition of Kinapse in the third quarter of 2018, partially offset by lower growth in reimbursable expenses and the impact of fluctuations in foreign currency exchange rates.

GAAP net income for the three months ended June 30, 2019 was $11.3 million, resulting in diluted earnings per share of $0.11, compared to GAAP net income of $13.6 million, or diluted earnings per share of $0.13, for the three months ended June 30, 2018.

Adjusted net income for the three months ended June 30, 2019 was $77.3 million, resulting in adjusted diluted earnings per share of $0.74, representing growth of 19.4% from the same period in prior year. The increases in adjusted net income and adjusted diluted earnings per share were primarily due to growth in adjusted EBITDA and the reduction of the Company's non-GAAP effective tax rate to 24.5%.

Adjusted EBITDA for the three months ended June 30, 2019 increased 12.2% to $153.8 million from the same period in the prior year, representing an increase in adjusted EBITDA margin from 12.7% to 13.2%. This increase in adjusted EBITDA was driven primarily by revenue growth, an increase in net realized synergies, and the impact of fluctuations in foreign currency exchange rates, partially offset by the startup of large new customer relationships.

TTM net new business awards were $5,265.2 million for the period ended June 30, 2019, representing a TTM book-to-bill ratio of 1.16x. Clinical Solutions TTM net new business awards for the period ended June 30, 2019 were $3,967.0 million, representing a TTM book-to-bill ratio of 1.20x. Commercial Solutions TTM net new business awards for the period ended June 30, 2019 were $1,298.2 million, representing a TTM book-to-bill ratio of 1.04x. These net new business awards contributed to an ending backlog of $8,455.3 million as of June 30, 2019, comprised of an ending backlog of $7,834.0 million for Clinical Solutions and an ending backlog of $621.3 million for the Deployment Solutions (formerly called Selling Solutions) offering within Commercial Solutions.

First Half 2019 Results

For the six months ended June 30, 2019, GAAP revenue increased 7.3% to $2,285.8 million and adjusted revenue increased 7.1% to $2,289.0 million from the same period in the prior year. On a constant currency basis, adjusted revenue increased 8.4%. This increase was driven by revenue growth in both Commercial Solutions and Clinical Solutions, as discussed below.

For the six months ended June 30, 2019, Clinical Solutions GAAP revenue increased 5.4% to $1,654.9 million and adjusted revenue increased 5.1% to $1,658.1 million from the same period in the prior year. On a constant currency basis, adjusted revenue increased 6.6%. This increase was primarily due to net new business growth and higher growth in reimbursable expenses, partially offset by the impact of fluctuations in foreign currency exchange rates.

For the six months ended June 30, 2019, Commercial Solutions GAAP revenue increased 12.9% to $631.0 million and adjusted revenue increased 12.7% to $631.0 million from the same period in the prior year. On a constant currency basis, adjusted revenue increased 13.4%. This increase was primarily due to net new business growth, favorable revenue mix, and the Company's acquisition of Kinapse in the third quarter of 2018, partially offset by lower growth in reimbursable expenses and the impact of fluctuations in foreign currency exchange rates.

GAAP net loss for the six months ended June 30, 2019 was $18.7 million, resulting in a diluted loss per share of $0.18, compared to a net loss of $11.0 million, or a diluted loss per share of $0.11, for the six months ended June 30, 2018.

Adjusted net income for the six months ended June 30, 2019 was $139.4 million, resulting in adjusted diluted earnings per share of $1.33, representing growth of 14.7% from the same period in prior year. The increases in adjusted net income and adjusted diluted earnings per share were primarily due to growth in adjusted EBITDA and the reduction of the Company's non-GAAP effective tax rate to 24.5%.

Adjusted EBITDA for the six months ended June 30, 2019 increased 8.7% to $288.8 million from the same period in the prior year, representing an increase in adjusted EBITDA margin from 12.4% to 12.6%. This increase in adjusted EBITDA was driven primarily by revenue growth, an increase in net realized synergies, and the impact of fluctuations in foreign currency exchange rates, partially offset by higher than anticipated seasonal expenses and the startup of large new customer relationships.

Capital Management Update

During the three and six months ended June 30, 2019, the Company repaid $40.0 million and $77.5 million of principal of its term loans, respectively. During the three months ended June 30, 2019, the Company repurchased 509,100 shares of common stock for a total repurchase price of approximately $23.1 million. During the six months ended June 30, 2019, the Company repurchased 1,181,800 shares of common stock for a total repurchase price of approximately $49.7 million. As of June 30, 2019, the Company had remaining repurchase authorization of approximately $125.3 million, which is available through the end of 2019.

Full Year 2019 Business Outlook

The Company's guidance takes into account a number of factors, including existing backlog, current sales pipeline, trends in cancellations and delays, and estimated synergies from the merger with inVentiv Health, net of reinvestments. Furthermore, the guidance presented below is based on current foreign currency exchange rates, current interest rates, and the Company's expected non-GAAP effective tax rate. The guidance is based upon the Company's estimated number of weighted average diluted shares outstanding, and does not take into account any share repurchases beyond the second quarter of 2019. The Company's updated full year 2019 guidance is outlined below:







                                            Guidance Issued as of May 9, 2019     Guidance Issued as of August 6, 2019
                                            Full Year 2019                        Full Year 2019
                                            Low           High                    Low           High
                                            (in millions, except per share data)  (in millions, except per share data)
        Adjusted revenue                    $     4,620   $     4,730             $     4,640   $     4,750
        Clinical Solutions adjusted revenue 3,345         3,410                   3,365         3,430
        Commercial Solutions revenue        1,275         1,320                   1,275         1,320
        Adjusted EBITDA                     625           660                     630           660
        Adjusted diluted EPS                $     3.03    $     3.23              $     3.08    $     3.26
        


Clinical Solutions adjusted revenue guidance includes an add-back of deferred revenue eliminated in purchase accounting of approximately $6.5 million for 2019.

The Company anticipates that its 2019 non-GAAP effective tax rate will be between 24.0% and 25.0%. Important disclosures in this earnings release about and reconciliations of historical and forward-looking non-GAAP measures, to the nearest corresponding GAAP measures are provided below under "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Measures."

Webcast and Conference Call Details

Syneos Health will host a conference call at 8:00 a.m. ET on August 6, 2019, to discuss its second quarter 2019 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 2196064.

An archived replay of the conference call is expected to be available online at investor.syneoshealth.com after 1:00 p.m. ET on August 6, 2019. 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 2196064.

About Syneos Health

Syneos Health(TM) /zigman2/quotes/207981284/composite SYNH -0.61% 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. Created through the merger of two industry leading companies - INC Research and inVentiv Health - 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 statements regarding creating a strong foundation for 2019 and beyond, anticipated financial results for the full year 2019, plans for capital deployment, and potential acquisitions. 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; 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 our 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 planned 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 the integration of the Company's business with the business of inVentiv Health and its operation of the combined business following the closing of the merger with inVentiv Health in 2017; 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, 2018 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 reported 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; loss on extinguishment of debt; and other income (expense), net.

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 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.

/zigman2/quotes/207981284/composite
US : U.S.: Nasdaq
$ 55.03
-0.34 -0.61%
Volume: 267,261
Oct. 18, 2019 4:00p
P/E Ratio
361.33
Dividend Yield
N/A
Market Cap
$5.69 billion
Rev. per Employee
$182,922
loading...
/zigman2/quotes/207981284/composite
US : U.S.: Nasdaq
$ 55.03
-0.34 -0.61%
Volume: 267,261
Oct. 18, 2019 4:00p
P/E Ratio
361.33
Dividend Yield
N/A
Market Cap
$5.69 billion
Rev. per Employee
$182,922
loading...
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