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8-K - 8-K - PRA Health Sciences, Inc. | a15-4792_18k.htm |
EX-99.2 - EX-99.2 - PRA Health Sciences, Inc. | a15-4792_1ex99d2.htm |
Exhibit 99.1
PRA Health Sciences, Inc. Reports 4th Quarter and Full Year 2014 Results
and 2015 Guidance
· $323.8 million of service revenue in the fourth quarter; 8% consolidated service revenue growth compared to the fourth quarter of 2013
· $50.6 million of Adjusted EBITDA in the fourth quarter; 44% growth compared to the fourth quarter of 2013
· Fourth quarter Adjusted Net Income per share increased 35% to $0.35 per share and Adjusted Net Income increased 80% to $18.6 million compared to the fourth quarter of 2013
· Fourth quarter GAAP Net Loss per share was $0.45 and GAAP Net Loss was $22.8 million, which were driven by costs incurred in connection with the Companys IPO and related pay-down of debt
Raleigh, NC, February 18, 2015 PRA Health Sciences, Inc. (PRA or the Company) (NASDAQ: PRAH) today reported its financial results for the fourth quarter ended December 31, 2014.
For the three months ended December 31, 2014, the Companys service revenues were $323.8 million, which represents growth of 8%, or $25.0 million, compared to the fourth quarter of 2013 at actual foreign exchange rates. On a constant currency basis, service revenue grew $29.7 million, representing growth of 10% compared to the fourth quarter of 2013. The increase in service revenue is due largely to the increase in our opening backlog, the type of service we are providing on our active studies and the growth in new business awards as a result of higher demand for our services.
Net new business for the quarter ended December 31, 2014 was $388.4 million representing a book-to-bill ratio of 1.2 in the period. This net new business contributed to an ending backlog of $2.1 billion at December 31, 2014.
I am very pleased with the progress made on our financial performance. We have delivered strong revenue growth and bottom line results in line with our expectations, as well as, continued strength in net new business awards, said Colin Shannon, PRAs Chief Executive Officer. Following our initial public offering in November 2014, we have continued to maintain our momentum, which demonstrates the confidence our clients have in our ability to provide high quality project-based, embedded and functional outsourcing services.
We remain focused on areas that will differentiate our services to our clients by continuing to strengthen our therapeutic expertise and enhance our medical informatics, as well as developing new capabilities that will allow us to provide broad and flexible services to our clients.
Direct costs were $214.9 million during the three months ended December 31, 2014 compared to $205.1 million for the fourth quarter of 2013. Direct costs were 66.4% of service revenue during the fourth quarter of 2014 compared to 68.6% of service revenue during the fourth quarter of 2013. The decrease in direct costs as a percentage of service revenue is primarily related to our ability to leverage our billable staff and the successful integration of our acquisitions.
Selling, general and administrative expenses were $73.7 million during the three months ended December 31, 2014 compared to $65.1 million for the fourth quarter of 2013. Selling, general and administrative costs were 22.8% of service revenue during the fourth quarter of 2014 compared to 21.8% of service revenue during the fourth quarter of 2013. The increase in selling, general and administrative expenses is primarily related to one-time IPO-related expenses. These payments were partially offset by a decrease in expenses as we realize synergies from our acquisitions and continue to leverage our selling and administrative functions.
Reported EBITDA on a GAAP basis was $17.4 million, representing a decrease of 17.2% compared to the fourth quarter of 2013. The primary drivers of the decrease in reported EBITDA on a GAAP basis were $11.9 million of expenses related to our IPO and a $23.7 million loss from the extinguishment of a portion of our long-term debt attributable to a prepayment penalty incurred on our senior notes and the write-off of previously recorded unamortized debt issuance costs related to our first lien term loan and senior notes. Adjusted EBITDA was $50.6 million for the three months ended December 31, 2014, representing growth of 43.6% compared to the fourth quarter of 2013.
Reported GAAP net loss was $22.8 million and reported GAAP diluted loss per share was $0.45 for the three months ended December 31, 2014, increases of 143% and 88%, respectively, when compared to the fourth quarter of 2013. The increase in our GAAP net loss and our reported GAAP diluted loss per share were primarily driven by expenses related to our IPO discussed previously.
Adjusted Net Income was $18.6 million for the three months ended December 31, 2014, representing growth of 80.0% compared to the fourth quarter of 2013. Adjusted Net Income per share was $0.35 for the three months ended December 31, 2014, representing growth of 35% compared to the fourth quarter of 2013.
Foreign currency gains (losses) were a gain of $9.0 million for the three months ended December 31, 2014 compared to a loss of $4.7 million for the fourth quarter of 2013. Foreign exchange gains and losses are due to fluctuations in the U.S. dollar and the settling and revaluation of inter-company accounts.
Reconciliations of our non-GAAP measures, including Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share to the corresponding GAAP measures are attached to this press release.
Fiscal Year 2014
For the twelve months ended December 31, 2014, the Companys service revenues were $1,266.6 million, which represents growth of 52%, or $433.7 million as compared to 2013 at actual foreign exchange rates. On a constant currency basis, service revenue grew $435.5 million, also representing growth of 52% compared to 2013. Reported GAAP income from operations was $56.8 million, reported GAAP net loss was $35.7 million and reported GAAP diluted loss per share was $0.83 for the twelve months ended December 31, 2014. Adjusted Net Income was $55.7 million for the twelve months ended December 31, 2014, representing growth of 119% compared to 2013. Adjusted Net Income per share was $1.26 for the twelve months ended December 31, 2014, representing growth of 107% compared to 2013.
Other
In November 2014, the Company completed its successful IPO of 19,523,255 shares of common stock for cash consideration of $18 per share. The common stock is listed on the Nasdaq Global Select Market under the symbol PRAH.
2015 Guidance
For 2015, the Company expects to achieve service revenues between $1.35 billion and $1.4 billion, diluted GAAP earnings per share between $0.60 and $0.65 per share, diluted Adjusted Net Income per share of $1.35 to $1.45 per share, and annual effective income tax rate estimates at approximately 30%. This financial guidance assumes the first of January foreign currency exchange rates.
Webcast & Conference Call Details
PRA will host a conference call at 9:00 a.m. EDT tomorrow to discuss its fourth quarter 2014 financial results. To participate, please dial +1 (887) 930-8062 or +1 (253) 336-7647 outside the United States approximately 15 minutes before the scheduled start of the call. The conference call ID for the call is 81129194. The conference call will also be accessible, live via webcast, on the Investors section of the PRA website at www.prahs.com/investors. An archived replay of the conference call will be available online at www.prahs.com/investors. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing (855) 859-2056 within the United States or (404) 537-3406 outside the United States. The replay ID is 81129194.
About PRA
PRA (NASDAQ: PRAH) is one of the worlds leading global contract research organizations, or CROs, by revenue, providing outsourced clinical development services to the biotechnology and pharmaceutical industries. PRAs global clinical development platform includes more than 75 offices across North America, Europe, Asia, Latin America, South Africa, Australia and the Middle East and approximately 11,000 employees worldwide. Since 2000, PRA has performed approximately 2,300 clinical trials worldwide and has worked on more than 100 marketed drugs across several therapeutic areas. In addition, PRA has participated in the pivotal or supportive trials that led to U.S. Food and Drug Administration, or international regulatory approval of more than 45 drugs.
PRA has therapeutic expertise in areas that are among the largest in pharmaceutical development, including oncology, central nervous system, inflammation and infectious diseases. PRA believes that it provides its clients with one of the most flexible clinical development service offerings, which includes both traditional, project-based Phase I through Phase IV services, as well as embedded and functional outsourcing services. The Company has invested in medical informatics and clinical technologies designed to enhance efficiencies, improve study predictability, and provide better transparency to clients throughout their clinical development processes. To learn more about PRA, please visit www.prahs.com.
Internet Posting of Information: The Company routinely posts information that may be important to investors in the Investors section of the Companys website at www.prahs.com. The Company encourages investors and potential investors to consult the Companys website regularly for important information about the Company.
Contact: |
Linda Baddour, Executive Vice President and Chief Financial Officer or Mike Bonello, Senior Vice President and Corporate Controller at +1.919.786.8270 |
Forward-Looking Statements
This press release contains forward-looking statements that reflect, among other things, the Companys current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements, market trends or industry results to differ materially from those expressed or implied by such forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may constitute forward-looking statements. Without limiting the foregoing, words such as anticipates, believes, estimates, expects, guidance, intends, may, plans, projects, should, targets, will and the negative thereof and similar words and expressions are intended to identify forward-looking statements. Actual results may differ materially from the Companys expectations due to a number of factors, including that most of the Companys contracts may be terminated on short notice, and that the Company may be unable to maintain large customer contracts or to enter into new contracts; the historical indications of the relationship of backlog to revenues may not be indicative of their future relationship; the market for the Companys services may not grow as the Company expects; the Company may under price contracts or overrun its cost estimates, and if the Company is unable to achieve operating efficiencies or grow revenues faster than expenses, operating margins will be adversely affected; the Company may be unable to maintain information systems or effectively update them; customer or therapeutic concentration could harm the Companys business; the Companys business is subject to risks associated with international operations, including economic, political and other risks; government regulators or customers may limit the scope of prescription or withdraw products from the market, and government regulators may impose new regulations affecting the Companys business; the Company may be unable to successfully develop and market new services or enter new markets; the Companys failure to perform services in accordance with contractual requirements, regulatory standards and ethical considerations may subject it to significant costs or liability, damage its reputation and cause it to lose existing business or not receive new business; the Companys services are related to treatment of human patients, and it could face liability if a patient is harmed; the Company has substantial indebtedness and may incur additional indebtedness in the future, which could adversely affect the Companys financial condition; and other factors that are set forth in the Companys filings with the Securities and Exchange Commission, including the final prospectus dated November 12, 2014 relating to the Companys initial public offering. The Company undertakes no obligation to update any forward-looking statement after the date of this release, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.
Use of Non-GAAP Financial Measures
This press release includes Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share, each of which are financial measures not prepared in accordance with accounting principles generally accepted in the United States (GAAP). Management believes that these measures are more indicative of our operating results as they exclude certain items whose fluctuation from period-to-period do not necessarily correspond to changes in the operating results of our business. As a result, management and our board of directors regularly use EBITDA and Adjusted EBITDA as a tool in evaluating our operating and financial performance and in establishing discretionary annual bonuses. Adjusted EBITDA is also the basis for covenant compliance EBITDA, which is used in certain covenants in the credit agreement governing our senior secured credit facilities and the indenture governing the senior notes. In addition, management believes that EBITDA, Adjusted EBITDA and Adjusted Net Income (including diluted adjusted net income per share) facilitate comparisons of our operating results with those of other companies by backing out of GAAP net income items relating to variations in capital structures (affecting interest expense), taxation, and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance. We believe that EBITDA, Adjusted EBITDA and Adjusted Net Income (including diluted adjusted net income per share) are frequently used by securities analysts, investors, and other interested parties in the evaluation of issuers, many of which
also present EBITDA, Adjusted EBITDA and Adjusted Net Income (including diluted adjusted net income per share) when reporting their results in an effort to facilitate an understanding of their operating results.
These non-GAAP financial measures have limitations as analytical tools, and you should not consider these measures in isolation, or as a substitute for analysis of our results as reported under GAAP. Additionally, because not all companies use identical calculations, these presentations of EBITDA, Adjusted EBITDA and Adjusted Net Income (including diluted adjusted net income per share) may not be comparable to similarly titled measures of other companies.
EBITDA represents net (loss) income before interest, taxes, depreciation and amortization. Adjusted EBITDA and Adjusted Net Income (including diluted adjusted net income per share) represent EBITDA and net income (including diluted net income per share), respectively, adjusted to exclude management fees, stock-based compensation expense, loss on disposal of fixed assets, loss on modification or extinguishment of debt, foreign currency losses and gains, other (expense) income, equity in losses of unconsolidated joint ventures, transaction and acquisition related costs, relocation costs, severance costs and restructuring charges, non-cash rent adjustments and other one-time charges. Adjusted Net Income is also adjusted to exclude amortization of intangible assets and amortization of deferred financing costs. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net (loss) income or other performance measures derived in accordance with GAAP or as alternatives to cash flow from operating activities as measures of our liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are:
· EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
· EBITDA and Adjusted EBITDA do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
· EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;
· EBITDA and Adjusted EBITDA do not reflect historical capital expenditures or future requirements for capital expenditures or contractual commitments;
· although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and
· other companies in our industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.
PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
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Successor |
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Twelve |
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Successor |
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Predecessor |
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Months |
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September 23, |
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January 1, |
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Successor |
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Ended |
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2013 - |
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2013 - |
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Three Months Ended December 31, |
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December 31, |
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December 31, |
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September 22 |
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2014 |
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2013 |
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2014 |
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2013 |
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2013 |
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(unaudited) |
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Revenue: |
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Service revenue |
|
$ |
323,759 |
|
$ |
298,791 |
|
$ |
1,266,596 |
|
$ |
324,362 |
|
$ |
508,539 |
|
Reimbursement revenue |
|
46,204 |
|
50,851 |
|
192,990 |
|
54,854 |
|
103,531 |
| |||||
Total revenue |
|
369,963 |
|
349,642 |
|
1,459,586 |
|
379,216 |
|
612,070 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Direct costs |
|
214,943 |
|
205,076 |
|
859,218 |
|
222,776 |
|
304,102 |
| |||||
Reimbursable out-of-pocket costs |
|
46,204 |
|
50,851 |
|
192,990 |
|
54,854 |
|
103,531 |
| |||||
Selling, general and administrative |
|
73,689 |
|
65,140 |
|
253,970 |
|
69,730 |
|
142,880 |
| |||||
Transaction-related costs |
|
|
|
1,935 |
|
|
|
29,180 |
|
47,486 |
| |||||
Depreciation and amortization |
|
23,424 |
|
21,960 |
|
96,564 |
|
25,333 |
|
25,144 |
| |||||
(Gain) loss on disposal of fixed assets, net |
|
(4 |
) |
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5 |
|
|
|
225 |
| |||||
Income (loss) from operations |
|
11,707 |
|
4,680 |
|
56,839 |
|
(22,657 |
) |
(11,298 |
) | |||||
Interest expense, net |
|
(18,329 |
) |
(21,812 |
) |
(81,939 |
) |
(23,703 |
) |
(32,719 |
) | |||||
Loss on modification or extinguishment of debt |
|
(23,652 |
) |
(1,586 |
) |
(25,036 |
) |
(7,211 |
) |
(21,678 |
) | |||||
Foreign currency gains (losses), net |
|
8,979 |
|
(4,662 |
) |
10,538 |
|
(4,117 |
) |
(3,641 |
) | |||||
Other (expense) income, net |
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(2,024 |
) |
1,232 |
|
(2,254 |
) |
1,180 |
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(530 |
) | |||||
Loss before income taxes and equity in losses of unconsolidated joint ventures |
|
(23,319 |
) |
(22,148 |
) |
(41,852 |
) |
(56,508 |
) |
(69,866 |
) | |||||
Benefit from income taxes |
|
(1,535 |
) |
(13,389 |
) |
(8,154 |
) |
(17,186 |
) |
(22,079 |
) | |||||
Loss before equity in losses of unconsolidated joint ventures |
|
(21,784 |
) |
(8,759 |
) |
(33,698 |
) |
(39,322 |
) |
(47,787 |
) | |||||
Equity in losses of unconsolidated joint ventures, net of tax |
|
(1,036 |
) |
(621 |
) |
(2,044 |
) |
(621 |
) |
(603 |
) | |||||
Net loss |
|
$ |
(22,820 |
) |
$ |
(9,380 |
) |
$ |
(35,742 |
) |
$ |
(39,943 |
) |
$ |
(48,390 |
) |
Net loss per share attributable to common shareholders: |
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|
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Basic |
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$ |
(0.45 |
) |
$ |
(0.24 |
) |
$ |
(0.83 |
) |
$ |
(1.02 |
) |
$ |
(1.22 |
) |
Diluted |
|
$ |
(0.45 |
) |
$ |
(0.24 |
) |
$ |
(0.83 |
) |
$ |
(1.02 |
) |
$ |
(1.22 |
) |
Weighted average common shares outstanding: |
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|
|
|
|
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|
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| |||||
Basic |
|
50,684 |
|
39,337 |
|
42,897 |
|
39,337 |
|
39,643 |
| |||||
Diluted |
|
50,684 |
|
39,337 |
|
42,897 |
|
39,337 |
|
39,643 |
|
PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
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|
December 31, |
| ||||
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2014 |
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2013 |
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ASSETS |
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Current assets: |
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| ||
Cash and cash equivalents |
|
$ |
85,192 |
|
$ |
72,155 |
|
Restricted cash |
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6,337 |
|
8,760 |
| ||
Accounts receivable and unbilled services, net |
|
338,781 |
|
294,984 |
| ||
Acquisition-related receivables |
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|
|
15,851 |
| ||
Prepaid expenses and other current assets |
|
32,719 |
|
27,222 |
| ||
Income taxes receivable |
|
4,466 |
|
9,798 |
| ||
Deferred tax assets |
|
23,673 |
|
29,224 |
| ||
Total current assets |
|
491,168 |
|
457,994 |
| ||
Fixed assets, net |
|
72,933 |
|
75,827 |
| ||
Goodwill |
|
1,033,543 |
|
1,099,081 |
| ||
Intangible assets, net |
|
600,910 |
|
699,791 |
| ||
Deferred tax assets |
|
888 |
|
1,026 |
| ||
Investment in unconsolidated joint ventures |
|
1,213 |
|
3,246 |
| ||
Deferred financing fees |
|
27,496 |
|
41,373 |
| ||
Other assets |
|
12,370 |
|
16,396 |
| ||
Total assets |
|
$ |
2,240,521 |
|
$ |
2,394,734 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Current portion of borrowings under credit facilities |
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$ |
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$ |
10,000 |
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Current portion of long-term debt |
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|
|
8,900 |
| ||
Accounts payable |
|
39,100 |
|
27,686 |
| ||
Accrued expenses and other current liabilities |
|
116,088 |
|
119,204 |
| ||
Income taxes payable |
|
14,131 |
|
7,169 |
| ||
Deferred tax liabilities |
|
154 |
|
416 |
| ||
Advance billings |
|
296,121 |
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295,889 |
| ||
Total current liabilities |
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465,594 |
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469,264 |
| ||
Deferred tax liabilities |
|
109,030 |
|
185,591 |
| ||
Long-term debt, net |
|
948,537 |
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1,245,812 |
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Other long-term liabilities |
|
40,545 |
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26,732 |
| ||
Total liabilities |
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1,563,706 |
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1,927,399 |
| ||
Commitments and contingencies |
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Stockholders equity: |
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| ||
Common stock, $0.01 par value, 1,000,000,000 authorized shares at December 31, 2014 and December 31, 2013; 59,808,888 and 40,268,017 issued and outstanding at December 31, 2014 and December 31, 2013, respectively |
|
598 |
|
403 |
| ||
Additional paid-in-capital |
|
821,411 |
|
490,006 |
| ||
Accumulated other comprehensive (loss) income |
|
(69,509 |
) |
16,869 |
| ||
Accumulated deficit |
|
(75,685 |
) |
(39,943 |
) | ||
Total stockholders equity |
|
676,815 |
|
467,335 |
| ||
Total liabilities and stockholders equity |
|
$ |
2,240,521 |
|
$ |
2,394,734 |
|
PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
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Successor |
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Successor |
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Predecessor |
| |||
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January 1, 2014 - |
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September 23, 2013 - |
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January 1, 2013 - |
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December 31, 2014 |
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December 31, 2013 |
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September 22, 2013 |
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Cash flows from operating activities: |
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| |||
Net loss |
|
$ |
(35,742 |
) |
$ |
(39,943 |
) |
$ |
(48,390 |
) |
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: |
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|
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| |||
Depreciation and amortization |
|
96,564 |
|
25,333 |
|
25,144 |
| |||
Amortization of debt issuance costs |
|
5,737 |
|
1,608 |
|
1,916 |
| |||
Stock-based compensation |
|
3,467 |
|
132 |
|
24,609 |
| |||
Unrealized foreign currency (gains) losses |
|
(12,149 |
) |
2,057 |
|
1,178 |
| |||
Loss on modification or extinguishment of debt |
|
10,785 |
|
7,211 |
|
16,880 |
| |||
Loss on disposal of fixed assets |
|
5 |
|
|
|
225 |
| |||
Change in acquisition-related contingent consideration |
|
504 |
|
(1,103 |
) |
414 |
| |||
Equity in losses of unconsolidated joint ventures |
|
2,044 |
|
795 |
|
807 |
| |||
Unrealized loss on derivatives |
|
1,731 |
|
|
|
|
| |||
Allowance for doubtful accounts |
|
976 |
|
51 |
|
136 |
| |||
Other reconciling items |
|
|
|
(120 |
) |
(252 |
) | |||
Deferred income taxes |
|
(37,231 |
) |
(21,980 |
) |
(29,215 |
) | |||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
| |||
Accounts receivable, unbilled services, and advanced billings |
|
(46,517 |
) |
42,241 |
|
(681 |
) | |||
Other operating assets and liabilities |
|
32,573 |
|
(40,221 |
) |
56,437 |
| |||
Net cash provided by (used in) operating activities |
|
22,747 |
|
(23,939 |
) |
49,208 |
| |||
Cash flows from investing activities: |
|
|
|
|
|
|
| |||
Purchase of fixed assets |
|
(27,323 |
) |
(4,910 |
) |
(14,806 |
) | |||
Acquisition of PRA Holdings, Inc., net of cash acquired |
|
|
|
(667,441 |
) |
|
| |||
Acquisition of RPS Parent Holding Corp, net of cash acquired |
|
|
|
(268,740 |
) |
|
| |||
Acquisition of CRI Lifetree, net of cash acquired |
|
|
|
(77,868 |
) |
|
| |||
Acquisition of ClinStar LLC, net of cash acquired |
|
|
|
|
|
(40,774 |
) | |||
Proceeds from RPS working capital settlement |
|
15,000 |
|
|
|
|
| |||
Proceeds from CRI working capital settlement |
|
851 |
|
|
|
|
| |||
Payment of amounts held in escrow |
|
(787 |
) |
|
|
|
| |||
Investment in unconsolidated joint ventures |
|
|
|
|
|
(4,609 |
) | |||
Proceeds from the sale of fixed assets |
|
|
|
|
|
10 |
| |||
Net cash used in investing activities |
|
(12,259 |
) |
(1,018,959 |
) |
(60,179 |
) | |||
Cash flows from financing activities: |
|
|
|
|
|
|
| |||
Proceeds from issuance of long-term debt, net of debt issuance costs withheld |
|
|
|
1,263,443 |
|
93,246 |
| |||
Payment of debt discount |
|
|
|
(8,250 |
) |
|
| |||
Payments for debt issuance costs |
|
|
|
(48,957 |
) |
(1,030 |
) | |||
Repayment of long-term debt |
|
(308,775 |
) |
(567,063 |
) |
(1,912 |
) | |||
Borrowings on line of credit |
|
105,000 |
|
50,000 |
|
10,000 |
| |||
Repayments of line of credit |
|
(115,000 |
) |
(40,000 |
) |
(10,000 |
) | |||
Proceeds from common stock issued, net of underwriters discount |
|
333,950 |
|
470,400 |
|
|
| |||
Payment for common stock issuance costs |
|
(5,325 |
) |
|
|
|
| |||
Proceeds from stock option exercises |
|
33 |
|
|
|
105 |
| |||
Dividends paid |
|
|
|
(4,346 |
) |
(127,280 |
) | |||
Principal repayments of fixed assets purchased under a financing agreement |
|
|
|
(186 |
) |
(396 |
) | |||
Payment of acquisition-related contingent consideration |
|
(1,589 |
) |
|
|
|
| |||
Net cash provided by (used in) financing activities |
|
8,294 |
|
1,115,041 |
|
(37,267 |
) | |||
Effects of foreign exchange changes on cash and cash equivalents |
|
(5,745 |
) |
12 |
|
(462 |
) | |||
Change in cash and cash equivalents |
|
13,037 |
|
72,155 |
|
(48,700 |
) | |||
Cash and cash equivalents, beginning of period |
|
72,155 |
|
|
|
109,211 |
| |||
Cash and cash equivalents, end of period |
|
$ |
85,192 |
|
$ |
72,155 |
|
$ |
60,511 |
|
PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
Successor |
|
|
|
|
| |||||
|
|
|
|
|
|
Twelve |
|
Successor |
|
Predecessor |
| |||||
|
|
|
|
|
|
Months |
|
September 23, |
|
January 1, |
| |||||
|
|
Successor |
|
Ended |
|
2013 - |
|
2013 - |
| |||||||
|
|
Three Months Ended December 31, |
|
December 31, |
|
December 31, |
|
September 22 |
| |||||||
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
$ |
(22,820 |
) |
$ |
(9,380 |
) |
$ |
(35,742 |
) |
$ |
(39,943 |
) |
$ |
(48,390 |
) |
Depreciation and amortization |
|
23,424 |
|
21,960 |
|
96,564 |
|
25,333 |
|
25,144 |
| |||||
Interest expense, net |
|
18,329 |
|
21,812 |
|
81,939 |
|
23,703 |
|
32,719 |
| |||||
Benefit from income taxes |
|
(1,535 |
) |
(13,389 |
) |
(8,154 |
) |
(17,186 |
) |
(22,079 |
) | |||||
EBITDA |
|
17,398 |
|
21,003 |
|
134,607 |
|
(8,093 |
) |
(12,606 |
) | |||||
Management fees (a) |
|
11,900 |
|
560 |
|
13,476 |
|
560 |
|
1,467 |
| |||||
Stock-based compensation expense (b) |
|
738 |
|
132 |
|
3,467 |
|
132 |
|
24,609 |
| |||||
(Gain) loss on disposal of fixed assets, net (c) |
|
(4 |
) |
|
|
5 |
|
|
|
225 |
| |||||
Loss on modification or extinguishment of debt (d) |
|
23,652 |
|
1,586 |
|
25,036 |
|
7,211 |
|
21,678 |
| |||||
Foreign currency (gains) losses, net (e) |
|
(8,979 |
) |
4,662 |
|
(10,538 |
) |
4,117 |
|
3,641 |
| |||||
Other (income) expense, net (f) |
|
2,024 |
|
(1,232 |
) |
2,254 |
|
(1,180 |
) |
530 |
| |||||
Equity in losses of unconsolidated joint ventures |
|
1,036 |
|
621 |
|
2,044 |
|
621 |
|
603 |
| |||||
Transaction and acquisition related costs (g) |
|
986 |
|
4,762 |
|
7,253 |
|
32,049 |
|
51,409 |
| |||||
Relocation costs (h) |
|
|
|
|
|
|
|
|
|
(18 |
) | |||||
Severance and restructuring charges (i) |
|
895 |
|
2,353 |
|
2,900 |
|
2,353 |
|
235 |
| |||||
Non-cash rent adjustment (j) |
|
989 |
|
500 |
|
2,268 |
|
500 |
|
|
| |||||
Other one-time charges (k) |
|
2 |
|
320 |
|
76 |
|
320 |
|
212 |
| |||||
Adjusted EBITDA |
|
$ |
50,637 |
|
$ |
35,267 |
|
$ |
182,848 |
|
$ |
38,590 |
|
$ |
91,985 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
$ |
(22,820 |
) |
$ |
(9,380 |
) |
$ |
(35,742 |
) |
$ |
(39,943 |
) |
$ |
(48,390 |
) |
Amortization of intangible assets |
|
18,006 |
|
16,473 |
|
74,352 |
|
19,174 |
|
13,250 |
| |||||
Amortization of deferred financing costs |
|
1,359 |
|
1,488 |
|
5,737 |
|
1,608 |
|
1,916 |
| |||||
Management fees (a) |
|
11,900 |
|
560 |
|
13,476 |
|
560 |
|
1,467 |
| |||||
Stock-based compensation expense (b) |
|
738 |
|
132 |
|
3,467 |
|
132 |
|
24,609 |
| |||||
(Gain) loss on disposal of fixed assets, net (c) |
|
(4 |
) |
|
|
5 |
|
|
|
225 |
| |||||
Loss on modification or extinguishment of debt (d) |
|
23,652 |
|
1,586 |
|
25,036 |
|
7,211 |
|
21,678 |
| |||||
Foreign currency (gains) losses, net (e) |
|
(8,979 |
) |
4,662 |
|
(10,538 |
) |
4,117 |
|
3,641 |
| |||||
Other (income) expense, net (f) |
|
2,024 |
|
(1,232 |
) |
2,254 |
|
(1,180 |
) |
530 |
| |||||
Equity in losses of unconsolidated joint ventures |
|
1,036 |
|
621 |
|
2,044 |
|
621 |
|
603 |
| |||||
Transaction and acquisition related costs (g) |
|
986 |
|
4,762 |
|
7,253 |
|
32,049 |
|
51,409 |
| |||||
Relocation costs (h) |
|
|
|
|
|
|
|
|
|
(18 |
) | |||||
Severance and restructuring charges (i) |
|
895 |
|
2,353 |
|
2,900 |
|
2,353 |
|
235 |
| |||||
Non-cash rent adjustment (j) |
|
989 |
|
500 |
|
2,268 |
|
500 |
|
|
| |||||
Other one-time charges (k) |
|
2 |
|
320 |
|
76 |
|
320 |
|
212 |
| |||||
Total adjustments |
|
52,604 |
|
32,225 |
|
128,330 |
|
67,465 |
|
119,757 |
| |||||
Tax effect of total adjustments (l) |
|
(11,140 |
) |
(12,484 |
) |
(36,862 |
) |
(26,403 |
) |
(47,066 |
) | |||||
Adjusted net income |
|
$ |
18,644 |
|
$ |
10,361 |
|
$ |
55,726 |
|
$ |
1,119 |
|
$ |
24,301 |
|
Diluted weighted average common shares outstanding |
|
53,008 |
|
39,337 |
|
44,121 |
|
40,730 |
|
41,547 |
| |||||
Adjusted net income per diluted share |
|
$ |
0.35 |
|
$ |
0.26 |
|
$ |
1.26 |
|
$ |
0.03 |
|
$ |
0.58 |
|
PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES, CONTINUED
(in thousands, except per share data)
(unaudited)
|
|
Three |
|
|
|
Three |
|
Twelve |
|
|
|
Twelve |
| ||||||
|
|
Months |
|
|
|
Months |
|
Months |
|
|
|
Months |
| ||||||
|
|
Ended |
|
|
|
Ended |
|
Ended |
|
|
|
Ended |
| ||||||
|
|
December 31, |
|
|
|
December 31, |
|
December 31, |
|
|
|
December 31, |
| ||||||
|
|
2014 |
|
|
|
2014 |
|
2014 |
|
|
|
2014 |
| ||||||
|
|
As Reported |
|
Adjustments |
|
As Adjusted |
|
As Reported |
|
Adjustments |
|
As Adjusted |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Service revenue |
|
$ |
323,759 |
|
$ |
|
|
$ |
323,759 |
|
$ |
1,266,596 |
|
$ |
|
|
$ |
1,266,596 |
|
Reimbursement revenue |
|
46,204 |
|
|
|
46,204 |
|
192,990 |
|
|
|
192,990 |
| ||||||
Total revenue |
|
369,963 |
|
|
|
369,963 |
|
1,459,586 |
|
|
|
1,459,586 |
| ||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Direct costs |
|
214,943 |
|
(315) |
(b) |
214,628 |
|
859,218 |
|
(752) |
(b) |
858,466 |
| ||||||
Reimbursable out-of-pocket costs |
|
46,204 |
|
|
|
46,204 |
|
192,990 |
|
|
|
192,990 |
| ||||||
Selling, general and administrative |
|
73,689 |
|
(15,195) |
(a)(b)(g)(h)(i)(j)(k) |
58,494 |
|
253,970 |
|
(28,688) |
(a)(b)(g)(h)(i)(j)(k) |
225,282 |
| ||||||
Transaction-related costs |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Depreciation and amortization |
|
23,424 |
|
(18,006 |
) |
5,418 |
|
96,564 |
|
(74,352 |
) |
22,212 |
| ||||||
(Gain) loss on disposal of fixed assets, net |
|
(4 |
) |
4 |
(c) |
|
|
5 |
|
(5) |
(c) |
|
| ||||||
Income from operations |
|
11,707 |
|
33,512 |
|
45,219 |
|
56,839 |
|
103,797 |
|
160,636 |
| ||||||
Interest expense, net |
|
(18,329 |
) |
1,359 |
|
(16,970 |
) |
(81,939 |
) |
5,737 |
|
(76,202 |
) | ||||||
Loss on modification or extinguishment of debt |
|
(23,652 |
) |
23,652 |
(d) |
|
|
(25,036 |
) |
25,036 |
(d) |
|
| ||||||
Foreign currency gains (losses), net |
|
8,979 |
|
(8,979) |
(e) |
|
|
10,538 |
|
(10,538) |
(e) |
|
| ||||||
Other (expense) income, net |
|
(2,024 |
) |
2,024 |
(f) |
|
|
(2,254 |
) |
2,254 |
(f) |
|
| ||||||
(Loss) income before income taxes and equity in losses of unconsolidated joint ventures |
|
(23,319 |
) |
51,568 |
|
28,249 |
|
(41,852 |
) |
126,286 |
|
84,434 |
| ||||||
(Benefit from) provision for income taxes |
|
(1,535 |
) |
11,140 |
(l) |
9,605 |
|
(8,154 |
) |
36,862 |
(l) |
28,708 |
| ||||||
(Loss) income before equity in losses of unconsolidated joint ventures |
|
(21,784 |
) |
40,428 |
|
18,644 |
|
(33,698 |
) |
89,424 |
|
55,726 |
| ||||||
Equity in losses of unconsolidated joint ventures, net of tax |
|
(1,036 |
) |
1,036 |
|
|
|
(2,044 |
) |
2,044 |
|
|
| ||||||
Net (loss) income |
|
$ |
(22,820 |
) |
$ |
41,464 |
|
$ |
18,644 |
|
$ |
(35,742 |
) |
$ |
91,468 |
|
$ |
55,726 |
|
Net (loss) income per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Diluted |
|
$ |
(0.45 |
) |
|
|
$ |
0.35 |
|
$ |
(0.83 |
) |
|
|
$ |
1.26 |
| ||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Diluted |
|
50,684 |
|
|
|
53,008 |
|
42,897 |
|
|
|
44,121 |
|
(a) We have historically paid management fees to affiliates of our investors. These fees terminated upon completion of the IPO.
(b) Stock-based compensation expense represents the amount of non-cash expense related to the companys equity compensation programs.
(c) Loss on disposal of fixed assets represents the costs incurred in connection with the sale or disposition of fixed assets, primarily IT equipment and furniture and fixtures. We exclude these losses from Adjusted EBITDA and Adjusted Net Income because they result from investing decisions rather than from decisions made related to our ongoing operations.
(d) Loss on modification or extinguishment of long-term debt relates to costs incurred in connection with changes to our long-term debt. We exclude these losses from Adjusted EBITDA and Adjusted Net Income because they result from financing decisions rather than from decisions made related to our ongoing operations.
(e) Foreign currency loss (gain), net primarily relates to gains or losses that arise in connection with the revaluation of short-term inter-company balances between our domestic and international subsidiaries. In addition, this amount includes gains or losses from foreign currency transactions, such as those resulting from the settlement of third-party accounts receivable and payables denominated in a currency other than the local currency of the entity making the payment. We exclude these gains and losses from Adjusted EBITDA and Adjusted Net Income because they result from financing decisions rather than from decisions made related to our ongoing operations and because fluctuations from period-to-period do not necessarily correspond to changes in our operating results.
(f) Other (expense) income, net represents income and expense that are non-operating and whose fluctuations from period-to-period do not necessarily correspond to changes in our operating results.
(g) Transaction and acquisition related costs primarily relate to costs incurred in connection with due diligence performed in connection with contemplated acquisitions; the closing of the acquisition of PRA by KKR (KKR Transaction), the PRA acquisition of RPS Parent Holding Corp. (RPS), the PRA acquisition of CRI Holding Company, LLC (CRI LifeTree) and the PRA acquisition of ClinStar, LLC (ClinStar); and the integration of ClinStar, RPS and CRI LifeTree acquisitions. The
integration costs primarily consist of professional fees, rebranding costs, the elimination of redundant facilities and any other costs incurred directly related to the integration of these acquisitions.
(h) Relocation costs represent charges incurred in connection with the relocation of certain of its employees, including those employees relocated in connection with the KKR Transaction and the acquisitions of ClinStar, RPS and CRI Lifetree.
(i) Severance and restructuring charges represent amounts incurred in connection with the elimination of redundant positions within the organization, including positions eliminated in connection with the KKR Transaction and the acquisitions of ClinStar, RPS and CRI Lifetree.
(j) We have escalating leases that require the amortization of rent expense on a straight-line basis over the life of the lease. The non-cash rent adjustment represents the difference between rent expense recorded in the consolidated statement of operations and the amount of cash actually paid.
(k) Represents charges incurred that are not considered part of our core operating results.
(l) Represents the tax effect of the total adjustments at our estimated effective tax rate.