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| 8-K - FORM 8-K - INVENTIV HEALTH INC | d28828d8k.htm |
 inVentiv
Health Second Quarter 2015 Earnings Presentation
Aug 17, 2015 Exhibit 99.1 |
 Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks that may cause our performance to differ materially. These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We
wish to caution readers that certain important factors may have affected
and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. Such factors include, without limitation: • the impact of our substantial level of indebtedness on our ability to generate sufficient cash to fulfill our obligations under our existing debt
instruments or our ability to incur additional indebtedness; •
the impact of customer project delays, cancellations and
terminations; •
our ability to sufficiently increase our revenues and manage expenses and capital
expenditures to permit us to fund our operations; •
our ability to continue to comply with the covenants and terms of our debt instruments and to access sufficient capital under our credit agreement or from other sources of debt or equity financing to fund our operations; • the impact of any future acquisitions; • our ability to successfully identify new businesses to acquire, conclude acquisition negotiations and integrate the acquired businesses into our
operations, and achieve the resulting synergies; •
the impact of any change in our current credit ratings or the ratings of our debt
securities on our relationships with customers, vendors and other third parties; • the impact of any additional leverage we may incur on our ratings and the ratings of our debt securities;
• the impact of any default by any of our credit providers; • our ability to accurately forecast costs to be incurred in providing services under fixed price contracts;
• our ability to accurately forecast insurance claims within our self-insured programs;
• the potential impact on pharmaceutical and biotechnology companies, including pricing pressures, from healthcare reform initiatives or from
changes in the reimbursement policies of third-party payers; •
our ability to grow our existing client relationships, obtain new clients
and cross-sell our services; •
the potential impact of financial, economic, political and other risks, including
interest rate and exchange rate risks, related to conducting business internationally; • our ability to successfully operate new lines of business; • our ability to manage our infrastructure and resources to support our growth including through outsourced service providers;
• any disruptions, impairments, or malfunctions affecting software as well as excessive costs or delays that may adversely impact our continued
investment in and development of software; •
the potential impact of government regulation on us and our clients;
• our ability to comply with all applicable laws as well as our ability to successfully adapt to any changes in applicable laws on a timely and cost effective basis; • our ability to recruit, motivate and retain qualified personnel; • the impact of impairment of goodwill and intangible assets and the factors leading to such impairments;
• consolidation in the pharmaceutical and biotechnology industry; • changes in trends in the healthcare, pharmaceutical and biotechnology industries or in industry outsourcing, including initiatives by our clients
to perform services we offer internally; •
our ability to convert backlog into revenue;
• the potential liability associated with injury to clinical trial participants; • the impact of the adoption of certain accounting standards; and • our ability to maintain technological advantages in a variety of functional areas, including sales force automation, electronic claims
surveillance and patient compliance. Holders of our debt instruments are
referred to our prospectus dated August 5, 2015 relating to our Registration Statement on Form S-4 File No. 333-197719, and our quarterly report for the period ended June 30, 2015 on file with the SEC for further discussion of these risks and other factors.
This presentation contains the non-GAAP financial measures “EBITDA” and
“Adjusted EBITDA.” These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. Non-GAAP
measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Management believes that the non-GAAP financial measures included herein, when shown in conjunction with the corresponding GAAP measures, are
useful in order to (i) present financial information on a more comparable
period-to-period basis, (ii) enhance investors’ overall understanding of our past financial performance and our planning and forecasting of future periods; and (iii) allow investors to assess our financial
performance using management’s analytical approach. We have included in the appendices to this presentation the most directly comparable GAAP financial measures and a reconciliation between the non-GAAP and GAAP financial measures. 2 |
 Quarterly
Highlights Strong financial performance in Q2 builds on recent
momentum Organic revenue
(1) growth of 12% (9% reported net revenue growth) Adjusted EBITDA (2) growth of 32% to $62mm Q2 benefited from timing within the year of certain items Year-to-date organic revenue (1) and Adjusted
EBITDA (2) growth of 11% and 26%, respectively Macro environment remains favorable with strong biotech funding, new drug approvals
and expanding client budgets
Expanded and strengthened clinical management team
Business development across segments remains strong
Timing of awards impacting clinical business bookings
Actively identifying and executing on margin improvement opportunities
2015 expectations remain on track
(1) Organic growth excludes the impact of foreign currency fluctuations of approximately $13.5 million for the three months ended 6/30/2015 and
approximately $25.7 for the six months ended 6/30/2015.
(2) Refer to the Appendix for a reconciliation to GAAP. 3 |
 Clinical
Update Organic Revenue
(1) growth of 11% (7% reported net revenue growth) Backlog conversion accelerating on full service projects Growth is strongest in full service space Strategic resourcing revenues expected to accelerate in second half Miami clinic will come on-line in January; first study already sold Business development remains strong however timing of awards impacted bookings in
the quarter • Very strong growth across core large pharma client base • Continued discussions regarding strategic partnership opportunities with large
and mid-tier client base
Operational technology investments and implementation remain on track
Margin improvement opportunities actively being identified and executed on
(1) Organic growth excludes the impact of foreign currency fluctuations of approximately $9.2 million.
4 |
 Commercial Update Acceleration of performance in Q2 Organic Revenue (1) growth of 13% (11% reported net revenue growth) Adjusted EBITDA (2) growth of 40% Selling solutions business strength continues Record volume of new teams launched in quarter Additional margin enhancements realized in communications business Client interest in CCO offering remains robust Elevated level of dialogues with potential clients (1) Organic growth excludes the impact of foreign currency fluctuations of approximately $4.3 million. (2) Refer to the Appendix for a reconciliation to GAAP. 5 |
 Consolidated inVentiv Health Q2 2015 Financial
Update (1) The sum of the segments do not reconcile to Consolidated inVentiv Health due to the elimination of intersegment revenue which totaled approximately $3 million for the three months ended 6/30/2015, approximately $6 million for the six months ended 6/30/2015, approximately $1 million for the three months ended 6/30/2014, and approximately $3 million for the six months ended 6/30/2014. (2) Refer to the Appendix for a reconciliation to GAAP. 6 $871 $940 YTD 2014 YTD 2015 Net Revenues (1) ($ millions) Adjusted EBITDA (2) ($ millions) $450 $489 Q2 2014 Q2 2015 $90 $114 YTD 2014 YTD 2015 $47 $62 Q2 2014 Q2 2015 |
 Clinical
Performance 7
$433 $453 YTD 2014 YTD 2015 Net Revenues (1) ($ millions) Adjusted EBITDA (2) ($ millions) $218 $234 Q2 2014 Q2 2015 $47 $56 YTD 2014 YTD 2015 $22 $29 Q2 2014 Q2 2015 (1) The sum of the segments do not reconcile to Consolidated inVentiv Health due to the elimination of intersegment revenue which totaled
approximately $3 million for the three months ended
6/30/2015, approximately $6 million for the six months ended 6/30/2015, approximately $1 million for the three months ended 6/30/2014, and approximately $3 million for the six months ended 6/30/2014. (2) Refer to the Appendix for a reconciliation to GAAP. |
 Clinical
Book-to-Bill (1) Net Book-to-Bill = New Wins + Cancellations and Scope Changes + Project Restarts and (Delays)/ Revenue Earned. 8 Total Clinical Q1 2015 Q2 2015 LTM Serviceable Backlog Rollforward Beginning Backlog $1,860 $1,926 $1,806 New Wins $380 $368 $1,446 Cancellations and Scope Changes, (net) ($90) ($117) ($290) Project Restart and (Delays), net ($5) ($1) ($130) Revenue Earned ($220) ($234) ($891) Ending Backlog $1,926 $1,942 $1,942 Net Book-to-Bill (1) 1.30x 1.07x 1.15x |
 Commercial Performance (1) The sum of the segments do not reconcile to Consolidated inVentiv Health due to eliminations of approximately $3 million in intersegment revenue for the three months ended 6/30/2015, and approximately $6 million for the six months ended 6/30/2015.
(2) Refer to the Appendix for a reconciliation to GAAP. 9 $442 $493 YTD 2014 YTD 2015 Net Revenues (1) ($ millions) Adjusted EBITDA (2) ($ millions) $233 $259 Q2 2014 Q2 2015 $55 $76 YTD 2014 YTD 2015 $30 $42 Q2 2014 Q2 2015 |
 Appendix |
  For the
Quarter and Last Six Months Ended June 30, 2015 ($ millions)
Adjusted EBITDA Reconciliation
11 Note: Please refer to slide 16 for footnotes. QTD Q2 2015 QTD Q2 2014 YTD Q2 2015 YTD Q2 2014 Net Income (loss) from continuing operations ($30.0) ($47.5) ($75.0) ($93.5) Income tax provision (benefit) 2.7 5.8 7.3 7.7 Interest expense, net 57.1 53.2 113.6 105.7 Equity investment income (0.2) 0.2 1.3 0.2 Operating Income $29.6 $11.6 $47.2 $20.1 Depreciation and amortization 23.9 27.1 48.9 53.6 EBITDA $53.5 $38.7 $96.1 $73.7 Impairment loss (a) 0.0 0.0 0.0 0.0 Stock based compensation (b) 0.0 0.1 0.5 0.5 Impact of acquisition accounting adjustments (c) 0.9 (0.5) 1.4 (0.2) Management fees (d) 0.7 0.7 1.4 1.4 Foreign currency transaction (gains)/losses (e) 1.7 0.9 3.7 1.0 Impact of unrestricted subsidiaries (f) 0.3 1.0 1.3 1.9 Other (g) (1.2) (2.2) (1.0) (0.6) Management Adjustments $2.5 $0.0 $7.3 $3.9 Acquisition and financing expense (h) 0.1 0.1 0.2 0.3 Transaction Specific Adjustments $0.1 $0.1 $0.2 $0.3 Severance (i) 1.8 4.9 4.3 6.9 Restructuring costs (j) 1.5 2.9 3.5 5.8 One time non-recurring items (k) 2.1 0.0 2.1 0.0 Prior Restructuring and Integration Addbacks $5.4 $7.9 $9.9 $12.6 Adjusted EBITDA $61.5 $46.7 $113.5 $90.4 |
  For the
Quarter Ended June 30, 2015 ($ millions)
Adjusted EBITDA Reconciliation
12 Note: Please refer to slide 16 for footnotes. Clinical Commercial Corporate inVentiv Health, Inc. Net Income (loss) from continuing operations ($30.0) Income tax provision (benefit) 2.7 Interest expense, net 57.1 Equity investment income (0.2) Operating Income $17.6 $25.7 ($13.6) $29.6 Depreciation and amortization 9.7 12.5 1.7 23.9 EBITDA $27.2 $38.2 ($11.9) $53.5 Impairment loss (a) 0.0 0.0 0.0 0.0 Stock based compensation (b) 0.1 0.0 (0.0) 0.0 Impact of acquisition accounting adjustments (c) 0.5 0.4 0.0 0.9 Management fees (d) 0.0 0.0 0.7 0.7 Foreign currency transaction (gains)/losses (e) (0.1) 0.5 1.3 1.7 Impact of unrestricted subsidiaries (f) (0.1) 0.3 0.0 0.3 Other (g) 0.3 (1.2) (0.3) (1.2) Management Adjustments $0.7 $0.0 $1.8 $2.5 Acquisition and financing expense (h) 0.0 0.0 0.1 0.1 Transaction Specific Adjustments $0.0 $0.0 $0.1 $0.1 Severance (i) 0.6 1.2 0.1 1.8 Restructuring costs (j) 0.6 0.2 0.6 1.5 One time non-recurring items (k) 0.0 2.1 0.0 2.1 Prior Restructuring and Integration Addbacks $1.2 $3.5 $0.7 $5.4 Adjusted EBITDA $29.1 $41.7 ($9.3) $61.5 |
  For the
Quarter Ended June 30, 2014 ($ millions)
Adjusted EBITDA Reconciliation
13 Note: Please refer to slide 16 for footnotes. Clinical Commercial Corporate inVentiv Health, Inc. Net Income (loss) from continuing operations ($47.5) Income tax provision (benefit) 5.8 Interest expense, net 53.2 Equity investment income 0.2 Operating Income $3.5 $16.3 ($8.1) $11.6 Depreciation and amortization 14.0 11.0 2.1 27.1 EBITDA $17.5 $27.3 ($6.1) $38.7 Impairment loss (a) 0.0 0.0 0.0 0.0 Stock based compensation (b) 0.0 0.0 0.1 0.1 Impact of acquisition accounting adjustments (c) (0.6) 0.1 0.0 (0.5) Management fees (d) 0.0 0.0 0.7 0.7 Foreign currency transaction (gains)/losses (e) 1.0 (0.2) 0.2 0.9 Impact of unrestricted subsidiaries (f) 0.0 1.0 0.0 1.0 Other (g) 0.3 (1.7) (0.8) (2.2) Management Adjustments $0.6 ($0.8) $0.2 $0.0 Acquisition and financing expense (h) 0.0 0.0 0.1 0.1 Transaction Specific Adjustments $0.0 $0.0 $0.1 $0.1 Severance (i) 2.6 2.1 0.3 4.9 Restructuring costs (j) 1.8 1.0 0.1 2.9 One time non-recurring items (k) 0.0 0.0 0.0 0.0 Prior Restructuring and Integration Addbacks $4.3 $3.1 $0.4 $7.9 Adjusted EBITDA $22.4 $29.6 ($5.4) $46.7 |
  For the
Six Months Ended June 30, 2015 ($ millions)
Adjusted EBITDA Reconciliation
14 Note: Please refer to slide 16 for footnotes. Clinical Commercial Corporate inVentiv Health, Inc. Net Income (loss) from continuing operations ($75.0) Income tax provision (benefit) 7.3 Interest expense, net 113.6 Equity investment income 1.3 Operating Income $32.2 $40.6 ($25.6) $47.2 Depreciation and amortization 20.5 24.9 3.5 48.9 EBITDA $52.7 $65.5 ($22.1) $96.1 Impairment loss (a) 0.0 0.0 0.0 0.0 Stock based compensation (b) 0.1 0.0 0.4 0.5 Impact of acquisition accounting adjustments (c) 0.5 0.9 0.0 1.4 Management fees (d) 0.0 0.0 1.4 1.4 Foreign currency transaction (gains)/losses (e) (1.0) 2.8 1.9 3.7 Impact of unrestricted subsidiaries (f) (0.2) 1.5 0.0 1.3 Other (g) 0.2 (0.8) (0.4) (1.0) Management Adjustments ($0.3) $4.4 $3.2 $7.3 Acquisition and financing expense (h) 0.0 0.1 0.2 0.2 Transaction Specific Adjustments $0.0 $0.1 $0.2 $0.2 Severance (i) 1.4 2.8 0.1 4.3 Restructuring costs (j) 2.0 0.6 0.9 3.5 One time non-recurring items (k) 0.0 2.1 0.0 2.1 Prior Restructuring and Integration Addbacks $3.4 $5.5 $1.0 $9.8 Adjusted EBITDA $55.7 $75.5 ($17.8) $113.5 |
  For the
Six Months Ended June 30, 2014 ($ millions)
Adjusted EBITDA Reconciliation
15 Note: Please refer to slide 16 for footnotes. Clinical Commercial Corporate inVentiv Health, Inc. Net Income (loss) from continuing operations ($93.5) Income tax provision (benefit) 7.7 Interest expense, net 105.7 Equity investment income 0.2 Operating Income $7.7 $28.3 ($15.9) $20.1 Depreciation and amortization 28.5 21.6 3.6 53.6 EBITDA $36.2 $49.8 ($12.3) $73.7 Impairment loss (a) 0.0 0.0 0.0 0.0 Stock based compensation (b) 0.0 0.0 0.4 0.5 Impact of acquisition accounting adjustments (c) (0.4) 0.2 0.0 (0.2) Management fees (d) 0.0 0.0 1.4 1.4 Foreign currency transaction (gains)/losses (e) 0.7 0.1 0.2 1.0 Impact of unrestricted subsidiaries (f) 0.0 1.9 0.0 1.9 Other (g) 4.2 (2.1) (2.7) (0.6) Management Adjustments $4.5 $0.1 ($0.7) $3.9 Acquisition and financing expense (h) 0.0 0.0 0.3 0.3 Transaction Specific Adjustments $0.0 $0.0 $0.3 $0.3 Severance (i) 3.5 3.0 0.3 6.9 Restructuring costs (j) 3.1 2.3 0.4 5.8 One time non-recurring items (k) 0.0 0.0 0.0 0.0 Prior Restructuring and Integration Addbacks $6.6 $5.3 $0.7 $12.6 Adjusted EBITDA $47.3 $55.2 ($12.1) $90.4 |
 Adjusted
EBITDA Footnotes 16
(a) Represents non-cash losses associated with the write-off of goodwill, intangible assets and other long-lived assets
that affect the comparability of our operational results and for which an adjustment
is made consistent with the terms of our debt instruments.
(b) Represents non-cash compensation charges for which an adjustment is made consistent with the terms of our debt
instruments. (c) Represents non-cash adjustments resulting from the revaluation of certain items such as deferred revenue and
deferred rent recognized in connection with our acquisitions that affect the
comparability of our operational results and for which an adjustment is
made consistent with the terms of our debt instruments. (d)
Represents the annual sponsor monitoring fee and related expenses. These costs are
excluded from the calculation of Adjusted EBITDA to make it easier to
compare our results with companies with different capital structures.
(e) Represents the net gain or loss resulting from currency remeasurements that affect the comparability of our operational results and for which an adjustment is made consistent with the terms of our debt instruments.
(f) Represents the financial results of our subsidiaries designated as unrestricted for purposes of our debt instruments.
(g) Represents third party costs for tax services, franchise taxes, interest income and certain non-cash items.
(h) Represents legal and advisory fees incurred in connection with our acquisitions that do not relate to and are not
indicative of our core on-going operations and for which an adjustment is made
consistent with the terms of our debt instruments.
(i) Represents employee termination costs required to be paid in connection with actions taken that affect the
comparability of our operational results and for which an adjustment is made
consistent with the terms of our debt instruments.
(j) Represents costs in connection with facilities, relocations, integrations and business optimization. We identified these
costs as associated with discrete events that do not relate to and are not indicative
of our core on-going operations and for which an adjustment is made
consistent with the terms of our debt instruments. (k)
Represents costs from third party advisors regarding financial infrastructure for tax
and financial planning and analysis and the loss on sale of a business.
We identified these costs as associated with discrete events that do not
relate to and are not indicative of our core on-going operations and for which an
adjustment is made consistent with the terms of our debt
instruments. |