PRA Health Sciences, Inc. (“PRA,” "we," "us" or the “Company”)
(NASDAQ: PRAH) today reported financial results for the quarter
ended March 31, 2021.
“I am delighted to report double-digit revenue and
earnings growth for the first quarter of 2021,” said Colin Shannon,
PRA’s President and Chief Executive Officer. “The year has started
on a strong note and we continue to be well-positioned for the
remainder of 2021. We are working diligently preparing to close our
merger with ICON, which is anticipated to close in July of this
year.”
Net new business for our Clinical Research segment
for the three months ended March 31, 2021 excluding reimbursement
revenue was $797.2 million, representing growth of 31.8% and a net
book-to-bill ratio of 1.24 for the period. Net new business for our
Clinical Research segment for the three months ended March 31, 2021
including reimbursement revenue was $1,154.4 million, representing
growth of 20.8% and a net book-to-bill of 1.33 for the period. We
continue to see strength across the entire Clinical Research
segment and our new business continues to be diversified across a
number of different therapeutic areas. The mix of our new business
awards continues to be in line with prior years with approximately
50% of our new business coming from large pharma and the remainder
coming from mid-sized pharma and biotech. Net new business,
excluding reimbursement revenue, contributed to an ending backlog
at March 31, 2021 of $5.5 billion, an increase of 16.4% year over
year.
For the three months ended March 31, 2021, revenue
was $933.8 million, which represents an increase of 19.1%, or
$150.1 million, compared to the three months ended March 31, 2020
at actual foreign exchange rates. On a constant currency basis,
revenue increased $137.6 million, an increase of 17.6% compared to
the first quarter of 2020. By segment, the Clinical Research
segment generated revenues of $866.6 million, representing an
increase of 19.3%, while the Data Solutions segment generated
revenues of $67.1 million, representing an increase of 16.6%.
Our customer concentration continues to be well-diversified, with
our top five clients representing approximately 35% of revenue,
with no client representing more than 10% of our revenue during the
quarter.
Direct costs, exclusive of depreciation and
amortization, were $472.0 million during the three months ended
March 31, 2021 compared to $403.9 million for the three months
ended March 31, 2020 at actual foreign exchange rates. On a
constant currency basis, direct costs increased $57.5 million
compared to the first quarter of 2020. The increase in direct costs
continues to be driven by increased labor costs in our Clinical
Research segment as we continue to hire to support our growth and
increased data costs in our Data Solutions segment as we renew
existing contracts and add new data assets. Direct costs were 50.5%
of revenue during the first quarter of 2021 compared to 51.5%
of revenue during the first quarter of 2020.
Selling, general and administrative expenses were
$122.8 million during the three months ended March 31, 2021
compared to $107.0 million for the three months ended March 31,
2020. Selling, general and administrative costs were 13.1% of
revenue during the first quarter of 2021 compared to 13.6% of
revenue during the first quarter of 2020.
GAAP net income was $56.9 million for the three
months ended March 31, 2021, or $0.86 per share on a diluted basis,
compared to GAAP net income of $40.7 million for the three months
ended March 31, 2020, or $0.63 per share on a diluted basis.
EBITDA was $114.4 million for the three months
ended March 31, 2021, representing an increase of 10.8% compared to
the three months ended March 31, 2020. Adjusted EBITDA was $135.8
million for the three months ended March 31, 2021, representing an
increase of 21.1% compared to the three months ended March 31,
2020.
Adjusted net income was $89.6 million for the three
months ended March 31, 2021, representing an increase of 33.0%
compared to the three months ended March 31, 2020. Adjusted net
income per diluted share was $1.35 for the three months ended March
31, 2021, representing an increase of 28.6% compared to the three
months ended March 31, 2020.
Acquisition by ICON plc
On February 24, 2021, we entered into the a
definitive merger agreement with ICON plc (ICON), ICON US Holdings
Inc. (US Holdco) and Indigo Merger Sub, Inc. (Merger Sub). Under
the terms of the merger agreement, Merger Sub will merge with and
into PRA, with PRA surviving as a wholly owned subsidiary of ICON
and US HoldCo. Upon successful completion of the merger, our
stockholders will receive $80.00 per share in cash and 0.4125 ICON
ordinary shares for each share of our common stock.
Conference Call Details
PRA will not hold a first quarter 2021 conference
call.
Additional Information
A reconciliation of our non-GAAP measures, EBITDA,
adjusted EBITDA, adjusted net income, adjusted net income per
share, to the corresponding GAAP measures is included in this press
release.
A financial supplement with first quarter 2021
results, which should be read in conjunction with this press
release, may be found in the Investor Relations section of our
website at investor.prahs.com in a document titled “Q1 2021
Earnings Presentation.”
About PRA Health Sciences
PRA (NASDAQ: PRAH) is one of the world’s leading
global contract research organizations by revenue, providing
outsourced clinical development and data solution services to the
biotechnology and pharmaceutical industries. PRA’s global clinical
development platform includes more than 70 offices across North
America, Europe, Asia, Latin America, South Africa, Australia and
the Middle East and more than 18,100 employees worldwide. Since
2000, PRA has participated in approximately 4,200 clinical trials
worldwide. 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 100 drugs.
PRA has therapeutic expertise in areas that are
among the largest in pharmaceutical development, including
oncology, immunology, central nervous system, inflammation and
infectious diseases. PRA believes that it provides its clients with
flexible clinical development service offerings, which include both
traditional, project-based Phase I through Phase IV services, as
well as embedded, functional outsourcing and data solution
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 ‘Investor Relations’ section of the Company’s website at
www.prahs.com. The Company encourages investors and potential
investors to consult the Company’s website regularly for important
information about the Company.
Contacts:
Kevin DohertySolebury TroutManaging
DirectorInvestorRelations@prahs.com or
kdoherty@soleburytrout.com
Forward-Looking Statements
This press release contains forward-looking
statements that reflect, among other things, the Company’s 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 Company’s expectations due to a number of factors,
including that: the merger with ICON does not close or is delayed,
the pending merger may adversely impact our business and the
anticipated benefits of the merger are not realized; the potential
loss, delay, or non-renewal of contracts by clients for services
that the Company has performed could adversely affect our results;
the Company may underprice contracts, overrun its cost estimates,
or fail to receive approval for, or experience delays in,
documenting change orders; the historical indications of the
relationship of backlog to revenues may not be indicative of their
future relationship; client or therapeutic concentration or
competition among clients could harm the Company’s business; the
Company’s relationships with existing or potential clients who are
in competition with each other may adversely impact the degree to
which other clients or potential clients use its services; the
Company may be unable to compete effectively with other players in
the fragmented and highly competitive biopharmaceutical services
industry; biopharmaceutical industry outsourcing trends and changes
in spending and research and development budgets could change and
adversely affect the Company’s operations and growth rate; the
effects of the current COVID-19 pandemic could continue to affect
adversely our business, results of operations and financial
condition; the Company could be unable to attract suitable
investigators and patients for its clinical trials and maintain its
clinical development business; the Company may lose key personnel
or be unable to recruit and retain experienced personnel; the
Company's services could subject the Company to potential
liability, including as a result of direct interaction with
clinical trial patients and operation of clinical facilities;
failure of the information systems upon which the Company depends,
including those used to provide services to clients, could
materially limit operations; a failure or breach of the Company’s
IT systems could result in customer information being compromised
or otherwise significantly disrupt the Company’s business
operations; if the Company does not keep pace with rapid
technological changes, its services may become less competitive or
obsolete; the Company’s suppliers may increase its costs to obtain,
restrict its use of or refuse to license its data, or the Company
may otherwise be unable to continue to obtain products, services
and licenses from third parties; the Company has a limited ability
to protect its intellectual property rights domestically and
internationally; the Company could be unsuccessful at investing in
growth opportunities; the Company may be unable to successfully
identify, acquire and integrate businesses, services and
technologies; the Company may experience challenges with the
acquisition, development, enhancement or deployment of the
technology necessary to operate; the Company’s business is subject
to economic, political and other risks associated with
international operations, including foreign currency exchange rate
fluctuations; the Company may be exposed to liabilities under
anti-corruption laws due to the global nature of its business; the
Company’ s failure to perform services in accordance with
contractual requirements, certain laws and 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 U.S. and international
healthcare industry is subject to political, economic and/or
regulatory influences and changes, such as healthcare reform;
current and proposed laws and regulations regarding the protection
of personal data could result in increased risks of liability or
increased cost or could limit the Company’s service offerings; the
Company may be unable to protect its intellectual property; patent
and other intellectual property litigation could be time-consuming
and costly; exchange rate fluctuations may affect the Company’s
results of operations and financial condition; the Company’s
effective income tax rate may fluctuate which may adversely affect
its operations, earnings, and earnings per share; the Company may
not realize the full value of its goodwill and intangible assets,
and may be unable to use net operating loss carry-forwards; the
Company has substantial indebtedness, some of which have interest
rates pricing using a spread over LIBOR, and may incur additional
indebtedness in the future, which could adversely affect the
Company’s financial condition; the Company may not be able to
comply with the covenants in its financing agreements or generate
sufficient funds to service its indebtedness; interest rate
fluctuations may affect the Company’s results of operations and
financial condition; the Company’s corporate governance documents
and Delaware law could make a change in the board of directors or
in control of the Company more difficult; and other factors that
are set forth in the Company’ s filings with the Securities and
Exchange Commission, including its most recent Annual Report on
Form 10-K filed with the SEC on February 24, 2021, as amended on
March 30, 2021. The forward-looking statements in this release
speak only as of the date hereof, and the Company undertakes no
obligation to update any such 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 EBITDA, adjusted
EBITDA, adjusted net income and adjusted net income per diluted
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
provide useful supplemental information to management and investors
regarding 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. In addition,
management believes that EBITDA, adjusted EBITDA and adjusted net
income (including adjusted net income per share on a diluted basis)
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 adjusted net income per share on a diluted
basis) 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 adjusted net income per share on a diluted basis) 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 adjusted net income per
share on a diluted basis) may not be comparable to similarly titled
measures of other companies.
EBITDA represents net income before interest,
taxes, depreciation and amortization. Adjusted EBITDA and adjusted
net income (including adjusted net income per share on a diluted
basis) represent EBITDA and net income (including diluted net
income per share), respectively, adjusted to
exclude stock-based compensation expense, loss (gain) on
disposal of fixed assets, loss on modification or extinguishment of
debt, foreign currency losses (gains), other non-operating
expense (income), equity in (gains) losses of unconsolidated joint
ventures, transaction-related costs, acquisition-related costs,
severance costs and restructuring charges, prior year foreign
research and development credits, lease termination expense,
non-cash rent adjustment, adjustment to reflect amounts
attributable to noncontrolling interest and other charges. Adjusted
net income is also adjusted to exclude amortization of intangible
assets, amortization of terminated interest rate swaps, and
amortization of deferred financing costs. EBITDA, adjusted EBITDA
and adjusted net income are not measurements of our financial
performance under GAAP and should not be considered as alternatives
to net 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, adjusted EBITDA and adjusted
net income 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.
Constant Currency
Constant currency comparisons are based on
translating local currency amounts in the current year period at
actual foreign exchange rates for the prior year. The Company
routinely evaluates its financial performance on a constant
currency basis in order to facilitate period-to-period comparisons
without regard to the impact of changing foreign currency exchange
rates.
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS (in thousands,
except per share amounts) (unaudited)
|
|
Three Months Ended March 31, |
|
|
2021 |
|
2020 |
Revenue |
|
$ |
933,775 |
|
|
|
$ |
783,708 |
|
|
Operating expenses: |
|
|
|
|
Direct costs (exclusive of depreciation and amortization
expense) |
|
472,010 |
|
|
|
403,862 |
|
|
Reimbursable expenses |
|
223,352 |
|
|
|
176,841 |
|
|
Selling, general and administrative expenses |
|
122,778 |
|
|
|
106,957 |
|
|
Transaction-related costs |
|
13,436 |
|
|
|
609 |
|
|
Depreciation and amortization expense |
|
32,568 |
|
|
|
32,278 |
|
|
Loss (gain) on disposal of fixed assets, net |
|
123 |
|
|
|
(19 |
) |
|
Income from operations |
|
69,508 |
|
|
|
63,180 |
|
|
Interest expense, net |
|
(5,212 |
) |
|
|
(13,487 |
) |
|
Foreign currency gains, net |
|
12,388 |
|
|
|
7,842 |
|
|
Other expense, net |
|
(48 |
) |
|
|
(4 |
) |
|
Income before income
taxes |
|
76,636 |
|
|
|
57,531 |
|
|
Provision for income taxes |
|
19,696 |
|
|
|
16,871 |
|
|
Net income |
|
56,940 |
|
|
|
40,660 |
|
|
Net income per share attributable to common stockholders: |
|
|
|
|
Basic |
|
$ |
0.89 |
|
|
|
$ |
0.65 |
|
|
Diluted |
|
$ |
0.86 |
|
|
|
$ |
0.63 |
|
|
Weighted average common shares outstanding: |
|
|
|
|
Basic |
|
64,147 |
|
|
|
62,933 |
|
|
Diluted |
|
66,170 |
|
|
|
64,339 |
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE
SHEETS (in thousands, except share
amounts) (unaudited)
|
|
March 31, |
|
December 31, |
|
|
2021 |
|
2020 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
690,259 |
|
|
|
$ |
506,303 |
|
|
Accounts receivable and unbilled services, net of allowance for
credit losses of $3,103 and $3,064 as of March 31, 2021, and
December 31, 2020, respectively |
|
779,346 |
|
|
|
843,905 |
|
|
Other current assets |
|
126,156 |
|
|
|
110,306 |
|
|
Total current assets |
|
1,595,761 |
|
|
|
1,460,514 |
|
|
Fixed assets, net |
|
192,462 |
|
|
|
194,620 |
|
|
Operating lease right-of-use assets |
|
170,091 |
|
|
|
178,144 |
|
|
Goodwill |
|
1,690,464 |
|
|
|
1,691,007 |
|
|
Intangible assets, net |
|
581,170 |
|
|
|
599,885 |
|
|
Other assets |
|
52,797 |
|
|
|
54,331 |
|
|
Total assets |
|
$ |
4,282,745 |
|
|
|
$ |
4,178,501 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Current portion of borrowings under credit facilities |
|
$ |
91,300 |
|
|
|
$ |
91,300 |
|
|
Current portion of long-term debt |
|
25,000 |
|
|
|
25,000 |
|
|
Accounts payable |
|
46,478 |
|
|
|
56,935 |
|
|
Accrued expenses and other current liabilities |
|
388,361 |
|
|
|
320,375 |
|
|
Current portion of operating lease liabilities |
|
38,771 |
|
|
|
39,631 |
|
|
Advanced billings |
|
732,641 |
|
|
|
732,782 |
|
|
Total current liabilities |
|
1,322,551 |
|
|
|
1,266,023 |
|
|
Long-term debt, net |
|
1,152,663 |
|
|
|
1,158,668 |
|
|
Long-term portion of operating lease liabilities |
|
150,551 |
|
|
|
158,983 |
|
|
Deferred tax liabilities |
|
48,324 |
|
|
|
63,451 |
|
|
Other long-term liabilities |
|
52,134 |
|
|
|
52,191 |
|
|
Total liabilities |
|
2,726,223 |
|
|
|
2,699,316 |
|
|
Commitments and contingencies |
|
|
|
|
Stockholders' equity: |
|
|
|
|
Preferred stock (100,000,000 authorized shares; $0.01 par
value) |
|
|
|
|
Issued and outstanding -- none |
|
— |
|
|
|
— |
|
|
Common stock (1,000,000,000 authorized shares; $0.01 par
value) |
|
|
|
|
Issued and outstanding -- 64,765,369 and 64,538,729 at March 31,
2021 and December 31, 2020, respectively |
|
648 |
|
|
|
645 |
|
|
Additional paid-in capital |
|
1,174,096 |
|
|
|
1,137,028 |
|
|
Accumulated other comprehensive loss |
|
(115,487 |
) |
|
|
(98,813 |
) |
|
Retained earnings |
|
497,265 |
|
|
|
440,325 |
|
|
Total stockholders' equity |
|
1,556,522 |
|
|
|
1,479,185 |
|
|
Total liabilities and stockholders' equity |
|
$ |
4,282,745 |
|
|
|
$ |
4,178,501 |
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS (in thousands)
(unaudited)
|
|
Three Months Ended March 31, |
|
|
2021 |
|
2020 |
Cash flows from operating activities: |
|
|
|
|
Net income |
|
$ |
56,940 |
|
|
|
$ |
40,660 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization expense |
|
32,568 |
|
|
|
32,278 |
|
|
Amortization of debt issuance costs |
|
419 |
|
|
|
421 |
|
|
Amortization of terminated interest rate swaps |
|
— |
|
|
|
1,565 |
|
|
Stock-based compensation expense |
|
18,772 |
|
|
|
15,425 |
|
|
Change in fair value of acquisition-related contingent
consideration |
|
— |
|
|
|
574 |
|
|
Unrealized foreign currency gains, net |
|
(18,158 |
) |
|
|
(4,788 |
) |
|
Deferred income tax benefit |
|
(14,830 |
) |
|
|
(18,524 |
) |
|
Other reconciling items |
|
(766 |
) |
|
|
135 |
|
|
Changes in operating assets and liabilities, net of acquired assets
and assumed liabilities: |
|
|
|
|
Accounts receivable, unbilled services, and advanced billings |
|
68,921 |
|
|
|
(7,600 |
) |
|
Other operating assets and liabilities |
|
48,339 |
|
|
|
436 |
|
|
Net cash provided by operating activities |
|
192,205 |
|
|
|
60,582 |
|
|
Cash flows from investing activities: |
|
|
|
|
Purchase of fixed assets |
|
(18,734 |
) |
|
|
(21,460 |
) |
|
Cash paid for interest on interest rate swap, net |
|
— |
|
|
|
(780 |
) |
|
Proceeds from the sale of fixed assets |
|
3 |
|
|
|
26 |
|
|
Acquisition of Care Innovations, Inc., net of cash acquired |
|
— |
|
|
|
(159,078 |
) |
|
Net cash used in investing activities |
|
(18,731 |
) |
|
|
(181,292 |
) |
|
Cash flows from financing activities: |
|
|
|
|
Borrowings on line of credit |
|
— |
|
|
|
100,000 |
|
|
Repayments of line of credit |
|
— |
|
|
|
(55,000 |
) |
|
Repayments of long-term debt |
|
(6,250 |
) |
|
|
(6,250 |
) |
|
Proceeds from stock option exercises |
|
18,299 |
|
|
|
2,908 |
|
|
Payments for debt issuance costs |
|
— |
|
|
|
(470 |
) |
|
Net cash provided by financing activities |
|
12,049 |
|
|
|
41,188 |
|
|
Effects of foreign exchange changes on cash, cash equivalents, and
restricted cash |
|
(1,567 |
) |
|
|
(5,908 |
) |
|
Change in cash, cash equivalents, and restricted cash |
|
183,956 |
|
|
|
(85,430 |
) |
|
Cash, cash equivalents, and restricted cash, beginning of
period |
|
506,303 |
|
|
|
236,270 |
|
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
690,259 |
|
|
|
$ |
150,840 |
|
|
PRA HEALTH SCIENCES, INC. AND
SUBSIDIARIES RECONCILIATION OF NON-GAAP
MEASURES (in thousands, except per share
amounts) (unaudited)
|
|
Three Months Ended March 31, |
|
|
2021 |
|
2020 |
Net income attributable to PRA Health Sciences,
Inc. |
|
$ |
56,940 |
|
|
|
$ |
40,660 |
|
|
Depreciation and amortization expense |
|
32,568 |
|
|
|
32,278 |
|
|
Interest expense, net |
|
5,212 |
|
|
|
13,487 |
|
|
Provision for income taxes |
|
19,696 |
|
|
|
16,871 |
|
|
EBITDA |
|
114,416 |
|
|
|
103,296 |
|
|
Stock-based compensation expense (a) |
|
18,772 |
|
|
|
15,425 |
|
|
Loss (gains) on disposal of fixed assets, net (b) |
|
123 |
|
|
|
(19 |
) |
|
Foreign currency gains, net (c) |
|
(12,388 |
) |
|
|
(7,842 |
) |
|
Other non-operating expense, net (d) |
|
48 |
|
|
|
4 |
|
|
Transaction-related costs (e) |
|
13,436 |
|
|
|
609 |
|
|
Acquisition-related costs (f) |
|
— |
|
|
|
838 |
|
|
Non-cash rent adjustment (g) |
|
(920 |
) |
|
|
(508 |
) |
|
Other charges (h) |
|
2,264 |
|
|
|
282 |
|
|
Adjusted EBITDA |
|
$ |
135,751 |
|
|
|
$ |
112,085 |
|
|
|
|
|
|
|
Net income attributable to PRA Health Sciences,
Inc. |
|
$ |
56,940 |
|
|
|
$ |
40,660 |
|
|
Provision for income taxes |
|
19,696 |
|
|
|
16,871 |
|
|
Amortization of intangible assets |
|
17,939 |
|
|
|
19,126 |
|
|
Amortization of deferred financing costs |
|
419 |
|
|
|
421 |
|
|
Amortization of terminated interest rate swaps |
|
— |
|
|
|
1,565 |
|
|
Stock-based compensation expense (a) |
|
18,772 |
|
|
|
15,425 |
|
|
Loss (gains) on disposal of fixed assets, net (b) |
|
123 |
|
|
|
(19 |
) |
|
Foreign currency gains, net (c) |
|
(12,388 |
) |
|
|
(7,842 |
) |
|
Other non-operating expense, net (d) |
|
48 |
|
|
|
4 |
|
|
Transaction-related costs (e) |
|
13,436 |
|
|
|
609 |
|
|
Acquisition-related costs (f) |
|
— |
|
|
|
838 |
|
|
Non-cash rent adjustment (g) |
|
(920 |
) |
|
|
(508 |
) |
|
Other charges (h) |
|
2,264 |
|
|
|
282 |
|
|
Adjusted pre-tax income |
|
116,329 |
|
|
|
87,432 |
|
|
Adjusted tax expense (i) |
|
(26,755 |
) |
|
|
(20,108 |
) |
|
Adjusted net income |
|
$ |
89,574 |
|
|
|
$ |
67,324 |
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding |
|
66,170 |
|
|
|
64,339 |
|
|
|
|
|
|
|
Adjusted net income per diluted share |
|
$ |
1.35 |
|
|
|
$ |
1.05 |
|
|
(a) |
Stock-based compensation expense represents the amount of recurring
non-cash expense related to the Company’s equity compensation
programs. |
(b) |
Loss (gains) 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. |
(c) |
Foreign currency gains, 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. |
(d) |
Other non-operating expense, 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. |
(e) |
Transaction-related costs include fees associated with costs
associated with acquisition related earn-out liabilities, our
secondary offerings, stock-based compensation expense related to
the transfer restrictions on vested options, the amendment to our
accounts receivable financing agreement, and expenses associated
with our acquisitions. |
(f) |
Acquisition-related 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. |
(g) |
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. |
(h) |
Represents charges incurred that are not considered part of our
core operating results. |
(i) |
Represents the tax effect of adjusted pre-tax income at our
estimated effective tax rate. |
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