News Column

Quintiles results beat expectations, trigger higher forecast

July 31, 2014

By David Ranii, The News & Observer (Raleigh, N.C.)

July 31--Buoyed by a second-quarter performance that outpaced Wall Street's expectations, pharmaceutical services giant Quintiles raised its guidance for annual revenue and earnings per share.

Analyst Eric Coldwell of Robert W. Baird & Co. deemed it a "good but not perfect quarter." He noted in a research note that bookings in Quintiles' mainstay product development business, an indicator of future revenue, were "light" in the face of cancellations.

Investors seemed to focus on the less-than-perfect aspects of the company's performance, as Quintiles shares fell as much as 4 percent in trading early Thursday. The company's second-quarter results were released before the markets opened.

Quintiles' revenue rose 9.7 percent from a year ago to $1.035 billion. After adjusting for currency fluctuations, revenue rose 8.6 percent.

Adjusted net income totaled $85.7 million, up 36.2 percent from a year ago. That amounted to earnings per share of 65 cents, compared to 60 cents anticipated by analysts polled by Thomson Reuters.

"I'm pleased to report another quarter of strong performance," Tom Pike, CEO of the Durham-based company, said during a Thursday morning conference call.

The revenue growth was driven by the company's integrated healthcare services business, or IHS, which rose 15.6 percent in the quarter.

That growth was "underpinned by strong new business wins over the prior three quarters," Pike said.

IHS, which accounted for one-fourth of overall revenue in the quarter, provides drug companies with sales forces that promote products to physicians. It also provides "real-world research" on drugs that are already on the market, which can help companies gather intelligence on competing drugs and fashion marketing pitches.

Pike and Kevin Gordon, the company's chief financial officer, also said they were pleased with the performance of Quintiles' product development business, which posted a 6.7 percent gain in revenue. That business helps drug companies test experimental drugs and analyze the results.

But some analysts, such as John Kreger of William Blair & Co. and Wells Fargo'sTim Evans, were expecting stronger growth on the product development side.

On the bookings side, overall bookings rose 21.2 percent. Product development bookings totaled $870 million in the quarter, but analyst Coldwell was anticipating $968 million.

Higher-than-average cancellations, which Pike said can occur from time to time in the industry, affected product development billings.

"We had one large cancellation happen very late in the quarter, and it had an impact," he said. "It's not a trend."

Pike added that Quintiles' pipeline of new business is at a record high.

Quintiles shares, which closed at $56.82 on Wednesday, fell as low as $54.52 in early trading Thursday. For the year, the company's shares are up about 18 percent.

Quintiles, the world's largest pharmaceutical services company, has 2,400 employees in the Triangle and more than 30,000 worldwide.


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Source: News & Observer (Raleigh, NC)

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