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Contacts
Darcie Peck
(203) 845-5237
dpeck@imshealth.com
Gary Gatyas
(610) 834-4596
ggatyas@us.imshealth.com
Reports Strong 4Q Cash Flow; EPS Exceeds Analysts’ Consensus
NORWALK, CT, January 31, 2008 – IMS Health (NYSE: RX), the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries, today announced fourth-quarter 2007 revenue of $605.9 million, up 11 percent or 6 percent on a constant-dollar basis, compared with revenue of $543.5 million for the fourth quarter of 2006.
“I am pleased with our fourth-quarter performance, which reflects very strong demand for our consulting capabilities, exceptional cash flow and solid execution by our teams worldwide,” said David R. Carlucci, IMS chairman and chief executive officer. “We are moving forward on our actions to more effectively align our resources to capture new opportunities and accelerate operational efficiencies in a demanding healthcare marketplace. IMS continues to focus on areas essential to our clients as a critical partner in helping them understand market dynamics, manage brands and optimize performance, and we’re well positioned for the future.”
The company also announced its financial guidance for the 2008 full year. Constant-dollar revenue is expected to grow 6 – 9 percent this year, with constant-dollar operating income growth at or above that rate. Diluted earnings per share is expected to be in the $1.70 – $1.76 range.
Operating income in the fourth quarter of 2007, including the previously announced restructuring charge of $88.7 million, was $47.0 million compared with $125.7 million in the year-earlier period. When adjusted for the restructuring charge, operating income for the 2007 fourth quarter would have been $135.7 million (See Note c to the financial tables).
Fourth-quarter 2007 diluted earnings per share was $0.09 on a GAAP basis, compared with $0.32 in the prior-year quarter. The restructuring charge of $88.7 million reduced fourth-quarter earnings per share by $0.32. When adjusted for this item, and the phasing of tax benefits and foreign exchange hedge gains and losses, earnings per share on a non-GAAP basis for this year’s fourth quarter would have been $0.43 (See Note c to the financial tables).
Net income on a GAAP basis also reflects the restructuring charge and was $18.0 million in the fourth quarter, compared with $65.5 million in the year-earlier quarter. When adjusted for this item, and the phasing of tax benefits, tax provisions, and foreign exchange hedge gains and losses, net income on a non-GAAP basis for the 2007 fourth quarter would have been $83.4 million, an increase of $2.2 million (See Note c to the financial tables).
Full-Year Results
For the 2007 full year, revenues were $2,192.6 million, up 12 percent or 8 percent constant dollar, compared with revenue of $1,958.6 million in 2006. Operating income for 2007 was $393.3 million, compared with $444.2 million in 2006. Operating income for 2007 included the $88.7 million restructuring charge taken in the fourth quarter. When adjusted for the restructuring charge, operating income for the 2007 full year would have been $482.0 million (See Note c to the financial tables).
For the 2007 full year, diluted earnings per share on a GAAP basis was $1.18, compared with $1.53 a year earlier. In addition to the restructuring charge in the fourth quarter of 2007, earnings per share for 2007 also included a tax charge in the third quarter. When adjusted for these items, on a non-GAAP basis, earnings per share for 2007 would have been $1.53, $0.12 above diluted earnings per share on a non-GAAP basis of $1.41 in 2006 (See Note c to the financial tables).
Net income on a GAAP basis was $234.0 million, compared with $315.5 million in 2006. In addition to the restructuring charge in the fourth quarter of 2007, net income for 2007 also included a tax charge in the third quarter. When adjusted for these items, on a non-GAAP basis, net income for 2007 would have been $304.3 million (See Note c to the financial tables).
Preliminary net cash provided by operating activities on a GAAP basis was $467.1 million. Preliminary free cash flow on a non-GAAP basis for the full-year 2007 was $283.4 million (See Note d to the financial tables).
Balance Sheet Highlights
IMS’s cash and cash equivalents as of December 31, 2007 totaled $218.2 million, compared with $157.3 million on December 31, 2006. Total debt as of December 31, 2007 was $1,203.2 million, up from $975.4 million at the end of 2006, due to borrowings in connection with 2007 share repurchases and acquisitions.
Share Repurchase Program, Shares Outstanding
During the fourth quarter, 3.3 million shares were repurchased at a total cost of $79.7 million, completing the 10 million share repurchase program authorized by the Board of Directors in December, 2006. Shares repurchased in 2007 totaled 16.4 million shares at a cost of $472.5 million. The impact of the share repurchase program was an EPS benefit of $0.01 per share in 2007 compared to slightly less than $0.08 per share in 2006.
The number of shares outstanding as of December 31, 2007 was approximately 191.2 million, compared with 200.7 million as of December 31, 2006.
About IMS
Operating in more than 100 countries, IMS Health is the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries. With $2.2 billion in 2007 revenue and more than 50 years of industry experience, IMS offers leading-edge market intelligence products and services that are integral to clients’ day-to-day operations, including portfolio optimization capabilities; launch and brand management solutions; sales force effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve ROI and the delivery of quality healthcare worldwide. Additional information is available at http://www.imshealth.com.
Conference Call and Webcast Details
IMS will host a conference call at 8:00 a.m. ET today to discuss its fourth-quarter and full-year results. To participate, please dial 1-800-768-3350 (U.S. and Canada) or 1-212-231-2905 (outside the U.S. and Canada) approximately 15 minutes before the scheduled start of the call. The conference call also will be accessible live on the Investor Relations section of the IMS Website at www.imshealth.com. Prior to the conference call, a copy of this press release and any other financial or statistical information presented during the call will be made available in the “Investors” area of IMS’s Website.
A replay of the conference call will be available online on the “Investors” section of the IMS Website and via telephone by dialing 1-800-633-8284 (U.S. and Canada) or 1-402-977-9140 (outside the U.S. and Canada), and entering access code 21373602 beginning at 10:30 a.m. ET today.
Fourth Quarter 2007 Earnings Table (pdf)
Forward-Looking Statements
This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although IMS Health believes the expectations contained in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove correct. This information may involve risks and uncertainties that could cause actual results of IMS Health to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to (i) the risks associated with operating on a global basis, including fluctuations in the value of foreign currencies relative to the U.S. dollar, and the ability to successfully hedge such risks, (ii) regulatory, legislative and enforcement initiatives, particularly in the areas of data access and utilization and tax, (iii) to the extent unforeseen cash needs arise, the ability to obtain financing on favorable terms, (iv) to the extent IMS Health seeks growth through acquisitions and joint ventures, the ability to identify, consummate and integrate acquisitions and joint ventures on satisfactory terms, (v) the ability to develop new or advanced technologies and systems for its businesses on time and on a cost-effective basis, and (vi) deterioration in economic conditions, particularly in the pharmaceutical, healthcare or other industries in which IMS Health’s customers operate. Additional information on factors that may affect the business and financial results of the Company can be found in the filings of the company made from time to time with the Securities and Exchange Commission and in note (d) of this press release.
