01—Abstract
Summary
Summary of the 10-K filed February 13, 2014. Cited figures are marked; the original filing is the authoritative source.
Quintiles Transnational Holdings Inc. (now IQVIA Holdings Inc.) reported in its annual report for fiscal 2013 that it is the world's largest provider of biopharmaceutical development and commercial outsourcing services, with $3.8 billiona of service revenues, operations in approximately 100 countries and about 28,200 employees.
Service revenues rose $116.0 millionb, or 3.1%, from 2012, and net income attributable to shareholders was $226.6 million, versus $177.5 million in 2012. Product Development generated $2.9 billion of service revenues and $562.3 million of segment income from operations, while Integrated Healthcare Services declined to $888.6 million in service revenues, with segment income falling to $42.1 million from $60.5 million. Net new business grew 9% to $4.9 billion and backlog reached $9.9 billion at December 31, 2013, up from $8.7 billion a year earlier, though the filing notes that approximately $6.3 billion of backlog is not expected to generate revenue in the next 12 months.
The company completed its IPO on the NYSE in May 2013 at $40.00c per share, raising about $489.6 million in net proceeds, which were used to repay debt, pay a $25.0 million management agreement termination fee, and partly fund the $146.6 million acquisition of Novella Clinical. No dividends were declared or paid in 2013, and the company states it does not currently intend to pay dividends. Leverage remains significant: total debt and capital leases were $2.06 billion and the shareholders' deficit was $667.5 million at year-end.
Cash rose to $778.1 milliond, and the company refinanced its senior secured debt into a $2.061 billion Term Loan B-3 due 2018. The filing also notes that shareholders party to the Shareholders Agreement hold about 65% of common stock, making the company a controlled company under NYSE rules.
02—Key points
Key Highlights
- Service revenues of $3.81 billion in 2013, up 3.1% from $3.69 billion in 2012, with constant currency growth of about 5.1% offset by a $70.6 million foreign currency headwind.
- Net income attributable to Quintiles Transnational Holdings Inc. was $226.6 million in 2013, compared with $177.5 million in 2012; diluted EPS was $1.77 versus $1.51.
- Net new business grew 9% to $4.90 billion and backlog rose to $9.86 billion at December 31, 2013, from $8.70 billion a year earlier.
- Integrated Healthcare Services service revenues fell 7.8% to $888.6 million, and segment income from operations dropped to $42.1 million from $60.5 million, citing scope reductions and cancellations in North American commercial services.
- The May 2013 IPO raised about $489.6 million in net proceeds, used to repay debt, pay a $25.0 million fee to terminate the management agreement, and fund the Novella acquisition for about $146.6 million.
- Total debt and capital leases of $2.06 billion and a shareholders' deficit of $667.5 million at year-end 2013; a $2.061 billion Term Loan B-3 due 2018 replaced prior term loans.
- No dividends were declared or paid in 2013, and the company does not intend to pay dividends currently; shareholders party to the Shareholders Agreement own about 65% of common stock.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 13, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $5.10B$4.87B | +4.8% |
| R&D Expenses | $4.96M$10.43M | −52.5% |
| SG&A Expenses | $860.51M$817.75M | +5.2% |
| Operating Income | $462.33M$396.44M | +16.6% |
| Interest Expense | $123.51M-$134.37M | +191.9% |
| Net Income | $226.59M$177.55M | +27.6% |
| EPS (Basic) | $1.83$1.53 | +19.6% |
| EPS (Diluted) | $1.77$1.51 | +17.2% |
| Shares Outstanding (Basic) | 124.15M115.71M | +7.3% |
| Shares Outstanding (Diluted) | 127.86M117.80M | +8.5% |
05—Questions
Frequently Asked Questions
How did the company perform financially in 2013?
Service revenues rose $116.0 million, or 3.1%, to $3.81 billion. Net income attributable to the company was $226.6 million, up from $177.5 million in 2012. Product Development drove growth, while Integrated Healthcare Services revenue declined 7.8%.
What is the company's backlog and new business trend?
Net new business grew 9% to $4.90 billion in 2013, and backlog increased to $9.86 billion at December 31, 2013 from $8.70 billion. The filing notes that approximately $6.34 billion of backlog is not expected to generate revenue in 2014 and that backlog may not be a reliable predictor of future revenue.
How is the company's debt structure and balance sheet positioned?
Total debt and capital leases were $2.06 billion at year-end 2013, and the company had a shareholders' deficit of $667.5 million. Cash and equivalents were $778.1 million. Senior secured debt was refinanced into a $2.061 billion Term Loan B-3 due 2018, and a $300.0 million revolving facility was undrawn.
What did the IPO accomplish and what are the dividend expectations?
The company's May 2013 IPO at $40.00 per share raised about $489.6 million in net proceeds, which repaid debt and funded the Novella acquisition and a $25.0 million management fee termination. No dividends were declared or paid in 2013, and the company does not currently intend to pay dividends, though its Board will reevaluate the policy periodically.
What governance considerations should investors be aware of?
Parties to the Shareholders Agreement own approximately 65% of common stock, giving them control over matters requiring shareholder approval, including director elections and significant transactions. The company is a controlled company under NYSE rules and is not required to have a majority of independent directors.
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