01—Abstract
Summary
Summary of the 10-K filed February 12, 2015. Cited figures are marked; the original filing is the authoritative source.
Quintiles Transnational Holdings Inc. reported service revenues of $4.17 billiona for 2014, up from $3.81 billion in 2013, with income from operations of $590.4 million and net income attributable to the company of $356.4 million (diluted EPS of $2.72).
Product Development generated 74.4% of service revenues and Integrated Healthcare Services 25.6%. The company ended 2014 with backlog of $11.24 billionb, up from $9.86 billion, and net new business of $5.60 billion, up 14% from $4.90 billion in 2013. The balance sheet carries significant leverage.
At December 31, 2014 the company had total assets of $3.31 billionc, total liabilities of $4.01 billion and a shareholders' deficit of $704 million, with $2.29 billion of total indebtedness. Operating cash flow was $431.8 million, and cash and equivalents were $867.4 million. During 2014 the company repurchased roughly $415 million of common stock, including a $250.0 million secondary-related repurchase and a $165.1 million private repurchase from TPG Quintiles Holdco, and it acquired Encore Health Resources for about $91.5 million in cash.
The filing also flags governance and structural considerations. The company is transitioning away from controlled-company status under NYSE rules, parties to the Shareholders Agreement own about 41.5% of outstanding shares, and the company does not currently plan regular dividends. In February 2015 the Board approved a restructuring plan of approximately $30.0 milliond to be executed through 2015 and 2016.
02—Key points
Key Highlights
- Service revenues rose 9.4% to $4.17 billion in 2014; constant-currency growth was 10.1%.
- Income from operations increased to $590.4 million, and net income attributable to the company was $356.4 million, or $2.72 diluted EPS.
- Backlog reached $11.24 billion at December 31, 2014, up from $9.86 billion, with net new business of $5.60 billion (up 14%).
- Integrated Healthcare Services service revenues grew 20.2% to $1.07 billion, with segment operating margin of 6.1%; Product Development grew 6.1% to $3.10 billion with a 20.8% segment margin.
- The balance sheet shows a shareholders' deficit of $704 million and $2.29 billion of total indebtedness, including a $2.03 billion Term Loan B-3 due 2018.
- Capital returns were significant in 2014, including about $415 million of common stock repurchases, and the company paid no dividends in 2014 or 2013.
- A February 2015 restructuring plan of about $30.0 million was approved to reduce overcapacity over 2015 and 2016.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 12, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $5.46B$5.10B | +7.1% |
| R&D Expenses | $5.79M$4.96M | +16.9% |
| SG&A Expenses | $781.00M$860.51M | −9.2% |
| Operating Income | $590.00M$462.33M | +27.6% |
| Interest Expense | $101.00M$123.51M | −18.2% |
| Net Income | $357.00M$226.59M | +57.6% |
| EPS (Basic) | $2.78$1.83 | +51.9% |
| EPS (Diluted) | $2.72$1.77 | +53.7% |
| Shares Outstanding (Basic) | 128.00M124.15M | +3.1% |
| Shares Outstanding (Diluted) | 131.10M127.86M | +2.5% |
05—Questions
Frequently Asked Questions
How much revenue did the company generate and how is it split between segments?
Service revenues were $4.17 billion in 2014, up from $3.81 billion in 2013. Product Development contributed 74.4% of service revenues and Integrated Healthcare Services contributed 25.6%.
What is the size of the company's contracted future revenue?
Backlog was $11.24 billion at December 31, 2014, compared with $9.86 billion a year earlier. Of the 2014 year-end backlog, approximately $7.59 billion was not expected to generate revenue in 2015.
How leveraged is the balance sheet?
At year-end 2014 total liabilities were $4.01 billion against total assets of $3.31 billion, producing a shareholders' deficit of $704 million. Total indebtedness was $2.29 billion, and the company had $400.0 million of additional revolving credit availability.
Does the company pay dividends, and what did it do with shareholder capital in 2014?
No dividends were declared or paid in 2014 or 2013, and the company does not currently intend to pay dividends. In 2014 it repurchased about $415.1 million of common stock, including a $165.1 million private repurchase from TPG Quintiles Holdco and a $250.0 million repurchase in connection with a secondary offering.
What governance factors could limit shareholder influence?
The company is no longer a controlled company under NYSE rules and is relying on a one-year transition period for certain independence requirements. Parties to the Shareholders Agreement own approximately 41.5% of outstanding common stock and can significantly influence corporate decisions.
06—Continue