01—Abstract
Summary
Summary of the 10-K filed February 11, 2016. Cited figures are marked; the original filing is the authoritative source.
Quintiles Transnational Holdings Inc. (now IQVIA Holdings Inc.) reported 2015 service revenues of $4.33 billiona, up $160.6 million, or 3.9%, from 2014 at actual exchange rates, and net income attributable to the company of $387.2 million, or diluted EPS of $3.08.
Constant-currency service revenue growth was 9.0%, and foreign currency fluctuations reduced reported growth by approximately $212.3 millionb. Product Development generated about 74% of service revenues and Integrated Healthcare Services about 26%. Income from operations rose to $646.6 million from $590.4 million.
Net new business was $5.32 billionc, down 5.1% from $5.60 billion in 2014, while backlog grew to $12.04 billion from $11.24 billion. Management estimates that about $8.19 billion of year-end backlog will not convert to revenue in 2016. The company had $2.5 billion of total indebtedness at year-end and $977.2 million of cash.
In May 2015 it refinanced with $1.95 billiond of new senior secured facilities and $800 million of 4.875% senior notes due 2023. The joint venture Q2 Solutions with Quest Diagnostics, in which the company holds 60%, was formed in July 2015. Share repurchases were significant: $515.0 million of common stock was bought back in 2015, leaving $144.5 million of authorization.
The company paid no dividends in 2015 or 2014. A February 2016 restructuring plan of approximately $22 million is expected to reduce 2016 service revenues by roughly $18 million to $20 million.
02—Key points
Key Highlights
- Service revenues of $4.33 billion in 2015, up 3.9% at actual rates and 9.0% in constant currency; Product Development grew 3.0% and Integrated Healthcare Services grew 6.3%.
- Income from operations increased to $646.6 million from $590.4 million; diluted EPS was $3.08 versus $2.72 in 2014.
- Backlog reached $12.04 billion at December 31, 2015, up from $11.24 billion, but net new business declined 5.1% to $5.32 billion.
- Total indebtedness was $2.5 billion, with $534.0 million of additional revolver availability; a total leverage covenant caps the ratio at 5.75 to 1.00.
- The company repurchased 7,855,796 common shares for $515.0 million in 2015 and increased its repurchase authorization by $600.0 million to $725.0 million in total.
- Q2 Solutions joint venture with Quest Diagnostics (60% owned by the company) combined clinical trial laboratory operations; restructuring charges were $30.8 million in 2015.
- A February 2016 restructuring plan of approximately $22 million is expected to reduce 2016 service revenues by about $18 million to $20 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 11, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $5.74B$5.46B | +5.1% |
| R&D Expenses | $3.34M$5.79M | −42.4% |
| SG&A Expenses | $815.00M$781.00M | +4.4% |
| Operating Income | $646.00M$590.00M | +9.5% |
| Interest Expense | $101.00M$101.00M | 0.0% |
| Net Income | $387.00M$357.00M | +8.4% |
| EPS (Basic) | $3.15$2.78 | +13.3% |
| EPS (Diluted) | $3.08$2.72 | +13.2% |
| Shares Outstanding (Basic) | 123.00M128.00M | −3.9% |
| Shares Outstanding (Diluted) | 125.60M131.10M | −4.2% |
05—Questions
Frequently Asked Questions
How did the company perform financially in 2015?
Service revenues were $4,326.4 million, up $160.6 million or 3.9% at actual exchange rates. Net income attributable to Quintiles Transnational Holdings Inc. was $387.2 million, and diluted EPS was $3.08. Foreign currency movements reduced reported revenue growth by approximately $212.3 million.
What does the backlog and net new business trend indicate?
Backlog rose 7% to $12,038 million at year-end 2015. Net new business fell 5.1% to $5,319 million, driven by lower Product Development and Integrated Healthcare Services signings. The filing notes that about $8,188 million of backlog is not expected to generate revenue in 2016 and that backlog is not a reliable predictor of future revenue.
How is the company's debt structure and liquidity position?
Total indebtedness was $2.5 billion at December 31, 2015, including $800 million of 4.875% senior notes due 2023 and term loans under the May 2015 senior secured facilities. Cash and cash equivalents were $977.2 million, of which $244.9 million was in the United States. The company had $534.0 million of available revolver borrowings and stated it was in compliance with its covenants.
Does the company pay dividends or repurchase shares?
No dividends were declared or paid in 2015 or 2014, and the company does not currently intend to pay regular dividends. It repurchased $515.0 million of common stock in 2015 under its Repurchase Program, with $144.5 million of authorization remaining at year-end.
What are the main risks highlighted for investors?
Key risks include the ability of customers to terminate contracts on 30 to 90 days notice, the relationship between backlog and revenue, foreign currency exposure (about 32% of 2015 service revenues were denominated in non-US dollar currencies), leverage and variable-rate debt, and the significant influence of the Shareholders Agreement parties, who own approximately 30.2% of common stock.
06—Continue