01—Abstract
Summary
Summary of the 10-K filed February 16, 2018. Cited figures are marked; the original filing is the authoritative source.
IQVIA Holdings Inc. (filed as Quintiles IMS Holdings, Inc. at the time of filing; renamed IQVIA Holdings Inc. effective November 6, 2017, with ticker IQV from November 15, 2017) reports fiscal 2017 results following its October 3, 2016 merger of equals with IMS Health.
Total revenues were $9.74 billiona in 2017, up from $6.88 billion in 2016, and revenues excluding reimbursed expenses were $8.06 billion, up $2.70 billion, or 50.3%, with the Merger contributing $2,557 million of the increase. Income from operations was not reported as a standalone figure in the extracted text, but net income attributable to IQVIA Holdings Inc. was $1,309 million, or $5.88 diluted EPS, compared with $0.76 in 2016; the result was boosted by a $977 million provisional tax benefit from the Tax Cuts and Jobs Act, which produced an effective tax rate of (298.2)%. The company's three segments were Commercial Solutions ($3,630 million revenue), Research & Development Solutions ($3,647 million) and Integrated Engagement Services ($783 million).
Ending backlog in R&D Solutions was $10.54 billionb, and net new business for the twelve months was $4.54 billion. Total debt was $10.3 billion at year-end, and the company repurchased 30.9 million shares for approximately $2.6 billion during 2017. On February 14, 2018, the board raised the post-merger repurchase authorization by $1.5 billion to $5.0 billion, with $1.7 billion remaining.
The filing also details ongoing legal matters, including a Veeva Systems lawsuit in which Veeva counterclaimed for damages in excess of $200 millionc, Korean privacy litigation and indictments, and a U.S. government contract compliance review whose outcome the company cannot yet determine. Management states that none of these matters is expected to have a material adverse effect, though unfavorable outcomes could be material in the period resolved.
02—Key points
Key Highlights
- Revenues were $9.74 billion in 2017 (total, including reimbursed expenses), up from $6.88 billion in 2016, with service revenues of $8.06 billion, up 50.3%.
- Net income attributable to IQVIA Holdings Inc. was $1,309 million, or $5.88 per diluted share, versus $0.76 in 2016, aided by a $977 million provisional deferred tax benefit from the Tax Act.
- Commercial Solutions revenue rose to $3,630 million from $1,089 million, driven by $2,557 million of incremental revenue from the IMS Health Merger.
- Research & Development Solutions revenue was $3,647 million (up 4.9%), with ending backlog of $10.54 billion and net new business of $4.54 billion for the twelve months.
- Total debt was $10.3 billion at December 31, 2017, and the company repurchased 30.9 million shares for about $2.6 billion during 2017.
- The board increased the post-merger share repurchase authorization by $1.5 billion on February 14, 2018, to $5.0 billion, with $1.7 billion remaining.
- Veeva Systems counterclaimed for damages in excess of $200 million against the company's January 2017 intellectual property lawsuit, and the company intends to vigorously defend its position.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 16, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $9.70B$6.88B | +41.1% |
| SG&A Expenses | $1.62B$1.02B | +59.6% |
| Operating Income | $665.00M$576.00M | +15.5% |
| Interest Expense | $346.00M$144.00M | +140.3% |
| Net Income | $1.28B$72.00M | +1673.6% |
| EPS (Basic) | $5.86$0.48 | +1120.8% |
| EPS (Diluted) | $5.74$0.47 | +1121.3% |
| Shares Outstanding (Basic) | 217.80M149.10M | +46.1% |
| Shares Outstanding (Diluted) | 222.60M152.00M | +46.4% |
05—Questions
Frequently Asked Questions
How did the Merger with IMS Health affect 2017 results?
The Merger, completed October 3, 2016, drove much of the 2017 growth. Commercial Solutions revenue increased $2,541 million, including $2,557 million from the Merger, and depreciation and amortization rose $722 million, primarily due to approximately $6.4 billion of intangible assets acquired in the Merger. Because results include IMS Health only from the Merger date, the periods are not directly comparable.
Why was the effective tax rate negative in 2017?
The Tax Act lowered the federal corporate rate from 35% to 21% and forced a provisional deferred tax benefit of $977 million. This produced an income tax benefit of $987 million and an effective tax rate of (298.2)%. The company notes that the accounting may change when its 2017 U.S. tax return is filed in 2018.
What are the main legal risks disclosed?
The filing discloses a Veeva Systems lawsuit with counterclaims seeking damages above $200 million; South Korean privacy litigation, in which the District Court awarded no damages and an appeal is pending, and a July 2015 indictment of IMS Korea and two employees; and a U.S. government contract compliance matter under the GSA Contract that the company cannot yet resolve. Management does not expect these to have a material adverse effect, but unfavorable outcomes could be material in the period resolved.
How much cash and debt does the company carry, and what does it plan to do with capital?
The company had cash of $959 million at December 31, 2017 and total indebtedness of $10.3 billion, excluding $500 million of available revolver borrowings. It repurchased $2.6 billion of stock in 2017 and has $182 million remaining under the existing program, plus the February 2018 increase to $1.7 billion of remaining authorization. Management states it has no current plans to pay regular dividends.
06—Continue