Quintiles’ first $1 billion quarter exceeds expectations

dranii@newsobserver.comFebruary 13, 2014 

  • Job cuts planned

    Quintiles plans to cut 400 jobs worldwide for the second consecutive year.

    The cuts, outlined in the company’s annual report filed Thursday with the Securities and Exchange Commission and mentioned during the company’s fourth-quarter earnings conference call, would amount to 1.4 percent of the company’s global workforce of 28,200.

    Quintiles has set aside $13 million for restructuring that would go to the approximately 400 workers whose jobs will be eliminated, primarily in the product development division that accounts for three-fourths of the company’s revenue.

    “Quintiles evaluates its resource needs and makes adjustments in line with our overall strategy,” company spokesman Phil Bridges said. “It is important to note that the restructuring numbers listed in our regulatory filings are for the full year 2014 and are global numbers.”

    Bridges declined to say how the layoffs would affect the company’s 2,300 workers in the Triangle but stressed that the company is continuing to hire workers, too.

    “To provide proper context, we currently have more than 1,100 open positions worldwide for which we are recruiting,” he said.

    This is the fourth consecutive year that Quintiles has initiated a restructuring. It eliminated 400 jobs last year.

    Bridges said that overall employment at the company has continued to rise during that span.

    Staff writer David Ranii

Pharmaceutical services giant Quintiles’ fourth-quarter performance exceeded expectations as the company’s quarterly revenue hit the $1 billion mark for the first time.

The Durham-based company also projected that revenue for all of 2014 will range between $4.09 billion and $4.15 billion, a growth rate of 7.4 percent to 9 percent that exceeds Wall Street’s forecasts. The company expects earnings per share growth this year will range from 11 percent to 17.1 percent.

Quintiles shares rose 5.5 percent on Thursday to close at $52.20, up $2.76. The company went public at $40 a share last May.

CEO Tom Pike said during a conference call Thursday morning that Quintiles is adding to its industry-leading market share.

Given the company’s momentum, “we believe 2014 should be a stronger year in terms of revenue growth,” he said. Quintiles ended 2013 with a $9.9 billion backlog, including $1.3 billion in net new business in the fourth quarter.

Quintiles is the world’s largest contract research organization, or CRO, helping pharmaceutical and biotechnology companies test experimental drugs and analyze the results. It also assists those companies with selling and marketing medicines after they receive regulatory approval.

Analyst Eric Coldwell of Robert W. Baird & Co. raised his 12-month target for Quintiles shares from $56 to $64 on Thursday.

“Quintiles is our top CRO pick in 2014,” Coldwell wrote in a research note.

The company is winning more sophisticated assignments from its clients.

“Increasingly, our customers have us work side-by-side with them designing trials and improving efficiency,” Pike said.

Quintiles’ revenue rose 6.2 percent to $1 billion in the fourth quarter. Revenue rose 7.7 percent after excluding currency fluctuations. Analysts polled by Thomson Reuters expected revenue to come in at $981 million.

Adjusted net income for the quarter totaled $76.5 million, or 58 cents per share, up 58.2 percent in dollars and 41.5 percent on an earnings-per-share basis. Analyst had been projecting per-share earnings of 55 cents.

Chief Financial Officer Kevin Gordon said that improved operating margins aided the bottom line. However, Wells Fargo Securities analyst Tim Evans noted that the 12.9 percent operating margin fell short of analysts’ expectations of 13.3 percent.

For all of 2013, Quintiles posted revenue of $3.81 billion, up 3.1 percent from 2012. Adjusted net income totaled $268.9 million, up 28.7 percent.

Gordon also gave a thumbs-up to the performance of Novella Clinical, the 800-employee, privately held Morrisville company that Quintiles acquired for $146.5 million in September.

Novella contributed $36.5 million in revenue from mid-September through Dec. 31 and is generating new business at a “similar level” to the rest of Quintiles and in line with expectations, Gordon said.

Gordon also said Novella was a “minor” contributor to fourth-quarter net income.

“The company has certainly delivered on profitability,” he said.

Pike said that although Quintiles’ 2014 guidance is based on anticipated organic growth, the company remains interested in acquisitions. Quintiles ended 2013 with $778.1 million in cash.

Quintiles has 28,200 workers worldwide and 2,300 in the Triangle.

Ranii: 919-829-4877

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