QuintilesIMS, the giant pharmaceutical services and health care information company forged from the recent merger of Durham-based Quintiles and IMS Health, reported mixed third-quarter results for the two businesses.
The company – which has dual headquarters in Durham and Danbury, Conn., where IMS Health was headquartered – also doubled down on its expectations for cost savings from the merger. QuintilesIMS now expects to realize annual cost savings of $200 million by the end of 2019, up from $100 million previously.
CEO Ari Bousbib, who previously was CEO of IMS Health, said during a conference call that the integration teams charged with melding the merged companies’ operations had “identified additional cost synergy opportunities.”
Tom Pike, president of research and development solutions and previously CEO of Quintiles, said that the combined company is “off to a strong start with integration.”
In addition, the company announced that its board has authorized repurchasing up to $1.5 billion of its stock by the end of 2017, a move that boosts future earnings on a per-share basis.
“This $1.5 billion authorization represents about 8 percent of our market cap,” Bousbib said. “As you know, share repurchases have been the preferred method of returning capital to shareholders at both Quintiles and IMS Health legacy companies.”
QuintilesIMS shares closed Wednesday at $72.36, up 70 cents, and traded as high as $73.99 earlier in the day.
But Baird & Co. analyst Eric Coldwell wrote in a research note, “We are less impressed than the market appears to be.” He added that, in his opinion, the company’s shares would have fallen if not for the announcement of the share buyback.
“Neither company put up overly impressive results,” Coldwell said.
Some analysts were also displeased that the company is changing the way it reports its backlog.
“We view this as a negative sign as we will not be able to directly compare the company’s bookings performance to that of its peers, or to historical performance,” wrote William Blair & Co. analyst John Kreger.
Quintiles and IMS completed their merger on Oct. 3, the first business day after the close of the third quarter, and therefore reported separate results for the two businesses. Starting with the fourth quarter, financial results will be combined.
QuintilesIMS projected that combined fourth-quarter revenue will total $1.95 billion to $1.99 billion, below the $2.06 billion projected by Wall Street analysts polled by Bloomberg News.
For the third quarter, the Quintiles business reported service revenue of $1.14 billion, up 3.9 percent. That fell short of the $1.16 billion anticipated by analysts.
The Quintiles business reported adjusted net income of $121.2 million, or $1 per share, versus $125.3 million a year ago. That was 2 cents per share better than analysts were projecting.
The IMS Health business reported revenue of $791 million, up 7.5 percent. Adjusted net income was $132.1 million, or 39 cents per share, up 2.2 percent.
QuintilesIMS has more than 50,000 employees, including 2,500 in the Triangle.