Better-than-expected first-quarter results and an upgrade in its guidance for the year propelled the shares of pharmaceutical research firm INC Research 17 percent higher Monday.
“I’m pleased to report that we are building on our momentum from 2014 with a strong start to 2015,” CEO Jamie Macdonald said during a conference call with analysts.
The Raleigh-based pharmaceutical services company, which went public last year, also announced a secondary offering of 9.2 million shares. INC won’t receive any of the proceeds because all of the shares are being sold by existing shareholders.
In conjunction with the stock offering, INC reported it is buying back $150 million in shares from its two largest shareholders: Avista Capital Partners, a private equity firm with more than $6 billion in assets under management, and a Canadian public pension fund, the Ontario Teachers Pension Plan. After the buyback, the two shareholders will continue to own a majority of INC’s Class A common stock.
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INC also unveiled a new $675 million credit agreement that will cut the interest rate it currently pays roughly in half. The credit deal includes a $525 million term loan, part of which will be used for the stock buyback, and a $150 million revolving credit facility.
INC, which announced its first-quarter earnings before the markets opened Monday, reported that net revenue rose 15 percent to $211.5 million. Analysts surveyed by Zacks Investment Research anticipated $211.2 million in revenue.
After accounting for foreign currency fluctuations, revenue rose nearly 20 percent, Macdonald said.
An influx of new business contracts over the last 18 months and a lower cancellation rate contributed to the growth, which the company said was especially strong in complex therapeutic areas such as oncology and diseases affecting the central nervous system. Contract research organizations such as INC help pharmaceutical and biotechnology companies conduct clinical trials of experimental drugs and analyze the results.
Adjusted net income totaled $26.3 million, or 42 cents per share, up from $6.2 million a year ago. Analysts had projected 28 cents per share.
INC boosted its guidance for both revenue and net income for the full year. It upped its projections for net revenue to between $870 million and $900 million to between $880 million and $905 million, which would represent growth of between 10 percent and 13 percent. It raised its guidance for adjusted net income to $1.40 to $1.52 per share, up from between $1 .19 and $1.29 previously.
INC ended the first quarter with 5,800 employees worldwide, including 888 in the Triangle, after adding 200 workers in the quarter. A dozen of those new workers were added in the Triangle.
Greg Rush, chief financial officer, said in an interview that although the company isn’t disclosing future hiring plans in detail, it expects the pace of new hires to “accelerate slightly” the remainder of this year to accommodate the company’s growth.
INC shares closed Monday at $35.31, up $5.19. Its shares are up 37 percent for the year.