Pharmaceutical services giant QuintilesIMS posted first quarter net income that was better than expected and revenue that was in line with expectations, but failed to impress Wall Street.
Shares of the company, which has dual headquarters in Durham and Connecticut, closed 3 percent lower Wednesday as investors apparently focused on other aspects of QuintilesIMS’s announcement, such as guidance for the second quarter that was weaker than expected.
Still, QuintilesIMS reaffirmed its revenue guidance for the full year and raised its anticipated earnings per share by a nickel as a result of hefty share buybacks. Stock buybacks reduce the number of outstanding shares, increasing earnings on a per-share basis.
First-quarter revenue totaled $1.91 billion, up 2 percent – or 3.1 percent after taking currency fluctuations into account – after adjusting the results as if the merger between Durham-based Quintiles and IMS Health of Danbury, Conn., occurred at the outset of 2016 for purposes of comparison. The merger was completed in October 2016.
The combined company has more than 50,000 employees worldwide, including about 2,500 in the Triangle.
Adjusted net income totaled $238 million, or $1.01 per share, 5 cents better than projected by analysts polled by Bloomberg News. A comparison to last year’s adjustable net income wasn’t provided.
CEO Ari Bousbib called it “a strong start to 2017” and said he was encouraged that the company’s next-generation clinical development offerings, which combines Quintiles’ expertise in running clinical trials for drug companies with IMS’s vast health care data, have generated more than $400 million in new contracts since the merger was completed.
Those next-generation offerings, Bousbib said, are enabling the company to improve the design of clinical trials, better determine where the trials should be conducted and accelerate patient recruitment.
“We are trying to transition the business model to be data, analytics, expertise and technology-driven,” Bousbib said. “We are repositioning the business and we are in a unique position to do that.”
Revenue for the company’s research and development solutions business – which includes substantially all of the legacy Quintiles CRO – rose 4.3 percent to $866 million after adjusting for currency fluctuations. The contract research organization manages and analyzes clinical trials for pharmaceutical and biotechnology companies. Bousbib said revenue would have been up 5.5 percent if not for the closures of an early-stage clinical development site in London last year.
Revenue for the commercial solutions business – which includes the IMS legacy businesses plus a few Quintiles businesses – rose 2.4 percent to $854 million after adjusting for currency fluctuations.
Revenue for the integrated engagement services business, which includes what was formerly Quintiles’ contract sales operations, fell two-tenths of a percent to $198 million after adjusting for currency fluctuations.
During the quarter, QuintilesIMS also repurchased $1.3 billion worth of company shares. That included buybacks of nearly 8.7 million shares from two private equity funds and 1 million shares from Quintiles founder Dennis Gillings, now the lead director on the corporate board of QuintilesIMS.
QuintilesIMS shares closed at $82.64, down $2.70. The company’s shares have risen 9 percent this year.