RALEIGH, N.C., July 28, 2016 (GLOBE NEWSWIRE) -- INC Research Holdings, Inc. (Nasdaq:INCR), a leading global Phase I to Phase IV contract research organization, today reported financial results for the second quarter and year-to-date periods ended June 30, 2016.

“INC Research employees once again delivered a robust quarter of solid financial results, excellent operational performance and strong customer focus resulting in strong backlog coverage for the remainder of 2016,” said CEO Jamie Macdonald. “As we look to the second half of the year, we remain focused on achieving our financial targets and becoming the CRO of Choice for all of our stakeholders. At the end of the day it’s about helping to develop new therapies for patients in need, and INC is particularly excited to be partnering with CISCRP on the ‘Inspiring Hope’ Ideathon event September 27-28 in Boston to shine a light on the importance of clinical trial participation in advancing public health.”

Second Quarter 2016 Results

Net service revenue for the three months ended June 30, 2016 increased by 13.8% to $258.8 million, compared to net service revenue of $227.4 million for the three months ended June 30, 2015. Net service revenue for the six months ended June 30, 2016 increased by 15.7% to $507.8 million, compared to net service revenue of $438.9 million for the six months ended June 30, 2015. Net service revenue growth during both the second quarter and first half of 2016 was primarily driven by continued strong awards over the last two years. In the first half of 2016, revenue has grown across all therapeutic areas and was particularly strong in the central nervous system ("CNS"), oncology and other complex therapeutic areas. During the three and six months ended June 30, 2016, fluctuations in foreign currency exchange rates resulted in an unfavorable impact of $0.1 million and $6.1 million on net service revenue compared to the same period in the prior year.

Income from operations for the three months ended June 30, 2016 increased 10.3% to $39.7 million, compared to $35.9 million for the three months ended June 30, 2015. Income from operations for the six months ended June 30, 2016 increased 5.6% to $72.2 million, compared to $68.3 million for the six months ended June 30, 2015. Operating margin for the three and six months ended June 30, 2016 was 15.3% and 14.2%, respectively, compared to 15.8% and 15.6% for the same periods in the prior year.

The Company's income from operations includes certain expenses and transactions that it believes are not representative of its core operations, as described in more detail below under “Use of Non-GAAP Financial Measures.” Excluding these items, adjusted income from operations was $55.0 million for the three months ended June 30, 2016, compared to $48.8 million for the three months ended June 30, 2015, representing growth of 12.6%. Adjusted income from operations was $107.2 million for the six months ended June 30, 2016, compared to $95.3 million for the six months ended June 30, 2015, representing growth of 12.5%. Adjusted operating margin for the three and six months ended June 30, 2016, was 21.3% and 21.1%, respectively, compared to 21.5% and 21.7% for the same periods in 2015.

The Company reported net income for the three months ended June 30, 2016 of $30.4 million, resulting in diluted earnings per share of $0.54, compared to net income of $23.3 million, or $0.39 per diluted share, for the three months ended June 30, 2015. The Company reported net income for the six months ended June 30, 2016 of $47.8 million, resulting in diluted earnings per share of $0.85, compared to net income of $48.6 million, or $0.79 per diluted share, for the six months ended June 30, 2015. Adjusted net income for the three months ended June 30, 2016 was $34.3 million, or $0.61 per diluted share, compared to $28.6 million, or $0.47 per diluted share, for the same period in the prior year. Adjusted net income for the six months ended June 30, 2016 was $66.8 million, or $1.19 per diluted share, compared to $54.9 million, or $0.89 per diluted share, for the same period in the prior year.

Adjusted EBITDA for the three months ended June 30, 2016 increased 12.8% to $60.1 million, up from $53.3 million for the three months ended June 30, 2015. Adjusted EBITDA for the six months ended June 30, 2016 increased 12.1% to $117.1 million, up from $104.5 million for the six months ended June 30, 2015. Adjusted EBITDA margins decreased to 23.2% and 23.1%, for the three and six months ended June 30, 2016, respectively, from 23.4% and 23.8%, for the three and six months ended June 30, 2015, respectively.

Important disclosures about and reconciliations of non-GAAP measures, including adjusted income from operations, adjusted operating margin, adjusted net income and adjusted diluted earnings per share, EBITDA and adjusted EBITDA, to the corresponding GAAP measures, are provided below and attached to this press release.

New Business Awards and Backlog

Backlog grew by 13.9% to $1.9 billion as of June 30, 2016, as compared to $1.7 billion for the period ended June 30, 2015. For the three, six and twelve months ended June 30, 2016, fluctuations in foreign currency exchange rates resulted in an unfavorable impact on our June 30, 2016 backlog in the amount of $8.2 million, $1.2 million and $13.3 million, respectively. Net new business awards were $302.1 million, representing a book-to-bill ratio of 1.2x, for the three months ended June 30, 2016, as compared to $295.9 million for the three months ended June 30, 2015. Net new business awards were $604.4 million, representing a book-to-bill ratio of 1.2x, for the six months ended June 30, 2016, as compared to $551.4 million for the six months ended June 30, 2015.

Net new business awards were higher in the first six months of 2016 compared to the first six months of 2015 primarily due to the continued growth of the Company's business across its CNS, oncology and other complex therapeutic areas, partially offset by a large program cancellation during the second quarter of 2016. Specifically, the Company's net new business awards for the three months ended June 30, 2016, were negatively impacted by a $57 million cancellation by one of its customers due to insufficient clinical efficacy of the underlying compound.

Stock Repurchase Plan

On July 26, 2016, the Company’s board of directors approved a $150.0 million stock repurchase program for shares of the Company’s common stock commencing on August 1, 2016 and ending no later than December 31, 2017. The Company intends to use cash on hand and borrowings under its 2015 Credit Facility to fund the stock repurchase program. The stock repurchase program does not obligate the Company to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. The timing and amount of repurchases will be determined by the Company’s management based on a variety of factors such as the market price of the Company’s common stock, the Company’s corporate requirements, and the overall market condition.

Business Outlook

The Company is updating its 2016 full-year guidance as outlined in the following table. The guidance takes into account a number of factors, including our current sales pipeline, existing backlog and our expectations for net awards for the remainder of 2016. Further, our guidance is based on current foreign currency exchange rates, current interest rates, our expected tax rates, and does not take into account the effects of future stock repurchases.

About INC Research

INC Research (Nasdaq:INCR) is a leading global contract research organization providing the full range of Phase I to Phase IV clinical development services for the biopharmaceutical and medical device industries. Leveraging the breadth of our service offerings and the depth of our therapeutic expertise across multiple patient populations, INC Research connects customers, clinical research sites and patients to accelerate the delivery of new medicines to market. The Company was named “Best Contract Research Organization” in December 2015 by a distinguished panel for Scrip Intelligence and ranked “Top CRO to Work With” among large global CROs in the 2015 CenterWatch Global Investigative Site Relationship Survey. INC Research is headquartered in Raleigh, NC, with operations across six continents and experience spanning more than 110 countries. For more information, please visit www.incresearch.com.