MORRISVILLE, N.C., May 09, 2019 (GLOBE NEWSWIRE) -- Syneos Health (Nasdaq:SYNH), a leading biopharmaceutical solutions organization combining a CRO and a CCO, today reported financial results for the first quarter ended March 31, 2019.
“The year is off to a solid start, with strong RFP flow, a diverse pipeline of clinical and commercial opportunities and continued customer interest in our integrated offerings,” said Alistair Macdonald, Chief Executive Officer, Syneos Health. “We also continue to reinforce our unique end-to-end market position with further innovation and expansion of our Syneos One product offering. We look forward to continuing to deliver strong results in 2019, fueling growth and creating value for customers of all sizes.”
First Quarter 2019 Results
Please refer to the "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Measures" included in this press release and accompanying tables for important disclosures about non-GAAP measures and a reconciliation of these measures to the nearest GAAP measures.
For the three months ended March 31, 2019, GAAP revenue was $1.12 billion, an increase of $61.8 million, or 5.8%, over the same period in the prior year. On a constant currency basis, revenue grew 7.3% over the same period in the prior year. This increase was driven by revenue growth in both Commercial Solutions and Clinical Solutions.
For the three months ended March 31, 2019, GAAP Clinical Solutions revenue was $805.0 million, an increase of $18.1 million, or 2.3%, over the same period in the prior year. On a constant currency basis, revenue grew 4.1% over the same period in the prior year. This increase was primarily due to net new business growth, partially offset by unfavorable revenue mix and the impact of fluctuations in foreign currency exchange rates.
For the three months ended March 31, 2019, GAAP Commercial Solutions revenue was $314.0 million, an increase of $43.7 million, or 16.2%, over the same period in the prior year. On a constant currency basis, revenue grew 16.9% over the same period in the prior year. This increase was primarily due to net new business growth, favorable revenue mix, and the Company’s acquisition of Kinapse in the third quarter of 2018.
GAAP net loss for the three months ended March 31, 2019 was $30.0 million, resulting in diluted loss per share of $0.29, compared to a net loss of $24.6 million, or a diluted loss per share of $0.24, for the three months ended March 31, 2018. Adjusted net income for the three months ended March 31, 2019 was $62.1 million, resulting in adjusted diluted earnings per share of $0.59, representing growth of 7.3% when compared to the same period in prior year. The increases in adjusted net income and adjusted diluted earnings per share were primarily due to growth in adjusted EBITDA and the reduction of the Company's non-GAAP effective tax rate to 24.5%.
Adjusted EBITDA for the three months ended March 31, 2019 was $134.9 million, an increase of $6.2 million, or 4.8%, over the same period in the prior year. This increase was driven primarily by revenue growth, favorable revenue mix, and an increase in net realized synergies, which were partially offset by higher than anticipated expenses, the majority of which were timing-related.
TTM net new business awards were $5.52 billion for the period ended March 31, 2019, representing a TTM book-to-bill ratio of 1.24x. Clinical Solutions TTM net new business awards for the period ended March 31, 2019 were $4.19 billion, representing a TTM book-to-bill ratio of 1.29x. Commercial Solutions TTM net new business awards for the period ended March 31, 2019 were $1.32 billion, representing a TTM book-to-bill ratio of 1.08x. These net new business awards contributed to an ending backlog of $8.30 billion as of March 31, 2019, comprised of an ending backlog of $7.6 billion for Clinical Solutions and an ending backlog of $0.7 billion for the Selling Solutions offering within Commercial Solutions.
Capital Management Update
On March 26, 2019, the Company entered into Amendment No. 2 to the Credit Agreement (“the Second Amendment”). The Amendment, among other things, modifies the terms of the Credit Agreement to refinance the existing Term Loan A facility and the Revolver as follows:
- to increase the existing Term Loan A facility by $587.5 million. $187.5 million was used to pay down Term Loan B and related fees and expenses. The remaining $400 million will be funded in future draws within 9 months of closing, and is expected to be used to further pay down Term Loan B or the Senior Unsecured Notes;
- to increase the existing Revolver commitments available by $100.0 million to $600.0 million, and reduce the margin spread by 0.25% overall; and
- to extend the maturity of the Term Loan A facility and the Revolver to March 2024.
In connection with the Second Amendment, during the three months ended March 31, 2019, the Company recorded a $4.4 million loss on extinguishment of debt, mainly due to the write-off of the deferred issuance costs and debt discount.
In addition to the refinancing discussed above, during the three months ended March 31, 2019, the Company repaid $37.5 million of principal of the Term Loans.
During the three months ended March 31, 2019, the Company repurchased 672,700 shares of the outstanding common stock for a total repurchase price of approximately $26.6 million. As of March 31, 2019, the Company had remaining repurchase authorization of approximately $148.4 million, which is available through the end of 2019.
Full Year 2019 Business Outlook
The Company's guidance takes into account a number of factors, including existing backlog, current sales pipeline, trends in cancellations and delays, and estimated Merger synergies, net of reinvestments. Furthermore, the guidance presented below is based on current foreign currency exchange rates, current interest rates, and expected non-GAAP effective tax rate. The guidance is based upon the Company's estimated number of weighted average diluted shares outstanding, and does not take into account any share repurchases beyond the first quarter of 2019. The Company's full year 2019 guidance is outlined below:
About Syneos Health
Syneos Health™ (Nasdaq:SYNH) is the only fully integrated biopharmaceutical solutions organization. The Company, including a Contract Research Organization (CRO) and Contract Commercial Organization (CCO), is purpose-built to accelerate customer performance to address modern market realities. Created through the merger of two industry leading companies – INC Research and inVentiv Health – Syneos Health brings together approximately 24,000 clinical and commercial minds with the ability to support customers in more than 110 countries. The Company shares insights, uses the latest technologies, and applies advanced business practices to speed its customers’ delivery of important therapies to patients. To learn more about how Syneos Health is shortening the distance from lab to life® visit syneoshealth.com.
