IMS Health Reports Fourth-Quarter and Full-Year 2015 Results
Fourth-Quarter 2015 Operating Results
Revenue for the fourth quarter of $812 million was up 28.3 percent on a constant currency basis and 19.7 percent on a reported basis compared with the fourth quarter of 2014. Excluding the impact of the acquisition of Cegedim’s CRM and Strategic Data businesses (“Cegedim Acquisition”), revenue was up 6.8 percent on a constant currency basis and up 0.7 percent on a reported basis, with the difference entirely due to the year-over-year strengthening of the U.S. dollar versus currencies in which the company transacts business.
The company’s revenue growth in the fourth quarter included a 47.3 percent increase in technology services revenue on a constant currency basis, up 37.9 percent on a reported basis, versus the same period last year. Information offerings revenue was up 12.4 percent on a constant currency basis and up 4.2 percent reported. Emerging markets revenue increased 32.0 percent in the fourth quarter at constant currency and 14.8 percent reported. Developed markets revenue grew 27.7 percent at constant currency and 20.6 percent reported.
Excluding the Cegedim Acquisition, technology services revenue increased 12.3 percent at constant currency and 7.2 percent reported. Information offerings revenue grew 2.1 percent on a constant currency basis and declined 4.8 percent on a reported basis.
Adjusted EBITDA of $232 million improved 16.8 percent at constant currency and 8.4 percent reported compared with the fourth quarter of 2014.
“We delivered another year of steady performance in our core IMS business, including our tenth consecutive quarter of double-digit constant currency revenue growth in technology services, continued resilience of our information business, and strong operating results,” said Ari Bousbib, chairman and CEO, IMS Health. “We are pleased with the progress of the Cegedim Acquisition integration and expect sustained top- and bottom-line growth in 2016 and beyond.”
Fourth-quarter 2015 net income was $29 million, compared with $8 million in last year’s fourth quarter. Adjusted Net Income for the fourth quarter was $125 million, up 11.8 percent on a constant currency basis and flat on a reported basis.
Diluted earnings per share was $0.09 in the fourth quarter, compared with $0.03 per share in the fourth quarter of 2014.
Adjusted Diluted Earnings per Share increased 14.6 percent at constant currency and 2.5 percent reported to $0.37 in the fourth quarter.
Full-Year 2015 Operating Results
Revenue for the year ended December 31, 2015 of $2,921 million increased 21 percent on a constant currency basis and 10.6 percent reported compared with 2014. Excluding the impact of the Cegedim Acquisition, revenue was up 5.8 percent on a constant currency basis and down 2.6 percent on a reported basis. Adjusted EBITDA of $886 million increased 11.2 percent at constant currency and 0.9 percent reported compared with 2014. Net income was $417 million, compared with a net loss of $189 million in the prior-year period, which included one-time IPO-related charges. Adjusted Net Income was $515 million, up 24.6 percent at constant currency and 13.5 percent reported from 2014. Diluted Earnings per Share was $1.23 for 2015, compared with a loss of $0.59 per share in 2014. Adjusted Diluted Earnings per Share increased 21.3 percent on a constant currency basis and 10.5 percent on a reported basis to $1.52, compared with $1.37 in the prior-year period.
Financial Position
As of December 31, 2015, cash and cash equivalents were $396 million and the principal amount of debt was $4,266 million, resulting in net debt of $3,870 million.
Cash Flow
Net cash provided by operating activities was $164 million in the fourth quarter, and $490 million for full-year 2015. Capital expenditures and additions to deferred software were $67 million in the quarter and $183 million for full-year 2015, up $16 million versus the prior year. Unlevered Free Cash Flow for the fourth quarter was $211 million, or 91 percent of Adjusted EBITDA. Full-year 2015 Unlevered Free Cash Flow was $628 million, or 71 percent of Adjusted EBITDA.
Share Repurchase
IMS Health repurchased $17 million of its stock during the fourth quarter of 2015, which brings the year-to-date total to $317 million. The company has a total of $233 million remaining for repurchase under the existing share repurchase authorization.
Cash Tax Guidance
IMS Health extends its high teens cash tax rate guidance by two additional years. The company now expects its cash tax rate to remain in the high teens through mid-2023.
2016 Full-Year Guidance
IMS Health expects constant currency results for full-year 2016 as follows: Revenue growth of 10 to 12 percent, Adjusted EBITDA growth of 7.5 to 9.5 percent, Adjusted Net Income growth of 6.5 to 8.5 percent and Adjusted Diluted Earnings per Share growth of 8.5 to 10.5 percent.
Assuming foreign exchange rates hold at current levels through the end of 2016, IMS Health expects reported revenue growth of 7.5 to 9.5 percent, Adjusted EBITDA growth of 6 to 8 percent, Adjusted Net Income growth of 0.5 to 2.5 percent and Adjusted Diluted Earnings per Share growth of 2.5 to 4.5 percent.
Constant Currency
IMS Health reports results in U.S. dollars, but does business on a global basis. Exchange rate fluctuations affect the U.S. dollar value of foreign currency revenue and expenses and may have a significant effect on reported results. The discussion of IMS Health’s financial results in this release includes comparisons with the prior year in constant currency terms, using consistent exchange rates. Management believes this information facilitates comparison of underlying results over time.
About IMS Health
IMS Health is a leading global information and technology services company providing clients in the healthcare industry with end-to-end solutions to measure and improve their performance. Our 7,500 services experts connect configurable SaaS applications to 10+ petabytes of complex healthcare data in the IMS One™ cloud platform, delivering unique insights into diseases, treatments, costs and outcomes. The company’s 15,000 employees blend global consistency and local market knowledge across 100 countries to help clients run their operations more efficiently. Customers include pharmaceutical, consumer health and medical device manufacturers and distributors, providers, payers, government agencies, policymakers, researchers and the financial community.
As a global leader in protecting individual patient privacy, IMS Health uses anonymous healthcare data to deliver critical, real-world disease and treatment insights. These insights help biotech and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders to identify unmet treatment needs and understand the effectiveness and value of pharmaceutical products in improving overall health outcomes.
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