Delaware
|
001-36730
|
27-3403111
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
|
3201 Beechleaf Court, Suite 600
Raleigh, North Carolina |
27604-1547
|
|
(Address of principal executive offices)
|
(Zip Code)
|
⃞
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
⃞
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
⃞
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
⃞
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Exhibit No.
|
|
Description
|
99.1
|
|
|
|
|
SYNEOS HEALTH, INC.
|
|
|
|
|
|
|
Date:
|
February 28, 2018
|
By:
|
/s/ Jason Meggs
|
|
|
|
|
Name:
|
Jason Meggs
|
|
|
|
Title:
|
Executive Vice President and Interim Chief Financial Officer
|
•
|
Combined Company net new business awards of
$622.9 million
for the fourth quarter and
$2.55 billion
for the full year
2017
representing growth of
16.5%
for the full year 2017.
|
•
|
Combined Company book-to-bill ratio of
1.16
x for the fourth quarter and
1.20
x for the full year
2017
.
|
•
|
GAAP net service revenue of
$750.5 million
and
$1.85 billion
for the fourth quarter and full year
2017
, respectively.
|
•
|
Combined Company adjusted net service revenue of
$770.5 million
and
$3.10 billion
for the fourth quarter and full year
2017
, respectively.
|
•
|
Combined Company adjusted EBITDA of
$156.2 million
and
$580.7 million
for the fourth quarter and full year
2017
, respectively, resulting in an adjusted EBITDA margin of
20.3%
and
18.7%
.
|
•
|
GAAP diluted loss per share of
$0.14
and
$1.85
for the fourth quarter and full year
2017
, respectively.
|
•
|
Combined Company adjusted diluted EPS of
$0.70
and
$2.27
for the fourth quarter and full year
2017
, respectively.
|
•
|
Board of Directors authorized $250.0 million stock repurchase program.
|
|
Guidance issued as of February 28, 2018
|
||||||||||||||
|
First Quarter 2018
|
|
Full Year 2018
|
||||||||||||
|
Low
|
|
High
|
|
Low
|
|
High
|
||||||||
|
(in millions, except per share data)
|
||||||||||||||
Net service revenue
|
$
|
751.0
|
|
|
$
|
781.0
|
|
|
$
|
3,229.5
|
|
|
$
|
3,334.5
|
|
Adjusted net service revenue
|
755.0
|
|
|
785.0
|
|
|
3,235.0
|
|
|
3,340.0
|
|
||||
Clinical Solutions adjusted net service revenue
|
530.0
|
|
|
545.0
|
|
|
2,245.0
|
|
|
2,300.0
|
|
||||
Commercial Solutions adjusted net service revenue
|
225.0
|
|
|
240.0
|
|
|
990.0
|
|
|
1,040.0
|
|
||||
Adjusted EBITDA
|
132.0
|
|
|
142.0
|
|
|
620.0
|
|
|
660.0
|
|
||||
Adjusted net income
|
56.6
|
|
|
63.5
|
|
|
285.5
|
|
|
313.1
|
|
||||
|
|
|
|
|
|
|
|
||||||||
GAAP diluted EPS
|
$
|
(0.03
|
)
|
|
$
|
0.04
|
|
|
$
|
0.63
|
|
|
$
|
0.89
|
|
Adjusted diluted EPS
|
$
|
0.54
|
|
|
$
|
0.60
|
|
|
$
|
2.68
|
|
|
$
|
2.94
|
|
Investor Relations Contact:
Ronnie Speight
Vice President, Investor Relations
Phone: +1 919 745 2745
Email:
Investor.Relations@syneoshealth.com
|
Press/Media Contact:
Danielle DeForge
Senior Director, External Communications
Phone: +1 781 425 2624
Email:
danielle.deforge@syneoshealth.com
|
|
Three Months Ended December 31,
|
|
Year Ended
December 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(unaudited)
|
|
|
||||||||||||
Net service revenue
|
$
|
750,471
|
|
|
$
|
262,979
|
|
|
$
|
1,852,843
|
|
|
$
|
1,030,337
|
|
Reimbursable out-of-pocket expenses
|
326,212
|
|
|
143,092
|
|
|
819,221
|
|
|
580,259
|
|
||||
Total revenue
|
1,076,683
|
|
|
406,071
|
|
|
2,672,064
|
|
|
1,610,596
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
||||||||
Direct costs (exclusive of depreciation and amortization)
|
509,380
|
|
|
155,437
|
|
|
1,232,023
|
|
|
626,633
|
|
||||
Reimbursable out-of-pocket expenses
|
326,212
|
|
|
143,092
|
|
|
819,221
|
|
|
580,259
|
|
||||
Selling, general, and administrative
|
106,300
|
|
|
44,568
|
|
|
282,620
|
|
|
172,386
|
|
||||
Restructuring and other costs
|
20,689
|
|
|
3,329
|
|
|
33,315
|
|
|
13,612
|
|
||||
Transaction and integration-related expenses
|
15,734
|
|
|
286
|
|
|
123,815
|
|
|
3,143
|
|
||||
Asset impairment charges
|
—
|
|
|
—
|
|
|
30,000
|
|
|
—
|
|
||||
Depreciation
|
18,128
|
|
|
6,096
|
|
|
44,407
|
|
|
21,353
|
|
||||
Amortization
|
65,220
|
|
|
9,463
|
|
|
135,529
|
|
|
37,851
|
|
||||
Total operating expenses
|
1,061,663
|
|
|
362,271
|
|
|
2,700,930
|
|
|
1,455,237
|
|
||||
Income (loss) from operations
|
15,020
|
|
|
43,800
|
|
|
(28,866
|
)
|
|
155,359
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other (expense) income, net:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
417
|
|
|
77
|
|
|
1,182
|
|
|
216
|
|
||||
Interest expense
|
(29,907
|
)
|
|
(2,699
|
)
|
|
(63,725
|
)
|
|
(12,016
|
)
|
||||
Loss on extinguishment of debt
|
(520
|
)
|
|
—
|
|
|
(622
|
)
|
|
(439
|
)
|
||||
Other (expense) income, net
|
(3,682
|
)
|
|
1,759
|
|
|
(19,846
|
)
|
|
(9,002
|
)
|
||||
Total other expense, net
|
(33,692
|
)
|
|
(863
|
)
|
|
(83,011
|
)
|
|
(21,241
|
)
|
||||
(Loss) income before provision for income taxes
|
(18,672
|
)
|
|
42,937
|
|
|
(111,877
|
)
|
|
134,118
|
|
||||
Income tax benefit (expense)
|
3,625
|
|
|
(5,446
|
)
|
|
(26,592
|
)
|
|
(21,488
|
)
|
||||
Net (loss) income
|
$
|
(15,047
|
)
|
|
$
|
37,491
|
|
|
$
|
(138,469
|
)
|
|
$
|
112,630
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.14
|
)
|
|
$
|
0.70
|
|
|
$
|
(1.85
|
)
|
|
$
|
2.08
|
|
Diluted
|
$
|
(0.14
|
)
|
|
$
|
0.68
|
|
|
$
|
(1.85
|
)
|
|
$
|
2.03
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
104,364
|
|
|
53,684
|
|
|
74,913
|
|
|
54,031
|
|
||||
Diluted
|
104,364
|
|
|
54,932
|
|
|
74,913
|
|
|
55,610
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
321,262
|
|
|
$
|
102,471
|
|
Restricted cash
|
714
|
|
|
607
|
|
||
Accounts receivable billed, net
|
642,985
|
|
|
211,476
|
|
||
Accounts receivable unbilled
|
373,003
|
|
|
173,873
|
|
||
Prepaid expenses and other current assets
|
84,215
|
|
|
34,202
|
|
||
Total current assets
|
1,422,179
|
|
|
522,629
|
|
||
Property and equipment, net
|
180,412
|
|
|
58,306
|
|
||
Goodwill
|
4,292,571
|
|
|
552,502
|
|
||
Intangible assets, net
|
1,286,050
|
|
|
114,486
|
|
||
Deferred income tax assets
|
20,159
|
|
|
14,726
|
|
||
Other long-term assets
|
84,496
|
|
|
25,858
|
|
||
Total assets
|
$
|
7,285,867
|
|
|
$
|
1,288,507
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
58,575
|
|
|
$
|
23,693
|
|
Accrued liabilities
|
500,303
|
|
|
153,559
|
|
||
Deferred revenue
|
559,270
|
|
|
277,600
|
|
||
Current portion of capital lease obligations
|
16,414
|
|
|
—
|
|
||
Current portion of long-term debt
|
25,000
|
|
|
11,875
|
|
||
Total current liabilities
|
1,159,562
|
|
|
466,727
|
|
||
Capital lease obligations, non-current
|
20,376
|
|
|
—
|
|
||
Long-term debt, non-current
|
2,945,934
|
|
|
485,849
|
|
||
Deferred income tax liabilities
|
37,807
|
|
|
8,295
|
|
||
Other long-term liabilities
|
99,609
|
|
|
26,163
|
|
||
Total liabilities
|
4,263,288
|
|
|
987,034
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
|
|
||
Preferred stock, $0.01 par value; 30,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2017 and 2016, respectively
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 600,000,000 shares authorized, 104,435,501 and 53,762,786 shares issued and outstanding at December 31, 2017 and 2016, respectively
|
1,044
|
|
|
538
|
|
||
Additional paid-in capital
|
3,414,389
|
|
|
573,176
|
|
||
Accumulated other comprehensive loss, net of tax
|
(22,385
|
)
|
|
(42,250
|
)
|
||
Accumulated deficit
|
(370,469
|
)
|
|
(229,991
|
)
|
||
Total shareholders' equity
|
3,022,579
|
|
|
301,473
|
|
||
Total liabilities and shareholders' equity
|
$
|
7,285,867
|
|
|
$
|
1,288,507
|
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net (loss) income
|
$
|
(138,469
|
)
|
|
$
|
112,630
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
179,936
|
|
|
59,204
|
|
||
Amortization of capitalized loan fees and original issue discount, net of Senior Notes premium
|
500
|
|
|
972
|
|
||
Share-based compensation
|
59,696
|
|
|
14,020
|
|
||
Provision for doubtful accounts
|
4,167
|
|
|
2,570
|
|
||
Provision for (benefit from) deferred income taxes
|
14,431
|
|
|
(22,260
|
)
|
||
Foreign currency transaction losses
|
7,912
|
|
|
20,681
|
|
||
Asset impairment charges
|
30,000
|
|
|
—
|
|
||
Fair value adjustment of contingent tax-sharing obligation
|
(12,276
|
)
|
|
—
|
|
||
Loss on extinguishment of debt
|
622
|
|
|
439
|
|
||
Other non-cash items
|
4,712
|
|
|
286
|
|
||
Changes in operating assets and liabilities, net of effect of business combinations:
|
|
|
|
|
|
||
Billed and unbilled accounts receivable
|
31,656
|
|
|
(103,748
|
)
|
||
Accounts payable and accrued expenses
|
(16,982
|
)
|
|
6,658
|
|
||
Deferred revenue
|
28,967
|
|
|
4,060
|
|
||
Other assets and liabilities
|
3,386
|
|
|
13,820
|
|
||
Net cash provided by operating activities
|
198,258
|
|
|
109,332
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Payments associated with business acquisitions, net of cash acquired
|
(1,678,814
|
)
|
|
—
|
|
||
Purchases of property and equipment
|
(43,896
|
)
|
|
(31,353
|
)
|
||
Other, net
|
(197
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(1,722,907
|
)
|
|
(31,353
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
2,598,000
|
|
|
—
|
|
||
Payments of debt financing costs
|
(25,476
|
)
|
|
(868
|
)
|
||
Repayments of long-term debt
|
(525,097
|
)
|
|
—
|
|
||
Proceeds from revolving line of credit
|
15,000
|
|
|
100,000
|
|
||
Repayments of revolving line of credit
|
(40,000
|
)
|
|
(105,000
|
)
|
||
Redemption of Senior Notes and associated breakage fees
|
(292,425
|
)
|
|
—
|
|
||
Payments of capital leases
|
(8,145
|
)
|
|
—
|
|
||
Payments for repurchase of common stock
|
—
|
|
|
(64,500
|
)
|
||
Proceeds from exercise of stock options
|
19,335
|
|
|
17,891
|
|
||
Payments related to tax withholding for share-based compensation
|
(6,824
|
)
|
|
(839
|
)
|
||
Net cash provided by (used in) financing activities
|
1,734,368
|
|
|
(53,316
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
9,072
|
|
|
(7,203
|
)
|
||
Net change in cash and cash equivalents
|
218,791
|
|
|
17,460
|
|
||
Cash and cash equivalents, beginning of period
|
102,471
|
|
|
85,011
|
|
||
Cash and cash equivalents, end of period
|
$
|
321,262
|
|
|
$
|
102,471
|
|
|
Three Months Ended December 31,
|
|
Year Ended
December 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Combined Company adjusted net service revenue:
|
|
|
|
|
|
|
|
||||||||
Net service revenue, as reported
|
$
|
750,471
|
|
|
$
|
262,979
|
|
|
$
|
1,852,843
|
|
|
$
|
1,030,337
|
|
Pre-merger inVentiv net service revenue
|
—
|
|
|
534,594
|
|
|
1,202,170
|
|
|
2,192,587
|
|
||||
Combined Company net service revenue, before adjustments
|
750,471
|
|
|
797,573
|
|
|
3,055,013
|
|
|
3,222,924
|
|
||||
Acquisition-related deferred revenue adjustment (a)
|
20,000
|
|
|
18,372
|
|
|
47,014
|
|
|
18,372
|
|
||||
Combined Company adjusted net service revenue
|
$
|
770,471
|
|
|
$
|
815,945
|
|
|
$
|
3,102,027
|
|
|
$
|
3,241,296
|
|
Combined Company segment adjusted net service revenue:
|
|
|
|
|
|
|
|
||||||||
Clinical Solutions net service revenue, as reported
|
$
|
522,187
|
|
|
$
|
260,019
|
|
|
$
|
1,459,968
|
|
|
$
|
1,021,017
|
|
Pre-merger inVentiv Clinical Solutions net service revenue
|
—
|
|
|
247,741
|
|
|
616,594
|
|
|
1,024,843
|
|
||||
Combined Company Clinical Solutions net service revenue, before adjustments
|
522,187
|
|
|
507,760
|
|
|
2,076,562
|
|
|
2,045,860
|
|
||||
Acquisition-related deferred revenue adjustment (a)
|
16,916
|
|
|
17,620
|
|
|
41,244
|
|
|
17,620
|
|
||||
Combined Company Clinical Solutions adjusted net service revenue
|
$
|
539,103
|
|
|
$
|
525,380
|
|
|
$
|
2,117,806
|
|
|
$
|
2,063,480
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial Solutions net service revenue, as reported
|
$
|
228,284
|
|
|
$
|
2,960
|
|
|
$
|
392,875
|
|
|
$
|
9,320
|
|
Pre-merger inVentiv Commercial Solutions net service revenue
|
—
|
|
|
286,853
|
|
|
585,576
|
|
|
1,167,744
|
|
||||
Combined Company Commercial Solutions net service revenue, before adjustments
|
228,284
|
|
|
289,813
|
|
|
978,451
|
|
|
1,177,064
|
|
||||
Acquisition-related deferred revenue adjustment (a)
|
3,084
|
|
|
752
|
|
|
5,770
|
|
|
752
|
|
||||
Combined Company Commercial Solutions adjusted net service revenue
|
$
|
231,368
|
|
|
$
|
290,565
|
|
|
$
|
984,221
|
|
|
$
|
1,177,816
|
|
Combined Company adjusted income from operations:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations, as reported
|
$
|
15,020
|
|
|
$
|
43,800
|
|
|
$
|
(28,866
|
)
|
|
$
|
155,359
|
|
Pre-merger inVentiv (loss) income from operations
|
—
|
|
|
(117,391
|
)
|
|
(58,752
|
)
|
|
33,650
|
|
||||
Combined Company income (loss) from operations, before adjustments
|
15,020
|
|
|
(73,591
|
)
|
|
(87,618
|
)
|
|
189,009
|
|
||||
Acquisition-related deferred revenue adjustment (a)
|
20,000
|
|
|
18,372
|
|
|
47,014
|
|
|
18,372
|
|
||||
Amortization (b)
|
65,220
|
|
|
40,958
|
|
|
283,708
|
|
|
96,714
|
|
||||
Restructuring and other costs (c)
|
20,689
|
|
|
8,855
|
|
|
48,695
|
|
|
47,450
|
|
||||
Transaction and integration-related expenses (d)
|
15,734
|
|
|
46,363
|
|
|
149,461
|
|
|
58,021
|
|
||||
Asset impairment charges (e)
|
—
|
|
|
67,982
|
|
|
30,000
|
|
|
67,982
|
|
||||
Share-based compensation (f)
|
4,976
|
|
|
30,569
|
|
|
37,009
|
|
|
44,077
|
|
||||
Contingent consideration and other expense (g)
|
—
|
|
|
290
|
|
|
—
|
|
|
1,696
|
|
||||
Discretionary bonus accrual reversal (h)
|
—
|
|
|
—
|
|
|
(5,953
|
)
|
|
(4,144
|
)
|
||||
R&D tax credit adjustment (i)
|
(3,568
|
)
|
|
(2,528
|
)
|
|
(9,598
|
)
|
|
(2,949
|
)
|
||||
Monitoring and advisory fees (j)
|
—
|
|
|
861
|
|
|
7,538
|
|
|
3,494
|
|
||||
Acquisition-related revaluation adjustments (k)
|
—
|
|
|
—
|
|
|
4,408
|
|
|
717
|
|
||||
Combined Company adjusted income from operations
|
$
|
138,071
|
|
|
$
|
138,131
|
|
|
$
|
504,664
|
|
|
$
|
520,439
|
|
GAAP operating margin
|
2.0
|
%
|
|
16.7
|
%
|
|
(1.6
|
)%
|
|
15.1
|
%
|
||||
Combined Company adjusted operating margin
|
17.9
|
%
|
|
16.9
|
%
|
|
16.3
|
%
|
|
16.1
|
%
|
|
Three Months Ended December 31,
|
|
Year Ended
December 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Combined Company EBITDA and adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income, as reported
|
$
|
(15,047
|
)
|
|
$
|
37,491
|
|
|
$
|
(138,469
|
)
|
|
$
|
112,630
|
|
Pre-merger inVentiv net loss
|
—
|
|
|
(150,810
|
)
|
|
(105,577
|
)
|
|
(183,538
|
)
|
||||
Combined Company net (loss) income, before adjustments
|
(15,047
|
)
|
|
(113,319
|
)
|
|
(244,046
|
)
|
|
(70,908
|
)
|
||||
Interest expense, net
|
29,490
|
|
|
69,262
|
|
|
149,327
|
|
|
243,536
|
|
||||
Income tax expense (benefit)
|
(3,625
|
)
|
|
(22,371
|
)
|
|
(19,288
|
)
|
|
13,300
|
|
||||
Depreciation
|
18,128
|
|
|
21,300
|
|
|
75,988
|
|
|
78,435
|
|
||||
Amortization (b)
|
65,220
|
|
|
40,958
|
|
|
283,708
|
|
|
96,714
|
|
||||
EBITDA
|
94,166
|
|
|
(4,170
|
)
|
|
245,689
|
|
|
361,077
|
|
||||
Acquisition-related deferred revenue adjustment (a)
|
20,000
|
|
|
18,372
|
|
|
47,014
|
|
|
18,372
|
|
||||
Restructuring and other costs (c)
|
20,689
|
|
|
8,855
|
|
|
48,695
|
|
|
47,450
|
|
||||
Transaction and integration-related expenses (d)
|
15,734
|
|
|
46,363
|
|
|
149,461
|
|
|
58,021
|
|
||||
Asset impairment charges (e)
|
—
|
|
|
67,982
|
|
|
30,000
|
|
|
67,982
|
|
||||
Share-based compensation (f)
|
4,976
|
|
|
30,569
|
|
|
37,009
|
|
|
44,077
|
|
||||
Contingent consideration and other expense (g)
|
—
|
|
|
290
|
|
|
—
|
|
|
1,696
|
|
||||
Discretionary bonus accrual reversal (h)
|
—
|
|
|
—
|
|
|
(5,953
|
)
|
|
(4,144
|
)
|
||||
R&D tax credit adjustment (i)
|
(3,568
|
)
|
|
(2,528
|
)
|
|
(9,598
|
)
|
|
(2,949
|
)
|
||||
Monitoring and advisory fees (j)
|
—
|
|
|
861
|
|
|
7,538
|
|
|
3,494
|
|
||||
Acquisition-related revaluation adjustments (k)
|
—
|
|
|
—
|
|
|
4,408
|
|
|
717
|
|
||||
Other expense (income), net (l)
|
3,682
|
|
|
(8,384
|
)
|
|
25,767
|
|
|
1,641
|
|
||||
Loss on extinguishment of debt (m)
|
520
|
|
|
1,221
|
|
|
622
|
|
|
1,440
|
|
||||
Combined Company adjusted EBITDA
|
$
|
156,199
|
|
|
$
|
159,431
|
|
|
$
|
580,652
|
|
|
$
|
598,874
|
|
Adjusted EBITDA Margin
|
20.3
|
%
|
|
19.5
|
%
|
|
18.7
|
%
|
|
18.5
|
%
|
|
Three Months Ended December 31,
|
|
Year Ended
December 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Combined Company adjusted net income:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income, as reported
|
$
|
(15,047
|
)
|
|
$
|
37,491
|
|
|
$
|
(138,469
|
)
|
|
$
|
112,630
|
|
Pre-merger inVentiv net loss
|
—
|
|
|
(150,810
|
)
|
|
(105,577
|
)
|
|
(183,538
|
)
|
||||
Combined Company net (loss) income, before adjustments
|
(15,047
|
)
|
|
(113,319
|
)
|
|
(244,046
|
)
|
|
(70,908
|
)
|
||||
Acquisition-related deferred revenue adjustment (a)
|
20,000
|
|
|
18,372
|
|
|
47,014
|
|
|
18,372
|
|
||||
Amortization (b)
|
65,220
|
|
|
40,958
|
|
|
283,708
|
|
|
96,714
|
|
||||
Restructuring and other costs (c)
|
20,689
|
|
|
8,855
|
|
|
48,695
|
|
|
47,450
|
|
||||
Transaction and integration-related expenses (d)
|
15,734
|
|
|
46,363
|
|
|
149,461
|
|
|
58,021
|
|
||||
Asset impairment charges (e)
|
—
|
|
|
67,982
|
|
|
30,000
|
|
|
67,982
|
|
||||
Share-based compensation (f)
|
4,976
|
|
|
30,569
|
|
|
37,009
|
|
|
44,077
|
|
||||
Contingent consideration and other expense (g)
|
—
|
|
|
290
|
|
|
—
|
|
|
1,696
|
|
||||
Discretionary bonus accrual reversal (h)
|
—
|
|
|
—
|
|
|
(5,953
|
)
|
|
(4,144
|
)
|
||||
R&D tax credit adjustment (i)
|
(3,568
|
)
|
|
(2,528
|
)
|
|
(9,598
|
)
|
|
(2,949
|
)
|
||||
Monitoring and advisory fees (j)
|
—
|
|
|
861
|
|
|
7,538
|
|
|
3,494
|
|
||||
Acquisition-related revaluation adjustments (k)
|
—
|
|
|
—
|
|
|
4,408
|
|
|
717
|
|
||||
Other expense (income), net (l)
|
3,682
|
|
|
(8,384
|
)
|
|
25,767
|
|
|
1,641
|
|
||||
Loss on extinguishment of debt (m)
|
520
|
|
|
1,221
|
|
|
622
|
|
|
1,440
|
|
||||
Bridge financing fee (n)
|
—
|
|
|
—
|
|
|
5,815
|
|
|
—
|
|
||||
Income tax adjustment to normalized rate (o)
|
(132,569
|
)
|
|
(46,491
|
)
|
|
(236,601
|
)
|
|
(83,648
|
)
|
||||
Impact of Tax Cut and Jobs Act (p)
|
94,415
|
|
|
—
|
|
|
94,415
|
|
|
—
|
|
||||
Combined Company adjusted net income
|
$
|
74,052
|
|
|
$
|
44,749
|
|
|
$
|
238,254
|
|
|
$
|
179,955
|
|
|
|
|
|
|
|
|
|
||||||||
Combined Company diluted weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average common shares outstanding, as reported
|
104,364
|
|
54,932
|
|
|
74,913
|
|
55,610
|
|
||||||
Effect of certain securities considered anti-dilutive under GAAP (q)
|
1,191
|
|
—
|
|
|
1,255
|
|
—
|
|
||||||
Estimated additional dilutive shares outstanding as a result of the Merger (r)
|
—
|
|
|
49,927
|
|
|
28,801
|
|
49,927
|
|
|||||
Combined Company diluted weighted average common shares outstanding
|
105,555
|
|
104,859
|
|
|
104,969
|
|
105,537
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Adjusted diluted earnings per share
|
$
|
0.70
|
|
|
$
|
0.43
|
|
|
$
|
2.27
|
|
|
$
|
1.71
|
|
(a)
|
Represents non-cash adjustments resulting from the revaluation of deferred revenue and the subsequent elimination of revenue in purchase accounting in connection with business combinations.
|
(b)
|
Represents the amortization of intangible assets associated with acquired customer relationships, backlog, and trademarks.
|
(c)
|
Restructuring and other costs consist primarily of: (i) severance costs associated with a reduction/optimization of the Company's workforce in line with the Company's expectations of future business operations, (ii) transition costs associated with the change in the Company's Chief Executive Officer during the fourth quarter of 2016, (iii) consulting costs incurred for the continued consolidation of legal entities and restructuring of the Company's contract management process to meet the requirements of upcoming accounting regulation changes, and (iv) termination costs in connection with abandonment and closure of redundant facilities and other lease-related charges.
|
(d)
|
Represents fees associated with corporate transactions and integration-related activities which primarily relate to the Merger in 2017, partially offset by a benefit from the change in fair value of contingent tax-sharing obligations due to the enactment of the
Tax Act
. Accounting rules require us to estimate the fair value of the contingent tax-sharing obligations at the time of the acquisition, and any subsequent changes to the estimate or payout are charged to current period expense or income. We exclude the impact of any changes to the contingent tax-sharing obligations from our non-GAAP measures because we believe these expenses or benefits do not accurately reflect the performance of our ongoing operations for the period in which such expenses or benefits are recorded.
|
(e)
|
Represents impairment charges associated with the INC Research tradename due to the Company’s rebranding in January 2018 in connection with the Merger.
|
(f)
|
Represents non-cash share-based compensation expense related to awards granted under equity incentive plans.
|
(g)
|
Represents contingent consideration expense incurred as a result of acquisitions and other expenses accounted for as compensation expense under GAAP.
|
(h)
|
Represents inVentiv discretionary bonus accruals from the prior year that were reversed in periods prior to the Merger.
|
(i)
|
Represents additional research and development tax credits in certain international locations for expenses incurred and recorded as a reduction of direct costs.
|
(j)
|
Represents the annual sponsor management fee previously paid pursuant to the THL and Advent Management Agreement with inVentiv.
|
(k)
|
Represents non-cash adjustments resulting from the revaluation of certain items such as vehicle leases in connection with inVentiv's Merger with Advent in 2016 and facilities.
|
(l)
|
Represents other (income) expense comprised primarily of foreign exchange gains and losses.
|
(m)
|
Represents loss on extinguishment of debt associated with the debt refinancing activities.
|
(n)
|
Represents bridge financing fees incurred by the Company related to its 2017 Credit Agreement prior to the Merger.
|
(o)
|
Represents the income tax effect of the combined company non-GAAP adjustments made to arrive at adjusted net income using an estimated effective tax rate of approximately
31.8%
and
34%
for the
three months and year ended
December 31, 2017
, respectively, and
35%
for the
three months and year ended
December 31, 2016
. This rate has been adjusted to exclude tax impacts related to valuation allowances recorded against deferred tax assets.
|
(p)
|
Represents the direct and indirect net income tax effect recorded in the
three months and year ended
December 31, 2017
as a result of the enactment of the
Tax Act
.
|
(q)
|
Represents the weighted average number of equity-based awards issued under the Company's equity incentive plans calculated using the treasury stock method that were excluded from shares used in computing GAAP diluted net loss per share due to reporting a net loss under GAAP for the period.
|
(r)
|
Represents the estimated impact on the dilutive weighted average shares outstanding of shares and equity-based awards issued by the Company as a result of the Merger had the Merger occurred on January 1, 2016. The amount consists of the shares issued to inVentiv's shareholders on August 1, 2017 and the fully vested stock option awards and restricted stock units issued under the equity incentive plans formerly related to inVentiv that were assumed by the Company in the Merger.
|
|
First Quarter 2018
|
|
Full Year 2018
|
||||||||||||||||||||||||||||
|
Adjusted Net Income
|
|
Adjusted Diluted Earnings Per Share
|
|
Adjusted Net Income
|
|
Adjusted Diluted Earnings Per Share
|
||||||||||||||||||||||||
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
||||||||||||||||
GAAP net (loss) income and diluted earnings per share
|
$
|
(3.2
|
)
|
|
$
|
3.7
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.04
|
|
|
$
|
66.8
|
|
|
$
|
94.4
|
|
|
$
|
0.63
|
|
|
$
|
0.89
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization (a)
|
51.1
|
|
|
51.1
|
|
|
|
|
|
|
204.2
|
|
|
204.2
|
|
|
|
|
|
||||||||||||
Share-based compensation (a)
|
11.0
|
|
|
11.0
|
|
|
|
|
|
|
43.9
|
|
|
43.9
|
|
|
|
|
|
||||||||||||
Restructuring and other costs (a)
|
12.8
|
|
|
12.8
|
|
|
|
|
|
|
50.6
|
|
|
50.6
|
|
|
|
|
|
||||||||||||
Transaction expenses (a)
|
7.6
|
|
|
7.6
|
|
|
|
|
|
|
12.2
|
|
|
12.2
|
|
|
|
|
|
||||||||||||
Merger-related deferred revenue adjustment (a)
|
4.0
|
|
|
4.0
|
|
|
|
|
|
|
5.5
|
|
|
5.5
|
|
|
|
|
|
||||||||||||
Other (a)
|
0.1
|
|
|
0.1
|
|
|
|
|
|
|
0.5
|
|
|
0.5
|
|
|
|
|
|
||||||||||||
Income tax effect of above adjustments (b)
|
(26.8
|
)
|
|
(26.8
|
)
|
|
|
|
|
|
(98.2
|
)
|
|
(98.2
|
)
|
|
|
|
|
||||||||||||
Adjusted net income and adjusted diluted earnings per share
|
$
|
56.6
|
|
|
$
|
63.5
|
|
|
$
|
0.54
|
|
|
$
|
0.60
|
|
|
$
|
285.5
|
|
|
$
|
313.1
|
|
|
$
|
2.68
|
|
|
$
|
2.94
|
|
(a)
|
Amounts are estimates with an estimated range of +/- 5% and are presented gross without the benefit of associated income tax deduction.
|
(b)
|
Income tax expense is calculated and the adjustments are tax-affected at an approximate rate of
30%
-
32%
, which represents the estimated range of the Company's full year non-GAAP effective tax rate and takes into account the estimated effect of the enactment of the
Tax Act
.
|