RESEARCH TRIANGLE PARK, N.C. - July 17, 2002 - Quintiles Transnational Corp. (Nasdaq: QTRN) today announced financial results for second quarter 2002. Earnings per share for the quarter ended June 30, 2002, were $0.17 on a diluted basis, exceeding analysts' consensus expectations and up from second quarter 2001 earnings per share of $0.09, excluding the $2.1 million restructuring charge incurred in 2001. Net revenue and net income for second quarter 2002 were $390.3 million and $20.6 million, respectively, compared to $406.6 million and $11.1 million, excluding the 2001 restructuring charge, for second quarter 2001.
"I'm very pleased that we've exceeded analysts' consensus expectations for EPS and with our progress in implementing key elements of our business plan, especially ongoing increases in efficiency and in further raising the quality of our service delivery," said Quintiles Chief Executive Officer Pam Kirby, Ph.D. "Our Product Development group had a solid quarter, increasing its contribution sequentially -- the eighth such increase in the last nine quarters. In addition to operating more efficiently, we've made substantial progress in enhancing service delivery quality. For example, over the past 18 months we've reduced by 60% the average time elapsed between site visits by our North American clinical trial monitors and submission of completed reports to our customers. We've also worked hard to recruit and retain experienced monitors; the average experience of these clinical monitors now is about 40% greater than a year ago.
"During the second quarter our Commercialization group's contribution margin increased for the fourth consecutive quarter sequentially, although revenue for the group declined, as we expected, because of the continued difficult market for traditional commercialization services. We are making good progress migrating to our new partnership model through our PharmaBio transactions."
Quintiles Chairman Dennis Gillings, Ph.D., said: "We are particularly pleased with our PharmaBio product-related agreements, where revenues have shown growth. We have had a full quarter of ownership of certain assets of Bioglan Pharma Inc. in the U.S. and its suite of dermatology products. In addition, we are targeting royalty revenue of $500 million to $900 million for PharmaBio new business arrangements that we have signed in the last few months."
For the first half of 2002, net new business arrangements totaled an estimated $614 million, including $54 million in internal backlog for services. This resulted in a backlog at June 30, 2002, of approximately $1.8 billion, compared to a backlog at Dec. 31, 2001, of approximately $2 billion. These amounts do not include the targeted royalty revenues of $500 million to $900 million from new PharmaBio Development contracts.
Quintiles Transnational Chief Financial Officer Jim Bierman said: "Our focus on quality business and efficiency is reflected in our strong $49 million cash flow from operations in the second quarter. We've met or exceeded our EPS targets in the first two quarters of 2002, which we believe is consistent with our previously announced 2002 EPS target range of 64 to 72 cents."
In other second quarter developments, Quintiles completed its healthcare informatics joint venture with McKesson Corporation -- Verispan. McKesson and Quintiles are co-equal owners of Verispan, with a portion of equity owned by or to be allocated to key providers of de-identified healthcare data who join Verispan. Operating results include Quintiles Informatics for two months of the quarter and prorated ownership of Verispan for one month of the quarter.
Also during the quarter, Quintiles repurchased a record 1.28 million shares of its common stock for an aggregate price of approximately $17.4 million -- the most shares repurchased during a quarter in the company's history. Quintiles' Board of Directors previously authorized the repurchase of up to $100 million of Quintiles' common stock between March 1, 2001 and March 1, 2003; through second quarter 2002, $50.2 million of that authorization is still available for repurchases. Supplemental financial information is available under "Additional Financials" in the Investors section of Quintiles' Web site, http://www.quintiles.com/investors/additional_financials (access expired).
Quintiles Transnational's second quarter 2002 financial briefing will be held at 11 a.m. EDT on Thursday, July 18, and will be broadcast live over the Web. Interested parties can access the Webcast at http://www.quintiles.com/corporate_info/broadcast_center (access expired). Additionally, a replay of the Webcast will be available via the same link about two hours after completion of the call, and will be archived for on-demand replay through 5 p.m. EDT, Thursday, Aug. 1, 2002.
Quintiles Transnational helps improve healthcare worldwide by providing a broad range of professional services, information and partnering solutions to the pharmaceutical, biotechnology and healthcare industries. Headquartered near Research Triangle Park, North Carolina, Quintiles is a member of the S&P 500 and Fortune 1000. For more information visit the company's Web site at www.quintiles.com.
The schedule attached to this release is an integral part of this release. Information in this press release contains "forward-looking statements" about Quintiles. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the risk the market for our products and services will not grow as we expect, the risk that our PharmaBio transactions will not generate revenues or profit at the rate or levels we anticipate or that royalty revenues under the PharmaBio agreements may not be adequate to offset Quintiles' upfront and ongoing expenses in providing sales and marketing services or in making milestone and marketing payments, our ability to efficiently distribute backlog among project management groups and match demand to resources, actual operating performance, the actual savings and operating improvements resulting from the restructuring, the ability to maintain large customer contracts or to enter into new contracts, changes in trends in the pharmaceutical industry, and the ability to operate successfully in new lines of business. Additional factors that could cause actual results to differ materially are discussed in the company's recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K, its Form 8-Ks, and its other periodic reports, including Form 10-Qs.