RESEARCH TRIANGLE PARK, N.C. – November 14, 2005 – Quintiles Transnational Corp. today announced financial results for the quarter ended September 30, 2005. Net revenue for third quarter 2005 was $470.3 million, an increase of 19% from net revenue of $396.5 million for third quarter 2004. Profit contribution from Quintiles' Product Development and Commercial Services groups totaled $210.5 million in third quarter 2005, up from $193.1 million for third quarter 2004.
Net income for third quarter 2005 was $26.9 million, after $3.4 million in charges relating to the company's previously announced restructuring program, compared to a net income of $34.5 million in third quarter 2004. Quintiles' effective income tax rate for the third quarter of 2005 was positively impacted due to a $17.8 million income tax benefit recognized as a result of the company's adoption of its domestic reinvestment plan related to the American Jobs Creation Act of 2004. The net income in third quarter 2004 included an after-tax gain of $53.8 million resulting from Quintiles' sale of certain assets relating to its Bioglan Pharmaceuticals business to Bradley Pharmaceuticals, Inc. (NYSE: BDY) for $188 million in cash.
Third quarter 2005 earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $58.6 million, including income from discontinued operations net of loss on sale, before income taxes, of $300,000, and the restructuring charge of $3.4 million. Third quarter 2004 EBITDA was $103.2 million, including a gain on sale net of a loss from discontinued operations, before income taxes, of $87.3 million. Excluding these one-time events, EBITDA for third quarter 2005 and third quarter 2004 was, respectively, $60.8 million and $11.3 million. See Schedule 3 for a reconciliation of the above amounts.
"We are continuing to focus on the fundamentals – providing our customers high-quality, value-added clinical and commercialization services and partnering solutions – while positioning Quintiles to take advantage of the significant potential we see in emerging markets," said Quintiles Chairman and Chief Executive Officer Dennis Gillings, CBE. "These strong results are tangible evidence of the progress we're making."
Quintiles Transnational Executive Vice President and Chief Financial Officer John Ratliff said: "Our continued improvement in operating profits is the result of our emphasis throughout Quintiles on driving revenue growth and managing costs. At the same time, we are enhancing processes to achieve greater quality and efficiency, and we are investing in areas where we see key opportunities for market growth and to help our customers succeed."
As of September 30, 2005, Quintiles had cash and cash equivalents of $479 million.
During the third quarter of 2005, Quintiles completed the sale to Aptuit, Inc., of its Early Development and Packaging business for approximately $124 million.
After third quarter 2005 ended, Quintiles closed a financing transaction, as previously announced, in which it raised approximately $250 million in cash by monetizing its rights to receive royalties and certain other payments from the U.S. sales of Eli Lilly and Company's antidepressant drug Cymbalta® (duloxetine hydrochloride). The royalty rights were part of Quintiles' agreement with Lilly to help co-promote Cymbalta in the United States for five years; that co-promotion agreement remains materially unchanged and Quintiles continues to have a financial interest in the royalty rights. Quintiles contributed its royalty rights and certain other payment rights under the co-promotion agreement to an indirect wholly owned subsidiary (Royalty Sub), which issued $125 million in notes and borrowed $125 million in loans, each secured primarily by the royalty and other payment rights. Quintiles used a portion of the proceeds to repay in full its outstanding term loans of $154 million under Quintiles' existing senior secured credit facility; Quintiles plans to use the remaining cash for other purposes permitted under Quintiles' other debt arrangements and for general corporate purposes.
Quintiles Transnational's third quarter 2005 financial briefing will be held at 11:00 a.m. EST on Tuesday, Nov. 15, and will be broadcast live over the Web. The webcast or replay, which will be available through 5:00 p.m. EST Friday, Dec. 2, can be accessed at www.quintiles.com/corporate_info/broadcast_center.
Quintiles is the global leader in pharmaceutical services. We improve healthcare worldwide by providing quality professional expertise, market intelligence and innovative partnering solutions to the pharmaceutical, biotechnology and healthcare industries. Quintiles has 16,000 specialized employees and offices in 50 countries. For more information visit the company's Web site at www.quintiles.com.
The schedules attached to this release are 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 ability to maintain large customer contracts or to enter into new contracts, changes in trends in the pharmaceutical industry, the risk that the market for our products and services will not grow as we expect, the risk that our PharmaBio transactions will not generate revenue 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 fulfill our obligations under our financing arrangements and the potential impact on our operations, our ability to efficiently distribute backlog among project management groups and match demand to resources, actual operating performance, variation in the actual savings and operating improvements resulting from previous restructurings, the ability to operate successfully in new lines of business, and the risk that, even though Royalty Sub's notes and loans are non-recourse to Quintiles, Quintiles may be required to make payments equal to the outstanding principal and interest on the notes and loans in certain limited circumstances. 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.