Exhibit 99.1
IMS Health Announces 14 Percent Revenue Growth for First-Quarter 2005
FAIRFIELD, Conn.--(BUSINESS WIRE)--April 19, 2005--IMS Health
(NYSE: RX) today announced first-quarter 2005 revenue of $411.0
million, up 14 percent (10 percent constant dollar), compared with
revenue of $361.6 million for the first quarter of 2004.
"We delivered another strong quarter, with double-digit growth in
the key metrics of our business, and a 63 percent increase in
consulting and services revenue," said David R. Carlucci, IMS chief
executive officer and president. "Our team performed very well
globally, with our European operations leading the way. In a dynamic
marketplace, we are providing our clients with innovative,
evidence-based solutions. This gives us confidence we will achieve our
financial objectives for 2005."
The company is taking the opportunity provided by the American
Jobs Creation Act of 2004 to repatriate approximately $650 million of
previously undistributed foreign earnings. As a result, IMS recorded a
one-time tax charge in the 2005 first quarter of $67 million, or $0.29
per share. Including this charge, first-quarter diluted earnings per
share on an SEC-reported basis was $0.13, compared with $0.34 in the
2004 first quarter. On an adjusted basis, first-quarter diluted
earnings per share was $0.29, compared with $0.26 per share in the
same period of 2004, an increase of 12 percent. Net income on an
SEC-reported basis was $30.3 million, compared with net income of
$81.1 million in the year-earlier quarter. On an adjusted basis, net
income for the first quarter of 2005 was $68.1 million, up 11 percent
from $61.4 million in the first quarter of 2004. See Tables 3 and 4
for a reconciliation from SEC to adjusted results for the quarters
ended March 31, 2005 and 2004, respectively.
The first-quarter 2005 tax charge of $67 million may be reduced by
approximately $19 million (to a tax charge of $48 million) if the U.S.
Congress enacts technical corrections legislation as expected.
Balance Sheet Highlights
IMS's cash, cash equivalents and short-term marketable securities
as of March 31, 2005 totaled $408.1 million, compared with $460.0
million on December 31, 2004. Total debt as of March 31, 2005 was
$731.5 million, up from $626.7 million at the end of 2004. See Table 5
for selected consolidated balance sheet items.
Share Repurchase Program, Shares Outstanding
IMS repurchased approximately 3.9 million shares in the first
quarter at a total cost of $92.6 million. In December 2004, the board
of directors authorized the company to repurchase up to 10 million IMS
shares.
The number of actual shares outstanding as of March 31, 2005 was
approximately 226.6 million, compared with 235.0 million as of March
31, 2004.
About IMS
Operating in more than 100 countries, IMS Health is the world's
leading provider of information solutions to the pharmaceutical and
healthcare industries. With $1.6 billion in 2004 revenue and more than
50 years of industry experience, IMS offers leading-edge business
intelligence products and services that are integral to clients'
day-to-day operations, including portfolio optimization capabilities;
launch and brand management solutions; sales force effectiveness
innovations; managed care and over-the-counter offerings; and
consulting and services solutions that improve ROI and the delivery of
quality healthcare worldwide. Additional information is available at
http://www.imshealth.com.
Conference Call and Webcast Details
IMS will host a conference call at 5 p.m. Eastern time today to
discuss its first-quarter results. To participate, please dial
1-888-568-1969 (U.S. and Canada) and 1-212-341-7080 (outside the U.S.
and Canada) approximately 15 minutes before the scheduled start of the
call. The conference call also will be accessible live on the Investor
Relations section of the IMS Website at www.imshealth.com. Prior to
the conference call, a copy of this press release and any other
financial or statistical information presented during the call will be
made available in the "Investors" area of IMS's Website.
A replay of the conference call will be available online on the
Investor Relations section of the IMS Website and via telephone by
dialing 1-800-633-8284 (U.S. and Canada) or 1-402-977-9140 (outside
the U.S. and Canada), and entering access code 21239956 beginning one
hour after the call is completed.
Forward-Looking Statements
This press release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Although IMS
Health believes the expectations contained in such forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove correct. This information may involve risks
and uncertainties that could cause actual results of IMS Health to
differ materially from the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not
limited to (i) the risks associated with operating on a global basis,
including fluctuations in the value of foreign currencies relative to
the U.S. dollar, and the ability to successfully hedge such risks,
(ii) to the extent IMS Health seeks growth through acquisitions and
joint ventures, the ability to identify, consummate and integrate
acquisitions and joint ventures on satisfactory terms, (iii) the
ability to develop new or advanced technologies and systems for its
businesses on time and on a cost-effective basis, (iv) regulatory,
legislative and enforcement initiatives, particularly in the areas of
medical privacy and tax, (v) to the extent unforeseen cash needs
arise, the ability to obtain financing on favorable terms, and (vi)
deterioration in economic conditions, particularly in the
pharmaceutical, healthcare or other industries in which IMS Health's
customers operate.
Table 1
IMS Health
SEC Income Statement (a)
Three Months Ended March 31
(unaudited, in millions except per share)
2005 2004 % Fav
SEC SEC (Unfav)
---------------------
Revenue (b)
Sales Force Effectiveness $199.9 $179.7 11 %
Portfolio Optimization 125.5 114.8 9
Launch, Brand and Other 85.5 67.1 27
--------------
Total 411.0 361.6 14
Operating Expenses (c)
Operating Costs (183.4)(152.7) (20)
Selling and Administrative (106.1) (91.0) (17)
Depreciation and Amortization (24.7) (21.7) (14)
--------------
Total (314.1)(265.3) (18)
Operating Income 96.9 96.2 1
Interest expense, net (3.8) (3.3)
Gains from investments, net (e) 2.7 6.5
Other income, net (f) 9.3 2.8
--------------
Pretax Income 105.0 102.2 3
Provision for Income Taxes (g) (74.7) (20.1)
TriZetto Equity Loss, net (d) 0.0 (1.0)
--------------
Net Income $30.3 $81.1 (63)
Diluted EPS:
Total Diluted EPS $0.13 $0.34 (62)%
Shares Outstanding:
Weighted Average Diluted 231.5 240.4 4 %
End-of-Period Actual 226.6 235.0 4
The accompanying notes are an integral part of these financial
tables.
Table 2
IMS Health
Adjusted Income Statement (a)
Three Months Ended March 31
(unaudited, in millions except per share)
Constant
$
2005 2004 % Fav Growth
Adjusted Adjusted (Unfav) (h)
---------------------------------
Revenue (b)
Sales Force Effectiveness $199.9 $179.7 11 % 8 %
Portfolio Optimization 125.5 114.8 9 6
Launch, Brand and Other 85.5 67.1 27 23
------------------
Total 411.0 361.6 14 10
Operating Expenses (c)
Operating Costs (183.4) (152.7) (20)
Selling and Administrative (106.1) (91.0) (17)
Depreciation and Amortization (24.7) (21.7) (14)
------------------
Total (314.1) (265.3) (18)
Operating Income 96.9 96.2 1 (1)
Interest expense, net (3.8) (3.3) (15)
Gain from investments, net (e) 3.0 0.0 NM
Other expense, net (f) (0.4) (2.5) 84
------------------
Pretax Income 95.7 90.4 6
Provision for Income Taxes (g) (27.6) (28.0) 2
TriZetto Equity Loss, net (d) 0.0 (1.0) NM
------------------
Net Income from continuing operations $68.1 $61.4 11 %
Diluted EPS:
Total Diluted EPS $0.29 $0.26 12 %
Shares Outstanding:
Weighted Average Diluted 231.5 240.4 4 %
End-of-Period Actual 226.6 235.0 4
The accompanying notes are an integral part of these financial
tables.
Table 3
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Three Months Ended March 31, 2005
(unaudited, in millions except per share)
Adjusted
SEC Q1 Adjustments Q1
---------------------------
Revenue (b)
Sales Force Effectiveness $199.9 $0.0 $199.9
Portfolio Optimization 125.5 0.0 125.5
Launch, Brand and Other 85.5 0.0 85.5
---------------------------
Total 411.0 0.0 411.0
Operating Expenses (c)
Operating Costs (183.4) 0.0 (183.4)
Selling and Administrative (106.1) 0.0 (106.1)
Depreciation and Amortization (24.7) 0.0 (24.7)
---------------------------
Total (314.1) 0.0 (314.1)
Operating Income 96.9 0.0 96.9
Interest expense, net (3.8) 0.0 (3.8)
Gains from investments, net (e) 2.7 0.4 3.0
Other income (expense), net (f) 9.3 (9.7) (0.4)
---------------------------
Pretax Income 105.0 (9.3) 95.7
Provision for Income Taxes (g) (74.7) 47.1 (27.6)
---------------------------
Net Income $30.3 $37.8 $68.1
Diluted EPS:
Total Diluted EPS $0.13 $0.16 $0.29
Shares Outstanding:
Weighted Average Diluted 231.5 0.0 231.5
End-of-Period Actual 226.6 0.0 226.6
The accompanying notes are an integral part of these financial
tables.
Table 4
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Three Months Ended March 31, 2004
(unaudited, in millions except per share)
Adjusted
SEC Q1 Adjustments Q1
---------------------------
Revenue (b)
Sales Force Effectiveness $179.7 $0.0 $179.7
Portfolio Optimization 114.8 0.0 114.8
Launch, Brand and Other 67.1 0.0 67.1
---------------------------
Total 361.6 0.0 361.6
Operating Expenses (c)
Operating Costs (152.7) 0.0 (152.7)
Selling and Administrative (91.0) 0.0 (91.0)
Depreciation and Amortization (21.7) 0.0 (21.7)
---------------------------
Total (265.3) 0.0 (265.3)
Operating Income 96.2 0.0 96.2
Interest expense, net (3.3) 0.0 (3.3)
Gains from investments, net (e) 6.5 (6.5) 0.0
Other income (expense), net (f) 2.8 (5.3) (2.5)
---------------------------
Pretax Income 102.2 (11.7) 90.4
Provision for Income Taxes (g) (20.1) (7.9) (28.0)
TriZetto Equity Loss, net (d) (1.0) 0.0 (1.0)
---------------------------
Net Income $81.1 ($19.6) $61.4
Diluted EPS:
Total Diluted EPS $0.34 ($0.08) $0.26
Shares Outstanding:
Weighted Average Diluted 240.4 0.0 240.4
End-of-Period Actual 235.0 0.0 235.0
The accompanying notes are an integral part of these financial
tables.
Table 5
IMS Health
Selected Consolidated Balance Sheet Items
(unaudited, in millions)
March Dec.
31, 31,
2005 2004
------ ------
Cash and cash equivalents $401.3 $444.9
Short-term marketable securities 6.7 15.1
Accounts receivable, net 330.3 280.5
Total debt 731.5 626.7
The accompanying notes are an integral part of these financial
tables.
IMS Health
NOTES TO FINANCIAL TABLES
(a) "SEC Income Statement" (Table 1) differs from the "Adjusted Income
Statement" (Table 2) by amounts that are detailed on Tables 3 and
4. Adjusted results are those used by management for the purposes
of global business decision-making, including developing budgets
and managing expenditures. Adjusted results exclude certain U.S.
GAAP measures to the extent that management believes exclusion
will facilitate comparisons across periods and more clearly
indicate trends. Although IMS discloses adjusted results in order
to give a full picture to investors of its business as seen by
management, these adjusted results are not prepared specifically
for investors and are not a replacement for the more comprehensive
information for investors included in IMS's U.S. GAAP results. The
method IMS uses to prepare adjusted results differs in significant
respects from U.S. GAAP and is likely to differ from the methods
used by other companies. Investors interested in management's
adjusted results are urged to review the detailed reconciliations
of the adjusted measures to comparable U.S. GAAP results.
(b) Revenue in 2004 has been reclassified to conform to the 2005
presentation, including a reclassification of Consulting and
Services revenue into the other three business lines. Consulting
and Services revenue was $54.6 million in first-quarter 2005, up
63% (59% constant dollar) from $33.5 million in first-quarter
2004.
(c) Operating expenses in 2004 reflect a reclassification between
operating costs and selling and administrative expenses to make
them comparable with the 2005 presentation.
(d) In the fourth quarter of 2004, IMS Health sold its entire interest
in TriZetto back to the company.
(e) Gains from investments, net were $2.7 million in the first quarter
of 2005, relating primarily to a $3.0 million gain from the sale
of a 20% interest we held in a German company (GPI), partially
offset by $0.4 million of management fees for the Enterprise
investments. This is compared with a net gain of $6.5 million in
the first quarter of 2004 from the sale of certain Enterprise
investments. The gains and losses from Enterprise investments are
excluded from adjusted results because they relate to
non-strategic investments and are not related to IMS's core
business operations.
(f) Other income, net includes $1.2 million and $0.4 million of
expenses for legal fees in the first quarter of 2005 and 2004,
respectively, related to the IRI litigation. These expenses are
excluded from adjusted results because they relate to a D&B legacy
matter and are not related to IMS's core business operations. In
addition, Other income, net excludes a quarterly phasing
adjustment of foreign currency hedge gains (losses), net of
$(10.9) million in the first quarter of 2005 and ($5.7) million in
the first quarter of 2004. This phasing adjustment is made to
adjusted results in order to more closely match the timing of
foreign exchange hedge gains (losses) with the operating income
being hedged. For the full year, there is no difference between
the hedge losses in adjusted and SEC results.
(g) The tax provision for the first quarter of 2005 includes a net
provision of $3.2 million related primarily to the items described
in note (f). The tax provision for the first quarter of 2004
includes a tax provision of $4.1 million related to items
described in notes (e) and (f). These tax provisions are excluded
from adjusted results because the related charges and gains are
excluded from adjusted results. The tax provision in the first
quarter of 2005 also includes a $29.3 million tax benefit related
to a favorable audit resolution in Japan of the tax years through
2003. Adjusted results include a phasing adjustment to recognize
this benefit ratably throughout the year; the phasing adjustment
for the first quarter of 2005 was $23.2 million. This phasing
adjustment allows the full year effective tax rate to be applied
in each quarter to adjusted pretax results. Also in the first
quarter of 2005, $67.1 million of tax expense was recorded related
to the decision to repatriate approximately $650 million of
foreign earnings back to the U.S. during 2005 under the American
Jobs Creation Act of 2004 (AJCA). If Congress passes an expected
technical correction to the AJCA, this tax expense is likely to
decrease to $48.1 million. As the AJCA is a one-time event, this
tax expense has been excluded from adjusted results. In addition,
the first quarter 2004 tax provision also includes a $15.6 million
tax benefit related to a favorable audit resolution in the U.S. of
the 1998 and 1999 tax years. The phasing adjustment for the first
quarter of 2004 was $12.1 million.
(h) Constant-dollar growth rates eliminate the impact of
year-over-year foreign currency fluctuations.
Amounts presented in the financial tables may not add due to
rounding.
These financial tables should be read in conjunction with IMS
Health's filings previously made or to be made with the Securities
and Exchange Commission.
CONTACT: IMS Health
Corporate Communications
Bill Hughes, 203-319-4732
bhughes@imshealth.com
or
Investor Relations
Darcie Peck, 203-319-4766
dpeck@imshealth.com