EXHIBIT 99.1
IMS Health Delivers Strong Revenue and Earnings Per Share Growth in
First-Quarter 2006
FAIRFIELD, Conn.--(BUSINESS WIRE)--April 19, 2006--IMS Health (NYSE: RX),
the world's leading provider of market intelligence to the pharmaceutical and
healthcare industries, today announced first-quarter 2006 revenue of $446.2
million, up 9 percent (13 percent constant dollar), compared with revenue of
$411.0 million for the first quarter of 2005.
"IMS had a great start to the year," said David R. Carlucci, IMS chairman
and chief executive officer. "We continued to build on our momentum and turned
in an outstanding operational performance in the first quarter, with impressive
gains in each of our regions and exceptional growth in the U.S., our largest
market. Our execution across business lines is excellent, reflecting our strong
client focus and sustained execution by our teams worldwide. We remain confident
that we will achieve our guidance for 2006."
First-quarter 2006 diluted earnings per share on an SEC-reported basis was
$0.56, compared with $0.13 in the prior year. Excluding the expensing of stock
options, on an adjusted basis, earnings per share was $0.34, a 17 percent
increase, compared with $0.29 per share in the same period last year. Including
the expensing of stock options, adjusted earnings per share for the first
quarter was $0.31, up 7 percent. Net income on an SEC-reported basis was $118.1
million, compared with $30.3 million in the year-earlier quarter. On an adjusted
basis, excluding the expensing of stock options, first-quarter net income rose 6
percent to $72.1 million for the 2006 first quarter, compared with net income of
$68.1 million in the prior year. Including the expensing of stock options,
adjusted net income for the first quarter of 2006 was $65.3 million, down 4
percent.
Operating income in the first quarter of 2006 was $96.7 million on both an
SEC-reported basis and adjusted basis (including the expensing of stock
options), compared with $96.9 million in the year-earlier period. Excluding the
expensing of stock options, adjusted operating income in the 2006 first quarter
was $106.4 million, up 10 percent (13 percent constant dollar) over the prior
year.
Adjusted results for the 2006 first quarter exclude a net $29.5 million
U.S. tax benefit resulting from a favorable audit settlement with the IRS on a
legacy tax matter, as well as certain net tax benefits of approximately $21.8
million. First-quarter 2005 results on an adjusted basis exclude a one-time tax
charge of $67.1 million related to repatriating $647 million of previously
undistributed foreign earnings under the American Jobs Creation Act (See Notes
to Financial Tables).
Balance Sheet Highlights
IMS's cash and cash equivalents as of March 31, 2006 totaled $146.4
million, compared with $362.9 million on December 31, 2005. Total debt as of
March 31, 2006 was $1,112.8 million, up from $611.4 million at the end of 2005,
due to borrowings in connection with the share repurchase in January 2006.
Share Repurchase Program, Shares Outstanding
IMS repurchased 29 million shares in the first quarter of 2006 at a total
cost of $728.2 million. In January 2006, the board of directors authorized the
company to repurchase 30 million IMS shares, of which approximately 11 million
remain available to repurchase.
The number of actual shares outstanding as of March 31, 2006 was
approximately 199.7 million, compared with 226.6 million as of March 31, 2005.
About IMS
Operating in more than 100 countries, IMS Health is the world's leading
provider of market intelligence to the pharmaceutical and healthcare industries.
With $1.8 billion in 2005 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 1-800-621-5175 (U.S. and
Canada) and 1-212-231-6020 (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 21288907 beginning at 7:30 p.m. Eastern time today.
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)
2006 2005 % Fav
SEC SEC (Unfav)
---------------------
Revenue (b)
Sales Force Effectiveness $214.1 $200.0 7 %
Portfolio Optimization 129.8 126.7 2
Launch, Brand and Other 102.2 84.3 21
------ ------ ---
Total 446.2 411.0 9
Operating Expenses (c)
Operating Costs (197.9)(180.0) (10)
Selling and Administrative (124.2)(109.4) (13)
Depreciation and Amortization (27.3) (24.7) (11)
------ ------ ---
Total (349.4)(314.1) (11)
Operating Income 96.7 96.9 0
Interest Income (Expense), net (6.9) (3.8) (82)
Gains from investments, net (d) 2.7 2.7 0
Other Income (Expense), net (e) 1.8 9.3 (81)
------ ------ ---
Pretax Income 94.3 105.0 (10)
Benefit (Provision) for Income Taxes (f) 23.8 (74.7) NM
------ ------ ---
Net Income $118.1 $30.3 NM
Diluted EPS:
Total Diluted EPS $0.56 $0.13 NM %
Shares Outstanding:
Weighted Average Diluted 211.9 231.5 8 %
End-of-Period Actual 199.7 226.6 12
Weighted Average Basic 209.3 227.9 8
The accompanying notes are an integral part of these financial tables.
Table 2
IMS Health
Adjusted Income Statement (a)
Excluding SFAS 123r Cost/Expense in 2006
Three Months Ended March 31
(unaudited, in millions except per share)
2006 2005 % Fav Constant $
Adjusted Adjusted (Unfav) Growth (g)
------------------------------------
Revenue (b)
Sales Force Effectiveness $ 214.1 $ 200.0 7 % 11 %
Portfolio Optimization 129.8 126.7 2 7
Launch, Brand and Other 102.2 84.3 21 26
------- ------- ---- ----
Total 446.2 411.0 9 13
Operating Expenses (c)
Operating Costs (196.5) (180.0) (9)
Selling and Administrative (115.9) (109.4) (6)
Depreciation and Amortization (27.3) (24.7) (11)
------- ------- ----
Total (339.8) (314.1) (8)
Operating Income 106.4 96.9 10 13
Interest Income (Expense), net (6.9) (3.8) (82)
Gains from investments, net (d) 3.2 3.0 7
Other Income (Expense), net (e) (0.3) (0.4) 28
------- ------- ----
Pretax Income 102.4 95.7 7
Provision for Income Taxes (f) (30.3) (27.6) (10)
------- ------- ----
Net Income $ 72.1 $ 68.1 6 %
Diluted EPS:
Total Diluted EPS $ 0.34 $ 0.29 17 %
Shares Outstanding:
Weighted Average Diluted 211.9 231.5 8 %
End-of-Period Actual 199.7 226.6 12
Weighted Average Basic 209.3 227.9 8
The accompanying notes are an integral part of these financial tables.
Table 3
IMS Health
Adjusted Income Statement (a)
Including SFAS 123r Cost/Expense in 2006
Three Months Ended March 31
(unaudited, in millions except per share)
2006 2005 % Fav Constant $
Adjusted Adjusted (Unfav) Growth (g)
------------------------------------
Revenue (b)
Sales Force Effectiveness $ 214.1 $ 200.0 7 % 11 %
Portfolio Optimization 129.8 126.7 2 7
Launch, Brand and Other 102.2 84.3 21 26
------- ------- ---- ----
Total 446.2 411.0 9 13
Operating Expenses (c)
Operating Costs (197.9) (180.0) (10)
Selling and Administrative (124.2) (109.4) (13)
Depreciation and Amortization (27.3) (24.7) (11)
------- ------- ----
Total (349.4) (314.1) (11)
Operating Income 96.7 96.9 0 3
Interest Income (Expense), net (6.9) (3.8) (82)
Gains from investments, net (d) 3.2 3.0 7
Other Income (Expense), net (e) (0.3) (0.4) 28
------- ------- ----
Pretax Income 92.7 95.7 (3)
Provision for Income Taxes (f) (27.5) (27.6) 0
------- ------- ----
Net Income $ 65.3 $ 68.1 (4)%
Diluted EPS:
Total Diluted EPS $ 0.31 $ 0.29 7 %
Shares Outstanding:
Weighted Average Diluted 211.9 231.5 8 %
End-of-Period Actual 199.7 226.6 12
Weighted Average Basic 209.3 227.9 8
The accompanying notes are an integral part of these financial tables.
Table 4
IMS Health
Reconciliation of Adj. Income Statement Excluding to Including SFAS
123r cost/expense (a)
Three Months Ended March 31, 2006
(unaudited, in millions except per share)
Excluding Including
SFAS 123r SFAS 123r SFAS 123r
Q1 Adjustments Q1
--------------------------------
Revenue
Sales Force Effectiveness $ 214.1 $ 0.0 $ 214.1
Portfolio Optimization 129.8 0.0 129.8
Launch, Brand and Other 102.2 0.0 102.2
------- ------ -------
Total 446.2 0.0 446.2
Operating Expenses
Operating Costs (196.5) (1.4) (197.9)
Selling and Administrative (115.9) (8.2) (124.2)
Depreciation and Amortization (27.3) 0.0 (27.3)
------- ------ -------
Total (339.8) (9.6) (349.4)
Operating Income 106.4 (9.6) 96.7
Interest Income (Expense), net (6.9) 0.0 (6.9)
Gains from investments, net (d) 3.2 0.0 3.2
Other Income (Expense), net (e) (0.3) 0.0 (0.3)
------- ------ -------
Pretax Income 102.4 (9.6) 92.7
Provision for Income Taxes (f) (30.3) 2.8 (27.5)
------- ------ -------
Net Income $ 72.1 $ (6.8) $ 65.3
Diluted EPS:
Total Diluted EPS $ 0.34 $(0.03) $ 0.31
Shares Outstanding:
Weighted Average Diluted 211.9 0.0 211.9
End-of-Period Actual 199.7 0.0 199.7
Weighted Average Basic 209.3 0.0 209.3
The accompanying notes are an integral part of these financial tables.
Table 5
IMS Health
Reconciliation from SEC to Adjusted Income Statement Including
SFAS 123r cost/expense (a)
Three Months Ended March 31, 2006
(unaudited, in millions except per share)
Adjusted
SEC Q1 Adjustments Q1
----------------------------
Revenue
Sales Force Effectiveness $ 214.1 $ 0.0 $ 214.1
Portfolio Optimization 129.8 0.0 129.8
Launch, Brand and Other 102.2 0.0 102.2
------- ------ -------
Total 446.2 0.0 446.2
Operating Expenses
Operating Costs (197.9) 0.0 (197.9)
Selling and Administrative (124.2) 0.0 (124.2)
Depreciation and Amortization (27.3) 0.0 (27.3)
------- ------ -------
Total (349.4) 0.0 (349.4)
Operating Income 96.7 0.0 96.7
Interest Income (Expense), net (6.9) 0.0 (6.9)
Gains from investments, net (d) 2.7 0.6 3.2
Other Income (Expense), net (e) 1.8 (2.1) (0.3)
------- ------ -------
Pretax Income 94.3 (1.5) 92.7
Benefit (Provision) for Income Taxes (f) 23.8 (51.3) (27.5)
------- ------ -------
Net Income $ 118.1 $(52.8) $ 65.3
Diluted EPS:
Total Diluted EPS $ 0.56 $(0.25) $ 0.31
Shares Outstanding:
Weighted Average Diluted 211.9 0.0 211.9
End-of-Period Actual 199.7 0.0 199.7
Weighted Average Basic 209.3 0.0 209.3
The accompanying notes are an integral part of these financial tables.
Table 6
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 $ 200.0 $ 0.0 $ 200.0
Portfolio Optimization 126.7 0.0 126.7
Launch, Brand and Other 84.3 0.0 84.3
------- ----- -------
Total 411.0 0.0 411.0
Operating Expenses (c)
Operating Costs (180.0) 0.0 (180.0)
Selling and Administrative (109.4) 0.0 (109.4)
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 Income (Expense), net (3.8) 0.0 (3.8)
Gains from investments, net (d) 2.7 0.4 3.0
Other Income (Expense), Net (e) 9.3 (9.7) (0.4)
------- ----- -------
Pretax Income 105.0 (9.3) 95.7
Provision for Income Taxes (f) (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
Weighted Average Basic 227.9 0.0 227.9
The accompanying notes are an integral part of these financial tables.
Table 7
IMS Health
Selected Consolidated Balance Sheet Items
(unaudited, in millions)
March 31, 2006 Dec. 31, 2005
-------------- -------------
Cash and cash equivalents $ 146.4 $ 362.9
Accounts receivable, net 310.2 297.3
Total debt 1,112.8 611.4
The accompanying notes are an integral part of these financial tables.
IMS Health
NOTES TO FINANCIAL TABLES
(a) "Adjusted Income Statement" (Table 2) excludes SFAS 123r and
differs from "Adjusted Income Statement" (Table 3) which includes
SFAS 123r by amounts detailed on Table 4. "Adjusted Income
Statement" (Table 3) differs from the "SEC Income Statement"
(Table 1) by amounts that are detailed on Tables 5 and 6. 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 2005 has been reclassified between business lines to
conform to the 2006 presentation. Consulting and Services revenue
was $69.0 million in first quarter 2006, up 26% (31% constant
dollar) from $54.8 million in first-quarter 2005.
(c) Operating expenses in 2005 reflect a reclassification between
operating costs and selling and administrative expenses to make
them comparable with the 2006 presentation.
(d) Gains from investments, net were $2.7 million in the first quarter
of 2006, relating primarily to a $3.3 million gain from the sale
of an investment in Allscripts, partially offset by $0.6 million
of management fees and writedowns for the Enterprise investments.
This is compared with a net gain of $2.7 million in the first
quarter of 2005, resulting from the $3.0 million gain on the sale
of a 20% interest we held in a German company (GPI), partially
offset by $0.3 million of management fees for the Enterprise
investments. These 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.
(e) Other expense, net includes $0.0 million and $1.2 million of
expenses for legal fees in the first quarter of 2006 and 2005,
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 expense, net excludes a quarterly phasing
adjustment of foreign currency hedge gains (losses), net of $(2.1)
million in the first quarter of 2006 and ($10.9) million in the
first quarter of 2005. 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 gains (losses) in adjusted and SEC results.
(f) The tax benefit (provision) for the first quarter of 2006 and 2005
includes a net provision of $0.5 million and $3.2 million,
respectively, related to the Enterprise gains described in note
(d) and items described in note (e). These tax provisions are
excluded from adjusted results because the related charges and
gains are excluded from adjusted results. The tax benefit
(provision) in the first quarter of 2006 also includes a $29.5
million net benefit from a favorable audit settlement with the IRS
for the ILA partnership for years 1998 through 2005, net of tax
expense related to certain D&B legacy tax matters in dispute with
D&B. This tax benefit is excluded from the adjusted tax provision
because it relates to D&B legacy tax matters and is not related to
IMS's core business operations. The tax benefit (provision) in the
first quarter of 2006 also includes a $28.7 million net tax
benefit primarily from a favorable settlement with the IRS of the
IMS corporate tax audit for years 2000-2003, net of a tax
provision for a foreign jurisdiction. Adjusted results include a
phasing adjustment of $(22.3) million in the first quarter of 2006
to recognize this benefit ratably throughout the year. The tax
provision in the first quarter of 2005 included a $29.3 million
tax benefit related to a favorable audit resolution in Japan for
the tax years through 2003. Adjusted results included a phasing
adjustment to recognize this benefit ratably throughout the year;
the phasing adjustment for the first quarter of 2005 was $(23.2)
million. These phasing adjustments allow 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 $647 million of
foreign earnings back to the U.S. during 2005 under the American
Jobs Creation Act of 2004 (AJCA). As the AJCA was a one-time
event, this tax expense was excluded from adjusted results.
(g) 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
Investor Relations:
Darcie Peck, 203-319-4766
dpeck@imshealth.com
or
Communications:
Betty Nelson, 203-319-4732
bnelson@us.imshealth.com