EXHIBIT 99.1
IMS Health Delivers 11 Percent Revenue and
Operating Income Growth in Second Quarter
Results in U.S., Japan and Emerging Markets Drive Growth
NORWALK, Conn.--(BUSINESS WIRE)--July 18, 2007--IMS Health (NYSE:
RX), the world's leading provider of market intelligence to the
pharmaceutical and healthcare industries, today announced
second-quarter 2007 revenue of $537.5 million, up 11 percent or 8
percent on a constant- dollar basis, compared with revenue of $486.2
million for the second quarter of 2006.
Operating income in the second quarter of 2007 was $118.1 million,
up 11 percent or 13 percent constant dollar, compared with $106.3
million in the year-earlier period. Excluding a merger cost of $6.0
million in the 2006 second quarter, on a non-GAAP basis, operating
income growth would have been 5 percent or 7 percent constant dollar
(See Note c to the financial tables).
"IMS turned in a solid second-quarter performance, driven by
strong revenue gains in the U.S., Japan and the emerging markets,"
said David R. Carlucci, IMS chairman and chief executive officer. "In
an increasingly challenging healthcare environment, we remain focused
on areas most critical to our clients, who clearly recognize the value
and relevance of our capabilities and industry perspective."
Second-quarter 2007 diluted earnings per share on a GAAP basis was
$0.36, compared with $0.30 in the prior-year quarter, an increase of
20 percent. Earnings per share for the second quarter of 2006 included
foreign exchange hedge gains and losses, a tax provision related to a
reorganization and income and expenses related to the terminated
merger with The Nielsen Company (formerly VNU, N.V.). When adjusted
for these items and the phasing of tax benefits and provisions, on a
non-GAAP basis, earnings per share for this year's second quarter
would have grown $0.05 year over year to $0.39, a 15 percent increase
(See Note c to the financial tables).
Net income on a GAAP basis was $73.4 million, compared with $62.7
million in the year-earlier quarter, an increase of 17 percent. Net
income for the second quarter of 2006 included foreign exchange hedge
gains and losses, net of taxes, a tax provision and merger-related
income and expenses, net of taxes. Adjusted for these items and the
phasing of tax benefits and provisions, on a non-GAAP basis, net
income for this year's second quarter would have grown $8.0 million
(See Note c to the financial tables).
First-Half 2007 Results
For the first half of 2007, revenues were $1,047.8 million, up 12
percent or 9 percent constant dollar, compared with revenue of $932.4
million for the first half of 2006. First-half 2007 operating income
was $229.2 million, a 13 percent increase or 14 percent constant
dollar, compared with $203.1 million in the year-earlier period.
For the first six months of 2007, diluted earnings per share on a
GAAP basis was $0.79, compared with $0.86 in the prior-year period.
Earnings per share for the first half of 2007 and 2006 included net
tax benefits and foreign exchange hedge gains and losses, while the
second quarter of 2006 also included merger-related income and
expenses. When adjusted for these items, on a non-GAAP basis, earnings
per share for the 2007 first half would have grown $0.09 year over
year to $0.74 (See Note c to the financial tables).
Net income on a GAAP basis was $159.0 million, compared with
$180.8 million in the first half of 2006. Net income for the first six
months of 2007 and 2006 included net tax benefits and foreign exchange
hedge gains and losses, net of taxes, while the second quarter of 2006
also included merger-related income and expenses. Adjusted for these
items, on a non-GAAP basis, net income for this year's first half
would have grown $13.2 million (See Note c to the financial tables).
Balance Sheet Highlights
IMS's cash and cash equivalents as of June 30, 2007 totaled $210.4
million, compared with $157.3 million on December 31, 2006. Total debt
as of June 30, 2007 was $1,171.4 million, up from $975.4 million at
the end of 2006, due to borrowings in connection with 2007 share
repurchases.
Share Repurchase Program, Shares Outstanding
During the second quarter, 5.0 million shares were repurchased at
a total cost of $157.6 million, bringing the total shares repurchased
in the first half to 11.1 million shares at a total cost of $333.6
million. There remain approximately 5.3 million shares available to
repurchase under the current Board of Directors' authorization.
The number of shares outstanding as of June 30, 2007 was
approximately 195.0 million, compared with 201.5 million as of June
30, 2006.
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 $2.0 billion in 2006 revenue and more than
50 years of industry experience, IMS offers leading-edge market
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 consumer health 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 5:00 p.m. Eastern time today to
discuss its second-quarter results. To participate, please dial
1-800-709-0219 (U.S. and Canada) and 1-415-537-1964 (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
"Investors" 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 21343594 beginning at 7:00 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) regulatory, legislative and enforcement initiatives, particularly
in the areas of data access and utilization and tax, (iii) to the
extent unforeseen cash needs arise, the ability to obtain financing on
favorable terms, (iv) 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,
(v) the ability to develop new or advanced technologies and systems
for its businesses on time and on a cost-effective basis, and (vi)
deterioration in economic conditions, particularly in the
pharmaceutical, healthcare or other industries in which IMS Health's
customers operate. Additional information on factors that may affect
the business and financial results of the Company can be found in the
filings of the company made from time to time with the Securities and
Exchange Commission.
Table 1
IMS Health
GAAP Income Statement
Three Months Ended June 30
(unaudited, in millions except per share)
Non-GAAP
2007 2006 % Fav Constant $
GAAP GAAP (Unfav) Growth %
----------------------------------
Revenue (a)
Sales Force Effectiveness $246.2 $230.0 7 % 5
Portfolio Optimization 157.0 138.6 13 11
Launch, Brand and Other 134.2 117.6 14 11
------- -------
Total 537.5 486.2 11 8
Revenue Detail:
- -----------------------------------
Information & Analytics
("I&A") Revenue 422.9 393.7 7 5
Consulting & Services ("C&S")
Revenue 114.6 92.5 24 21
------- -------
Total Revenue 537.5 486.2 11 8
Operating Expenses (b)
Operating Costs of I&A (179.8) (166.0) (8)
Direct and Incremental Costs of
C&S (54.1) (46.2) (17)
Selling and Administrative (154.2) (132.9) (16)
External-use Software
Amortization (12.4) (11.0) (13)
Depreciation and Other
Amortization (18.9) (17.8) (6)
Merger Costs 0.0 (6.0) NM
------- -------
Total (419.3) (379.9) (10)
Operating Income (a) 118.1 106.3 11 % 13
Interest expense, net (7.7) (9.0) 14
Gains (losses) from investments,
net 2.2 0.1 NM
Other Income (Expense), net 0.0 36.9 NM
------- -------
Pretax Income 112.6 134.3 (16)
Provision for Income Taxes (39.2) (71.6) 45
------- -------
Net Income 73.4 62.7 17
Diluted EPS:
Total Diluted EPS $0.36 $0.30 20%
Shares Outstanding:
Weighted Average Diluted 201.1 205.8
End-of-Period Actual 195.0 201.5
Weighted Average Basic 196.5 200.8
The accompanying notes are an integral part of these financial
tables.
Table 2
IMS Health
GAAP Income Statement
Six Months Ended June 30
(unaudited, in millions except per share)
Non-GAAP
2007 2006 % Fav Constant $
GAAP GAAP (Unfav) Growth %
----------------------------------
Revenue (a)
Sales Force Effectiveness $479.3 $444.1 8 % 6
Portfolio Optimization 311.5 268.4 16 13
Launch, Brand and Other 257.1 219.9 17 13
------- -------
Total 1,047.8 932.4 12 9
Revenue Detail:
- -----------------------------------
Information & Analytics
("I&A") Revenue 834.1 770.8 8 5
Consulting & Services ("C&S")
Revenue 213.8 161.5 32 28
------- -------
Total Revenue 1,047.8 932.4 12 9
Operating Expenses (b)
Operating Costs of I&A (352.5) (324.5) (9)
Direct and Incremental Costs of
C&S (110.7) (85.4) (30)
Selling and Administrative (293.8) (257.3) (14)
External-use Software
Amortization (23.6) (21.3) (11)
Depreciation and Other
Amortization (38.1) (34.8) (9)
Merger Costs 0.0 (6.0) NM
------- -------
Total (818.6) (729.3) (12)
Operating Income (a) 229.2 203.1 13 % 14
Interest expense, net (14.4) (15.9) 9
Gains (losses) from investments,
net 2.0 2.7 (29)
Other Income (Expense), net (2.8) 38.6 NM
------- -------
Pretax Income 213.9 228.6 (6)
Provision for Income Taxes (55.0) (47.8) (15)
------- -------
Net Income 159.0 180.8 (12)
Diluted EPS:
Total Diluted EPS $0.79 $0.86 (8)
Shares Outstanding:
Weighted Average Diluted 200.9 209.6
End-of-Period Actual 195.0 201.5
Weighted Average Basic 196.6 205.0
The accompanying notes are an integral part of these financial
tables.
Table 3
IMS Health
Selected Consolidated Balance Sheet Items
(unaudited, in millions)
June 30, 2007 Dec. 31, 2006
--------------- ---------------
Cash and cash equivalents $210.4 $157.3
Accounts receivable, net 396.1 367.4
Total long-term debt 1,171.4 975.4
The accompanying notes are an integral part of these financial
tables.
IMS Health
NOTES TO FINANCIAL TABLES
a) Reference to Constant Dollar Growth (non-GAAP).
"Constant-dollar growth (non-GAAP)" rates eliminate the impact of
year-over-year foreign currency fluctuations (Table 1). IMS reports
results in U.S. dollars but does business on a global basis. Exchange
rate fluctuations affect the rate at which IMS translates foreign
revenues and expenses into U.S. dollars and have important effects on
results. In order to illustrate these effects, IMS provides the
magnitude of changes in revenues and operating income in constant
dollar terms. IMS uses results at constant dollar rates for purposes
of global business decision-making, including developing budgets and
managing expenditures. IMS management believes this information, when
read together with U.S. GAAP results, facilitates a comparative view
of business growth. Constant-dollar rates are not prepared under U.S.
GAAP 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 constant-dollar rates differs in significant respects from
U.S. GAAP and is likely to differ from the methods used by other
companies.
b) Operating expenses in 2006 reflect a reclassification between
operating costs and selling and administrative expenses to make them
comparable with the 2007 presentation.
c) Net income and fully diluted EPS for the three and six months
ended June 30, 2007 included the following notable items:
-- In Provision for income taxes, a $20.9 million tax benefit
during the first quarter of 2007 arising from the settlement
of a foreign tax audit and the reorganization of certain
subsidiaries; if $5.2 million ($0.03 EPS impact) of this
benefit was included into the three months ended June 30, 2007
for non-GAAP measures, and $10.4 million ($0.05 EPS impact)
was phased into the second-half for non-GAAP measures, the
first half's effective tax rate would be approximately 31%.
-- After adjusting for this item and the phasing of foreign
exchange losses ($0.2 million and $0.7 million, net of taxes
for the three and six months ended June 30, 2007), on a
non-GAAP basis, net income and diluted EPS would have been
$78.8 million and $149.3 million and $0.39 and $0.74 for the
three and six months ended June 30, 2007, respectively.
Net income and fully diluted EPS for the three and six months
ended June 30, 2006 included the following notable items:
-- In Merger costs, $6.0 million ($3.8 million net of taxes, or
$0.02 EPS impact) of investment bankers' fees in the second
quarter of 2006 due on the receipt of a $45.0 million merger
termination payment from The Nielsen Company ("Nielsen"),
formerly known as VNU N.V., as discussed below.
-- In Other income (expense), net, $45.0 million income ($28.3
million net of taxes, or $0.14 EPS impact) from a payment
received during the second quarter of 2006 from Nielsen
associated with the termination of a proposed merger. The
merger termination agreement provided that Nielsen would pay
IMS $45.0 million in the event Nielsen had a change of control
within twelve months of the merger termination; this event
occurred in second quarter 2006.
-- In Other income (expense), net, a $6.8 million foreign
exchange hedge loss for the three months ended June 30, 2006,
of which $5.4 million ($3.5 million net of taxes, or $0.02 EPS
impact) was phased into later quarters for non-GAAP measures,
as the phased amount related to hedging operating income
anticipated to be earned in quarters three and four. A $4.5
million foreign exchange hedge loss for the six months ended
June 30, 2006, of which $3.3 million ($2.2 million net of
taxes, or $0.01 EPS impact) was phased into later quarters for
non-GAAP measures, as the phased amount related to hedging
operating income anticipated to be earned in quarters three
and four.
-- In Provision for income taxes, a $28.8 million net tax benefit
($0.14 EPS impact) for the six months ended June 30, 2006,
resulting from a favorable audit settlement with the IRS of
certain D&B legacy matters.
-- In Provision for income taxes, a $28.7 million net tax benefit
in the first quarter of 2006 resulting primarily from a
favorable audit settlement with the IRS of the IMS corporate
tax audit for years 2000 - 2003, of which $7.1 million ($0.03
EPS impact) was included in the three months ended June 30,
2006 for non-GAAP measures, and $15.2 million ($0.07 EPS
impact) was phased into the second-half for non-GAAP measures,
causing each quarter's adjusted effective tax rate to be
approximately 30%.
-- In Provision for income taxes, a $21.4 million tax provision
($0.10 EPS impact) in the second quarter of 2006 associated
with a reorganization of several of the Company's
subsidiaries.
-- After adjusting for these items, on a non-GAAP basis, net
income and diluted EPS was $70.8 million and $136.1 million
and $0.34 and $0.65 for the three and six months ended June
30, 2006, respectively.
Operating income for the three and six months ended June 30, 2006
included the following notable item:
-- In Merger costs, $6.0 million of investment bankers' fees in
the second quarter of 2006 due on the receipt of a $45.0
million merger termination payment from Nielsen as discussed
above.
-- After adjusting for this item, on a non-GAAP basis, operating
income was $112.3 million and $209.1 million for the three and
six months ended June 30, 2006, respectively.
References are made to results after adjusting certain U.S. GAAP
measures to reflect notable items to the extent that management
believes adjusting for these items will facilitate comparisons across
periods and more clearly indicate trends. Certain non-GAAP measures
are those used by management for purposes of global business decision
making, including developing budgets and managing expenditures. Any
such measures presented on a non-GAAP basis are not prepared under a
comprehensive set of accounting rules and are not a replacement for
the more comprehensive information for investors included in IMS's
U.S. GAAP results.
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
Darcie Peck, 203-845-5237
Investor Relations
dpeck@imshealth.com
or
Gary Gatyas, 610-834-4596
Communications
ggatyas@us.imshealth.com