ICON Reports Third Quarter 2021 Results
ICON plc (NASDAQ: ICLR), a world-leading healthcare intelligence and clinical research organisation, today reported its financial results for the third quarter ended September 30, 2021.
CEO Dr. Steve Cutler commented, “I’m delighted with new ICON’s strong start as a combined organisation as shown by record new business wins of $2,374 million resulting in a net book to bill of 1.27 and backlog growth over the initial three month period since closing of 3% to $18.6 billion. The response to the acquisition by our customers has been excellent and we are already engaging in a number of more strategic discussions which we expect will drive further growth over the long term. With the strong performance in the third quarter, we are revising our full year 2021 guidance to revenue of $5,430 - $5,530 million, an increase of 96% at the midpoint of the range, and adjusted earnings per share of $9.55 - $9.75”.
Third Quarter 2021 Results
Gross business wins in the third quarter were $2,720 million and cancellations were $346 million. This resulted in net business wins of $2,374 million and a book to bill of 1.27.
GAAP revenue for Quarter 3 was $1,866.4 million. Adjusted revenue for Quarter 3 was $1,870.4 million. This represents a year on year increase of 167% or 165% on a constant currency basis.
GAAP net loss attributable to the Group was $94.3 million. Adjusted net income attributable to the Group for the quarter was $209.8 million resulting in an adjusted diluted earnings per share of $2.55 compared to $1.92 per share for Quarter 3 2020.
Adjusted EBITDA for Quarter 3 was $324.9 million or 17.4% of revenue, a year on year increase of 143%.
Cash generated from operating activities for the quarter was $299.0 million. During the quarter, $24.4 million was spent on capital expenditure. At September 30, 2021 the Group had cash and cash equivalents of $1,008.5 million, compared to cash and cash equivalents of $1,055.5 million at June 30, 2021 and $708.0 million at the end of September 2020.
Year to date 2021 Results
Gross business wins year to date were $5,330 million and cancellations were $750 million. This resulted in net business wins of $4,580 million and a book to bill of 1.27.
Year to date GAAP revenue was $3,595.7 million. Year to date adjusted revenue was $3,599.7 million. This represents a year on year increase of 76.7% or 76.1% on a constant currency basis.
GAAP net income attributable to the Group year to date was $76.7 million. Adjusted net income attributable to the Group was $448.4 million resulting in an adjusted diluted earnings per share of $7.11 compared to $5.26 per share for the equivalent prior year period.
Adjusted EBITDA year to date was $637.4 million or 17.7% of revenue, a year on year increase of 74.8%.
Other Information
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures, including adjusted revenue, adjusted EBITDA, adjusted net income attributable to the Group and adjusted diluted earnings per share attributable to the Group. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share exclude amortization, stock compensation, foreign exchange gains and losses and transaction-related / integration-related adjustments. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, ICON believes certain non-GAAP information is useful to investors for historical comparison purposes.
To assist investors and analysts with year-over-year comparability for the merged business, we have included Combined Company Backlog information. This Combined Company information is not intended to represent pro forma financial information prepared in accordance with GAAP or Regulation S-X.
Adjusted earnings per share attributable to the Group (Non-GAAP) has been computed by dividing adjusted net income attributable to the Group by the weighted average number of shares outstanding. For the nine months ended 30 September 2020, GAAP earnings per share attributable to the Group has been computed by dividing net income attributable to the Group plus a GAAP charge associated with non-controlling interest in MeDiNova Research (“MeDiNova”) by the weighted average number of shares outstanding. ICON purchased a majority shareholding in MeDiNova on May 23, 2019. ICON exercised its call on the outstanding shares in MeDiNova and derecognised the non-controlling interest effective from March 2020.
ICON will hold a conference call tomorrow, November 4th, 2021 at 09:00 EDT [13:00 Ireland & UK]. This call and linked slide presentation can be accessed live from our website at http://investor.iconplc.com. A recording will also be available on the website for 90 days following the call. In addition, a calendar of company events, including upcoming conference presentations, is available on our website, under “Investors”. This calendar will be updated regularly.
This press release contains forward-looking statements. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. These statements are not guarantees of future performance or actual results, and actual results, developments and business decisions may differ from those stated in this press release. The forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements, including, but not limited to, the ability to enter into new contracts, maintain client relationships, manage the opening of new offices and offering of new services, the integration of new business mergers and acquisitions, the impact of COVID-19 on our business, as well as other economic and global market conditions and other risks and uncertainties detailed from time to time in SEC reports filed by ICON, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not place undue reliance on these forward-looking statements when making investment decisions. The word "expected" and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by ICON, including its Form 20-F, F-1, F-4, S-8, F-3 and certain other reports, which are available on the SEC's website at http://www.sec.gov.
ICON plc is a world-leading healthcare intelligence and clinical research organisation. From molecule to medicine, we advance clinical research providing outsourced services to pharmaceutical, biotechnology, medical device and government and public health organisations. We develop new innovations, drive emerging therapies forward and improve patient lives. With headquarters in Dublin, Ireland, ICON employed approximately 37,960 employees in 159 locations in 53 countries as at September 30, 2021. For further information about ICON, visit: www.iconplc.com and www.iconplc.com/pra.
Source: ICON plc
Contact: Investor Relations +1888 381 7923 or
Brendan Brennan Chief Financial Officer +353 1 291 2000
Kate Haven Vice President Investor Relations +1888 381 7923
All at ICON.
ICON plc
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
(in thousands except share and per share data)
Revenue
$ 1,866,352
$ 701,729
$ 3,595,705
$ 2,037,059
Costs and expenses:
Direct costs (excluding depreciation and amortization)
1,357,942
493,410
2,615,309
1,444,536
Selling, general and administrative expense
206,713
82,715
382,614
254,309
Depreciation and amortization
140,636
16,801
175,317
48,981
Transaction and integration-related expenses
149,791
402
182,309
(497)
Restructuring
6,162
—
6,162
18,089
Total costs and expenses
1,861,244
593,328
3,361,711
1,765,418
Income from operations
5,108
108,401
233,994
271,641
Interest income
53
268
496
2,518
Interest expense
(102,306)
(3,239)
(129,584)
(9,640)
(Loss) income before provision for income taxes
(97,145)
105,430
104,906
264,519
Benefit arising/(provision) for income taxes
3,563
(13,706)
(26,718)
(32,706)
(Loss) income before share of earnings from equity method investments
(93,582)
91,724
78,188
231,813
Share of equity method investments
(688)
(83)
(1,471)
(83)
Net (loss) income
(94,270)
91,641
76,717
231,730
Net income attributable to noncontrolling interest
—
—
—
(633)
Net (loss) income attributable to the Group
$ (94,270)
$ 91,641
$ 76,717
$ 231,097
Net (loss) income per Ordinary Share attributable to the Group:
Basic
$ (1.17)
$ 1.74
$ 1.23
$ 4.28
Diluted
$ (1.17)
$ 1.72
$ 1.22
$ 4.25
Weighted average number of Ordinary Shares outstanding:
Basic
80,771,397
52,737,299
62,264,851
52,885,252
Diluted
80,771,397
53,194,327
63,095,857
53,283,680
ICON plc
CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(Unaudited)
(Audited)
September 30,
2021
December 31,
2020
ASSETS
(in thousands)
Current Assets:
Cash and cash equivalents
$ 1,008,524
$ 840,305
Available for sale investments
1,712
1,729
Accounts receivable, net of allowance for credit losses
1,338,326
715,271
Unbilled revenue
550,692
428,684
Other receivables
60,376
35,394
Prepayments and other current assets
131,554
53,477
Income taxes receivable
38,484
28,118
Total current assets
3,129,668
2,102,978
Other Assets:
Property, plant and equipment, net
319,457
174,343
Goodwill
8,935,212
936,257
Operating right-of-use assets
238,107
84,561
Other non-current assets
57,637
20,773
Non-current income taxes receivable
16,119
17,230
Non-current deferred tax asset
117,313
12,705
Equity method investments
3,062
4,534
Investments in equity-long term
22,758
15,765
Intangible assets, net
4,815,184
66,460
Total Assets
$ 17,654,517
$ 3,435,606
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$ 62,576
$ 51,113
Unearned revenue
1,349,000
660,883
Other liabilities
794,879
399,769
Income taxes payable
39,614
12,178
Current bank credit lines and loan facilities
55,150
—
Total current liabilities
2,301,219
1,123,943
Other Liabilities:
Non-current bank credit lines and loan facilities
5,872,720
348,477
Non-current operating lease liabilities
190,912
60,801
Non-current other liabilities
73,917
26,366
Non-current government grants
760
838
Non-current income taxes payable
18,868
14,539
Non-current deferred tax liability
1,227,535
10,406
Commitments and contingencies
—
—
Total Liabilities
9,685,931
1,585,370
Shareholders' Equity:
Ordinary shares, par value 6 euro cents per share; 100,000,000 shares authorised,
81,397,821 shares issued and outstanding at September 30, 2021 and
52,788,093 shares issued and outstanding at December 31, 2020
6,629
4,580
Additional paid-in capital
6,700,407
617,104
Other undenominated capital
1,134
1,134
Accumulated other comprehensive loss
(79,196)
(35,477)
Retained earnings
1,339,612
1,262,895
Total Shareholders' Equity
7,968,586
1,850,236
Total Liabilities and Shareholders' Equity
$ 17,654,517
$ 3,435,606
ICON plc
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(UNAUDITED)
Nine Months Ended
September 30,
2021
September 30,
2020
(in thousands)
Cash flows from operating activities:
Net income
$ 76,717
$ 231,730
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense
175,317
48,981
Impairment of right-of-use assets
5,731
5,411
Reduction in carrying value of operating right-of-use assets
30,607
21,367
Unrealised foreign currency gains, net
(7,374)
(3,982)
Loss on issuance of debt
59,460
—
Loss on equity method investments
1,471
83
Stock compensation expense
114,791
20,157
Loss/(gain) on interest rate hedge
891
(725)
Amortization of financing costs
4,448
368
Loss on extinguishment of debt
14,434
—
Deferred taxes
(26,532)
1,416
Other non-cash items
(1,592)
(121)
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable
123,413
24,623
Unbilled revenue
49,203
(17,635)
Unearned revenue
(60,514)
82,386
Other assets and liabilities
(21,147)
(41,446)
Net cash provided by operating activities
539,324
372,613
Cash flows from investing activities:
Purchase of property, plant and equipment
(46,067)
(28,026)
Purchase of subsidiary undertakings, net of cash acquired
(5,914,475)
(37,761)
Purchase of equity method investments
(2,450)
(2,450)
Sale of available for sale investments
17
47,902
Purchase of investments in equity - long term
(2,243)
(2,737)
Net cash used in investing activities
(5,965,218)
(23,072)
Cash flows from financing activities:
Financing related costs
(30,349)
—
Proceeds from exercise of equity compensation
104,070
12,349
Share issue costs
(848)
(10)
Repurchase of ordinary shares
—
(175,000)
Share repurchase costs
—
(140)
Drawdown of bank credit lines and loan facilities, net of debt issuance costs and debt discount withheld
5,905,100
—
Repayment of bank credit lines and loan facilities
(377,780)
—
Net cash provided by (used in) financing activities
5,600,193
(162,801)
Effect of exchange rate movements on cash
(6,080)
946
Net increase in cash and cash equivalents
168,219
187,686
Cash and cash equivalents at beginning of period
840,305
520,309
Cash and cash equivalents at end of period
$ 1,008,524
$ 707,995
ICON plc
RECONCILIATION OF NON-GAAP MEASURES
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
(in thousands except share and per share data)
Adjusted revenue
Revenue, as reported
$ 1,866,352
$ 701,729
$ 3,595,705
$ 2,037,059
Acquisition related deferred revenue adjustment (a)
4,000
—
4,000
—
Adjusted revenue
$ 1,870,352
$ 701,729
$ 3,599,705
$ 2,037,059
Adjusted EBITDA
Net income/(loss) attributable to the Group
$ (94,270)
$ 91,641
$ 76,717
$ 231,097
Net income/(loss) attributable to non-controlling interest
—
—
—
633
Share of equity method investments
688
83
1,471
83
Provision for income taxes
(3,563)
13,706
26,718
32,706
Net interest expense (b)
102,253
2,971
129,088
7,122
Depreciation and amortization
140,636
16,801
175,317
48,981
Stock-based compensation expense (c)
26,355
7,260
41,987
21,431
Foreign currency losses (gains), net (d)
(7,185)
596
(6,347)
4,977
Restructuring (e)
6,162
—
6,162
18,089
Acquisition related deferred revenue adjustment (a)
4,000
—
4,000
—
Transaction-related / integration-related costs (f)
149,791
402
182,309
(497)
Adjusted EBITDA
$ 324,867
$ 133,460
$ 637,422
$ 364,622
Adjusted net income attributable to the Group and adjusted diluted net income per Ordinary Share attributable to the Group
Net income/(loss) attributable to the Group
$ (94,270)
$ 91,641
$ 76,717
$ 231,097
Provision for income taxes
(3,563)
13,706
26,718
32,706
Amortisation
115,874
4,890
124,615
14,427
Stock-based compensation expense (c)
26,355
7,260
41,987
21,431
Foreign currency losses (gains), net (d)
(7,185)
596
(6,347)
4,977
Restructuring (e)
6,162
—
6,162
18,089
Acquisition related deferred revenue adjustment (a)
4,000
—
4,000
—
Transaction-related / integration-related costs (f)
149,791
402
182,309
(497)
Transaction-related financing costs (g)
55,773
—
78,252
—
Adjusted tax expense (h)
(43,121)
(16,119)
(85,993)
(41,825)
Adjusted net income attributable to the Group
$ 209,816
$ 102,376
$ 448,420
$ 280,405
Diluted weighted average number of Ordinary Shares outstanding
82,293,287
53,194,327
63,095,857
53,283,680
Adjusted diluted net income per Ordinary Share attributable to the Group
$ 2.55
$ 1.92
$ 7.11
$ 5.26
(a)
Acquisition related deferred revenue adjustment represents non-cash adjustments resulting from the revaluation of deferred revenue and the subsequent charge to revenue in connection with business combinations.
(b)
Net Interest expense includes losses on modification or extinguishment of debt.
(c)
Stock-based compensation expense represents the amount of recurring non-cash expense related to the Company’s equity compensation programs
(d)
Foreign currency losses (gains), net relates to gains or losses that arise in connection with the revaluation of non-US dollar denominated assets and liabilities. We exclude these gains and losses from adjusted EBITDA and adjusted net income because fluctuations from period- to- period do not necessarily correspond to changes in our operating results.
(e)
Restructuring charges incurred relate to charges incurred in connection with the termination of leases at locations that are no longer being used and amounts incurred in connection with the elimination of redundant positions within the organisation.
(f)
Transaction-related / integration-related costs include expenses/credits associated with our acquisitions, share-based compensation expense related to the acceleration of share-based compensation awards and replacement share-based awards, contingent consideration valuation adjustments, and any other costs incurred directly related to the integration of these acquisitions.
(g)
Transaction-related financing costs includes costs incurred in connection with changes to our long-term debt and amortization of financing fees. We exclude these costs from Adjusted EBITDA and Adjusted Net Income because they result from financing decisions rather than from decisions made related to our ongoing operations.
(h)
Represents the tax effect of adjusted pre-tax income at our estimated effective tax rate.
ICON/ICLR-F
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