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IMS Health Reports Third-Quarter 2015 ResultsIMS Health Holdings, Inc. ("IMS Health") (NYSE:IMS), a leading global provider of information and technology services to the healthcare and life sciences industries, today announced results for the quarter ended September 30, 2015. Third-Quarter 2015 Operating Results Revenue for the third quarter of $735 million was up 23.0 percent on a constant currency basis and 12.0 percent on a reported basis compared with the third quarter of 2014. Excluding the impact of Cegedim's CRM and Strategic Data businesses ("the Cegedim Acquisition"), revenue was up 4.1 percent on a constant currency basis and down 4.4 percent on a reported basis, with the difference entirely due to the year-over-year strengthening of the U.S. dollar versus key currencies in which the company transacts business. The company's revenue growth in the third quarter included a 42.4 percent increase in technology services revenue on a constant currency basis, up 31.9 percent on a reported basis, versus the same period last year. Information offerings revenue was up 8.9 percent on a constant currency basis and down 2.3 percent reported. Emerging markets revenue increased 30.5 percent in the third quarter on a constant currency basis and 11.2 percent on a reported basis. Developed markets revenue grew 21.5 percent on a constant currency basis and 12.2 percent reported. Excluding the Cegedim Acquisition, technology services revenue increased 10.1 percent at constant currency and 3.6 percent reported. Information offerings revenue was flat on a constant currency basis and declined 10.1 percent on a reported basis. Adjusted EBITDA of $218 million improved 8.6 percent at constant currency and decreased 1.5 percent reported compared with the third quarter of 2014. "We had another quarter of strong financial and operating performance; this marks our 19th consecutive quarter of revenue and Adjusted EBITDA growth at constant currency," said Ari Bousbib, chairman and CEO, IMS Health. "We are making excellent progress integrating the Cegedim acquisition and are especially pleased with the traction that the NexxusTM Suite of applications and the newly integrated Mobile Intelligence CRM platform are gaining in the marketplace, as well as the continued strong growth in our Real-World Evidence offerings." Third-quarter 2015 net income was $43 million compared with $47 million in last year's third quarter. Adjusted Net Income for the third quarter was $129 million, up 10.6 percent on a constant currency basis and 3.0 percent on a reported basis. Diluted earnings per share was $0.13 in the third quarter, compared with $0.14 per share in the third quarter of 2014. Adjusted Diluted Earnings per Share increased 12.6 percent at constant currency and 4.9 percent on a reported basis to $0.38 in the third quarter. Year-to-date 2015 Operating Results Revenue for the nine months ended September 30, 2015 of $2,109 million increased 18.3 percent on a constant currency basis and 7.4 percent reported, compared with the first nine months of 2014. Excluding the impact of the Cegedim Acquisition, revenue for the nine months ended September 30, 2015 was up 5.4 percent on a constant currency basis and down 3.7 percent on a reported basis. Adjusted EBITDA of $654 million increased 9.3 percent at constant currency and declined 1.5 percent reported, compared with the first nine months of 2014. Net income for the nine months ended September 30, 2015 was $388 million, compared with a net loss of $197 million in the prior-year period, which included one-time IPO-related charges. Adjusted Net Income was $390 million, up 29.5 percent at constant currency and 18.6 percent reported, from the prior-year period. Diluted Earnings per Share was $1.14 in the first nine months of 2015, compared with a loss of $0.63 per share in the prior-year period. Adjusted Diluted Earnings per Share increased 22.9 percent on a constant currency basis and 12.6 percent on a reported basis to $1.15 in the first nine months, compared with $1.02 in the prior-year period. Financial Position As of September 30, 2015, cash and cash equivalents were $394 million and the principal amount of debt was $4,296 million, resulting in net debt of $3,902 million. At the end of the third quarter of 2015, IMS Health's Gross Leverage Ratio was 5.0 times trailing 12 month Adjusted EBITDA, compared with 4.3 times at December 31, 2014. Cash Flow Net cash provided by operating activities was $111 million in the third quarter and capital expenditures and additions to deferred software were $38 million. Unlevered Free Cash Flow for the third quarter was $141 million, or 65 percent of Adjusted EBITDA. 2015 Full-Year Guidance IMS Health expects constant currency results for 2015 as follows: Revenue growth of 19 to 20 percent, Adjusted EBITDA growth of approximately 11 percent, Adjusted Net Income growth of 22 to 23 percent and Adjusted Diluted Earnings per Share growth of 17 to 18 percent. Assuming current foreign exchange rates hold constant through the end of the year, IMS Health expects reported revenue growth of approximately 10 percent, Adjusted EBITDA growth of approximately 1 percent, Adjusted Net Income growth of 10 to 11 percent and Adjusted Diluted Earnings per Share growth of 5 to 6 percent. Constant Currency IMS Health reports results in U.S. dollars, but does business on a global basis. Exchange rate fluctuations affect the U.S. dollar value of foreign currency revenue and expenses and may have a significant effect on reported results. The discussion of IMS Health's financial results in this release includes comparisons with the prior year in constant currency terms, using consistent exchange rates. Management believes this information facilitates comparison of underlying results over time. Non-GAAP Measures This release presents certain "non-GAAP Measures" and other statistical measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings per Share, Gross Leverage Ratio and Unlevered Free Cash Flow, because management believes these measures provide additional information regarding the company's performance and its ability to service debt. In addition, management believes that these measures are useful to assess the company's operating performance trends because they exclude certain material non-cash items, unusual or non-recurring items that are not expected to continue in the future, and certain other items. The non-GAAP Measures are not presented in accordance with U.S. GAAP, and IMS Health's computation of these non-GAAP Measures may vary from those used by other companies. These measures have limitations as an analytical tool, and should not be considered in isolation or as a substitute or alternative to net income or loss, operating income or loss, cash flows from operating activities, total indebtedness or any other measures of operating performance, liquidity or indebtedness derived in accordance with GAAP. Reconciliations of these non-GAAP Measures to the most directly comparable GAAP Measures and related notes are presented at the end of this release. The non-GAAP Measures used in our full-year guidance will differ from U.S. GAAP net income, earnings per share and net cash used in operating activities, respectively, in ways similar to those described in the reconciliations at the end of this press release. Conference Call and Webcast IMS Health's management team will host a conference call and webcast to discuss the company's third-quarter 2015 results at 9:00 a.m. Eastern Time on Thursday, October 29, 2015. The audio and slide presentation for the call can be accessed live by webcast on IMS Health's Investor Relations website at http://ir.imshealth.com. The discussion also will be available by dialing +1-800-926-9175 in the U.S. and Canada, or +1-212-231-2920 for international callers. A replay of the webcast will be available on the company's Investor Relations site at http://ir.imshealth.com following the live call. Forward-looking Statements Reported numbers are preliminary and not final until the filing of IMS Health's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 with the Securities and Exchange Commission and, therefore, remain subject to adjustment. This press release includes "forward-looking statements" including statements regarding future financial and operating results, especially those set forth under the heading "Full-Year Guidance." The words "guidance," "ongoing," "believes," "expects," "may," "will" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees that the future results, plans, intentions or expectations expressed or implied will be achieved. Matters subject to forward-looking statements involve known and unknown risks and uncertainties, including regulatory, competitive and other factors, which may cause actual financial or operating results or the timing of events to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include, but are not limited to: imposition of restrictions on our use of data by data suppliers or their refusal to license data to us; failure to meet our productivity objectives; failure to successfully invest in growth opportunities; imposition of restrictions on our current and future activities under data protection and privacy laws; breaches or misuse of our or our outsourcing partners' security or communications systems; hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements; consolidation in the industries in which our clients operate; our ability to protect our intellectual property rights and our susceptibility to claims by others that we are infringing on their intellectual property rights; 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; general economic conditions in the markets in which we operate, including financial market conditions; our ability to successfully integrate Cegedim's Customer Relationship Management and Strategic Data businesses, and the other factors set forth in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2014 on file with the SEC and any subsequent SEC filings. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise. About IMS Health IMS Health is a leading global information and technology services company providing clients in the healthcare industry with end-to-end solutions to measure and improve their performance. Our 7,500 services experts connect configurable SaaS applications to 10+ petabytes of complex healthcare data in the IMS One™ cloud platform, delivering unique insights into diseases, treatments, costs and outcomes. The company's 15,000 employees blend global consistency and local market knowledge across 100 countries to help clients run their operations more efficiently. Customers include pharmaceutical, consumer health and medical device manufacturers and distributors, providers, payers, government agencies, policymakers, researchers and the financial community. As a global leader in protecting individual patient privacy, IMS Health uses anonymous healthcare data to deliver critical, real-world disease and treatment insights. These insights help biotech and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders to identify unmet treatment needs and understand the effectiveness and value of pharmaceutical products in improving overall health outcomes. Additional information is available at www.imshealth.com. IMSFIN
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