PRA Health Sciences, Inc. (PRAH)

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PRA Health Sciences, Inc. (PRAH)

Q1 2018 Earnings Conference Call

April 26, 2018 09:00 am ET


Mike Bonello - Senior Vice President and Corporate Controller

Colin Shannon - President, Chief Executive Officer

Linda Baddour - Executive Vice President, Chief Financial Officer


John Kreger - William Blair

Donald Hooker - KeyBanc

Jack Meehan - Barclays

Erin Wright - Credit Suisse

Jason Twizell - MUFG Securities

Eric Coldwell - Baird

David Windley - Jefferies

Derik De Bruin - Bank of America Merrill Lynch



Good day, ladies and gentlemen, and welcome to the PRA Health Sciences First Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Mike Bonello, Senior Vice President and Corporate Controller. Sir, you may begin.

Mike Bonello

Good morning and thank you for joining us for the PRA Health Sciences first quarter of 2018 earnings teleconference. Today Colin Shannon, our Chief Executive Officer; and [technical difficulty] Financial Officer, will discuss our first quarter financial results. Following our prepared remarks, we'll be available for questions. In addition to our press release, an investor supplement with additional financial information is available in the Investor Relations portion of our website.

Before we begin, I'd like to remind you that our remarks and responses during this teleconference may include forward-looking statements. Actual results may differ materially from the stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in the risk factors section of our Form 10-K filed with the SEC on February 22, 2018. Our risk factors may be updated from time-to-time in our filings with SEC. Please note that we assume no obligation to update any forward-looking statements.

Certain financial measures we will discuss on this call are non-GAAP financial measures. We believe that providing these measures helps investors gain a more helpful and complete understanding of our results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure calculated and presented in accordance with GAAP are available in the earnings press release and investor supplement included in the Investor Relation portion of our website.

I would now like to turn the call over to our CEO, Colin Shannon.

Colin Shannon

Thank you, Mike. Good morning. I'd like to thank you all, for joining the PRA Health Sciences conference call covering our first quarter of 2018 financial results. We're off to solid start and our first quarter results are in line with our expectations as we produce double-digit growth or revenue, adjusted net income and net new business. Revenue is approximately $702 million for the quarter which represents an increase of approximately 44% year-over-year at actual foreign exchange rates and 41% on a constant currency basis.

Organic revenue growth which excludes the impact of the adoption of ASC 606 and our 2017 acquisitions was approximately 18% year-over-year at actual foreign exchange rates and 15% on a constant currency basis. Adjusted net income for the quarter was approximately $56 million, an increase of approximately 39% versus the first quarter of 2017. Adjusted net income per diluted share was $0.85, a 37% increase versus first quarter of 2017.

Net new business increased approximately 15% when compared to the first quarter of 2017 with a record level of $650 million of net new business awards representing in a book-to-bill of 1.29 times. Our new business awards and calculation of net book-to-bill ratio excludes the revenue impact of adopting ASC 606 excludes reimbursed revenue and consistent with prior quarter excludes revenue from our Data Solutions segment. The addition of new awards is resulted in a backlog increasing approximately 8% on a sequential basis and 23% year-over-year finishing at approximately $3.8 billion.

As we previously disclosed our backlog does not include our Data Solution segment. In addition, we're not including pass through our investigator revenue in backlog. The mix of our new business awards continues to be consistent with previous quarter with approximately 60% of new awards coming from the pharmaceutical sector and approximately 40% coming from the biotechnology sector.

In addition, our client base also continues to be well diversified with our top five clients representing approximately 40% of revenue for the quarter with our largest clients representing approximately 9% of revenue. Book metrics exclude the impact of adopting ASC 606. [Indiscernible] Symphony Health. As mentioned on our fourth quarter call, this is a cyclical business and the first quarter in particular tends to be softer. However, we remain very optimistic about the full year 2018 forecast.

In addition, during the quarter we formalized our integration plan and on the position to have the integration completed by the end of 2018. As stated on our last call, our primary goal this year for Symphony to achieve its 2018 plan, while senior leadership develops a key strategic initiatives of product expansion and new product offerings. As many of you are aware, we filed an 8-K yesterday afternoon announcing the retirement of Linda Baddour and the promotion of Mike Bonello effective May 1, 2018. Linda will be assisting me in an advisory capacity and assisting with transition through September 30, 2018.

I would like to take this opportunity to thank Linda for her many years of service to PRA Health Sciences'. She'll be solely missed by me and the Company. I would also like to congratulate Mike on his promotion. I'm looking forward to working with him in this new role as Chief Financial Officer. I'm confident Mike is well positioned to take over these responsibilities. In closing, I would like to thank our entire staff and our clients for their continued commitment to PRA Health Sciences. We're delighted with our strong financial results and believe we're well positioned for strong growth in 2018.

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