Healthcare Business News

Going public has its price for IMS, prompting Q2 loss of $220 million

By Rachel Landen
Posted: July 24, 2014 - 11:45 am ET

Several one-time charges for IMS Health Holdings left the company with a $220 million second-quarter net loss despite a boost to revenue driven by double-digit growth in technology services.

The Danbury, Conn.-based provider of analytics and services to payers, pharmaceutical companies and healthcare providers went public in April, raising $1.3 billion in cash during its initial public offering. But charges tied to the IPO—including $219 million in expenses related to the early retirement and refinancing of debt—hurt the company's bottom line. Struggles with foreign currency devaluation also dragged down IMS Health Holdings' results for its second quarter reporting as a public company.

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IMS had recorded $8 million of net income in the year-ago period. But revenue for the second quarter of 2014 was up 6.1% to $662 million from $624 million in the second quarter of 2013 thanks to 12.7% revenue growth in the company's technology services sector. Revenue for its information offerings segment increased 1.8%.

“We delivered another strong quarter of revenue and adjusted EBITDA growth through steady execution of our strategy,” Ari Bousbib, chairman and CEO of IMS Health, said in a release. “Our recent successful IPO and debt refinancing position us well to significantly increase earnings and cash flow and, at the same time, to continue investing for future growth, including the pending transaction with Cegedim.”

IMS Health announced last month that it would acquire the information solutions and customer-relationship-management businesses of the French company Cegedim for about $520 million in cash. During a call with investors Thursday morning, management called the pending acquisition, which is expected to close early next year, “a great fit at a great price.”

IMS has been on a buying spree recently, scooping up Belgium-based Forcea, a provider of business intelligence applications and analytics, in May, and Swedish advisory and analytics firm Pygargus in December.

In its latest earnings release and call, management reaffirmed its expectations for the full year, anticipating revenue growth between 5% and 6% and adjusted net income growth of 15% to 20%. For the first six months of 2014, revenue rose 5.7%, compared with the first six months of last year. But the second quarter has so far pulled the company into an overall net loss for the first part of the year, reporting a loss of $244 million compared with net income of $20 million in the first two quarters of 2013.

Follow Rachel Landen on Twitter: @MHrlanden

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