PDI CONTACT: INVESTOR
CONTACTS:
Jeffrey
E. Smith Lippert/Heilshorn
& Associates, Inc.
Chief
Financial
Officer Kim
Sutton Golodetz (kgolodetz@lhai.com)
(201)
258-8451 (212)
838-3777
jesmith@pdi-inc.com Bruce
Voss (bvoss@lhai.com)
www.pdi-inc.com (310)
691-7100
PDI
Reports Fourth Quarter and Full Year Financial Results;
Announces
Product Commercialization, an Extension of Strategic Plan
Conference
Call Begins Today at 5:00 p.m. Eastern Time
SADDLE RIVER, N.J. (March 12, 2007) –
PDI, Inc. (NASDAQ: PDII), a provider of commercialization services to the
biopharmaceutical industry, today announced financial results for
the three and 12 months ended December 31, 2007, and provided a business
update.
Summary
results from continuing operations are as follows:
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For
the three-month periods
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For
the years
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ended
December 31
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ended
December 31
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$'s
in millions except EPS
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$ |
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$ |
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2007 |
* |
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2006 |
* |
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Change
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2007 |
* |
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2006
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Change
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Revenue,
net
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$ |
32.6 |
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$ |
55.8 |
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|
$ |
(23.2 |
) |
|
$ |
117.1 |
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$ |
239.2 |
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$ |
(122.1 |
) |
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Gross
profit
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$ |
9.7 |
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$ |
12.8 |
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$ |
(3.1 |
) |
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$ |
31.6 |
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$ |
55.8 |
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$ |
(24.2 |
) |
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Operating
expense
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$ |
12.6 |
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$ |
13.8 |
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$ |
(1.2 |
) |
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$ |
45.9 |
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$ |
49.9 |
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$ |
(4.0 |
) |
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Operating
(loss) income
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$ |
(2.9 |
) |
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$ |
(1.0 |
) |
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$ |
(1.9 |
) |
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$ |
(14.3 |
) |
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$ |
5.9 |
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$ |
(20.2 |
) |
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Interest
income, net
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$ |
1.6 |
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$ |
1.2 |
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$ |
0.4 |
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$ |
6.1 |
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$ |
4.7 |
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$ |
1.4 |
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(Loss)
income before income tax
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$ |
(1.3 |
) |
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$ |
0.2 |
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$ |
(1.5 |
) |
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$ |
(8.2 |
) |
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$ |
10.7 |
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$ |
(18.9 |
) |
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(Loss)
income from continuing operations
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$ |
(1.5 |
) |
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$ |
4.8 |
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$ |
(6.3 |
) |
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$ |
(10.0 |
) |
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$ |
11.4 |
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$ |
(21.4 |
) |
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Diluted
(loss) income per share
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from
continuing operations
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$ |
(0.11 |
) |
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$ |
0.35 |
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|
$ |
(0.46 |
) |
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$ |
(0.72 |
) |
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$ |
0.81 |
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$ |
(1.53 |
) |
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*Unaudited
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Financial
Overview – Continuing Operations
Revenue –
Lower net revenue in the 2007 fourth quarter and full year compared with
prior-year results is primarily attributable to the winding down of certain
significant contracts in the Sales Services segment, partially offset by new
contract wins in 2007. Revenue in both the Sales Services segment and the
Marketing Services segment improved in the fourth quarter of 2007 over the third
quarter of 2007. On a year-over-year basis, revenue for the fourth quarter and
year in the Marketing Services segment was lower than 2006 results, mainly due
to ongoing budgetary constraints within our customer base, slower than
anticipated regulatory drug approvals as well as delays in project
acceptances. Revenue from delayed projects is expected to shift into
the first and second quarters of 2008.
Gross
profit – The decrease in gross profit was almost entirely attributable to
lower net revenue. The improvement in the overall gross profit percentage for
the year in 2007 reflects the benefit of higher actual margins on new business,
lower contract close down costs than in 2006 and the fact that the higher margin
Marketing Services business is a larger percentage of 2007 consolidated results.
In addition to these factors, the overall gross profit percentage for the fourth
quarter of 2007 benefited from higher margin seasonal business, the recording of
performance fees determined on an annual basis, and a favorable resolution of a
contract contingency ($0.6 million).
Operating
expenses – Total operating expenses were lower in the fourth quarter and
full year 2007 compared with prior-year periods due in large part to the
Company’s ongoing cost-reduction initiatives. Fourth quarter 2007
operating expenses include approximately $1.0 million related to the outsourcing
of the hosting of the Company’s data center and other one time charges related
to long term cost reduction initiatives.
Income (loss)
from continuing operations – The loss from continuing operations for the
fourth quarter and full year 2007 is due primarily to the winding down of
certain significant contracts in the Sales Services segment and fewer projects
in the Marketing Services segment. In addition, 2006 fourth quarter and full
year benefited from the required reduction of certain statutory tax
reserves.
Liquidity and
cash flow – Cash, cash equivalents and short-term investments as of
December 31, 2007 were $107.0 million, compared with $114.7 million as of
December 31, 2006. The decrease in cash was primarily attributable to
the 2007 net loss.
Financial
Commentary
Michael
Marquard, chief executive officer of PDI, said, “Revenue in the fourth quarter
of 2007 benefited from new sales force contract wins, revenue from certain
seasonal products, and year-end performance fees, which, as expected, resulted
in higher revenue when compared with the immediately preceding quarter. When
compared with prior-year periods, our fourth quarter and full year financial
results continue to reflect the winding down of sales contracts during both 2007
and 2006. Although 2007 results were significantly below 2006, we are
pleased with the progress we made in our sales service business this year. We
achieved wins in all the flexible sales service offerings we introduced during
2007. Our win rate for competitive contracts was greater than 50 percent. We
anticipate that the new business booked during 2007 will continue through
2008. In the first quarter of this year, a current contract with a
top-ten pharmaceutical company was extended. This extension expands our
relationship with this company to three years. We also signed new business with
another top-ten pharmaceutical company. This company was a former
significant client of PDI sales services and we’re excited to reengage our
relationship with this important customer.
“Our
Marketing Services segment was impacted during the fourth quarter and full year
by overall budgeting constraints within the pharmaceutical industry and shifting
of projects into the first and second quarters of 2008,” Mr. Marquard
added.
PDI
PRODUCT COMMERCIALIZATION
PDI is
also announcing today the expansion of its strategic plan to include Product
Commercialization. This initiative involves fully funding and managing the
marketing and selling of products in exchange for a share of revenue. PDI
Product Commercialization provides another powerful option for pharmaceutical
companies when added to the Company’s existing service offerings.
Commenting
on this strategy, Mr. Marquard said, “We believe the reduction in industry
internal sales and marketing resources and their reallocation to high-priority
brands is creating compelling opportunities for PDI to take financial
responsibility for marketing products that are mature, and/or under-promoted, or
less strategic, but still have financial potential if promoted adequately in the
marketplace. The value proposition for our customers is the ability
to maximize the commercial potential for these products, while enabling them to
focus internal resources on their high priority, most strategic
brands. We are actively seeking to ‘carve out’ these types of
products with remaining patent life, as well as soon-to-launch products in
established markets that have significant profit potential and can provide
longer term contracts for PDI. The product owner would maintain
regulatory, legal, medical affairs, manufacturing and distribution
responsibilities. Our plan is to use our considerable marketing and
sales expertise to promote those products in a revenue-sharing agreement, to
benefit both PDI and to the product’s manufacturer. We are currently
evaluating opportunities in this area,” he added.
Carl
Sailer is leading this new business unit and has been promoted to Vice
President, Product Commercialization, reporting to Mr. Marquard. In his
new role, Carl is responsible for the oversight of the entire process of
sourcing, screening and evaluating opportunities to create and manage these
relationships with pharmaceutical companies.
Mr.
Sailer joined PDI in 2001 and has held leadership positions in product
development, marketing and business development. Prior to PDI he held
several sales and marketing positions of increasing responsibility at
Bristol-Myers Squibb and Bayer Healthcare.
Michael
Marquard continued, “This new strategic initiative, the third phase of our
strategic plan, is expected to provide PDI with longer term contracts and profit
margins over the life of the contract that significantly exceed those of our
typical sales service agreements. However, these agreements will
likely involve a significant upfront investment of our resources with no
guaranteed return on investment particularly in the first year of the contract
as ramp up occurs. Leveraging our expertise in integrating our services to
manage products throughout their lifecycles enables us to maximize profitable
brand growth. Equally important, we believe that our proven
analytical capability allows us to identify the most appropriate product
targets, resulting in commercial partnerships that benefit both
parties. We are very excited about this initiative because it is a
natural extension of our core business and offers the potential to accelerate
our growth and earnings.”
Conference
Call
PDI will
hold a conference call and webcast today beginning at 5:00 p.m. Eastern time to
discuss this announcement and to answer questions. The webcast will
be accessible through the Investor Relations section of PDI's website at www.pdi-inc.com, and
will be archived on the website for future on-demand replay.
Alternatively,
the call can be accessed by dialing (866) 644-4654 from the U.S. or (706)
634-8407 from outside the U.S. A telephone replay will be available
from 7:30 p.m. Eastern time on March 12, 2008 through 11:59 p.m. Eastern Time on
March 14, 2008 by dialing (800) 642-1687 (domestic) or (706) 645-9291
(international) and entering conference ID number 38587197.
About
PDI
PDI
provides commercialization services for established and emerging
biopharmaceutical companies. The Company is dedicated to maximizing
the return on investment for its clients by providing strategic flexibility;
sales, marketing and commercialization expertise.
PDI
currently operates in two areas, Sales Services and Marketing
Services. Our Sales Services include Performance Sales Teams™, which
are dedicated teams for specific customers; Select Access™, our targeted sales
solution that leverages an existing infrastructure; and PDI ON DEMAND,
innovative sales services that provide rapid, customized sales force solutions
tailored to meet local, regional and seasonal needs. Our Marketing
Services include marketing research and consulting services through TVG in
Dresher, PA, and medical communications services through Pharmakon in
Schaumburg, IL. In addition, PDI is a high-quality provider of
continuing medical education through Vital Issues in Medicine (VIM®), located in
Dresher, PA. PDI's experience extends across multiple therapeutic
categories and includes office- and hospital-based initiatives.
PDI's
commitment is to deliver innovative solutions, unparalleled execution and
superior results for its customers. Recognized as an industry
pioneer, PDI remains committed to continuous innovation and to retaining the
industry's highest-quality employees. For more information, please
visit the Company's website at www.pdi-inc.com.
Forward-Looking
Statements
This
press release contains forward-looking statements regarding future events and
financial performance. These statements involve a number of risks and
uncertainties and are based on numerous assumptions involving judgments with
respect to future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond PDI's control. Some of the important
factors that could cause actual results to differ materially from those
indicated by the forward-looking statements are general economic conditions, the
termination of or material reduction in the size of any of our customer
contracts, the loss of our or our customers' intellectual property rights, our
ability or inability to secure new business to offset the recent loss of
customer contracts and the terms of any replacement business we secure, changes
in our operating expenses, FDA, legal or accounting developments, competitive
pressures, failure to meet performance benchmarks in significant contracts,
changes in customer and market requirements and standards, the impact of any
stock repurchase programs, the adequacy of the reserves PDI has taken, the
financial viability of certain companies whose debt and equity securities we
hold, the outcome of certain litigation, PDI's ability to implement its current
and future business plans, and the risk factors detailed from time to time in
PDI's periodic filings with the Securities and Exchange Commission, including
without limitation, PDI's Annual Report on Form 10-K for the year ended December
31, 2006, and PDI's subsequently filed annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. The forward-looking
statements in this press release are based upon management's reasonable belief
as of the date hereof. PDI undertakes no obligation to revise or update publicly
any forward-looking statements for any reason.
(Tables
to Follow)
|
(in
thousands, except for per share data)
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Three
Months Ended
|
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|
Years
Ended
|
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|
December
31,
|
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|
December
31,
|
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|
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|
2007
|
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|
2006
|
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|
2007
|
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|
2006
|
|
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|
|
(unaudited)
|
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|
(unaudited)
|
|
|
(unaudited)
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|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
Revenue,
net
|
|
$ |
32,576 |
|
|
$ |
55,830 |
|
|
$ |
117,131 |
|
|
$ |
239,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of services
|
|
|
22,853 |
|
|
|
43,051 |
|
|
|
85,516 |
|
|
|
183,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
9,723 |
|
|
|
12,779 |
|
|
|
31,615 |
|
|
|
55,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
12,623 |
|
|
|
13,796 |
|
|
|
45,895 |
|
|
|
49,931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(loss) income
|
|
|
(2,900 |
) |
|
|
(1,017 |
) |
|
|
(14,280 |
) |
|
|
5,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income, net
|
|
|
1,648 |
|
|
|
1,243 |
|
|
|
6,073 |
|
|
|
4,738 |
|
|
(Loss)
income before income tax
|
|
|
(1,252 |
) |
|
|
226 |
|
|
|
(8,207 |
) |
|
|
10,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income tax
|
|
|
267 |
|
|
|
(4,611 |
) |
|
|
1,767 |
|
|
|
(724 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from continuing operations
|
|
|
(1,519 |
) |
|
|
4,837 |
|
|
|
(9,974 |
) |
|
|
11,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations,
net of tax
|
|
|
- |
|
|
|
(7 |
) |
|
|
- |
|
|
|
434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income
|
|
$ |
(1,519 |
) |
|
$ |
4,830 |
|
|
$ |
(9,974 |
) |
|
$ |
11,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income per share of common stock:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
(0.11 |
) |
|
$ |
0.35 |
|
|
$ |
(0.72 |
) |
|
$ |
0.82 |
|
|
Discontinued
operations
|
|
|
- |
|
|
|
(0.00 |
) |
|
|
- |
|
|
|
0.03 |
|
|
|
|
$ |
(0.11 |
) |
|
$ |
0.35 |
|
|
$ |
(0.72 |
) |
|
$ |
0.85 |
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
(0.11 |
) |
|
$ |
0.35 |
|
|
$ |
(0.72 |
) |
|
$ |
0.81 |
|
|
Discontinued
operations
|
|
|
- |
|
|
|
(0.00 |
) |
|
|
- |
|
|
|
0.03 |
|
|
|
|
$ |
(0.11 |
) |
|
$ |
0.35 |
|
|
$ |
(0.72 |
) |
|
$ |
0.84 |
|
|
Selected
Balance Sheet Data
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and short-term investments
|
|
$ |
106,985 |
|
|
$ |
114,684 |
|
|
Working
capital
|
|
|
111,587 |
|
|
|
112,186 |
|
|
Total
assets
|
|
|
179,554 |
|
|
|
201,636 |
|
|
Total
liabilities
|
|
|
39,365 |
|
|
|
52,439 |
|
|
Total
stockholders' equity
|
|
|
140,189 |
|
|
|
149,197 |
|
