Healthy IMS Swallows Cost of Restructure

Pharma research leader IMS Health has announced full year 2007 revenues up 12% (a very respectable 8% at constant currency) to $2,192.6m. Operating income for the year was down from $444.2m to $393.3m after a fourth quarter restructuring charge of $88.7m.

IMS announced in the first week of January (www.mrweb.com/drno/news7765.htm ) that it plans to cut staff numbers by 10% during 2008 in an effort to save money and improve efficiency. Savings of $55m to $60m a year are anticipated from 2009.

Fourth-quarter 2007 revenue was $605.9m, up 11% or 6% on a constant-dollar basis, while operating income was down from $125.7m to $47.0m with the restructuring charge. Q4 diluted EPS was $0.09 on a GAAP basis, compared with $0.32 in the prior-year quarter. The restructuring charge reduced fourth-quarter earnings per share by $0.32.

With the resturcturing charge again dominant, net income on a GAAP basis was $18.0m in the fourth quarter, compared with $65.5m in the year-earlier quarter.

For the 2007 full year, diluted earnings per share on a GAAP basis was $1.18, compared with $1.53 a year earlier; while net income on a GAAP basis was $234.0m, compared with $315.5m in 2006. Both were impacted by the restructuring charge in Q4 and a tax charge in Q3.

Chairman and CEO David R. Carlucci 'I am pleased with our fourth-quarter performance, which reflects very strong demand for our consulting capabilities, exceptional cash flow and solid execution by our teams worldwide. We are moving forward on our actions to more effectively align our resources to capture new opportunities and accelerate operational efficiencies in a demanding healthcare marketplace.'

The cuts will include streamlining consulting practice areas, moves to common production platforms in several locations, and the reduction of staff numbers in support functions and in marketing, finance and administration.

In its financial guidance for 2008, IMS says it expects constant-dollar revenue to grow 6 - 9% with the same or higher growth in constant-dollar operating income. The firm expects diluted EPS in the range $1.70 - $1.76. During the fourth quarter, 3.3m shares were repurchased at a total cost of $79.7m, completing the 10m share repurchase program authorized by the Board of Directors in December 2006.

IMS Health is the world's leading provider of market intelligence to the pharmaceutical and healthcare industries, with $2.2 billion in 2007 revenue. It is online at www.imshealth.com.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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