May 15 2012
PDI, Inc. (Nasdaq: PDII), today reported financial and operational results for the first quarter ended March 31, 2012. Summary financial and operating highlights include:
- First quarter 2012 operating loss from continuing operations of $0.2 million improved 84% compared to the first quarter of 2011.
- First quarter 2012 adjusted EBITDA was $0.7 million, compared to $0.1 million in the same period of 2011.
- Announced new and renewal contracts totaling $16 million in revenues, approximately $13 million of which is expected to be recognized during 2012.
CEO Comments
"While first quarter 2012 revenues were below those of the same period in 2011, due primarily to the anticipated expiration of certain contracts, gross profit margins improved from 18% in 2011 to 23% in 2012, and expenses were reduced significantly due to continued cost control measures," stated Nancy Lurker, PDI's chief executive officer. "On the revenue front, we are pleased to note that, during the quarter, we began to see tangible conversion of our pipeline opportunities. This was reflected in our recent announcement of the signing of several new and renewal contracts. Together, these contracts are expected to generate total revenues of $16 million over the life of the contracts, and approximately $13 million in 2012. These business wins cover a range of promotional and communications agreements under which PDI will variously provide promotional and support services through the company's established relationship team, dedicated sales teams, clinical educators, and/or talent acquisition and training services. These latest contract wins and renewals are indicative of PDI's strong market position and reflect an upswing in market activity and momentum. Our new business pipeline remains robust and we are confident we will win additional contracts moving forward.
"Looking ahead, we are optimistic about our potential for growth and expect 2012 to be a year of continued execution on all fronts. The initiatives we have put into place have put the company on solid footing to achieve long-term profitability. As such, we remain highly focused on cost containment efforts, which have allowed us to drive down our cost basis, and improve our gross margin during the first quarter of this year. Additionally, as noted above, our core business and pipeline are strong, which we anticipate will lead to additional key contract wins and renewals over the remainder of the year. Meanwhile, we also continue to see interest and growth opportunities for Interpace BioPharma, which offers full product commercialization services. As such, we are committed to executing on our accelerated growth strategy for this important business unit.
"Finally, as previously announced, Frank Ryan, who has been on our Board for close to 10 years, will be retiring effective May 28. I would like to thank Frank for his many years of valuable service and important contributions to PDI."
Business Review – Continuing Operations
Revenue- For the first quarter of 2012, revenue of $31.7 million was 28% lower than the first quarter of 2011. The overall decrease is primarily attributable to lower Sales Services revenue.
- Sales Services segment revenue for the first quarter of 2012 of $23.4 million was 45% lower than the first quarter of 2011. This decrease was primarily due to new contract wins being more than offset by certain contracts renewing for smaller amounts and the anticipated expiration of certain other contracts.
- Marketing Services segment revenue for the first quarter of 2012 of $3.1 million was 57% higher than the first quarter of 2011. This increase was primarily due to higher Group DCA revenue.
- Product Commercialization Services segment revenue for the first quarter of 2012 was $5.2 million from the fee-for-service arrangement in the Interpace BioPharma business unit, launched late in the second quarter of 2011. There was no revenue in the first quarter of 2011, as there were no ongoing product commercialization activities during that period.
Gross Profit- For the first quarter of 2012, gross profit of $7.4 million was 10% lower than the first quarter of 2011. At the same time, the gross profit percentage increased to 23% in 2012 from 18% in 2011. The overall decrease in gross profit dollars was driven by the decrease in Sales Services revenue. The overall increase in gross profit percentage was primarily driven by improved gross profit in Group DCA.
- Sales Services segment gross profit for the first quarter of 2012 of $5.0 million was 44% lower than the first quarter of 2011. This decrease was primarily the result of lower revenue.
- Marketing Services segment gross profit for the first quarter of 2012 of $1.2 million was higher when compared to 2011 as a result of increased revenue and improved margins at Group DCA. The segment's negative $0.6 million gross margin for the first quarter of 2011 was attributable in large part to the impact of acquisition accounting.
- Product Commercialization Services segment gross profit for the first quarter of 2012 was $1.2 million. There was no gross profit in the first quarter of 2011, as there were no ongoing product commercialization activities during that period.
Total Operating Expenses- For the first quarter of 2012, total operating expenses were $7.6 million, $2.0 million lower than the first quarter of 2011, a decrease of 21%.
The decrease is attributable to a reduction in professional service and information technology costs as well as a significant reduction in costs at Group DCA due to the post acquisition right-sizing of that business.
Operating Loss- For the first quarter of 2012 the reported operating loss from continuing operations was $0.2 million, an improvement of approximately $1.2 million when compared to the operating loss of $1.4 million in the first quarter of 2011. This decrease in the operating loss can be attributed to the improved financial results at Group DCA, the addition of the product commercialization contract for the first quarter of 2012 and the reduction in total operating expenses.
Liquidity and Cash Flow- Cash and cash equivalents as of March 31, 2012 were $61.9 million, down $2.5 million from year end.
- The company had net cash used in operations of $2.4 million for the first quarter of 2012. This decrease in cash is primarily attributable to the payments of severance and close-out costs associated with the sale of the Pharmakon business unit in December, 2011 as well as the right-sizing of the Group DCA unit.
- As of March 31, 2012, the company's cash equivalents were predominantly invested in U.S. Treasury money market funds and the company had no commercial debt.