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PDI Reports 2009 Fourth Quarter And Full Year Financial Results

PARSIPPANY, N.J., March 4 /PRNewswire-FirstCall/ -- PDI, Inc. (Nasdaq: PDII), a leading provider of outsourced sales and marketing support to U.S. pharmaceutical companies, today reported financial and operational results for the fourth quarter and year ended December 31, 2009. Recent operating highlights include:

  • Two key new business wins with Top 10 pharmaceutical companies in December 2009 and January 2010 expected to generate approximately $18 million in revenue in 2010.
  • Major contract renewal with a Top 5 pharmaceutical company expected to generate approximately $33 million in revenue in 2010.
  • Relocation of corporate headquarters to Parsippany, NJ to reduce ongoing costs and increase access to pharmaceutical industry talent pool.
    
    
    
    
    Summary Consolidated Statements of Operations – GAAP Basis:
    
                                              4th Quarter                  
                                                 Ended        Year Ended   
      GAAP Basis                             December 31,*   December 31,* 
                                             -------------   ------------- 
      $'s in millions except EPS              2009    2008    2009    2008 
                                              ----    ----    ----    ---- 
                                                                           
      Revenue                                $24.0   $25.4   $84.9  $112.5 
                                                                           
      Gross Profit                            $7.6   $(8.2)  $26.3    $4.5 
                                                                           
      Operating Expenses                                                   
         Compensation expense                 $4.7    $5.1   $22.3   $22.8 
         Other SG&A                           $4.8    $3.9   $17.5   $16.8 
         Executive severance                    $-      $-    $0.2    $1.2 
         Asset Impairment                    $18.1      $-   $18.1      $- 
         Facilities realignment               $5.7    $0.1    $8.7    $0.1 
                                              ----    ----    ----    ---- 
               Total Operating Expenses      $33.3    $9.0   $66.9   $40.9 
                                                                           
      Operating Loss                        $(25.7) $(17.2) $(40.6) $(36.4)
                                                                           
      Other income, net                         $-    $0.3    $0.2    $2.8 
                                                                           
      (Benefit) Provision for Income Taxes   $(7.3)     $-   $(6.8)   $0.9 
                                             -----      --   -----    ---- 
                                                                           
            Net Loss                        $(18.4) $(16.9) $(33.6) $(34.5)
                                            ======  ======  ======  ====== 
                                                                           
       Diluted Loss Per Share               $(1.30) $(1.19) $(2.36) $(2.42)
                                            ======  ======  ======  ====== 
                                                                           
        *Unaudited                                                         
    
    

The Company's GAAP basis Summary Consolidated Statements of Operations (above) includes the following:

 In 2009:

  • A non-cash asset impairment charge of $18.1 million (reflected in Q4 and full year 2009 results) related to the carrying value of our Pharmakon business unit goodwill and intangibles. This charge is the result of the Company's annual assessment of goodwill and an indication of impairment of our intangibles which arose in the fourth quarter of 2009.  The most recent assessment was heavily influenced by the recent performance of Pharmakon, adverse industry dynamics, the general adverse economic environment and reduced valuations of comparable companies.
  • Facilities realignment charges of $5.7 million in the fourth quarter of 2009 and $8.7 million for the full year 2009, related to the downsizing of space at our former Company headquarters and TVG business unit and the fourth quarter relocation of Company's corporate headquarters to Parsippany, NJ.
  • A net gain of $2.5 million (reflected in full year 2009 results) related to the mutual termination of the product commercialization contract entered into in 2008. The gain arises from the reversal of loss contract reserves accrued for in 2008.
  • A reduction of revenue of $1.7 million in the fourth quarter of 2009 and $5.1 million for the full year 2009 as a result of credits issued in connection with the mutual termination of the product commercialization contract entered into in 2008.
  • A total tax benefit realized of $7.0 million (approximately 50% cash) as a result of the Worker, Homeownership, and Business Assistance Act passed in November 2009 (reflected in Q4 and full year 2009 results).

In 2008:

  • A contract loss accrual of $10.3 million (reflected in Q4 and full year 2008 results) related to the product commercialization contract entered into in 2008.

Because of the nature of the above items, the Company believes that financial results, excluding the above items, more accurately reflect the ongoing operations of PDI. Company management excludes the above items in evaluating the operating performance of the businesses and believes that it would also be useful to investors to exclude these items in assessing the performance of the Company's operations on a comparable period to period basis. The summary Consolidated Statements of Operations below, referred to as "Adjusted Basis" excludes these items.  A full reconciliation of GAAP results to Adjusted Basis results on a Consolidated and Segment basis is included in Exhibit A.

    
    
    
    
    Summary Consolidated Statements of Operations – Adjusted Basis:
    
                                              4th Quarter                  
                                                 Ended        Year Ended   
      Adjusted Basis                         December 31,*   December 31,* 
                                             -------------   ------------- 
      $'s in millions except EPS              2009    2008    2009    2008 
                                              ----    ----    ----    ---- 
                                                                           
      Revenue                                $25.7   $25.4   $90.0  $112.5 
                                                                           
      Gross Profit                            $7.8    $2.1   $24.1   $14.8 
                                                                           
      Operating Expenses                                                   
         Compensation expense                 $4.7    $5.1   $22.3   $22.8 
         Other SG&A                           $4.8    $3.9   $17.5   $16.8 
         Executive severance                    $-      $-    $0.2    $1.2 
         Asset Impairment                       $-      $-      $-      $- 
         Facilities realignment                 $-      $-      $-      $- 
                                                --      --      --      -- 
               Total Operating Expenses       $9.5    $8.9   $40.0   $40.8 
                                                                           
      Operating Loss                         $(1.7)  $(6.8) $(15.9) $(26.0)
                                                                           
      Other income, net                         $-    $0.3    $0.2    $2.8 
                                                                           
      (Benefit) Provision for Income Taxes   $(0.3)     $-    $0.2    $0.9 
                                             -----      --    ----    ---- 
                                                                           
            Net Loss                         $(1.4)  $(6.5) $(15.9) $(24.0)
                                             =====   =====  ======  ====== 
                                                                           
       Diluted Loss Per Share               $(0.10) $(0.46) $(1.12) $(1.69)
                                            ======  ======  ======  ====== 
                                                                           
       *Unaudited                                                         
    
    

Commenting on today's announcement, Nancy Lurker, Chief Executive Officer of PDI, Inc. stated, "While adjusted basis revenue of $90.0 million for 2009 was down 20% compared to 2008, fourth quarter adjusted basis revenue of $25.7 million was 1% higher than 2008 reflecting, in part, what we believe is the beginning of an overall strengthening of the market. On an adjusted basis, our gross profit, operating loss, net loss and loss per share all improved significantly for the full year and fourth quarter of 2009 compared to 2008."

Ms. Lurker continued, "Although the first nine months of 2009 were especially challenging, we experienced signs of improvement in the overall business environment and in our win rate during the fourth quarter – factors which we are cautiously optimistic about continuing throughout 2010. During 2009, we took a variety of actions to strengthen the Company.  Our focus on providing measurable value to clients, pursuing new business opportunities and continuing cost reductions puts PDI in a solid position to benefit from a market upswing. Indeed, this was evidenced in the fourth quarter by a stabilization in adjusted basis revenues relative to 2008 and the first nine months of 2009, and a significant reduction in our adjusted basis operating loss compared to 2008. In tandem with a more positive economic climate and the completion of various industry mergers, pharmaceutical companies are now actively assessing their portfolios, commercial models and field force needs. As such, they are reaching out more aggressively to companies like PDI in order to improve the efficiency, flexibility and return on investment of their sales force initiatives.  We believe that our two recent business wins and major contract renewal, as well as an increase in our new business pipeline since the end of the third quarter of 2009, are representative of this turnabout and reflect the industry's continued recognition of the high-impact value PDI provides to clients.  While additional new business will be required in order for us to return to profitability, it is our belief that all of the actions taken in 2009, along with our actions aimed at driving revenue expansion, have solidly positioned the Company for growth."

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