Management will host Conference Call at 4:30 PM ET Today SADDLE
RIVER, N.J., Nov. 5 /PRNewswire-FirstCall/ -- PDI, Inc. (NASDAQ:
PDII), a leading provider of sales and marketing support to U.S.
pharmaceutical companies, today reported financial and operational
results for the third quarter ended September 30, 2009. Commenting
on today's announcement, Nancy Lurker, Chief Executive Officer of
PDI, Inc., stated, "Third quarter 2009 revenues of $21.0 million
were lower than last year by approximately 14%. Higher revenue in
our Marketing Services business was offset by reductions in our
Sales Services business. Despite lower revenue, this year's third
quarter operating loss was reduced by more than 50% compared to
last year. The reduction in operating loss was in large part due to
the absence of the impact of the product commercialization contract
that was in effect in 2008. However, on an adjusted basis,
excluding the loss from the product commercialization contract,
facilities realignment and severance charges, the third quarter
2009 operating loss is still 38% lower than last year, in large
part due to our ongoing cost reduction initiatives and higher
revenue in Marketing Services. "While revenues were down in the
third quarter compared to last year, as expected, they were up
almost 30% over the second quarter of this year. However, the
current economic climate coupled with pharmaceutical industry
consolidation and downsizing, has led to a delay in gaining
significant new business as many pharmaceutical companies have
slowed their sales force initiatives while they continue to
implement their integration and cost cutting strategies. Our
continuing discussions with current and potential clients have
confirmed their intent to expand their use of CSOs as an integral
part of their business strategy, although it is still too early to
predict with any certainty how robust the demand will be when the
market recovers. That said, we have recently experienced an
increase in the number of new business opportunities before us,
lending credence to our belief that as recessionary pressures ease,
the industry, and PDI, should benefit. Considering these factors
and the uncertainty surrounding the duration of the U.S. recession,
we approach year end and enter 2010 with a sense of caution as to
the timing of gaining significant new business. "In the interim,
PDI continues to develop plans to manage in today's environment and
we are executing on our goals, including focusing on our core
business, identifying areas in which to drive down expenses while
reinvesting in order to bolster our competitive position, and
improving asset utilization. A new virtual call center, which went
live in early October, and our recently announced co-marketing
agreement with Physicians Interactive, will allow us to further
expand the range of integrated, value-added services we provide. We
expect these and other initiatives, including a new sales force
automation system designed to lower costs while enhancing the
effectiveness and efficiency of our field force, to make a positive
impact on both existing and new client engagements moving forward.
"We continue to focus aggressively on gaining new business while
working in parallel to reduce our cost structure so that as the
market improves, the impact on our earnings and profitability will
be that much more pronounced. As evidence of our progress, on an
adjusted basis, even with reduced revenue, we significantly reduced
our operating loss in part due to our ongoing cost reduction
initiatives. Our next most visible sign of cost reduction efforts
will come at the end of the fourth quarter of this year when we
will be relocating our corporate offices to smaller, less costly
facilities in Parsippany, New Jersey. While this move will require
a charge to earnings of up to $5 million, we anticipate that it
will result in savings beginning in 2010." Financial Overview -
Third Quarter 2009 For the quarter ended September 30, 2009, net
revenue totaled $21.0 million, compared to $24.5 million in the
same period last year. Revenue in the Sales Services segment for
the third quarter of 2009 was $17.8 million, compared to $20.0
million in the same period of 2008. While Sales Services has gained
revenue as a result of new contracts and the expansion of existing
contracts, these gains were more than offset by lost revenue from
the internalization of a contract sales force by a long-term client
and the expiration or termination of other sales force arrangements
in effect during 2008. Revenue in the Marketing Services segment
for the third quarter of 2009 was $5.1 million compared to $4.5
million in 2008. A 30% increase in our Pharmakon business unit due
to an increase in the number of projects was partially offset by a
decrease in revenue from closing the VIM business unit in 2009.
Gross profit for the third quarter of 2009 was $6.9 million
compared to $0.4 million in the same period last year. Gross profit
for the Sales Services segment increased to $4.3 million from $2.8
million last year and gross profit in the Marketing Services
segment increased to $2.4 million from $1.7 million in the year ago
period. The impact on gross profit of lower revenue in the Sales
Services segment was more than offset by lower operating costs, in
large part resulting from the Company's cost savings initiatives as
well as the recognition of higher performance related fees in 2009.
The increase in gross profit in the Marketing Services segment was
primarily attributable to higher revenue from our Pharmakon
business unit. The Company's third quarter 2008 gross profit was
negatively impacted by $4.1 million from the execution of the
product commercialization agreement which was mutually terminated
in the second quarter of 2009. Total operating expenses for the
third quarter of 2009 were $11.4 million compared to $10.0 million
in the same period in 2008. Other income, which is primarily
interest income, declined to $30,000 in the third quarter of 2009
compared to $600,000 in 2008 due to a combination of significantly
lower interest rates and lower average cash balances. The operating
loss for the third quarter of 2009 declined to $4.6 million
compared to $9.6 million in the same period of 2008. On an adjusted
basis, which excludes the loss from the product commercialization
contract, facilities realignment and severance charges, the
operating loss for the third quarter of 2009 declined 38% to $2.7
million from $4.4 million in 2008. The net loss per share for the
third quarter of 2009 was $0.32 compared to $0.63 in 2008. Cash and
cash equivalents as of September 30, 2009 were $70.6 million, a
$5.6 million decline from June 30, 2009 and a $19.5 million decline
from December 31, 2008. This decrease is primarily attributable to
the Company's operating losses and cash expenses related to
fulfillment of commitments, which extend through December 31, 2009,
under the terminated product commercialization contract. As of
September 30, 2009, the Company's cash equivalents were
predominately invested in Treasury money market funds and the
Company had no commercial debt. Conference Call As previously
announced, PDI will hold a conference call today, to discuss
financial and operational results of the third quarter ended
September 30, 2009 as follows: Time: 4:30 pm (ET) Dial-in numbers:
866-644-4654 (U.S. & Canada) or (706) 643-1203 Conference ID#:
38133586 Live webcast: http://www.pdi-inc.com/ The teleconference
replay will be available three hours after completion through
Saturday, November 7, 2009 by dialing 800-642-1687 (U.S. &
Canada) or 706-645-9291 and entering conference ID 38133586. The
archived webcast will be available for one year on the Company's
investor website, http://www.pdi-inc.com/. Non-GAAP Financial
Measures This press release contains certain non-GAAP financial
measures. A reconciliation of these to the comparable GAAP measures
is included as Exhibit A. 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. For more information, please visit
the Company's website at http://www.pdi-inc.com/. Forward-Looking
Statements This press release contains forward-looking statements
regarding future events and financial performance. These statements
are based on current expectations and assumptions involving
judgments about, among other things, 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. These statements also involve known and
unknown risks, uncertainties and other factors that may cause PDI's
actual results to be materially different from those expressed or
implied by any forward-looking statement. For example, with respect
to statements regarding projections of future revenues, actual
results may differ materially from those set forth in this release
based on the loss, early termination or significant reduction of
any of our existing service contracts or the failure to meet
performance goals in PDI's incentive-based arrangements with
customers. In addition, with respect to statements regarding the
prospects for PDI's future growth, actual results may differ
materially based on adverse market conditions, PDI's inability to
successfully implement its strategic initiatives relating to
leveraging and expanding its core CSO capabilities, expanding its
range of integrated, value-added services and reducing expenses,
adverse changes in outsourcing trends in the pharmaceutical
industry or a reduction or elimination of the role of
pharmaceutical sales representatives. Also, with respect to
statements regarding anticipated future savings relating to the
impending relocation of our corporate headquarters, these savings
may be offset in whole or in part by expenses associated with the
lease for our current corporate headquarters unless we are able to
successfully sublet this facility in a timely manner. Additionally,
all forward-looking statements are subject to 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,
2008, and PDI's subsequently filed quarterly reports on Form 10-Q
and current reports on Form 8-K. Because of these and other risks,
uncertainties and assumptions, undue reliance should not be placed
on these forward-looking statements. In addition, these statements
speak only as of the date of this press release and, except as may
be required by law, PDI undertakes no obligation to revise or
update publicly any forward-looking statements for any reason. PDI,
INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except for per share data) Three Months Nine Months
Ended Ended September 30, September 30, ------------- -------------
2009 2008 2009 2008 ---- ---- ---- ---- Revenue, net $21,041
$24,496 $60,863 $87,124 Cost of services 14,182 24,084 42,152
74,423 ------ ------ ------ ------ Gross profit 6,859 412 18,711
12,701 Compensation expense 5,774 5,696 17,820 19,006 Other
selling, general and administrative expenses 4,431 4,305 12,690
12,892 Facilities realignment 1,220 - 3,030 - ----- - ----- - Total
operating expenses 11,425 10,001 33,540 31,898 ------ ------ ------
------ Operating loss (4,566) (9,589) (14,829) (19,197) Other
income, net 30 629 194 2,579 -- --- --- ----- Loss before income
tax (4,536) (8,960) (14,635) (16,618) Provision for income tax 26
44 477 923 -- -- --- --- Net loss $(4,562) $(9,004) $(15,112)
$(17,541) ======= ======= ======== ======== Loss per share of
common stock: Basic $(0.32) $(0.63) $(1.06) $(1.23) Diluted $(0.32)
$(0.63) $(1.06) $(1.23) Weighted average number of common shares
and common share equivalents outstanding: Basic 14,216 14,243
14,216 14,253 Diluted 14,216 14,243 14,216 14,253 Segment Data
(Unaudited) (in thousands) Product Sales Marketing Commercial-
Services Services ization Eliminations Consolidated --------
-------- ----------- ------------ ------------ Three months ended
September 30, 2009: Revenue $17,800 $5,081 $- $(1,840) $21,041
Gross profit 4,347 2,447 - 65 6,859 Gross profit % 24.4% 48.2% 0.0%
NM 32.6% Three months ended September 30, 2008: Revenue $19,979
$4,517 $- $- $24,496 Gross profit 2,831 1,710 (4,129) - 412 Gross
profit % 14.2% 37.9% NM 0.0% 1.7% Nine months ended September 30,
2009: Revenue $52,230 $12,036 $- $(3,403) $60,863 Gross profit
10,308 5,617 2,486 300 18,711 Gross profit % 19.7% 46.7% 0.0% NM
30.7% Nine months ended September 30, 2008: Revenue $68,636 $19,488
$(1,000) $- $87,124 Gross profit 13,876 8,441 (9,616) - 12,701
Gross profit % 20.2% 43.3% NM 0.0% 14.6% NM - Not Meaningful
Selected Balance Sheet Data (Unaudited) (in thousands) September
30, December 31, 2009 2008 ---- ---- Cash and cash equivalents
$70,551 $90,074 Total current assets $93,707 $112,999 Total current
liabilities 20,107 31,360 ------ ------ Working capital $73,600
$81,639 ------- ------- Total assets $124,925 $149,036 Total
liabilities $31,781 $41,929 Total stockholders' equity $93,144
$107,107 Selected Cash Flow Data (Unaudited) (in thousands)
September 30, September 30, 2009 2008 ---- ---- Net loss $(15,112)
$(17,541) Non-cash items 4,605 4,992 Net change in assets and
liabilities (8,371) 6,229 ------ ----- Net cash used in operations
$(18,878) $(6,320) Change in cash and cash equivalents $(19,523)
$(4,875) Exhibit A Non-GAAP Financial Measures When we evaluate the
performance of our business as a whole, we focus on results (such
as gross profit, operating expense and operating income/loss)
before certain types of gains and charges because such gains and
charges are not a component of our ongoing income or expenses
and/or may have a disproportionate positive or negative impact on
the results of our ongoing underlying business operations. These
non-GAAP results should not be considered in isolation and are not
in accordance with, or a substitute for, GAAP results. Our non-GAAP
results may differ from similar measures used by other companies,
even if similar terms are used to identify such measures. PDI's
management believes non-GAAP results are useful in evaluating the
performance of its business; however, its reliance on these
measures is limited since items excluded from such measures may
have a material impact on our revenue, gross profit, operating
expenses and operating loss calculated in accordance with GAAP.
Therefore, investors should consider these limitations and evaluate
non-GAAP results in conjunction with GAAP. Reconciliation from GAAP
to non-GAAP ("Adjusted") Financial Measures (Unaudited) (in
thousands) Three Months Ended Three Months Ended September 30, 2009
September 30, 2008 ------------------ ------------------ Gross
Operating Gross Operating Revenue Profit (Loss) Revenue Profit
(Loss) ------- ------ --------- ------- ------ --------- GAAP
$21,041 $6,859 $(4,566) $24,496 $412 $(9,589) Product
commercialization(1) - - - - 4,129 4,785 Facilities realignment(2)
- - 1,220 - - - Severance(3) - - 600 - - 400 --- --- --- --- ---
--- non-GAAP ("Adjusted") $21,041 $6,859 $(2,746) $24,496 $4,541
$(4,404) ======= ====== ======= ======= ====== ======= (1)
Represents costs from our PC Services segment in connection with
the promotional contract that was mutually terminated in April
2009. $4.1 million is recorded within Cost of services, $0.4
million is recorded within Compensation expense and $0.3 million is
recorded within Selling, general and administrative expense in the
Company's Condensed Consolidated Statement of Operations. (2)
Relates to charges for exiting and subleasing the first floor of
our Saddle River, New Jersey facility in connection with our cost
savings initiative and is recorded within Facilities Realignment in
the Company's Condensed Consolidated Statement of Operations. (3)
Relates to severance charges at our TVG business unit during the
three months ended September 30, 2009 and severance charges for an
executive departure during the three months ended September 30,
2008 and is recorded within Compensation expense in the Company's
Condensed Consolidated Statement of Operations. DATASOURCE: PDI,
Inc. CONTACT: Amy Lombardi of PDI, Inc., +1-201-574-8663, ; or
investors, Melody Carey of Rx Communications Group,
+1-917-322-2571, Web Site: http://www.pdi-inc.com/
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