Business Wire | Nov 3, 2021 04:50PM EDT

ICON Reports Third Quarter 2021 Results

Nov. 03, 2021

DUBLIN--(BUSINESS WIRE)--Nov. 03, 2021--ICONplc(NASDAQ: ICLR), a world-leading healthcare intelligence and clinical research organisation, today reported its financial results for the third quarter ended September 30, 2021.

CEO Dr. Steve Cutler commented, "I'm delighted with new ICON's strong start as a combined organisation as shown by record new business wins of $2,374 million resulting in a net book to bill of 1.27 and backlog growth over the initial three month period since closing of 3% to $18.6 billion. The response to the acquisition by our customers has been excellent and we are already engaging in a number of more strategic discussions which we expect will drive further growth over the long term. With the strong performance in the third quarter, we are revising our full year 2021 guidance to revenue of $5,430 - $5,530 million, an increase of 96% at the midpoint of the range, and adjusted earnings per share of $9.55 - $9.75".

Third Quarter 2021 Results

Gross business wins in the third quarter were $2,720 million and cancellations were $346 million. This resulted in net business wins of $2,374 million and a book to bill of 1.27.

GAAP revenue for Quarter 3 was $1,866.4 million. Adjusted revenue for Quarter 3 was $1,870.4 million. This represents a year on year increase of 167% or 165% on a constant currency basis.

GAAP net loss attributable to the Group was $94.3 million. Adjusted net income attributable to the Group for the quarter was $209.8 million resulting in an adjusted diluted earnings per share of $2.55 compared to $1.92 per share for Quarter 3 2020.

Adjusted EBITDA for Quarter 3 was $324.9 million or 17.4% of revenue, a year on year increase of 143%.

Cash generated from operating activities for the quarter was $299.0 million. During the quarter, $24.4 million was spent on capital expenditure. At September 30, 2021 the Group had cash and cash equivalents of $1,008.5 million, compared to cash and cash equivalents of $1,055.5 million at June 30, 2021 and $708.0 million at the end of September 2020.

Year to date 2021 Results

Gross business wins year to date were $5,330 million and cancellations were $750 million. This resulted in net business wins of $4,580 million and a book to bill of 1.27.

Year to date GAAP revenue was $3,595.7 million. Year to date adjusted revenue was $3,599.7 million. This represents a year on year increase of 76.7% or 76.1% on a constant currency basis.

GAAP net income attributable to the Group year to date was $76.7 million. Adjusted net income attributable to the Group was $448.4 million resulting in an adjusted diluted earnings per share of $7.11 compared to $5.26 per share for the equivalent prior year period.

Adjusted EBITDA year to date was $637.4 million or 17.7% of revenue, a year on year increase of 74.8%.

Other Information

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures, including adjusted revenue, adjusted EBITDA, adjusted net income attributable to the Group and adjusted diluted earnings per share attributable to the Group. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share exclude amortization, stock compensation, foreign exchange gains and losses and transaction-related / integration-related adjustments. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, ICON believes certain non-GAAP information is useful to investors for historical comparison purposes.

To assist investors and analysts with year-over-year comparability for the merged business, we have included Combined Company Backlog information. This Combined Company information is not intended to represent pro forma financial information prepared in accordance with GAAP or Regulation S-X.

Adjusted earnings per share attributable to the Group (Non-GAAP) has been computed by dividing adjusted net income attributable to the Group by the weighted average number of shares outstanding. For the nine months ended 30 September 2020, GAAP earnings per share attributable to the Group has been computed by dividing net income attributable to the Group plus a GAAP charge associated with non-controlling interest in MeDiNova Research ("MeDiNova") by the weighted average number of shares outstanding. ICON purchased a majority shareholding in MeDiNova on May 23, 2019. ICON exercised its call on the outstanding shares in MeDiNova and derecognised the non-controlling interest effective from March 2020.

ICON will hold a conference call tomorrow, November 4th, 2021 at 09:00 EDT [13:00 Ireland & UK]. This call and linked slide presentation can be accessed live from our website at http://investor.iconplc.com. A recording will also be available on the website for 90 days following the call. In addition, a calendar of company events, including upcoming conference presentations, is available on our website, under "Investors". This calendar will be updated regularly.

This press release contains forward-looking statements. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. These statements are not guarantees of future performance or actual results, and actual results, developments and business decisions may differ from those stated in this press release. The forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements, including, but not limited to, the ability to enter into new contracts, maintain client relationships, manage the opening of new offices and offering of new services, the integration of new business mergers and acquisitions, the impact of COVID-19 on our business, as well as other economic and global market conditions and other risks and uncertainties detailed from time to time in SEC reports filed by ICON, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not place undue reliance on these forward-looking statements when making investment decisions. The word "expected" and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by ICON, including its Form 20-F, F-1, F-4, S-8, F-3 and certain other reports, which are available on the SEC's website at http://www.sec.gov.

ICON plc is a world-leading healthcare intelligence and clinical research organisation. From molecule to medicine, we advance clinical research providing outsourced services to pharmaceutical, biotechnology, medical device and government and public health organisations. We develop new innovations, drive emerging therapies forward and improve patient lives. With headquarters in Dublin, Ireland, ICON employed approximately 37,960 employees in 159 locations in 53 countries as at September 30, 2021. For further information about ICON, visit: www.iconplc.com and www.iconplc.com/pra.

Source: ICON plc

Contact: Investor Relations +1888 381 7923 or

Brendan Brennan Chief Financial Officer +353 1 291 2000

Kate Haven Vice President Investor Relations +1888 381 7923

All at ICON.

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020

(UNAUDITED)

Three Months Ended Nine Months Ended

September September September September 30, 30, 30, 30, 2021 2020 2021 2020

(in thousands except share and per share data)



Revenue $ 1,866,352 $ 701,729 $ 3,595,705 $ 2,037,059



Costs and expenses:

Direct costs (excludingdepreciation and 1,357,942 493,410 2,615,309 1,444,536amortization)

Selling, general and 206,713 82,715 382,614 254,309administrative expense

Depreciation and amortization 140,636 16,801 175,317 48,981

Transaction and 149,791 402 182,309 (497)integration-related expenses

Restructuring 6,162 - 6,162 18,089



Total costs and expenses 1,861,244 593,328 3,361,711 1,765,418



Income from operations 5,108 108,401 233,994 271,641

Interest income 53 268 496 2,518

Interest expense (102,306) (3,239) (129,584) (9,640)



(Loss) income before (97,145) 105,430 104,906 264,519provision for income taxes

Benefit arising/(provision) 3,563 (13,706) (26,718) (32,706)for income taxes



(Loss) income before share ofearnings from equity method (93,582) 91,724 78,188 231,813investments

Share of equity method (688) (83) (1,471) (83)investments



Net (loss) income (94,270) 91,641 76,717 231,730

Net income attributable to - - - (633)noncontrolling interest

Net (loss) income $ (94,270) $ 91,641 $ 76,717 $ 231,097attributable to the Group



Net (loss) income perOrdinary Share attributable to the Group:



Basic $ (1.17) $ 1.74 $ 1.23 $ 4.28

Diluted $ (1.17) $ 1.72 $ 1.22 $ 4.25



Weighted average number of Ordinary Shares outstanding:



Basic 80,771,397 52,737,299 62,264,851 52,885,252



Diluted 80,771,397 53,194,327 63,095,857 53,283,680

ICON plc CONDENSED CONSOLIDATED BALANCE SHEETS AS AT SEPTEMBER 30, 2021 AND DECEMBER 31, 2020

(Unaudited) (Audited)

September December 30, 31, 2021 2020

ASSETS (in thousands)

Current Assets:

Cash and cash equivalents $ $ 840,305 1,008,524

Available for sale investments 1,712 1,729

Accounts receivable, net of allowance for credit 1,338,326 715,271 losses

Unbilled revenue 550,692 428,684

Other receivables 60,376 35,394

Prepayments and other current assets 131,554 53,477

Income taxes receivable 38,484 28,118

Total current assets 3,129,668 2,102,978



Other Assets:

Property, plant and equipment, net 319,457 174,343

Goodwill 8,935,212 936,257

Operating right-of-use assets 238,107 84,561

Other non-current assets 57,637 20,773

Non-current income taxes receivable 16,119 17,230

Non-current deferred tax asset 117,313 12,705

Equity method investments 3,062 4,534

Investments in equity-long term 22,758 15,765

Intangible assets, net 4,815,184 66,460

Total Assets $ $ 17,654,517 3,435,606

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable $ 62,576 $ 51,113

Unearned revenue 1,349,000 660,883

Other liabilities 794,879 399,769

Income taxes payable 39,614 12,178

Current bank credit lines and loan facilities 55,150 -

Total current liabilities 2,301,219 1,123,943

Other Liabilities:

Non-current bank credit lines and loan facilities 5,872,720 348,477

Non-current operating lease liabilities 190,912 60,801

Non-current other liabilities 73,917 26,366

Non-current government grants 760 838

Non-current income taxes payable 18,868 14,539

Non-current deferred tax liability 1,227,535 10,406

Commitments and contingencies - -

Total Liabilities 9,685,931 1,585,370



Shareholders' Equity:

Ordinary shares, par value 6 euro cents per share; 100,000,000 shares authorised,

81,397,821 shares issued and outstanding at September 30, 2021 and

52,788,093 shares issued and outstanding at December 6,629 4,580 31, 2020

Additional paid-in capital 6,700,407 617,104

Other undenominated capital 1,134 1,134

Accumulated other comprehensive loss (79,196) (35,477)

Retained earnings 1,339,612 1,262,895

Total Shareholders' Equity 7,968,586 1,850,236

Total Liabilities and Shareholders' Equity $ $ 17,654,517 3,435,606

ICON plc CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020 (UNAUDITED)

Nine Months Ended

September 30, September 2021 30, 2020

(in thousands)

Cash flows from operating activities:

Net income $ 76,717 $ 231,730

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense 175,317 48,981

Impairment of right-of-use assets 5,731 5,411

Reduction in carrying value of operating 30,607 21,367 right-of-use assets

Unrealised foreign currency gains, net (7,374) (3,982)

Loss on issuance of debt 59,460 -

Loss on equity method investments 1,471 83

Stock compensation expense 114,791 20,157

Loss/(gain) on interest rate hedge 891 (725)

Amortization of financing costs 4,448 368

Loss on extinguishment of debt 14,434 -

Deferred taxes (26,532) 1,416

Other non-cash items (1,592) (121)

Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:

Accounts receivable 123,413 24,623

Unbilled revenue 49,203 (17,635)

Unearned revenue (60,514) 82,386

Other assets and liabilities (21,147) (41,446)

Net cash provided by operating activities 539,324 372,613

Cash flows from investing activities:

Purchase of property, plant and equipment (46,067) (28,026)

Purchase of subsidiary undertakings, net of cash (5,914,475) (37,761) acquired

Purchase of equity method investments (2,450) (2,450)

Sale of available for sale investments 17 47,902

Purchase of investments in equity - long term (2,243) (2,737)

Net cash used in investing activities (5,965,218) (23,072)

Cash flows from financing activities:

Financing related costs (30,349) -

Proceeds from exercise of equity compensation 104,070 12,349

Share issue costs (848) (10)

Repurchase of ordinary shares - (175,000)

Share repurchase costs - (140)

Drawdown of bank credit lines and loan facilities,net of debt issuance costs and debt discount 5,905,100 - withheld

Repayment of bank credit lines and loan facilities (377,780) -

Net cash provided by (used in) financing activities 5,600,193 (162,801)

Effect of exchange rate movements on cash (6,080) 946

Net increase in cash and cash equivalents 168,219 187,686

Cash and cash equivalents at beginning of period 840,305 520,309

Cash and cash equivalents at end of period $ $ 707,995 1,008,524

ICON plc RECONCILIATION OF NON-GAAP MEASURES FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020 (UNAUDITED)

Three Months Ended Nine Months Ended

September September September September 30, 30, 30, 30, 2021 2020 2021 2020

(in thousands except share and per share data)



Adjusted revenue

Revenue, as reported $ $ 701,729 $ $ 1,866,352 3,595,705 2,037,059

Acquisition relateddeferred revenue adjustment 4,000 - 4,000 -^(a)

Adjusted revenue $ $ 701,729 $ $ 1,870,352 3,599,705 2,037,059



Adjusted EBITDA

Net income/(loss) $ (94,270) $ 91,641 $ 76,717 $ 231,097attributable to the Group

Net income/(loss)attributable to - - - 633non-controlling interest

Share of equity method 688 83 1,471 83investments

Provision for income taxes (3,563) 13,706 26,718 32,706

Net interest expense ^(b) 102,253 2,971 129,088 7,122

Depreciation and 140,636 16,801 175,317 48,981amortization

Stock-based compensation 26,355 7,260 41,987 21,431expense ^(c)

Foreign currency losses (7,185) 596 (6,347) 4,977(gains), net ^(d)

Restructuring ^(e) 6,162 - 6,162 18,089

Acquisition relateddeferred revenue adjustment 4,000 - 4,000 -^(a)

Transaction-related /integration-related costs ^ 149,791 402 182,309 (497)(f)

Adjusted EBITDA $ 324,867 $ 133,460 $ 637,422 $ 364,622



Adjusted net incomeattributable to the Groupand adjusted diluted net income per Ordinary Shareattributable to the Group

Net income/(loss) $ (94,270) $ 91,641 $ 76,717 $ 231,097attributable to the Group

Provision for income taxes (3,563) 13,706 26,718 32,706

Amortisation 115,874 4,890 124,615 14,427

Stock-based compensation 26,355 7,260 41,987 21,431expense ^(c)

Foreign currency losses (7,185) 596 (6,347) 4,977(gains), net ^(d)

Restructuring ^(e) 6,162 - 6,162 18,089

Acquisition relateddeferred revenue adjustment 4,000 - 4,000 -^(a)

Transaction-related /integration-related costs ^ 149,791 402 182,309 (497)(f)

Transaction-related 55,773 - 78,252 -financing costs ^(g)

Adjusted tax expense ^(h) (43,121) (16,119) (85,993) (41,825)

Adjusted net income $ 209,816 $ 102,376 $ 448,420 $ 280,405attributable to the Group



Diluted weighted averagenumber of Ordinary Shares 82,293,287 53,194,327 63,095,857 53,283,680outstanding



Adjusted diluted net incomeper Ordinary Share $ 2.55 $ 1.92 $ 7.11 $ 5.26attributable to the Group





Acquisition related deferred revenue adjustment represents non-cash(a) adjustments resulting from the revaluation of deferred revenue and the subsequent charge to revenue in connection with business combinations.

(b) Net Interest expense includes losses on modification or extinguishment of debt.

(c) Stock-based compensation expense represents the amount of recurring non-cash expense related to the Company's equity compensation programs

Foreign currency losses (gains), net relates to gains or losses that arise in connection with the revaluation of non-US dollar denominated assets and(d) liabilities. We exclude these gains and losses from adjusted EBITDA and adjusted net income because fluctuations from period- to- period do not necessarily correspond to changes in our operating results.

Restructuring charges incurred relate to charges incurred in connection(e) with the termination of leases at locations that are no longer being used and amounts incurred in connection with the elimination of redundant positions within the organisation.

Transaction-related / integration-related costs include expenses/credits associated with our acquisitions, share-based compensation expense related(f) to the acceleration of share-based compensation awards and replacement share-based awards, contingent consideration valuation adjustments, and any other costs incurred directly related to the integration of these acquisitions.

Transaction-related financing costs includes costs incurred in connection with changes to our long-term debt and amortization of financing fees. We(g) exclude these costs from Adjusted EBITDA and Adjusted Net Income because they result from financing decisions rather than from decisions made related to our ongoing operations.

(h) Represents the tax effect of adjusted pre-tax income at our estimated effective tax rate.

ICON/ICLR-F

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CONTACT: Contact: Investor Relations +1 888 381 7923 or Brendan Brennan Chief Financial Officer +353 1 291 2000 Kate Haven Vice President Investor Relations +1888 381 7923 http://www.iconplc.com