Skip to main content
Offcanvas
Some text as placeholder. In real life you can have the elements you have chosen. Like, text, images, lists, etc.
What are you looking for?

Syneos Health Reports Fourth Quarter and Full Year 2020 Results

Highlights

  • GAAP revenue of $1,140.0 million for the three months ended December 31, 2020, representing a sequential increase of 3.7% compared to the three months ended September 30, 2020.
  • Net new business awards of $1,764.1 million and $5,863.1 million for the three and twelve months ended December 31, 2020, representing book-to-bill ratios of 1.55x and 1.33x, respectively.
    • Clinical Solutions segment net new business awards of $1,299.3 million and $4,698.7 million for the three and twelve months ended December 31, 2020, representing book-to-bill ratios of 1.52x and 1.42x, respectively, and year-over-year backlog growth of 24.6% as of December 31, 2020.
    • Commercial Solutions segment net new business awards of $464.8 million and $1,164.4 million for the three and twelve months ended December 31, 2020, representing book-to-bill ratios of 1.63x and 1.05x, respectively.
  • GAAP net income of $91.9 million for the three months ended December 31, 2020, representing growth of 0.9% compared to the three months ended December 31, 2019.
  • Adjusted EBITDA of $194.8 million for the three months ended December 31, 2020, representing growth of 3.3% compared to the three months ended December 31, 2019.
  • GAAP diluted earnings per share of $0.87 for the three months ended December 31, 2020, representing growth of 1.2% compared to the three months ended December 31, 2019.
  • Adjusted diluted earnings per share of $1.11 for the three months ended December 31, 2020, representing growth of 7.8% compared to the three months ended December 31, 2019.
  • Completed acquisitions of Synteract and Illingworth Research Group along with the divestiture of the Company’s medication adherence business.
  • Full year 2021 guidance; revenue of $5,125 million to $5,325 million, GAAP net income of $207.9 million to $234.5 million, adjusted EBITDA of $745.0 million to $785.0 million, GAAP diluted earnings per share of $1.95 to $2.20, and adjusted diluted earnings per share of $4.09 to $4.38.

MORRISVILLE, N.C., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Syneos Health (Nasdaq:SYNH), the only fully integrated biopharmaceutical solutions organization, today reported financial results for the three and twelve months ended December 31, 2020.

“We delivered another quarter of strong awards performance, along with sequential revenue growth and robust profitability in the fourth quarter. Our innovative solutions, including Kinetic, continue to resonate with customers and we further strengthened our differentiated model with our acquisitions of Synteract, enhancing our SMID footprint, and Illingworth Research Group, further enabling our in-home capability for Decentralized Solutions,” said Alistair Macdonald, Chief Executive Officer, Syneos Health. “We remain confident in the long-term strength of our business given our record backlog, which we expect to fuel strong growth in both segments for the full year 2021.”

Please refer to the "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Measures" included in this press release and accompanying tables for important disclosures about non-GAAP measures and a reconciliation of these measures to the nearest GAAP measures.

Fourth Quarter 2020 Results

For the three months ended December 31, 2020, GAAP revenue decreased 6.0% to $1,140.0 million and decreased 6.1% compared to the adjusted revenue from the same period in the prior year. On a constant currency basis, revenue decreased 7.0% compared to the adjusted revenue from the same period in the prior year. This decrease was driven by revenue declines in both Clinical Solutions and Commercial Solutions, as discussed below.

For the three months ended December 31, 2020, Clinical Solutions GAAP revenue decreased 4.9% to $855.6 million, and decreased 5.0% compared to the adjusted revenue from the same period in the prior year. On a constant currency basis, revenue decreased 5.9% compared to the adjusted revenue from the same period in the prior year. This decrease was primarily due to the impacts of COVID-19, including the related decline in reimbursable out-of-pocket expenses, and the second quarter divestiture of the Company’s contingent staffing business, partially offset by the positive impacts from the Synteract acquisition and fluctuations in foreign currency exchange rates.

For the three months ended December 31, 2020, Commercial Solutions GAAP revenue decreased 9.3% to $284.5 million from the same period in the prior year. On a constant currency basis, revenue decreased 9.9%. This decrease was primarily due to the impacts of elevated cancellations in the first half of 2020, as well as the impacts of COVID-19, including a disproportionate decline in reimbursable out-of-pocket expenses and delays in new project starts. Further, Commercial Solutions GAAP revenue for the three months ended December 31, 2020 was negatively impacted by the divestiture of the Company’s medication adherence business in November 2020.

GAAP net income for the three months ended December 31, 2020 increased 0.9% to $91.9 million, resulting in diluted earnings per share of $0.87, compared to GAAP net income of $91.1 million, or diluted earnings per share of $0.86, for the three months ended December 31, 2019. The increases in GAAP net income and diluted earnings per share were primarily due to higher income from operations, a decrease in other expenses primarily related to a lower expense from foreign exchange rate fluctuations, a gain on sale of the medication adherence business and lower interest expense, partially offset by a loss on the extinguishment of debt.

Adjusted net income for the three months ended December 31, 2020 increased 7.5% to $116.8 million, resulting in adjusted diluted earnings per share of $1.11, compared to adjusted net income of $108.6 million, or adjusted diluted earnings per share of $1.03 for the three months ended December 31, 2019. The increases in adjusted net income and adjusted diluted earnings per share were primarily due to the increase in adjusted EBITDA, discussed below, and lower interest expense.

Adjusted EBITDA for the three months ended December 31, 2020 increased 3.3% to $194.8 million from the same period in the prior year. The increase in adjusted EBITDA was driven primarily by the impact of the Company’s synergies and cost management strategies, including ForwardBound, partially offset by the impacts of COVID-19.

Full Year 2020 Results

For the twelve months ended December 31, 2020, GAAP revenue decreased 5.6% to $4,415.8 million and decreased 5.7% compared to the adjusted revenue from the same period in the prior year. On a constant currency basis, revenue decreased 5.8% compared to the adjusted revenue from the same period in the prior year. This decrease was driven by revenue declines in both Clinical Solutions and Commercial Solutions, as discussed below.

For the twelve months ended December 31, 2020, Clinical Solutions GAAP revenue decreased 3.4% to $3,306.7 million, and decreased 3.5% compared to the adjusted revenue from the same period in the prior year. On a constant currency basis, revenue decreased 3.7% compared to the adjusted revenue from the same period in the prior year. This decrease was primarily due to the impacts of COVID-19, including the related decline in reimbursable out-of-pocket expenses and the second quarter divestiture of the Company’s contingent staffing business, partially offset by revenue growth during the three months ended March 31, 2020.

For the twelve months ended December 31, 2020, Commercial Solutions GAAP revenue decreased 11.6% to $1,109.0 million from the same period in the prior year. On a constant currency basis, revenue decreased 11.7% compared to the GAAP revenue from the same period in the prior year. This decrease was primarily due to the impact of elevated cancellations during the first half of 2020, as well we the impacts of COVID-19, including a disproportionate decline in reimbursable out-of-pocket expenses and delays in new project starts.

GAAP net income for the twelve months ended December 31, 2020 increased 46.9% to $192.8 million, resulting in diluted earnings per share of $1.83, compared to GAAP net income of $131.3 million, or diluted earnings per share of $1.25, for the twelve months ended December 31, 2019. The increases in GAAP net income and diluted earnings per share were primarily due to higher income from operations, lower interest expense, and a decrease in other expenses primarily due to lower expense from foreign exchange rate fluctuations, partially offset by a higher income tax expense.

Adjusted net income for the twelve months ended December 31, 2020 increased 5.9% to $359.2 million, resulting in adjusted diluted earnings per share of $3.41, compared to adjusted net income of $339.3 million, or adjusted diluted earnings per share of $3.23 for the twelve months ended December 31, 2019. The increases in adjusted net income and adjusted diluted earnings per share were primarily due to lower interest expense, partially offset by a decline in adjusted EBITDA, discussed below.

Adjusted EBITDA for the twelve months ended December 31, 2020 decreased 1.8% to $633.6 million from the same period in the prior year. This decrease in adjusted EBITDA was driven primarily by the impacts of COVID-19, partially offset by the impact of the Company’s synergies and cost management strategies, including ForwardBound. A portion of these cost reductions were due to temporary cost savings measures implemented in response to the uncertainty caused by the COVID-19 pandemic. The majority of these temporary cost savings measures ended in the third quarter of 2020.

Net New Business Awards and Backlog

Net new business awards were $1,764.1 million and $5,863.1 million for the three and twelve months ended December 31, 2020, representing book-to-bill ratios of 1.55x and 1.33x, respectively. Clinical Solutions net new business awards were $1,299.3 million and $4,698.7 million for the three and twelve months ended December 31, 2020, representing a book-to-bill ratio of 1.52x and 1.42x, respectively. Commercial Solutions net new business awards were $464.8 million and $1,164.4 million for the three and twelve months ended December 31, 2020, representing book-to-bill ratios of 1.63x and 1.05x, respectively. These net new business awards contributed to an ending backlog of $10,951.1 million as of December 31, 2020, consisting of $10,239.5 million for Clinical Solutions and $711.6 million for the Deployment Solutions offering within Commercial Solutions.

Liquidity and Capital Management Update

The Company remains confident in its liquidity position, which includes cash on hand of $272.2 million as of December 31, 2020, and access to its revolving credit facility.

During the three months ended December 31, 2020, the Company made $13.5 million and $200.0 million of voluntary prepayments against its Term Loan A and Term Loan B, respectively that were applied to future mandatory principal payment due. The Company is not required to make a mandatory payment against the principal balance of Term Loan A until April 2022 and Term Loan B until maturity in August 2024. The Company also entered into an amendment to the Credit Agreement that extended the maturity date of the Revolver and a portion of Term Loan A to August 1, 2024.

In addition, on November 24, 2020, the Company completed the issuance and sale of $600.0 million aggregate principal amount of 3.625% senior notes due 2029. The Company received net proceeds, after deducting offering expenses, of $592.5 million. The net proceeds of the offering, together with cash on hand, were used for general corporate purposes, including the funding of acquisitions, and for the repayment of indebtedness.

During the three months ended December 31, 2020, the Company repurchased $8.1 million of common stock. On November 17, 2020, the Company’s Board approved a new stock repurchase program effective January 1, 2021, which succeeded the existing stock repurchase program that expired on December 31, 2020. The new stock repurchase program authorizes the Company to repurchase up to $300.0 million of common stock and expires on December 31, 2022. The Company will continue to evaluate the utilization of its share repurchase program as market and economic conditions evolve.

Full Year 2021 Business Outlook

The Company's guidance takes into account a number of factors, including existing backlog, current sales pipeline, trends in cancellations and delays, and the Company’s ForwardBound initiative, which includes expansion of the Syneos Operating Network, process optimization, and automation initiatives. In addition, the guidance presented below represents the Company’s best efforts to estimate the impact of COVID-19 on its business. The severity and duration of the COVID-19 pandemic are outside of the Company’s control and, given the uncertain nature of the pandemic, could cause the Company’s future operating results to be different from our current expectations, particularly if the impact of the pandemic worsens. Furthermore, the guidance presented below is based on current foreign currency exchange rates, current interest rates, and the Company's expected non-GAAP effective tax rate of approximately 24.0% for the year ending December 31, 2021. The guidance is based upon the Company's estimated number of weighted average diluted shares outstanding, and does not take into account any share repurchases beyond the fourth quarter of 2020. The Company's full year 2021 guidance is outlined below:

    FY 2021
    Low   High
         
    (in millions, except per share data)
Revenue   $ 5,125.0   $ 5,325.0
GAAP Net Income     207.9     234.5
GAAP Diluted EPS     1.95     2.20
Adjusted EBITDA     745.0     785.0
Adjusted Diluted EPS   $ 4.09   $ 4.38

Webcast and Conference Call Details

Syneos Health will host a conference call at 8:00 a.m. ET on February 18, 2021, to discuss its fourth quarter and full year 2020 financial results. The live webcast will be available in listen-only mode in the Events section of the Company's Investor Relations website at investor.syneoshealth.com. To participate via phone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call.

An archived replay of the conference call is expected to be available online at investor.syneoshealth.com after 1:00 p.m. ET on February 18, 2021.

About Syneos Health

Syneos Health® (Nasdaq:SYNH) is the only fully integrated biopharmaceutical solutions organization. The Company, including a Contract Research Organization (CRO) and Contract Commercial Organization (CCO), is purpose-built to accelerate customer performance to address modern market realities. Syneos Health brings together approximately 25,000 clinical and commercial minds with the ability to support customers in more than 110 countries. The Company shares insights, uses the latest technologies, and applies advanced business practices to speed its customers’ delivery of important therapies to patients. To learn more about how Syneos Health is Shortening the distance from lab to life® visit syneoshealth.com.

Forward-Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including the future impact of the COVID-19 pandemic on our business, financial results and financial condition, anticipated financial results for the full year 2021, our foundation for growth in 2021, and plans for cost savings and capital deployment. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to: risks associated with the COVID-19 pandemic; the Company's ability to maintain or generate new business awards; the Company's backlog not being indicative of future revenues and its ability to realize the anticipated future revenue reflected in its backlog; fluctuations in the Company's operating results and effective income tax rate; the Company's ability to adequately price its contracts and not overrun cost estimates; risks related to the Company's information systems and cybersecurity; changes and costs of compliance with regulations related to data privacy; any adverse effects from the Company's customer or therapeutic area concentration; general and international economic, political, and other risks, including currency and stock market fluctuations and the uncertain economic environment; risks related to the United Kingdom’s withdrawal from the European Union; risks related to the Company's transfer pricing policies; the Company's ability to increase its market share, grow its business, and execute its growth strategies; failure to perform services in accordance with contractual requirements, regulatory requirements and ethical considerations; risks associated with the Company's early phase clinical facilities; insurance risk; reliance on key personnel; principal investigators and patients; risks of liability resulting from harm to patients; success of investments in the Company's customers’ business or drugs; foreign currency exchange rate fluctuations; risks related to the Company's income tax expense and tax reform; risks relating to the Company's intellectual property; risks associated with the Company's acquisition strategy; the degree to which our relationships with existing or potential customers may adversely impact the degree to which other customers or potential customers use our services as a result of competition; failure to realize the full value of goodwill and intangible assets; restructuring risk; potential violations of anti-corruption and anti-bribery laws; risks related to the Company's dependence on third parties; liability related to our embedded and functional outsourcing services; ability to utilize our net operating loss carryforwards and other tax attributes; downgrades of the Company's credit ratings; competition in the biopharmaceutical services industry; changes in outsourcing trends; regulatory risks; trends in the Company's customers’ businesses; the Company's ability to keep pace with rapid technological change; risks related to the Company's indebtedness; risks related to the ownership of our common stock; and other risk factors set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as updated by the Company’s other SEC filings, copies of which are available free of charge on the Company's website at investor.syneoshealth.com. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), this press release contains certain non-GAAP financial measures, including adjusted revenue, segment adjusted revenue, adjusted net income (including adjusted diluted earnings per share), EBITDA, adjusted EBITDA, and non-GAAP effective income tax rate. We also present adjusted revenue growth in constant currency. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period's foreign currency exchange rates measured against the comparative period's adjusted revenues. Constant currency segment revenue growth is defined as revenue for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period’s adjusted or GAAP revenues, as applicable.

A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s financial performance that excludes or includes amounts from the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets, or statements of cash flows of the Company.

The Company defines adjusted revenue and segment adjusted revenue as GAAP revenue and segment revenue, respectively, adjusted to include revenue eliminated as a result of purchase accounting.

The Company defines adjusted net income (including adjusted diluted earnings per share) as net income (including diluted earnings per share) excluding acquisition-related deferred revenue adjustments; acquisition-related amortization; restructuring and other costs; transaction and integration-related expenses; share-based compensation expense; gain or loss on extinguishment of debt; other income (expense), net; the income tax effect of the above adjustments; and the impact of the base erosion and anti-abuse tax.

EBITDA represents earnings before interest, taxes, depreciation and amortization. The Company defines adjusted EBITDA as EBITDA, further adjusted to exclude expenses and transactions that the Company believes are not representative of its core operations, namely: acquisition-related deferred revenue adjustments; restructuring and other costs; transaction and integration-related expenses; share-based compensation expense; other income (expense), net; and gain or loss on extinguishment of debt. The Company presents EBITDA and adjusted EBITDA because it believes they are useful metrics for investors as they are commonly used by investors, analysts and debt holders to measure the Company's ability to fund capital expenditures and meet working capital requirements.

Each of the non-GAAP measures noted above are used by management and the Board to evaluate the Company's core operating results because they exclude certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the core operations of the business. Adjusted net income (including adjusted diluted earnings per share) and adjusted EBITDA are used by management and the Board to assess the performance of the Company's business.

Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. Also, other companies might calculate these measures differently. Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures included in this press release and the accompanying tables.

Investor Relations Contact:   Press/Media Contact:
     
Ronnie Speight   Gary Gatyas
Senior Vice President, Investor Relations   Executive Director, External Communications
Phone: +1 919 745 2745   Phone: +1 908 763 3428
Email: [email protected]   Email: [email protected]


Syneos Health, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)

 
    Three Months Ended December 31,
  Year Ended December 31,
    2020    2019
  2020    2019
                         
       
Revenue   $ 1,140,019     $ 1,212,954     $ 4,415,777     $ 4,675,815  
                                 
Costs and operating expenses:                                
Direct costs (exclusive of depreciation and amortization)     848,008       927,900       3,398,142       3,645,905  
Selling, general, and administrative expenses     108,442       112,421       442,484       446,281  
Restructuring and other costs     6,000       2,384       29,414       42,135  
Transaction and integration-related expenses     12,342       26,509       30,242       61,275  
Depreciation     18,355       18,869       70,185       76,532  
Amortization     36,421       41,510       152,167       165,933  
Total operating expenses     1,029,568       1,129,593       4,122,634       4,438,061  
Income from operations     110,451       83,361       293,143       237,754  
                                 
Total other expense (income), net:                                
Interest expense, net     22,754       26,839       90,880       122,278  
Loss (gain) on extinguishment of debt     1,235       (14,750 )     1,581       (10,395 )
Other (income) expense, net     (403 )     53,527       (2,976 )     24,162  
Total other expense, net     23,586       65,616       89,485       136,045  
Income before provision for income taxes     86,865       17,745       203,658       101,709  
Income tax (benefit) expense     (5,021 )     (73,305 )     10,871       (29,549 )
Net income   $ 91,886     $ 91,050     $ 192,787     $ 131,258  
                                 
Earnings per share attributable to common shareholders:                                
Basic   $ 0.88     $ 0.88     $ 1.85     $ 1.27  
Diluted   $ 0.87     $ 0.86     $ 1.83     $ 1.25  
Weighted average common shares outstanding:                                
Basic     103,932       103,813       104,168       103,618  
Diluted     105,410       105,378       105,465       105,005  



Syneos Health, Inc. and Subsidiaries

Consolidated Balance Sheets
(in thousands, except par value)

 
    December 31, 2020     December 31, 2019  
ASSETS                
Current assets:                
Cash, cash equivalents, and restricted cash   $ 272,173     $ 163,689  
Accounts receivable and unbilled services, net     1,344,781       1,303,641  
Prepaid expenses and other current assets     121,058       94,834  
Total current assets     1,738,012       1,562,164  
Property and equipment, net     216,200       203,926  
Operating lease right-of-use assets     223,285       218,531  
Goodwill     4,776,178       4,350,380  
Intangible assets, net     933,525       973,081  
Deferred income tax assets     35,059       37,012  
Other long-term assets     141,047       108,701  
Total assets   $ 8,063,306     $ 7,453,795  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 113,684     $ 136,686  
Accrued expenses     611,042       568,911  
Deferred revenue     793,068       696,907  
Current portion of operating lease obligations     42,082       38,055  
Current portion of finance lease obligations     17,455       17,777  
Current portion of long-term debt           58,125  
Total current liabilities     1,577,331       1,516,461  
Long-term debt     2,902,054       2,550,395  
Operating lease long-term obligations     221,760       218,343  
Finance lease long-term obligations     31,522       36,914  
Deferred income tax liabilities     20,216       11,101  
Other long-term liabilities     68,311       90,927  
Total liabilities     4,821,194       4,424,141  
                 
Commitments and contingencies                
                 
Shareholders' equity:                
Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding at December 31, 2020 and 2019            
Common stock, $0.01 par value; 600,000 shares authorized, 103,935 and 103,866 shares issued and outstanding at December 31, 2020 and 2019, respectively     1,039       1,039  
Additional paid-in capital     3,461,747       3,441,471  
Accumulated other comprehensive loss, net of taxes     (40,801 )     (71,593 )
Accumulated deficit     (179,873 )     (341,263 )
Total shareholders' equity     3,242,112       3,029,654  
Total liabilities and shareholders' equity   $ 8,063,306     $ 7,453,795  



Syneos Health, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
(in thousands)

 
    Year Ended December 31,  
    2020     2019  
Cash flows from operating activities:                
Net income   $ 192,787     $ 131,258  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     222,352       242,465  
Share-based compensation     58,491       55,193  
Provision for doubtful accounts     695       1,897  
Benefit from deferred income taxes     (3,839 )     (40,069 )
Foreign currency transaction gains     4,148       11,166  
Fair value adjustment of contingent obligations     (3,664 )     17,260  
Gain on sale of business     (7,133 )      
Loss (gain) on extinguishment of debt     1,581       (10,395 )
Other non-cash items     1,765       2,766  
Changes in operating assets and liabilities, net of effect of business combinations:                
Accounts receivable, unbilled services, and deferred revenue     16,316       (120,389 )
Accounts payable and accrued expenses     (2,561 )     28,316  
Other assets and liabilities     (55,445 )     (987 )
Net cash provided by operating activities     425,493       318,481  
Cash flows from investing activities:                
Payments associated with business combinations, net of cash acquired     (456,455 )     (712 )
Proceeds from sale of business     17,970        
Purchases of property and equipment     (50,010 )     (63,973 )
Investments in unconsolidated affiliates     (15,589 )     (16,976 )
Net cash used in investing activities     (504,084 )     (81,661 )
Cash flows from financing activities:                
Proceeds from issuance of long-term debt, net of discount     600,000       582,000  
Payments of debt financing costs     (9,570 )     (2,636 )
Repayments of long-term debt     (327,294 )     (437,936 )
Proceeds from accounts receivable financing agreement     31,600       127,815  
Repayments of accounts receivable financing agreement     (6,600 )     (22,400 )
Proceeds from revolving line of credit     300,000        
Repayments of revolving line of credit     (300,000 )      
Redemption of Senior Notes and associated breakage fees           (418,112 )
Payments of contingent consideration related to business combinations     (26,634 )     (178 )
Payments of finance leases     (16,434 )     (14,493 )
Payments for repurchases of common stock     (70,151 )     (56,716 )
Proceeds from exercises of stock options     24,568       40,322  
Payments related to tax withholdings for share-based compensation     (21,220 )     (13,135 )
Net cash provided by (used in) financing activities     178,265       (215,469 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     8,810       (13,594 )
Net change in cash, cash equivalents, and restricted cash     108,484       7,757  
Cash, cash equivalents, and restricted cash - beginning of period     163,689       155,932  
Cash, cash equivalents, and restricted cash - end of period   $ 272,173     $ 163,689  



Syneos Health, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures
(in thousands)
(unaudited)

 
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2020     2019     2020     2019  
Adjusted revenue:                                
Revenue, as reported   $ 1,140,019     $ 1,212,954     $ 4,415,777     $ 4,675,815  
Acquisition-related deferred revenue adjustment (a)           1,594             6,375  
Adjusted revenue   $ 1,140,019     $ 1,214,548     $ 4,415,777     $ 4,682,190  
                                 
Segment adjusted revenue:                                
Clinical Solutions revenue, as reported   $ 855,568     $ 899,289     $ 3,306,736     $ 3,421,596  
Acquisition-related deferred revenue adjustment (a)           1,594             6,375  
Clinical Solutions adjusted revenue   $ 855,568     $ 900,883     $ 3,306,736     $ 3,427,971  
                                 
Commercial Solutions revenue, as reported   $ 284,451     $ 313,665     $ 1,109,041     $ 1,254,219  
Acquisition-related deferred revenue adjustment (a)                        
Commercial Solutions adjusted revenue   $ 284,451     $ 313,665     $ 1,109,041     $ 1,254,219  


    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2020     2019     2020     2019  
EBITDA and adjusted EBITDA:                                
Net income, as reported   $ 91,886     $ 91,050     $ 192,787     $ 131,258  
Interest expense, net     22,754       26,839       90,880       122,278  
Income tax (benefit) expense     (5,021 )     (73,305 )     10,871       (29,549 )
Depreciation     18,355       18,869       70,185       76,532  
Amortization (b)     36,421       41,510       152,167       165,933  
EBITDA     164,395       104,963       516,890       466,452  
Acquisition-related deferred revenue adjustment (a)           1,594             6,375  
Restructuring and other costs (c)     6,000       2,384       29,414       42,135  
Transaction and integration-related expenses (d)     12,342       26,509       30,242       61,275  
Share-based compensation (e)     11,225       14,329       58,491       55,193  
Other (income) expense, net (f)     (403 )     53,527       (2,976 )     24,162  
Loss (gain) on extinguishment of debt (g)     1,235       (14,750 )     1,581       (10,395 )
Adjusted EBITDA   $ 194,794     $ 188,556     $ 633,642     $ 645,197  



Syneos Health, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share data)
(unaudited)

 
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2020     2019     2020     2019  
Adjusted net income:                                
Net income, as reported   $ 91,886     $ 91,050     $ 192,787     $ 131,258  
Acquisition-related deferred revenue adjustment (a)           1,594             6,375  
Amortization (b)     36,421       41,510       152,167       165,933  
Restructuring and other costs (c)     6,000       2,384       29,414       42,135  
Transaction and integration-related expenses (d)     12,342       26,509       30,242       61,275  
Share-based compensation (e)     11,225       14,329       58,491       55,193  
Other (income) expense, net (f)     (403 )     53,527       (2,976 )     24,162  
Loss (gain) on extinguishment of debt (g)     1,235       (14,750 )     1,581       (10,395 )
Income tax adjustment to normalized rate (h)     (41,905 )     (85,057 )     (102,547 )     (121,627 )
Impact of base erosion and anti-abuse tax (i)           (22,531 )           (15,054 )
Adjusted net income   $ 116,801     $ 108,565     $ 359,159     $ 339,255  
                                 
Diluted weighted average common shares outstanding     105,410       105,378       105,465       105,005  
                                 
Adjusted diluted earnings per share   $ 1.11     $ 1.03     $ 3.41     $ 3.23  
  1. Represents non-cash adjustments resulting from the revaluation of deferred revenue and the subsequent elimination of revenue in purchase accounting in connection with business combinations.

  2. Represents the amortization of intangible assets associated with acquired backlog, customer relationships, trade names and trademarks, and intellectual property.

  3. Restructuring and other costs consist primarily of severance costs associated with a reduction/optimization of our workforce in line with our expectations of future business operations and termination costs in connection with abandonment and closure of redundant facilities and other lease-related charges.

  4. Represents fees associated with business combinations, stock repurchases and secondary stock offerings, debt placement and refinancings, and other corporate transactions costs.

  5. Represents non-cash share-based compensation expense related to awards granted under equity incentive plans.

  6. Other expense (income) is comprised primarily of foreign currency exchange gains and losses.

  7. Loss (gain) on extinguishment of debt is associated with debt prepayments and refinancing activities.

  8. Represents the income tax effect of the non-GAAP adjustments made to arrive at adjusted net income using an estimated effective tax rate of approximately 24.0% for the three and twelve months ended December 31, 2020 and 24.0% for the three and twelve months ended December 31, 2019. These rates have been adjusted to exclude tax impacts related to valuation allowances recorded against deferred tax assets.

  9. Represents the net income tax expense recorded as a result of the base erosion and anti-abuse tax.



Syneos Health, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP
Full Year 2021 Guidance
(in millions, except per share data)
(Unaudited)

 
    Low     High    
EBITDA and Adjusted EBITDA:                  
GAAP net income   $ 207.9     $ 234.5    
Adjustments (a):                  
Interest expense, net     94.0       94.0    
Income tax expense     89.1       100.5    
Depreciation     76.0       76.0    
Amortization     157.0       157.0    
EBITDA     624.0       662.0    
Restructuring and other costs     26.0       27.0    
Transaction expenses     28.0       28.0    
Share-based compensation expense     67.0       68.0    
Adjusted EBITDA   $ 745.0     $ 785.0    


    Adjusted
Net Income
    Adjusted Diluted
Earnings Per Share
   
    Low     High     Low     High    
Adjusted net income and adjusted diluted earnings
per share:
                                 
GAAP net income and diluted earnings per share   $ 207.9     $ 234.5     $ 1.95     $ 2.20    
Adjustments:                                  
Amortization (a)     157.0       157.0       1.47       1.47    
Restructuring and other costs (a)     26.0       27.0       0.24       0.25    
Transaction expenses (a)     28.0       28.0       0.26       0.26    
Share-based compensation expense (a)     67.0       68.0       0.63       0.64    
Income tax effect of above adjustments (b)     (49.5 )     (47.1 )     (0.46 )     (0.45 )  
Adjusted net income and adjusted diluted earnings
per share (c)(d)
  $ 436.4     $ 467.4     $ 4.09     $ 4.38    
  1. Amounts are estimates with an estimated range of +/- 5% and are presented gross without the benefit of associated income tax deduction.

  2. Income tax expense is calculated and the adjustments are tax-affected at an approximate effective rate of 24.0%, which represents the Company's estimated full year non-GAAP effective tax rate.

  3. Guidance for Adjusted Diluted EPS incorporates interest expense based upon an assumed one-month LIBOR of 0.6% through the end of 2021.

  4. Guidance for Adjusted Diluted EPS is based on an expectation of a fully diluted weighted average share count for the year ending December 31, 2021 of approximately 106.7 million shares, which will vary by quarter.

Primary Logo

Source: Syneos Health, Inc.

Interested in Syneos Health?