RX: IMS Health Results Not What the Doctor Prescribed
Mid Cap Watch List (Track at Marketocracy) and Large Cap Watch List (Track at Marketocracy) member IMS Health (RX) Delivered 14 Percent Revenue and 15 Percent Operating Income Growth in First Quarter:
IMS Health (NYSE: RX – News), the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries, today announced first-quarter 2007 revenue of $510.3 million, up 14 percent or 11 percent on a constant- dollar basis, compared with revenue of $446.2 million for the first quarter of 2006.
First-quarter 2007 diluted earnings per share on a GAAP basis was $0.43, compared with $0.56 in the prior-year quarter. Earnings per share for the first quarter of 2007 and 2006 included tax benefits and foreign exchange hedge gains and losses. When adjusted for these items, on a non-GAAP basis, earnings per share for this year’s first quarter would have grown $0.04 year over year to $0.35.
Consensus estimates called for $0.34 on $491 million in sales, both of which were nicely exceeded. However, the guidance issued on the conference call did not follow suit:
Constant dollar revenue growth of 9% to 11%, constant dollar operating income growth of 9% to 11%, full year GAAP EPS of $1.56 to $1.60, and free cash flow of $290 million to $325 million. With this strong Q1 performance, we continue to be comfortable with our full year guidance.
Confirming rather than raising guidance of 9% to 11% revenue growth when the first quarter had 14% (and beat estimates by nearly 4%) indicates things may slow down later in the year. And with consensus at $1.59 (the high end of EPS guidance) investors were probably hoping for an indication that the penny surprise would be followed by similar ones later in the year.
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