PharmaNet Earnings Plummet in Q4
In what could be PharmaNet Development Group’s last earnings release as a public company, the contract research organization (CRO) reported its 2008 financial information late last night without an investor conference call.
The company’s fourth quarter 2008 earnings dropped significantly year-over-year with fourth quarter net income of $1.6 million, or $0.08 per diluted share, compared with net income of $3.8 million, or $0.20 per diluted share, in the fourth quarter 2007.
A drop in PharmaNet’s early-stage business resulted in a decrease in direct revenues for both the fourth quarter and the full year, according to a company statement. Direct revenue in the fourth quarter decreased 7.9% to $85 million, compared with $92.3 million in the same period 2007. Revenue for the full year 2008, decreased 1.3% to $357.7 million, compared to $362.5 million in 2007.
Operating margin for the full year 2008 was negative 57.7% compared to 5.9% in 2007, primarily due to a $210.6 million non-cash impairment charge related to goodwill and indefinite-lived assets recorded in the third quarter 2008, which resulted from the decline in the company's market capitalization.
PharmaNet warned that all financial information released last week is subject to recording a fourth quarter non-cash impairment charge related to goodwill and indefinite-lived assets as a result of the decline in the company's market capitalization during the fourth quarter 2008. The CRO is working with its valuation consultant and is in the process of completing its annual goodwill, indefinite-lived and long-lived asset impairment assessments.
Earlier this month, PharmaNet signed a definitive merger agreement with private equity firm JLL Partners, a $250-million deal that will make the now public CRO a private company.