Canadian life science company MDS, the parent company of King of Prussia, Pa.-based MDS Pharma Services, released fourth quarter results reflecting another disappointing quarter for its embattled contract research organization (CRO) division. Net revenues for MDS Pharma were $112 million, down 9% from the same quarter last year.
These financials come one month after a major shareholder pressured company leaders to sell off several business units including MDS Pharma in order to increase shareholder value. Earlier this month, MDS lowered its financial guidance for the third time this year.
“In Q4, we saw growth in early stage phase I and bioanalytical. This growth, however, was offset by delays in phase II through phase IV as customers continue to reprioritize their pipelines during these uncertain times,” said MDS president and CEO Stephen DeFalco in Wednesday’s investor conference call.
MDS also expects a non-cash write-down of $270 million to $370 million for its CRO division as a result of “the decline in overall stock market valuation of the contract-research sector, the uncertain economic outlook and the delay in profit recovery at MDS Pharma Services,” according to a company release. The final amount of this write-down will be released in January with the company’s audited financial statements.
The CRO did see an EBITDA gain in the fourth quarter from $1 million in the fourth quarter of 2007 to $8 million in the fourth quarter of 2008, but this gain was largely the result of major restructuring efforts started this summer, including the laying off of more than 150 MDS Pharma employees.