PPD reports 30% sequential increase in gross authorizations for first-quarter 2010

PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the first quarter ended March 31, 2010.

“We are pleased to deliver a 30 percent sequential increase in gross authorizations for the first quarter of 2010”

PPD recorded net revenue of $346.8 million for the first quarter of 2010, compared to $364.4 million for the first quarter of 2009. First quarter 2010 income from operations was $26.1 million, compared to $66.6 million for the same period in 2009. Income from operations for the first quarter of 2010 was lower than the same period last year due primarily to lower net revenue, operating and integration expenses related to PPD's recent acquisitions, an increase in research and development expenditures and other costs related to the company's compound partnering business, and an increase in business development expenses. First quarter 2010 diluted earnings per share were $0.14, compared to $0.38 for the same period last year.

Segment Performance

Development segment net revenue for the first quarter of 2010 was $323.8 million, compared to $335.4 million for the first quarter of 2009. Development segment income from operations for the first quarter of 2010 was $36.8 million, compared to $62.6 million for the first quarter of 2009.

Discovery sciences segment net revenue for the first quarter of 2010 was $0.3 million, compared to $5.2 million for the first quarter of 2009. First quarter 2009 net revenue for this segment included two milestone payments from Janssen-Cilag totaling $5.0 million triggered by the first two national regulatory approvals of Priligy^TM. Discovery sciences segment loss from operations for the first quarter of 2010 was $10.7 million, compared to income from operations of $4.0 million for the same period in 2009. The loss for the first quarter of 2010 was due primarily to lower net revenue as noted above, an increase in research and development expenditures from the two compounds PPD in-licensed from Janssen Pharmaceutica N.V. in the fourth quarter of 2009, and an increase in general and administrative expenses related to the previously announced spin-off of the company's compound partnering business.

Other Financial Information

Gross authorizations for the first quarter of 2010 totaled $607.1 million. Backlog at March 31, 2010, was $3.1 billion. Contract cancellations and adjustments for the quarter were $127.3 million.

Year-to-date days sales outstanding at March 31, 2010, were 24.6 days, compared to 31.3 days at December 31, 2009. Cash flow from operations for the first quarter of 2010 was $62.0 million. At March 31, 2010, PPD had $674.9 million in cash and investments. The effective tax rate for continuing operations in the first quarter of 2010 was 32.0 percent.

"We are pleased to deliver a 30 percent sequential increase in gross authorizations for the first quarter of 2010," said David Grange, chief executive officer of PPD. "During the first quarter, request for proposal activity improved, cancellations and adjustments decreased to a normal level, and we continued to make strategic investments to strengthen our business models and global infrastructure. Our leadership team is fully-aligned, and we are committed to pursuing our strategic initiatives to create long-term value for our shareholders."

"Our first quarter 2010 accomplishments confirm the strength and value of our global organization and reaffirm our confidence in the market for CRO services," said Fred Eshelman, executive chairman of PPD. "We continued to advance our global laboratory strategy in the quarter with the opening of a cGMP laboratory in Ireland and the launch of our new Vaccines and Biologics Center of Excellence in Pennsylvania, and the planned spin-off of our compound partnering business into Furiex Pharmaceuticals remains on track for completion in mid-2010."