ICON Reports Fourth Quarter and Full Year 2022 Results

Highlights

Net business wins in the quarter of $2,350 million; a net book to bill of 1.20. Full year net business wins of $9,450 million; a net book to bill of 1.22.

Closing backlog in the quarter of $20.7 billion, an increase of 2.4% on quarter three 2022 or an increase of 8.7% on quarter four 2021.

Quarter four revenue of $1,962 million, representing an increase of 4.3% on quarter four 2021 adjusted revenue and 7.6% on a constant currency organic basis. Full year revenue of $7,741.4 million, representing an increase of 41.2% on full year 2021 revenue or 45.4% on a constant currency basis.

Record quarter four adjusted EBITDA1 of $405 million or 20.6% of revenue, an increase of 21.8% on quarter four 2021. Full year adjusted EBITDA of $1,479.5 million or 19.1% of revenue, an increase of 52.5% on full year 2021.

GAAP net income attributable to the Group for quarter four of $117.4 million or $1.42 per diluted share. Full year GAAP net income attributable to the Group of $505.3 million or $6.13 per diluted share.

Adjusted net income1 attributable to the Group for quarter four of $257.7 million or $3.13 per diluted share, an increase of 19% on prior year quarter four. Full year adjusted net income attributable to the Group of $968.7 million or $11.75 per diluted share, an increase of 21.8% on full year 2021.

$200 million repayment made on Term Loan B debt during quarter four, bringing full year repayments to $800 million. Net debt balance of $4.4 billion with net debt to adjusted EBITDA ratio of 2.9x. Hedging solution finalized resulting in proportion of fixed debt amounting to circa 60% of total debt, providing greater certainty on interest expenses going forward.

Full year 2023 revenue guidance reaffirmed in the range of $7,940 – $8,340 million, representing a year over year increase of 2.6% to 7.7%, and full year 2023 adjusted earnings per share1 guidance in the range of $12.40 – $13.05, representing a year over year increase of 5.5% to 11.1%. Adjusted earnings per share to exclude amortization, stock compensation, foreign exchange, restructuring and transaction-related / integration-related adjustments.

DUBLIN, Ireland–(BUSINESS WIRE)–ICON plc (NASDAQ: ICLR), a world-leading healthcare intelligence and clinical research organization, today reported its financial results for the fourth quarter and year ended December 31, 2022.

CEO, Dr. Steve Cutler commented, “ICON continued its positive momentum in the fourth quarter of 2022, with 7.6% constant currency revenue growth year over year, and delivering on our full-year financial outlook in a dynamic market environment. We saw solid demand across our portfolio of services, resulting in backlog growth of 8.7% on a year over year basis. The combination of strong underlying operational performance and focused cost management delivered outstanding adjusted EBITDA1 growth of 22% and adjusted earnings per share1 growth of 19% on a year-over-year basis in quarter four.

As we turn to 2023, demand for our services has continued as we remain focused on meeting the evolving needs of our customers and further invest in our comprehensive offering to deliver enhanced outcomes in clinical development. As such, we are reaffirming our previously announced financial outlook for the full year 2023, with revenue guidance in the range of $7,940 – $8,340 million and adjusted earnings per share1 guidance in the range of $12.40 – $13.05.”

Fourth Quarter 2022 Results

Gross business wins in the quarter were $2,705 million and cancellations were $355 million. This resulted in net business wins of $2,350 million and a book to bill of 1.20.

Revenue for quarter four was $1,962 million. This represents an increase of 4.3% on prior year adjusted revenue or 7.6% on a constant currency organic basis.

GAAP net income attributable to the Group was $117.4 million resulting in $1.42 diluted earnings per share in quarter four 2022 compared to $0.92 diluted earnings per share in quarter four 2021. Adjusted net income1 attributable to the Group for the quarter was $257.7 million resulting in an adjusted diluted earnings per share1 of $3.13 compared to $2.63 per share in quarter four 2021.

Adjusted EBITDA1 for quarter four was $405 million or 20.6% of revenue, a year on year increase of 21.8%.

Full Year 2022 Results

Gross business wins were $10,991 million and cancellations were $1,542 million. This resulted in net business wins of $9,450 million and a book to bill of 1.22.

Full year revenue was $7,741.4 million. This represents an increase of 41.2% on prior year revenue or 45.4% on a constant currency basis.

GAAP net income attributable to the Group was $505.3 million resulting in GAAP diluted earnings per share of $6.13 for the full year 2022 compared to $2.25 GAAP diluted earnings per share for the full year 2021. Adjusted net income1 attributable to the Group was $968.7 million resulting in an adjusted diluted earnings per share1 of $11.75 compared to $9.65 per share for the equivalent prior year period.

Adjusted EBITDA1 was $1,479.5 million or 19.1% of revenue, a year on year increase of 52.5%.

Cash generated from operating activities for the year was $563.3 million. During the year, $142.2 million was spent on capital expenditure. At December 31, 2022, the Group had cash and cash equivalents of $288.8 million, compared to cash and cash equivalents of $609.2 million at September 30, 2022 and $752.2 million at December 31, 2021. During the year, $800 million of Term Loan B payments were made resulting in a net indebtedness balance of $4.4 billion at December 31, 2022.

Other Information

Colin Shannon resigned from the Board of Directors in December 2022, having served as a non-executive director since the completion of the PRA Health Sciences transaction in July 2021. Ciaran Murray, Chairman of the Board, commented, “I would like to thank Colin for his service to ICON, and his support and contribution to the integration of ICON and PRA.”

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income attributable to the Group and adjusted diluted earnings per share attributable to the Group. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share exclude amortization, stock compensation, foreign exchange gains and losses, restructuring and transaction-related / integration-related adjustments. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, ICON believes certain non-GAAP information is useful to investors for historical comparison purposes.

ICON will hold a conference call on February 23, 2023 at 08:00 EST [13:00 Ireland & UK]. This call and linked slide presentation can be accessed live from our website at http://investor.iconplc.com. A recording will also be available on the website for 90 days following the call. In addition, a calendar of company events, including upcoming conference presentations, is available on our website, under “Investors”. This calendar will be updated regularly.

This press release contains forward-looking statements, including statements about our financial guidance. These statements are based on management’s current expectations and information currently available, including current economic and industry conditions. These statements are not guarantees of future performance or actual results, and actual results, developments and business decisions may differ from those stated in this press release. The forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements, including, but not limited to, the ability to enter into new contracts, maintain client relationships, manage the opening of new offices and offering of new services, the integration of new business mergers and acquisitions, the impact of COVID-19 on our business, as well as other economic and global market conditions and other risks and uncertainties detailed from time to time in SEC reports filed by ICON, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not place undue reliance on these forward-looking statements when making investment decisions. The word “expected” and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by ICON, including its Form 20-F, F-1, F-4, S-8, F-3 and certain other reports, which are available on the SEC’s website at http://www.sec.gov.

ICON plc is a world-leading healthcare intelligence and clinical research organization. From molecule to medicine, we advance clinical research providing outsourced services to pharmaceutical, biotechnology, medical device and government and public health organizations. We develop new innovations, drive emerging therapies forward and improve patient lives. With headquarters in Dublin, Ireland, ICON employed approximately 41,100 employees in 111 locations in 53 countries as at December 31, 2022. For further information about ICON, visit: www.iconplc.com.

1

Refer to “Other Information” for a discussion of the Company’s use of non-GAAP financial measures, and to “Reconciliation of Non-GAAP Measures” for reconciliations of non-GAAP results to applicable GAAP results. Our full-year 2023 guidance adjusted earnings per share measures are provided on a non-GAAP basis because the Company is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

Source: ICON plc

ICON/ICLR-F

 

 

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2022 AND DECEMBER 31, 2021

(UNAUDITED)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2022

December 31,

2021

 

December 31,

2022

December 31,

2021

 

(in thousands except share and per share data)

 

 

 

 

 

 

Revenue

$

1,962,002

 

$

1,885,121

 

 

$

7,741,386

 

$

5,480,826

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Direct costs (excluding depreciation and amortization)

 

1,380,679

 

 

1,357,303

 

 

 

5,527,045

 

 

3,972,612

 

Selling, general and administrative expense

 

226,753

 

 

202,716

 

 

 

778,753

 

 

585,330

 

Depreciation and amortization

 

142,228

 

 

139,670

 

 

 

569,513

 

 

314,987

 

Transaction and integration-related expenses

 

10,725

 

 

15,954

 

 

 

39,695

 

 

198,263

 

Restructuring

 

(1,747

)

 

24,943

 

 

 

31,143

 

 

31,105

 

 

 

 

 

 

 

Total costs and expenses

 

1,758,638

 

 

1,740,586

 

 

 

6,946,149

 

 

5,102,297

 

 

 

 

 

 

 

Income from operations

 

203,364

 

 

144,535

 

 

 

795,237

 

 

378,529

 

Interest income

 

618

 

 

78

 

 

 

2,345

 

 

574

 

Interest expense

 

(75,185

)

 

(52,839

)

 

 

(229,731

)

 

(182,423

)

 

 

 

 

 

 

Income before provision for income taxes

 

128,797

 

 

91,774

 

 

 

567,851

 

 

196,680

 

Provision for income taxes

 

(10,859

)

 

(14,616

)

 

 

(59,411

)

 

(41,334

)

 

 

 

 

 

 

Income before share of earnings from equity method investments

 

117,938

 

 

77,158

 

 

 

508,440

 

 

155,346

 

Share of equity method investments

 

(493

)

 

(690

)

 

 

(3,136

)

 

(2,161

)

 

 

 

 

 

 

Net income attributable to the Group

$

117,445

 

$

76,468

 

 

$

505,304

 

$

153,185

 

 

 

 

 

 

 

Net income per Ordinary Share attributable to the Group:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.44

 

$

0.94

 

 

$

6.20

 

$

2.28

 

Diluted

$

1.42

 

$

0.92

 

 

$

6.13

 

$

2.25

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

81,683,430

 

 

81,488,189

 

 

 

81,532,320

 

 

67,110,186

 

Diluted

 

82,452,097

 

 

82,827,674

 

 

 

82,468,363

 

 

68,068,311

 

 

 

ICON plc

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 2022 AND DECEMBER 31, 2021

UNAUDITED

 

 

December 31,

2022

December 31,

2021

ASSETS

(in thousands)

Current Assets:

 

 

Cash and cash equivalents

$

288,768

 

$

752,213

 

Available for sale investments

 

1,713

 

 

1,712

 

Accounts receivable, net of allowance for credit losses

 

1,731,388

 

 

1,342,770

 

Unbilled revenue

 

957,655

 

 

623,121

 

Other receivables

 

63,658

 

 

56,760

 

Prepayments and other current assets

 

137,094

 

 

114,323

 

Income taxes receivable

 

48,790

 

 

50,299

 

Total current assets

 

3,229,066

 

 

2,941,198

 

 

 

 

Non-current Assets:

 

 

Property, plant and equipment, net

 

350,320

 

 

336,444

 

Goodwill

 

8,971,670

 

 

9,037,931

 

Intangible assets

 

4,278,659

 

 

4,710,843

 

Operating right-of-use assets

 

153,832

 

 

198,123

 

Other receivables

 

70,790

 

 

70,557

 

Income taxes receivable

 

21,380

 

 

18,637

 

Deferred tax asset

 

76,930

 

 

48,392

 

Equity method investments

 

 

 

2,373

 

Investments in equity- long term

 

32,631

 

 

22,592

 

Total Assets

$

17,185,278

 

$

17,387,090

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current Liabilities:

 

 

Accounts payable

$

81,194

 

$

90,764

 

Unearned revenue

 

1,507,449

 

 

1,323,961

 

Other liabilities

 

1,005,025

 

 

949,629

 

Income taxes payable

 

41,783

 

 

59,433

 

Current bank credit lines and loan facilities

 

55,150

 

 

55,150

 

Total current liabilities

 

2,690,601

 

 

2,478,937

 

Non-current Liabilities:

 

 

Non-current bank credit lines and loan facilities

 

4,599,037

 

 

5,381,162

 

Lease liabilities

 

131,644

 

 

159,483

 

Non-current other liabilities

 

38,260

 

 

42,596

 

Non-current income taxes payable

 

239,188

 

 

172,109

 

Deferred tax liability

 

988,585

 

 

1,085,976

 

Total Liabilities

 

8,687,315

 

 

9,320,263

 

 

 

 

Shareholders’ Equity:

 

 

Ordinary shares, par value 6 euro cents per share; 100,000,000 shares authorized,

 

 

81,723,555 shares issued and outstanding at December 31, 2022 and

81,554,683 shares issued and outstanding at December 31, 2021.

 

6,649

 

 

6,640

 

Additional paid‑in capital

 

6,840,306

 

 

6,733,910

 

Other undenominated capital

 

1,162

 

 

1,134

 

Accumulated other comprehensive income

 

(171,538

)

 

(90,937

)

Retained earnings

 

1,821,384

 

 

1,416,080

 

Total Shareholders’ Equity

 

8,497,963

 

 

8,066,827

 

Total Liabilities and Equity

$

17,185,278

 

$

17,387,090

 

 

 

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2022 AND DECEMBER 31, 2021
(UNAUDITED)

 

 

Twelve Months Ended

 

December 31,

2022

 

December 31,

2021

 

(in thousands)

Cash flows from operating activities:

 

 

 

Net income

$

505,304

 

 

$

153,185

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization expense

 

569,513

 

 

 

314,987

 

Impairment of long lived assets

 

28,767

 

 

 

20,037

 

Reduction in carrying value of operating right-of-use assets

 

45,215

 

 

 

45,339

 

Loss on equity method investments

 

3,136

 

 

 

2,161

 

Amortization of financing costs and debt discount

 

17,749

 

 

 

12,890

 

Stock compensation expense

 

70,523

 

 

 

133,844

 

Loss on extinguishment of debt

 

 

 

 

14,434

 

Deferred taxes

 

(124,985

)

 

 

(60,616

)

Unrealised FX

 

(13,009

)

 

 

(6,054

)

Loss on issuance of debt

 

 

 

 

59,460

 

Other non-cash items

 

11,324

 

 

 

4,480

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

(420,695

)

 

 

113,513

 

Unbilled revenue

 

(332,592

)

 

 

(17,656

)

Unearned revenue

 

192,944

 

 

 

(69,121

)

Other net assets

 

10,121

 

 

 

108,259

 

Net cash provided by operating activities

 

563,315

 

 

 

829,142

 

Cash flows from investing activities:

 

 

 

Purchase of property, plant and equipment

 

(142,160

)

 

 

(93,750

)

Purchase of subsidiary undertakings

 

 

 

 

(5,914,475

)

Purchase of equity method investments

 

 

 

 

(2,450

)

Loan to equity method investment

 

 

 

 

(10,000

)

Sale of available for sale investments

 

481

 

 

 

497

 

Purchase of available for sale investments

 

(482

)

 

 

(480

)

Proceeds from investments in equity – long term

 

1,906

 

 

 

500

 

Purchase of investments in equity – long term

 

(5,612

)

 

 

(4,077

)

Net cash used in investing activities

 

(145,867

)

 

 

(6,024,235

)

Cash flows from financing activities:

 

 

 

Financing costs

 

 

 

 

(30,328

)

Proceeds from exercise of equity compensation

 

35,844

 

 

 

118,589

 

Share issue costs

 

(17

)

 

 

(853

)

Repurchase of ordinary shares

 

(99,983

)

 

 

 

Share repurchase costs

 

(17

)

 

 

 

Drawdown of bank credit lines and loan facilities

 

75,000

 

 

 

5,905,100

 

Repayment of bank credit lines and loan facilities

 

(875,000

)

 

 

(877,780

)

Net cash used in financing activities

 

(864,173

)

 

 

5,114,728

 

Effect of exchange rate movements on cash

 

(16,720

)

 

 

(7,727

)

Net (decrease)/ increase in cash and cash equivalents

 

(463,445

)

 

 

(88,092

)

Cash and cash equivalents at beginning of period

 

752,213

 

 

 

840,305

 

Cash and cash equivalents at end of period

$

288,768

 

 

$

752,213

 

 

 

ICON plc

RECONCILIATION OF NON-GAAP MEASURES

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2022 AND DECEMBER 31, 2021

(UNAUDITED)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2022

December 31,

2021

 

December 31,

2022

December 31,

2021

 

(in thousands except share and per share data)

 

 

 

 

 

 

Adjusted revenue

 

 

 

 

 

Revenue, as reported

$

1,962,002

 

$

1,885,121

 

 

$

7,741,386

 

$

5,480,826

 

Acquisition related deferred revenue adjustment (a)

 

 

 

(4,000

)

 

 

 

 

 

Adjusted revenue

$

1,962,002

 

$

1,881,121

 

 

$

7,741,386

 

$

5,480,826

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

Net income attributable to the Group

$

117,445

 

$

76,468

 

 

$

505,304

 

$

153,185

 

Share of equity method investments

 

493

 

 

690

 

 

 

3,136

 

 

2,161

 

Provision for income taxes

 

10,859

 

 

14,616

 

 

 

59,411

 

 

41,334

 

Net interest expense (b)

 

74,567

 

 

52,761

 

 

 

227,386

 

 

181,849

 

Depreciation and amortization

 

142,228

 

 

139,670

 

 

 

569,513

 

 

314,987

 

Stock-based compensation expense (c)

 

15,047

 

 

19,410

 

 

 

69,889

 

 

61,397

 

Foreign currency losses (gains), net (d)

 

35,399

 

 

(7,968

)

 

 

(25,997

)

 

(14,314

)

Acquisition related deferred revenue adjustment (a)

 

 

 

(4,000

)

 

 

 

 

 

Restructuring (e)

 

(1,747

)

 

24,943

 

 

 

31,143

 

 

31,105

 

Transaction-related / integration-related costs (f)

 

10,725

 

 

15,954

 

 

 

39,695

 

 

198,263

 

Adjusted EBITDA

$

405,016

 

$

332,544

 

 

$

1,479,480

 

$

969,967

 

 

 

 

 

 

 

Adjusted net income attributable to the Group and adjusted diluted net income per Ordinary Share attributable to the Group

 

 

 

 

 

Net income attributable to the Group

$

117,445

 

$

76,468

 

 

$

505,304

 

$

153,185

 

Provision for income taxes

 

10,859

 

 

14,616

 

 

 

59,411

 

 

41,334

 

Amortisation

 

114,969

 

 

114,888

 

 

 

463,087

 

 

239,503

 

Stock-based compensation expense (c)

 

15,047

 

 

19,410

 

 

 

69,889

 

 

61,397

 

Foreign currency losses (gains), net (d)

 

35,399

 

 

(7,968

)

 

 

(25,997

)

 

(14,314

)

Restructuring (e)

 

(1,747

)

 

24,943

 

 

 

31,143

 

 

31,105

 

Acquisition related deferred revenue adjustment (a)

 

 

 

(4,000

)

 

 

 

 

 

Transaction-related / integration-related costs (f)

 

10,725

 

 

15,954

 

 

 

39,695

 

 

198,263

 

Transaction-related financing costs (g)

 

4,205

 

 

8,484

 

 

 

17,814

 

 

86,736

 

Adjusted tax expense (h)

 

(49,174

)

 

(44,798

)

 

 

(191,667

)

 

(130,791

)

Adjusted net income attributable to the Group

$

257,728

 

$

217,997

 

 

$

968,679

 

$

666,419

 

 

 

 

 

 

 

Diluted weighted average number of Ordinary Shares outstanding

 

82,452,097

 

 

82,827,674

 

 

 

82,468,363

 

 

 

 

 

 

 

 

Adjusted diluted net income per Ordinary Share attributable to the Group

$

3.13

 

$

2.63

 

 

$

11.75

 

$

9.65

 

 

 

 

 

 

 

(a)

Acquisition related deferred revenue adjustment represents non-cash adjustments resulting from the revaluation of deferred revenue and the subsequent charge to revenue in connection with business combinations

(b)

Net interest expense includes losses on modification or extinguishment of debt.

(c)

Stock-based compensation expense represents the amount of recurring non-cash expense related to the Company’s equity compensation programs (inclusive of employer related taxes).

(d)

Foreign currency losses (gains), net relates to gains or losses that arise in connection with the revaluation of non-US dollar denominated assets and liabilities. We exclude these gains and losses from adjusted EBITDA and adjusted net income because fluctuations from period- to- period do not necessarily correspond to changes in our operating results.

(e)

Restructuring charges incurred relate to charges incurred in connection with the termination of leases at locations that are no longer being used and amounts incurred in connection with the elimination of redundant positions within the organization.

(f)

Transaction-related / integration-related costs include expenses/credits associated with our acquisitions, share-based compensation expense related to the acceleration of share-based compensation awards and replacement share-based awards, contingent consideration valuation adjustments, and any other costs incurred directly related to the integration of these acquisitions.

(g)

Transaction-related financing costs includes costs incurred in connection with changes to our long-term debt and amortization of financing fees. We exclude these costs from Adjusted EBITDA and Adjusted Net Income because they result from financing decisions rather than from decisions made related to our ongoing operations.

(h)

Represents the tax effect of adjusted pre-tax income at our estimated effective tax rate.

 

Contacts

Investor Relations +1 888 381 7923 or

Brendan Brennan Chief Financial Officer +353 1 291 2000

Kate Haven Vice President Investor Relations +1 888 381 7923

All at ICON

http://www.iconplc.com

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