Back to top

Analyst Blog

PDI Inc. reported third-quarter 2013 operating net loss of 14 cents per share, narrower than the Zacks Consensus Estimate of a loss of 23 cents. However, the results deteriorated from operating net loss of 6 cents per share incurred in the year-ago quarter.

PDI Inc.’s bottom line was affected by lower margins derived from the new business in its Sales Service segment.

Including loss from discontinued operations, PDI Inc. posted net loss of 15 cents per share in the third quarter, widening from net loss of 7 cents per share reported in the prior-year quarter.

Operational Update

Total revenues of PDI Inc. increased 8% year over year to $34.3 million. Top-line growth was driven by higher revenues from the Sales Service segment. Results however lagged the Zacks Consensus estimate of $38 million.

Gross profit of PDI Inc. declined 20.9% year over year to $4.7 million in the quarter. The decline came on the back of higher cost of services (up 14.4% year over year). The gross profit margin deteriorated 500 basis points (bps) to 13.7% during the quarter.

Total operating expenses of $6.7 million were almost in line with the year-ago quarter. Several cost-saving initiatives by the company helped to effectively control costs.

PDI Inc. reported adjusted loss before interest, tax, depreciation and amortization of approximately $1.3 million compared with adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $0.2 million in the year-ago quarter.

Operating loss of PDI Inc. was nearly $2.0 million in the quarter, widening substantially from $0.7 million reported a year ago.

Segment Update

Sales Services: Revenues totaled $30.7 million during the quarter, up 22.8% year over year. The increase is attributable to recent execution of multi-year new contracts which were won during 2012 and in the first half of 2013.

Competitive pricing pressures have trimmed gross profit by 2.4% year over year to $4 million. Gross margin also declined 350 bps to 13.1%.

Marketing Services: Total revenues of $0.8 million dropped 64.4% year over year. The decline was primarily caused by lower contract signings by Group DCA.

The segment could not report a positive gross profit in the quarter. Gross loss incurred was $0.01 million compared to $0.4 million of gross profit earned in the prior-year quarter. The plunge was owing to a declining top line. Gross margin slid to negative of 1.3% in the quarter compared to 19.2% reported a year ago.

Product Commercialization Services: Total revenues declined 40% year over year to $2.7 million primarily due to internalization of selective commercialization activities of a customer since Oct 1, 2012.

Gross profit slid to $0.7 million from $1.4 million in the prior-year quarter due to lower revenues. Gross margin also declined 530 bps year over year to 24.5%.

Financial Update

PDI Inc. exited the quarter with cash and cash equivalents of $49.6 million declining almost 6% from the 2012 end-level.

Total assets of PDI stood at $73.2 million as of Sep 30, sliding 6.7% from $78.4 million at 2012-end.

Total liabilities also declined 13.1% from 2012 end-level to $37.2 million as of Sep 30, 2013.

Total shareholders’ equity also inched up 1% from 2012-end level to $36 million as of reported quarter-end.

Net cash flow from operations amounted to $0.2 million in the first nine months of 2013, compared to cash used in operations of $3.2 million in the year-ago period.

Business Update

During the quarter, PDI Inc. inked a collaboration agreement deal with privately held molecular diagnostics company in order to commercialize the company’s molecular diagnostics tests. Under the terms of collaboration, PDI Inc. has paid an initial fee of $1.5 million to molecular diagnostics and in turn has received an option to purchase the company. The purchase price can go up to $6 million subject to terms and conditions.

PDI Inc. also signed a U.S. collaboration agreement in order to commercialize CardioPredict in October. A molecular diagnostic test, CardioPredict is developed by Transgenomic.

Guidance

PDI Inc. expects its top line to achieve a growth rate of 20% for 2013. The company also expects its gross profit of 2013 to hover around 2012 level.

Performances by Other Business Service Providers

WNS (Holdings) Ltd. reported operating net earnings of 33 cents per share for fiscal second-quarter 2014 ending Sep 30, 2013. Results surpassed the Zacks Consensus Estimate of 28 cents and improved 37.5% year over year.

Hertz Global Holdings Inc. posted third-quarter 2013 adjusted earnings per share of 73 cents, surpassing the Zacks Consensus Estimate by a couple of cents. The quarterly earnings rose 15.9% from 63 cents per share earned in the prior-year quarter.

Avis Budget Group Inc. posted third-quarter 2013 adjusted earnings per share of $1.48, missing the Zacks Consensus Estimate of $1.55. However, the quarterly earnings rose 1.4% from $1.46 per share earned in the year-ago quarter.

Zacks Rank

PDI Inc. presently carries a Zacks Rank #4 (Sell).

Please login to Zacks.com or register to post a comment.