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Analyst Blog

Shares of PDI, Inc. (PDII - Snapshot Report) fell 3.7% to close at $4.91 after the company posted dismal fourth-quarter earnings results on Feb 27. Loss came in at 25 cents per share, wider than the Zacks Consensus Estimate loss of 11 cents and the year-ago loss of 3 cents.

Loss per share of 83 cents for full-year 2013 came in narrower than the loss of $1.75 incurred in 2012. Revenues for 2013 grossed $150.8 million, up 18.8% over 2012.

Behind the Headlines

Total revenue of PDI Inc. grossed nearly $36.4 million in the quarter, improving 2% year over year, largely on the back of higher contribution from the Sales Services segment. The top line was ahead of the Zacks Consensus Estimate of $38 million.

While Sales Services revenues improved 6.6%, Product Commercialization Services revenues increased 7.3% year over year. Marketing Services revenues, on the other hand, plunged 71% year over year.

Gross margin contracted 75 basis points to 12.1%.

Total operating expense dipped to $8.0 million due to an absence of asset impairment and a facilities realignment in the reported quarter.

Adjusted operating loss was $3.6 million, which compared unfavorably with profit of $0.284 million earned in the year-ago quarter.

Adjusted earnings before income taxes, interest expenses, interest income, depreciation and amortization (EBITDA) was negative $2.9 million versus earnings of $1.1 million in the prior-year quarter.

Financial Update

PDI Inc. exited 2013 with cash and cash equivalents of $45.6 million, decreasing from $52.8 million as of Dec 31, 2012.

Total assets were valued at $69.1 million versus $78.4 million at 2012 end. Total stockholders' equity came in at $32.4 million versus $35.6 million at 2012-end.

Cash used in operating activities by PDI Inc. was $3.5 million in 2013, higher than $10.3 million used in 2012.

Business Update

PDI Inc. upgraded internal systems for CSO business and completed and launched the innovative new software platform – PD One.

The company also began execution of strategy through Interpace Diagnostics to be a commercialization partner for companies in the molecular diagnostics industry. PDI Inc. entered into two collaboration agreements to commercialize molecular diagnostic tests.

Looking Forward

PDI Inc. expects 2014 revenues in core business to be down slightly from the 2013 level. Gross profit is expected to remain flat year over year as profit from higher margin offerings and continued improvements in cost of services offset much of the impact of lower revenues.

Operating expenses are estimated to be lower than the 2013 number, as a result of which operating loss is expected to reduce.

Adjusted EBITDA from the core business is projected to be slightly positive. This guidance excludes the impact of Interpace Diagnostic business.

Zacks Rank

PDI Inc. presently holds a Zacks Rank #2 (Buy).

Performance of Other Business Service Providers

SouFun Holdings Ltd. (SFUN - Snapshot Report) reported fourth-quarter operating earnings of $1.41 per share which exceeded the Zacks Consensus Estimate by 34.5%. Results surged 86% year over year.

Rentrak Corp. (RENT - Snapshot Report) delivered fourth-quarter 2013 operating loss of 3 cents per share, narrower than the Zacks Consensus Estimate loss of 13 cents and the year-ago loss of 15 cents per share.

Viad Corp. (VVI - Snapshot Report) posted fourth-quarter loss per share of 20 cents, wider than the Zacks Consensus Estimate loss of 17 cents but narrower than the loss of 34 cents per share incurred in the year-ago quarter.

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