MORRISVILLE, N.C., Feb. 17, 2022 (GLOBE NEWSWIRE) — Syneos Health (Nasdaq:SYNH), the only fully integrated biopharmaceutical solutions organization, today reported financial results for the three and twelve months ended December 31, 2021.
“Strong fundamentals and execution across our business, combined with innovative, integrated clinical and commercial capabilities enabled by data and technology, drove robust earnings and cash flow growth in the fourth quarter and full year 2021,” said Alistair Macdonald, CEO, Syneos Health. “The market for our services remains strong, driven in part by customer adoption of our unique product development strategy, new drug approvals and biotech funding. In 2022, we expect robust growth propelled by recent acquisitions, uptake for our Syneos One and Medical Affairs offerings, and continued execution of our Value Creation Plan.”
Please refer to the “Use of Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Measures” included in this press release and accompanying tables for important disclosures about non-GAAP measures and a reconciliation of these measures to the nearest GAAP measures.
Fourth Quarter 2021 Results
Revenue of $1,373.4 million increased 20.5% on a reported basis and 20.8% on a constant currency basis for the three months ended December 31, 2021, compared to the same period in the prior year, due in part to the prior period being impacted by the COVID-19 pandemic. Clinical Solutions revenue increased 20.7% on a reported basis and 21.0% on a constant currency basis to $1,042.5 million. Acquisitions contributed approximately 1,000 basis points to Clinical Solutions reported revenue growth. Commercial Solutions revenue increased 19.8% on a reported basis and 20.2% on a constant currency basis to $330.9 million. The divestiture of medication adherence resulted in an approximate 300 basis point headwind to Commercial Solutions reported revenue growth.
GAAP net income for the three months ended December 31, 2021, decreased 17.3% to $76.0 million, resulting in diluted earnings per share of $0.72, compared to GAAP net income of $91.9 million, or diluted earnings per share of $0.87, for the three months ended December 31, 2020. The decrease in GAAP net income and diluted earnings per share for the three months ended December 31, 2021, was primarily driven by favorable discrete tax benefits in the fourth quarter of 2020. Adjusted net income for the three months ended December 31, 2021, increased 33.4% to $155.8 million, resulting in adjusted diluted earnings per share of $1.48, compared to adjusted net income of $116.8 million, or adjusted diluted earnings per share of $1.11, for the three months ended December 31, 2020.
Adjusted EBITDA for the three months ended December 31, 2021, increased 21.6% to $237.0 million from the same period in the prior year.
Full Year 2021 Results
Revenue of $5,213.0 million increased 18.1% on a reported basis and 17.0% on a constant currency basis for the twelve months ended December 31, 2021, compared to the same period in the prior year, due in part to the prior period being impacted by the COVID-19 pandemic. Clinical Solutions revenue increased 20.1% on a reported basis and 18.8% on a constant currency basis to $4,009.1 million. Acquisitions contributed approximately 830 basis points and the divestiture of contingent staffing resulted in an approximate 60 basis point headwind to Clinical Solutions reported revenue growth. Commercial Solutions revenue increased 11.9% on a reported basis and 11.5% on a constant currency basis to $1,203.9 million. The divestiture of medication adherence resulted in an approximate 280 basis point headwind to Commercial Solutions reported revenue growth.
GAAP net income for the twelve months ended December 31, 2021, increased 21.8% to $234.8 million, resulting in diluted earnings per share of $2.24, compared to GAAP net income of $192.8 million, or diluted earnings per share of $1.83, for the twelve months ended December 31, 2020. Adjusted net income for the twelve months ended December 31, 2021, increased 30.4% to $468.4 million, resulting in adjusted diluted earnings per share of $4.46, compared to adjusted net income of $359.2 million, or adjusted diluted EPS of $3.41, for the twelve months ended December 31, 2020.
Adjusted EBITDA for the twelve months ended December 31, 2021, increased 20.8% to $765.3 million from the prior year.
Net New Business Awards and Backlog
Within Clinical Solutions, the pandemic has accelerated the adoption of virtual engagement with sites and patients, creating increased demand for decentralized solutions capabilities. As a result, we have continued to experience reduced travel and other reimbursable out-of-pocket expenses related to lower physical monitoring visits for Clinical Solutions relative to pre-pandemic levels. We have also experienced a reduction the costs associated with investigational medicinal products, which has also resulted in lower reimbursable out-of-pocket expenses. Within Commercial Solutions, we have continued to experience fewer field team visits to healthcare providers and increased virtual investigator meetings. Therefore, we expect reimbursable out-of-pocket expenses as a percentage of revenue to remain lower relative to pre-pandemic levels and adjusted our ending backlog accordingly, impacting both our reported net new business awards and backlog growth in the fourth quarter.
Net new business awards and book-to-bill ratios for the three and twelve months ended December 31, 2021, were as follows (in millions):
| Three Months Ended December 31, 2021 |
Twelve Ended December 31, 2021 |
|||||||||||||||
| Net new business awards |
Book-to-bill ratio |
Net new business awards |
Book-to-bill ratio |
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| Including reimbursable out-of-pocket expenses: | (dollars in millions) | |||||||||||||||
| Clinical Solutions | $ | 357.1 | 0.34x | $ | 4,362.6 | 1.09x | ||||||||||
| Commercial Solutions | 486.4 | 1.47x | 1,370.1 | 1.14x | ||||||||||||
| Total | $ | 843.5 | 0.61x | $ | 5,732.7 | 1.10x | ||||||||||
| Excluding reimbursable out-of-pocket expenses: | ||||||||||||||||
| Clinical Solutions | $ | 895.5 | 1.26 | x | $ | 3,579.5 | 1.34 | x | ||||||||
| Commercial Solutions | 420.4 | 1.48 | x | 1,205.3 | 1.15 | x | ||||||||||
| Total | $ | 1,315.9 | 1.32 | x | $ | 4,784.8 | 1.29 | x | ||||||||
Our backlog as of December 31, 2021, was as follows (in millions):
| Including reimbursable out-of-pocket expenses: | 2021 | 2020 | Growth % | |||||||||
| Clinical Solutions | $ | 10,567.3 | $ | 10,270.5 | 2.9 | % | ||||||
| Commercial Solutions – Deployment Solutions | 860.3 | 711.6 | 20.9 | % | ||||||||
| Total backlog | $ | 11,427.6 | $ | 10,982.1 | 4.1 | % | ||||||
| Excluding reimbursable out-of-pocket expenses: | ||||||||||||
| Clinical Solutions | $ | 6,771.7 | $ | 5,870.2 | 15.4 | % | ||||||
| Commercial Solutions – Deployment Solutions | 687.9 | 547.0 | 25.8 | % | ||||||||
| Total backlog | $ | 7,459.6 | $ | 6,417.1 | 16.2 | % | ||||||
Liquidity and Capital Management Update
Cash flows provided by operating activities were $186.0 million and $450.3 million during the three and twelve months ended December 31, 2021, respectively.
During the three months ended December 31, 2021, the Company amended its accounts receivable financing agreement to increase the available borrowing amount from $365.0 million to $400.0 million, extended the maturity to October 2024, and drew down the additional $35.0 million. At the same time, the Company paid down $35.0 million on the facilities under its Credit Agreement. In addition, the Company repaid the remaining outstanding balance on its revolving credit facility and made $125 million in voluntary prepayments on its Term Loan A, resulting in a net leverage of 3.6x as of December 31, 2021.
During the three months ended December 31, 2021, the Company did not repurchase common stock. During the twelve months ended December 31, 2021, the Company repurchased $117.5 million of common stock and has $182.5 million of remaining share repurchase authorization available through December 31, 2022.
Full Year 2022 Business Outlook
The Company’s guidance takes into account a number of factors, including existing backlog, current sales pipeline, trends in cancellations and delays, trends in reimbursable out-of-pocket expenses, and the Company’s ForwardBound initiative, which includes expansion of the Syneos Operations Network, process optimization, and automation initiatives. In addition, the guidance presented below represents the Company’s best efforts to estimate the impact of COVID-19 on its business. The severity and duration of the COVID-19 pandemic are outside of the Company’s control and, given the uncertain nature of the pandemic, could cause the Company’s future operating results to be different from our current expectations, particularly if the impact of the pandemic worsens. Furthermore, the guidance presented below is based on current foreign currency exchange rates, current interest rates, and the Company’s expected non-GAAP effective tax rate of approximately 23.5% for the year ending December 31, 2022. The guidance is based upon the Company’s estimated number of weighted average diluted shares outstanding and does not take into account any share repurchases that may occur in 2022. The Company’s full year 2022 guidance is outlined below:
| Guidance issued February 17, 2022 | ||||||||
| FY 2022 | ||||||||
| Low | High | |||||||
| (in millions, except per share data) | ||||||||
| Revenue | $ | 5,600.0 | $ | 5,750.0 | ||||
| GAAP Net Income | 281.1 | 300.7 | ||||||
| GAAP Diluted EPS | 2.66 | 2.84 | ||||||
| Adjusted EBITDA | 840.0 | 880.0 | ||||||
| Adjusted Diluted EPS | $ | 4.98 | $ | 5.24 | ||||
About Syneos Health
Syneos Health® (Nasdaq:SYNH) is the only fully integrated biopharmaceutical solutions organization purpose-built to accelerate customer success. We lead with a product development mindset, strategically blending clinical development, medical affairs and commercial capabilities to address modern market realities.
We bring together approximately 28,000 minds, across more than 110 countries, with a deep understanding of patient and physician behaviors and market dynamics. Together we share insights, use the latest technologies and apply advanced business practices to speed our customers’ delivery of important therapies to patients.
Syneos Health supports a diverse, equitable and inclusive culture that cares for colleagues, customers, patients, communities and the environment.
To learn more about how Syneos Health is shortening the distance from lab to life®, visit syneoshealth.com or subscribe to our podcast.
