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IMS HEALTH INC. (NYSE: RX)
200 Nyala Farms Rd.Westport 06880
203-222-4200
Chairman: Robert E. Weissman
Revenues (1997): $980.5 million
Operating Income (1997): $265.4 million
Employees: 8,000 worldwide
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Business New Haven
1/25/1999
By: BNH
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Sometimes transactions in business can be just as disorienting as a ride on the teacups at an amusement park. Spinning can make one lose one's balance or invigorate the souls that thrive on excitement. For IMS, spin-off is an integral part of the story.
In 1996, shareholders of the Dun & Bradstreet Corp. (D&B) received a distribution of common shares of a D&B subsidiary resulting in a new publicly traded company known as Cognizant Corp. Two years later, through a dividend, Cognizant distributed shares of its IMS Health to shareholders, which created publicly traded IMS Health Inc.
The newly public IMS continues in operations which provide information capabilities to health-care and pharmaceutical organizations with services that include market research, sales management and marketing information solutions, and information support and services for managed care. IMS operate several businesses including IMS Health Strategic Technologies, Cognizant Technology Solutions, Enterprise Associates Inc. and Erisco Managed Care Technologies.
Ending its first quarter as a separate publicly traded company last September 30, the company already has exhibited a penchant for fast rides. The quarter marked the acquisition of certain assets of Pharmaceutical Marketing Services Inc. (PMSI), which it plans to combine with IMS' current operations in Europe. This will allow for quicker delivery in Europe of Xponent, its new products for sales.
The company has introduced new innovations in Japan for reporting market data, and through its Strategic Technologies has signed contracts with pharmaceutical firms and released it Cornerstone 3.0 innovations to customers worldwide. In December, Strategic purchased the assets of Logix Inc. of Denvile, N.J.
Performance has been enough to make one's head spin. Revenues for the quarter ended September 30 increased 13 percent to $283.6 million, compared to $251.1 million for the equivalent 1997 period. Operating income grew 21 percent to $71.3 million, compared to $59.2 million for the 1997 comparable period.
Net income increased 23 percent to $66.6 million or 40 cents per diluted share, compared to $54.0 million (33 cents per diluted share) for the same 1997 period. For the nine months ending September 30, the company reported a nine-percent increase in revenues to $795.1 million, compared to $731.5 for the comparable 1997 period. IMS also experienced a 33-percent increase in operating income to $160.4 million, compared to the 1997 period operating income of $120.1 million.
Net income of $159.6 million or (95 cents per share diluted) compared favorably to $123.4 million (74 cents per diluted share) for the same period one year before. As of September 30, the company had cash and equivalents of $312.2 million, assets of $1,656.4 million and equity of $768.9 million.
For the 1997 fiscal year IMS, while operating within the corporate structure of Cognizant, experienced an 8.4 percent increase in revenues for the 1997 fiscal year to $980.5 million, compared to 1996 revenues of $904.4 million. Excluding the effect of a strong U.S. dollar the increase in revenues was 11.4 percent. Operating income for 1997 of $265.4 million, a 14-percent increase over 1996 operating income of $232.8 million.
The board of directors approved a two-for-one stock split for distribution January 15 for shareholders of record on December 29, 1998. As a result of the split, the number of the company's basic shares will double to about 320 million. The stock closed January 13, 1999 at 70 7/8, up 3/8 (pre split). Trading commenced on this stock in July 1998, with a 52-week low of 42 3/4 and high of 78 3/8.
Dividends were increased 33 percent by the board of directors in December to eight cents per share on a post-split and annual basis. The board also increased its share repurchase plan to five percent of outstanding common stock, or 16 million shares.
In a separate action, the company announced stock ownership requirements for its senior executives and outside directors to be attained within five years. The requirements range from ten times salary and bonus, or more than ten times the directors' retainer.
Business is rarely a walk in the park, but IMS certainly experienced a 1998 to remember. And 1999 may prove to be just as busy.
In December 1998 the company announced the election of Victoria R. Fash, president and COO, to CEO effective March 19. She replaces Robert E. Weissman, who will continue his service as chairman.
Also, following the recent historical pattern, the company is planning for a spin off of its equity in the GartnerGroup to IMS shareholders. For IMS, spinning appears to be invigorating.
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