PDI Announces New Multi-Year Win Valued At up to $150 Million
PDI, (Nasdaq: PDII) today announced the signing of a new multi-year Sales Services contract with a Top 5 global pharmaceutical company to provide a dedicated sales team that will target primary care physicians, pediatricians and psychiatrists. The contract is expected to generate revenue to PDI of approximately $48 million in 2013 and up to $150 million over the life of the agreement. The FDA-approved product is expected to be marketed beginning early in the first quarter of 2013 after completion of certain non-FDA regulatory approvals and third party agreements. PDI expects to record less than $1 million of revenue from this contract in the fourth quarter of 2012. In addition to the Sales Services contract, PDI will be providing services to deliver HCP digital communications in support of the product through PDI's Group DCA division.
"This new major win affirms the value we provide to our customers," said Nancy Lurker, Chief Executive Officer of PDI, Inc. "At PDI, we focus on providing customers with a high return on their investment in our outsourcing services and the strategic flexibility to make the most effective use of their resources."
As a part of PDI's ongoing focus on cost reduction, the company continues to streamline its operations. As a result, the company expects to record charges in the fourth quarter for severance of approximately $1.0 million and facilities realignment of approximately $1.1 million.
"Including the contract win we announced today, we have won more than $250 million of new contracts and renewals in 2012," said Lurker. "Due to the timing of these wins and the execution timelines of these contracts we expect that only approximately $40 million will impact revenue in 2012 however, we expect to be entering 2013 with a strong backlog of business under contract. Factoring in this activity, we now estimate that total revenue for the full year of 2012 will be in the range of $127 - $130 million.
"As we previously stated, the gross margin on new Sales Services business in 2012 continues to trend lower than historical rates, including the $150 million win announced today. While on a total company basis we expect the gross margin percentage for the full year of 2012 to approximate 2011's level, we also anticipate that the company's overall gross margin percentage will decline in 2013 as new wins are executed and the competition for new assignments increases as fewer large new pharmaceutical products are approved in relation to those loosing patient exclusivity. We continue to be optimistic that outsourcing will continue to grow and become more the standard in the pharmaceutical industry. From an operating standpoint, excluding the severance and facilities charges previously referenced, we expect a small operating loss for the full year of 2012 and positive adjusted EBITDA in the range of 1% - 2% of revenue," concluded Lurker.
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