Canadian life sciences company MDS has reported preliminary results for the fourth quarter showing that net revenues at its US-based contract research unit, MDS Pharma Services, dropped by 8.9% year on year to US$112 million.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 700% to US$8 million, albeit from a low base of US$1 million in the fourth quarter of 2007. MDS Pharma Services’ EDITDA in the latest quarter included savings from restructuring and a US$9 million gain related to currency translation, benefits that were partly offset by inflation and lower revenues.
Early-stage revenues for the fourth quarter dipped by 1.5% to US$65 million, with improvements in Phase I and bioanalytical services. Customer-driven delays were blamed for a 17.5% decline in late-stage revenues, which fell to US$47 million in the quarter.
New business wins of US$131 million during the reporting period, compared with US$134 million in last year’s quarter, resulted in a backlog of US$485 million, 13.8% higher than in the year-ago period. On a sequential basis, new business wins were down by 22.5% “as clients continue to reprioritise their product pipelines”, MDS said.
The Pharma Services backlog shrank by 12.0% quarter by quarter, reflecting the weakening euro and the more than 40% of the backlog denominated in currencies outside the US.
Overall, MDS delivered adjusted EDITDA of US$37 million for the fourth quarter, up by 5.7% year on year, on net revenues that slipped by 3.9% to US$295 million.
However, a US$246 million after-tax charge to write off the net book value of the abandoned MAPLE nuclear reactor project in Ontario saw the group record a net loss of US$255 million and a loss per share from continuing operations of US$2.11 for the quarter. Adjusted earnings per share were US$0.02 compared with US$0.10 in the fourth quarter of 2007.
Nor did the results include the estimated US$270 million to US$370 million write-down of MDS Pharma Services goodwill that was announced earlier this month. This adjustment reflects “the decline in the overall stock-market valuation of the contract research sector, the uncertain economic outlook and the delay in profit recovery at MDS Pharma Services”, the parent company noted.
