Canadian life sciences company MDS has set at US$320 million the final value of a goodwill write-down for its troubled contract research division MDS Pharma Services.

MDS originally announced the non-cash write-down last December, when the company lowered its financial guidance for the third time that year. Citing “the decline in overall contract research organisation stock market valuations, current economic uncertainty and the delay in profit recovery”, MDS said at the time that the write-down would be in the range of US$270 million to US$370 million.

Preliminary results for the fourth quarter, disclosed in late December, showed that net revenues at MDS Pharma Services dropped by 8.9% year on year to US$112 million. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) at the US-based contract research unit jumped 700% to US$8 million, albeit from a low base of US$1 million in the fourth quarter of 2007.

The preliminary results included a group net loss of US$255 million and a loss per share from continuing operations of US$2.11 for the fourth quarter, which took into account a US$246 million after-tax charge to write off the net book value of the abandoned MAPLE nuclear reactor project in Ontario, Canada.

It did not, however, incorporate the MDS Pharma Services write-down. With the final value pegged at US$320 million, MDS reported a net loss of US$575 million for the final quarter and a loss per share from continuing operations of US$4.77.

Recently the company has come under renewed pressure from US-based hedge fund Obrem Capital Management, which owns around 5% of MDS’ stock, to unlock shareholder value by divesting parts of its business including MDS Pharma Services.

“In 2008, MDS confronted challenges in a difficult environment,” commented president and chief executive officer Stephen DeFalco as the company released its final results for the fourth quarter.

“While we made progress in several areas, we recognise the necessity of improved performance. We are operating with a sense of urgency, and have an engaged Board and Management team focused on driving growth, improving performance and shaping the Company’s business portfolio. We continue to review our strategy against potential options, with a firm commitment to delivering shareholder value.”