MDS Reports First Quarter 2008 Results

TORONTO, March 6 /CNW/ - MDS Inc. (TSX: MDS; NYSE: MDZ), a leading provider of products and services to the global life sciences markets, today reported its first quarter 2008 results. For the quarter, MDS reported net revenues of $296 million, net income of $17 million and earnings per share from continuing operations of $0.14. Adjusted EBITDA rose to $40 million, up from $30 million in the prior year. Adjusted earnings per share were $0.05, down from $0.07 in the prior year. This solid start to 2008 is primarily driven by improvements at MDS Pharma Services and MDS Analytical Technologies, partially offset by challenges at MDS Nordion. << Quarterly Highlights - Delivered $296 million in net revenues, up 23% from $241 million in the prior year. - Increased adjusted EBITDA to $40 million, up 33% from $30 million in the prior year. - Reported adjusted earnings per share of $0.05, down from $0.07 in the prior year impacted by $0.08 of intangible amortization from the Molecular Devices acquisition. - MDS Pharma Services delivered $146 million in total revenues and $6 million in adjusted EBITDA, up from $1 million in the prior year with new business wins at $177 million up 32% over the prior quarter. - MDS Nordion delivered $60 million in revenues, down 10% in the quarter impacted by a medical isotope supply disruption and light cobalt shipments. - MDS Analytical Technologies delivered $116 million in revenues and $27 million in adjusted EBITDA with the highest quarterly revenue in Molecular Devices history. - MDS repurchased and cancelled 252,000 Common shares for $5 million under its Normal Course Issuer Bid. "We are off to a solid start in the first quarter with double-digit growth in both net revenues and adjusted EBITDA," said Stephen P. DeFalco, President and Chief Executive Officer of MDS Inc. "I am very pleased with the performance of the Molecular Devices acquisition which continues to perform strongly, setting new records in revenue. I am also encouraged by the accelerating pace of new business wins at MDS Pharma Services which we expect to result in revenue growth in the second half of 2008." Operating Segment Results MDS Pharma Services % Change ---------- ($ millions) Q1 2008 Q1 2007 Reported ------------------------------------------------------------------------- Net Revenue: Early-stage 63 66 (5%) Late-stage 57 55 4% ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ 120 $ 121 (1%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Reimbursement revenues 26 23 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total revenues $ 146 $ 144 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Adjusted EBITDA: $ 6 $ 1 500% % 5 % 1 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> For the first quarter, MDS Pharma Services net revenues declined 1% over the prior year. Adjusted EBITDA was $6 million compared to $1 million last year, an improvement of $5 million year-over-year, driven primarily by savings from 2007 restructuring activities. MDS Pharma Services initiated the reporting of certain non-GAAP measures for new business wins and period ending backlog, to track confirmed contracts to which customers have committed within the period. New orders increased to $177 million representing three quarters of sequential improvements and are up 32% from last quarter. Contract cancellations were $37 million in the quarter leaving a quarter-ending backlog of $395 million, down 16% year-over-year and up 5% sequentially. As of the end of the first quarter, MDS Pharma Services has implemented 90% of its restructuring initiatives announced in the second quarter of last year and is well positioned to accelerate profitable growth with higher second half revenues coupled with a lower cost base. In January, MDS Pharma Services opened its 300-bed expansion of a Phase I facility in Phoenix, Arizona and is now conducting trials. As well, MDS Pharma Services launched Apollo, a new study management system for central lab customers which is designed to improve efficiency and enable MDS to deliver its brand promise of on-time, high-quality service. << MDS Nordion % Change ---------- ($ millions) Q1 2008 Q1 2007 Reported ------------------------------------------------------------------------- Revenue $ 60 $ 67 (10%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Adjusted EBITDA: $ 11 $ 20 (45%) % 18 % 30 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- MDS Nordion's revenues for the first quarter were $60 million, down 10% from the prior year driven by a disruption in medical isotope supply and light cobalt shipments. Adjusted EBITDA was $11 million compared to $20 million in the first quarter of 2007. This decrease includes $5 million in unfavourable impact from the medical isotope disruption and a $4 million non-cash charge to account for foreign exchange impact on supply agreements. During the quarter, MDS Nordion announced the sale of two non-strategic product lines. This sale is expected to close in the second quarter of 2008. MDS Analytical Technologies % Change ---------- ($ millions) Q1 2008 Q1 2007 Reported ------------------------------------------------------------------------- Revenue $ 116 $ 53 119% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Adjusted EBITDA: $ 27 $ 12 125% % 23 % 23 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> MDS Analytical Technologies delivered $116 million in revenues, a 119% increase over prior year and $27 million in adjusted EBITDA, a 125% year-over-year increase. Sciex contributed $60 million in revenues and $16 million in adjusted EBITDA in the first quarter, up 13% and 33% from the prior year respectively. Mass spectrometry end user revenue grew 5% compared to the same period last year. Molecular Devices (MD) contributed $56 million in revenues and $11 million in adjusted EBITDA. This is the highest quarterly revenue for MD in its history. We remain on track to exceed our first year commitments for the MD acquisition. Conference Call MDS will be holding a conference call today at 9:30 am EST to discuss first quarter 2008 results. This call will be webcast live at and will also be available in archived format at after the call. MDS Annual Shareholders Meeting MDS will be holding its annual shareholders meeting today for shareholders of record at 4:00 pm EST in Toronto. The AGM will be webcast live at and will also be available in archived format at About MDS MDS Inc. (TSX: MDS; NYSE: MDZ) is a global life sciences company that provides market-leading products and services that our customers need for the development of drugs and diagnosis and treatment of disease. We are a leading global provider of pharmaceutical contract research, medical isotopes for molecular imaging, radiotherapeutics, and analytical instruments. MDS has more than 5,500 highly skilled people in 29 countries. Find out more at or by calling 1-888-MDS-7222, 24 hours a day. Caution Concerning Forward-Looking Statements This document contains forward-looking statements. Some forward-looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. The statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. MDS's actual results could differ materially from those expressed in the forward-looking statements due to these risks and a number of other factors, including, but not limited to, successful implementation of structural changes, including restructuring plans and acquisitions, technical or manufacturing or distribution issues, the competitive environment for MDS's products, the degree of market penetration of its products, the ability to secure a reliable supply of raw materials, the impact of our clients' exercising rights to cancel certain contracts, the strength of the Canadian and US economies, the impact of the movement of the US dollar relative to other currencies, particularly the Canadian dollar and the euro, uncertainties associated with critical accounting assumptions and estimates, and other factors set forth in reports and other documents filed by MDS with Canadian and US securities regulatory authorities from time to time, including MDS's quarterly and annual MD&A, annual information form, and annual report on Form40-F for the fiscal year ended October 31, 2007 filed with the Securities & Exchange Commission. Also note that all financial data is now shown on a US GAAP basis. MDS converted to US GAAP reporting with the filing of its 2007 annual report and financial statements on January 29, 2008. Use of Non-GAAP Financial Measures The use of non-GAAP measures including terms such as net revenues, adjusted EBITDA, adjusted EPS, new orders and backlog are used to explain the operating performance of the Company. These terms are not defined by GAAP and MDS's use may vary from that of other companies. MDS uses certain non-GAAP measures so that investors and analysts have a better understanding of the significant events and transactions that have had an impact on results or may have an impact on MDS's financial outlook. MDS provides a description of these non-GAAP measures and a reconciliation of these non-GAAP measures for 2007 actual results to GAAP financial results in the MD&A of its 2007 annual report.