MDS Inc. (MDS), a life sciences company, has announced its second-quarter of fiscal 2009 results. On a GAAP basis, MDS reported total revenue of $282 million, a net loss of $17 million and a loss per share of $0.15 for the second quarter of 2009. These results include a non-cash asset write-down of $16 million. Net revenue was $257 million and adjusted EBITDA was $31 million for the second quarter of 2009, compared with $326 million and $34 million in the prior year, respectively.
For the quarter, the Company announced adjusted earnings per share of $0.03, compared with $0.08 in the corresponding period a year ago.
Quarterly Highlights
— Net revenue of $257 million, down 21% from $326 million in the prior year.
— Excluding the impact of foreign exchange, acquisitions and divestitures, net revenue decreased 10%.
— Adjusted EBITDA of $31 million with 12% margin, versus $34 million with 10% margin in the prior year, as $15 million in restructuring and productivity savings largely offset market declines.
— Adjusted earnings per share of $0.03, compared with $0.08 in the prior year, primarily driven by lower adjusted EBITDA and higher interest expense.
— Period-end cash position increased $94 million to $243 million.
— New product introductions to provide customers with advanced technology and improved performance, including the AB SCIEX TOF/TOF 5800 system, a new administration system for TheraSphere, a suite of iMethods tests, and MetaXpress analysis software.
For the second quarter, MDS Pharma Services reported adjusted EBITDA of $3 million, compared with a loss of $1 million last year. This $4 million year-over-year increase was largely due to productivity gains and restructuring savings, partially offset by lower volumes. Net revenue decreased 18% over the prior-year period with foreign exchange negatively impacting revenue by $9 million. In the second quarter, Late Stage declines were primarily due to lower demand in Central Labs. In Early Stage, declines were largely driven by lower revenues in bioanalytical services.
MDS Pharma Services recorded new business wins totaling $114 million, a sequential increase of 10%, compared with new business wins in the first quarter, but down 31% compared with $165 million of new business wins last year. The sequential improvement was primarily driven by solid orders in Phase II-IV and Early Stage bioanalytical services. The year-over-year decline was largely due to the impact of foreign exchange and slower market demand as customers reprioritize their research and development (R&D) projects. Period-end backlog was $442 million, down 11% from $496 million in the prior year. This decrease is primarily related to changes in foreign exchange and declines in Late Stage, partially offset by a 10% increase in Early Stage backlog.
MDS Nordion reported adjusted EBITDA of $23 million in the second quarter, down 4% compared with last year, and included an embedded derivative gain of $3 million, versus a gain of $2 million last year. Excluding divestitures and foreign exchange, adjusted EBITDA increased 12% compared with last year. Revenue for the second quarter was $65 million, compared with $80 million last year. Excluding the $10 million negative impact of foreign exchange and $10 million related to the divestiture of certain product lines, revenue increased by $4 million, or 6% year-over-year. Excluding the divestitures and foreign exchange, year-over-year improvement in revenue and adjusted EBITDA was primarily driven by strength in medical isotopes.
In the second quarter, MDS Analytical Technologies reported $13 million in adjusted EBITDA, compared with $17 million in the corresponding quarter last year. Excluding $5 million of unfavorable impact from foreign exchange, primarily as a result of hedge positions established in 2008, adjusted EBITDA increased $1 million or 4%, driven by restructuring and productivity savings, which were largely offset by pricing and lower volumes. For the quarter, MDS Analytical Technologies reported $87 million in revenue, down 26% from $118 million in the prior year. The effect of foreign exchange reduced reported revenue by $11 million, or 9% year-over-year. Including the impact of foreign exchange, total end-user revenue decreased 13%, with an 11% decline in mass spectrometry end-user revenue. Soft end-user demand in pharmaceutical markets for instruments was the primary driver for the year-over-year decline in volumes across all product lines. The Company continues to see growth in applied markets, services and new products – particularly the recently launched 5500 series of mass spectrometers, which are being well received by customers.
Corporate selling, general and administration expenses were $7 million in the second quarter of 2009, level compared with the second quarter of 2008. These expenses included $3 million in corporate development costs primarily associated with the sale of MDS Pharma Services’ Phase II-IV operations, which were offset by a $2 million recovery in stock-based compensation expense.
Relative to cash performance, as of the end of the second quarter, MDS reported $243 million in cash and cash equivalents, which is approximately equivalent to the Company’s debt position of $276 million minus a government loan of $39 million, which is entirely offset by a corresponding financial instrument.