INC stock launches up almost 10% as CEO says business as usual
INC CEO Jamie Macdonald told Outsourcing-Pharma.com in an interview that it’s “business as usual on the operating side,” with the successful completion of clinical trials continuing.
He added that the timing of the IPO is “good and allows us to make a significant improvement to our capital structure,” noting that the increased transparency “helps our customers have confidence in our liquidity and longevity.”
With about $100m in cash and a $100m line of credit, the company is also poised for additional acquisitions though Macdonald didn’t elaborate on where those might take place. In March, INC bought CRO MEK Consulting to expand its presence into the Middle East.
“We’re one of the larger clinical CROs,” and in terms of “size and scale we think we’re pretty competitive, and we expect we’ll grow bigger,” Macdonald told us. The company derives about 99% of its net service revenue from clinical development services.
The proceeds from the IPO will be used to refinance INC’s long-term debt. Macdonald also said the company is looking into offering an employee stock program, though that will be “farther down the road.”
Outlook
As far as expectations for the CRO industry, INC says it believes the penetration rate of the total $56bn addressable market will increase from about 37% to 46% by 2018.
A geographically diverse set of clients will also help INC stay ahead of the consolidation among its EU and US partners.
CFO Greg Rush also told us that from a profitability perspective, INC has been profitable for the last two years.
Strategic Partnerships
INC peer and competitor Parexel recently discussed some troubles in an earnings call that the company was experiencing with its strategic partnerships and requests for proposals. Macdonald, however, said that he’s “pleased with the volume of business right now for INC.”
“Some companies have specific performance issues or fluctuations… and there’s a misperception that all CROs compete for same business,” but there are differences by therapeutic areas, and INC hasn’t “seen any change in opportunities,” Macdonald added.
