Syneos Health (Nasdaq:SYNH), the only fully integrated biopharmaceutical solutions organization, today reported financial results for the three and nine months ended September 30, 2022.
'We are disappointed in our third quarter results, as we experienced more significant headwinds in net awards, revenue and margins in the quarter than we had anticipated. We are taking decisive actions to address these issues - including accelerating Clinical Reimagined, enhancing business development, improving visibility and increasing efficiency - in order to improve our performance moving forward,' said Michelle Keefe, CEO, Syneos Health. 'While these initiatives are a top priority, we are continuing to leverage our unique product development model to drive differentiation and achieve sustainable, long-term growth. We remain confident in our ability to thrive in a growing market as we execute on our vision of becoming the premier biopharma solutions provider.'
Third Quarter 2022 Results
Revenue of $1,336.2 million decreased 0.9% on a reported basis and increased 2.2% on a constant currency basis for the three months ended September 30, 2022, compared to the same period in the prior year. Revenue was below the Company's guidance primarily due to the impact of lower net new business awards, delays in backlog conversion and customer delays in its FSP business within Clinical Solutions. Clinical Solutions revenue decreased 3.5% on a reported basis and 0.2% on a constant currency basis to $1,003.3 million. Acquisitions contributed approximately 80 basis points to Clinical Solutions reported revenue growth. Commercial Solutions revenue increased 8.0% on a reported basis and 10.6% on a constant currency basis to $333.0 million. Prior period segment results have been recast to conform to insignificant changes to management reporting in 2022.
GAAP net income for the three months ended September 30, 2022 increased 11.3% to $87.0 million, resulting in diluted earnings per share of $0.84, compared to GAAP net income of $78.2 million, or diluted earnings per share of $0.75, for the three months ended September 30, 2021. Adjusted net income for the three months ended September 30, 2022 decreased 0.4% to $127.3 million, resulting in adjusted diluted earnings per share of $1.23, compared to adjusted net income of $127.8 million, or adjusted diluted earnings per share of $1.22, for the three months ended September 30, 2021. GAAP net income and GAAP diluted earnings per share were above the Company's guidance primarily due to other income from foreign currency gains.
Adjusted EBITDA for the three months ended September 30, 2022 increased 3.7% to $210.0 million from the prior year. Adjusted EBITDA and adjusted diluted earnings per share were below the Company's guidance primarily due to the impact of lower than expected revenue, partially offset by cost reductions.
Year-to-Date 2022 Results
Revenue of $4,033.2 million increased 5.0% on a reported basis and 7.2% on a constant currency basis for the nine months ended September 30, 2022, compared to the same period in the prior year. Clinical Solutions revenue increased 2.5% on a reported basis and 4.8% on a constant currency basis to $3,047.3 million. Acquisitions contributed approximately 90 basis points to Clinical Solutions reported revenue growth. Commercial Solutions revenue increased 13.7% on a reported basis and 15.5% on a constant currency basis to $985.9 million.
GAAP net income for the nine months ended September 30, 2022 increased 32.8% to $211.0 million, resulting in diluted earnings per share of $2.04, compared to GAAP net income of $158.9 million, or diluted earnings per share of $1.51, for the nine months ended September 30, 2021. Adjusted net income for the nine months ended September 30, 2022 increased 15.6% to $361.4 million, resulting in adjusted diluted earnings per share of $3.49, compared to adjusted net income of $312.7 million, or adjusted diluted earnings per share of $2.98, for the nine months ended September 30, 2021.
Adjusted EBITDA for the nine months ended September 30, 2022 increased 12.0% to $591.7 million from the prior year.
About Syneos Health
Syneos Health (Nasdaq:SYNH) is the only fully integrated biopharmaceutical solutions organization purpose-built to accelerate customer success. We lead with a product development mindset, strategically integrating clinical development, medical affairs and commercial capabilities to address modern market realities.
We bring together more than 29,000 minds, across more than 110 countries, with a deep understanding of patient and physician behaviors and market dynamics. Together we share insights, use the latest technologies and apply advanced business practices to speed our customers' delivery of important therapies to patients.
Syneos Health supports a diverse, equitable and inclusive culture that cares for colleagues, customers, patients, communities and the environment.
Forward-Looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including the future impact of the COVID-19 pandemic, inflation, the war between Russia and Ukraine and other macroeconomic trends on our business, financial results and financial condition, expected interest rates, anticipated financial results for the full year 2022, our sales pipeline, existing backlog and expectations of net awards, including expectations regarding lower net new business awards, delays in backlog conversion, and customer delays in its FSP business within Clinical Solutions, expected non-GAAP tax rate, trends in reimbursable out-of-pocket expenses, benefits of recent acquisitions, and plans for capital deployment. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to: risks associated with the COVID-19 pandemic; the Company's potential failure to generate a large number of new business awards and the risk of delay, termination, reduction in scope, or failure to go to contract of our business awards; the Company's potential failure to convert backlog to revenue; fluctuations in the Company's operating results and effective income tax rate; the impact of potentially underpricing the Company's contracts, overrunning our cost estimates, or failing to receive approval for or experiencing delays with documentation of change orders; cyber-security and other risks associated with the Company's information systems infrastructure; changes and costs of compliance with regulations related to data privacy; concentration of the Company's customers or therapeutic areas; the risks associated with doing business internationally, including risks related to the war in Ukraine; challenges by tax authorities of the Company's intercompany transfer pricing policies; the Company's potential failure to successfully increase its market share, grow its business, and execute its growth strategies; the Company's ability to effectively upgrade its information systems; the Company's failure to perform its services in accordance with contractual requirements, regulatory standards, and ethical considerations; risks related to the management of clinical trials; the need to hire, develop, and retain key personnel; the impact of unfavorable economic conditions, including the uncertain international economic environment, changes in foreign currency exchange rates; effective income tax rate fluctuations; the Company's ability to protect its intellectual property; risks related to the Company's acquisition strategy, including its ability to realize synergies; the Company's relationships with customers who are in competition with each other; any failure to realize the full value of the Company's goodwill and intangible assets; risks related to restructuring; the Company's compliance with anti-corruption and anti-bribery laws; the Company's dependence on third parties; potential employment liability; impacts from increasing focus on environmental sustainability and social initiatives; the Company's ability to utilize net operating loss carryforwards and other tax attributes; downgrades of the Company's credit ratings; competition in the biopharmaceutical services industry; outsourcing trends and changes in aggregate spending and research and development budgets; the impact of, including changes in, government regulations and healthcare reform; intense competition faced by our customers from lower cost generic products and other competing products; the Company's ability to keep pace with rapid technological change; the cost of and the Company's ability to service its substantial indebtedness; other risks related to ownership of the Company's common stock and other risk factors set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as updated by the Company's other SEC filings, copies of which are available free of charge on the Company's website at investor.syneoshealth.com. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
Contact:
Gary Gatyas
Tel: +1 908 763 3428
Email: gary.gatyas@syneoshealth.com
SYNEOS HEALTH, INC. 
