PDI Inc. Posts Wider-Than-Expected Loss, Reiterates Guidance

PDI, Inc. (PDII) posted second-quarter 2014 operating loss of 17 cents per share that was wider than the Zacks Consensus Estimate of 12 cents per share and compared unfavorably with the year-ago quarter’s loss of 6 cents per share.

Including loss of a penny per share from discontinued operations, net loss of PDI Inc. came in at 18 cents per share, wider than the year-ago loss of 6 cents.

Behind the Headlines

Total revenue of PDI Inc. grossed nearly $31.6 million in the quarter, down 15.1% year over year, as the expiry or reduction of contracts that were executed so far in 2014 exceeded the number of new contracts entered in the Sales Services segment. Revenues also missed the Zacks Consensus Estimate of $36 million.

While Sales Services revenues declined 13.1%, Product Commercialization Services revenues decreased 12.4%, both on a year-over-year basis. Marketing Services revenues, on the other hand, plunged 62.7% year over year.

Total operating expense fell to $6.6 million from $7.7 million in the year-ago quarter mainly due to lower compensation expenses.

Operating loss was $2.5 million, which compared unfavorably with a loss of $0.8 million in the prior-year quarter. This deterioration largely resulted from an expected decline in revenues and margins as well as investment in strategic plans.

Adjusted earnings before income taxes, interest expenses, interest income, depreciation and amortization (EBITDA) was negative $1.5 million versus earnings of $0.2 million in the prior-year quarter. This deterioration was largely owing to the company’s expenditure on key strategic initiatives and a decline in gross profit.

Financial Update

As of Jun 30, 2014, PDI Inc.’s cash and cash equivalents were $35.6 million, decreasing from $45.6 million as of Dec 31, 2013. This decline mainly stemmed from higher working capital requirements, timing of some payments from customers and investment in strategic plans.

Total assets of PDI Inc. were valued at $59.5 million as of Jun 30, 2014, lower than $69.1 million at 2013 end. Total stockholders' equity came in at $29.4 million as of Jun 30, 2014 versus $32.5 million at 2013-end.

Cash used in operating activities by PDI Inc. was $8.3 million in the second quarter of 2014, higher than $0.6 million used in the year-ago quarter.

Looking Forward

PDI Inc. expects revenues in core business to decrease in the third quarter of 2014. Additionally, revenues for the full year are expected to decline from the 2013 level. At the same time, based on the recent acquisition of Asuragen Inc., management expects modest revenues in 2014 from Interpace Diagnostic and an operating loss worth $5–$6 million.

Management reiterated the operating loss guidance of $4–$5 million and continues to expect core business adjusted EBITDA to breakeven in 2014.

Performance of Other Business Service Providers

SouFun Holdings Ltd. (SFUN) reported operating net income of 16 cents per share in the second quarter of 2014, a penny higher than the Zacks Consensus Estimate.

Cardtronics Inc.’s (CATM) second-quarter 2014 operating income of 55 cents per share beat the Zacks Consensus Estimate by 5.8%.

Viad Corp. (VVI) posted second-quarter earnings per share of 44 cents, surpassing the Zacks Consensus Estimate by 12.8%.

Zacks Rank

PDI Inc. presently has a Zacks Rank #3 (Hold).