Daily Research News Online no. 8777 - US Pharma Decline Mars Harris Results Again

US Pharma Decline Mars Harris Results Again

August 22 2008

Harris Interactive has announced results for its fourth fiscal quarter and fiscal year ended June 30, 2008. Annual revenue was up 13% to $238.7m, but pro forma organic revenue was down 1%, with a decline of 3% in North American more than cancelling out good growth of 6% in Europe.

In the fourth quarter, the imbalance was even more apparent, with growth of 12% in Europe and decline of 7% in North America giving another 3% overall decline. With acquisitions, consolidated revenue was up 11% to $63.5m overall and annual revenue looked healthier at $238.7m.

Q4 adjusted EBITDA was $2.4m or 3.7% of revenue, down from $7.0m or 12.2% of revenue reported a year earlier. For the full year, the figure was $16.1m or 6.7% of revenue, down 30% from $22.9m (10.8%) in the previous year.

President and CEO Gregory T. Novak says 2008 was 'a challenging year, to say the least' with a positive start 'derailed by the rapid deterioration of the macro-economic environment in North America which hit our pharma business particularly hard.' He nevertheless declares himself 'optimistic about our future', and says second-half right-sizing and restructuring has left the company 'a leaner and stronger organization.' He notes that the fourth quarter saw continuing difficulties in the US pharma business but also some hopeful signs: 'significant bookings, revenue and Internet revenue growth in Europe, growth in all of our US non-pharma custom research groups, and continued cash generation and strength in our balance sheet.'

The firm reports consolidated bookings up 5% on the year to $53.3m, helped by European bookings up 30% and hindered by a 21% drop in North American healthcare bookings.

CFO Ronald Salluzzo comments: 'Our new Healthcare leaders are making good progress in the turnaround of that group, and we now expect Healthcare revenue to stabilize by the end of the calendar year with the possibility of some upside in the second half of fiscal 2009.'

Consolidated bookings for fiscal year 2008 were $233.6 million, up 8% over the $217.1 million in bookings in fiscal 2007, with good results from France, Germany and Asia.

Revenue from Internet research as a proportion of the total continues to hover around the 2/3 mark for North America, and has consolidated at a similar level for Europe, after leaping from a third or less a year ago.

The latest figures are muddied by a massive impairment charge of $123.0 million in Q4, in addition to other one-off charges - $1.6m for a strategic review; and a $0.5m restructuring charge for actions taken to streamline operations in the UK, in addition to planned restructuring and severance charges.

The company is online at www.harrisinteractive.com .