ICON Reports Second Quarter 2023 Results

Highlights

• Net business wins in the quarter of $2,419 million; a net book to bill of 1.20 or 1.21 on a trailing twelve month basis.

• Closing backlog of $21.7 billion, an increase of 2.2% on quarter one 2023 or an increase of 8.5% on quarter two 2022.

• Quarter two revenue of $2,020.3 million representing an increase of 4.4% on prior year revenue and 4.3% on a constant currency organic basis. YTD revenue of $3,998.8 million representing a year on year increase of 4.2% and 4.7% on a constant currency basis.

• Quarter two adjusted EBITDA of $414.2 million or 20.5% of revenue, an increase of 16.9% on quarter two 2022. YTD adjusted EBITDA of $813.4 million or 20.3% of revenue, representing a year on year increase of 17.0%.

• GAAP net income attributable to the Group for the quarter of $115.6 million or $1.40 per diluted share. YTD GAAP net income of $232.3 million or $2.81 per diluted share, an increase of 1.8% on the prior year.

• Quarter two adjusted net income attributable to the Group was $256.9 million or $3.11 per diluted share, an increase of 8.7% on quarter two 2022 adjusted earnings per share. Year to date adjusted net income attributable to the Group of $496.7 million or $6.01 per diluted share, an increase of 6.9% year on year.

• Days sales outstanding reduced to 52 days from 54 days at March 31, 2023.

• $150 million repayment made on Term Loan B debt. Net debt balance of $4.0 billion with Net Debt to adjusted EBITDA ratio of 2.5x.

• Quarter two effective tax rate of 15.2%. Updated estimate for full year 2023 effective tax rate of 15.5%, a decrease from prior estimated effective tax rate of 16.5%.

• Updated full-year 2023 financial guidance for revenue by narrowing the revenue range to $8,070 - $8,210 million, representing a year over year increase of 4.3 to 6.1%, and adjusted earnings per share* in the range of $12.63 - $12.91, representing a year over year increase of 7.5 to 9.9%. This is an increase of $.04 at the midpoint from our previous adjusted earnings per share guidance range. Adjusted earnings per share to exclude amortization, stock compensation, foreign exchange and transaction-related / integrated-related adjustments.

ICON plc (NASDAQ: ICLR), a world-leading healthcare intelligence and clinical research organization, today reported its financial results for the second quarter ended June 30, 2023.

CEO, Dr. Steve Cutler commented, “ICON delivered positive results in the second quarter, with revenue growth of 4.4% year over year and excellent adjusted EBITDA performance resulting in 17% year over year growth. We are encouraged by the positive customer demand trends across our business and have confidence in our long-term growth trajectory. We now expect revenue in the range of $8,070 - $8,210 million for the full-year 2023, representing growth of 4.3 to 6.1% on a year over year basis. Given our strong margin performance, as well as a more favorable tax position, we are revising our adjusted earnings per share* range to $12.63 - $12.91, reflecting a year over year increase of 7.5 to 9.9%, an increase of $.04 at the midpoint from our previous guidance range.”

Second Quarter 2023 Results

Gross business wins in the second quarter were $2,860 million and cancellations were $441 million. This resulted in net business wins of $2,419 million and a book to bill of 1.20.

Revenue for the second quarter was $2,020.3 million. This represents an increase of 4.4% on prior year revenue or 4.3% on a constant currency organic basis.

GAAP net income attributable to the Group was $115.6 million resulting in $1.40 diluted earnings per share in quarter two 2023 compared to $1.41 diluted earnings per share in quarter two 2022. Adjusted net income attributable to the Group for the quarter was $256.9 million resulting in an adjusted diluted earnings per share of $3.11 compared to $2.86 per share for the second quarter 2022.

Adjusted EBITDA for the second quarter was $414.2 million or 20.5% of revenue, a year on year increase of 16.9%.

The effective tax rate in quarter two was 15.2%.

Cash generated from operating activities for the quarter was $203.9 million. During the quarter $32.1 million was spent on capital expenditure. At June 30, 2023, the Group had cash and cash equivalents of $270.2 million, compared to cash and cash equivalents of $279.9 million at March 31, 2023 and $614.9 million at June 30, 2022. $50 million of the revolving credit facility was drawn down in April 2023 and $80 million was repaid in June 2023. Additionally, $150 million of Term Loan B payments were made during the quarter resulting in a net indebtedness of $4.0 billion at June 30, 2023.

Year to date 2023 Results

Gross business wins year to date were $5,718 million and cancellations were $884 million. This resulted in net business wins of $4,834 million and a book to bill of 1.21.

Year to date GAAP revenue was $3,998.8 million. This represents a year on year increase of 4.2% or 4.7% on a constant currency basis.

GAAP net income attributable to the Group year to date was $232.3 million resulting in $2.81 diluted earnings per share. Adjusted net income attributable to the Group was $496.7 million resulting in an adjusted diluted earnings per share of $6.01 compared to $5.62 per share for the equivalent prior year period.

Adjusted EBITDA year to date was $813.4 million or 20.3% of revenue, a year on year increase of 17.0%.

Other Information

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income attributable to the Group and adjusted diluted earnings per share attributable to the Group. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share exclude amortization, stock compensation, foreign exchange gains and losses restructuring and transaction-related / integration-related adjustments. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, ICON believes certain non-GAAP information is useful to investors for historical comparison purposes.

ICON will hold a conference call on July 27, 2023 at 08:00 EDT [13:00 Ireland & UK]. This call and linked slide presentation can be accessed live from our website at http://investor.iconplc.com. A recording will also be available on the website for 90 days following the call. In addition, a calendar of company events, including upcoming conference presentations, is available on our website, under “Investors”. This calendar will be updated regularly.

This press release contains forward-looking statements, including statements about our financial guidance. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. These statements are not guarantees of future performance or actual results, and actual results, developments and business decisions may differ from those stated in this press release. The forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements, including, but not limited to, the ability to enter into new contracts, maintain client relationships, manage the opening of new offices and offering of new services, the integration of new business mergers and acquisitions, the impact of COVID-19 on our business, as well as other economic and global market conditions and other risks and uncertainties detailed from time to time in SEC reports filed by ICON, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not place undue reliance on these forward-looking statements when making investment decisions. The word "expected" and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by ICON, including its Form 20-F, F-1, F-4, S-8, F-3 and certain other reports, which are available on the SEC's website at http://www.sec.gov.

* Our full-year 2023 guidance adjusted earnings per share measures are provided on a non-GAAP basis because the company is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. For the same reasons, the company is unable to address the probable significance of the unavailable information.

ICON plc is a world-leading healthcare intelligence and clinical research organization. From molecule to medicine, we advance clinical research providing outsourced services to pharmaceutical, biotechnology, medical device and government and public health organizations. We develop new innovations, drive emerging therapies forward and improve patient lives. With headquarters in Dublin, Ireland, ICON employed approximately 41,160 employees in 108 locations in 53 countries as at June 30, 2023. For further information about ICON, visit: www.iconplc.com.

ICON/ICLR-F

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2022

(UNAUDITED)

ICON plc

CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT JUNE 30, 2023 AND DECEMBER 31, 2022

ICON plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2022

(UNAUDITED)

ICON plc

RECONCILIATION OF NON-GAAP MEASURES

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2022

(UNAUDITED)

(a) Stock-based compensation expense represents the amount of recurring non-cash expense related to the Company’s equity compensation programs (inclusive of employer related taxes).

(b) Foreign currency losses (gains), net relates to gains or losses that arise in connection with the revaluation or settlement of non-US dollar denominated assets and liabilities. We exclude these gains and losses from adjusted EBITDA and adjusted net income because fluctuations from period- to- period do not necessarily correspond to changes in our operating results.

(c) Restructuring charges incurred relate to charges incurred in connection with the termination of leases at locations that are no longer being used and amounts incurred in connection with the elimination of redundant positions within the organization.

(d) Transaction-related / integration-related costs include expenses/credits associated with our acquisitions and any other costs incurred directly related to the integration of these acquisitions.

(e) Transaction-related financing costs includes costs incurred in connection with changes to our long-term debt and amortization of financing fees. We exclude these costs from adjusted EBITDA and adjusted net income because they result from financing decisions rather than from decisions made related to our ongoing operations.

(f) On April 20, 2023, the Company completed the purchase of the majority investor’s 51% majority voting share capital of Oncacare Limited (“Oncacare”). This gave rise to an acquisition-related gain of $6.2 million. This gain was excluded from adjusted EBITDA and adjusted net income.

(g) Represents the tax effect of adjusted pre-tax income at our estimated effective tax rate.

http://www.iconplc.com

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