PAREXEL International — Debt Investor Presentation (July 2017)
46 slides from PAREXEL International's debt investor presentation, Jul 11, 2017
Slide 1: Investor Presentation July 2017
Investor Presentation July 2017 Exhibit 99.1
Slide 2: Safe Harbor
SAFE HARBOR By accepting this Presentation, recipients acknowledge that they have read, understood and accepted the terms of this Disclaimer. This Presentation is the property of, and contains the proprietary and confidential information of Parexel International Corporation, West Street Merger Sub,
Slide 3: Safe Harbor
SAFE HARBOR All information herein speaks only as of (1) the date hereof, in the case of information about the Company (2) the date of such information, in the case of information from persons other than the Company. The Company specifically disclaims any obligation to update these forward-looking s
Slide 4: Today's Presenters
Today’s Presenters Josef H. von Rickenbach Chairman of the Board and Chief Executive Officer 35 years at PAREXEL Simon Harford Senior Vice President and Chief Financial Officer 2 months at PAREXEL Emma Reeve Corporate Vice President and Former Interim Chief Financial Officer 3 years at PAREXEL Mark
Slide 5: Agenda
Agenda TRANSACTION OVERVIEW BUSINESS OVERVIEW KEY CREDIT HIGHLIGHTS HISTORICAL FINANCIALS
Slide 6: Transaction Overview
BOSTON, MASSACHUSETTS TRANSACTION OVERVIEW ©2017 PAREXEL INTERNATIONAL CORP. 6 PAREXEL.
Slide 7: Transaction Overview
TRANSACTION OVERVIEW On June 19, 2017, PAREXEL International Corporation (“PAREXEL” or the “Company”) entered into a definitive agreement to be acquired by Pamplona Capital Management, LLP (“Pamplona”) for $88.10 per share in cash, or approximately $5.1bn including PAREXEL’s net debt Leading biophar
Slide 8: Transaction Summary
TRANSACTION SUMMARY ($ in millions) Amount xEBITDA % of Cap. Cash $284.3 New $300mm RC Facility due 2022 0.0 New Term Loan B due 2024 2,065.0 Total secured debt $2,065.0 5.01x 37.6% Net secured debt $1,780.7 4.32x New Senior Unsecured Notes due 2025 720.0 Total debt $2,785.0 6.75x 50.8% Net total de
Slide 9: Summary Indicative Terms – Senior Unsecured Bridge Facility
SUMMARY INDICATIVE TERMS – SENIOR UNSECURED bridge facility Issuer: West Street Merger Sub, Inc. (to be merged into PAREXEL International Corporation) Facility: $720 million Senior Unsecured Bridge Facility Guarantors: Each of (i) the Borrower’s existing and future, direct and indirect, wholly-owned
Slide 10: Key Transaction Dates
Key transaction dates Date Key Event Bank Holiday Key Transaction Date Tuesday, July 11th Bridge Investor Call Tuesday, July 18th Bridge Lender Commitments Due Early September Announce High Yield Offering and Commence High Yield Roadshow Late September Anticipated Acquisition Close July 2017 August
Slide 11: Corporate Legal Structure
CORPORATE LEGAL STRUCTURE Third Party Investors Management United Kingdom Holding Company Pamplona Fund Cayman, LP United Kingdom Intermediate Holding Company¹ United States Holding Company United States Intermediate Holding Company Parexel International Corporation (Massachusetts)²,³ US and Foreign
Slide 12: Pamplona Overview
PAMPLONA Overview Leader in private equity Global investment firm with offices in New York, London and Boston Founded in 2004 with the goal to invest in market leading companies with outstanding management teams $10 billion plus of assets under management across a number of funds for a variety of cl
Slide 13: Pamplona Investment Thesis
Pamplona Investment thesis Strong presence in faster growing geographies (#1 position in Asia) and therapeutic areas (oncology, rare diseases, and personalized medicine) 3 Second largest pure-play CRO with a reputation for scientific excellence 2 Opportunity to create significant value by bringing t
Slide 14: Business Overview
BERLIN, GERMANY 2017 PAREXEL INTERNATIONAL CORP.) 14 PAREXEL.
Slide 15: Company Snapshot
Company Snapshot Company Overview Historical Financials ($ in mm) – Fiscal Year Ended 6/30 Service Revenue Adjusted EBITDA1 / Margin Second largest pure‐play CRO with over 19,000 employees across 51 countries Diversified across geographies: 47% Americas, 39% EMEA, 14% Asia/Pacific1 Broad therapeutic
Slide 16: History of PAREXEL
1993 Files S-1 & registers with SEC to become a publicly traded company 2008 PAREXEL offers unprecedented access to eClinical technologies and resources 2010 PAREXEL begins strategic partnership model 2012 PAREXEL launches BioPharm Unit 2017 Second largest pure‐play CRO with over 19,000 employees ac
Slide 17: CROs Offer a Unique Value Proposition to Biopharma
Clinical research organizations OFFER A UNIQUE VALUE PROPOSITION to Biopharma ü Enhanced cost structure flexibility Development optimization Specialized therapeutic and regulatory expertise Full range of solutions Switch to more variable cost structures Reduce need to maintain redundant development
Slide 18: Parexel's Offerings Overview
Parexel’s offerings overview Comprehensive Suite of Services Full suite of services Planning Phase I – IV Post Launch Full Set of Solutions Clinical Research Informatics Consulting Expertise Across all Knowledge Sectors Therapeutic Regulatory Market Access Global Expertise Flexible Monetization Mode
Slide 19: Parexel Segment Overview
Parexel segment overview PAREXEL Clinical Research Services Early Phase Services Phase II-III Services Clinical Trial Supplies & Logistics Quantitative Clinical Development Clinical Development Optimization Clinical Data Management PAREXEL Access Late-Phase Interventional Observational Research Drug
Slide 20: PAREXEL Poised for Success
“Capture New Growth” “Energize the Core” PAREXEL poised for success Win account-level technology assignments Leverage integrated technology & services for differentiation & growth Expand clinical development data collection capabilities Broaden logistics/RTSM solutions with profitable value-added se
Slide 21: Clinical Research Services Overview
Clinical Research Services (CRS) overview Offers complete services for the design, initiation and management of clinical trial programs Early Phase business encompasses the early stages of clinical testing and offers clients a one-stop service Phase II-III business unit performs both full-service an
Slide 22: Extensive Therapeutic Area Experience
EXTENSIVE THERAPEUTIC AREA EXPERIENCE Expertise in all major therapeutic areas, with particular strength in oncology and rare diseases Significant growth in approvals for targeted oncology products in recent years Oncology represents the fastest growing market for CROs at ~10‐12% compared to overall
Slide 23: Clinical Delivery Organization Provides Operational Excellence
Clinical delivery organization PROVIDES Operational Excellence Best-in-class study start-up time: 12% faster than industry 21% faster than CROs Increased focus on patient centricity, real-world data, technology to improve patient recruitment Implementing LEAN and reorganizing oversight models have b
Slide 24: Recent Acquisitions Enhance FSP and MSL Capabilities
Recent acquisitions enhance Functional service provider and Medical service liaison capabilities ExecuPharm enables full-service FSP offering in US Acquisition received well by market and clients PAREXEL gaining wallet share in accounts adopting FSP model (Pfizer, Merck, BI) Maintaining leadership i
Slide 25: PAREXEL Informatics Overview
PAREXEL Informatics overview PAREXEL Informatics Overview World’s largest trial randomization experience through its experience with Optum and access to 300+ other data sources PAREXEL MyTrials platform integrates site investigator applications to drive efficiencies in clinical trials Facilitates ev
Slide 26: PAREXEL Consulting Overview
PAREXEL Consulting overview PAREXEL Consulting Overview PAREXEL Consulting is an industry leader in providing strategic advice and related services to earn regulatory approval for products PAREXEL Consulting delivers 1,200+ projects a year across product and therapeutic areas and client types PAREXE
Slide 27: Key Credit Highlights
TAIPEL, TAIWAN KEY CREDIT HIGHLIGHTS ©2017 PAREXEL INTERNATIONAL CORP. / 27 PAREXEL.
Slide 28: Key Credit Highlights
Key credit highlights DIVERSIFIED BUSINESS AND LONG-STANDING PARTNERSHIPS WITH BLUE-CHIP CUSTOMERS 3 A LEADING FULL SERVICE CRO WITH GLOBAL CAPABILITIES 2 WELL POSITIONED IN KEY GROWTH AREAS AND STRATEGIC MARKETS 4 FAVORABLE INDUSTRY TRENDS 1 BOOKINGS AND DIVERSE BACKLOG GROWTH TO DRIVE ACCELERATING
Slide 29: Biopharmaceutical Industry Evolution Curve
Time Cumulative Value Pharma as “Chemical Company” Pharma Monopoly Pharma Post-Hatch-Waxman Act Rise of Biotech's Future Illustrative Current state of the Pharma Industry Representative R&D Spend Current state of the Biotech Industry Hatch-Waxman Bill Enacted As few generics come to market immediate
Slide 30: Favorable Industry Trends: Attractive, Growing End Market
1 FAVORABLE INDUSTRY TRENDS Attractive, growing end market CRO Market Projection ($B)1 1 Bain Consulting CRO Growth Drivers Global CRO market expected to grow ~5‐7% p.a. from 2016 – 20201, driven by: Growth in pharma R&D spend ‐ ~2% p.a. Growth in outsourcing penetration ‐ ~4% p.a. CRO projected mar
Slide 31: Continued Trend Toward Outsourcing Across Biopharma
IP & Funding Clinical Development Manufacturing Commercial Regulatory Discovery/ Preclinical Clinical IT Large, established companies increasingly willing to extend the range and breadth of outsourced services Regulatory Safety Commercial Clinical IT Large Integrated Biopharma Company Small-to-midsi
Slide 32: A Leading Full Service CRO
A LEADING FULL SERVICE CRO… Second largest pure-play CRO in late-stage clinical development More than 30 years of excellence 19,000+ employees across 51 countries Over 2,000 clinical trials conducted with more than 900,000 patients at 100,000+ sites in past 5 years Differentiated ability to manage c
Slide 33: With Global Capabilities
…With global capabilities 2 NORTH AMERICA 5,300+ employees 13 offices: California (3), Illinois, Maryland (2), Massachusetts (3), New Jersey, North Carolina, Pennsylvania LATIN AMERICA 800+ employees 6 offices: Argentina (2), Brazil, Chile, Mexico, Peru EUROPE 6,200+ employees 33 offices: Belgium, C
Slide 34: Diversified Business and Partnerships with Blue-Chip Customers
DIVERSIFIED BUSINESS AND LONG-STANDING PARTNERSHIPS WITH BLUE-CHIP CUSTOMERS 3 Source: Company filings, internal management analysis. Revenue Breakdown by Product Increasing Client Diversification Total: $2.1B Customers outside top 20 grew from 24% to 35% of revenue since 2016 Blue-Chip Clients and
Slide 35: Well Positioned in Key Growth Areas and Strategic Markets
WELL POSITIONED IN KEY GROWTH AREAS AND STRATEGIC MARKETS Small and Mid Sized Biopharma Customers Early Clinical Development Oncology Asia +31% CAGR Note: Uses previous backlog policy; data not available for new policy Gross new business Gross new business Note: Uses previous backlog policy; data no
Slide 36: Oncology/Hematology and Rare Diseases Trends
Oncology/Hematology Rare Diseases Sources: Citeline, Express Scripts, 2013, Drug Trend Report; IMS Health Report, 2014; JPM Healthcare Technology Report. 2013; Wells Fargo Report, 2013, PwC Specialty Drug Report, Fierce Biotech, DCAT, Cowen–Therapeutic Categories Outlook (Feb 2015), Strategy & Analy
Slide 37: PAREXEL Redefined Its Backlog Definition
PAREXEL redefined its backlog definition Preparation for disclosure of Performance Obligations under ASC 606 Peer group aligning on common methodology Revenue must be expected to begin within six months Redefinition decreased PAREXEL’s backlog from $5.9B to ~$4.1B Old definition: Formal contract Let
Slide 38: Bookings and a Diverse Backlog Drive Sustainable Long-Term Growth
BOOKINGS AND a diverse BACKLOG DRIVE Sustainable LONG-TERM GROWTH Gross bookings have grown ~11% annually over the past two years New backlog definition (e.g. formal contract/LOI only) increases visibility of revenues and improves overall credit profile CRO peer group aligning on common methodology
Slide 39: Stable and Predictable Business Model Leads to Strong Free Cash Flow
STABLE AND PREDICTABLE BUSINESS model leads to STRONG FREE CASH FLOW GENERATION Cash Flow Conversion2 64.3% 75.2% 75.6% 75.0% 80.0% Recurring and Stable Revenue Streams Free Cash Flow2 Long-term partnerships create stickier customers with better revenue visibility and greater switching costs High re
Slide 40: Historical Financials
TOKYO, JAPAN HISTORICAL FINANCIALS ©2017 PAREXEL INTERNATIONAL CORP. / 40 PAREXEL.
Slide 41: Parexel Guidance Issued 05/03/17
Parexel guidance issued 05/03/17 Q4 Guidance Revenue $531-$545 Million GAAP Diluted EPS $0.57-$0.71 Non-GAAP Diluted EPS* $0.87-$1.01 FY17 Guidance Revenue $2.09-$2.11 Billion GAAP Diluted EPS $2.04-$2.18 Non-GAAP Diluted EPS* $3.17-$3.31 Guidance Issued 05/03/17 * Reflects acquisition of the Medica
Slide 42: Recent Performance Trends
RECENT PERFORMANCE TRENDS Historical Revenue Growth Summary of Recent Performance From FY09-FY15, PAREXEL grew at an impressive 11.5% CAGR vs. the market at 6-8% Driven by the Company’s: early global expansion pioneering of the strategic partnership model leveraging of outsourcing penetration captur
Slide 43: Opportunity to Bring Margin in Line with Peers
OPPORTUNITY TO BRING MARGIN IN LINE WITH PEERS THROUGH DISCRETE INITIATIVES Parexel’s CRS EBITDA margin of 15% compares to industry average of ~24%1 Higher margin Informatics and Consulting businesses representing ~25% of total revenue should result in margins above CRO peers Leveraging through reve
Slide 44: Meaningful Progress on Performance Improvement Initiatives
PaREXEl has shown meaningful progress on performance improvement initiatives Target Area Description Margin Enhancement Launched Margin Acceleration Program in 2015 focused on transitioning resources from high to low-cost countries, optimizing spans of control and management layers through reduction
Slide 45: Historical Financial Performance
HISTORICAL FINANCIAL PERFORMANCE Service Revenue Adjusted EBITDA & EBITDA Margin1 Capital Expenditures2 Free Cash Flow3 EBITDA Margin 13.1% 15.2% 16.3% 18.3% - YoY Growth - 11.8% 4.0% 3.9% - % of revenue Maint. Acq. 4.7% 5.6% 3.8% 0.0% 4.0% 5.2% 4.6% 3.2% 3.6% 8.8% Cash Flow Conversion3 64.3% 75.2%
Slide 46: Adjusted EBITDA reconciliation footnotes
Non-recurring costs incurred to carry out restructuring initiatives pertaining to the Margin Acceleration Program announced in Q4’15 and the first phase of the New Phase initiative announced in Jan’17 Reversal of non-cash FV adjustment associated with contingent considerations revaluations relating
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