PDI Reports 2012 Fourth Quarter and Year End Financial Results

        PDI Reports 2012 Fourth Quarter and Year End Financial Results

Management Will Host Conference Call Tomorrow March 7, 2013 at 8:30am ET

PR Newswire

PARSIPPANY, N.J., March 6, 2013

PARSIPPANY, N.J., March 6, 2013 /PRNewswire/ --PDI, Inc. (Nasdaq: PDII),
today reported financial and operational results for the fourth quarter and
year ended December 31, 2012. Summary financial and operating highlights
include:

  oFull year 2012 revenue was $126.9 million compared to $157.3 million for
    2011. The company's revenue was lower in 2012 compared to 2011 primarily
    due to the expiration of certain contracts and the timing of initiation of
    new contract wins.
  oThe company finished the full year with over $250 million of new
    multi-year contract wins and renewals, significantly higher than 2011.
  oOperating loss for 2012 which includes asset impairment charges of $23.5
    million was $25.2 million compared to $4.7 million in 2011, however,
    Adjusted Operating Loss (a non-GAAP measure) for 2012 was $1.0 million
    compared to $1.8 million in 2011 and a profit of $0.3 million in the
    fourth quarter of 2012.
  oAdjusted EBITDA (a non-GAAP measure) for 2012 increased to $2.8 million
    compared to a loss of $0.1 million for 2011.

Condensed Summary Statement of Continuing Operations
($ in thousands, except per share data) (Unaudited)
                               4th Quarter Ended         Year Ended
                               December 31,              December 31,
                               2012         2011         2012        2011
Revenue, net                   $ 35,632    $ 38,283    $ 126,899   $ 157,291
Gross profit                   6,985        8,701        26,860      32,471
Operating expenses:
 Compensation expense        3,688        4,544        16,414      19,694
 Other SG&A                  3,013        3,705        11,455      14,590
 Asset impairment            23,517       -            23,517      -
 GroupDCA contingent
consideration buyout and       -            2,889        -           2,889
related charges
 Facilities realignment       706          -            706         -
 Total operating       30,924       11,138       52,092      37,173
expenses
Operating loss                 $(23,939)    $ (2,437)   $ (25,232)  $ 
                                                                     (4,702)
Other (expense) income, net    (13)         119          (28)        (14)
Provision (benefit) for income (11)         (422)        208         (939)
tax
Loss from continuing           $(23,941)    $ (1,896)   $ (25,468)  $ 
operations                                                           (3,777)
Diluted loss per share from    $  (1.64)  $  (0.13)  $         $  
continuing operations                                    (1.75)      (0.26)

CEO Comments

Commenting on the results, Nancy Lurker, chief executive officer of PDI, Inc.
noted, "As anticipated and discussed during the third quarter conference call,
revenue for the full year of 2012 was below that of 2011, due primarily to the
timing and implementation of new contracts. During 2012 we won more than $250
million in new multi-year contracts and renewals; however, as a result of the
timing of these wins and the execution timelines of these contracts, only $40
million impacted revenue in 2012. Looking forward to 2013, we expect revenues
to be significantly higher as we continue to gain new business and realize
revenue from the 2012 wins.

"The gross margin percentage for the full year of 2012 was essentially flat
compared to 2011, but, as we previously discussed, due to intensified
competitive pressures, is expected to decline in 2013 as new wins with lower
margins are executed. From an operating standpoint, we maintained tight cost
controls. For the full year of 2012, excluding asset impairment and facilities
realignment charges we reduced ongoing compensation expense and other SG&A by
approximately $6.4 million compared to 2011 and the Adjusted Operating Loss,
which also excludes these charges, was $1.0 million. We also had positive
Adjusted EBITDA of $2.8 million for the full year of 2012. Both of these
measures were improvements compared to 2011."

Ms. Lurker continued, "We entered 2013 with a strong backlog of business under
contract and expect our core business to generate significantly higher
revenues during the year. Because these higher revenues will generate lower
overall margins we will continue to maintain tight controls over ongoing
operating expenses. In addition to being a year of revenue growth for PDI,
2013 will also be a year of investment. Given the dynamics of our current core
businesses we are committed to continuing to differentiate them and to
developing more predictable, higher growth and higher margin business.

"To these ends, in 2013 we will: invest in a number of areas that will help
differentiate and further strengthen and support our core offerings;
aggressively pursue the in-licensing, acquisition or partnering of products
that take advantage of and leverage PDI's core commercialization strengths to
add more stable and higher margin business; and complete and fund a new Group
DCA product offering that will connect health care providers, sales
representatives and other promotional channels in a new and unique way. We
expect to provide additional detail on these initiatives as the year
progresses."

Fourth Quarter Business Reviews - Continuing Operations

Revenue- For the fourth quarter of 2012, revenue of $35.6 million was $2.7
million lower than the fourth quarter of 2011. Overall, revenue in the Sales
Services segment increased slightly but was more than offset by decreases from
both the Marketing Services and Product Commercialization segments.

  oSales Services segment revenue for the fourth quarter of 2012 of $30.7
    million was $0.9 million higher than the fourth quarter of 2011. Revenue
    from new contract wins more than offset the anticipated expiration of
    certain other contracts.
  oMarketing Services segment revenue for the fourth quarter of 2012 of $2.1
    million was $0.9 million lower than the fourth quarter of 2011. This
    decrease was primarily due to fewer contract signings by Group DCA.
  oProduct Commercialization Services segment revenue for the fourth quarter
    of 2012 was $2.9 million, $2.7 million lower than the fourth quarter of
    2011 due to internalization of selected commercialization activities by
    our customer as of October 1, 2012.

Gross Profit- For the fourth quarter of 2012, gross profit of $7.0 million was
$1.7 million lower than the fourth quarter of 2011. At the same time, the
gross profit percentage decreased to 20% in 2012 from 23% in 2011.

  oSales Services segment gross profit for the fourth quarter of 2012 of $5.9
    million was $0.5 million lower than the fourth quarter of 2011. While
    revenue was $0.9 million higher in 2012, lower margins were realized on
    new business.
  oMarketing Services segment gross profit for the fourth quarter of 2012 of
    $0.2 million was $0.6 million lower than 2011 as a result of lower revenue
    and a lower gross profit percentage within the segment.
  oProduct Commercialization Services segment gross profit for the fourth
    quarter of 2012 of $0.9 million was $0.6 million lower compared to 2011 as
    a result of lower revenue due to the internalization of commercialization
    activities by our customer.

Total Operating Expenses- For the fourth quarter of 2012, total operating
expenses were $30.9 million compared to $11.1 million in 2011. Included in
fourth quarter 2012 expenses are $23.5 million of asset impairment and $0.7
million of facilities realignment charges and included in 2011 expenses is
$2.9 million of Group DCA contingent consideration buyout and related
charges. Excluding these items, total operating expenses for the fourth
quarter of 2012 were $6.7 million; $1.5 million lower than of 2011. The
decrease is a result of the company's continuing focus on cost reduction and
right-sizing of the business.

During the fourth quarter of 2012 the company recorded total asset impairments
of $23.5 million. The majority of these asset impairment charges, $22.8
million, were associated with the write-down of goodwill and other intangible
assets in the Group DCA business unit within our Marketing Services segment.
The company continues to believe in the long-term growth of this business and
intends to continue to invest to achieve that growth. However, the recent
decline in revenue, the decrease in new business generated and changes in
pharmaceutical industry spending, at least in the near term, were factors
contributing to the impairment charge. In addition, the company recorded a
$0.7 million charge in the fourth quarter of 2012 from the write-down of
assets related to the fourth quarter 2011 sale of certain assets of the
company's discontinued Pharmakon business unit.

During the fourth quarter of 2012 the Marketing Services segment incurred a
charge of approximately $0.7 million related to the downsizing of office space
related to Group DCA in Parsippany, New Jersey.We are currently seeking to
sublet this unused office space.

Operating Loss- For the fourth quarter of 2012 the operating loss was $23.9
million, compared to an operating loss of $2.4 million in the fourth quarter
of 2011. Excluding the effect of the asset impairment and facilities
realignment charges in 2012 and the contingent consideration buyout in 2011,
Adjusted Operating Income in the fourth quarter of 2012 was $0.3 million
compared to $0.5 million in 2011.

Liquidity and Cash Flow- Adjusted EBITDA for the fourth quarter of 2012 was
$1.1 million compared to $(1.6) million in the fourth quarter of 2011. Cash
and cash equivalents as of December 31, 2012 were $52.8 million, down $11.6
million from December 31, 2011.

  oThe decrease in cash from December 31, 2011 is primarily attributable to
    the payments of severance and close-out costs associated with the fourth
    quarter 2011 sale of our Pharmakon business unit, right-sizing of the
    Group DCA unit, scheduled payments to the sellers of Group DCA in 2012 and
    the timing of collection of certain trade receivables.

As of December 31, 2012, the company's cash equivalents were predominantly
invested in U.S. Treasury money market funds and the company had no commercial
debt.

Non-GAAP Financial Measures

In addition to United States generally accepted accounting principles, or
GAAP, results provided throughout this document, PDI has provided certain
non-GAAP financial measures to help evaluate the results of its performance.
The company believes that these non-GAAP financial measures, when presented in
conjunction with comparable GAAP financial measures, are useful to both
management and investors in analyzing the company's ongoing business and
operating performance. The company believes that providing non-GAAP
information to investors, in addition to the GAAP presentation, allows
investors to view the company's financial results in the way that management
views financial results.

In this document, the company discusses Adjusted Operating Income (Loss), a
non-GAAP financial measure. Adjusted Operating Income (Loss) is a metric used
by management to measure the profitability of the ongoing business. Adjusted
Operating Income (Loss) is defined as operating loss, plus asset impairment,
Group DCA contingent consideration buyout, and facilities realignment. The
table below includes a reconciliation of this non-GAAP financial measure to
the most directly comparable GAAP financial measure.

Adjusted Operating Income (Loss) (Unaudited)
($ in thousands)
                              4th Quarter Ended       Year Ended
                              December 31,            December 31,
                              2012        2011        2012          2011
Operating loss                $ (23,939)  $ (2,437)  $ (25,232)   $ (4,702)
Asset impairment              23,517      -           23,517        -
Group DCA contingent
consideration buyout and      -           2,889       -             2,889
related charges
Facilities realignment        706         -           706           -
Adjusted operating income     $       $        $  (1,009)  $ (1,813)
(loss)                        284         452

In this document, the company also discusses Adjusted EBITDA, a non-GAAP
financial measure. Adjusted EBITDA is a metric used by management to measure
cash flow of the ongoing business. Adjusted EBITDA is defined as operating
loss, plus depreciation and amortization, non-cash stock-based compensation,
and other non-cash expenses. The table below includes a reconciliation of this
non-GAAP financial measure to the most directly comparable GAAP financial
measure.

Adjusted EBITDA (Unaudited)
($ in thousands)
                        4th Quarter Ended           Year Ended
                        December 31,                December 31,
                        2012           2011         2012          2011
Operating loss          $  (23,939)  $         $           $   
                                       (2,437)      (25,232)      (4,702)
Depreciation and        544            599          2,034         2,665
amortization
Stock compensation      271            253          1,791         1,936
Asset impairment        23,517         -            23,517        -
Facilities realignment  706            -            706           -
Adjusted EBITDA         $           $         $         $     
                        1,099         (1,585)      2,816         (101)

Conference Call

As previously announced, PDI will hold a conference call tomorrow, Thursday,
March 7 to discuss financial and operational results for the fourth quarter
and year ended December 31, 2012 as follows:

Time: 8:30 AM (ET)
Dial-in numbers: (866) 644-4654 (U.S. and Canada) or (706) 643-1203
Conference ID#: 98411955

Live webcast: www.pdi-inc.com, under "Investor Relations"

The teleconference replay will be available three hours after completion
through March 11, 2013 at (800) 585-8367 (U.S. and Canada) or (404) 537-3406.
The replay pass code is 98411955. The archived web cast will be available for
one year.

About PDI, Inc.

PDI is a leading health care commercialization company providing superior
insight-driven, integrated multi-channel message delivery to established and
emerging health care companies. The company is dedicated to enhancing
engagement with health care practitioners and optimizing commercial
investments for its clients by providing strategic flexibility, full product
commercialization services, innovative multi-channel promotional solutions,
and sales and marketing expertise. For more information, please visit the
company's website at http://www.pdi-inc.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding future events
and financial performance. These statements are based on current expectations
and assumptions involving judgments about, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which
are beyond PDI's control. These statements also involve known and unknown
risks, uncertainties and other factors that may cause PDI's actual results to
be materially different from those expressed or implied by any forward-looking
statement. For example, with respect to statements regarding projections of
future revenues, growth and profitability, actual results may differ
materially from those set forth in this release based on the loss, early
termination or significant reduction of any of our existing service contracts,
the failure to meet performance goals in PDI's incentive-based arrangements
with customers, the inability to secure additional business or our inability
to develop more predictable, higher margin business through in-licensing or
other means. Additionally, all forward-looking statements are subject to the
risk factors detailed from time to time in PDI's periodic filings with the
Securities and Exchange Commission, including without limitation, PDI's
subsequently filed Annual Report on Form 10-K for the year ended December 31,
2012 and current reports on Form 8-K. Because of these and other risks,
uncertainties and assumptions, undue reliance should not be placed on these
forward-looking statements. In addition, these statements speak only as of the
date of this press release and, except as may be required by law, PDI
undertakes no obligation to revise or update publicly any forward-looking
statements for any reason.

(Tables to Follow)

PDI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
($ in thousands, except per share data)
                          Three Months Ended          Years Ended
                          December 31,                December 31,
                          2012          2011          2012         2011
Revenue, net              $  35,632    $  38,283    $ 126,899   $ 157,291
Cost of services          28,647        29,582        100,039      124,820
Gross profit              6,985         8,701         26,860       32,471
Compensation expense      3,688         4,544         16,414       19,694
Other selling, general
and administrative        3,013         3,705         11,455       14,590
expenses
Asset impairment          23,517        -             23,517       -
GroupDCA contingent
consideration buyout and  -             2,889         -            2,889
related charges
Facilities realignment    706           -             706          -
Total operating expenses  30,924        11,138        52,092       37,173
Operating loss            (23,939)      (2,437)       (25,232)     (4,702)
Other (expense) income,   (13)          119           (28)         (14)
net
Loss from continuing
operations before
income tax                (23,952)      (2,318)       (25,260)     (4,716)
(Benefit) provision for   (11)          (422)         208          (939)
income tax
Loss from continuing      (23,941)      (1,896)       (25,468)     (3,777)
operations
Income (loss) from
discontinued operations,  145           (8,369)       (59)         (8,137)
net of tax
Net loss                 $ (23,796)    $ (10,265)    $ (25,527)  $ (11,914)
Basic and diluted (loss)
income per share of
common stock:
From continuing           $   (1.64)  $   (0.13)  $          $  
operations                                            (1.75)      (0.26)
From discontinued         0.01          (0.58)        -            (0.57)
operations
Net loss per basic and                                $          $  
diluted share of common   $   (1.63)  $   (0.71)  (1.75)      (0.83)
stock
Weighted average number
of common shares and
common share equivalents
outstanding:
Basic                     14,627        14,496        14,585       14,440
Diluted                   14,627        14,496        14,585       14,440



Segment Data (Unaudited)
($ in thousands)
                    Sales         Marketing       PC
                    Services      Services        Services*     Consolidated
Three months ended
December 31, 2012:
Revenue, net        $  30,667   $    2,066   $   2,899   $   35,632
Gross profit        $   5,938  $     196  $    851  $    6,985
Gross profit %      19.4%         9.5%            29.4%         19.6%
Three months ended
December 31, 2011:
Revenue, net        $  29,762   $    2,929   $   5,592   $   38,283
Gross profit        $   6,485  $     806  $   1,410   $    8,701
Gross profit %      21.8%         27.5%           25.2%         22.7%
Year ended December
31, 2012:
Revenue, net        $  99,206   $   10,127    $  17,566    $  126,899
Gross profit        $  19,076   $    2,887   $   4,897   $   26,860
Gross profit %      19.2%         28.5%           27.9%         21.2%
Year ended December
31, 2011:
Revenue, net        $ 135,970    $   12,195    $   9,126   $  157,291
Gross profit        $  27,200   $    3,051   $   2,220   $   32,471
Gross profit %      20.0%         25.0%           24.3%         20.6%
* Product Commercialization (PC) Services



Selected Balance Sheet Data (Unaudited)
($ in thousands)
                                          December 31,    December 31,
                                          2012              2011
Cash and cash equivalents                 $     52,783  $     64,337
Total current assets                      $     71,583  $     80,360
Total current liabilities                 36,390            46,078
Working capital                           $     35,193  $     34,282
Total assets                              $     78,447  $    113,379
Total liabilities                         $     42,817  $     53,856
Total stockholders' equity                $     35,630  $     59,523
Selected Cash Flow Data (Unaudited)
($ in thousands)
                                          December 31,
                                          2012              2011
Net loss                                  $    (25,527)  $    (11,914)
Non-cash items:
 Depreciation and amortization        2,034             3,046
 Stock-based compensation             1,791             1,936
 Other                                23,744            5,530
Net change in assets and liabilities      (12,328)          3,387
Net cash (used in) provided by operations $    (10,286)  $      1,985
Change in cash and cash equivalents       $    (11,554)  $      1,626



SOURCE PDI, Inc.

Website: http://www.pdi-inc.com
Contact: INVESTORS AND MEDIA - Melody Carey, Rx Communications Group, LLC,
+1-917-322-2571, Mcarey@RxIR.com