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MDS' Q2 Revenues Drop 21 Percent

NEW YORK (GenomeWeb News) – MDS today reported that its second-quarter revenues fell 21 percent and it swung to a loss from a profit year over year as soft spending markets took a toll on its top and bottom lines.

The Toronto-based firm brought in total revenues of $282 million for the three-month period ended April 30, compared to revenues of $350 million for the second quarter of 2008. It said that excluding the impact of foreign exchange, acquisitions, and divestitures its net revenue decreased 10 percent.

MDS Analytical Technologies, which houses the firm's mass spectrometry operations, reported a 26 percent drop in revenues to $87 million from $118 million. The firm said that foreign currency effects reduced the segment's revenues by $11 million for the quarter. MDS said that mass spec end-user revenue declined 11 percent year over year.

"Soft end-user demand in pharmaceutical markets for instruments was the primary driver for the year-over-year decline in volumes across all product lines," MDS said in a statement.

The firm's MDS Pharma Services segment brought in Q2 revenues of $130 million, down 14 percent from $152 million in Q2 2008. MDS recently announced that it would focus the segment on early-stage services and sell its MDS Pharma Services Late Stage operations, which are comprised of Phase II-IV operations and Central Labs. MDS already has signed an agreement to sell its Phase II-IV operations to contract research organization INC Research for $50 million. It is looking for a buyer for its Central Labs business.

MDS said that it has begin restructuring actions related to MDS Pharma Services, which it expects will cost around $4 million, impact 180 jobs, and generate around $9 million in annual savings.

Its MDS Nordion segment reported revenues of $65 million for the quarter, down 19 percent from $80 million.

MDS posted a net loss of $17 million, or $.15 per share, for the quarter compared to a profit of $13 million, or $.11 per share, for the second quarter of 2008. The most recent quarter included a non-cash asset write-down of $16 million.

The firm's R&D spending decreased 36 percent to $14 million from $22 million, and its SG&A expenses dropped 17 percent to $62 million from $75 million.

As of the end of the quarter, MDS had cash and cash equivalents of roughly $243 million.

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