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Quintiles IMS Holdings, Inc.$103.48$.57.55%

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 QuintilesIMS Reports Fourth-Quarter and Full-Year 2016 Results, Issues First-Quarter and Full-Year 2017 Guidance
   Tuesday, February 14, 2017 7:00:02 AM ET

--Adjusted EBITDA of $541 million, up 129.2 percent constant currency, 133.7 percent reported; on a combined company basis up 14.5 percent constant currency, 16.7 percent reported for the fourth quarter

--Diluted GAAP Loss per Share of $0.74; Adjusted Diluted Earnings per Share of $1.09 for the fourth quarter

--Post-merger share repurchase authorization increased to $2.5 billion from $1.5 billion

Quintiles IMS Holdings, Inc. (Q ), a leading global provider of information, technology services and contract research to the healthcare and life sciences industries, today reported financial results for the quarter and full-year ended December 31, 2016. On October 3, 2016, the merger of Quintiles Transnational Holdings Inc. and IMS Health Holdings, Inc. was completed. To aid investors and analysts with year-over-year comparability for the merged business, we are providing combined company financial information, which combines the stand-alone Quintiles and IMS Health financial information for revenue and Adjusted EBITDA as if the merger had taken place on January 1, 2015, with conforming adjustments to the current year presentation.

Fourth-Quarter 2016 Operating Results

Revenue for the fourth quarter of $1,953 million increased 74.2 percent on a constant currency basis and 73.1 percent on a reported basis, compared to the fourth quarter of 2015. Under purchase accounting rules, a portion of IMS Health’s deferred revenue, which would have otherwise been realized as revenue in future periods, must be eliminated. Excluding this deferred revenue adjustment, and on a combined company basis, revenue for the fourth quarter increased 4.2 percent on a constant currency basis and 3.5 percent at actual FX rates.

Commercial Solutions revenue increased 927.4 percent in the fourth quarter on a constant currency basis and 921.0 percent on a reported basis versus the same period last year. Excluding the $55 million deferred revenue adjustment, the legacy IMS Commercial business had revenues of $860 million and grew 6.9 percent at constant currency and 6.1 percent at actual FX rates. The legacy Quintiles Commercial business had revenues of $74 million and declined 14.0 percent at constant currency and 14.2 percent at actual FX rates. Combined company Commercial Solutions revenue of $934 million grew 4.9 percent in the fourth quarter at constant currency and 4.2 percent at actual FX rates.

Combined company Research & Development Solutions revenue of $882 million grew 6.6 percent on a constant currency basis and 5.4 percent at actual FX rates.

Combined company Integrated Engagement Services revenue of $192 million declined 8.4 percent at constant currency and 6.7 percent at actual FX rates.

Adjusted EBITDA of $541 million improved 129.2 percent on a constant currency basis and 133.7 percent on a reported basis, compared to the fourth quarter of 2015. On a combined company basis, Adjusted EBITDA improved 14.5 percent at constant currency and 16.7 percent at actual FX rates compared to the fourth quarter of 2015.

Fourth-quarter 2016 net loss was $178 million and loss per share was 0.74. This loss was primarily due to a one-time deferred tax charge relating to certain changes in our assertion regarding reinvestment of foreign earnings. Adjusted Net Income was $266 million and Adjusted Diluted Earnings per Share was $1.09 in the fourth quarter.

"For our first quarter as a combined company, we delivered a strong operational performance and achieved financial results in line with or above our targets," said Ari Bousbib, chairman and CEO, QuintilesIMS. "The post-merger integration process is advancing well and we are pleased with our progress to date."

Full-Year 2016 Operating Results

Revenue of $5,364 million for the full year of 2016 increased 24.2 percent on a constant currency basis and 24.0 percent reported, compared to the full year of 2015. On a full-year combined company basis, and excluding the deferred revenue adjustment, revenue of $7,783 million for the full year of 2016 increased 7.8 percent on a constant currency basis and 7.4 percent at actual FX rates.

Commercial Solutions revenue increased 241.6 percent on a constant currency basis and 239.8 percent on a reported basis. On a combined company basis, and excluding the deferred revenue adjustment, the legacy IMS Commercial business had revenues of $3,224 million and grew 11.3 percent at constant currency and 10.5 percent at actual FX rates. The legacy Quintiles Commercial business had revenues of $291 million and declined 9.6 percent on a constant currency basis and 9.8 percent at actual FX rates. Combined company Commercial Solutions revenue of $3,515 million increased 9.1 percent at constant currency and 8.5 percent at actual FX rates.

Research & Development Solutions revenue of $3,472 million grew 10.6 percent on a constant currency basis and 9.9 percent at actual FX rates. Research & Development Solutions contracted net new business totaled approximately $4.3 billion for the 12 months ended December 31, 2016. Contracted backlog was approximately $9.5 billion at December 31, 2016, stated at end of period exchange rates. The company expects approximately $2.9 billion of this backlog to convert to revenue in the next twelve months.

Integrated Engagement Services revenue of $796 million declined 7.9 percent at constant currency and 5.8 percent at actual FX rates.

Adjusted EBITDA of $1,244 million increased 40.5 percent on a constant currency basis and 46.3 percent on a reported basis, compared to the full year of 2015. On a full-year combined company basis, Adjusted EBITDA of $1,956 million increased 9.1 percent on a constant currency basis and 12.6 percent at actual FX rates.

Financial Position

As of December 31, 2016, cash and cash equivalents were $1,198 million and the principal amount of debt was $7,219 million, resulting in net debt of $6,021 million. At the end of the fourth quarter, QuintilesIMS’s Gross Leverage Ratio was 3.7 times, and net Leverage Ratio was 3.1 times trailing 12-month combined company Adjusted EBITDA.

Share Repurchase

QuintilesIMS repurchased $1.0 billion of its stock during the fourth quarter of 2016. On February 12, 2017, the QuintilesIMS board authorized an increase of the post-merger share repurchase authorization by $1.0 billion to a total of $2.5 billion, with $1.5 billion authorization remaining.

2017 Full-Year and First-Quarter Guidance

For full-year 2017, QuintilesIMS provides the following guidance:

                                       
($ millions, except per share data)                                Full-Year 2017
------------------------------------- -------------------- ------------------------------------------
Revenue at Constant Currency (1)                                  $8,125 - $8,225
                                                                                               (125)
  FX Impact (1)
                                                                                --------------------
Revenue at Actual Currency                                                           $8,000 - $8,100
     Commercial Solutions                                                            $3,600 - $3,650
     Research & Development Solutions                                                $3,655 - $3,690
     Integrated Engagement Services                                                      $745 - $760
                                                                                 
Adjusted EBITDA (2)                                                                  $2,000 - $2,100
                                                                                 
Adjusted Diluted EPS (2)                                                               $4.40 - $4.55
                                                                                 
Adjusted Book Tax Rate (3)                                                                       30%
                                                                                                 16%
  Adjusted Cash Tax Rate (3)
GAAP Book Tax Rate                                         25%
------------------------------------- -------------------- -------------------- --------------------
1. Constant currency assumes rates for 2017 are the same
as they were on average during 2016; FX impact based on current FX
rates.
2. The company does not provide forward-looking guidance
for certain financial measures on a GAAP basis or fully reconcile
such forward-looking guidance to the corresponding GAAP measure
because it is unable to reasonably predict certain items contained
in the GAAP measures. Such items include, but are not limited to,
merger and transaction related expenses, restructuring and related
charges, share-based compensation and other items not reflective
of the company’s ongoing operations.
3. Adjusted Book Tax Rate is defined as adjusted book
tax expense divided by adjusted pre-tax income, Adjusted Cash Tax
Rate is defined as cash taxes divided by adjusted pre-tax income.
                                                                                 

For the first quarter of 2017, QuintilesIMS provides the following guidance at actual FX rates:

($ millions, except per share data)                   First-Quarter 2017 Guidance
------------------------------------- -------------------- ------------------------------------------
Revenue                                        $1,890 - $1,925
                                                                                         $850 - $865
     Commercial Solutions
                                                                                         $855 - $870
     Research & Development Solutions
                                                                                         $185 - $190
     Integrated Engagement Services
                                                                                 
Adjusted EBITDA (1)                                                                      $450 - $465
                                                                                 
Adjusted Diluted EPS (1)                         $0.93 - $0.97
------------------------------------- -------------------- -------------------- --------------------
1. The company does not provide forward-looking guidance
for certain financial measures on a GAAP basis because it is
unable to reasonably predict certain items contained in the GAAP
measures. Such items include, but are not limited to, merger and
transaction related expenses, restructuring and related charges,
share-based compensation and other items not reflective of the
company’s ongoing operations.
                                                                                 

QuintilesIMS revenue guidance includes an estimate for a non-cash accounting adjustment in connection with the merger that is expected to reduce the Commercial Solutions segment and QuintilesIMS first-quarter 2017 revenue and full-year 2017 revenue by approximately $7 million. Under purchase accounting rules, a portion of IMS’s deferred revenue, which would have otherwise been realized as revenue in future periods, must be eliminated. This estimate is subject to change upon completion of purchase accounting.

This financial guidance assumes current foreign currency exchange rates remain in effect for the remainder of the year. Revenue guidance excludes reimbursed expenses.

Webcast & Conference Call Details

QuintilesIMS will host a conference call at 9:00 a.m. Eastern Time today to discuss its fourth-quarter and full-year 2016 financial results and 2017 guidance. To participate, please dial 1-800-616-7436 in the United States and Canada or +1-303-223-4394 outside the United States approximately 15 minutes before the scheduled start of the call. The conference call and a presentation will be accessible live via webcast on the Investors section of the QuintilesIMS website at http://ir.quintilesims.com . An archived replay of the webcast will be available online at http://ir.quintilesims.com after 1:00 p.m. Eastern Time today.

About QuintilesIMS

QuintilesIMS (Q ) is a leading integrated information and technology-enabled healthcare service provider worldwide, dedicated to helping its clients improve their clinical, scientific and commercial results. Formed through the merger of Quintiles Transnational and IMS Health, QuintilesIMS’s approximately 50,000 employees conduct operations in more than 100 countries. Companies seeking to improve real-world patient outcomes through treatment innovations, care provision and access can leverage QuintilesIMS’s broad range of healthcare information, technology and service solutions to drive new insights and approaches. QuintilesIMS provides solutions that span clinical to commercial, bringing customers a unique opportunity to realize the full potential of innovations and advanced healthcare outcomes.

As a global leader in protecting individual patient privacy, QuintilesIMS uses healthcare data to deliver critical, real-world disease and treatment insights. Through a wide variety of privacy-enhancing technologies and safeguards, QuintilesIMS protects individual privacy while managing information to drive healthcare forward. These insights and execution capabilities help biotech, medical device and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders in the development and approval of new therapies, and to identify unmet treatment needs and understand the safety, effectiveness and value of pharmaceutical products in improving overall health outcomes. To learn more, visit www.QuintilesIMS.com.

Cautionary Statements Regarding Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "target," similar expressions, and variations or negatives of these words. Actual results may differ materially from our expectations due to a number of factors, including, but not limited to, that our ability to integrate the legacy IMS Health and Quintiles businesses successfully and to achieve anticipated cost savings and other synergies; the possibility that other anticipated benefits of the proposed transaction will not be realized, including without limitation, anticipated revenues, expenses, earnings and other financial results, and growth and expansion of the combined company’s operations, and the anticipated tax treatment; possible disruptions from the combination of IMS Health and Quintiles through a "merger of equals" business combination that could harm our businesses, including current plans and operations; our ability to retain, attract and hire key personnel; potential adverse reactions or changes to relationships with clients, employees, suppliers or other parties resulting from the merger; that most of our contracts may be terminated on short notice, and we may be unable to maintain large client contracts or to enter into new contracts; our financial results may be adversely affected if we underprice our contracts, overrun our cost estimates or fail to receive approval for or experience delays in documenting change orders; imposition of restrictions on our use of data by data suppliers or their refusal to license data to us; failure to meet our productivity objectives; failure to successfully invest in growth opportunities; imposition of restrictions on our current and future activities under data protection and privacy laws; breaches or misuse of our or our outsourcing partners’ security or communication systems; hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements; consolidation in the industries in which our clients operate; our ability to protect our intellectual property rights and our susceptibility to claims by others that we are infringing on their intellectual property rights; the risks associated with operating on a global basis, including fluctuations in the value of foreign currencies relative to the U.S. dollar, and the ability to successfully hedge such risks; general economic conditions in the markets in which we operate, including financial market conditions; and our ability to successfully integrate, and achieve expected benefits from, our acquired businesses. For a further discussion of the risks relating to the combined company’s business, see the "Risk Factors" in our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2016, filed with the SEC, as such factors may be amended or updated from time to time in our subsequent periodic and other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We assume no obligation to update any such forward-looking statement after the date of this release, whether as a result of new information, future developments or otherwise.

Note on Non-GAAP Financial Measures

Non-GAAP results, such as adjusted EBITDA, adjusted net income and adjusted diluted EPS, are presented only as a supplement to the company’s financial statements based on GAAP. Non-GAAP financial information is provided to enhance understanding of the company’s financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP, and non-GAAP measures should not be considered in isolation from, or as a substitute analysis for, the company’s results of operations as determined in accordance with GAAP. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measures are provided within the schedules attached to this release. The company uses non-GAAP measures in its operational and financial decision making, and believes that it is useful to exclude certain items in order to focus on what it regards to be a more reliable indicator of the underlying operating performance of the business. As a result, internal management reports feature non-GAAP measures which are also used to prepare strategic plans and annual budgets and review management compensation. The company also believes that investors may find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures.

Non-GAAP measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to the company, many of which present non-GAAP measures when reporting their results. Non-GAAP measures have limitations as an analytical tool. They are not presentations made in accordance with GAAP, are not measures of financial condition or liquidity and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. Non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider such performance measures in isolation from, or as a substitute analysis for, the company’s results of operations as determined in accordance with GAAP.

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                                                                                                                                                  Table 1
                                                                                                                               QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES
                                                                                                                                     CONSOLIDATED STATEMENTS OF INCOME
                                                                                                                                   (in millions, except per share data)
                                                                                                                                        (preliminary and unaudited)
                                                                                                                                                                                                                                                                                                            
                                                                                                                                 Three Months Ended                                                                                                   Twelve Months Ended
                                                                                                                                    December 31,                                                                                                         December 31,
                                                                                          -------------------------------------------------------------------------------------------------                        ----------------------------------------------------------------------------------------
                                                                                       2016                                      2015                                                   2016                                  2015
--------------------------------------------------------------------                      ------------------------------------                         ------------------------------------                        ---------------------------    -------------------- ------------------------------------
                                                                                                                                                                                                                                                   
Revenues                                                                                                     $          1,953                                             $          1,129                                            $ 5,364                                             $          4,326
Reimbursed expenses                                                                                    385                                       393                           1,514                                     1,411
                                                                                          -------------------- --------------                          -------------------- --------------                         -------------------- -----                          -------------------- --------------
   Total revenues                                                                                                       2,338                                                        1,522                                              6,878                                                        5,737
Costs of revenue, exclusive of amortization and depreciation                                                            1,111                                                          692                                              3,236                                                        2,705
Costs of revenue, reimbursed expenses                                                                                     385                                                          393                                              1,514                                                        1,411
Selling, general and administrative expenses                                                                              390                                                          215                                              1,011                                                          815
Depreciation and amortization                                                                                             190                                                           35                                                289                                                          128
Restructuring costs                                                                                                        43                                                            7                                                 71                                                           30
Merger related costs                                                                                                       75                                               --                                                 87                                               --
Impairment charges                                                                          --                                         2                              28                                         2
                                                                                          -------------------- --------------                          -------------------- --------------                         -------------------- -----                          -------------------- --------------
  Income from operations                                                                                                  144                                                          178                                                642                                                          646
Interest income                                                                                                            (1 )                                                         (1 )                                               (4 )                                                         (4 )
Interest expense                                                                                                           71                                                           26                                                144                                                          101
Loss on extinguishment of debt                                                                                             31                                               --                                                 31                                                            8
Other (income) expense, net                                                                            (12 )                                      (6 )                            (8 )                                       2
                                                                                          -------------------- --------------                          -------------------- --------------                         -------------------- -----                          -------------------- --------------
  Income before income taxes and equity in (losses) earnings of                                                            55                                                          159                                                479                                                          539
  unconsolidated affiliates
Income tax expense                                                                                     227                                        51                             345                                       159
                                                                                          -------------------- --------------                          -------------------- --------------                         -------------------- -----                          -------------------- --------------
  (Loss) income before equity in (losses) earnings of unconsolidated                                                     (172 )                                                        108                                                134                                                          380
  affiliates
Equity in (losses) earnings of unconsolidated affiliates                                                (3 )                          --                              (4 )                                       8
                                                                                          -------------------- --------------                          -------------------- --------------                         -------------------- -----                          -------------------- --------------
  Net (loss) income                                                                                                      (175 )                                                        108                                                130                                                          388
Net (income) loss attributable to non-controlling interests                                             (3 )                                      (3 )                           (15 )                                      (1 )
                                                                                          -------------------- --------------                          -------------------- --------------                         -------------------- -----                          -------------------- --------------
                                                                                                             $           (178 )                                           $            105                                            $   115                                             $            387
  Net (loss) income attributable to Quintiles IMS Holdings, Inc.
                                                                                          ==================== ==============                          ==================== ==============                         ==================== =====                          ==================== ==============
(Loss) earnings per share attributable to common stockholders:
  Basic                                                                                                      $          (0.74 )                                           $           0.86                                            $  0.77                                             $           3.15
  Diluted                                                                                                    $          (0.74 )                                           $           0.85                                            $  0.76                                             $           3.08
Weighted-average common shares outstanding:
  Basic                                                                                                                 238.8                                                        121.0                                              149.1                                                        123.0
  Diluted                                                                                                               238.8                                                        123.2                                              152.0                                                        125.6
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                         
                                                                                                                                                      Table 2
                                                                                                                                   QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES
                                                                                                                                            CONSOLIDATED BALANCE SHEETS
                                                                                                                                       (in millions, except per share data)
                                                                                                                                            (preliminary and unaudited)
                                                                                                                                                                                                                                                                                               
                                                                                                                                                                  December 31,                                                                                     December 31,
                                                                                                                                2016                                                                                             2015
---------------------------------------------------------------------------------------------- --------------------                      --------------------------------------------------------------                         -----------------------------------------------------------------------------------
                                            ASSETS
Current assets:
  Cash and cash equivalents                                                                                                                                 $                                    1,198                                             $                                      977
  Trade accounts receivable and unbilled services, net                                                                                                                                           1,707                                                                                  1,166
  Prepaid expenses                                                                                                                                                                                 123                                                                                     51
  Deferred income taxes                                                                                                                                                                 --                                                                                    101
  Income taxes receivable                                                                                                                                                                           34                                                                                     34
  Investments in debt, equity and other securities                                                                                                                                                  40                                                                         --
  Other current assets and receivables                                                                                                                                          235                                                                  83
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
    Total current assets                                                                                                                                                      3,337                                                               2,412
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
  Property and equipment, net                                                                                                                                                                      406                                                                                    188
  Investments in debt, equity and other securities                                                                                                                                                  13                                                                                     33
  Investments in unconsolidated affiliates                                                                                                                                                          69                                                                                     52
  Goodwill                                                                                                                                                                                      10,727                                                                                    720
  Other identifiable intangibles, net                                                                                                                                                            6,390                                                                                    368
  Deferred income taxes                                                                                                                                                                             89                                                                                     43
  Deposits and other assets                                                                                                                                                     177                                                                 110
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
    Total assets                                                                                                                                            $                                   21,208                                             $                                    3,926
                                                                                                                                         ==================== ======================================                            ==================== ======================================
           LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                                                                                                                                          $                                      250                                             $                                      145
  Accrued expenses                                                                                                                                                                               1,493                                                                                    761
  Unearned income                                                                                                                                                                                  774                                                                                    585
  Income taxes payable                                                                                                                                                                              76                                                                                     35
                                                                                                                                                                                                    92                                                                                     49
  Current portion of long-term debt and obligations held under
  capital leases
                                                                                                                                                                                 20                                                                  19
  Other current liabilities
                                                                                                                                         -------------------- --------------------------------------                            -------------------- --------------------------------------
    Total current liabilities                                                                                                                                                                    2,705                                                                                  1,594
  Long-term debt and obligations held under capital leases,                                                                                                                                      7,108                                                                                  2,419
  less current portion
  Deferred income taxes                                                                                                                                                                          2,133                                                                                     66
  Other liabilities                                                                                                                                                             402                                                                 183
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
    Total liabilities                                                                                                                                                        12,348                                                               4,262
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
Commitments and contingencies
Stockholders’ equity deficit:
                                                                                                                                                                                                10,602                                                                                      9
  Common stock and additional paid-in capital, 400.0 and 300.0
  shares authorized at December 31, 2016 and 2015 respectively,
  $0.01 par value, 248.3 and 119.4 shares issued and outstanding at
  December 31, 2016 and December 31, 2015, respectively
  Accumulated deficit                                                                                                                                                                             (399 )                                                                                 (462 )
  Treasury stock, at cost, 12.9 shares at December 31, 2016                                                                                                                                     (1,000 )                                                                       --
  Accumulated other comprehensive loss                                                                                                                                         (570 )                                                              (111 )
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
                                                                                                                                                                                                 8,633                                                                                   (564 )
    Equity (deficit) attributable to Quintiles IMS Holdings, Inc.’s
    stockholders
  Non-controlling interests                                                                                                                                                     227                                                                 228
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
    Total stockholders’ equity (deficit)                                                                                                           8,860                                                                (336 )
                                                                                                                                         -------------------- -----------------------------------------                         -------------------- -----------------------------------------
    Total liabilities and stockholders’ equity (deficit)                                                                         $                                   21,208                                             $                                    3,926
                                                                                                                                         ==================== ======================================                            ==================== ======================================
                                                                                                                                                                                                                                                                                               
                                                                                                                                                      Table 3
                                                                                                                                   QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES
                                                                                                                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                                   (in millions)
                                                                                                                                            (preliminary and unaudited)
                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                             December 31,
                                                                                                                    -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                        2016                                                                                                        2015
----------------------------------------------------------------------------------------------                      -----------------------------------------------------------------------------------                         -----------------------------------------------------------------------------------
Operating Activities:                                                                                                                                          
Net Income                                                                                                                             $                                                      130                                                                       $            388
Adjustments to reconcile net income to cash
provided by operating activities:
   Depreciation and amortization                                                                                                                                                              289                                                                                    128
   Amortization of debt issuance costs and discount                                                                                                                                            30                                                                                      9
                                                                                                                                                                                                3                                                                                      8
   Amortization of accumulated other comprehensive loss on terminated
   interest rate swaps
   Stock-based compensation                                                                                                                                                                    80                                                                                     38
   Impairment of goodwill, identifiable intangible and long-lived assets                                                                                                                       28                                                                                      2
   Gain on disposals of property and equipment, net                                                                                                                                            (1 )                                                                                   (1 )
   Loss (earnings) from unconsolidated affiliates                                                                                                                                               8                                                                                     (8 )
   (Gain) loss on investments, net                                                                                                                                                            (13 )                                                                                    1
   Provision for (benefit from) deferred income taxes                                                                                                                                         135                                                                                     18
   Excess income tax benefits from stock-based award activities                                                                                                                               (41 )                                                                                  (39 )
Changes in operating assets and liabilities:
   Accounts receivable and unbilled services                                                                                                                                                  (62 )                                                                                 (246 )
   Prepaid expenses and other assets                                                                                                                                                           (8 )                                                                                   15
   Accounts payable and accrued expenses                                                                                                                                                      160                                                                                    104
   Unearned income                                                                                                                                                                             52                                                                                     54
   Income taxes payable and other liabilities                                                                                         70                                                                   5
                                                                                                                    -------------------- -------------------- -------------------- --------------                                                    -------------------- --------------
    Net cash provided by operating activities                                                                                                                                                 860                                                                                    476
Investing activities:
   Acquisition of property, equipment and software                                                                                                                                           (164 )                                                                                  (78 )
   Net cash assumed from acquisition of businesses (1)                                                                                                                                      1,887                                                                                     32
   Purchase of trading securities                                                                                                                                                             (40 )                                                                       --
   Proceeds from corporate owned life insurance policies                                                                                                                                       21                                                                         --
   Proceeds from sale of equity securities                                                                                                                                                     41                                                                         --
   Investments in unconsolidated affiliates, net of payments received                                                                                                                         (17 )                                                                                  (12 )
   Termination of interest rate swaps                                                                                                                                              --                                                                                    (11 )
                                                                                                                                       3                                                                   2
   Other
                                                                                                                    -------------------- -------------------- -------------------- --------------                                                    -------------------- --------------
    Net cash provided by (used in) investing activities                                                                                                                                     1,731                                                                                    (67 )
Financing activities:
   Proceeds from issuance of debt                                                                                                                                                             466                                                                                  2,249
   Payment of debt issuance costs                                                                                                                                                              (7 )                                                                                  (22 )
   Repayment of debt                                                                                                                                                                       (1,949 )                                                                               (2,057 )
   Proceeds from revolving credit facility                                                                                                                                                    172                                                                         --
   Principal payments on capital lease obligations                                                                                                                                             (2 )                                                                                   (4 )
   Payment of contingent consideration                                                                                                                                                         (5 )                                                                                   (3 )
   Stock issued under employee stock purchase and option plans                                                                                                                                 97                                                                                     64
   Repurchase of common stock                                                                                                                                                              (1,097 )                                                                                 (515 )
   Excess income tax benefits from stock-based award activities                                                                       41                                                                  39
                                                                                                                    -------------------- -------------------- -------------------- --------------                                                    -------------------- --------------
     Net cash used in financing activities                                                                                                                                                 (2,284 )                                                                                 (249 )
Effect of foreign currency exchange rate changes on cash                                                         (86 )                    (50 )
                                                                                                -------------------- -------------------- -------------------- --------------         -------------------- --------------
Increase in cash and cash equivalents                                                                                                                                     221                                         110
Cash and cash equivalents at beginning of period                                                                 977                      867
                                                                                                -------------------- -------------------- -------------------- --------------         -------------------- --------------
Cash and cash equivalents at end of period                                                                         $              1,198                            $            977
                                                                                                ==================== ==================== ==================== ==============         ==================== ==============
(1)  Includes $2,031 million of cash acquired in the
Merger
                                                                                                                                                                                                                                
                                                                                                                                                                                                          
                                                                                                                                                                               Table 4
                                                                                                                                                            QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES
                                                                                                                                                            NET INCOME TO ADJUSTED EBITDA RECONCILIATION
                                                                                                                                                                            (in millions)
                                                                                                                                                                     (preliminary and unaudited)
                                                                                                                                                                                                                                                  
                                                                                                                          Three Months Ended                                                                                                                                                     Twelve Months Ended
                                                                                                                             December 31,                                                                                                                                        December 31,
                                                                -------------------------------------------------------------------------------------------------------------------------------        --------------------                      ------------------------------------------------------------------------------------------------------------
                                                                             2016                                                               2015 (1)                                                                       2016 (2)                                         2015 (1)
------------------------------------------                      ----------------------------------------------------------------                         ---------------------------------------------------------------                         ---------------------------------------------                        -------------------------------------------
Net Income                                                                         $ (178 )                                                                                 $ 105                                                                                   $   115                                                              $ 387
Provision for (benefit from) income taxes                                             227                                                                                      51                                                                                       345                                                                159
Depreciation and Amortization                                                         190                                                                                      35                                                                                       288                                                                127
Interest Expense, net                                                                  70                                                                                      25                                                                                       141                                                                 97
(Income) loss in unconsolidated affiliates                                              3                                                                                       3                                                                                         4                                                                 (8 )
(Income) loss in non-controlling interests                                              3                                                                                       -                                                                                        15                                                                  1
Deferred revenue purch. acctg. Adjustment                                              55                                                                                       -                                                                                        55                                                                  -
Stock-based compensation                                                               24                                                                                       9                                                                                        59                                                                 38
Other income (expense), net                                                            20                                                                                      (4 )                                                                                      26                                                                 10
Impairment charges                                                                      -                                                                                       -                                                                                        28                                                                  3
Restructuring and Related Charges                                                      43                                                                                       7                                                                                        70                                                                 31
Acquisition Related Charges                                                             9                                                                                       -                                                                                        11                                                                  5
Merger Related Charges                                              75                              -                               87                            -  
------------------------------------------                      -------------------- ---- -------------------- --------------------                      -------------------- --- -------------------- --------------------                      -------------------- ----- --------------------                      -------------------- --- --------------------
Adjusted EBITDA                                                                    $  541                                             $ 231                                             $ 1,244                                           $ 850  
------------------------------------------                      -------------------- ---- -------------------- --------------------                      -------------------- --- -------------------- --------------------                      -------------------- ----- --------------------                      -------------------- --- --------------------
                                                                                                                                                                                                                                                                                                                                                
(1) Data is for legacy Quintiles organization,
Quintiles Transnational Holdings Inc.
(2) Data includes full year of Quintiles organization,
Quintiles Transnational Holding Inc.; and fourth quarter of IMS
Health organization, IMS Health Holdings Inc.
                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                          
                                                                                                                                                                                  Table 5
                                                                                                                                                               QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES
                                                                                                                                                               NET INCOME TO ADJUSTED EBITDA RECONCILIATION
                                                                                                                                                               COMBINED COMPANY AS IF MERGER CLOSED 1/1/2015
                                                                                                                                                                               (in millions)
                                                                                                                                                                        (preliminary and unaudited)
                                                                                                                                                                                                                                                  
                                                                                                                          Three Months Ended                                                                                                                                                         Twelve Months Ended
                                                                                                                             December 31,                                                                                                                                            December 31,
                                                                -----------------------------------------------------------------------------------------------------------------------------------------------------------                      --------------------------------------------------------------------------------------------------------------------------
                                                                             2016                                                                 2015                                                                           2016                                                2015
------------------------------------------                      --------------------------------------------------------------------                     -------------------------------------------------------------------                     ------------------------------------------------                     -----------------------------------------------------
Net Income                                                                         $ (178 )                                                                                 $ 134                                                                                   $   236                                                              $        804
Provision for (benefit from) income taxes                                             227                                                                                      70                                                                                       385                                                                       (41 )
Depreciation and Amortization                                                         190                                                                                     113                                                                                       551                                                                       469
Interest Expense, net                                                                  70                                                                                      69                                                                                       281                                                                       263
(Income) loss in unconsolidated affiliates                                              3                                                                                       -                                                                                         4                                                                        (8 )
(Income) loss in non-controlling interests                                              3                                                                                       3                                                                                        15                                                                         1
Deferred revenue purch. acctg. Adjustment                                              55                                                                                       4                                                                                        60                                                                        10
Stock-based compensation                                                               24                                                                                      16                                                                                        82                                                                        67
Other income (expense), net                                                            20                                                                                     (11 )                                                                                      33                                                                       (10 )
One time IPO expense                                                                    -                                                                                       -                                                                                         -                                                                         2
Impairment charges                                                                      -                                                                                       3                                                                                        28                                                                         2
Restructuring and Related Charges                                                      43                                                                                      45                                                                                       147                                                                       121
Acquisition Related Charges                                                             9                                                                                      17                                                                                        38                                                                        56
Merger Related Charges                                              75                              -                               96                                   -  
------------------------------------------                      -------------------- ---- -------------------- --------------------                      -------------------- --- -------------------- --------------------                      -------------------- ----- --------------------                      -------------------- ---------- --------------------
Adjusted EBITDA                                                                    $  541                                             $ 463                                             $ 1,956                                           $      1,736  
------------------------------------------                      -------------------- ---- -------------------- --------------------                      -------------------- --- -------------------- --------------------                      -------------------- ----- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                            
                                                                  
                                                                         Table 6
                                                      QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES
                                                            NET INCOME TO ADJUSTED NET INCOME
                                                          (in millions, except per share data)
                                                               (preliminary and unaudited)
                                                                                       
                                                                                                              Three Months Ended
                                                                                                                 December 31,
                                                                                      ------------------------------------------------------------------
                                                                                                  2016
----------------------------------------------------------------                      ------------------------------------------------------------------
Net Income                                                                                                           $        (178 )
Provision for income taxes                                                                                                     227
Purchase Accounting Amortization                                                                                               131
(Income) Loss from Unconsolidated Affiliates                                                                                     3
(Income) Loss from Minority Interest                                                                                             3
Deferred revenue purch. acctg. Adjustment                                                                                       55
Stock-based compensation                                                                                                        24
Other Income (Loss), net                                                                                                        20
Royalty Hedge Gain/(Loss)                                                                                                       (3 )
Restructuring and Related Charges                                                                                               43
Acquisition Related Charges                                                                                                      9
Merger Related Charges                                                                                       75
----------------------------------------------------------------                      -------------------- ------------------------
Adjusted Pre Tax Income                                                                                  $                     409
Provision for Income Taxes                                                                                                    (227 )
(Income) Loss from Minority Interest                                                                                            (3 )
Other Income Tax Adjustments                                                                                                   209
Minority Interest effect in Non GAAP adjustments (1)                                                                            (1 )
Tax effect of Non GAAP adjustments                                                                         (121 )
----------------------------------------------------------------                      -------------------- ----------------------
Adjusted Net Income                                                                                      $                     266
----------------------------------------------------------------                      -------------------- ------------------------
                                                                                                            
Adjusted Earnings per Share Attributable to Common Shareholders:
  Basic                                                                                                  $                    1.11
  Diluted                                                                                                $                    1.09
Weighted-Average Common Shares Outstanding:
  Basic                                                                                                                      238.8
  Diluted                                                                                                                    243.9
                                                                                                                                    
(1) Reflects the portion of Q(2) Solutions’
after-tax non-GAAP adjustments attributable to the minority
interest partner.
                                                                                                                                    
                                                       
                                                                                    Table 7
                                                                 QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES
        CALCULATION OF GROSS AND NET LEVERAGE RATIOS
                                                                            as of December 31, 2016
                                                                                 (in millions)
                                                                          (preliminary and unaudited)
                                                                                                                                       
                                                                              
----------------------------------------------------- --------------------------------------- --------------------------------------- ---------------------------------------
Gross Debt as of December 31, 2016                                                                                                  $                                   7,219
Net Debt as of December 31, 2016                                                                                                    $                                   6,021
-----------------------------------------------------                                                                                 ---------------------------------------
Adjusted EBITDA (1) for the year ended December                                                                                     $                                   1,956
31, 2016
-----------------------------------------------------                                                                                 ---------------------------------------
Gross Leverage Ratio (Gross Debt/LTM Adjusted EBITDA)                                                                                                                    3.7x
Net Leverage Ratio (Net Debt/LTM Adjusted EBITDA)                                                                                                                        3.1x
-----------------------------------------------------                                                                                 ---------------------------------------
                                                                                                                                       
(1) LTM Adjusted EBITDA is for the combined company
(assumes merger closed 1/1/2015) and recast to conform with
current methodology
                                                                                                                                       

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170214005502r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170214005502/en/

SOURCE: Quintiles IMS Holdings, Inc.

QuintilesIMS 
Investor Relations 
Andrew Markwick, +1 973-257-7144 
andrew.markwick@quintilesims.com 
or 
Media Relations 
Tor Constantino, +1 484-567-6732 
tor.constantino@quintilesims.com


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