Syneos Health, Inc. (SYNH): history, ownership, mission, how it works & makes money

A Brief History of Syneos Health, Inc.

Syneos Health, Inc. is a global provider of end-to-end biopharmaceutical outsourcing solutions, operating under two reportable segments: Clinical Solutions and Commercial Solutions. As of June 30, 2023, Syneos Health reported total revenue of $1,366.1 million for the second quarter, reflecting a marginal increase of 0.4% from $1,360.7 million in Q2 2022. For the six months ending June 30, 2023, total revenue was $2,722.9 million, up from $2,697.0 million in the same period of the previous year, indicating a growth of 1.0%.

Financial Performance

In the second quarter of 2023, Syneos Health's direct costs (exclusive of depreciation and amortization) were $1,071.4 million, compared to $1,034.9 million in Q2 2022, marking a 3.5% increase. The gross margin percentage decreased from 23.9% in Q2 2022 to 21.6% in Q2 2023. For the six months ended June 30, 2023, direct costs amounted to $2,159.9 million, representing a 3.9% increase year-over-year.

Net Income and Earnings Per Share

Syneos Health reported a net income of $0.8 million for Q2 2023, a significant decrease from $77.7 million in Q2 2022. For the six months ended June 30, 2023, the company experienced a net loss of $71.4 million compared to a net income of $123.9 million in the prior year. The diluted earnings per share (EPS) for Q2 2023 was $0.01, down from $0.75 in Q2 2022.

Balance Sheet Highlights

As of June 30, 2023, Syneos Health had cash and cash equivalents amounting to $82.2 million, down from $111.9 million as of December 31, 2022. The company held restricted cash of $0.1 million. The total shareholders' equity stood at $3.5 billion at the end of Q2 2023.

Recent Developments

On May 10, 2023, Syneos Health entered into a merger agreement with Star Parent, Inc., whereby each share of Class A common stock would be converted into $43.00 in cash at closing, pending regulatory approvals. As of June 30, 2023, the company had incurred approximately $23.0 million in costs related to the merger.

Restructuring and Other Costs

For the three months ended June 30, 2023, Syneos Health incurred restructuring and other costs of $10.6 million, compared to $9.0 million for the same period in 2022. For the six months ended June 30, 2023, these costs totaled $95.3 million, a substantial increase from $24.5 million in the prior year.

Market Position and Outlook

Syneos Health continues to position itself as a key player in the biopharmaceutical outsourcing sector, with ongoing efforts to enhance operational efficiencies and customer engagement. The company anticipates further developments as it navigates the merger process and restructures its operations to adapt to market demands.

A Who Owns Syneos Health, Inc. (SYNH)

Shareholder Structure

As of 2024, Syneos Health, Inc. (SYNH) is primarily owned by institutional investors and private equity firms following a merger agreement. The ownership structure is significantly influenced by major stakeholders such as Elliott Investment Management, Patient Square Capital, and Veritas Capital, which are involved in the merger process.

Major Shareholders

Insider Ownership

Insider ownership remains limited due to the transition to private ownership. However, recent reports indicate that insiders collectively own less than 5% of the shares post-merger announcement.

Stock Performance and Market Trends

As of June 30, 2023, Syneos Health reported a market capitalization of approximately $3.7 billion before the merger announcements. The stock was trading at around $43.00 per share, which reflects the buyout price offered in the merger agreement.

Financial Overview

For the six months ended June 30, 2023, Syneos Health reported total revenue of $2.72 billion, with a net loss of approximately $71.36 million. The financial performance has been impacted by increased operating costs and restructuring expenses, totaling $95.3 million in the first half of 2023.

Institutional Ownership

As of the latest filings, institutional investors hold a substantial portion of Syneos Health's stock, with the following breakdown:

Conclusion of Ownership Transition

The impending merger is set to transition Syneos Health into a privately held entity, which will significantly alter its shareholder structure. Upon completion, it is projected that the company's shares will no longer be publicly traded, fundamentally changing ownership dynamics.

Syneos Health, Inc. (SYNH) Mission Statement

Overview of Mission Statement

Syneos Health, Inc. operates with the mission to provide end-to-end biopharmaceutical solutions that improve patient outcomes and accelerate the development and commercialization of innovative therapies. The company emphasizes collaboration with clients to navigate the complexities of the biopharmaceutical landscape.

Core Values

• Collaboration: Foster partnerships with clients to enhance service delivery.
• Innovation: Leverage technology and data to drive efficiencies.
• Integrity: Uphold ethical standards in all operations.
• Patient-Centricity: Focus on patient needs in every project undertaken.

Financial Performance

As of June 30, 2023, Syneos Health reported total revenue of $2.72 billion, reflecting an increase of 1.0% compared to the previous year. The revenue breakdown was as follows:

Direct Costs and Profitability

The direct costs associated with delivering services for the six months ending June 30, 2023, were reported at $2.16 billion, resulting in a gross margin of 20.7%. The company faced increased costs in both segments, primarily driven by higher reimbursable out-of-pocket expenses.

Backlog and Business Awards

As of June 30, 2023, Syneos Health reported a total backlog of $9.65 billion, a decrease of 15.8% from the prior year. The breakdown of the backlog was:

Recent Developments

In May 2023, Syneos Health announced a merger agreement with Star Parent, Inc. The merger is expected to close in the near future, with a proposed cash consideration of $43.00 per share of Class A common stock.

Conclusion of Financial Insights

In the first half of 2023, Syneos Health faced challenges with net income, reporting a net loss of $71.4 million compared to a profit of $123.9 million in the same period the previous year. Cost management and operational efficiency remain key areas of focus as the company navigates its business transformation initiatives.

How Syneos Health, Inc. (SYNH) Works

Overview of Syneos Health, Inc.

Syneos Health, Inc. operates as a global provider of end-to-end biopharmaceutical outsourcing solutions. The company has two primary segments: Clinical Solutions and Commercial Solutions, delivering a wide range of services that support clients in developing, launching, and marketing their products.

Financial Performance

As of June 30, 2023, Syneos reported revenue of $2,722.9 million for the six months ended, which reflects a 1.0% increase from $2,696.9 million in the same period in 2022. For the three months ended June 30, 2023, revenue was $1,366.1 million, up 0.4% from $1,360.7 million year-over-year. The company's net loss for the six months was $(71.4) million compared to a net income of $123.9 million in the previous year.

Segment Revenue Breakdown

The revenue from each segment for the three months ended June 30, 2023, is detailed below:

Operating Expenses

The total operating expenses for the six months ended June 30, 2023, were $2,720.2 million, representing an increase of 8.5% from $2,506.5 million in the prior year. Key components of operating expenses include:

Balance Sheet Highlights

As of June 30, 2023, Syneos Health reported total assets of $8,075.4 million, a decrease from $8,199.2 million at the end of 2022. The breakdown of the balance sheet is as follows:

Debt and Financing

As of June 30, 2023, Syneos Health had total principal indebtedness of approximately $2.71 billion, which includes:

Recent Developments

On May 10, 2023, Syneos Health entered into a merger agreement with Star Parent, Inc., where each share of Class A common stock will be converted to $43.00 in cash upon completion of the merger. As of June 30, 2023, the company had incurred approximately $23.0 million in costs related to the merger.

Cash Flow Analysis

For the six months ended June 30, 2023, the cash flows from operating, investing, and financing activities were as follows:

How Syneos Health, Inc. (SYNH) Makes Money

Overview of Revenue Streams

Syneos Health, Inc. operates primarily through two segments: Clinical Solutions and Commercial Solutions. The company derives its revenue from a wide range of biopharmaceutical outsourcing solutions aimed at enhancing the development, launch, and marketing of biopharmaceutical products.

Revenue Breakdown by Segment

For the six months ended June 30, 2023, Syneos Health reported total revenue of $2,722.9 million, reflecting a 1.0% increase from $2,696.9 million in the same period of 2022. The revenue breakdown by segment is as follows:

Clinical Solutions Segment

In the Clinical Solutions segment, revenue for the first half of 2023 was $2,035.5 million, a slight decrease compared to $2,044.1 million in the prior year. This segment primarily offers clinical trial services and is impacted by project start-up fluctuations.

Direct costs for Clinical Solutions were $1,564.8 million, representing 76.9% of segment revenue, leading to a gross margin of 23.1% for the six-month period.

Commercial Solutions Segment

The Commercial Solutions segment generated revenue of $687.4 million, up from $652.9 million in 2022. This increase was primarily driven by higher reimbursable out-of-pocket expenses. Direct costs for this segment amounted to $572.9 million, accounting for 83.3% of segment revenue, resulting in a gross margin of 16.7%.

Cost Structure

For the six months ended June 30, 2023, total direct costs were $2,159.9 million, which is 79.3% of total revenue. This reflects a significant increase in costs compared to $2,079.3 million in 2022, mainly due to rising personnel costs and reimbursable out-of-pocket expenses.

Geographic Revenue Distribution

Revenue is also distributed across various geographic regions, with North America being the largest market. The following table summarizes revenue by region for the six months ended June 30, 2023:

Recent Developments

As of June 30, 2023, Syneos Health is in the process of a merger, which is expected to significantly impact its operational structure and financial outlook. The merger involves a cash consideration of $43.00 per share for its Class A common stock, pending regulatory approvals.

Financial Performance Summary

For the six months ended June 30, 2023, Syneos Health reported a net loss of $(71,356) million, compared to a net income of $123,920 million during the same period in 2022. The decline in profitability is attributed to increased operating expenses and restructuring costs related to the ongoing business transformation initiatives.