INC Research Accused of Misleading Investors About Its Merger
On August 1, 2017, INC announced that it merged with inVentiv Health, Inc., representing the merger as “the beginning of an industry-changing new company.” However, the merger did not provide the benefit that INC officials represented because inVentiv was underperforming. On November 9, 2017, INC reported Q3 2017 results that fell far below investors’ expectations, including a net loss from operations of $88.9 million, compared to income from operations of $39.4 million for Q3 2016. INC attributed the poor results to merger-related transaction expenses of $84.3 million, an impairment charge of $30 million with respect to the INCR trademark intangible asset, and an increase in amortization expense of $41.9 million due to the acquisition of intangible assets from the merger. These results drew criticism from a William Blair analyst, who called the financial results “sloppy” and “worrisome” and noted negative implications for the company’s revenues. On this news, INC’s stock fell $16.35 per share, or over 28%, to close at $41.15 per share on November 9, 2017.