UPDATE 2-UDG raises earnings growth forecast, sees deal paying off

Wed May 14, 2014 11:55am BST

Quotes

   

* Expects EPS to grow 5-9 pct vs prior view of 2-5 pct

* Sees KnowledgePoint360 revenue of $100 mln, EBITDA of $16 mln a year

* Ashfield first-half operating profit rises 36 pct

* Shares rise as much as 3.25 pct (Adds CEO comments; updates share movement)

May 14 (Reuters) - Healthcare services provider UDG Healthcare Plc raised its full-year earnings per share growth forecast as it expects the recent acquisition of KnowledgePoint360 to boost its commercial and medical services business.

The company, which provides outsourced sales and marketing, drug distribution and packaging services to healthcare companies, now expects adjusted EPS to grow 5-9 percent on a constant-currency basis, compared with its prior forecast of a 2-5 percent growth.

Shares in the company rose 3.25 percent in early trade, pushing the stock into the list of top percentage gainers on the FTSE-250 Midcap Index.

UDG Healthcare, earlier known as United Drug, bought healthcare communications business KnowledgePoint360 for $144 million in late February to expand in the United States and Europe.

The company said adjusted operating profit rose 2 percent to 45.0 million euros ($62 million) in the six months ended March 31.

This growth was driven by a 36 percent jump in operating profit at its Ashfield Commercial and Medical Services division, which houses KnowledgePoint360.

"We are encouraged by the performance of Ashfield which we estimate will be the group's largest profit contributor from H214 onwards," Goodbody Stockbrokers analyst David O'Brien said in a note.

Ashfield division provides sales teams, telesales, nurse educators, medical information, healthcare communications and event management services to healthcare companies in 22 countries.

UDG Healthcare Chief Executive Liam FitzGerald told Reuters that he expects KnowledgePoint360 to bring in revenue of $100 million and EBITDA of about $16 million a year.

KnowledgePoint360 was UDG Healthcare's biggest acquisition.

"Given the size of the KnowledgePoint360 deal, there will be a period of consolidation now before we look to grow the business through acquisitions in the future," Fitzgerald added.

KnowledgePoint360 provides medical education, publication support and scientific content development to global pharmaceutical companies.

Revenue rose 2.34 percent to 1.04 billion euros in the six months ended March 31, the company said.

Davy Research analyst Jack Gorman said in a note to clients that the addition of KnowledgePoint360 should ensure strong earnings acceleration for the company in the second half of the year.

Shares in UDG Healthcare were up 1.8 percent at 366.7 pence at 1050 GMT on the London Stock Exchange. The stock has nearly doubled in value since the company delisted from the Irish Stock Exchange in late 2012. ($1 = 0.7296 Euros) (Reporting by Roshni Menon in Bangalore; Editing by Sunil Nair and Don Sebastian)