Pharmaceutical Product Development Inc. has a market cap of $3.04 billion; its shares were traded at around $25.75 with a P/E ratio of 27.2 and P/S ratio of 2.2. The dividend yield of Pharmaceutical Product Development Inc. stocks is 2.3%. Pharmaceutical Product Development Inc. had an annual average earning growth of 17.1% over the past 10 years. GuruFocus rated Pharmaceutical Product Development Inc. the business predictability rank of 3.5-star.PPDI is in the portfolios of Third Avenue Management, John Hussman of Hussman Economtrics Advisors, Inc., Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Richard Aster Jr of Meridian Fund, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC.
Highlight of Business Operations: As of September 30, 2010, we had $613.0 million of cash, cash equivalents and short- and long-term investments. In the third quarter of 2010, we generated $47.9 million in cash from operations. The number of days revenue outstanding in accounts receivable and unbilled services, net of unearned income, also known as DSO, was 23 days for the nine months ended September 30, 2010, compared to 31 days for the year ended December 31, 2009. DSO decreased in the first nine months of 2010 due to improved cash collections, the mix of contracts performed and their
In connection with the management of clinical trials, we pay, on behalf of our clients, fees to investigators and test subjects as well as other out-of-pocket costs for items such as travel, printing, meetings and couriers. Our clients reimburse us for these costs. Amounts paid by us as a principal for out-of-pocket costs are included in direct costs and the reimbursements we receive as a principal are reported as reimbursed revenue. In our statements of income, we combine amounts paid by us as an agent for out-of-pocket costs with the corresponding reimbursements, or revenue, we receive as an agent. During the three months ended September 30, 2009 and 2010, fees paid to investigators and other fees we paid as an agent and the associated reimbursements were approximately $79.2 million and $104.9 million, respectively.
Total direct costs increased $15.4 million to $190.0 million in the third quarter of 2010. The increase was mainly attributable to a $13.2 million increase in personnel costs, a $1.9 million increase in reimbursable out-of-pocket expenses, a $1.9 million increase in supply costs related to our laboratories and a $1.4 million increase in contract labor and subcontractor costs. These costs were partially offset by a hedging gain of $1.9 million in the third quarter of 2010 compared to a hedging gain of $0.2 million in the third quarter of 2009. The increase in personnel costs was due to a $7.9 million increase in incentive compensation expense due to overall company performance and a $4.7 million increase in personnel costs due to the addition of approximately 900 new employees from our acquisitions. Only a portion of these new employee costs were classified as direct, with the balance classified as SG&A. The remainder of the increase in personnel costs was due to growth and expansion in our business.
SG&A expenses increased $9.3 million to $102.4 million in the third quarter of 2010. The increase in SG&A expenses was primarily related to a $7.8 million increase in personnel costs and a $1.0 million increase in non-billable travel and entertainment costs. The increase in personnel costs was due to a $3.3 million increase in incentive compensation expense due to overall company performance, a $2.9 million increase due to more personnel related to acquired entities and the remainder due to growth and expansion in our business.
In October 2009, we committed to invest up to $102.7 million in Celtic Therapeutics Holdings, L.P. As of September 30, 2010, we had invested a total of $32.7 million of the aggregate commitment. We account for this investment under the equity method of accounting. For the three months ended September 30, 2010, we recognized a loss from equity investment of $4.6 million. The loss from equity method investment increased significantly in the third quarter due to additional spending by Celtic to advance their compounds. We expect our fourth quarter loss from Celtic to be down significantly. As of September 30, 2010, our investment balance in Celtic was $23.1 million.
Net income increased $0.3 million to $38.0 million in the third quarter of 2010, an increase of 0.9% from $37.7 million in the third quarter of 2009.
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