Good day, ladies and gentlemen. Welcome to the PDI 2012 Second Quarter Financial Results Conference Call. [Operator Instructions] Please note that today's call is being recorded. I would now like to turn the call over to RX Communications Group.

Good morning, everyone. This Melody Carey with RX Communications Group. Thank you for participating in today's call. On the call this morning from PDI are Nancy Lurker, Chief Executive Officer; and Jeff Smith, Chief Financial Officer. Yesterday, after the market closed, PDI released financial and operational results for the second quarter ended June 30, 2012. If you have not received the news release and would like to be added to the company's distribution list, please call my office at (917) 322-2568. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of PDI. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Form 10-K and 10-Q, which identifies specific risk factors that may cause actual results or events to materially differ from those described in the forward-looking statements. Additionally, the company will be referencing certain non-GAAP financial measures, specifically adjusted EBITDA before -- because it is an important measure used by management in evaluating results. The content of this conference call contains time-sensitive information that is accurate only as of today's date, August 14, 2012. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that said, I would now like to turn the call over to Nancy Lurker.

Thank you, Melody, and welcome to everyone on the call. I'd like to begin by addressing a few key measures of our financial performance for the quarter. First, despite lower revenue, we attained solid improvement in profitability and reduced our operating loss to $300,000 from almost $1.1 million last year. This was achieved chiefly through improved leveraging of our infrastructure, continued reduction in operating expenses and the success of Interpace BioPharma, which we established late in the second quarter of last year. At the same time, second quarter adjusted EBITDA rose to $800,000, compared to $100,000 in the same period of 2011. As anticipated, second quarter revenues were below those at the same period in 2011. As a result of the timing of the signing of a significant amount of new contracts, new revenue was not sufficient to offset the expected expiration of certain contracts. Go -- gross margin percentages for the quarter were higher than last year, but I will comment on how we see those developing in just a minute. And cash and cash equivalents at June 30 totaled almost $57 million and we continue to have no commercial debt. To expand on the revenue front, we are pleased to note that during, and subsequent to, the close of the quarter, we continue to see tangible conversion of our pipeline opportunities, which have been reflected in a number of recent Sales Services segment contract announcements totaling a combined $102 million. We expect to record as much as $35 million of revenue from these wins in 2012, primarily in the second half of the year. Notably, more than 80% of the total value of these contracts reflects new business and as a result, we have expanded our customer base to include 2 new Top 10 global pharmaceutical companies and a number of growing midsized pharmaceutical companies. Also important to note is that a key decision factor by clients in the number of these Sales Services wins was our ability to deliver integrated multi-channel promotional activities, particularly digital offerings through Group DCA. Our current RFP volume is up significantly year-over-year and we believe our win rate continues to be well above our fair share. The announced new Sales Services wins, which do not include the other channels, cover a wide range of contract sales and service agreements under which we will provide promotional and support services through our established relationship team, dedicated sales team, clinical educators and training services. In general, these sales term -- team contracts were won in a highly competitive environment, which will result in lower gross margins on average compared to those reflected in our recent operating results for similar business. Factoring in these new wins, we remain confident the second half revenues will exceed those of the first half of the year. However, we now believe that 2012 revenue may approach, but unlikely exceed, 2011 revenues because of the proportion of revenue that will be recorded in 2012 from new signed contracts given the timing of the signings, the impact on 2012 revenue of expected additional wins and the revenue GAAP resulting from contracts that have already expired or may be modified. Additionally, we expect overall gross margin percentages to be lower in the second half of the year and on a full year-over-year basis. We anticipate that we will continue to experience lower margins on new Sales Services business due to intensified competition, which I noted a moment ago. Our pipeline of potential business remains very robust and while we are extremely encouraged by the new wins, extensions and renewals, we need to continue to win additional new business and to reduce our operating costs to achieve our current revenue and profit goals for 2012. Our view of the second half of 2012 considers the fact that under the terms of our current Product Commercialization contract signed in mid-2011, our client has the right to internalize various activities at different times over the life of the contract. Due to the success of the program to date, they have elected to internalize selected commercialization activities as of October 1, 2012. And at the same time, extend other activities 6 months past the current contract expiration date to June 30, 2014. We anticipate that a modified and extended contract will be executed by October 1, resulting in an estimated net overall reduction to the current 2.5-year $55 million contract of approximately 10% to 15%. In terms of additional revenues for growth, EngageCE recently won 2 contracts and their pipeline also remains robust. In addition, we continue to see significant opportunities for long-term revenue growth and improved margins and profitability around Interpace BioPharma, which we believe provide a unique offering of full Product Commercialization Services. We remain strongly committed to executing on a broadened and accelerated growth strategy to take advantage of the capabilities of Interpace BioPharma to improve our long-term profitability. So far in 2012, Group DCA has significantly improved their bottom line relative to 2011, primarily due to the streamline of their organization. That said, I can tell you with confidence, as I noted earlier, that Group DCA's capabilities were instrumental in winning new Sales Services contracts during the quarter and we believe will continue to play a critical role in our CSO growth and improved profitability strategy in wins going forward. The company's latest wins and renewals are indicative of PDI's strong market position and the illustrated upswing in overall market activity. Based on the size of our pipeline, currently valued at over $350 million, we feel confident that we will find additional contract in the coming quarters. Going forward, we will continue to focus on the CSO business and expect to maintain the traction we have established to date as our value proposition is increasingly recognized within the industry. Additionally, we continue to play significant efforts toward reducing our cost basis and as indicated by our recent results, we have achieved substantial progress on that front. Of note, we have reduced our SG&A relative to 2011, primarily due to streamlining our organizational structure as well as other cost drivers. We will continue to focus on reducing costs during the remainder of 2012 while at the same time driving top line growth, our #1 priority. Regarding general market conditions, as I mentioned a moment ago, we are seeing an uptick in activity. This reflects the increasing utilization of outdoor services as a first option for companies that are launching their first product, or those that are expanding their field teams for existing products. That said, in other service businesses, we see slower growth as awards are delayed due to legal -- medical, legal and regulatory review times. We expect 2012 to be a year of continued execution on all fronts. The initiatives we implemented have strengthened the company both operationally and financially. Additionally, as previously noted, our core business and pipeline are strong, which we anticipate will result in additional key contract wins and renewals over the remainder of the year. Now I'll turn the call over to Jeff, who will walk you through the financial results for the quarter. Jeff?

Thank you, Nancy. As you can see in the release, on a consolidated basis, PDI's revenue in the second quarter of 2012 of $27.8 million was $10.8 million lower than last year, while the operating loss in 2012 was reduced to $300,000 compared to the $1.1 million loss last year. The overall decrease in revenue was primarily the net result of higher revenue in Product Commercialization and lower revenue in Sales Services. In Sales Services, revenue was $20.1 million, about $14 million lower than last year. While we have achieved significant new contract wins, as Nancy has described, due to the timing of the signings and the individual start dates, revenue from these wins was not sufficient in the quarter to offset the expected expiration of certain other contracts. When evaluating Sales Services revenue, you should also note that we included the Sales Services portion of the contract win for Interpace BioPharma in the Product Commercialization Services segment, somewhat artificially lower in 2012 Sales Services revenue. Product Commercialization Services at $4.9 million of revenue from the contract signed in mid last year compared to $700,000 last year. And Marketing Services revenue decreased by about $600,000 to $2.8 million for the quarter, primarily due to lower Group DCA revenue. Although revenue was lower in the quarter by 28%, total gross profit of $6.6 million decreased only 17% or $1.3 million when compared to 2011. Lower gross profit dollars from lower revenue were somewhat offset by higher overall gross profit percentages. In Sales Services, gross profit decreased roughly in line with lower revenue although the 2012 gross margin percentage was over 20% compared to about 18.5% last year. Product Commercialization Services added $1.2 million to gross profit for the quarter and Marketing Services gross profit of $1 million decreased about $300,000 compared to 2012 -- 2011, excuse me, in line with the revenue decline. A consolidated gross profit percentage for the quarter also improved due to higher percentage of the revenue for the quarter being generated from the higher margin Product Commercialization and Marketing Services segment. Operating expenses in the 2012 quarter were $6.9 million, $2.1 million lower than last year. This $2.1 million decline is primarily due to the company's ongoing cost reduction initiatives and savings realized by the streamlining of Group DCA. The operating loss was reduced to $300,000 for 2012 from $1.1 million last year, primarily due to the inclusion of product commercialization for the entire quarter and the reduction in operating expenses. While adjusted EBITDA was positive by $800,000 for the quarter, we continue to have no commercial debt and we ended the quarter with approximately $57 million of cash and equivalents. Cash was over $7 million lower than last year's -- year-end at 2011. This decrease in cash is primarily attributable to a delay in the timing of receipt of certain trade receivables as of June 30, payment of severance and close-out costs, primarily associated with the sale of our Pharmakon business unit in December of last year, as well as the rightsizing of our Group DCA business unit and a scheduled payment of $1.5 million to the sellers of Group DCA. In terms of the remainder of 2012, as Nancy stated earlier, we reiterate our previously stated goal of the second half revenue being higher than first half revenue. We now believe, however, that 2012 revenue may approach, but unlikely exceed, 2011 revenues given the proportion of revenues that will be earned in 2012 from the significant recent contract wins, the timing and impact on 2012 revenue of expected additional wins and the revenue GAAP resulting from contracts that have already expired or we expect to be modified. We also expect overall gross profit margins to be lower in the second half of the year and on a full year-over-year basis. And finally, note that we will need to win additional new business and continue to reduce operating expenses while continuing to invest in the expansion of our capabilities to strengthen our core and continue to differentiate our offerings to achieve our current 2012 revenue and profit goals. That completes our commentary on financial results. And I'd now like to turn the call back over to Nancy.

Thank you, Jeff. Before we turn the call over to your questions, I want to reiterate that while certainly, there are challenges that lay ahead, we are encouraged by the continued conversion of our pipeline, the expansion of our CSO customer base, including the addition of 2 new top 10 global pharmaceutical companies in the second quarter, and the progress being generated by EngageCE, Interpace BioPharma and Group DCA. As noted and as always, we remain focused on the execution of our growth strategy and the attainment of our 2012 revenue and profit goals. Thank you for joining our call today. And with that, I'll turn it over to the operator for your questions. Operator?

[Operator Instructions] Your first question comes from the line of John Kreger with William Blair.

This is Beth Rose in for John Kreger this morning. The first question would be -- so first, we want to just congratulate you on the new wins. I know we had talked about those previously, but just getting an idea of how many more contracts you need to win to be able to deliver on the revenue goals that you guys have put out for the year?

Beth, that's probably a little too specific. I think what we'll say is we'll stick with what we said this morning and that is, we do expect to have additional wins, the pipeline is strong and realistically, we've got a number of opportunities that we think we can land. But what we did say was that the amount of revenue that will be generated from those wins that fall into this year will not be terribly significant, and that's why we gave the direction we gave.

Okay. So that's why you're saying, "We'll now approach" versus exceed.

Right.

Okay, all right. Well then, one other one. So one comment -- or question on the commentary in the press release about gross margins and the pricing trends. Any more that you can give us on that. Who's driving the decreased margins on the new business?

Well, let me say this, we're not going say who it is because we're not going to discuss competitive issue to that degree, but we're pretty clear we know who it is. And as you know there's only really 4 main competitors in the market. There's smaller players who come in at very, very small teams and with, in some cases, different types of opportunities that they offer. They're not the drivers of this. So it remains a competitive market. I think also what's going on is that, as we said, you're seeing the pipeline grow robustly and so the competitive pressure to gain a portion of this expanding business base is partly what's causing the margin erosion.

Your next question comes from the line of Nick Halen with Sidoti & Company.

First question I had was just in terms of the margins going forward, it seems like you said there's a lot of competition right now that's kind of driving down pricing. I mean is this a business that we should look as a, I guess, a sub-20% gross margin going forward? Or I mean is there anything, I guess, you guys can do internally to, I guess, help boost the gross margins at all?

Well, yes. There's 2 parts to that question. Certainly, you see we continue to take costs out, so from that standpoint, we think we can help margins. We can continue to take some cost out but that will not dramatically change the margins, and without giving anything specific, if our margin has been roughly 20% up to this point, I think you have to assume that we're talking about sub-20% as we go forward, given everything we said on the call.

Okay. And that was actually kind of my next question. Just in terms of -- you guys obviously have done a great job of taking a lot of cost out of the business, so I was wondering, I mean is there still a good amount that you feel in your opinion that you could still take out?

I think there is definitely more, but not -- I would not say it's a substantial amount. We continue to have a very rigorous process around this. There's certainly -- as I said, it's ongoing cost we think we can take out, but I would not assume, Nick, that is a substantial amount.

Okay. And then lastly, I know you guys just spoke a little about competitive landscape and obviously pricing has been pretty tough, but I guess, how much further are you guys willing to go on pricing?

I want to hold on that just because that's a highly competitive and I think that -- let me say this, our goal is that we do not be the leader, certainly, on pricing because I think that, that is negative for the industry and also we have to be careful that we don't begin to overall jeopardize quality. Quality remains #1. We have to deliver a product that is -- meets all regulatory compliance guidelines and we often spend time talking with our clients about the need to make sure that though they're under cost pressures, if the cost pressure gets too intense for the suppliers, you'll end up jeopardizing the quality of the product. So we strive very hard to make sure we are not the leader on driving price down.

[Operator Instructions]

Okay. Thank you very much. Appreciate your time today and we look forward to speaking with you again at our next call.

Thank you.

This does conclude today's conference call. You may now disconnect.