Publicis Groupe is divesting its healthcare practice (Publicis Health Solutions) after the unit helped drag the company’s organic revenue down to 1.3% in the third quarter. Excluding the unit from the numbers, holding company growth would have been 2.2%, executives said on a call with analysts and investors Thursday to discuss Q3 results.
The Groupe has a very distinctive positioning in the healthcare communications sector with PHS which services CSOs (contract sales organizations), a business that does not exist in other healthcare communications networks as most of its competitors are specialized in outsourcing.
By its very nature, this business is highly volatile and developments in the healthcare sector have led clients to make last-minute adjustments, including the postponement or even the cancellation of campaigns, the company reported during the investor call, adding this entity is classified as a "non-core activity."
Company CEO/Chairman Arthur Sadoun also reported that the firm has launched a review of its asset portfolio, which he said would “optimize the allocation of our resources and help us scale our strategic game changers. We have to absolutely focus on disposing of non-core assets that are not aligned with our priorities,” he says.
Other Adland giants are conducting similar portfolio assessments, most notably Omnicom, which sold off 19 companies (mostly in the CRM space) in the third quarter alone.
Publicis Groupe’s Q3 net revenue was 2.20 billion euro ($2.53 billion), up 0.5% from 2.19 billion euro ($2.52 billion) in Q3 2017.
While healthcare operations were a drag on performance, the 1.3% growth achieved in Q3 was an improvement compared with the 0.4% organic
revenue decline reported for the first six months of the year, the Groupe reported.
On the new business front, Publicis Groupe won the GSK global media assignment earlier this month. The win, said Publicis Media chief Steve King, “is both emblematic and a concrete example of our attractiveness with the ability to execute at scale in global markets with data and technology at the core of our proposition.”
The GSK win follows assignments earlier this year from Cathay Pacific, Western Union, Nestlé, and Mondelez International among others.
All geographies in Q3 reported positive organic growth. North America was up 1.0% while Europe returned to growth at +4.2%.
For the first nine months of this year, net revenue was 6.48 billion euro ($7.46 billion), down 5.4% from 6.85 billion euro ($7.89 billion) for the corresponding period in 2017. The impact of exchange rates was a negative 5.5% or down 379 million euro.
Organic growth for the first nine months 0.2%, but would have been 0.8% without PHS.
Publicis shares were up 6% Thursday in midday trading on the Paris exchange.