**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





Form
      10-Q





**[X]
      Quarterly Report Pursuant to Section 13 or 15(d) of the
      Securities**


Exchange
      Act of 1934





For
      the
      quarterly period ended June 30, 2005





or





**[_]
      Transition Report Pursuant to Section 13 or 15(d) of the
      Securities**


Exchange
      Act of 1934





For
      the
      Transition Period From ___________ to ___________





Commission
      file number 0-30318





**VENTIV
      HEALTH, INC.**


(Exact
      name of registrant as specified in its charter)





Delaware
      52-2181734


(State
      or
      other jurisdiction (IRS Employer


of
      incorporation or organization) Identification No.)





200
      Cottontail Lane


Vantage
      Court North


Somerset,
      New Jersey 08873


(Address
      of principal executive office and zip code)





(800)
      416-0555


(Registrant's
      telephone number, including area code)





Indicate
      by check mark whether registrant (1) has filed all reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes [X] No [_]





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act).  Yes [X]
      No
      [_]





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date.





Common
      Stock, par value $0.001, 26,791,676 shares outstanding as of July 31,
      2005.





**VENTIV
      HEALTH, INC.**


**INDEX
      TO QUARTERLY REPORT ON**


**FORM
      10-Q**





**Page****PART
                I. FINANCIAL INFORMATION**ITEM
                1. Financial StatementsCondensed
                Consolidated Balance Sheets as of June 30, 2005and
                December 31, 2004 (unaudited)
            1Condensed
                Consolidated Income Statements for the three and six-monthsended
                June 30, 2005 and 2004 (unaudited)
            2Condensed
                Consolidated Statements of Cash Flows for the six-monthsended
                June 30, 2005 and 2004 (unaudited)
            3Notes
                to Condensed Consolidated Financial Statements
            4
                -
                12ITEM
                2. Management's Discussion and Analysis of Financial Condition
                andResults
                of Operations
            13
                - 22ITEM
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            23ITEM
                4. Controls and Procedures
            23**PART
                II. OTHER INFORMATION**ITEM
                1. Legal Proceedings
            24ITEM
                4. Submission of Matters to a Vote of Security Holders
            24ITEM
                6. Exhibits and Reports on Form 8-K
            25**SIGNATURES**
            26**EXHIBITS**
            27
                - 30











**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1.**  ***Financial
      Statements***





**VENTIV
      HEALTH, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(in
      thousands, except share amounts)**


**(unaudited)**





**June
                30,**
            
            **December
                31,****2005**
            
            **2004****ASSETS**Current
                assets:Cash
                and equivalents
            
            $
            40,914
            
            $
            50,809Restricted
                cash
            
            
            3,786
            
            
            2,488Accounts
                receivable, net of allowances for doubtful accounts of
                $1,684and
                $1,980 at June 30, 2005 and December 31, 2004,
                respectively
            
            
            75,297
            
            
            56,534Unbilled
                services
            
            
            42,937
            
            
            36,130Prepaid
                expenses and other current assets
            
            
            4,294
            
            
            2,755Current
                deferred tax assets
            
            
            9,227
            
            
            8,226Total
                current assets
            
            
            176,455
            
            
            156,942Property
                and equipment, net
            
            
            37,454
            
            
            40,226Goodwill
            
            
            64,796
            
            
            64,823Other
                intangibles, net
            
            
            20,768
            
            
            21,370Deferred
                tax assets
            
            
            2,925
            
            
            3,583Deposits
                and other assets
            
            
            2,406
            
            
            508Total
                assets
            
            $
            304,804
            
            $
            287,452**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Current
                portion of capital lease obligations
            
            $
            11,910
            
            $
            12,004Accrued
                payroll, accounts payable and accrued expenses
            
            
            44,104
            
            
            56,076Current
                income tax liabilities
            
            
            11,277
            
            
            12,113Client
                advances and unearned revenue
            
            
            5,267
            
            
            9,184Total
                current liabilities
            
            
            72,558
            
            
            89,377Capital
                lease obligations, net of current portion
            
            
            21,428
            
            
            24,898Other
                non-current liabilities
            
            
            3,888
            
            
            733Total
                liabilities
            
            
            97,874
            
            
            115,008Commitments
                and contingenciesStockholders'
                equity:Preferred
                stock, $.001 par value, 10,000,000 shares authorized, none
                issuedand
                outstanding at June 30, 2005 and December 31, 2004,
                respectively
            
            
            --
            
            
            --Common
                stock, $.001 par value, 50,000,000 shares authorized; 26,778,376
                and25,705,012
                shares issued and outstanding at June 30, 2005 andDecember
                31, 2004, respectively
            
            
            27
            
            
            26Additional
                paid-in-capital
            
            
            210,160
            
            
            193,061Deferred
                compensation
            
            
            (2,772
            )
            
            (420
            )Accumulated
                other comprehensive earnings
            
            
            272
            
            
            320Accumulated
                deficit
            
            
            (757
            )
            
            (20,543
            )Total
                stockholders' equity
            
            
            206,930
            
            
            172,444Total
                liabilities and stockholders' equity
            
            $
            304,804
            
            $
            287,452





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.





1


**VENTIV
      HEALTH, INC.**





**CONDENSED
      CONSOLIDATED INCOME STATEMENTS**


**(in
      thousands, except per share amounts)**


**(unaudited)**





**For
                the Three-Months Ended June 30**
            
            
            
            **For
                the Six-Months Ended June 30****2005**
            
            
            **2004**
            
            
            
            
            
            **2005**
            
            
            **2004**Revenues
            
            $
            131,788
            
            $
            75,221
            
            
            
            
            $
            252,646
            
            $
            145,882Operating
                expenses:Cost
                of services
            
            
            99,761
            
            
            60,297
            
            
            
            
            
            193,473
            
            
            116,607Selling,
                general and administrative expenses
            
            
            16,955
            
            
            7,299
            
            
            
            
            
            31,355
            
            
            13,570Restructuring
            
            
            --
            
            
            (264
            )
            
            
            
            
            --
            
            
            (264
            )Total
                operating expenses
            
            
            116,716
            
            
            67,332
            
            
            
            
            
            224,828
            
            
            129,913Operating
                income
            
            
            15,072
            
            
            7,889
            
            
            
            
            
            27,818
            
            
            15,969Interest
                expense
            
            
            (322
            )
            
            (200
            )
            
            
            
            
            (710
            )
            
            (381
            )Interest
                income
            
            
            253
            
            
            142
            
            
            
            
            
            506
            
            
            225Income
                from continuing operations before income
              taxes
            
            
            15,003
            
            
            7,831
            
            
            
            
            
            27,614
            
            
            15,813Income
                tax provision
            
            
            5,971
            
            
            2,976
            
            
            
            
            
            9,390
            
            
            6,009Income
                from continuing operations
            
            
            9,032
            
            
            4,855
            
            
            
            
            
            18,224
            
            
            9,804Income
                from discontinued operations:Gains
                on disposals of discontinued operations, net of taxes
            
            
            1,463
            
            
            1,754
            
            
            
            
            
            1,562
            
            
            1,908Net
                income from discontinued operations
            
            
            1,463
            
            
            1,754
            
            
            
            
            
            1,562
            
            
            1,908Net
                income
            
            $
            10,495
            
            $
            6,609
            
            
            
            
            $
            19,786
            
            $
            11,712Income
                per share (see Note 5):Continuing
                operations:Basic
            
            $
            0.34
            
            $
            0.21
            
            
            
            
            $
            0.69
            
            $
            0.42Diluted
            
            $
            0.32
            
            $
            0.19
            
            
            
            
            $
            0.66
            
            $
            0.39Discontinued
                operations:Basic
            
            $
            0.05
            
            $
            0.07
            
            
            
            
            $
            0.06
            
            $
            0.08Diluted
            
            $
            0.06
            
            $
            0.07
            
            
            
            
            $
            0.05
            
            $
            0.08Net
                income:Basic
            
            $
            0.39
            
            $
            0.28
            
            
            
            
            $
            0.75
            
            $
            0.50Diluted
            
            $
            0.38
            
            $
            0.26
            
            
            
            
            $
            0.71
            
            $
            0.47Weighted
                average common shares outstanding:Basic
            
            
            26,757
            
            
            23,546
            
            
            
            
            
            26,431
            
            
            23,353Diluted
            
            
            27,879
            
            
            25,297
            
            
            
            
            
            27,763
            
            
            24,933





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements





2


**VENTIV
      HEALTH, INC.**





**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(in
      thousands)**


**(unaudited)**





**For
                the Six-Months Ended June 30,****2005**
            
            **2004**Cash
                flows from operating activities:Net
                income
            
            $
            19,786
            
            $11,712Adjustments
                to reconcile net income to net cash provided by operating
                activities:Income
                from discontinued operations
            
            
            (1,562
            )
            (1,908)Depreciation
            
            
            8,508
            
            7,544Amortization
            
            
            602
            
            9Deferred
                taxes
            
            
            (343
            )
            --Stock
                compensation expense
            
            
            245
            
            45Tax
                benefit from stock option exercises
            
            
            7,815
            
            --Changesin
                assets and liabilities, net of effects from discontinued
                operations:Accounts
                receivable, net
            
            
            (18,763
            )
            10,575Unbilled
                services
            
            
            (6,807
            )
            (2,128)Prepaid
                expenses and other current assets
            
            
            (1,539
            )
            (2,269)Accrued
                payroll, accounts payable and accrued expenses
            
            
            (2,607
            )
            1,866Current
                income tax liabilities
            
            
            (836
            )
            5,516Client
                advances and unearned revenue
            
            
            (3,917
            )
            1,840Other
            
            
            2,257
            
            (269)Net
                cash provided by operating activities
            
            
            2,839
            
            32,533Cash
                flows from investing activities:Investment
                in restricted cash principal balances
            
            
            (1,298
            )
            (2,231)Investment
                in cash value of life insurance policies
            
            
            (961
            )
            --Cash
                paid for acquisitions, net of cash acquired
            
            
            (902
            )
            (6,667)Acquisition
                earn-out payments
            
            
            (5,181
            )
            --Proceeds
                from disposals of discontinued operations
            
            
            1,612
            
            701Proceeds
                from rebates on car leases
            
            
            2
            
            3,479Purchases
                of property and equipment
            
            
            (2,923
            )
            (2,111)Net
                cash used in investing activities
            
            
            (9,651
            )
            (6,829)Cash
                flows from financing activities:Repayments
                of capital lease obligations
            
            
            (6,418
            )
            (5,026)Proceeds
                from exercise of stock options
            
            
            3,433
            
            1,612Net
                cash used in financing activities
            
            
            (2,985
            )
            (3,414)Net
                cash (used in) provided by discontinued operations
            
            
            (50
            )
            1,207Effect
                of exchange rate changes
            
            
            (48
            )
            19Net
                (decrease) increase in cash and equivalents
            
            
            (9,895
            )
            23,516Cash
                and equivalents, beginning of period
            
            
            50,809
            
            54,970Cash
                and equivalents, end of period
            
            $
            40,914
            
            $78,486Supplemental
                disclosures of cash flow information:Cash
                paid for interest
            
            $
            725
            
            $381Cash
                paid for income taxes
            
            $
            2,766
            
            $682Supplemental
                disclosure of non-cash activities:Vehicles
                acquired through capital lease agreements
            
            $
            4,898
            
            $5,563Stock
                issuance related to earn-outs for 2004 acquisitions
            
            $
            3,255
            
            $3,580





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements





3


**1.**  **Organization,
      Business and Basis of Presentation:**





Ventiv
      Health Inc. (together with its subsidiaries “Ventiv ” or the “Company”) is a
      diversified pharmaceutical services company spanning late-stage clinical through
      commercialization services, with leading market positions in outsourced sales
      teams, clinical staffing, compliance, patient assistance and analytical
      planning. We provide these services to the world's largest pharmaceutical
      organizations as well as to emerging and specialty pharmaceutical and life
      sciences organizations. These programs include:




·
            sales
                and marketing teams;




·
            clinical
                staffing;




·
            planning
                and analytics;




·
            sample
                accountability and patient assistance;




·
            marketing
                support services;




·
            recruitment;




·
            professional
                development and training;




·
            data
                collection and management; and




·
            clinical
                support.




Over
      almost three decades, our businesses have provided excellence in customized
      solutions and helped our clients achieve their business objectives.





We
      currently serve our clients primarily through two business units, which
      correspond to our reporting segments for 2005:





·
            Ventiv
                Commercial Services,
                which consists of our outsourced sales and marketing teams, planning
                and
                analytics services, compliance and patient assistance businesses,
                marketing support services, professional development and training,
                and
                recruitment of sales representatives in the commercial services area;
                and


·
            Ventiv
                Clinical Services,
                which consists of the newly acquired businesses of Smith Hanley
                Associates, Smith Hanley Consulting Group and MedFocus (collectively
                “Smith Hanley”) and HHI Clinical & Statistical Research Services
                (“HHI”). This segment provides services related to recruitment, clinical
                staffing, and data collection and
                management.





In
      2004,
      we managed three operating segments, which included Ventiv Commercial Services,
      Ventiv Clinical Services and Ventiv Analytic Services. As a result of the fourth
      quarter acquisitions in the clinical services arena and the commonality of
      the
      nature of the commercial services we provide, our planning and analytics
      services business unit, which was operated as a separate reporting segment
      (Ventiv Analytic Services) during 2004, is now included as part of Ventiv
      Commercial Services for operating and segment reporting purposes.





The
      accompanying unaudited condensed consolidated financial statements present
      the
      condensed consolidated financial position, condensed consolidated results of
      operations and condensed consolidated cash flows of the Company and its
      subsidiaries (the "condensed consolidated financial statements"). These
      condensed consolidated financial statements have been prepared pursuant to
      the
      rules and regulations of the Securities and Exchange Commission (“SEC”) related
      to interim financial statements. Accordingly, certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      ("GAAP") have been omitted. The Company believes that the disclosures made
      herein are adequate such that the information presented is not misleading.
      These
      condensed consolidated financial statements reflect all adjustments (consisting
      of only normal recurring adjustments) that, in the opinion of management, are
      necessary to fairly present the Company's condensed consolidated financial
      position as of June 30, 2005 and December 31, 2004, the condensed consolidated
      income statements of the Company for the three and six-months ended June 30,
      2005 and 2004 and the condensed consolidated cash flows for the six-months
      ended
      June 30, 2005 and 2004. Operating results for the three and six-months ended
      June 30, 2005 are not indicative of the results that may be expected for the
      year ending December 31, 2005.





These
      condensed consolidated financial statements should be read in conjunction with
      the audited consolidated financial statements and accompanying notes included
      in
      the Company's Annual Report on Form 10-K for the year ended December 31, 2004,
      as filed with the Securities and Exchange Commission on March 31, 2005. Certain
      prior period balances have been reclassified to conform to current period
      presentation. The Company has also made an immaterial adjustment on its
      condensed consolidated cash flows to the prior year classification of restricted
      cash principal balances from operating and financing activities to an investing
      activity.





4





**VENTIV
      HEALTH, INC.**




**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
      Continued**


**2.**  **Recently
      Issued Accounting Standards:**




In
      June
      2005, the Financial
      Accounting Standards Board (“FASB”) issued
      Statement of Financial Account Standard (“SFAS”) No. 154, *Accounting
      Changes and Error Corrections* ,
      (“SFAS
      No.154”) a replacement of Accounting
      Principles Board ("APB") Opinion
      No. 20, *Accounting
      Changes* ,
      and
      Statement No. 3, *Reporting
      Accounting Changes in Interim Financial Statements* .
      SFAS
      No. 154 changes the requirements for the accounting for and the reporting of
      a
      change in accounting principle. Previously, most voluntary changes in accounting
      principles required recognition by recording a cumulative effect adjustment
      within net income in the period of change. SFAS No. 154 requires retrospective
      application to prior periods’ financial statements, unless it is impracticable
      to determine either the specific period effects or the cumulative effect of
      the
      change. SFAS No. 154 is effective for accounting changes made in fiscal years
      beginning after December 15, 2005. The Company does not expect the
      implementation of SFAS No. 154 to have an impact on our condensed consolidated
      balance sheets, condensed consolidated income statements or condensed
      consolidated statements of cash flows.





In
      March
      2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) that provides
      additional guidance in applying the provisions of SFAS No. 123 (revised 2004), *Share-Based
      Payment* (“SFAS
      No. 123R”). SFAS No. 123R requires that compensation cost relating to
      share-based payment transactions be recognized in the financial statements
      based
      on the fair value of the equity or liability instruments issued. SFAS No. 123R
      covers a wide range of share-based compensation arrangements, including share
      options, restricted share plans, performance-based awards, share appreciation
      rights and employee share purchase plans. SAB 107 describes the SEC staff's
      expectations in determining the assumptions that underlie fair value estimates
      and discusses the interaction of SFAS No. 123R with certain existing SEC
      guidance. The provisions of SAB 107 will be applied upon adoption of SFAS No.
      123R. In April 2005, the SEC adopted a new rule that allows companies to
      implement SFAS No. 123R at the beginning of their next fiscal year, instead
      of
      the next reporting period that begins after June 15, 2005. As such, the Company
      is required to adopt SFAS No. 123R in our first quarter of 2006, beginning
      January 1, 2006. Under SFAS No. 123R, the Company must determine the
      appropriate fair value model to be used for valuing share-based payments, the
      amortization method for compensation cost and the transition method to be used
      at the date of adoption. The transition alternatives include prospective and
      retroactive adoption methods. Under the retroactive methods, prior periods
      may
      be restated either as of the beginning of the year of adoption or for all
      periods presented. The prospective method requires that compensation expense
      be
      recorded for all unvested stock options and share awards at the beginning of
      the
      first quarter of adoption of SFAS No. 123R, while the retroactive methods
      would record compensation expense for all unvested stock options and share
      awards beginning with the first period restated. The Company is evaluating
      the
      requirements of SFAS No. 123R and the Company expects that the adoption
      of
      SFAS No. 123R will have a material impact on the Company’s consolidated
      results of operations and earnings per share. The Company has not determined
      the
      method of adoption or the effect of adopting SFAS No. 123R.





In
      December 2004, the FASB issued SFAS No. 123 (revised 2004), *Share-Based
      Payment* SFAS
      No. 123R, which replaces SFAS No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      No. 123”) and supercedes APB Opinion No. 25, *Accounting
      for Stock Issued to Employees* .
      SFAS
      No. 123R requires all share-based payments to employees, including grants
      of employee stock options, to be recognized in the financial statements based
      on
      their fair values, beginning with the first interim or annual period after
      June 15, 2005, with early adoption encouraged. In addition, SFAS
      No. 123R will cause unrecognized expense (based on the amounts in our
      pro
      forma footnote disclosure) related to options vesting after the date of initial
      adoption to be recognized as a charge to results of operations over the
      remaining vesting period.





**3.**  **Acquisitions:**





In
      June
      2004, Ventiv acquired the net assets of Franklin Group, Inc. and Lincoln Ltd.,
      Inc. (together, “Franklin”), privately-held companies based in Somerville, New
      Jersey. Franklin specializes primarily in conducting patient assistance programs
      and pharmaceutical compliance services. Ventiv paid approximately $11.3 million
      in cash and stock (taking into account post-closing adjustments and direct
      acquisition costs) to acquire approximately $2.7 million of net assets. Ventiv
      is obligated to make certain earn-out payments, which may be material,
      contingent on Franklin’s performance measurements during 2004 through 2006.
      Franklin’s 2004 earn-out paid in 2005 was approximately $1.8 million, $1.7
      million of which was accrued for at December 31, 2004; the portion adjusted
      in
      2005 mainly relates to the finalization of the 2004 earn-out. Franklin’s
      financial results have been reflected in the Ventiv Commercial Services segment
      since the date of acquisition.





In
      October 2004, the Company acquired the net assets of Smith Hanley. Smith Hanley
      specializes primarily in providing late-stage clinical staffing and recruiting
      services to the U.S. pharmaceutical industry. The Company acquired Smith Hanley
      to significantly expand our service portfolio in the clinical services and
      recruitment areas, expand our market position in the pharmaceutical services
      market and achieve cross-selling opportunities by leveraging our existing sales
      force and relationships. The Company acquired approximately $9.5 million of
      net
      assets for consideration of approximately $52.8 million in cash and stock
      (taking into account post-closing adjustments and direct acquisition costs)
      and
      will be




5
 
  **VENTIV
          HEALTH, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
          Continued**
  obligated
        to make certain earn-out payments, which may be material, contingent on Smith
        Hanley’s performance measurements in 2004 and 2005. Smith Hanley’s 2004 earn-out
        paid in 2005 was approximately $6.6 million, for which $6.8 million was
        previously accrued for at December 31, 2004; the portion adjusted in 2005
        mainly
        relates to the finalization of the 2004 earn-out. The results of Smith Hanley
        have been reflected in Ventiv Clinical Services segment since the date of
        acquisition.





In
      November 2004, Ventiv acquired the net assets of HHI. HHI, a privately-held
      company based in Baltimore, Maryland, is a leading specialized statistical
      analysis and data management provider to the U.S. pharmaceutical industry.
      HHI
      complements Ventiv's Smith Hanley business. The closing consideration for the
      transaction was approximately $6.2 million in cash and stock (taking into
      account post-closing adjustments and direct acquisition costs) for approximately
      $0.8 million of net assets. Ventiv will be obligated to make certain earn-out
      payments, which may be material, contingent on HHI’s performance measurements in
      2005 and 2006. The results of HHI have been reflected in Ventiv Clinical
      Services segment since the date of acquisition.





In
      August
      2005, Ventiv acquired the net assets of Pharmaceutical Resource Solutions,
      LLC
      (“PRS”), a privately-held company based in Horsham, Pennsylvania. PRS
      specializes in pharmaceutical sample management and compliance services and
      is
      similar in nature to our Franklin division described above. The Company paid
      approximately $13.0 million in cash and stock and will be obligated to make
      certain earn-out payments, which may be material, contingent on PRS’s
      performance measurements in 2005 and 2006. The results of PRS have not been
      reflected in the Company’s condensed consolidated financial statements as the
      acquisition occurred subsequent to the current reporting period.





**4.**  **Employee
      Stock Compensation:**





In
      December 2002, the FASB issued SFAS No. 148, *Accounting
      for Stock-Based Compensation - Transition and Disclosure - an Amendment of
      FASB
      Statement No. 123* (“SFAS
      No. 148”), to provide alternative methods of transition for a voluntary change
      to the fair value based method of accounting for stock-based employee
      compensation. In addition, this Statement amends the disclosure requirements
      of
      SFAS No. 123 to require prominent disclosures in both annual and interim
      financial statements about the method of accounting for stock-based employee
      compensation and the effect of the method used on reported results. We adopted
      the disclosure requirements of SFAS No. 148 as of December 31, 2002. We account
      for stock-based employee compensation arrangements in accordance with provisions
      of APB Opinion No. 25, *Accounting
      for Stock Issued to Employees,* and
      comply with the disclosure provisions of SFAS No. 123, as amended. Under APB
      Opinion No. 25, compensation expense is based on the difference, if any, on
      the
      date of grant, between the quoted market price of our stock and the exercise
      price.





The
      following table illustrates the effect on net income and net income per share
      if
      the Company had applied the fair value recognition provisions of SFAS No. 123
      to
      stock-based employee compensation arrangements:





**Three-months
                ended**
              **June
                30,**
            **Six-months
                ended**
              **June
                30,****2005**
            **2004**
            **2005**
            **2004**Net
                income attributable to common shareholders, as reported
            $10,495
            $6,609
            $19,786
            $11,712Less:
                stock-based employee compensation expense determined under the fair
                value
                method, net of related income taxes
            (684)
            (341)
            (2,336)
            (665)Pro
                forma net income
            $9,811
            $6,268
            $17,450
            $11,047Net
                earnings per share attributable to common shareholders:As
                reported: Basic
            $0.39
            $0.28
            $0.75
            $0.50As
                reported: Diluted
            $0.38
            $0.26
            $0.71
            $0.47Pro
                forma: Basic
            $0.37
            $0.27
            $0.66
            $0.47Pro
                forma: Diluted
            $0.35
            $0.25
            $0.63
            $0.44




The
      per
      share weighted-average fair value of stock options granted during the
      three-months ended June 30, 2005 and 2004 were $11.73 and $11.47 per share,
      respectively, and in addition, during the six-months ended June 30, 2005 and
      2004 were $14.13 and $10.50 per share, respectively, on the date of grant using
      the Black-Scholes option pricing model with the following weighted-average
      assumptions:






6


**VENTIV
        HEALTH, INC.**
  **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued**




**Employee
                Stock Options****Three-months
                ended**
              **June
                30,**
            **Six-months
                ended**
              **June
                30,****2005**
            **2004**
            **2005**
            **2004**Expected
                dividend yield
            0%
            0%
            0%
            0%Risk-free
                interest rate
            3.77%
            3.93%
            4.13%
            3.69%Expected
                volatility
            83%
            89%
            84%
            89%Expected
                life of options
            4
                yrs
            4
                yrs
            4
                yrs
            4
                yrs








**5.**  **Earnings
      Per Share (“EPS”):**





Basic
      earnings per share excludes dilution for potentially dilutive securities and
      is
      computed by dividing net income or loss attributable to common shareholders
      by
      the weighted average number of common shares outstanding during the
      period.  Diluted net income per share reflects the potential dilution
      that
      could occur if securities or other instruments to issue common stock were
      exercised or converted into common stock. Potentially dilutive securities are
      excluded from the computation of diluted net income per share when their
      inclusion would be antidilutive. Although the basic EPS calculations from
      continuing operations exceed the diluted EPS from continuing operations for
      the
      three and six-months ended June 30, 2005, the diluted EPS from discontinued
      operations exceed the basic EPS from discontinued operations by $0.01 for the
      three-months ended June 30, 2005 due to a rounding adjustment to ensure that
      the
      EPS from continuing operations and net EPS are stated properly on the face
      of
      the Company’s Condensed Consolidated Income Statements.





A
      summary
      of the computation of basic and diluted earnings per share from continuing
      operations is as follows:




**Three-Months
                Ended June 30,**
            **Six-Months
                Ended June 30,****2005**
            **2004**
            **2005**
            **2004****(in
                thousands, except per share data)****Basic
                EPS from Continuing Operations Computation**Income
                from continuing operations
            $9,032
            $4,855
            $18,224
            $9,804Weighted
                average number of common shares outstanding
            26,757
            23,546
            26,431
            23,353Basic
                EPS from continuing operations
            $0.34
            $0.21
            $0.69
            $0.42**Diluted
                EPS from Continuing Operations Computation**Income
                from continuing operations
            $9,032
            $4,855
            $18,224
            $9,804Weighted
                average number of common shares outstanding
            26,757
            23,546
            26,431
            23,353Stock
                options(1)
            1,112
            1,747
            1,323
            1,577Restricted
                stock awards(2)
            10
            4
            9
            3Total
                diluted common shares outstanding
            27,879
            25,297
            27,763
            24,933Diluted
                EPS from continuing operations
            $0.32
            $0.19
            $0.66
            $0.39





(1) For the
      three and six-months ended June 30, 2005, 102,545 shares and 84,616 shares,
      respectively, were excluded from the calculation of diluted EPS because the
      grant prices exceeded the market prices during those periods. Similarly, for
      the
      three and six-months ended June 30, 2004, 40,509 shares and 30,345 shares,
      respectively, were excluded from the calculation of diluted EPS because the
      grant prices exceeded the market prices during those periods.




(2) For the
      three and six-months ended June 30, 2005, 10,500 shares and 6,613 shares,
      respectively, were excluded from the calculation of diluted EPS because the
      grant prices exceeded the market prices during those periods.




**6.**  **Significant
      Clients:**





During
      the six-months ended June 30, 2005, three clients accounted for approximately
      16%, 12% and 11%, individually, of the Company's total revenues across both
      of
      our operating segments. For the six-months ended June 30, 2004, three clients
      accounted for approximately 25%, 19% and 15%, individually, of the Company's
      total revenues primarily in our Ventiv Commercial Services segment (Ventiv
      Clinical Services was established in October 2004).


7




**VENTIV
        HEALTH, INC.**
  **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
        Continued**


**7.
      Restricted Cash:**





In
      June
      2005, the Company pledged approximately $0.3 million of cash as collateral
      on an
      outstanding standby letter of credit to support the security deposit relating
      to
      the New York office rental for the Ventiv Clinical Services segment. The
      beneficiary has not drawn on this letter of credit. As this cash has been
      pledged as collateral, it is restricted from use for general purposes and has
      been classified accordingly in the Condensed Consolidated Balance Sheet as
      of
      June 30, 2005.





In
      January 2005, Ventiv pledged additional cash as collateral of approximately
      $1.0
      million, for a total of approximately $2.0 million, on an existing outstanding
      standby letter of credit to support the insurance policy relating to a fleet
      leasing arrangement for the Ventiv Commercial Services segment, opened in
      January 2004. The beneficiary has not drawn on this letter of credit. As this
      cash has been pledged as collateral, approximately $2.0 million and $1.0 million
      has been restricted from use for general purposes and classified accordingly
      in
      the Condensed Consolidated Balance Sheets as of June 30, 2005 and December
      31,
      2004, respectively.





In
      March
      2003, the Company pledged approximately $0.8 million of cash as collateral
      on an
      outstanding standby letter of credit, issued in support of the insurance policy
      relating to another fleet leasing arrangement for the Ventiv Commercial Services
      segment. The beneficiary has not drawn on this letter of credit. As this cash
      has been pledged as collateral, it is restricted from use for general purposes
      and has been classified accordingly in the Condensed Consolidated Balance Sheets
      as of June 30, 2005 and December 31, 2004.





The
      Company often receives cash advances from its clients as funding for specific
      projects and engagements. These funds are deposited into segregated bank
      accounts and used solely for purposes relating to the designated projects.
      Although these funds are not held subject to formal escrow agreements, the
      Company considers these funds to be restricted and has classified these balances
      accordingly. Cash held in such segregated bank accounts totaled approximately
      $0.7 million held in escrow on behalf of clients and was included in restricted
      cash in the Condensed Consolidated Balance Sheets as of June 30, 2005 and
      December 31, 2004.





**8** .  **Goodwill
      and Other Intangible Assets:**





Goodwill
      consists of the following:




**June
                        30,**
                    
                    **December
                        31,**(in
                        thousands)
                    
                    **2005**
                    
                    **2004**Ventiv
                        Commercial Services
                    
                    $
                    28,465
                    
                    $
                    28,314
                    (1)Ventiv
                        Clinical Services
                    
                    
                    36,331
                    
                    
                    36,509
                    (1)Total
                    
                    $
                    64,796
                    
                    $
                    64,823


(1)
        The
        changes in goodwill arose from the finalization of certain contingency
        consideration and additional acquisition costs relating to certain 2004
        acquisitions (see Note 3 for further details).


Other
      intangible assets consist of the following:





**June
                30, 2005**
            
            **December
                31, 2004**(in
                thousands)
            
            
            
            **Accumulated**
            
            
            
            
            
            **Accumulated****Gross**
            
            **Amortization**
            
            **Net**
            
            **Gross**
            
            **Amortization**
            
            **Net**Customer
                relationships
            
            $
            7,567
            
            $
            (844
            )
            $
            6,723
            
            $
            7,567
            
            $
            (282
            )
            $
            7,285Noncompete
                agreement
            
            
            240
            
            
            (35
            )
            
            205
            
            
            240
            
            
            (5
            )
            
            235Other
            
            
            260
            
            
            (180
            )
            
            80
            
            
            260
            
            
            (170
            )
            
            90Total
                definite-life intangibles
            
            
            8,067
            
            
            (1,059
            )
            
            7,008
            
            
            8,067
            
            
            (457
            )
            
            7,610Tradename
            
            
            13,760
            
            
            --
            
            
            13,760
            
            
            13,760
            
            
            --
            
            
            13,760Total
                other intangibles
            
            $
            21,827
            
            $
            (1,059
            )
            $
            20,768
            
            $
            21,827
            
            $
            (457
            )
            $
            21,370








8




**VENTIV
          HEALTH, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued**


The
      2004
      business combinations discussed in footnote 3 above resulted in approximately
      $44.2 million of goodwill (all of which is expected to be deductible for tax
      purposes) and the following gross intangible assets:





**Intangible
                asset**
            
            **Amount**
              **(in
                thousands)**
            
            **Weighted
                average**
              **amortization
                period**Tradename
            
            $
            13,760
            
            
            IndefiniteCustomer
                relationships
            
            
            7,567
            
            
            7.8
                yearsNoncompete
                agreement
            
            
            240
            
            
            4.0
                yearsTotal
            
            $
            21,567





Amortization
      expense, based on intangibles subject to amortization held at June 30, 2005,
      is
      expected to be $0.6 for the second half of 2005, $1.2 million annually from
      2006
      through 2007, $1.1 million in 2008 and $0.7 million in 2009.





**9.**  **Comprehensive
      Earnings:**





Comprehensive
      earnings reports the effect on net income of transactions that are related
      to
      equity of the Company, but that have not been transacted directly with the
      Company's shareholders. This statement only modifies disclosures, including
      financial statement disclosures, and does not result in other changes to the
      reported results of operations or financial position of the Company.




**Three-Months
                Ended June 30,**
            
            **Six-Months
                Ended June 30**,**2005**
            
            **2004**
            
            **2005**
            
            **2004****(in
                thousands)**Net
                income
            
            $
            10,495
            
            $
            6,609
            
            $
            19,786
            
            $
            11,712Other
                comprehensive earnings, net of tax:Foreign
                currency translation adjustments
            
            
            (28
            )
            
            (9
            )
            
            (48
            )
            
            19Comprehensive
                earnings
            
            $
            10,467
            
            $
            6,600
            
            $
            19,738
            
            $
            11,731





**10.**  **Capital
      Lease Obligations:**





During
      2000, the Company entered into a master lease agreement to provide a fleet
      of
      automobiles for sales representatives of its Ventiv Commercial Services
      operating segment. During the fourth quarter of 2002, the segment entered into
      a
      second agreement with another vendor. Based on the terms of the agreement,
      management concluded that the leases were capital in nature based on the
      criteria established by SFAS No. 13, "Accounting for Leases". The Company
      capitalized leased vehicles and recorded the related lease obligations totaling
      approximately $4.9 million and $5.6 million during the six-month periods ended
      June 30, 2005 and 2004, respectively. The Company also incurred net disposals
      of
      $2.0 million and $1.6 million during the six-months ended June 30, 2005 and
      2004, respectively.





A
      summary
      of our contractual obligations and commercial commitments as of June 30, 2005
      are as follows:





**(Amounts
                in thousands)**
            
            **Amounts
                Due In****Contractual
                Obligations**
            Total
                Obligation
            Less
                than 1 Year
            1
                -
                3 years
            3
                -5 years
            More
                than 5 yearsCapital
                lease obligations (a)
            $33,338
            $11,910
            $18,270
            $3,158
            $--Operating
                leases (b)
            30,508
            6,818
            11,392
            6,629
            5,669Total
                obligations
            $63,846
            $18,728
            $29,662
            $9,787
            $5,669





(a)
            These
                future commitments do not include interest and management fees, which
                are
                not recorded on the Consolidated Balance Sheet as of June 30, 2005
                but
                will be recorded as incurred.


(b)
            Operating
                leases include facility lease obligations in which the lease agreement
                may
                expire during the five-year period, but are expected to continue
                on a
                monthly basis beyond the lease
                term.


9


**VENTIV
          HEALTH, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
          Continued**


**11.**  **Deferred
      Compensation:**





On
      November 22, 2004, Ventiv adopted the Ventiv Health, Inc. Deferred Compensation
      Plan (the "Plan"), which was approved by Ventiv’s Board of Directors. The Plan
      provides eligible management and other highly compensated employees with the
      opportunity to defer, on a pre-tax basis, their salary, bonus, and other
      specified cash compensation and to receive the deferred amounts, together with
      a
      deemed investment return (positive or negative), either at a pre-determined
      time
      in the future or upon termination of employment with the Company or an
      affiliated employer participating in the Plan. The compensation deferrals were
      initiated in 2005. The deferred compensation liability of approximately $1.3
      million was included in other liabilities in the Company’s Condensed
      Consolidated Balance Sheet as of June 30, 2005. The Plan does not provide for
      the payment of above-market interest to participants.





To
      assist
      in the funding of the Plan obligation, the Company participates in a
      corporate-owned life insurance program in a rabbi trust whereby it purchases
      life insurance policies covering the lives of certain employees, with the
      Company named as beneficiary. Rabbi trusts are grantor trusts generally set
      up
      to fund compensation for a select group of management or highly paid executives.
      The cash value of the life insurance policy at June 30, 2005 was approximately
      $1.0 million and is currently classified in Deposits and other assets on the
      Company’s Condensed Consolidated Balance Sheet as of June 30, 2005.





**12.**   **Additional
      Paid-In-Capital:**


The
      following table describes 2005 activity in our Additional Paid-In-Capital
      account:





(in
                thousands)
            
            **Additional
                Paid-In- Capital**Balance
                at December 31, 2004
            
            $
            193,061Exercise
                of stock options
            
            
            3,433Issuance
                of restricted shares
            
            
            2,518Compensation
                expense
            
            
            78Tax
                benefit from exercise of employee
              stock
                options
            
            
            7,815Issuance
                of shares in connection with earn-outs for 2004
                acquisitions
            
            
            3,255Balance
                at June 30, 2005
            
            $
            210,160





**13.**  **Discontinued
      Operations:**





For
      the
      six-months ended June 30, 2005 and 2004, income from discontinued operations,
      net of taxes, were earnings of $1.6 million and $1.9 million, respectively.
      The
      gains on disposals of discontinued operations mainly consisted of contingency
      payments due from our previously-divested Hungary (2004 only) and Germany-based
      units. The maximum contingency payments relating to the Germany-based unit
      is
      approximately EUR 5.0 million contingent on the unit’s performance measurements.
      To date, the Company received approximately EUR 2.8 million or $3.4
      million.





**14.**  **Segment
      Information:**





In
      2004,
      the Company managed three operating segments: Ventiv Commercial Services,
      Planning and Analytics and Ventiv Clinical Services, and our non-operating
      reportable segment, “Other”. As a result of the fourth quarter acquisitions in
      the clinical services arena and the commonality of the nature of the commercial
      services we provide, our planning and analytics services business unit which
      was
      operated as a separate reporting segment (Ventiv Analytic Services) during
      2004,
      is now included as part of Ventiv Commercial Services for operating and segment
      reporting purposes. The Company identified the Ventiv Commercial Services and
      Ventiv Clinical Services segments as the two primary operating segments based
      on
      the way management makes operating decisions and assesses performance.




Ventiv's
      2005 reportable segments are:




·
            Ventiv
                Commercial Services, which includes our outsourced sales and marketing
                teams, planning and analytics services, compliance and patient assistance
                businesses, marketing support services, professional development
                and
                training, and sales representative recruitment in the commercial
                services
                area;


·
            Ventiv
                Clinical Services, which provides recruitment, clinical staffing
                and data
                collection and management; and


·
            Other,
                which encompasses the activities of the corporate management group.





10


**VENTIV
          HEALTH, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
          Continued**




For
      the
      three-months ended June 30, 2005 (in thousands):





**Ventiv
                Commercial**
              **Services**
            
            **Ventiv**
              **Clinical**
              **Services**
            
            **Other**
            
            **Total**Revenues
            
            $
            104,224
            
            $
            27,757
            
            $
            --
            
            $
            131,981Less:
                Intersegment revenues
            
            
            193
            
            
            --
            
            
            --
            
            
            193Reported
                revenues
            
            
            104,031
            
            
            27,757
            
            
            --
            
            
            131,788Depreciation
                and amortization
            
            
            3,203
            
            
            311
            
            
            22
            
            
            3,536Interest
                expense
            
            
            315
            
            
            --
            
            
            7
            
            
            322Interest
                income
            
            
            33
            
            
            6
            
            
            214
            
            
            253Income
                (losses) from continuingoperations,
                before income taxes
            
            
            14,620
            
            
            2,153
            
            
            (1,770
            )
            
            15,003





For
      the
      three-months ended June 30, 2004 (in thousands):





**Ventiv
                Commercial**
              **Services**
            
            
            **Ventiv**
              **Clinical**
              **Services**
            
            
            **Other**
            
            
            **Total**Revenues
            
            $
            75,299
            
            $
            --
            
            $
            --
            
            $
            75,299Less:
                Intersegment revenues
            
            
            78
            
            
            --
            
            
            --
            
            
            78Reported
                revenues
            
            
            75,221
            
            
            --
            
            
            --
            
            
            75,221Depreciation
                and amortization
            
            
            3,937
            
            
            --
            
            
            20
            
            
            3,957Restructuring
            
            
            249
            
            
            --
            
            
            15
            
            
            264Interest
                expense
            
            
            126
            
            
            --
            
            
            74
            
            
            200Interest
                income
            
            
            10
            
            
            --
            
            
            132
            
            
            142Income
                (losses) from continuingoperations,
                before income taxes
            
            $
            9,365
            
            $
            --
            
            $
            (1,534
            )
            $
            7,831





For
      the
      six-months ended June 30, 2005 (in thousands):





**Ventiv
                Commercial**
              **Services**
            
            
            **Ventiv**
              **Clinical**
              **Services**
            
            
            **Other**
            
            
            **Total**Revenues
            
            $
            200,527
            
            $
            52,467
            
            $
            --
            
            $
            252,994Less:
                Intersegment revenues
            
            
            340
            
            
            8
            
            
            --
            
            
            348Reported
                revenues
            
            
            200,187
            
            
            52,459
            
            
            --
            
            
            252,646Depreciation
                and amortization
            
            
            8,446
            
            
            621
            
            
            43
            
            
            9,110Interest
                expense
            
            
            603
            
            
            --
            
            
            107
            
            
            710Interest
                income
            
            
            59
            
            
            12
            
            
            435
            
            
            506Income
                (losses) from continuingoperations,
                before income taxes
            
            
            27,063
            
            
            4,107
            
            
            (3,556
            )
            
            27,614





11




**VENTIV
          HEALTH, INC.**
  **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
          Continued**


For
      the
      six-months ended June 30, 2004 (in thousands):





**Ventiv
                Commercial**
              **Services**
            
            
            **Ventiv**
              **Clinical**
              **Services**
            
            
            **Other**
            
            
            **Total**Revenues
            
            $
            146,088
            
            $
            --
            
            $
            --
            
            $
            146,088Less:
                Intersegment revenues
            
            
            206
            
            
            --
            
            
            --
            
            
            206Reported
                Revenues
            
            
            145,882
            
            
            --
            
            
            --
            
            
            145,882Depreciation
                and amortization
            
            
            7,520
            
            
            --
            
            
            33
            
            
            7,553Restructuring
            
            
            249
            
            
            --
            
            
            15
            
            
            264Interest
                expense
            
            
            239
            
            
            --
            
            
            142
            
            
            381Interest
                income
            
            
            13
            
            
            --
            
            
            212
            
            
            225Income
                (losses) from continuingoperations,
                before income taxes
            
            $
            18,829
            
            $
            --
            
            $
            (3,016
            )
            $
            15,813








**June
                30,**
              **2005**
            
            **December
                31, 2004****(in
                thousands)**Total
                Assets:Ventiv
                Commercial Services
            
            $
            218,259
            
            $
            201,613Ventiv
                Clinical Services
            
            
            79,176
            
            
            73,970Other*
            
            
            7,369
            
            
            11,869Total
                assets
            
            $
            304,804
            
            $
            287,452


*
      Shown
      net of intercompany adjustments.





The
      Company's continuing operations are exclusively in the United States.








12


**ITEM
      2.**  ***Management's
      Discussion and Analysis of Financial Condition and Results of Operations***





This
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations should be read in conjunction with the condensed consolidated
      financial statements, accompanying notes and other financial information
      included in the Annual Report on Form 10-K for the years ended December 31,
      2004, 2003 and 2002.





*Forward-Looking
      Statements*





This
      Quarterly Report on Form 10-Q, including this Management’s Discussion and
      Analysis of Financial Condition and Results of Operations, contains
      forward-looking statements regarding future events and our future results that
      are subject to the safe harbors created under the Securities Act of 1933 (the
      “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).
      These statements are based on current expectations, estimates, forecasts, and
      projections about the industries in which we operate and the beliefs and
      assumptions of our management. Words such as
“expects,”“anticipates,”“targets,”“goals,”“projects,”“intends,”“plans,”“believes,”“seeks,”“estimates,”“continues,”“may,”
      variations of such words, and similar expressions are intended to identify
      such
      forward-looking statements. In addition, any statements that refer to
      projections of our future financial performance, our anticipated growth and
      trends in our businesses, and other characterizations of future events or
      circumstances are forward-looking statements. Readers are cautioned that these
      forward-looking statements are only predictions and are subject to risks,
      uncertainties, and assumptions that are difficult to predict, including those
      identified below, under “Risk Factors,” and elsewhere herein. Therefore, actual
      results may differ materially and adversely from those expressed in any
      forward-looking statements. We undertake no obligation to revise or update
      any
      forward-looking statements for any reason.




*Overview*





Ventiv
      Health Inc. (together with its subsidiaries “Ventiv” or the “Company”) is a
      diversified pharmaceutical services company spanning late-stage clinical through
      commercialization services, with leading market positions in outsourced sales
      teams, clinical staffing, compliance, patient assistance and analytical
      planning. We provide these services to the world's largest pharmaceutical
      organizations as well as to emerging and specialty pharmaceutical and life
      sciences organizations. These programs include:




·
            sales
                and marketing teams;




·
            clinical
                staffing;




·
            planning
                and analytics;




·
            sample
                accountability and patient assistance;




·
            marketing
                support services;




·
            recruitment;




·
            professional
                development and training;




·
            data
                collection and management; and




·
            clinical
                support.




Over
      almost three decades, our businesses have provided excellence in customized
      solutions and helped our clients achieve their business objectives.





We
      currently serve our clients primarily through two business units, which
      correspond to our reporting segments for 2005:





·
            Ventiv
                Commercial Services,
                which consists of our outsourced sales and marketing teams, planning
                and
                analytics services, compliance and patient assistance businesses,
                marketing support services, professional development and training,
                and
                recruitment of sales representatives in the commercial services area;
                and


·
            Ventiv
                Clinical Services,
                which consists of the newly acquired businesses of Smith Hanley
                Associates, Smith Hanley Consulting Group and MedFocus (collectively
                “Smith Hanley”) and HHI Clinical & Statistical Research Services
                (“HHI”). This segment provides services related to recruitment, clinical
                staffing, and data collection and
                management.





In
      2004,
      we managed three operating segments, which included Ventiv Commercial Services,
      Ventiv Clinical Services and Ventiv Analytic Services. As a result of the fourth
      quarter acquisitions in the clinical services arena and the commonality of
      the
      nature of the commercial services we provide, our planning and analytics
      services business unit which was operated as a separate reporting segment
      (Ventiv Analytic Services) during 2004, is now included as part of Ventiv
      Commercial Services for operating and segment reporting purposes.





13


*Recent
      Business Developments*





*Ventiv
      Pharma Teams Contracts*





Ventiv
      Pharma Teams contracts often involve the deployment of large numbers of sales
      representative and may have appreciable impacts on revenues and earnings. The
      following are brief summaries of the most significant Ventiv Pharma Teams’
      contracting events during 2004 and 2005:





During
      the first quarter of 2004, we won several new contracts amounting to an
      additional 365 sales representatives. These contracts mainly comprise of small
      to
      mid-size clients looking to enter new markets or looking to build
      infrastructure. Among the notable contracts were Synthon Pharmaceuticals, Ltd.
      and ISTA Pharmaceuticals, Inc.





During
      the second quarter of 2004, we won two additional contracts, each adding 200
      sales representatives during the second half of the year, one with an existing
      client and another for a new client, Yamanouchi Pharmaceutical Company, Ltd.,
      in
      which deployment occurred during the fourth quarter of 2004.





In
      July
      2004, we entered into an agreement with Sanofi-Aventis (“Aventis”) to provide a
      national sales force including recruiting, training and operational support.
      Under the terms of the agreement, we provided approximately 452 sales
      representatives and 50 district managers during the second half of the
      year.




During
      the third quarter of 2004, we won two significant new contracts totaling over
      400 sales representatives with large, global pharmaceutical firms, including
      one
      contract with Bristol-Myers Squibb (“BMS”). To accommodate these and other new
      contracts, we agreed to an early wind-down of our contracts with Bayer
      Pharmaceuticals Corporation (“Bayer”) in order to redeploy its sales
      representatives from these older contracts to recently announced new multi-year
      contracts.






During
      the first half of 2005, we won several new contracts amounting to an additional 245
      representatives .
      These
      contracts are mainly comprised of small
      to
      mid-size clients looking to enter new markets or looking to build
      infrastructure, including Bayer Diagnostics, NPS and Connetics. These wins
      were
      slightly offset by contract conversions of certain small to mid-size clients
      during the first half of the year.




In
      June
      2004, Watson Pharmaceuticals, Inc. (“Watson”) elected to exercise its option to
      not continue its sales force contract for a second year, effective on or about
      August 1, 2004. This action was related to Watson’s strategic decision to
      refocus its broader business priorities, and was not a reflection on the
      performance of the Ventiv sales team. The contract originated in March 2003
      to
      provide for approximately 385 sales representatives.





In
      July
      2005, approximately 226 sales representatives from one of our ALTANA Pharma
      (“ALTANA”) sales teams were converted from full-time Ventiv employees to
      full-time ALTANA employees. Approximately 248 sales representatives from our
      other ALTANA sales team continue to service our continuing ALTANA
      contract.





*Acquisitions*





In
      June
      2004, Ventiv acquired the net assets of Franklin Group, Inc. and Lincoln Ltd.,
      Inc. (together, “Franklin”), privately-held companies based in Somerville, New
      Jersey. Franklin specializes primarily in conducting patient assistance programs
      and pharmaceutical compliance services. Ventiv paid approximately $11.3 million
      in cash and stock (taking into account post-closing adjustments and direct
      acquisition costs) to acquire approximately $2.7 million of net assets. Ventiv
      is obligated to make certain earn-out payments, which may be material,
      contingent on Franklin’s performance measurements during 2004 through 2006.
      Franklin’s 2004 earn-out paid in 2005 was approximately $1.8 million, $1.7
      million of which was accrued for at December 31, 2004; the portion adjusted
      in
      2005 mainly relates to the finalization of the 2004 earn-out. Franklin’s
      financial results have been reflected in the Ventiv Commercial Services segment
      since the date of acquisition.





In
      October 2004, the Company acquired the net assets of Smith Hanley. Smith Hanley
      specializes primarily in providing late-stage clinical staffing and recruiting
      services to the U.S. pharmaceutical industry. The Company acquired Smith Hanley
      to significantly expand our service portfolio in the clinical services and
      recruitment areas, expand our market position in the pharmaceutical services
      and
      achieve cross-selling opportunities by leveraging our existing sales force
      and
      relationships. The Company acquired approximately $9.5 million of net assets
      for
      consideration of approximately $52.8 million in cash and stock (taking into
      account post-closing adjustments and direct acquisition costs) and will be
      obligated to make certain earn-out payments, which may be material, contingent
      on Smith Hanley’s performance measurements in 2004 and 2005. Smith Hanley’s 2004
      earn-out paid in 2005 was approximately $6.6 million, for which $6.8 million
      was
      previously accrued for at December 31, 2004; the portion adjusted in 2005 mainly
      relates to the finalization of the 2004 earn-out. The results of Smith Hanley
      have been reflected in the Ventiv Clinical Services segment since the date
      of
      acquisition.





14


In
      November 2004, Ventiv acquired the net assets of HHI. HHI, a privately-held
      company based in Baltimore, Maryland, is a leading specialized statistical
      analysis and data management provider to the U.S. pharmaceutical industry.
      HHI
      complements Ventiv's Smith Hanley business. The closing consideration for the
      transaction was approximately $6.2 million in cash and stock (taking into
      account post-closing adjustments and direct acquisition costs) for approximately
      $0.8 million of net assets. Ventiv will be obligated to make certain earn-out
      payments, which may be material, contingent on HHI’s performance measurements in
      2005 and 2006. The results of HHI have been reflected in Ventiv Clinical
      Services segment since the date of acquisition.





In
      August
      2005, Ventiv acquired the net assets of Pharmaceutical Resource Solutions,
      LLC
      (“PRS”), a privately-held company based in Horsham, Pennsylvania. PRS
      specializes in pharmaceutical sample management and compliance services and
      is
      similar in nature to our Franklin division described above. The Company paid
      approximately $13.0 million in cash and stock and will be obligated to make
      certain earn-out payments, which may be material, contingent on PRS’s
      performance measurements in 2005 and 2006. The results of PRS have not been
      reflected in the Company’s condensed consolidated financial statements as the
      acquisition occurred subsequent to the current reporting period.





*Divesting
      Transactions*





During
      2002 and 2003, we divested our Communications and European Contract Sales
      businesses. We have been receiving payments subsequent to some of these
      divestitures based on the subsequent earnings of the divested unit. The
      following table summarizes the additional contingent consideration we received
      subsequent to these divestitures:








**Operation**
            **Consideration
                at Closing**
            **Additional
                Consideration**Alpharetta,
                Georgia-based business unit
            $0.9
                million in cash
            Up
                to $0.5 million in contingent payments based on results of divested
                unit
                (all received as of June 30, 2005)Ventiv
                Health Germany
            EUR
                6.2 million ($6.1 million) in cash
            Up
                to EUR 5.0 million payable from future earnings of the business (EUR
                2.8
                million or $3.4 million received through June 30, 2005)Hungary-based
                contract sales business
            $0.3
                million in cash
            Up
                to $0.3 million(all
                received as of June 30, 2005)





15




**Three-Months
      Ended June 30, 2005 Compared to Three-Months Ended June 30, 2004**





**Results
      of Operations**





The
      following sets forth, for the periods indicated, certain components of our
      operating earnings, including such data stated as percentage of
      revenues:




**For
                the Three-Months Ended June 30,****2005**
            **2004****(in
                thousands, except for per share data)**Revenues:
            
            
            
            
            
            Percentage*
            
            
            
            
            
            Percentage*Ventiv
                Commercial Services
            
            $
            104,031
            
            
            78.9
            %
            $
            75,221
            
            
            100.0
            %Ventiv
                Clinical Services
            
            
            27,757
            
            
            21.1
            %
            
            --
            
            
            --Other
            
            
            --
            
            
            --
            
            
            --
            
            
            --Total
                revenues
            
            
            131,788
            
            
            100.0
            %
            $
            75,221
            
            
            100.0
            %Cost
                of services:Ventiv
                Commercial Services
            
            
            81,607
            
            
            78.4
            %
            
            60,297
            
            
            80.2
            %Ventiv
                Clinical Services
            
            
            18,154
            
            
            65.4
            %
            
            --
            
            
            --Other
            
            
            --
            
            
            --
            
            
            --
            
            
            --Total
                cost of services
            
            
            99,761
            
            
            75.7
            %
            
            60,297
            
            
            80.2
            %Selling,
                general and administrative expenses
            
            
            16,955
            
            
            12.9
            %
            
            7,299
            
            
            9.7
            %Restructuring
            
            
            --
            
            
            --
            
            
            (264
            )
            
            (0.4
            )%Total
                operating income
            
            $
            15,072
            
            
            11.4
            %
            $
            7,889
            
            
            10.5
            %Interest
                expense
            
            
            (322
            )
            
            (0.2
            )%
            
            (200
            )
            
            (0.3
            )%Interest
                income
            
            
            253
            
            
            0.2
            %
            
            142
            
            
            0.2
            %Income
                from continuing operations before income taxes
            
            
            15,003
            
            
            11.4
            %
            
            7,831
            
            
            10.4
            %Income
                tax provision
            
            
            (5,971
            )
            
            (4.5
            )%
            
            (2,976
            )
            
            (3.9
            )%Income
                from continuing operations
            
            
            9,032
            
            
            6.9
            %
            
            4,855
            
            
            6.5
            %Income
                from discontinued operations:Gains
                on disposals of discontinued operations, net of taxes
            
            
            1,463
            
            
            1.1
            %
            
            1,754
            
            
            2.3
            %Income
                from discontinued operations
            
            
            1,463
            
            
            1.1
            %
            
            1,754
            
            
            2.3
            %Net
                Income
            
            $
            10,495
            
            
            8.0
            %
            $
            6,609
            
            
            8.8
            %Income
                per share:Continuing
                operations:Basic
            
            $
            0.34
            
            
            
            
            $
            0.21Diluted
            
            $
            0.32
            
            
            
            
            $
            0.19Discontinued
                operations:Basic
            
            $
            0.05
            
            
            
            
            $
            0.07Diluted
            
            $
            0.06
            
            
            
            
            $
            0.07Net
                Income:Basic
            
            $
            0.39
            
            
            
            
            $
            0.28Diluted
            
            $
            0.38
            
            
            
            
            $
            0.26





*  Cost
      of
      services is expressed as a percentage of segment revenue. All other line items
      are displayed as a percentage of total revenues.


16





***Revenues*** :
      Revenues increased by approximately $56.6 million, or 75.2%, to $131.8 million
      in the three-month period ended June 30, 2005, from $75.2 million in the
      three-months ended June 30, 2004.





Revenues
      in our Ventiv Commercial Services business were $104.0 million, an increase
      of
      $28.8 million or 38.3% from the $75.2 million in the same period in 2004, and
      accounted for 78.9% of total Ventiv revenues for the three-months ended June
      30,
      2005. This increase resulted primarily from new contracts won, ranging from
      small to mid-size clients looking to enter new markets or build infrastructure,
      to large, global pharmaceutical companies with existing infrastructure, and
      included contracts
      amounting to an additional 765 sales representatives during the first half
      of
      2004, and an additional 245 sales representatives during the first half of
      2005;
      a new contract with Aventis for approximately 452 sales representatives during
      the third quarter of 2004; and two additional contracts with
      large, global pharmaceutical firms  totaling
      over 400 sales representatives during the fourth quarter of 2004, one of which
      was BMS. The increases from these significant contract wins (described above)
      were offset by decreases attributable to contract conversions of certain small
      to mid-size clients; Watson’s election to terminate its sales force contract
      effective August 1, 2004; and the redeployment of Bayer representatives from
      older contracts to new multi-year contracts with other clients, as discussed
      previously. Finally, Ventiv acquired Franklin on June 9, 2004, resulting in
      approximately $6.3 million of revenue during the second quarter of 2005,
      compared to $0.7 million of revenue from June 9, 2004 to June 30,
      2004.




The
      newly
      acquired companies comprising Ventiv Clinical Services have contributed
      approximately $27.8 million in additional revenues for the second quarter of
      2005. Ventiv Clinical Services’ clientele consists of a wide range of
      pharmaceutical, biotechnology and medical device companies. Since the
      acquisitions occurred during the fourth quarter of 2004, there are no related
      revenues for the three-months ended June 30, 2004.




***Costs
      of Services*** :
      Costs
      of services increased by approximately $39.5 million or 65.4%, to $99.8 million
      this fiscal quarter from $60.3 million in the three-month period ended June
      30,
      2004. Costs of services decreased as a percentage of revenues to 75.7% from
      80.2% in the three-month periods ended June 30, 2005 and 2004, respectively.





Costs
      of
      services at the Ventiv Commercial Services business increased by approximately
      $21.3 million, or 35.3%, to $81.6 million in the second quarter of 2005 from
      $60.3 million in the second quarter of 2004. This variance is slightly lower
      than the increase in revenue between the related periods. Costs of services
      were
      78.4% of Ventiv Commercial Services revenue in the second quarter of 2005,
      compared to 80.2% in the second quarter of 2004. The decrease of costs of
      services as a percentage of revenue in 2005 as compared to 2004 was attributable
      to ongoing cost savings measures implemented by management to align the support
      and infrastructure of the Company with the current level of
      operations.




The
      Clinical Services segment contributed approximately $18.2 million to cost of
      sales. Costs of services represented approximately 65.4% of Ventiv Clinical
      Services revenues during this period. Since the acquisitions occurred during
      the
      fourth quarter of 2004, there is no related cost of services for the
      three-months ended June 30, 2004.




***Selling,
      General and Administrative Expenses (“SG&A”)*** :
      SG&A expenses increased by approximately $9.7 million, or 132.3%, to $17.0
      million from $7.3 million in the three-month periods ended June 30, 2005 and
      2004, respectively. This increase was primarily due to increased compensation
      levels in 2005 versus 2004, SG&A expenses incurred at the newly-acquired
      Franklin and Smith Hanley divisions, and increases in professional fees related
      to compliance with the internal control standards of Section 404 of the
      Sarbanes-Oxley Act of 2002.




SG&A
      expenses at Ventiv Commercial Services increased by approximately $1.8 million,
      or 32.2%, to $7.5 million in the quarter ended June 30, 2005 from $5.7 million
      incurred in the quarter ended June 30, 2004. This increase was due to increased
      compensation levels in 2005 versus 2004, increased rent expense due to Ventiv
      Commercial Services occupying additional space, which it previously subleased
      to
      a third party, and over two months of SG&A expenses related to Franklin that
      were not included in the second quarter ended June 30, 2004 since the
      acquisition did not occur until June 2004.




SG&A
      expenses at our newly acquired Ventiv Clinical Services businesses were
      approximately $7.5 million in the second quarter of 2005. Since the acquisitions
      occurred during the fourth quarter of 2004, there is no related SG&A for the
      three-months ended June 30, 2004.




Other
      SG&A was approximately $2.0 million for the three-months ended June 30,
      2005, an increase of approximately $0.4 million or 23.0% from $1.6 million
      for
      the three-months ended June 30, 2004. The increase was mainly related to
      increases in professional fees primarily related to our compliance with the
      internal control standards of Section 404 of the Sarbanes-Oxley Act of 2002.
      The
      2004 acquisitions will result in increased accounting fees for the 2005 audit
      of
      the Company’s financial statements and internal controls since the acquired
      entities were not included in management’s 2004 assessment of internal controls
      over financial reporting. In addition, the Company hired additional staff in
      internal audit to assist with the current year assessment.




17


***Restructuring*** :
      In May
      2004, the Company’s Ventiv Commercial Services segment signed an agreement to
      release one of its tenants from a sublease in the facility which is currently
      under lease in Somerset, New Jersey. Ventiv Commercial Services decided to
      occupy this space as an extension to its current space; as such, approximately
      $0.3 million of restructuring reserves, which were originally recorded in
      September 2001, was reversed during the second quarter of 2004.





***Provision
      for Income Taxes*** :
      Ventiv
      recorded a provision for income taxes on continuing operations using estimated
      effective tax rates of 39.8% and 38.0% for the three-month periods ended June
      30, 2005 and 2004, respectively. Our current effective tax rate is based on
      current projections for earnings in the tax jurisdictions in which Ventiv does
      business and is subject to taxation. Our effective tax rate could fluctuate
      due
      to changes in earnings between operating entities and related tax jurisdictions,
      or due to the potential tax impact arising from previous
      divestitures.





During
      the three-month period ended June 30, 2005, a tax benefit related to the
      exercise of stock options in the amount of $0.6 million was credited directly
      to
“Additional paid-in-capital” in the Condensed Consolidated Balance
      Sheet.





***Discontinued
      Operations*** :
      For the
      three-months ended June 30, 2005 and 2004, income from discontinued operations,
      net of taxes, were earnings of $1.5 million and $1.8 million, respectively.
      The
      gains on disposals of discontinued operations mainly consisted of contingency
      payments due from our previously-divested Hungary (2004 only) and Germany-based
      units, as more fully described in Recent Business Developments.





***Net
      Income and Earnings Per Share*** *:* Ventiv’s
      net income increased by approximately $3.9 million to $10.5 million, from net
      income of $6.6 million in the three-months ended June 30, 2005 and 2004,
      respectively. Diluted earnings per share increased to earnings of $0.38 per
      share for the three-month period ended June 30, 2005 from earnings of $0.26
      per
      share for the three-month period ended June 30, 2004.  Operating results
      were higher due to increased revenues from certain contracts and additional
      revenues from the 2004 acquisitions.








18


**Six-Months
      Ended June 30, 2005 Compared to Six-Months Ended June 30, 2004**





**Results
      of Operations**





The
      following sets forth, for the periods indicated, certain components of our
      operating earnings, including such data stated as percentage of
      revenues:




**For
                the Six-Months Ended June 30,****2005**
            
            **2004****(in
                thousands, except for per share data)**Revenues:
            
            
            
            Percentage*
            
            
            
            Percentage*Ventiv
                Commercial Services
            
            $
            200,187
            
            
            79.2
            %
            $
            145,882
            
            
            100.0
            %Ventiv
                Clinical Services
            
            
            52,459
            
            
            20.8
            %
            
            --
            
            
            --Other
            
            
            --
            
            
            --
            
            
            --
            
            
            --Total
                revenues
            
            
            252,646
            
            
            100.0
            %
            $
            145,882
            
            
            100.0
            %Cost
                of services:Ventiv
                Commercial Services
            
            
            159,195
            
            
            79.5
            %
            
            116,607
            
            
            79.9
            %Ventiv
                Clinical Services
            
            
            34,278
            
            
            65.3
            %
            
            --
            
            
            --Other
            
            
            --
            
            
            --
            
            
            --
            
            
            --Total
                cost of services
            
            
            193,473
            
            
            76.6
            %
            
            116,607
            
            
            79.9
            %Selling,
                general and administrative expenses
            
            
            31,355
            
            
            12.4
            %
            
            13,570
            
            
            9.3
            %Restructuring
            
            
            --
            
            
            --
            
            
            (264
            )
            
            (0.2
            )%Total
                operating income
            
            $
            27,818
            
            
            11.0
            %
            $
            15,969
            
            
            10.9
            %Interest
                expense
            
            
            (710
            )
            
            (0.3
            )%
            
            (381
            )
            
            (0.3
            )%Interest
                income
            
            
            506
            
            
            0.2
            %
            
            225
            
            
            0.2
            %Income
                from continuing operations before income taxes
            
            
            27,614
            
            
            10.9
            %
            
            15,813
            
            
            10.8
            %Income
                tax provision
            
            
            (9,390
            )
            
            (3.7
            )%
            
            (6,009
            )
            
            (4.1
            )%Income
                from continuing operations
            
            
            18,224
            
            
            7.2
            %
            
            9,804
            
            
            6.7
            %Income
                from discontinued operations:Gains
                on disposals of discontinued operations, net of taxes
            
            
            1,562
            
            
            0.6
            %
            
            1,908
            
            
            1.3
            %Income
                from discontinued operations
            
            
            1,562
            
            
            0.6
            %
            
            1,908
            
            
            1.3
            %Net
                Income
            
            $
            19,786
            
            
            7.8
            %
            $
            11,712
            
            
            8.0
            %Income
                per share:Continuing
                operations:Basic
            
            $
            0.69
            
            
            
            
            $
            0.42Diluted
            
            $
            0.66
            
            
            
            
            $
            0.39Discontinued
                operations:Basic
            
            $
            0.06
            
            
            
            
            $
            0.08Diluted
            
            $
            0.05
            
            
            
            
            $
            0.08Net
                income:Basic
            
            $
            0.75
            
            
            
            
            $
            0.50Diluted
            
            $
            0.71
            
            
            
            
            $
            0.47





*  Cost
      of
      services is expressed as a percentage of segment revenue. All other line items
      are displayed as a percentage of total revenues.


19





***Revenues*** :
      Revenues increased by approximately $106.7 million, or 73.2%, to $252.6 million
      in the six-months ended June 30, 2005, from $145.9 million in the six-months
      ended June 30, 2004.





Revenues
      in our Ventiv Commercial Services business were $200.2 million, an increase
      of
      $54.3 million or 37.2% from the $145.9 million in the same period in 2004,
      and
      accounted for 79.2% of total Ventiv revenues for the six-months ended June
      30,
      2005. This increase resulted primarily from new contracts won, ranging from
      small to mid-size clients looking to enter new markets or build infrastructure,
      to large, global pharmaceutical companies with existing infrastructure, and
      included contracts
      amounting to an additional 765 sales representatives during the first half
      of
      2004, and an additional 245 sales representatives during the first half of
      2005;
      a new contract with Aventis for approximately 452 sales representatives during
      the third quarter of 2004; and two additional contracts with
      large, global pharmaceutical firms  totaling
      over 400 sales representatives during the fourth quarter of 2004, one of which
      was BMS. The increases from these significant contract wins (described above)
      were offset by decreases attributable to contract conversions of certain small
      to mid-size clients; Watson’s election to terminate its sales force contract
      effective August 1, 2004; and the redeployment of Bayer representatives from
      older contracts to new multi-year contracts with other clients, as discussed
      previously. Finally, Ventiv acquired Franklin on June 9, 2004, resulting in
      approximately $12.2 million of revenue during the six-months ended June 30,
      2005, and approximately $0.7 million of revenue from June 9 through June 30,
      2004.




The
      newly
      acquired companies comprising Ventiv Clinical Services have contributed
      approximately $52.5 million in additional revenues for the first half of 2005.
      Ventiv Clinical Services’ clientele consists of a wide range of pharmaceutical,
      biotechnology and medical device companies. Since the acquisitions occurred
      during the fourth quarter of 2004, there are no related revenues for the
      six-months ended June 30, 2004.




***Costs
      of Services*** :
      Costs
      of services increased by approximately $76.9 million or 65.9%, to $193.5 million
      during the six-months ended June 30, 2005 from $116.6 million in the six-months
      ended June 30, 2004. Costs of services decreased as a percentage of revenues
      to
      76.6% from 79.9% in the six-months ended June 30, 2005 and 2004, respectively.





Costs
      of
      services at the Ventiv Commercial Services business increased by approximately
      $42.6 million, or 36.5%, to $159.2 million during the six-months ended June
      30,
      2005 from $116.6 million during the six-months ended June 30, 2004. This
      variance is almost in line with the increase in revenue between the related
      periods. Costs of services were 79.5% of Ventiv Commercial Services revenue
      in
      the six-months ended June 30, 2005, compared to 79.9% during the similar period
      in 2004.




The
      Clinical Services segment contributed approximately $34.3 million to cost of
      sales. Costs of services represented approximately 65.3% of Ventiv Clinical
      Services revenues during this period. Since the acquisitions occurred during
      the
      fourth quarter of 2004, there is no related cost of services for the six-months
      ended June 30, 2004.




***Selling,
      General and Administrative Expenses (“SG&A”)*** :
      SG&A expenses increased by approximately $17.8 million, or 131.1%, to $31.4
      million from $13.6 million in the six-month periods ended June 30, 2005 and
      2004, respectively. This increase was primarily due to increased compensation
      levels in 2005 versus 2004, SG&A expenses incurred at the newly acquired
      Franklin and Smith Hanley divisions, and increases in professional fees related
      to compliance with the internal control standards of Section 404 of the
      Sarbanes-Oxley Act of 2002.




SG&A
      expenses at Ventiv Commercial Services increased by approximately $2.9 million,
      or 27.9%, to $13.4 million in the six-months ended June 30, 2005 from $10.5
      million incurred during the six-months ended June 30, 2004. This increase was
      due to increased compensation levels in 2005 versus 2004, increased rent expense
      due to Ventiv Commercial Services occupying additional space, which it
      previously subleased to a third party, and over five months of SG&A expenses
      related to Franklin that were not included in the six-months ended June 30,
      2004
      since the acquisition did not occur until June 2004.




SG&A
      expenses at our newly acquired Ventiv Clinical Services businesses were
      approximately $14.1 million during the six-months ended June 30, 2005. Since
      the
      acquisitions occurred during the fourth quarter of 2004, there is no related
      SG&A for the six-months ended June 30, 2004.




Other
      SG&A was approximately $3.9 million for the six-months ended June 30, 2005,
      an increase of approximately $0.8 million or 25.2% from $3.1 million for the
      six-months ended June 30, 2004. The increase was mainly related to increases
      in
      professional fees primarily related to our compliance with the internal control
      standards of Section 404 of the Sarbanes-Oxley Act of 2002. The 2004
      acquisitions will result in increased accounting fees for the 2005 audit of
      the
      Company’s financial statements and internal controls since the acquired entities
      were not included in management’s 2004 assessment of internal controls over
      financial reporting. In addition, the Company hired additional staff in internal
      audit to assist us in 2005 with the current year assessment.




20


***Restructuring*** :
      In May
      2004, the Company’s Ventiv Commercial Services segment signed an agreement to
      release one of its tenants from a sublease in the facility which is currently
      under lease in Somerset, New Jersey. Ventiv Commercial Services decided to
      occupy this space as an extension to its current space; as such, approximately
      $0.3 million of restructuring reserves, which were originally recorded in
      September 2001, was reversed during the second quarter of 2004.





***Provision
      for Income Taxes*** :
      In
      March 2005, Ventiv recorded a tax benefit of approximately $1.6 million
      primarily related to prior period tax contingencies, which are no longer
      required. The aggregate effect of this benefit reduced Ventiv’s first half 2005
      effective tax rate from 39.8% to approximately 34.0%. Ventiv recorded a
      provision for income taxes on continuing operations using an estimated effective
      tax rate of 38.0% for the six-month period ended June 30, 2004. Our current
      effective tax rate is based on current projections for earnings in the tax
      jurisdictions in which Ventiv does business and is subject to taxation. Our
      effective tax rate could fluctuate due to changes in earnings between operating
      entities and related tax jurisdictions, or due to the potential tax impact
      arising from previous divestitures.





During
      the six-month period ended June 30, 2005, a tax benefit related to the exercise
      of stock options in the amount of $7.8 million was credited directly to
“Additional paid-in-capital” in the Condensed Consolidated Balance
      Sheet.





***Discontinued
      Operations*** :  For
      the
      six-months ended June 30, 2005 and 2004, income from discontinued operations,
      net of taxes, were earnings of $1.6 million and $1.9 million,
      respectively.  The
      gains
      on disposals of discontinued operations mainly consisted of contingency payments
      due from our previously-divested Hungary (2004 only) and Germany-based units,
      as
      more fully described in Recent Business Developments.





***Net
      Income and Earnings Per Share*** : ** Ventiv’s
      net income increased by approximately $8.1 million to net income of $19.8
      million, from net income of $11.7 million in the six-months ended June 30,
      2005
      and 2004, respectively. Diluted earnings per share increased to earnings of
      $0.71 per share for the six-month period ended June 30, 2005 from earnings
      of
      $0.47 per share for the six-month period ended June 30, 2004.  Operating
      results were higher due to increased revenues from certain contracts and
      additional revenues from the 2004 acquisitions *.*





***Liquidity
      and Capital Resources***





At
      June
      30, 2005, Ventiv had $40.9 million of unrestricted cash and equivalents, a
      decrease of $9.9 million from December 31, 2004. For the six-months ended June
      30, 2004 compared to June 30, 2005, cash provided by operations decreased by
      $29.7 million from $32.5 million to $2.8 million. Cash used in investing
      activities increased from $6.8 million to $9.7 million in the six-months ended
      June 30, 2005, when compared to the same period in 2004. Cash used in financing
      activities decreased by $0.4 million from $3.4 million to $3.0 million over
      the
      same comparative periods.





Cash
      provided by operations was $2.8 million during the six-months ended June 30,
      2005, while cash provided by operations was $32.5 million in the six-months
      ended June 30, 2004. This decrease was, in large part, due to the billing and
      collection of certain payments due under various contracts. The accounts
      receivable and unbilled services balances increased by approximately $25.6
      million during the first half of 2005, versus a decrease of approximately $8.4
      during the first half of 2004. This is mainly due to timing and not any
      collection issues. This decreased cash flow is offset by a $7.8 million increase
      in tax benefits from the exercises of stock options during the first half of
      2005.





Cash
      used
      in investing activities was $9.7 million for the six-months ended June 30,
      2005
      compared to $6.8 million used during the same period in 2004. The Company has
      existing letters of credit for insurance on its automobile fleet in its Ventiv
      Commercial Services business unit. Any increases in these letters of credit
      and
      changes in the principal of client escrow accounts constitute the increases
      in
      restricted cash.  These
      letters of credit have been fully cash collateralized by the Company in both
      the
      first six months of 2004 and 2005. In 2005, the Company entered into a Deferred
      Compensation Plan for certain key employees and funded the liability with a
      corporate-owned life insurance (“COLI”) program in a rabbi trust whereby it
      purchases life insurance policies covering the lives of certain employees,
      with
      the Company named as beneficiary. In 2005, the Company invested approximately
      $1.0 million in the COLI program. In addition, the Company paid approximately
      $0.9 million during the first half of 2005 in matters relating to 2004
      acquisitions, versus $6.7 million of purchase price for the acquisition of
      Franklin in June 2004. In 2005, the Company also paid approximately $5.2 million
      of cash relating to 2004 earn-outs, the majority of which was accrued at the
      end
      of 2004. Finally, i nvesting
      activities also included capital expenditures of approximately $2.9 million
      and
      $2.1 million for the six-months ended June 30, 2005 and 2004,
      respectively. These
      expenditures mainly relate to computer equipment purchased as a result of the
      increased business from several new contracts.





Cash
      used
      in financing activities was $3.0 million and $3.4 million for the six-months
      ended June 30, 2005 and 2004, respectively. During the six-months ended June
      30,
      2005, the Company received $3.4 million of proceeds from the exercise of stock
      options, versus $1.6 million in the six-months ended June 30, 2004. Also, the
      Company made capital lease payments of $6.4 million and $5.0 million for the
      same periods in 2005 and 2004, respectively, under the fleet lease agreement
      in
      its Ventiv Commercial Services business unit.





21


On
      March
      29, 2002, we entered into an asset-based lending agreement with Wells Fargo
      Foothill, Inc., providing for a maximum borrowing amount of $50 million. This
      agreement expired on March 31, 2005. Ventiv did not have any amounts outstanding
      under the credit facility in 2005 and 2004. We will seek to enter into a
      replacement credit facility and do not believe that the absence of a credit
      facility during the intervening period will materially impact our
      liquidity.





A
      summary
      of our contractual obligations and commercial commitments as of June 30, 2005
      are as follows:





**(Amounts
                in thousands)**
            
            **Amounts
                Due In****Contractual
                Obligations**
            Total
              Obligation
            Less
                than 1 Year
            1
                -
                3
              years
            3
                -5
              years
            More
                than 5 yearsCapital
                lease obligations (a)
            $33,338
            $11,910
            $18,270
            $3,158
            $--Operating
                leases (b)
            30,508
            6,818
            11,392
            6,629
            5,669Total
                obligations
            $63,846
            $18,728
            $29,662
            $9,787
            $5,669





(a)
            These
                future commitments do not include interest and management fees, which
                are
                not recorded on the Consolidated Balance Sheet as of June 30, 2005
                but
                will be recorded as incurred.


(b)
            Operating
                leases include facility lease obligations in which the lease agreement
                may
                expire during the five-year period, but are expected to continue
                on a
                monthly basis beyond the lease
                term.





The
      acquisition agreements entered into in connection with the Smith Hanley,
      Franklin, HHI and PRS transactions include earn-out
      provisions pursuant to which the sellers will become entitled to additional
      consideration, which may be material, if the acquired businesses achieve
      specified performance measurements. See footnote 3 to our consolidated financial
      statements included in Part I, Item 1 of this Quarterly Report on Form
      10-Q.





We
      believe that our cash and equivalents, cash to be provided by operations and
      available credit under our credit facility will be sufficient to fund our
      current operating requirements over the next 12 months and for the foreseeable
      future. Cash provided by operations may not be sufficient to fund all internal
      growth initiatives that we may wish to pursue or to fund investment and
      acquisition activities. If we pursue significant internal growth initiatives
      or
      if we wish to acquire additional businesses in transactions that include cash
      payments as part of the purchase price, we may pursue additional debt or equity
      sources to finance such transactions and activities, depending on market
      conditions. We cannot assure you that we will be successful in raising the
      cash
      required to complete all acquisition, investment or business opportunities
      which
      we may wish to pursue.





**Critical
      Accounting Policies**





The
      Company’s critical accounting policies are set forth in its Annual Report on
      Form 10-K for the year ended December 31, 2004. There has been no change, update
      or revision to the Company’s critical accounting policies subsequent to the
      filing of the Company’s Form 10-K for the year ended December 31,
      2004.





**Risk
      Factors**





Our
      business, financial condition and results of operations may be materially
      affected by the matters discussed under the caption “Business Considerations”
      within Item 7, Management’s Discussion and Analysis of Financial Condition and
      Results of Operations, of the Company’s Form 10-K for the year ended December
      31, 2004.





22





**ITEM
      3.** ***Quantitative
      and Qualitative Disclosures About Market Risk*** ****





We
      are
      exposed to market risk from changes in market interest rates. We are subject
      to
      interest rate risk on our debt for changes in the LIBOR and base lending rates.
      We do not currently engage in hedging or other market risk management
      strategies.




**Foreign
      Currency Exchange Rate Exposure**





The
      Company is not currently affected by foreign currency exchange rate exposure,
      except for any fluctuations in the foreign bank accounts remaining from the
      divestiture of the Company’s European business units.




**ITEM
        4.** ***Controls
        and Procedures***
  As
        reported
        in our 10-K for the year ended December 31, 2004, our management conducted
        an
        evaluation of the effectiveness of our system of internal control over financial
        reporting and concluded that our system of internal control over financial
        reporting was effective as of December 31, 2004. During the second
        quarter
        of 2005, management identified a material weakness in internal controls at
        Ventiv Clinical Services that resulted in a reporting error that was not
        material to the overall presentation of Ventiv’s financial statements in
        accordance with generally accepted accounting principles. The businesses
        making
        up Ventiv Clinical Services were acquired during the fourth quarter of 2004
        and,
        as permitted by applicable SEC rules, were excluded from the scope of our
        internal control assessment at December 31, 2004. As of the date of this
        filing,
        we have taken all steps necessary to fully remediate this material weakness
        in
        our internal control over financial reporting, and our Internal Audit department
        has evaluated the relevant internal controls and identified no exceptions.
        These
        internal controls will be subjected to testing by Ventiv’s internal and external
        auditors in connection with management’s annual assessment of the effectiveness
        of internal control over financial reporting as of December 31, 2005. Based
        on
        their evaluation as of June 30, 2005, our Chief Executive Officer and Chief
        Financial Officer have concluded that our disclosure controls and procedures
        (as
        defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
        Act
        of 1934, as amended) were not effective as of June 30, 2005 solely because
        of a
        material weakness in internal controls that did not result in a material
        reporting error.
  There
        were no changes in our internal controls over financial reporting during
        the
        quarter ended June 30, 2005 that have materially affected, or are reasonably
        likely to materially affect our internal controls over financial reporting
        other
        than the remediation actions referred to above, part of which was completed
        during the quarter ended June 30, 2005 and the remainder of which was
        subsequently completed.


23





**PART
      II.**  **OTHER
      INFORMATION**





**ITEM
      1.**  ***Legal
      Proceedings*** ****





The
      Company is subject to lawsuits, investigations and claims arising out of the
      conduct of its business, including those related to commercial transactions,
      contracts, government regulation and employment matters. Certain claims, suits
      and complaints have been filed or are pending against the Company. In the
      opinion of management and based on the advice of legal counsel, all matters
      are
      believed to be without merit or are of such kind, or involve such amounts,
      as
      would not have a material effect on the financial position or results of
      operations of the Company if disposed of unfavorably.





**ITEM
      2.**  ***Recent
      Sales of Unregistered Securities*** ****





During
      the three-months ended June 30, 2005, we issued the following unregistered
      securities:





•  On
      April
      11, 2005, we issued 25,206 shares of common stock pursuant to the
“earn-out” provision in the asset purchase agreement
      relating to our acquisition of the net assets of Franklin.  These shares
      were issued in reliance on Section 4(2) of the Securities
      Act.


•  On
      March
      23, 2005, we issued 111,225 shares of common stock pursuant to the
“earn-out” provision in the asset purchase agreement relating to our acquisition
      of the net assets of Smith Hanley.  These shares were issued in reliance
      on
      Section 4(2) of the Securities Act.





**ITEM
      4.** ***Submission
      of Matters to a Vote of Security Holders*** ****





At
      an annual meeting of the stockholders of the Company, held on June 15, 2005,
      the
      following matters were submitted to a vote of our stockholders, with the
      following votes cast:





(i) 
      the election of seven directors to the Board of Directors for a term of one
      year, expiring at the 2006 Annual Meeting:





**For**
            **Withheld**Daniel
                M. Snyder
            23,765,581
            471,996Eran
                Broshy
            23,769,705
            467,872A.
                Clayton Perfall
            23,725,434
            512,143Donald
                Conklin
            23,083,983
            1,153,594John
                R. Harris
            23,770,959
            466,618Per
                G.H. Lofberg
            23,114,999
            1,122,578Mark
                E. Jennings
            23,771,379
            466,198





(ii)
      the
      ratification of  the appointment of Deloitte and Touche LLP as the
      Company’s independent auditors for 2005:





**For**
            **Withheld**
            **Abstain**
            **Unvoted**Deloitte
                & Touche LLP ratification
            24,073,252
            13,240
            151,085
            --





24


**ITEM
      6.**  ***Exhibits
      and Reports on Form 8-K***





(a) *Exhibits*


**




31.1
            
            Certification
                by the Chief Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            
            Certification
                by the Chief Financial Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            
            Chief
                Executive Officer’s Certification of Financial Statements Pursuant to 18
                U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                the
                Sarbanes-Oxley Act of 200232.2
            
            Chief
                Financial Officer’s Certification of Financial Statements Pursuant to 18
                U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                the
                Sarbanes-Oxley Act of 2002






(b) *Reports
      on Form 8-K*





Current
      Report on Form 8-K, filed as of June 21, 2005, Items 1.01, 5.03 and Item 9.01,
      regarding a change in a Board member’s compensation, awards of restricted shares
      to Board members, amended Company’s current form of restricted stock agreement
      for executive officers and amended and restated Company By-laws.





Current
      Report on Form 8-K, filed as of May 13, 2005, Item 2.02 and Item 9.01,
      containing the conference call script and related non-GAAP financial information
      released during the Company’s earnings conference call held on May 9, 2005
      regarding financial results for the first quarter ended March 31,
      2005.





Current
      Report on Form 8-K, filed as of May 9, 2005, Item 2.02 and Item 9.01, regarding
      the Company’s release of financial information for the first quarter ended March
      31, 2005 on May 9, 2005.





Current
      Report on Form 8-K, filed as of April 15, 2005, Item 1.01, regarding the
      Company’s amendment to 2004 cash bonus plan and long term awards to executive
      officers on April 11, 2005 and cash compensation to non-management directors
      on
      February 9, 2005.











25


**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





**VENTIV
      HEALTH, INC.**






Date:
                August 9, 2005
            
            By:
            
            /S/    John
                R. Emery**John
                R. Emery**
              **Chief
                FinancialOfficer**


































26