**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 September 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, 27,633,988 shares outstanding as of October 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 September 30, 2005and
                December 31, 2004 (unaudited)
            1Condensed
                Consolidated Income Statements for the three and nine-monthsended
                September 30, 2005 and 2004 (unaudited)
            2Condensed
                Consolidated Statements of Cash Flows for the nine-monthsended
                September 30, 2005 and 2004 (unaudited)
            3Notes
                to Condensed Consolidated Financial Statements
            4
                -
                13ITEM
                2. Management's Discussion and Analysis of Financial Condition
                andResults
                of Operations
            14
                - 25ITEM
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            26ITEM
                4. Controls and Procedures
            26**PART
                II. OTHER INFORMATION**ITEM
                1. Legal Proceedings****
            27ITEM
                2. Recent Sales of Unregistered Securities
            27ITEM
                6. Exhibits and Reports on Form 8-K
            27**SIGNATURES**
            28**EXHIBITS**
            29
                - 32











**PART
      I. FINANCIAL INFORMATION**





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





**VENTIV
      HEALTH, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


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


**(unaudited)**





**September
                30,**
            
            
            **December
                31,****2005**
            
            
            **2004****ASSETS**Current
                assets:Cash
                and equivalents
            
            $
            52,054
            
            $
            50,809Restricted
                cash
            
            
            3,838
            
            
            2,488Accounts
                receivable, net of allowances for doubtful accounts of
                $1,678and
                $1,980 at September 30, 2005 and December 31, 2004,
                respectively
            
            
            76,797
            
            
            56,534Unbilled
                services
            
            
            35,382
            
            
            36,130Prepaid
                expenses and other current assets
            
            
            3,930
            
            
            2,755Current
                deferred tax assets
            
            
            13,271
            
            
            8,226Total
                current assets
            
            
            185,272
            
            
            156,942Property
                and equipment, net
            
            
            35,403
            
            
            40,226Goodwill
            
            
            73,640
            
            
            64,823Other
                intangibles, net
            
            
            24,252
            
            
            21,370Deferred
                tax assets
            
            
            5,819
            
            
            3,583Deposits
                and other assets
            
            
            3,442
            
            
            508Total
                assets
            
            $
            327,828
            
            $
            287,452**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Current
                portion of capital lease obligations
            
            $
            10,985
            
            $
            12,004Accrued
                payroll, accounts payable and accrued expenses
            
            
            44,507
            
            
            56,076Current
                income tax liabilities
            
            
            14,308
            
            
            12,113Client
                advances and unearned revenue
            
            
            6,102
            
            
            9,184Total
                current liabilities
            
            
            75,902
            
            
            89,377Capital
                lease obligations, net of current portion
            
            
            18,936
            
            
            24,898Other
                non-current liabilities
            
            
            4,510
            
            
            733Total
                liabilities
            
            
            99,348
            
            
            115,008Commitments
                and contingenciesStockholders'
                equity:Preferred
                stock, $.001 par value, 10,000,000 shares authorized, none
                issuedand
                outstanding at September 30, 2005 and December 31, 2004,
                respectively
            
            
            --
            
            
            --Common
                stock, $.001 par value, 50,000,000 shares authorized; 27,114,042
                and25,705,012
                shares issued and outstanding at September 30, 2005 andDecember
                31, 2004, respectively
            
            
            27
            
            
            26Additional
                paid-in-capital
            
            
            216,525
            
            
            193,061Deferred
                compensation
            
            
            (2,682
            )
            
            (420
            )Accumulated
                other comprehensive earnings
            
            
            256
            
            
            320Accumulated
                earnings (deficit)
            
            
            14,354
            
            
            (20,543
            )Total
                stockholders' equity
            
            
            228,480
            
            
            172,444Total
                liabilities and stockholders' equity
            
            $
            327,828
            
            $
            287,452





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





1


**For
                  the Three-Months**
                **Ended
                  September 30,**
              
              **For
                  the Nine-Months**
                **Ended
                  September 30,****2005**
              
              
              **2004**
              
              
              
              **2005**
              
              
              **2004**Revenues
              
              $
              128,359
              
              $
              88,853
              
              
              $
              381,005
              
              $
              234,735Operating
                  expenses:Cost
                  of services
              
              
              97,764
              
              
              72,022
              
              
              
              291,236
              
              
              188,629Selling,
                  general and administrative expenses
              
              
              16,726
              
              
              8,604
              
              
              
              48,082
              
              
              22,174Restructuring
              
              
              --
              
              
              --
              
              
              
              --
              
              
              (264
              )Total
                  operating expenses
              
              
              114,490
              
              
              80,626
              
              
              
              339,318
              
              
              210,539Operating
                  income
              
              
              13,869
              
              
              8,227
              
              
              
              41,687
              
              
              24,196Interest
                  expense
              
              
              (332
              )
              
              (226
              )
              
              
              (1,042
              )
              
              (607
              )Interest
                  income
              
              
              335
              
              
              203
              
              
              
              841
              
              
              428Income
                  from continuing operations before income
                Taxes
              
              
              13,872
              
              
              8,204
              
              
              
              41,486
              
              
              24,017Income
                  tax benefit (provision)
              
              
              1,161
              
              
              (3,117
              )
              
              
              (8,229
              )
              
              (9,126
              )Income
                  from continuing operations
              
              
              15,033
              
              
              5,087
              
              
              
              33,257
              
              
              14,891Income
                  from discontinued operations:Gains
                  on disposals of discontinued operations, net of taxes
              
              
              78
              
              
              223
              
              
              
              1,640
              
              
              2,131Net
                  income from discontinued operations
              
              
              78
              
              
              223
              
              
              
              1,640
              
              
              2,131Net
                  income
              
              $
              15,111
              
              $
              5,310
              
              
              $
              34,897
              
              $
              17,022Earnings
                  per share (see Note 5):Continuing
                  operations:Basic
              
              $
              0.56
              
              $
              0.21
              
              
              $
              1.25
              
              $
              0.63Diluted
              
              $
              0.53
              
              $
              0.20
              
              
              $
              1.19
              
              $
              0.59Discontinued
                  operations:Basic
              
              $
              0.00
              
              $
              0.01
              
              
              $
              0.06
              
              $
              0.09Diluted
              
              $
              0.01
              
              $
              0.01
              
              
              $
              0.06
              
              $
              0.09Net
                  income:Basic
              
              $
              0.56
              
              $
              0.22
              
              
              $
              1.31
              
              $
              0.72Diluted
              
              $
              0.54
              
              $
              0.21
              
              
              $
              1.25
              
              $
              0.68Weighted
                  average common shares outstanding:Basic
              
              
              26,943
              
              
              23,851
              
              
              
              26,604
              
              
              23,520Diluted
              
              
              28,132
              
              
              25,500
              
              
              
              27,890
              
              
              25,056


2


**VENTIV
      HEALTH, INC.**





**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(in
      thousands)**


**(unaudited)**


**For
                  the Nine-Months Ended September 30,****2005**
              
              
              **2004**Cash
                  flows from operating activities:Net
                  income from continuing operations
              
              $
              33,257
              
              $
              14,891Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Depreciation
              
              
              12,720
              
              
              11,250Amortization
              
              
              988
              
              
              80Deferred
                  taxes
              
              
              (7,281
              )
              
              365Restricted
                  stock compensation expense
              
              
              399
              
              
              67Tax
                  benefit from stock option exercises
              
              
              8,463
              
              
              --Changesin
                  assets and liabilities, net of effects from discontinued
                  operations:Accounts
                  receivable, net
              
              
              (19,738
              )
              
              166Unbilled
                  services
              
              
              1,395
              
              
              (1,175
              )Prepaid
                  expenses and other current assets
              
              
              (1,093
              )
              
              (1,433
              )Accrued
                  payroll, accounts payable and accrued expenses
              
              
              (2,471
              )
              
              11,625Current
                  income tax liabilities
              
              
              2,195
              
              
              7,974Client
                  advances and unearned revenue
              
              
              (3,082
              )
              
              3,706Other
              
              
              2,253
              
              
              (160
              )Net
                  cash provided by continuing operations
              
              
              28,005
              
              
              47,356Net
                  cash provided by discontinued operations
              
              
              28
              
              
              34Net
                  cash provided by operating activities
              
              
              28,033
              
              
              47,390Cash
                  flows from investing activities:Investment
                  in restricted cash principal balances
              
              
              (1,350
              )
              
              (3,515
              )Investment
                  in cash value of life insurance policies
              
              
              (1,370
              )
              
              --Cash
                  paid for acquisitions, net of cash acquired
              
              
              (10,547
              )
              
              (6,932
              )Acquisition
                  earn-out payments
              
              
              (5,181
              )
              
              --Proceeds
                  from disposals of discontinued operations
              
              
              1,612
              
              
              2,097Proceeds
                  from rebates on car leases
              
              
              2
              
              
              3,550Purchases
                  of property and equipment
              
              
              (4,025
              )
              
              (4,151
              )Net
                  cash used in investing activities
              
              
              (20,859
              )
              
              (8,951
              )Cash
                  flows from financing activities:Repayments
                  of capital lease obligations
              
              
              (10,721
              )
              
              (7,682
              )Proceeds
                  from exercise of stock options
              
              
              4,856
              
              
              2,036Net
                  cash used in financing activities
              
              
              (5,865
              )
              
              (5,646
              )Effect
                  of exchange rate changes
              
              
              (64
              )
              
              16Net
                  increase in cash and equivalents
              
              
              1,245
              
              
              32,809Cash
                  and equivalents, beginning of period
              
              
              50,809
              
              
              54,970Cash
                  and equivalents, end of period
              
              $
              52,054
              
              $
              87,779Supplemental
                  disclosures of cash flow information:Cash
                  paid for interest
              
              $
              1,051
              
              $
              575Cash
                  paid for income taxes
              
              $
              4,865
              
              $
              920Supplemental
                  disclosure of non-cash activities:Vehicles
                  acquired through capital lease agreements
              
              $
              7,895
              
              $
              9,616Vehicles
                  disposed through capital lease agreements
              
              $
              1,053
              
              $
              --Stock
                  issuance related to acquisitions
              
              $
              7,360
              
              $
              3,580




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





3


**VENTIV
      HEALTH, INC.**




NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
      Continued


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





Ventiv
      Health Inc. (together with its subsidiaries “Ventiv ” or the “Company”) is a
      leading provider of commercialization services to the pharmaceutical and life
      sciences industries. Ventiv provides pharmaceutical sales, marketing and
      clinical services spanning late-stage clinical through commercialization to
      over
      150 pharmaceutical, biotech, specialty and emerging companies, including 18
      of
      the top 20 global pharmaceutical companies. Ventiv’s customized clinical, sales,
      marketing and communications services span a wide variety of areas,
      including:




·
            sales
                and marketing teams;




·
            planning
                and analytics;




·
            sample
                accountability and patient assistance;




·
            marketing
                support services;




·
            professional
                development and training;




·
            advertising
                and communication agencies;




·
            branding
                consultation;




·
            interactive
                communication development;




·
            medical
                education;




·
            clinical
                staffing and recruitment;




·
            clinical
                analysis and data management; and




·
            clinical
                support.




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





Through
      September 30, 2005, we served our clients primarily through the following two
      business units:





·
            Ventiv
                Commercial Services,
                which consists of our outsourced sales and marketing teams, planning
                and
                analytics services, sample accountability 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 following businesses acquired during the fourth
                quarter of 2004: 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 clinical staffing and data collection and
                management.





In
      October 2005, we acquired inChord Communications, Inc. (“inChord”), a global
      healthcare marketing and communications company, which formed our third segment,
      Ventiv Communication Services, as more fully discussed below. This segment
      provides services related to pharmaceutical advertising, branding, interactive
      communication development and medical education.





In
      2004,
      we managed three operating segments: Ventiv Commercial Services, Ventiv Clinical
      Services and Ventiv Analytic Services. As a result of the fourth quarter 2004
      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. In August 2005, Ventiv acquired
      Pharmaceutical Resource Solutions, Inc. (“PRS”), a provider of compliance
      management and marketing support services based in Horsham, Pennsylvania; PRS
      is
      included in the Ventiv Commercial Services segment from the date of its
      acquisition. In October 2005, Ventiv acquired inChord, a healthcare marketing
      and communications company, which will be reported in a separate operating
      segment, Ventiv Communication Services, from the date of its acquisition. The
      foregoing acquisitions are described more fully in footnote 3
      below.





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 United States 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.


4


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





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 September 30,
      2005
      and December 31, 2004, the condensed consolidated income statements of the
      Company for the three and nine-months ended September 30, 2005 and 2004 and
      the
      condensed consolidated cash flows for the nine-months ended September 30, 2005
      and 2004. Operating results for the three and nine-months ended September 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. 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.





**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* ,
      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* (“APB
      25”). 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 December 31, 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.


5






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


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




In
      October 2005, Ventiv completed the previously-announced acquisition of all
      of
      the outstanding capital stock of inChord for approximately $193.8 million of
      cash and stock, including certain post-closing adjustments and direct
      acquisition costs, which have not yet been finalized. To help finance the
      transaction, Ventiv entered into a Credit Agreement, dated October 5, 2005,
      which provides for a term loan of $175 million, a $50 million revolving credit
      facility, of which $5 million is available for the issuance of letters of
      credit, and a $5 million swingline facility. The obligations under the Credit
      Agreement are secured by substantially all of Ventiv’s assets. The transaction
      was consummated pursuant to a definitive agreement dated September 6, 2005.
      Ventiv acquired inChord to vastly expand its service portfolio in the marketing
      and communications arena, expand its market position in the pharmaceutical
      services market and achieve cross-selling opportunities by leveraging its
      existing businesses. The Company will be obligated to make certain earn-out
      payments, which may be material, contingent on inChord’s performance
      measurements from 2005 through 2007. The results of inChord will be reflected
      in
      the newly-formed Ventiv Communication Services segment starting in the fourth
      quarter of 2005.




In
      August
      2005, Ventiv acquired the net assets of PRS, a provider of compliance management
      and marketing support services based in Horsham, Pennsylvania. PRS specializes
      in pharmaceutical sample management and compliance services; its operations
      are
      similar in nature to the business of Franklin Group, Inc. and Lincoln Ltd,
      Inc.
      (together, “Franklin”), which we acquired in June 2004. The closing
      consideration for the transaction was approximately $13.6 million in cash and
      stock (taking into account post-closing adjustments and direct acquisition
      costs) for approximately $1.0 million of net assets. Ventiv 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 been
      reflected in the Ventiv Commercial Services segment since the date of
      acquisition. Pro forma financial statements were not presented as the
      acquisition was not deemed significant. The purchase price and direct
      transaction costs were allocated to the assets purchased and liabilities
      assumed, based on their respective fair values at the date of acquisition.
      However, changes to the estimates of the fair values of PRS’s assets acquired
      and liabilities assumed may be necessary as additional information becomes
      available and a third-party valuation of certain intangible assets is finalized.





In
      November 2004, Ventiv acquired the net assets of HHI. HHI, based in Baltimore,
      Maryland, is a specialized statistical analysis and data management provider
      to
      the U.S. pharmaceutical industry. HHI complements Ventiv's Smith Hanley business
      by offering clients the option of outsourced clinical support services as an
      alternative to internal staffing. 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
      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. We acquired Smith Hanley to 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 $52.9 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 Ventiv Clinical Services segment since the date of acquisition.





In
      June
      2004, Ventiv acquired the net assets of Franklin, 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.


6




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





**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. The Company
      adopted the disclosure requirements of SFAS No. 148 as of December 31, 2002.
      The
      Company accounts for stock-based employee compensation arrangements in
      accordance with provisions of APB 25 *,* and
      complies with the disclosure provisions of SFAS No. 123, as amended. Under
      APB
      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 earnings per share
      attributable to common shareholders if the Company had applied the fair value
      recognition provisions of SFAS No. 123 to stock-based employee compensation
      arrangements:





**Three-months
                ended****Se****ptember
                30,**
            **Nine-months
                ended****September
                30,****2005**
            
            
            **2004**
            
            
            **2005**
            
            
            **2004**Net
                income attributable to common shareholders, as reported
            
            $
            15,111
            
            $
            5,310
            
            $
            34,897
            
            $
            17,022Less:
                stock-based employee compensation expense determined under the fair
                value
                method, net of related income taxes
            
            
            (647
            )
            
            (429
            )
            
            (2,967
            )
            
            (1,094
            )Pro
                forma net income
            
            $
            14,464
            
            $
            4,881
            
            $
            31,930
            
            $
            15,928Net
                earnings per share attributable to common shareholders:As
                reported: Basic
            
            $
            0.56
            
            $
            0.22
            
            $
            1.31
            
            $
            0.72As
                reported: Diluted
            
            $
            0.54
            
            $
            0.21
            
            $
            1.25
            
            $
            0.68Pro
                forma: Basic
            
            $
            0.54
            
            $
            0.20
            
            $
            1.20
            
            $
            0.68Pro
                forma: Diluted
            
            $
            0.51
            
            $
            0.19
            
            $
            1.14
            
            $
            0.64




The
      per
      share weighted-average fair value of stock options granted during the
      three-months ended September 30, 2005 was not applicable as no stock options
      were granted. The per share weighted-average fair value of stock options granted
      during the three-months ended September 30, 2004 was $11.10 per share. In
      addition, during the nine-months ended September 30, 2005 and 2004, the per
      share weighted-average fair values of stock options granted were $14.13 and
      $10.93 per share, respectively, on the date of grant using the Black-Scholes
      option pricing model with the following weighted-average assumptions:




**Employee
                Stock Options****Three-months
                ended**
              **September
                30,**
            **Nine-months
                ended**
              **September
                30,****2005**
            
            
            **2004**
            
            
            **2005**
            
            
            **2004**Expected
                dividend yield
            
            
            0
            %
            
            0
            %
            
            0
            %
            
            0
            %Risk-free
                interest rate
            
            
            4.01
            %
            
            3.36
            %
            
            4.13
            %
            
            3.45
            %Expected
                volatility
            
            
            82
            %
            
            88
            %
            
            84
            %
            
            88
            %Expected
                life of options
            
            
            4.0
                yrs
            
            
            5.1
                yrs
            
            
            4.0
                yrs
            
            
            4.8
                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. The diluted EPS from discontinued operations
      exceeds the basic EPS from discontinued operations by $0.01 for the three-months
      ended September 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.





7






**VENTIV
      HEALTH, INC.**




NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
      Continued




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




**Three-Months
                Ended September 30,**
            **Nine-Months
                Ended September 30,****2005**
            
            
            **2004**
            
            
            **2005**
            
            
            **2004****(in
                thousands, except per share data)****Basic
                EPS from Continuing Operations Computation**Income
                from continuing operations
            
            $
            15,033
            
            $
            5,087
            
            $
            33,257
            
            $
            14,891Weighted
                average number of common shares outstanding
            
            
            26,943
            
            
            23,851
            
            
            26,604
            
            
            23,520Basic
                EPS from continuing operations
            
            $
            0.56
            
            $
            0.21
            
            $
            1.25
            
            $
            0.63**Diluted
                EPS from Continuing Operations Computation**Income
                from continuing operations
            
            $
            15,033
            
            $
            5,087
            
            $
            33,257
            
            $
            14,891Weighted
                average number of common shares outstanding
            
            
            26,943
            
            
            23,851
            
            
            26,604
            
            
            23,520Stock
                options(1)
            
            
            1,155
            
            
            1,644
            
            
            1,269
            
            
            1,532Restricted
                stock awards(2)
            
            
            34
            
            
            5
            
            
            17
            
            
            4Total
                diluted common shares outstanding
            
            
            28,132
            
            
            25,500
            
            
            27,890
            
            
            25,056Diluted
                EPS from continuing operations
            
            $
            0.53
            
            $
            0.20
            
            $
            1.19
            
            $
            0.59





(1) For the
      three and nine-months ended September 30, 2005, 59,332 shares and 62,310 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 nine-months ended September 30, 2004, 273,459 shares and 117,157
      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 nine-months ended September 30, 2005, 734 shares and 893 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
      nine-months ended September 30, 2005, three clients accounted for approximately
      16%, 12% and 10%, individually, of the Company's total revenues across our
      Ventiv Commercial Services and Ventiv Clinical Services segments. For the
      nine-months ended September 30, 2004, three clients accounted for approximately
      21%, 17% and 12%, individually, of the Company's total revenues primarily in
      our
      Ventiv Commercial Services segment (Ventiv Clinical Services was established
      in
      October 2004).





**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
      September 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 September 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 September 30, 2005 and December 31, 2004.





8






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




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
      $0.8 million and $0.7 million held in escrow on behalf of clients and was
      included in restricted cash in the Condensed Consolidated Balance Sheets as
      of
      September 30, 2005 and December 31, 2004.





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





Goodwill
      consists of the following:


**September
                  30,**
              
              **December
                  31,**(in
                  thousands)
              
              
              **2005**
              
              
              **2004**Ventiv
                  Commercial Services
              
              $
              37,262
              
              $
              28,314
              (1)Ventiv
                  Clinical Services
              
              
              36,378
              
              
              36,509
              (2)Total
              
              $
              73,640
              
              $
              64,823





Other
      intangible assets consist of the following:





**September
                30, 2005**
            **December
                31, 2004**(in
                thousands)
            
            
            
            
            
            **Accumulated**
            
            
            
            
            
            
            
            
            **Accumulated****Gross**
            
            
            **Amortization**
            
            
            **Net**
            
            
            **Gross**
            
            
            **Amortization**
            
            
            **Net**Customer
                relationships
            
            $
            10,987
            
            $
            (1,195
            )
            $
            9,792
            
            $
            7,567
            
            $
            (282
            )
            $
            7,285Noncompete
                agreement
            
            
            690
            
            
            (65
            )
            
            625
            
            
            240
            
            
            (5
            )
            
            235Other
            
            
            260
            
            
            (185
            )
            
            75
            
            
            260
            
            
            (170
            )
            
            90Total
                definite-life intangibles
            
            
            11,937
            
            
            (1,445
            )
            
            10,492
            
            
            8,067
            
            
            (457
            )
            
            7,610Tradename
            
            
            13,760
            
            
            --
            
            
            13,760
            
            
            13,760
            
            
            --
            
            
            13,760Total
                other intangibles(1)
            
            $
            25,697
            
            $
            (1,445
            )
            $
            24,252
            
            $
            21,827
            
            $
            (457
            )
            $
            21,370





(1)  The
      $3.9
      million increase in total gross other intangibles arises from the acquisition
      of
      PRS.





The
      2004
      and 2005 business combinations discussed in footnote 3 above resulted in
      approximately $53.0 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
            
            10,987
            7.8
                yearsNoncompete
                agreement
            
            690
            4.7
                yearsTotal
            
            $25,437





Amortization
      expense, based on intangibles subject to amortization held at September 30,
      2005, is expected to be $0.4 for the last three months of 2005, $1.7 million
      annually from 2006 through 2008, $1.3 million in 2009 and $3.7 million
      thereafter.


9
 **VENTIV
            HEALTH, INC.**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued**


**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 September 30,**
              **Nine-Months
                  Ended September 30**,**2005**
              **2004**
              **2005**
              **2004****(in
                  thousands)**Net
                  income
              $15,111
              $5,310
              $34,897
              $17,022Other
                  comprehensive earnings, net of tax:Foreign
                  currency translation adjustments
              (16)
              (3)
              (64)
              16Comprehensive
                  earnings
              $15,095
              $5,307
              $34,833
              $17,038







All
      of
      other comprehensive earnings in equity at September 30, 2005 relates to foreign
      currency translation adjustments.




**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 $7.9 million and $9.6 million during the nine-month
      periods ended September 30, 2005 and 2004, respectively. The Company also
      incurred net disposals of $5.2 million and $2.2 million during the nine-months
      ended September 30, 2005 and 2004, respectively.





A
      summary
      of our current contractual obligations and commercial commitments is 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 yearsLong
                term debt obligations (a)
            $175,000
            $1,750
            $3,500
            $3,500
            $166,250Capital
                lease obligations (b)
            29,921
            10,985
            16,130
            2,806
            --Operating
                leases (c)
            28,908
            6,811
            10,768
            6,415
            4,914Total
                obligations
            $233,829
            $19,546
            $30,398
            $12,721
            $171,164







(a)
            These
                future commitments represent the principal payments under the $175
                million
                term loan, which was entered into after September 30, 2005, as previously
                discussed.


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


(c)
            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.


10
 **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 $1.5
      million was included in other liabilities in the Company’s Condensed
      Consolidated Balance Sheet as of September 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 September 30, 2005 was
      approximately $1.4 million and is currently classified in Deposits and other
      assets on the Company’s Condensed Consolidated Balance Sheet as of September 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
            
            
            4,856Issuance
                of restricted shares
            
            
            2,662Consultant
                compensation
            
            
            124Tax
                benefit from exercise of employee
              stock
                options
            
            
            8,463Issuance
                of shares in connection with earn-outs for 2004
                acquisitions
            
            
            3,255Issuance
                of shares for 2005 acquisitions
            
            
            4,104Balance
                at September 30, 2005
            
            $
            216,525





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





For
      the
      nine-months ended September 30, 2005 and 2004, income from discontinued
      operations, net of taxes, were earnings of $1.6 million and $2.1 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.





In
      August
      2005, Ventiv acquired PRS, which is reported in the Ventiv Commercial Services
      segment from the date of its acquisition. In October 2005, Ventiv acquired
      inChord, which will be reported in a separate operating segment, Ventiv
      Communication Services, from the date of its acquisition. The Company identified
      the Ventiv Commercial Services, Ventiv Communication Services and Ventiv
      Clinical Services segments as the three primary operating segments based on
      the
      way management makes operating decisions and assesses performance.






11




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






Subsequent
      to the inChord acquisition, which formed the Ventiv Communication Services’
      segment in October 2005, 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
                Communication Services, which provides services related to pharmaceutical
                advertising, branding, marketing and medical
                education;


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


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





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





**Ventiv
                Commercial**
              **Services**
            **Ventiv**
              **Clinical
                Services**
            **Other**
            **Total**Revenues
            $98,055
            $30,388
            $--
            $128,443Less:
                Intersegment revenues
            84
            --
            --
            84Reported
                revenues
            97,971
            30,388
            --
            128,359Depreciation
                and amortization
            4,266
            310
            22
            4,598Interest
                expense
            325
            --
            7
            332Interest
                income
            41
            9
            285
            335Income
                (losses) from continuing
              operations,
                before income taxes
            13,431
            2,834
            (2,393)
            13,872





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





**Ventiv
                Commercial**
              **Services**
            **Ventiv**
              **Clinical
                Services**
            **Other**
            **Total**Revenues
            $88,929
            $--
            $--
            $88,929Less:
                Intersegment revenues
            76
            --
            --
            76Reported
                revenues
            88,853
            --
            --
            88,853Depreciation
                and amortization
            3,758
            --
            19
            3,777Interest
                expense
            152
            --
            74
            226Interest
                income
            12
            --
            191
            203Income
                (losses) from continuing
              operations,
                before income taxes
            $10,129
            $--
            $(1,925)
            $8,204





For
      the
      nine-months ended September 30, 2005 (in thousands):





**Ventiv
                Commercial**
              **Services**
            **Ventiv**
              **Clinical
                Services**
            **Other**
            **Total**Revenues
            $298,583
            $82,854
            $--
            $381,437Less:
                Intersegment revenues
            424
            8
            --
            432Reported
                revenues
            298,159
            82,846
            --
            381,005Depreciation
                and amortization
            12,712
            931
            65
            13,708Interest
                expense
            928
            --
            114
            1,042Interest
                income
            100
            21
            720
            841Income
                (losses) from continuing
              operations,
                before income taxes
            40,492
            6,941
            (5,947)
            41,486





12
 **VENTIV
            HEALTH, INC.**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued**





For
      the
      nine-months ended September 30, 2004 (in thousands):





**Ventiv
                Commercial**
              **Services**
            **Ventiv**
              **Clinical
                Services**
            **Other**
            **Total**Revenues
            $235,018
            $--
            $--
            $235,018Less:
                Intersegment revenues
            283
            --
            --
            283Reported
                Revenues
            234,735
            --
            --
            234,735Depreciation
                and amortization
            11,280
            --
            50
            11,330Restructuring
            249
            --
            15
            264Interest
                expense
            391
            --
            216
            607Interest
                income
            26
            --
            402
            428Income
                (losses) from continuing
              operations,
                before income taxes
            $28,959
            $--
            $(4,942)
            $24,017








**September
                30,**
              **2005**
            **December
                31,**
              **2004****(in
                thousands)**Total
                Assets:Ventiv
                Commercial Services
            $240,893
            $201,613Ventiv
                Clinical Services
            81,041
            73,970Other*
            5,894
            11,869Total
                assets
            $327,828
            $287,452


*
      Shown
      net of intercompany adjustments.





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








13





**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
      leading provider of commercialization services to the pharmaceutical and life
      sciences industries. Ventiv provides pharmaceutical sales, marketing and
      clinical services spanning late-stage clinical through commercialization to
      over
      150 pharmaceutical, biotech, specialty and emerging companies, including 18
      of
      the top 20 global pharmaceutical companies. Ventiv’s customized clinical, sales,
      marketing and communications services span a wide variety of areas,
      including:




·
            sales
                and marketing teams;




·
            planning
                and analytics;




·
            sample
                accountability and patient assistance;




·
            marketing
                support services;




·
            professional
                development and training;




·
            advertising
                and communication agencies;




·
            branding
                consultation;




·
            interactive
                communication development;




·
            medical
                education;




·
            clinical
                staffing and recruitment;




·
            clinical
                analysis and data management; and




·
            clinical
                support.




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





Through
      September 30, 2005, we served our clients primarily through the following two
      business units:





·
            Ventiv
                Commercial Services,
                which consists of our outsourced sales and marketing teams, planning
                and
                analytics services, sample accountability 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 following businesses acquired during the fourth
                quarter of 2004: 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 clinical staffing, and data collection and
                management.





In
      October 2005, we acquired inChord Communications, Inc. (“inChord”), a global
      healthcare marketing and communications company, which formed our third segment,
      Ventiv Communication Services, as more fully discussed below. This segment
      provides services related to pharmaceutical advertising, branding, interactive
      communication development and medical education.





14


In
      2004,
      we managed three operating segments: Ventiv Commercial Services, Ventiv Clinical
      Services and Ventiv Analytic Services. As a result of the fourth quarter 2004
      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. In August 2005, Ventiv acquired
      Pharmaceutical Resource Solutions, Inc. (“PRS”), a provider of compliance
      management and marketing support services based in Horsham, Pennsylvania; PRS
      is
      included in the Ventiv Commercial Services segment from the date of its
      acquisition. In October 2005, Ventiv acquired inChord, a healthcare marketing
      and communications company, which will be reported in a separate operating
      segment, Ventiv Communication Services from the date of its
      acquisition.





*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 nine months ended September 30, 2005, we won several new contracts mainly
      comprised of small to mid-size clients looking to enter new markets or looking
      to build infrastructure, including NPS and Connetics. These wins were offset
      by
      certain contract conversions, mainly as described below relating to ALTANA
      Pharma (“ALTANA”).




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 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
      October 2005, Ventiv completed the previously-announced acquisition of all
      of
      the outstanding capital stock of inChord for approximately $193.8 million of
      cash and stock, including certain post-closing adjustments and direct
      acquisition costs, which have not yet been finalized. To help finance the
      transaction, Ventiv entered into a Credit Agreement, dated October 5, 2005,
      which provides for a term loan of $175 million, a $50 million revolving credit
      facility, of which $5 million is available for the issuance of letters of
      credit, and a $5 million swingline facility. The obligations under the Credit
      Agreement are secured by substantially all of Ventiv’s assets. The transaction
      was consummated pursuant to a definitive agreement dated September 6, 2005.
      Ventiv acquired inChord to expand its service portfolio in the marketing and
      communications arena, expand its market position in the pharmaceutical services
      market and achieve cross-selling opportunities by leveraging its existing
      businesses. The Company will be obligated to make certain earn-out payments,
      which may be material, contingent on inChord’s performance measurements from
      2005 through 2007. The results of inChord will be reflected in the newly-formed
      Ventiv Communication Services segment starting in the fourth quarter of
      2005.




15


In
      August
      2005, Ventiv acquired the net assets of PRS, a provider of compliance management
      and marketing support services based in Horsham, Pennsylvania. PRS specializes
      in pharmaceutical sample management and compliance services; its operations
      are
      similar in nature to the business of Franklin Group, Inc. and Lincoln Ltd,
      Inc.
      (together, “Franklin”), which we acquired in June 2004. The closing
      consideration for the transaction was approximately $13.6 million in cash and
      stock (taking into account post-closing adjustments and direct acquisition
      costs) for approximately $1.0 million of net assets. Ventiv 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 been
      reflected in the Ventiv Commercial Services segment since the date of
      acquisition. Pro forma financial statements were not presented as the
      acquisition was not deemed significant. The purchase price and direct
      transaction costs were allocated to the assets purchased and liabilities
      assumed, based on their respective fair values at the date of acquisition.
      However, changes to the estimates of the fair values of PRS’s assets acquired
      and liabilities assumed may be necessary as additional information becomes
      available and a third-party valuation of certain intangible assets is finalized.





In
      November 2004, Ventiv acquired the net assets of HHI. HHI, based in Baltimore,
      Maryland, is a specialized statistical analysis and data management provider
      to
      the U.S. pharmaceutical industry. HHI complements Ventiv's Smith Hanley business
      by offering clients the option of outsourced clinical support services as an
      alternative to internal staffing. 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
      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. We acquired Smith Hanley to 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 $52.9 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, of 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
      June
      2004, Ventiv acquired the net assets of Franklin, 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.





*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:





16





**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 September 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 September 30,
                2005)Hungary-based
                contract sales business
            $0.3
                million in cash
            Up
                to $0.3 million(all
                received as of September 30, 2005)





17


**Three-Months
      Ended September 30, 2005 Compared to Three-Months Ended September 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 September 30,****2005**
            
            **2004****(in
                thousands, except for per share data)**Revenues:
            
            
            
            Percentage*
            
            
            
            Percentage*Ventiv
                Commercial Services
            
            $97,971
            
            76.3%
            
            $88,853
            
            100.0%Ventiv
                Clinical Services
            
            30,388
            
            23.7%
            
            --
            
            --Other
            
            --
            
            --
            
            --
            
            --Total
                revenues
            
            128,359
            
            100.0%
            
            $88,853
            
            100.0%Cost
                of services:Ventiv
                Commercial Services
            
            
            77,687
            
            
            79.3
            %
            
            72,022
            
            
            81.1
            %Ventiv
                Clinical Services
            
            
            20,077
            
            
            66.1
            %
            
            --
            
            
            --Other
            
            
            --
            
            
            --
            
            
            --
            
            
            --Total
                cost of services
            
            
            97,764
            
            
            76.2
            %
            
            72,022
            
            
            81.1
            %Selling,
                general and administrative expenses
            
            
            16,726
            
            
            13.0
            %
            
            8,604
            
            
            9.7
            %Total
                operating income
            
            $
            13,869
            
            
            10.8
            %
            $
            8,227
            
            
            9.2
            %Interest
                expense
            
            
            (332
            )
            
            (0.3
            )%
            
            (226
            )
            
            (0.3
            )%Interest
                income
            
            
            335
            
            
            0.3
            %
            
            203
            
            
            0.3
            %Income
                from continuing operations before income taxes
            
            
            13,872
            
            
            10.8
            %
            
            8,204
            
            
            9.2
            %Income
                tax benefit (provision)
            
            
            1,161
            
            
            0.9
            %
            
            (3,117
            )
            
            (3.5
            )%Income
                from continuing operations
            
            
            15,033
            
            
            11.7
            %
            
            5,087
            
            
            5.7
            %Income
                from discontinued operations:Gains
                on disposals of discontinued operations, net of taxes
            
            
            78
            
            
            0.1
            %
            
            223
            
            
            0.3
            %Income
                from discontinued operations
            
            
            78
            
            
            0.1
            %
            
            223
            
            
            0.3
            %Net
                Income
            
            $
            15,111
            
            
            11.8
            %
            $
            5,310
            
            
            6.0
            %Earnings
                per share:Continuing
                operations:Basic
            
            $
            0.56
            
            
            
            
            $
            0.21Diluted
            
            $
            0.53
            
            
            
            
            $
            0.20Discontinued
                operations:Basic
            
            $
            0.00
            
            
            
            
            $
            0.01Diluted
            
            $
            0.01
            
            
            
            
            $
            0.01Net
                Income:Basic
            
            $
            0.56
            
            
            
            
            $
            0.22Diluted
            
            $
            0.54
            
            
            
            
            $
            0.21





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


18





***Revenues*** :
      Revenues increased by approximately $39.5 million, or 44.5%, to $128.4 million
      in the three-month period ended September 30, 2005, from $88.9 million in the
      three-months ended September 30, 2004.





Revenues
      in our Ventiv Commercial Services business were $98.0 million, an increase
      of
      $9.1 million or 10.3% from the $88.9 million in the same period in 2004, and
      accounted for 76.3% of total Ventiv revenues for the three-months ended
      September 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, such as 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 were offset by
      decreases attributable to certain contract conversions, including ALTANA, as
      described in Recent Business Developments; 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 PRS in August 2005,
      contributing additional revenue during the third quarter of 2005.




The
      newly
      acquired companies comprising Ventiv Clinical Services have contributed
      approximately $30.4 million in additional revenues for the third 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 September 30, 2004.




***Costs
      of Services*** :
      Costs
      of services increased by approximately $25.8 million or 35.7%, to $97.8 million
      this fiscal quarter from $72.0 million in the three-month period ended September
      30, 2004. Costs of services decreased as a percentage of revenues to 76.2%
      from
      81.1% in the three-month periods ended September 30, 2005 and 2004,
      respectively.





Costs
      of
      services at the Ventiv Commercial Services business increased by approximately
      $5.7 million, or 7.9%, to $77.7 million in the third quarter of 2005 from $72.0
      million in the third quarter of 2004. This variance is slightly lower than
      the
      increase in revenue between the related periods. Costs of services were 79.3%
      of
      Ventiv Commercial Services revenue in the third quarter of 2005, compared to
      81.1% in the third 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 $20.1 million to cost of
      sales. Costs of services represented approximately 66.1% 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 September 30, 2004.




***Selling,
      General and Administrative Expenses (“SG&A”)*** :
      SG&A expenses increased by approximately $8.1 million, or 94.4%, to $16.7
      million from $8.6 million in the three-month periods ended September 30, 2005
      and 2004, respectively. This increase was primarily due to SG&A expenses
      incurred at the newly-acquired Franklin, PRS 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 remained at approximately $6.6 million
      for the quarters ended September 30, 2005 and 2004. Increased compensation
      levels in 2005 versus 2004 were offset by ongoing cost savings measures
      implemented by management to align the support and infrastructure of the Company
      with the current level of operations.




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




Other
      SG&A was approximately $2.7 million for the three-months ended September 30,
      2005, an increase of approximately $0.6 million or 30.8% from $2.0 million
      for
      the three-months ended September 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 consolidated 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, among other things, to assist us in 2005 with the
      current year assessment.




19


***Provision
      for Income Taxes*** :
      During
      the third quarter of 2005, Ventiv recorded a tax benefit of approximately $6.7
      million primarily related to the reversal of reserves for net operating losses
      created by the divestiture and shutdown of certain former subsidiaries.
      Management believes it is more likely than not that the Company will be able
      to
      utilize certain net operating losses to offset current and future earnings.
      Prior to this tax benefit, Ventiv’s quarterly effective tax rate was 39.8% for
      the three-month period ended September 30, 2005. Ventiv recorded a provision
      for
      income taxes on continuing operations using an estimated effective tax rate
      of
      38.0% for the three-month period ended September 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.





***Discontinued
      Operations*** :
      For the
      three-months ended September 30, 2005 and 2004, income from discontinued
      operations, net of taxes, were earnings of $0.1 million and $0.2 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.





***Net
      Income and Earnings Per Share*** *:* Ventiv’s
      net income increased by approximately $9.8 million to $15.1 million, from net
      income of $5.3 million in the three-months ended September 30, 2005 and 2004,
      respectively. Diluted earnings per share increased to earnings of $0.54 per
      share for the three-month period ended September 30, 2005 from earnings of
      $0.21
      per share for the three-month period ended September 30, 2004.  Operating
      results were higher due to increased revenues from certain contracts and
      additional revenues from the 2004 acquisitions. Also, as described above, Ventiv
      recorded a one-time tax benefit of approximately $6.7 million during the three
      months ended September 30, 2005.











20


**Nine-Months
      Ended September 30, 2005 Compared to Nine-Months Ended September 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 Nine-Months Ended September 30,****2005**
            
            **2004****(in
                thousands, except for per share data)**Revenues:
            
            
            
            
            
            Percentage*
            
            
            
            
            
            Percentage*Ventiv
                Commercial Services
            
            $
            298,159
            
            
            78.3
            %
            $
            234,735
            
            
            100.0
            %Ventiv
                Clinical Services
            
            
            82,846
            
            
            21.7
            %
            
            --
            
            
            --Other
            
            
            --
            
            
            --
            
            
            --
            
            
            --Total
                revenues
            
            
            381,005
            
            
            100.0
            %
            $
            234,735
            
            
            100.0
            %Cost
                of services:Ventiv
                Commercial Services
            
            
            236,881
            
            
            79.4
            %
            
            188,629
            
            
            80.4
            %Ventiv
                Clinical Services
            
            
            54,355
            
            
            65.6
            %
            
            --
            
            
            --Other
            
            
            --
            
            
            --
            
            
            --
            
            
            --Total
                cost of services
            
            
            291,236
            
            
            76.4
            %
            
            188,629
            
            
            80.4
            %Selling,
                general and administrative expenses
            
            
            48,082
            
            
            12.6
            %
            
            22,174
            
            
            9.4
            %Restructuring
            
            
            --
            
            
            --
            
            
            (264
            )
            
            (0.1
            )%Total
                operating income
            
            $
            41,687
            
            
            10.9
            %
            $
            24,196
            
            
            10.3
            %Interest
                expense
            
            
            (1,042
            )
            
            (0.3
            )%
            
            (607
            )
            
            (0.3
            )%Interest
                income
            
            
            841
            
            
            0.3
            %
            
            428
            
            
            0.2
            %Income
                from continuing operations before income taxes
            
            
            41,486
            
            
            10.9
            %
            
            24,017
            
            
            10.2
            %Income
                tax provision
            
            
            (8,229
            )
            
            (2.2
            )%
            
            (9,126
            )
            
            (3.9
            )%Income
                from continuing operations
            
            
            33,257
            
            
            8.7
            %
            
            14,891
            
            
            6.3
            %Income
                from discontinued operations:Gains
                on disposals of discontinued operations, net of taxes
            
            
            1,640
            
            
            0.5
            %
            
            2,131
            
            
            0.9
            %Income
                from discontinued operations
            
            
            1,640
            
            
            0.5
            %
            
            2,131
            
            
            0.9
            %Net
                Income
            
            $
            34,897
            
            
            9.2
            %
            $
            17,022
            
            
            7.3
            %Earnings
                per share:Continuing
                operations:Basic
            
            $
            1.25
            
            
            
            
            $
            0.63Diluted
            
            $
            1.19
            
            
            
            
            $
            0.59Discontinued
                operations:Basic
            
            $
            0.06
            
            
            
            
            $
            0.09Diluted
            
            $
            0.06
            
            
            
            
            $
            0.09Net
                income:Basic
            
            $
            1.31
            
            
            
            
            $
            0.72Diluted
            
            $
            1.25
            
            
            
            
            $
            0.68





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


21





***Revenues*** :
      Revenues increased by approximately $146.3 million, or 62.3%, to $381.0 million
      in the nine-months ended September 30, 2005, from $234.7 million in the
      nine-months ended September 30, 2004.





Revenues
      in our Ventiv Commercial Services business were $298.2 million, an increase
      of
      $63.5 million or 27.0% from the $234.7 million in the same period in 2004,
      and
      accounted for 78.3% of total Ventiv revenues for the nine-months ended September
      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
      clients, including ALTANA, as discussed in Recent Business Developments;
      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. Also, Ventiv
      acquired Franklin on June 9, 2004, resulting in approximately $19.0 million
      of
      revenue during the nine-months ended September 30, 2005, and approximately
      $7.7
      million of revenue from June 9 through September 30, 2004. Finally, Ventiv
      acquired PRS in August 2005, contributing additional revenue during the third
      quarter of 2005.




The
      newly
      acquired companies comprising Ventiv Clinical Services have contributed
      approximately $82.8 million in additional revenues for the first nine months
      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 nine-months ended September 30, 2004.




***Costs
      of Services*** :
      Costs
      of services increased by approximately $102.6 million or 54.4%, to $291.2
      million during the nine-months ended September 30, 2005 from $188.6 million
      in
      the nine-months ended September 30, 2004. Costs of services decreased as a
      percentage of revenues to 76.4% from 80.4% in the nine-months ended September
      30, 2005 and 2004, respectively.





Costs
      of
      services at the Ventiv Commercial Services business increased by approximately
      $48.3 million, or 25.6%, to $236.9 million during the nine-months ended
      September 30, 2005 from $188.6 million during the nine-months ended September
      30, 2004. This variance corresponds closely to the increase in revenue between
      the related periods. Costs of services were 79.4% of Ventiv Commercial Services
      revenue in the nine-months ended September 30, 2005, compared to 80.4% during
      the similar period in 2004.




The
      Clinical Services segment contributed approximately $54.4 million to cost of
      sales for the nine-months ended September 30, 2005. Costs of services
      represented approximately 65.6% 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 nine-months ended September 30,
      2004.




***Selling,
      General and Administrative Expenses (“SG&A”)*** :
      SG&A expenses increased by approximately $25.9 million, or 116.8%, to $48.1
      million from $22.2 million in the nine-month periods ended September 30, 2005
      and 2004, respectively. This increase was primarily due to SG&A expenses
      incurred at the newly acquired Franklin, PRS and Smith Hanley divisions,
      increases in professional fees related to compliance with the internal control
      standards of Section 404 of the Sarbanes-Oxley Act of 2002, and increased
      compensation levels in 2005 versus 2004.




SG&A
      expenses at Ventiv Commercial Services increased by approximately $3.0 million,
      or 17.2%, to $20.0 million in the nine-months ended September 30, 2005 from
      $17.0 million incurred during the nine-months ended September 30, 2004. This
      increase was due to SG&A expenses from the acquisition of Franklin in June
      2004 and PRS in August 2005, and increased compensation levels in 2005 versus
      2004.






SG&A
      expenses at our newly acquired Ventiv Clinical Services businesses were
      approximately $21.6 million during the nine-months ended September 30, 2005.
      Since the acquisitions occurred during the fourth quarter of 2004, there is
      no
      related SG&A for the nine-months ended September 30, 2004.




Other
      SG&A was approximately $6.5 million for the nine-months ended September 30,
      2005, an increase of approximately $1.4 million or 27.4% from $5.1 million
      for
      the nine-months ended September 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 consolidated 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, among other things, to assist us in 2005 with the
      current year assessment.




22


***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. During the third quarter of 2005, Ventiv recorded a tax benefit of
      approximately $6.7 million primarily related to the reversal of reserves for
      net
      operating losses created by the divestiture and shutdown of certain former
      subsidiaries. Management believes it is more likely than not that the Company
      will be able to utilize certain net operating losses to offset current and
      future earnings. The aggregate effect of these benefits reduced Ventiv’s
      nine-month ended September 30, 2005 effective tax rate from 39.8% to
      approximately 19.8%. Ventiv recorded a provision for income taxes on continuing
      operations using an estimated effective tax rate of 38.0% for the nine-month
      period ended September 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 nine-month period ended September 30, 2005, a tax benefit related to the
      exercise of stock options in the amount of $8.5 million was credited directly
      to
“Additional paid-in-capital” in the Condensed Consolidated Balance
      Sheet.





***Discontinued
      Operations*** :  For
      the
      nine-months ended September 30, 2005 and 2004, income from discontinued
      operations, net of taxes, were earnings of $1.6 million and $2.1 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.





***Net
      Income and Earnings Per Share*** : ** Ventiv’s
      net income increased by approximately $17.9 million to net income of $34.9
      million, from net income of $17.0 million in the nine-months ended September
      30,
      2005 and 2004, respectively. Diluted earnings per share increased to earnings
      of
      $1.25 per share for the nine-month period ended September 30, 2005 from earnings
      of $0.68 per share for the nine-month period ended September 30, 2004. 
      Operating results were higher due to increased revenues from certain contracts
      and additional revenues from the 2004 and 2005 acquisitions. Tax benefits
      recorded during the nine months ended September 30, 2005 also contributed to
      the
      increase in earnings.





***Liquidity
      and Capital Resources***





At
      September 30, 2005, Ventiv had $52.1 million of unrestricted cash and
      equivalents, an increase of $1.2 million from December 31, 2004. For the
      nine-months ended September 30, 2004 compared to September 30, 2005, cash
      provided by operations decreased by $19.4 million from $47.4 million to $28.0
      million. Cash used in investing activities increased from $9.0 million to $20.9
      million in the nine-months ended September 30, 2005. Cash used in financing
      activities increased by $0.2 million from $5.7 million to $5.9 million over
      the
      same comparative periods.





Cash
      provided by operations was $28.0 million during the nine-months ended September
      30, 2005, while cash provided by operations was $47.4 million in the nine-months
      ended September 30, 2004. This decrease was, in large part, due to the billing
      and collection of certain payments due under various larger contracts, which
      may
      take longer to remit. The accounts receivable and unbilled services balances
      increased by approximately $18.3 million during the nine-months ended September
      30, 2005, versus an increase of approximately $1.0 million during the
      nine-months ended September 30, 2004. This is mainly due to timing of payments
      and increased volume of business. .





Cash
      used
      in investing activities was $20.9 million for the nine-months ended September
      30, 2005 compared to $9.0 million used during the same period in 2004. The
      Company paid approximately $9.1 million in August 2005 for the acquisition
      of
      PRS, versus $6.7 million of purchase price for the acquisition of Franklin
      in
      June 2004, both excluding acquisition costs. 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. 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 nine 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
      $1.4 million in the COLI program.





23


Cash
      used
      in financing activities was $5.9 million and $5.7 million for the nine-months
      ended September 30, 2005 and 2004, respectively. During the nine-months ended
      September 30, 2005, the Company received $4.9 million of proceeds from the
      exercise of stock options, versus $2.0 million in the nine-months ended
      September 30, 2004. Also, the Company made capital lease payments of $10.7
      million and $7.7 million for the same periods in 2005 and 2004, respectively,
      under the fleet lease agreement in its Ventiv Commercial Services business
      unit.





A
      summary
      of our current contractual obligations and commercial commitments is 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 yearsLong
                term debt obligations (a)
            $175,000
            $1,750
            $3,500
            $3,500
            $166,250Capital
                lease obligations (b)
            29,921
            10,985
            16,130
            2,806
            --Operating
                leases (c)
            28,908
            6,811
            10,768
            6,415
            4,914Total
                obligations
            $233,829
            $19,546
            $30,398
            $12,721
            $171,164








(a)
            These
                future commitments represent the principal payments under the $175
                million
                term loan, which was entered into after September 30, 2005, as more
                fully
                described below.


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


(c)
            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 Ventiv’s 2004 and 2005
      acquisitions 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.




The
      inChord acquisition on October 5, 2005 was funded principally through a
      borrowing under a Credit Agreement dated as of October 5, 2005 among Ventiv,
      certain of its subsidiaries (including inChord and certain of inChord’s
      subsidiaries) as guarantors, the lenders party thereto, UBS Securities LLC,
      as
      bookmanager and as joint lead arranger, and various other syndicated agencies.
      The Credit Agreement provides for a term loan of $175 million, which was made
      available to Ventiv in a single drawing, a $50 million revolving credit
      facility, of which $5 million is available for the issuance of letters of
      credit, and a $5 million swingline facility. The obligations under the Credit
      Agreement are secured by substantially all of Ventiv’s assets.




The
      term
      loan will mature on the sixth anniversary of the Credit Agreement, with
      scheduled quarterly amortization of 1% per year during years one through five
      and 95% during year six. The revolving loans will mature on the sixth
      anniversary of the Credit Agreement. Amounts advanced under the Credit Agreement
      must be prepaid with a percentage, determined based on a leverage test set
      forth
      in the Credit Agreement, of Excess Cash Flow (as defined in the Credit
      Agreement) and the proceeds of certain non-ordinary course asset sales and
      certain issuances of debt obligations or equity securities of Ventiv and its
      subsidiaries, subject to certain exceptions. Ventiv may elect to prepay the
      loans, in whole or in part at any time, in certain minimum principal amounts,
      without penalty or premium (other than normal London InterBank Offered
      Rate “ LIBOR”
      break funding costs). Amounts borrowed under the Credit Agreement that are
      repaid or prepaid may not be reborrowed.




Interest
      on the loans will accrue, at Ventiv’s election, at either (1) the Alternate Base
      Rate (which is the greater of UBS’s prime rate and federal funds effective rate
      plus 1/2 of 1%) or (2) the Adjusted LIBOR Rate, with interest periods determined
      at Ventiv’s option of 1, 2, 3 or 6 months (or, if the affected lenders agree, 9
      months), in each case plus a spread based on the type of loan and method of
      interest rate determination elected.




The
      Credit Agreement contains, among other things, conditions precedent,
      representations and warranties, covenants and events of default customary for
      facilities of this type. Such covenants include certain limitations on
      indebtedness, liens, sale-leaseback transactions, guarantees, fundamental
      changes and transactions with affiliates. The Credit Agreement also includes
      covenants under which Ventiv is required to maintain a maximum leverage ratio
      and minimum interest rate coverage and fixed charge coverage ratios that vary
      based on the amount of time elapsed since the initial extension of
      credit.




24




Under
      certain conditions, the lending commitments under the Credit Agreement may
      be
      terminated by the lenders and amounts outstanding under the Credit Agreement
      may
      be accelerated. Such events of default include failure to pay any principal,
      interest or other amounts when due, failure to comply with covenants, breach
      of
      representations or warranties in any material respect, non-payment or
      acceleration of other material debt of Ventiv and its subsidiaries, bankruptcy,
      insolvency, material judgments rendered against Ventiv or certain of its
      subsidiaries or a 40% change of control of Ventiv, subject to various exceptions
      and notice, cure and grace periods.




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.





**Off-Balance
      Sheet Arrangements**





At
      September 30, 2005 and December 31, 2004, we did not have any relationships
      with
      unconsolidated entities or financial partnerships, such as entities often
      referred to as structured finance or special purpose entities, which would
      have
      been established for the purpose of facilitating off-balance sheet arrangements
      or other contractually narrow or limited purposes.





**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.





25





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





During
      the normal course of business, the Company is routinely subjected to market
      risk
      associated with interest rate movements and foreign currency exchange rate
      movements. Interest rate risk arises from the Company’s debt obligations and
      related interest rate cap agreements. Foreign currency exchange rate risk arises
      from its non-U.S. operations.




**Interest
      Rate Risk**




The
      Company has variable rate debt obligations that are denominated in U.S. dollars.
      A change in interest rates impacts the interest incurred and cash paid on the
      variable-rate debt. The Company uses interest rate cap agreements for other
      than
      trading purposes in order to manage its exposure to fluctuations in interest
      rates on the Company’s variable-rate debt. Such agreements effectively convert
      $175 million of the Company’s variable-rate debt to a fixed-rate basis.


**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. The Company does not
      believe its foreign currency exchange rate exposure from these sources is
      material.








**ITEM
      4.** ***Controls
      and Procedures***




Based
      on
      their evaluation as of September 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 effective as of September 30, 2005.




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.  This
      material weakness in internal controls arose from
      inadequate reconciliation and review of certain accounts within the
      division.  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.  Immediately after the identification of this material weakness
      in
      the second quarter, we took the steps necessary to fully remediate this material
      weakness in our internal control over financial reporting, including ensuring
      that the proper reconciliations and reviews are conducted on a monthly basis
      and
      adequate training is provided to our employees.  Our Internal Audit
      department has evaluated the design and operating effectiveness of the
      additional internal controls and identified no exceptions from the date of
      their
      implementation through the date of this report.  Management believes
      that
      this material weakness has been fully remediated.




There
      were no changes in our internal controls over financial reporting during the
      quarter ended September 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.





















26





**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*** ****





On
      August
      5, 2005, we issued 186,943 shares of common stock pursuant to an asset
      purchase agreement relating to our acquisition of the net assets of PRS. 
      (See Note 3 to our Condensed Consolidated Financial Statements included in
      Item
      1 of Part I.) These shares were issued to the members of the selling entity
      in
      reliance on Section 4(2) of the Securities Act.





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





(a) *Exhibits*


**




10.15
            
            Asset
                Purchase Agreement dated as of August 5, 2005 among Pharmaceutical
                Resource Solution LLC, Ventiv Health Inc., PRS Acquisition LLC and
                the
                other signatories thereto*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







Certain
      portions omitted pursuant to a request for confidential treatment. The omitted
      material has been filed separately with the Securities and Exchange
      Commission.







(b) *Reports
      on Form 8-K*





Current
      Report on Form 8-K, filed as of September 9, 2005, Items 1.01, 2.03, 3.02,
      3.03,
      7.01 and Item 9.01, regarding a definitive agreement with inChord
      Communications, Inc. (“inChord”) for the acquisition of the outstanding capital
      stock of inChord subject to the completion of acquisition financing and other
      customary closing conditions on September 6, 2005.





Current
      Report on Form 8-K, filed as of August 11, 2005, Item 1.01, 3.02, 7.01 and
      Item
      9.01, regarding a definitive agreement with the Pharmaceutical Resource
      Solutions LLC (“PRS”) for substantially all of the assets of PRS on August 5,
      2005.





Current
      Report on Form 8-K, filed as of August 8, 2005, Item 2.02 and Item 9.01,
      regarding the Company’s release of financial information for the second quarter
      ended June 30, 2005 on August 8, 2005.





27


**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: 
                November 9, 2005
              By:
              /s/ John
                  R. EmeryJohn
                  R. Emery
                Chief
                  Financial
                  Officer





28