PHILADELPHIA, May 5/PRNewswire-FirstCall/ -- eResearchTechnology, Inc.
(eRT), (Nasdaq: ERES), a leading provider of centralized ECG and eClinical
technology, ePRO and other services to the pharmaceutical, biotechnology,
medical device and related industries, announced today results for the quarter
ended March 31, 2008.
Highlights for the first quarter of 2008 were:
-- Record quarterly net revenues of $33.7 million, including $3.3 million
of net revenues from Covance Cardiac Safety Services, Inc. (CCSS), a
59.7% increase from the first quarter of 2007;
-- Diluted net income per share of $0.11, up 175.0% from the first quarter
of 2007;
-- Gross margin of $17.7 million for a gross margin percentage of 52.5% up
4.9 percentage points from the first quarter of 2007. The gross margin
percentage was negatively impacted by CCSS, which generated net
revenues of $3.3 million while incurring expenses of $3.2 million;
-- Income before income taxes margin percentage of 26.5%, up 9.2
percentage points from the first quarter of 2007. The income before
income taxes margin percentage was negatively impacted by CCSS and the
integration of CCSS into eRT, which combined generated a loss before
income taxes of $1.4 million;
-- Record bookings of $50.1 million, compared to $29.7 million for the
first quarter of 2007;
-- Bookings included seven new Thorough ECG study agreements valued at an
average of slightly greater than $1 million each;
-- The backlog was a record $151.4 million, a net increase of
$11.2 million from December 31, 2007;
-- The cancellation rate was an annualized 15.6% as compared to an
annualized cancellation rate of 15.0% in the first quarter of 2007.
"We are extremely pleased with the first quarter results where we saw
record quarterly revenue, transactions, bookings and backlog for eRT,"
commented Dr. Michael McKelvey, President and CEO of eRT. "We continue to
execute very well on our projects. The integration of the CCSS acquisition is
proceeding on schedule, and we are meeting with clients to begin the
transition process of individual studies. Our services revenue grew by 80.9%,
driven by outstanding growth in our core cardiac safety business. Bookings
were strong across all phases, but especially in Phase I and Phase III
studies. The quarter again demonstrated the leverage in our business model as
evidenced by expanding gross margins and net income growth."
The Company reported revenues of $33.7 million for the first quarter of
2008, an increase of 59.7% from $21.1 million in the first quarter of 2007.
Net income was $5.7 million for the first quarter of 2008, an increase of
155.6% from $2.2 million for the first quarter of 2007. Diluted net income
per share was $0.11 for the first quarter of 2008, up $0.07 from the $0.04 in
the first quarter of 2007.
eRT ended the quarter with $48.9 million in cash, cash equivalents and
investments, an increase of $2.0 million from $46.9 million at December 31,
2007. Operations generated $7.6 million, which was partially offset by
payments to Covance under the terms of the CCSS acquisition.
"Our pipeline of new opportunities is strong, reflecting the continued
emphasis on cardiac safety and eRT's reputation for quality, medical and
scientific leadership, project execution and technology innovation," continued
Dr. McKelvey. "The pricing environment continues to be stable. The Exclusive
Marketing Agreement with Covance is adding to our pipeline, as are our
continued strong relationships with other key partnerships with CROs and Phase
I units. While there are many areas in which we will continue to work to
improve, the first quarter was an excellent start and bodes well for the
remainder of 2008."
2008 Guidance
The Company issued guidance for the second quarter of 2008 and for the
full year 2008. eRT expects to report revenues of between $34.0 million and
$36.0 million and diluted net income per share of between $0.10 to $0.12 for
the second quarter ending June 30, 2008. For the full year 2008, the Company
is increasing its guidance for revenue to between $133.0 million and $140.0
million and diluted net income per share to between $0.44 to $0.49; previously
issued guidance for revenue was between $130.0 million and $137.0 million and
for diluted net income per share was between $0.42 to $0.46.
Dr. McKelvey and Richard Baron, the Company's Chief Financial Officer,
will hold a conference call to discuss these results. The conference call will
take place at 5:00 p.m. EDT on May 5, 2008. Interested participants should
call 800-322-5044 when calling within the United States or 617-614-4927 when
calling internationally. Please use pass code 13961971. There will be a
playback available until May 12, 2008. To listen to the playback, please call
888-286-8010 when calling within the United States or 617-801-6888 when
calling internationally. Please use pass code 12540628 for the replay.
This call is being webcast by Thomson Financial and can be accessed at
eRT's web site at www.eRT.com . The webcast may also be accessed at Thomson's
Institutional Investor website at
http://phx.corporate-ir.net/playerlink.zhtml?c=119164&s=wm&e=1829106 . The
webcast can be accessed until May 5, 2009 on either site.
About eResearchTechnology, Inc.
Based in Philadelphia, PA, eResearchTechnology, Inc. (http://www.eRT.com )
is a provider of technology and services to the pharmaceutical, biotechnology
and medical device industries on a global basis. The Company is a market
leader in providing centralized core-diagnostic electrocardiographic (ECG)
technology and services to evaluate cardiac safety in clinical development.
The Company is also a leader in providing technology and services to
streamline the clinical trials process by enabling its customers to automate
the collection, analysis, and distribution of clinical data in all phases of
clinical development.
Statements included in this release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements, including, but not limited to, 2008 financial
guidance, involve a number of risks and uncertainties such as the Company's
ability to obtain new contracts and accurately estimate net revenues due to
uncertain regulatory guidance, variability in size, scope and duration of
projects, and internal issues at the sponsoring client, integration of
acquisitions, competitive factors, technological development, and market
demand. As a result, actual results may differ materially from any financial
outlooks stated herein. Further information on potential factors that could
affect the Company's financial results can be found in the Company's Reports
on Form 10-K and 10-Q filed with the Securities and Exchange Commission. The
Company undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events, or
otherwise.
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended March 31,
2007 2008
(unaudited) (unaudited)
Net revenues:
Licenses $782 $625
Services 13,968 25,273
Site support 6,334 7,775
Total net revenues 21,084 33,673
Costs of revenues:
Cost of licenses 66 200
Cost of services 6,790 10,514
Cost of site support 4,195 5,268
Total costs of revenues 11,051 15,982
Gross margin 10,033 17,691
Operating expenses:
Selling and marketing 2,538 3,323
General and administrative 3,469 4,873
Research and development 925 999
Total operating expenses 6,932 9,195
Operating income 3,101 8,496
Other income, net 550 427
Income before income taxes 3,651 8,923
Income tax provision 1,403 3,177
Net income $2,248 $5,746
Basic net income per share $0.04 $0.11
Diluted net income per share $0.04 $0.11
Shares used to calculate basic net
income per share 50,198 50,638
Shares used to calculate diluted net
income per share 51,431 51,894
eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, 2007 March 31, 2008
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $38,082 $40,568
Short-term investments 8,797 8,342
Accounts receivable, net 26,718 26,914
Prepaid income taxes 743 -
Prepaid expenses and other 3,087 3,197
Deferred income taxes 901 899
Total current assets 78,328 79,920
Property and equipment, net 33,347 30,826
Goodwill 30,908 31,737
Intangible assets 3,849 3,398
Deferred income taxes 1,011 1,375
Other assets 253 146
Total assets $147,696 $147,402
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,505 $2,869
Accrued expenses 12,103 7,710
Income taxes payable 2,352 1,675
Current portion of capital lease
obligations 1,097 394
Deferred revenues 13,905 13,555
Total current liabilities 32,962 26,203
Capital lease obligations, excluding
current portion 48 -
Other liabilities 1,174 1,167
Total liabilities 34,184 27,370
Stockholders' equity:
Preferred stock-$10.00 par value,
500,000 shares authorized, none
issued and outstanding - -
Common stock-$.01 par value,
175,000,000 shares authorized,
58,870,291 and 58,918,095 shares
issued, respectively 589 589
Additional paid-in capital 87,957 88,734
Accumulated other comprehensive
income 1,679 1,676
Retained earnings 85,477 91,223
Treasury stock, 8,247,119 shares
at cost (62,190) (62,190)
Total stockholders' equity 113,512 120,032
Total liabilities and
stockholders' equity $147,696 $147,402
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31,
2007 2008
Operating activities:
Net income $2,248 $5,746
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,215 4,344
Cost of sales of equipment 383 414
Provision for uncollectible accounts - 30
Share-based compensation 483 470
Changes in operating assets and
liabilities exclusive of CCSS acquisition:
Accounts receivable 1,654 (222)
Prepaid expenses and other (681) (11)
Accounts payable (2,209) (984)
Accrued expenses 84 (1,548)
Income taxes 1,395 (299)
Deferred revenues (398) (344)
Net cash provided by operating
activities 6,174 7,596
Investing activities:
Purchases of property and equipment (2,490) (1,430)
Purchases of investments (26,633) -
Proceeds from sales of investments 24,842 455
Payments for acquisition - (3,673)
Net cash used in investing
activities (4,281) (4,648)
Financing activities:
Repayment of capital lease obligations (40) (751)
Proceeds from exercise of stock options 879 189
Stock option income tax benefit 109 103
Net cash provided by (used in)
financing activities 948 (459)
Effect of exchange rate changes on cash 7 (3)
Net increase in cash and cash equivalents 2,848 2,486
Cash and cash equivalents, beginning
of period 15,497 38,082
Cash and cash equivalents, end of period $18,345 $40,568
SOURCE eResearchTechnology, Inc.
