| Press
Release
SOURCE: eResearchTechnology,
Inc.
eResearchTechnology Reports Second Quarter 2007 Results
eResearchTechnology Reports EPS of $0.08 vs. $0.03 in Q2 2006
Q2 Revenues Increase to $24.7 Million and New Bookings Increase to $34.5 Million
PHILADELPHIA, Aug. 2 /PRNewswire-FirstCall/ -- eResearchTechnology, Inc. (eRT),
(Nasdaq: ERES
- News),
a leading provider of centralized ECG and eClinical technology and services to the pharmaceutical, biotechnology, medical device and related industries, announced today results for the second quarter and six-month period ended June 30, 2007.
The Company reported revenues of $24.7 million for the second quarter of 2007, a sequential increase of 17.3% from $21.1 million in the first quarter of 2007 and an 8.4% increase from $22.8 million in the second quarter of 2006. The Company reported net income of $4.1 million for the second quarter of 2007, a sequential increase of 84.1% from the first quarter of 2007 and a 146.8% increase from $1.7 million in the second quarter of 2006. This resulted in net income per diluted share of $0.08 in the second quarter of 2007, compared to $0.04 in the first quarter of 2007 and $0.03 in the second quarter of 2006.
The Company's gross margin percentage in the second quarter of 2007 was 53.9% compared to 47.6% in the first quarter of 2007 and 46.7% in the second quarter of 2006. Pre-tax income margin in the second quarter of 2007 was 27.6% compared to 17.3% in the first quarter of 2007 and 12.3% in the second quarter of 2006. The Company's tax rate for the second quarter of 2007 was 39.3% compared to 40.1% in the second quarter of 2006.
For the six months ended June 30, 2007, the Company reported revenues of $45.8 million compared to $44.2 million for the six months ended June 30, 2006. eRT reported net income of $6.4 million, or $0.12 per diluted share, for the six months ended June 30, 2007 compared to net income of $3.6 million, or $0.07 per diluted share, for the six months ended June 30, 2006.
The Company's gross margin percentage for the six months ended June 30, 2007 was 51.0% compared to 49.0% for the six months ended June 30, 2006. Pre- tax income margin for the six months ended June 30, 2007 was 22.8% compared to 13.6% for the six months ended June 30, 2006. The Company's tax rate was 39.0% for the six months ended June 30, 2007 compared to 40.1% for the six months ended June 30, 2006.
eRT ended the quarter with $63.4 million in cash, cash equivalents and investments, an increase of $0.9 million from $62.5 million at the end of the first quarter of 2007.
"The Company demonstrated strong growth both sequentially and compared to the second quarter of the prior year," commented Dr. Michael McKelvey, President and CEO of eRT. "We were particularly pleased with the strong growth shown in our core services business (which is predominately cardiac safety). Services net revenues increased 25.7% sequentially from last quarter, and 37.0% compared to the second quarter of last year. This was offset by a reduction in equipment sales and eClinical revenues compared to both last quarter and the second quarter of last year. This quarter we improved our gross margin and pre-tax income margin percentage by 630 and 1030 basis points, respectively, from the first quarter of 2007. The gains from the second quarter of 2006 were even more pronounced. This demonstrates the leverage of our gross margin and pre-tax income as we increase our revenue and we continue to focus on improving the efficiency of our operations. We were also very pleased with the strong increase in our new bookings in the quarter, as well as the increase in our backlog."
Highlights of the second quarter included:
* $34.5 million in new bookings of contracts and work orders;
* Eight new Thorough ECG study agreements were signed, valued
at approximately $8.7 million, translating into an average
Thorough ECG study size of more than $1 million.
* Backlog increased to $106.8 million as of June 30, 2007.
This was an increase of $5.4 million from March 31, 2007,
a 23.3% annualized increase. The annualized cancellation
rate was 17.6%.
* The book-to-bill ratio for the second quarter was 1.58
based on an average of the last three quarters' revenue,
and 1.40 based on the second quarter revenue.
* A new line of business, -- electronic patient reported
outcomes (ePRO) -- was launched with the establishment of\
a long-term strategic relationship with Healthcare Technology
Systems, Inc. (HTS), a leading authority in the research,
development and validation of computer administeredclinical
rating instruments. The strategic relationship includes the
exclusive licensing (subject to one pre-existing license
agreement) of 57 interactive voice response (IVR) clinical
assessments offered by HTS, along with HTS' IVR system and
five-year consulting agreements with Drs. John Greist,
James (Jeff) Jefferson, and David Katzelnick -- pioneers
in the electronic assessment of patient outcomes in clinical
research studies.
Dr. McKelvey continued, "During the quarter we made meaningful progress on our strategic plan. The creation of the eRT Consulting Group has resulted in additional revenue and, more importantly, an increased recognition by our clients of the value of a one-stop experience for the cardiac safety component of clinical trials. The strategic investment we are making in international sales is paying off, as evidenced by the strong showing of international bookings in the quarter (39% of total cardiac safety bookings). In addition, our marketing investment has yielded a number of new leads and opportunities. Our cost efficiency program, implemented in February, has contributed to our improved margins. We have completed the first stage of investment in our eClinical suite. Finally, the strategic transaction with HTS to initiate our ePRO business has received favorable market reaction and we are excited about the contributions this business will make in the future."
2007 Guidance
The Company issued guidance for the third quarter of 2007. eRT anticipates revenues of between $24 million and $26 million and net income per diluted share of $0.07 to $0.09 for the third quarter ending September 30, 2007. For the full year ending December 31, 2007, management anticipates revenues being within the midpoint of the previously issued guidance of $95 million and $103 million. Management anticipates net income per diluted share to be at the high end of the previously issued guidance of $0.25 to $0.30.
Conference Call
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 4:30 p.m. EDT on August 2, 2007. For the conference call interested participants should dial 888-469-4228 when calling within the United States or 480-629-9564 when calling internationally. There will be a playback available through 11:59 p.m. (Eastern) on August 16. To listen to the playback, please call 800-406-7325 when calling within the United States or 303-590-3030 when calling internationally. Please use pass code 3762560 for the replay.
This call is being webcast by ViaVid Broadcasting and can be accessed at eRT's web site at http://www.eRT.com. The webcast may also be accessed at ViaVid's website at http://viavid.net/dce.aspx?sid=00004239. The webcast can be accessed until September 2, 2007 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, 2007 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, 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.
Contact:
Richard Baron Brett Maas
eResearchTechnology, Inc. Hayden Communications
215-282-5566 646-536-7331
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2007 2006 2007
Net revenues:
Licenses $1,096 $580 $1,734 $1,362
Services 12,822 17,561 27,547 31,529
Site support 8,900 6,593 14,936 12,927
Total net revenues 22,818 24,734 44,217 45,818
Costs of revenues:
Cost of licenses 77 63 153 129
Cost of services 6,300 7,233 12,456 14,023
Cost of site support 5,791 4,117 9,944 8,312
Total costs of revenues 12,168 11,413 22,553 22,464
Gross margin 10,650 13,321 21,664 23,354
Operating expenses:
Selling and marketing 3,178 3,054 6,216 5,592
General and administrative 3,974 2,919 7,813 6,388
Research and development 1,034 1,102 2,348 2,027
Total operating expenses 8,186 7,075 16,377 14,007
Operating income 2,464 6,246 5,287 9,347
Other income, net 338 569 728 1,119
Income before income taxes 2,802 6,815 6,015 10,466
Income tax provision 1,125 2,676 2,414 4,079
Net income $1,677 $4,139 $3,601 $6,387
Basic net income per share $0.03 $0.08 $0.07 $0.13
Diluted net income per share $0.03 $0.08 $0.07 $0.12
Shares used to calculate basic net
income per share 49,266 50,493 49,184 50,346
Shares used to calculate diluted
net income per share 51,515 51,782 51,600 51,606
eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, 2006 June 30, 2007
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $15,497 $19,896
Short-term investments 41,416 42,533
Accounts receivable, net 17,866 20,205
Prepaid income taxes 2,819 740
Prepaid expenses and other 2,761 3,766
Deferred income taxes 912 912
Total current assets 81,271 88,052
Property and equipment, net 31,129 35,731
Goodwill 1,212 1,212
Long-term investments 928 932
Other assets 524 381
Total assets $115,064 $126,308
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,360 $2,634
Accrued expenses 3,445 3,838
Income taxes payable 781 1,249
Current portion of capital lease
obligations 40 2,193
Deferred revenues 11,325 10,722
Total current liabilities 19,951 20,636
Capital lease obligations, excluding
current portion -- 324
Deferred tax liabilities 1,491 1,900
Total liabilities 21,442 22,860
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,
58,356,546 and 58,820,938
shares issued,
respectively 584 588
Additional paid-in capital 83,493 86,699
Accumulated other comprehensive
income 1,510 1,739
Retained earnings 70,225 76,612
Treasury stock, 8,247,119 shares
at cost (62,190) (62,190)
Total stockholders' equity 93,622 103,448
Total liabilities and
stockholders' equity $115,064 $126,308
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30,
2006 2007
Operating activities:
Net income $3,601 $6,387
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and
amortization 5,772 7,139
Cost of sales of equipment 2,612 535
Non-cash share-based
compensation 1,643 1,142
Changes in operating
assets and liabilities:
Accounts receivable 960 (2,269)
Prepaid expenses and
other (961) (245)
Accounts payable 1,458 (2,184)
Accrued expenses (823) 382
Income taxes (2,332) 2,259
Deferred revenues (5,788) (647)
Net cash provided
by operating
activities 6,142 12,499
Investing activities:
Purchases of property and
equipment (10,007) (7,995)
Purchases of investments (18,720) (40,651)
Proceeds from sales of investments 14,640 39,530
Net cash used in
investing
activities (14,087) (9,116)
Financing activities:
Repayment of capital lease
obligations (75) (1,132)
Proceeds from exercise of stock
options 2,062 1,462
Stock option income tax benefit 2,365 578
Repurchase of common stock for
treasury (5,803) --
Net cash (used in)
provided by
financing
activities (1,451) 908
Effect of exchange rate changes on
cash 144 108
Net (decrease) increase in cash and
cash equivalents (9,252) 4,399
Cash and cash equivalents, beginning
of period 18,432 15,497
Cash and cash equivalents, end of
period $9,180 $19,896
eResearchTechnology, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
For the Three and Six Months Ended June 30, 2006 and 2007
(in thousands)
(unaudited)
Three Months Six Months
Ended June 30 Ended June 30
2006 2007 2006 2007
Gross margin:
GAAP gross margin $10,650 $13,321 $21,664 $23,354
-- -- -- --
Non-GAAP income gross margin $10,650 $13,321 $21,664 $23,354
Reconciliation of GAAP to Non-GAAP
operating income:
GAAP operating income $2,464 $6,246 $5,287 $9,347
Cost of efficiency improvements -- -- -- 676
CEO and CFO transition 731 -- 1,200 --
Settlement of contract dispute -- -- 646 --
Subtotal of reconciling items 731 -- 1,846 676
Non-GAAP operating income $3,195 $6,246 $7,133 $10,023
Reconciliation of GAAP to Non-GAAP net
income and net income per diluted
share:
GAAP net income $1,677 $4,139 $3,601 $6,387
Cost of efficiency improvements -- -- -- 412
CEO and CEO transition 438 -- 718 --
Settlement of contract dispute -- -- 387 --
Subtotal of reconciling items 438 - 1,105 412
Non-GAAP net income $2,115 $4,139 $4,706 $6,799
GAAP net income per diluted share $0.03 $0.08 $0.07 $0.12
Non-GAAP net income per diluted share $0.04 $0.08 $0.09 $0.13
SOURCE: eResearchTechnology, Inc.
back to main page
|
