Monday November 23 2009 | Biotechnology feed | All feeds
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ERT Reports Third Quarter 2009 ResultsThursday 29th of October 2009 16:05-- ERT purchased 196,016 shares of its common stock at an average price of $5.49 under its approved stock repurchase program in the third quarter of 2009 at a total cost of $1.1 million leaving 5.0 million shares available for repurchase under this program.Financial highlights for the first nine months of 2009:
-- Net income was $7.4 million, or $0.15 per diluted share, for the nine
months ended September 30, 2009 compared to net income of $19.3 million,
or $0.37 per diluted share, for the nine months ended September 30,
2008.
-- Net revenues were $70.7 million for the nine months ended September 30,
2009 compared to $103.1 million for the nine months ended September 30,
2008.
-- Gross margin percentage for the nine months ended September 30, 2009 was
51.4% compared to 55.3% for the nine months ended September 30, 2008.
-- Operating income margin for the nine months ended September 30, 2009 was
18.2% compared to 28.9% for the nine months ended September 30, 2008.
-- The results include the EDC operations, which were sold on June 23,
2009. EDC licenses and services revenue was $2.5 million and $4.4
million in the first nine months of 2009 and 2008, respectively.
-- New bookings for the nine months ended September 30, 2009 were $109.2
million compared to $142.1 million in the nine months ended September
30, 2008.
-- For the nine months ended September 30, 2009, cash provided by operating
activities was $24.7 million compared to $26.8 million for the nine
months ended September 30, 2008.
-- For the nine months ended September 30, 2009, ERT purchased 2,902,735
shares of its common stock at an average price of $5.18 under its
approved stock repurchase program at a total cost of $15.1 million.
"The quarter was marked by growth in our routine (Phase I - IV) business, offset by a continued weakness in our Thorough QT business," commented Dr. Michael McKelvey, President and CEO of ERT. "We recorded a book to bill ratio of 1.9 in the quarter, the highest that ERT has ever recorded in recent history. This was due to a strong increase in routine bookings, which increased 23% sequentially and 15% compared to the third quarter a year ago. Thorough QT bookings continued to be impacted by the delays in the timing of sponsors' decisions on starting these trials. Sponsors may delay the running of Thorough QT trials until later in the drug development cycle, though regulatory guidance ultimately requires that they be performed. The quarter also saw a pick up in new bookings for our emerging ePRO business. We increased our operating income margin to 20.7% sequentially despite flat revenue (excluding the divestiture of our EDC operations) and slightly lower pricing." "We were very pleased with the results of our business development efforts in the quarter and feel that this will help spur future growth in our routine business," continued Dr. McKelvey. "The routine business is our target area where we see the potential to significantly increase the centralization of ECGs as sponsors focus on the quality, timeliness, and cost advantages of centralization," continued Dr. McKelvey. "We believe the fundamentals of our industry, and ERT's market leading position, remain strong. We are positioning ourselves for additional growth in the future by focusing on increased centralization of ECGs, increased use of ePRO in clinical trials, and increasing our market share." 2009 Guidance The Company issued guidance for the fourth quarter and full year of 2009. For the fourth quarter of 2009, management anticipates diluted net income per share of between $0.05 and $0.06, which translates into full year 2009 guidance of between $0.20 and $0.21. This is in line with the lower end of our previously issued guidance. Due to the lower than anticipated level of Thorough QT bookings in the third quarter of 2009 and some delays in starts of Thorough QT studies, management anticipates net revenues of between $22.0 million and $23.0 million for the fourth quarter of 2009, which translates into full year 2009 guidance of between $92.7 million and $93.7 million. The Company has also provided qualitative comments for its business outlook for 2010 and will provide quantitative guidance for 2010 when its year-end 2009 results are issued in February 2010. Absent the economy slipping back into recession, significant adverse events surrounding the pharmaceutical industry or significant increases in cancellation rates, management currently believes that the increasingly positive booking trends seen in 2009 and a positive outlook for future bookings will result in revenue and diluted net income per share growth in 2010. Reflecting our leveraged model, we anticipate that the growth in diluted net income per share should be greater than revenue growth. We base this belief on the positive book to bill ratios recorded over the past few quarters including the record 1.9 book to bill ratio in the third quarter resulting in expected increases in our routine business. We also believe an increased contribution of Thorough QT revenues -- based on an anticipated increase in available funding for small to medium size pharmaceutical companies and continued emphasis by the FDA on Thorough QT studies -- and a stronger contribution of our ePRO business driven by increased interest in suicidality monitoring and patient diaries will also be positive contributing factors. Management has not seen changes from regulatory agencies on their focus on the importance of Thorough QT studies, and while sponsors are always looking to run trials more cost effectively, we assume that these trials will be run as required. The Company is tracking a large number of potential Thorough QT trials from sponsors, but forecasting the timing of when these will occur has been difficult due to the challenging financial environment. However, as seen in 2007 and 2008, this trend can change quickly. Conference Call Dr. McKelvey and Keith Schneck, the Company's Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 5:00 PM EDT on October 29, 2009. For the conference call, interested participants should dial 1-800-860-2442 when calling within the United States or 1-412-858-4600 when calling internationally. There will be a playback available as well. To listen to the playback, please call 1-877-344-7529 when calling within the United States or 1-412-317-0088 when calling internationally. This call is being webcast by MultiVu and can be accessed at ERT's website at www.ert.com. The webcast may also be accessed via the direct link at http://www.videonewswire.com/event.asp?id=63252. The webcast can be accessed for up to one year on either site. About eResearchTechnology, Inc. Based in Philadelphia, PA, eResearchTechnology, Inc. (http://www.ert.com) is a global provider of technology and services to the biopharmaceutical, medical device, and related industries. The Company is the market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The Company also provides technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of ePRO clinical data in all phases of clinical development. This release may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views as to future events and financial performance with respect to our operations. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "aim," "anticipate," "are confident," "estimate," "expect," "will be," "will continue," "will likely result," "project," "intend," "plan," "believe," "look to" and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause such a difference include: unfavorable economic conditions; our ability to obtain new contracts and accurately estimate net revenues, our positive outlook for future bookings, variability in size, scope and duration of projects and internal issues at the sponsoring client; our ability to successfully integrate acquisitions; competitive factors in the market for centralized Cardiac Safety services; changes in the pharmaceutical, biotechnology and medical device industries to which we sell our solutions; technological development; and market demand. There is no guarantee that the amounts in our backlog will ever convert to revenue. Should the current economic conditions continue or deteriorate further, the cancellation rates that we have historically experienced could increase. 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. Guidance is based on management's good faith expectations given current market conditions but that continued or further deterioration of general economic conditions, in addition to other factors cited elsewhere, could result in the company not achieving the revenue and earnings per diluted share guidance provided. Forward-looking statements speak only as of the date made. We undertake no obligation to update any forward-looking statements, including prior forward-looking statements, to reflect the events or circumstances arising after the date as of which they were made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included in this release or that may be made in our filings with the Securities and Exchange Commission or elsewhere from time to time by, or on behalf of, us.
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2009 2008 2009
---- ---- ---- ----
Net revenues:
EDC licenses and services $1,564 $- $4,354 $2,501
Services 24,184 15,969 75,542 48,292
Site support 8,182 6,757 23,179 19,895
----- ----- ------ ------
Total net revenues 33,930 22,726 103,075 70,688
------ ------ ------- ------
Costs of revenues:
Cost of EDC licenses and services 456 - 1,371 863
Cost of services 9,674 7,577 30,126 22,941
Cost of site support 4,698 3,418 14,565 10,523
----- ----- ------ ------
Total costs of revenues 14,828 10,995 46,062 34,327
------ ------ ------ ------
Gross margin 19,102 11,731 57,013 36,361
------ ------ ------ ------
Operating expenses:
Selling and marketing 3,126 3,056 10,259 9,756
General and administrative 4,254 2,977 13,728 10,581
Research and development 1,173 989 3,223 3,131
----- --- ----- -----
Total operating expenses 8,553 7,022 27,210 23,468
----- ----- ------ ------
Operating income 10,549 4,709 29,803 12,893
Other income (expense), net 251 (82) 922 (375)
--- --- --- ----
Income before income taxes 10,800 4,627 30,725 12,518
Income tax provision 3,870 1,808 11,389 5,081
----- ----- ------ -----
Net income $6,930 $2,819 $19,336 $7,437
====== ====== ======= ======
Basic net income per share $0.14 $0.06 $0.38 $0.15
===== ===== ===== =====
Diluted net income per share $0.13 $0.06 $0.37 $0.15
===== ===== ===== =====
Shares used to calculate basic net
income per share 50,856 48,452 50,743 49,399
====== ====== ====== ======
Shares used to calculate diluted net
income per share 52,180 48,755 52,085 49,698
====== ====== ====== ======
eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
December September
31, 2008 30, 2009
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $66,376 $72,067
Short-term investments 50 50
Investment in marketable securities - 774
Accounts receivable less allowance for
doubtful accounts of $695 and $515,
respectively 29,177 16,773
Prepaid income taxes 1,892 4,266
Prepaid expenses and other 2,885 3,811
Deferred income taxes 1,831 1,899
----- -----
Total current assets 102,211 99,640
Property and equipment, net 29,639 23,766
Goodwill 34,603 34,635
Intangible assets 2,149 1,737
Other assets 520 417
--- ---
Total assets $169,122 $160,195
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,971 $3,156
Accrued expenses 8,140 4,511
Income taxes payable 2,492 2,195
Current portion of capital
lease obligations 43 -
Deferred revenues 12,276 12,220
------ ------
Total current liabilities 26,922 22,082
Deferred rent 2,183 2,413
Deferred income taxes 1,332 1,325
Other liabilities 1,257 879
----- ---
Total liabilities 31,694 26,699
------ ------
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, 59,950,257 and
60,057,392 shares issued, respectively 600 601
Additional paid-in capital 93,828 96,539
Accumulated other comprehensive loss (2,716) (1,677)
Retained earnings 110,479 117,916
Treasury stock, 8,686,868 and
11,589,603 shares at cost,
respectively (64,763) (79,883)
------- -------
Total stockholders' equity 137,428 133,496
------- -------
Total liabilities and
stockholders' equity $169,122 $160,195
======== ========
eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September 30,
2008 2009
---- ----
Operating activities:
Net income $19,336 $7,437
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of EDC operations - (530)
Depreciation and amortization 12,519 9,694
Cost of sales of equipment 717 93
Provision for uncollectible accounts 60 210
Share-based compensation 1,966 2,145
Deferred income taxes (1,151) 347
Changes in operating assets and liabilities:
Accounts receivable (6,601) 12,516
Prepaid expenses and other (1,560) (1,269)
Accounts payable 357 (69)
Accrued expenses (363) (3,728)
Income taxes 931 (2,955)
Deferred revenues 747 588
Deferred rent (177) 211
---- ---
Net cash provided by operating
activities 26,781 24,690
------ ------
Investing activities:
Purchases of property and equipment (6,966) (3,567)
Proceeds from sales of investments 8,747 -
Payments related to sale of EDC operations - (1,150)
Payments for acquisition (4,964) (655)
------ ----
Net cash used in investing
activities (3,183) (5,372)
------ ------
Financing activities:
Repayment of capital lease obligations (1,085) (43)
Proceeds from exercise of stock options 1,502 372
Stock option income tax benefit 839 134
Repurchase of common stock for treasury - (15,120)
--- -------
Net cash provided by (used in)
financing activities 1,256 (14,657)
----- -------
Effect of exchange rate changes on cash (610) 1,030
---- -----
Net increase in cash and cash equivalents 24,244 5,691
Cash and cash equivalents, beginning of period 38,082 66,376
------ ------
Cash and cash equivalents, end of period $62,326 $72,067
======= =======
SOURCE eResearchTechnology, Inc. Browse other news from this organisation: eResearchTechnology, Inc. Source PR Newswire  |
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