PHILADELPHIA, July 30 /PRNewswire-FirstCall/ --
eResearchTechnology, Inc. (ERT), (NASDAQ:ERES), a leading provider
of centralized ECG, ePRO, and other services to the
biopharmaceutical, medical device and related industries, announced
today results for the second quarter and six-month period ended
June 30, 2009. Unless otherwise noted, all comparative numbers
refer to changes from the same period a year ago. Highlights of the
second quarter of 2009 were: -- Revenue was $24.2 million for the
second quarter of 2009 compared to $35.5 million a year ago and
$23.8 million for the first quarter of 2009. -- Gross margin
percentage was 52.3% in the second quarter of 2009 compared to
57.0% a year ago and 50.4% for the first quarter of 2009. --
Operating income margin percentage was 20.0% in the second quarter
of 2009 compared to 30.3% a year ago and 14.0% for the first
quarter of 2009. -- Net income was $2.5 million, or $0.05 per
diluted share in the second quarter of 2009 compared to $6.7
million, or $0.13 per diluted share a year ago and $2.1 million, or
$0.04 per diluted share for the first quarter of 2009. -- The
results include the EDC operations, which were sold on June 23,
2009. EDC licenses and services revenue was $1.1 million in the
second quarter of 2009 and $1.5 million in the second quarter of
2008. The Company reported a $0.5 million gain on the sale of the
EDC operations, which is included in general and administrative
expenses. -- New bookings were $35.7 million in the second quarter
of 2009 compared to $49.0 million a year ago and $31.2 million for
the first quarter of 2009. -- Cash flow from operations in the
second quarter of 2009 was $10.0 million compared to $10.4 million
a year ago and $9.1 million in the first quarter of 2009. -- Cash
and cash equivalents totaled $68.7 million at June 30, 2009
compared to $66.4 million at December 31, 2008. -- ERT purchased
741,267 shares of its common stock at an average price of $5.43
under its approved stock repurchase program in the second quarter
of 2009 at a total cost of $4.0 million. -- Backlog was $153.7
million as of June 30, 2009 compared to $157.0 million as of March
31, 2009. The June 30, 2009 backlog excludes the backlog
attributable to the EDC operations. The annualized cancellation
rate was 16.1 % in the second quarter of 2009 compared to 18.1% a
year ago and 22.4% in the first quarter of 2009. Financial
highlights for the first six months of 2009: -- For the six months
ended June 30, 2009, the Company reported net revenues of $48.0
million compared to $69.1 million for the six months ended June 30,
2008. -- Gross margin percentage for the six months ended June 30,
2009 was 51.4% compared to 54.8% for the six months ended June 30,
2008. -- Operating income margin for the six months ended June 30,
2009 was 17.1% compared to 27.8% for the six months ended June 30,
2008. -- Net income was $4.6 million, or $0.09 per diluted share
for the six months ended June 30, 2009 compared to net income of
$12.4 million, or $0.24 per diluted share, for the six months ended
June 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 $2.8 million in the first six months of 2009 and
2008, respectively. The Company reported a $0.5 million gain on the
sale of the EDC operations, which is included in general and
administrative expenses. -- New bookings for the six months ended
June 30, 2009 were $66.9 million compared to $99.1 million in the
six months ended June 30, 2008. -- For the six months ended June
30, 2009, cash provided by operating activities was $19.1 million
compared to $18.0 million for the six months ended June 30, 2008.
-- For the six months ended June 30, 2009, ERT purchased 2,706,719
shares of its common stock at an average price of $5.16 under its
approved stock repurchase program at a total cost of $14.0 million.
"The results for this quarter were in line with our expectations,
as given by our guidance in April," commented Dr. Michael McKelvey,
President and CEO of ERT. "In the second quarter of 2009, we saw
increases from the first quarter of 2009 in revenue, bookings, and
margins. Revenue and bookings continue to be significantly impacted
by lower spending by clients on Thorough QT 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. As previously announced, we consolidated
our customer care teams in Philadelphia and continue to improve the
efficiency of our operations. This resulted in increases in our
margins in the second quarter and will positively impact our cost
base in the future. We believe the divestiture of our EDC
operations will be positive for ERT as it allows us to focus our
efforts on cardiac safety and ePRO opportunities." "We continue to
be pleased with the results of our discussions with key
pharmaceutical and biotechnology companies on strategic outsourcing
relationships," continued Dr. McKelvey. "We are still facing a
difficult economic environment and uncertainty in pharmaceutical
sponsors' spending, especially Thorough QT trials. However, despite
what is historically a slow summer period, we are seeing higher
levels of new business development activity. We believe the
fundamentals of our industry remain strong and that 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 third quarter of 2009 and for
the full year 2009. For the quarter ending September 30, 2009,
management anticipates net revenues of between $23.0 million and
$25.0 million and diluted net income per share of between $0.05 and
$0.07. ERT expects full year 2009 net revenues of between $96.0
million and $102.0 million with diluted net income per share of
between $0.20 and $0.28. Guidance reflects the seasonal slowdown we
experience due to summer vacations which typically reduces study
activity during our third quarter, the divestiture of the EDC
operations and the level of Thorough QT bookings in the second
quarter of 2009. 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 July 30, 2009. For the conference call, interested
participants should dial 1-800-638-4930 when calling within the
United States or 1-617-614-3944 when calling internationally.
Please use pass code 71733855. There will be a playback available
as well. To listen to the playback, please call 1- 888-286-8010
when calling within the United States or 1-617-801-6888 when
calling internationally. Please use pass code 26054685 for the
replay. This call is being webcast by Thomson Financial and can be
accessed at ERT's web site at http://www.ert.com/. The webcast may
also be accessed at Thomson's Institutional Investor website at
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=119164&eventID
=2319674. 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 a 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, variability in size, scope and
duration of projects and internal issues at the sponsoring client;
integration of future acquisitions; competitive factors;
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 Six Months Ended June 30, Ended June 30,
2008 2009 2008 2009 ---- ---- ---- ---- Net revenues: EDC licenses
and services $1,487 $1,083 $2,790 $2,501 Services 26,763 16,215
51,358 32,323 Site support 7,222 6,878 14,997 13,138 ----- -----
------ ------ Total net revenues 35,472 24,176 69,145 47,962 ------
------ ------ ------ Costs of revenues: Cost of EDC licenses and
services 468 397 919 863 Cost of services 10,185 7,671 20,448
15,364 Cost of site support 4,599 3,470 9,867 7,105 ----- -----
----- ----- Total costs of revenues 15,252 11,538 31,234 23,332
------ ------ ------ ------ Gross margin 20,220 12,638 37,911
24,630 ------ ------ ------ ------ Operating expenses: Selling and
marketing 3,810 3,274 7,133 6,700 General and administrative 4,601
3,527 9,474 7,604 Research and development 1,051 993 2,050 2,142
----- --- ----- ----- Total operating expenses 9,462 7,794 18,657
16,446 ----- ----- ------ ------ Operating income 10,758 4,844
19,254 8,184 Other income (expense), net 244 (409) 671 (293) ---
---- --- ---- Income before income taxes 11,002 4,435 19,925 7,891
Income tax provision 4,342 1,887 7,519 3,273 ----- ----- -----
----- Net income $6,660 $2,548 $12,406 $4,618 ====== ====== =======
====== Basic net income per share $0.13 $0.05 $0.24 $0.09 =====
===== ===== ===== Diluted net income per share $0.13 $0.05 $0.24
$0.09 ===== ===== ===== ===== Shares used to calculate basic net
income per share 50,734 48,866 50,686 49,872 ====== ====== ======
====== Shares used to calculate diluted net income per share 52,182
49,175 52,038 50,169 ====== ====== ====== ======
eResearchTechnology, Inc. and Subsidiaries Consolidated Balance
Sheets (in thousands, except share and per share amounts) December
31, June 30, 2008 2009 ------------ -------- ASSETS (unaudited)
Current assets: Cash and cash equivalents $66,376 $68,729
Short-term investments 50 50 Investment in marketable securities -
816 Accounts receivable less allowance for doubtful accounts of
$695 and $657, respectively 29,177 17,408 Prepaid income taxes
1,892 4,268 Prepaid expenses and other 2,885 3,929 Deferred income
taxes 1,831 1,645 ----- ----- Total current assets 102,211 96,845
Property and equipment, net 29,639 25,409 Goodwill 34,603 34,580
Intangible assets 2,149 1,874 Other assets 520 422 --- --- Total
assets $169,122 $159,130 ======== ======== LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,971
$3,518 Accrued expenses 8,140 4,570 Income taxes payable 2,492 501
Current portion of capital lease obligations 43 - Deferred revenues
12,276 13,680 ------ ------ Total current liabilities 26,922 22,269
Deferred rent 2,183 2,409 Deferred income taxes 1,332 2,136 Other
liabilities 1,257 997 ----- --- Total liabilities 31,694 27,811
------ ------ 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 59,985,442 shares issued, respectively 600 600
Additional paid-in capital 93,828 95,512 Accumulated other
comprehensive loss (2,716) (1,089) Retained earnings 110,479
115,097 Treasury stock, 8,686,868 and 11,393,587 shares at cost,
respectively (64,763) (78,801) ------- ------- Total stockholders'
equity 137,428 131,319 ------- ------- Total liabilities and
stockholders' equity $169,122 $159,130 ======== ========
eResearchTechnology, Inc. and Subsidiaries Consolidated Statements
of Cash Flows (in thousands) (unaudited) Six Months Ended June 30,
2008 2009 ---- ---- Operating activities: Net income $12,406 $4,618
Adjustments to reconcile net income to net cash provided by
operating activities: Gain on sale of EDC operations - (530)
Depreciation and amortization 8,574 6,620 Cost of sales of
equipment 492 26 Provision for uncollectible accounts 60 210
Share-based compensation 1,366 1,515 Deferred income taxes (360)
1,421 Changes in operating assets and liabilities: Accounts
receivable (2,622) 11,987 Prepaid expenses and other (1,616)
(1,277) Accounts payable (240) 683 Accrued expenses (815) (3,447)
Income taxes 348 (4,602) Deferred revenues 583 1,829 Deferred rent
(198) (3) ---- -- Net cash provided by operating activities 17,978
19,050 ------ ------ Investing activities: Purchases of property
and equipment (5,239) (2,520) Proceeds from sales of investments
2,392 - Payments related to sale of EDC operations - (1,150)
Payments for acquisition (4,798) (655) Net cash used in investing
activities (7,645) (4,325) ------ ------ Financing activities:
Repayment of capital lease obligations (855) (43) Proceeds from
exercise of stock options 1,174 72 Stock option income tax benefit
704 62 Repurchase of common stock for treasury - (14,038) --
------- Net cash provided by (used in) financing activities 1,023
(13,947) ----- ------- Effect of exchange rate changes on cash 8
1,575 --- ----- Net increase in cash and cash equivalents 11,364
2,353 Cash and cash equivalents, beginning of period 38,082 66,376
------ ------ Cash and cash equivalents, end of period $49,446
$68,729 ======= ======= DATASOURCE: ERT CONTACT: Keith Schneck of
eResearchTechnology, Inc., +1-215-282-5566; or Robert East of
Westwicke Partners, LLC, +1-410-321-9652 Web Site:
http://www.ert.com/
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