DATATRAK International, Inc. Announces Fourth Quarter and Full Year Results for 2009
March 31st, 2010 - Filed under: Press Releases.
Cleveland, Ohio, USA - DATATRAK International, Inc. (OTCQX: DATA), a technology and services company focused on global eClinical solutions for the clinical trials industry, today announced its operating results for the fourth quarter and full year of 2009.
"With a more efficient, rationalized business model and renewed focus, DATATRAK continued to successfully execute initiatives to right-size the organization, remain customer centric and increase product expansion. These efforts have yielded improved financial results and laid the foundation for 2010," noted Laurence P. Birch, DATATRAK's Chairman of the Board.
Corporate Focus
- Backlog increased from $8.6 million at June 30, 2009 to $9.5 million at December 31, 2009;
◦Backlog increases in Q3 & Q4 represented the first quarter-over-quarter increases in backlog in almost two years
◦Increased Sales and Marketing Team
- Introduction of DATATRAK ONETM in August; unlike our competitors, which require integration between disparate systems, the DATATRAK eClinicalTM product is the only system built on a single, unified platform and provides all the elements of a clinical trial in one easy-to-use online solution.
- DATATRAK continued to strengthen its CRO Connect program by welcoming five new partners into the program.
- DATATRAK continues to expand use of the DATATRAK eClinicalTM product in the Japanese market through the relationship with NTT DATA.
- In March 2009, DATATRAK announced the return of Chris Wilke as Vice President of Research and Development. Mr. Wilke has provided visionary leadership in the areas of software and services delivery and was recently named DATATRAK's Chief Technology Officer.
- DATATRAK continued to maintain its position as the market's technology leader with two major software releases in March and December 2009. The significant investment in research and development allows for continued product expansion and embodies its commitment to its customers.
◦Completed internationalization of modules including coding, randomization and enterprise platform management tools;
◦Positioned eClinical for massive service provider adoption by adding an embedded online learning center and electronic training system into eClinical;
◦Released the Clinical Process Manual allowing CROs and service providers to add new service delivery lines to their proposals when using DATATRAK eClinicalTM;
◦Optimized our software to provide users market-leading performance for trials of all sizes.
- DATATRAK realigned its marketing efforts in 2009, which included attendance at several high profile trade shows and the release of a new website in August.
- The legacy DATATRAK EDCTM product platform was retired in December 2009 eliminating the ongoing need for testing and maintenance of a second product, thus dedicating all resources to the DATATRAK eClinicalTM platform going forward.
- Reduced annual cost structure from $14 million in 2008 to $8 million in 2009.
- Management believes that as a result of the increase in backlog over the last six months of 2009, the expectation that backlog will continue to increase throughout 2010, anticipated revenue from trials already under contract and the reduction in its cost structure there no longer is substantial doubt about the Company continuing as a going concern. The Company's independent auditing firm expressed an unqualified opinion in their audit report issued for the year ended December 31, 2009.
Financial Focus
Revenue for the fourth quarter of 2009 decreased 31% to $1,464,000 compared to $2,122,000 in the same period of 2008. Gross profit margin declined to 73% for the three months ended December 31, 2009 compared to 80% for the last three months of 2008. The decline in the Company's gross margin reflects the decrease in revenue, offset by a 10% reduction in direct costs.
DATATRAK's loss from operations in the fourth quarter of 2009 was $(655,000) compared to $(109,000) in the same quarter of the prior year. The 2009 fourth quarter loss from operations includes: (i) severance expense of $46,000, (ii) research and development expense of $280,000, and (iii) non-cash items of $326,000. The net loss in the fourth quarter of 2009 was $(657,000), while the net income for the same quarter of 2008 was $3,035,000, which reflects the forgiveness of a $3 million debt obligation during the quarter.
For the year ended December 31, 2009, revenue decreased 21% to $6,935,000 compared to $8,826,000 in the same period of 2008. Direct cost and selling, general and administrative expenses decreased a combined $5,119,000, or 39%, for full year 2009 compared to full year 2008. Gross profit margin improved to 74% for the twelve months ended December 31, 2009 compared to 68% for the same time period of 2008. The improvement in margin reflects the decrease in revenue coupled with a 37% reduction in direct cost.
For the year ended December 31, 2009, DATATRAK's loss from operations was $(1,898,000) compared to $(19,473,000) for the year ended December 31, 2008. The 2009 loss from operations of $(1,898,000) includes: (i) severance expense of $551,000, (ii) research and development expense of $1,067,000, and (iii) non-cash items of $686,000.
The 2008 full year loss from operations of $(19,473,000) included (i) non-cash asset impairment charges of $12,788,000; (ii) severance expense of $775,000; and (iii) legal expense of $750,000 related to certain litigation. Net loss for the year ended December 31, 2009 was $(1,908,000). The net loss for the year ended December 31, 2008 was $(16,797,000) and reflects the forgiveness of a $3 million debt obligation during 2008.
"Despite the down turn in the economy, DATATRAK continues to see the results of its efforts and persistence. The 7% increase in backlog at December 31, 2009 to $9,487,000 represents the second consecutive quarter-over-quarter increase in backlog. This coupled with the significant improvement in our financial results validates that the course corrections made within the company over the last two years are coming to fruition."
"We stated a year ago that 2009 would be focused solely on maximizing operational performance, including re-establishment and strengthening of our relationships with existing and potential clients with the goal of addressing their needs in electronic data collection," continues Birch, "We have stayed true to our intentions, which is reflected in our strengthening financial position. Our continued investment in R&D reflects our strong commitment to our customers. The elimination of research and development associated costs would have dramatically improved the bottom line in 2009, but we felt it was more important to remain true to the long-term goal by continuing our efforts to support the DATATRAK ONETM vision - a single unified platform is the solution this industry desires."
DATATRAK's backlog at December 31, 2009 was $9.5 million compared to a backlog of $11.4 million at December 31, 2008. Backlog was $8.6 million at June 30, 2009. Backlog is defined as the remaining value of signed contracts or authorization letters to commence services. The Company does not include in its backlog potential contracts or authorization letters that have passed the verbal stage but have not been signed. All contracts are subject to possible delays or cancellation or can change in scope in a positive or negative direction. Therefore, current backlog is not necessarily indicative of the Company's future quarterly or annual revenue. Historically, backlog has been a poor predictor of the Company's short-term revenue.
About DATATRAK International, Inc.
DATATRAK International, Inc. is a worldwide technology and services company focused on the provision of multi-component eClinical solutions and related services for the clinical trials industry. We operate under the vision of DATATRAK ONETM, which encompasses our unique, single platform technology. The singular architecture of our DATATRAK eClinicalTM product suite has been embraced by clients around the globe for its ability to effectively manage clinical trials through a unified multi-component, comprehensive solution. The Company delivers a complete portfolio of software products that were created in order to accelerate clinical research data from investigative sites to clinical trial sponsors and ultimately the appropriate regulatory agency, faster and more efficiently than manual methods or loosely integrated technologies. DATATRAK's eClinicalTM software suite can be deployed worldwide through an ASP offering or in a licensed Enterprise Transfer model that fully empowers its clients. The DATATRAK software suite and its earlier versions have successfully supported hundreds of international clinical trials involving thousands of clinical research sites and encompassing tens of thousands of patients in 59 countries. DATATRAK International, Inc.'s product suite has been utilized in some aspect of the clinical development of 16 drugs and one medical device that have received regulatory approval from either the United States Food and Drug Administration or counterpart European bodies. DATATRAK International, Inc. has offices located in Cleveland, Ohio, and Bryan, Texas. Visit the DATATRAK International, Inc. web site at www.datatrak.net.
Except for the historical information contained in this press release, the statements made in this release are forward-looking statements. These forward-looking statements are made based on management's expectations, assumptions, estimates and current beliefs concerning the operations, future results and prospects of the Company and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond the control of the Company. Factors that may cause actual results to differ materially from those in the forward-looking statements include the limited operating history on which the Company's performance can be evaluated; the ability of the Company to continue to enhance its software products to meet customer and market needs; fluctuations in the Company's quarterly results; the viability of the Company's business strategy and its early stage of development; the timing of clinical trial sponsor decisions to conduct new clinical trials or cancel or delay ongoing trials; the Company's dependence on major customers; government regulation associated with clinical trials and the approval of new drugs; the ability of the Company to compete in the emerging EDC market; losses that potentially could be incurred from breaches of contracts or loss of customer data; the inability to protect intellectual property rights or the infringement upon other's intellectual property rights; and general economic conditions such as the rate of employment, inflation, interest rates and the condition of capital markets. This list of factors is not all-inclusive. In addition, the Company's success depends on the outcome of various strategic initiatives it has undertaken, all of which are based on assumptions made by the Company concerning trends in the clinical research market and the health care industry. The Company undertakes no obligation to update publicly or revise any forward-looking statement whether as a result of new information, future events or otherwise.
CONTACT: Varnesh Sritharan, DATATRAK International, Inc., 1-440-443-0082, extension 143