UK-based clinical technology specialist ClinPhone says it is already reaping the benefits of a restructuring programme launched last year to tackle the operational difficulties that put a hole in its forward order book over the summer.

The company, which in October 2006 reported its first profit since floating on the London Stock Exchange the previous June, slipped back into a £1.35 million (€1.81 million) operating loss for the half year ended 31 August 2007, as revenue growth was undercut by currency translation and a 36% increase in operating expenses. The financial setback followed a profits warning and a £10 million reduction in ClinPhone’s revenue guidance for the full year.

In its interim management statement for the third quarter to 30 November, though, ClinPhone was at pains to stress that it is well on the road to recovery. The restructuring plan has taken root more quickly than expected and the company is entering 2008 “in a strong position”, said chief executive Steve Kent.

There was no word on ClinPhone’s bottom line but third-quarter revenues were up by 13% year-on-year or 18% at constant exchange rates, the company noted. At constant rates, the order book expanded by 7% over last year’s quarter to £51.3 million, despite the impact of £4 million in cancellations last summer.

Underlying proposal activity is still robust, ClinPhone added. While the weakening US dollar and a change in business mix have diluted the average order value to below historical levels, the company’s customer base was reinforced by 39 new customer wins during the quarter, it pointed out. ClinPhone has also secured contracts to deliver a number of integrated clinical trial solutions to customers, an area in which it already claims market leadership.

In addition, the third quarter saw ClinPhone boost by 51 the number of trials using its systems, taking the average live trial tally up to 531 compared with 472 for the quarter ended 30 November 2006. Service revenues from the electronic data capture (EDC) product set acquired with US company Datalabs in November 2006 “continue to grow quickly”, ClinPhone reported.

Operational issues resolved
According to the company, the operational issues that plagued it last year have now been resolved and ClinPhone “is working with the small number of customers that were affected to restore their confidence in the service provided”. Assuming the dollar/sterling exchange rate averages $2.00 to £1.00 for the remainder of the year, results for the financial year to 29 February 2008 are expected to be “materially ahead of management’s expectations”.

ClinPhone is also optimistic about the next financial year. “As the customer base has grown and diversified to include a range of smaller clients with shorter duration trials and who are capable of making faster decisions on the use of our products, so the length of the order book has shortened, enabling the Company to deliver a higher proportion of the order book in the next financial year,” it stated. “With 70% of the clinical trials market still using paper based systems, demand for clinical technology services is expected to continue to exhibit strong growth.”