An “encouraging improvement” that is “starting to show the Company’s return to sound business fundamentals” was how chief executive officer Dr Jeffrey Green described the third quarter performance of troubled US-based eClinical specialist Datatrak International.

Following a second quarter that saw operating losses more than five times higher at US$15.6 million as revenues dropped by 26.6% to US$2.2 million, the latest quarter delivered a gratifying 11.8% increase in revenues to US$2.37 million while operating losses shrank by 55.2% against the third quarter of 2007 to US$1.57 million.

Datatrak’s gross profit margin for the three months to 30 September 2008 was 76% compared with 50% in last year’s quarter and 60% in the second quarter of 2008, reflecting not only revenue growth but substantially lower direct costs, the company noted. These costs were US$568,020, down by 46.5% on Q3 2007. The closure of Datatrak’s office in Bonn, Germany and the consolidation of the company’s Help Desk services into its US office in Cleveland were a major component in the cost savings.

The third-quarter results were adversely affected by a US$835,000 charge in selling, general and administrative expenses related to the Bonn office closure and office equipment leases, as well as severance charges of US$47,000 for six redundancies. There were also ongoing legal costs of around US$234,000 associated with the company’s lawsuit against former shareholders of ClickFind, the integrated technology specialist acquired by Datatrak in February 2006.

Backlog at 30 September was US$12.5 million and it currently stands at around US$12.1 million, Datatrak reported. This compares with a backlog of US$13.0 million at 31 December 2007.

“If one backs out the German lease charge and legal costs associated with the litigation, our net loss would only have been US$530,000,” Green commented. “As a result of our restructuring efforts and positive changes we have made across the Company we have significantly lowered our break-even point and now have strong leverage moving forward.”

Importantly, he added, service levels to customers remain high and Datatrak continues to win new business within the US, European and Japanese clinical trial markets. For example, NTT Data Corporation, the Japanese supplier of information system services with which Datatrak struck a five-year enterprise agreement and marketing alliance last December, has signed up a fourth client to use the US company’s eClinical platform. And during October Datatrak began its 18th cardiac safety study with COResearch, a division of Duke Medical Strategies.