etrials Worldwide, the troubled US supplier of eClinical software and services that last month saw its replacement chief executive officer (CEO) step down after just 14 months in the job, continues to operate at a growing loss.
At the same time, marked improvements in contract awards and new project bookings during the second quarter gave some cause for optimism about the rest of the year and beyond.
The operating loss for the quarter was US$2.26 million compared with a US$1.54 million loss in the second quarter of 2007. That was despite operating expenses (excluding the cost of services) falling by 35.9% to US$4.1 million and general and administrative costs by 32.0% to US$1.7 million in the latest quarter.
The cost of revenues, however, rose by 13.6% to US$2.5 million, mainly due to etrials hiring new operational personnel to align with its recovery strategy of process re-engineering, quality initiatives and focusing on service delivery and customer satisfaction. The gross margin for the quarter was 37% versus 59% one year previously and 30% in the first quarter of 2008.
Net service revenues, which exclude reimbursable out-of-pocket expenses, fell by 23.8% to US$3.97 million; first-quarter revenues were US$3.71 million. According to Chuck Piccirillo, the interim CEO filling in for the departed Eugene Jennings, revenue generation “continues to be impacted by soft bookings in prior quarters, the timing of the start of new studies and lower billable utilisation rates due to the ramp-up of newly hired project managers”.
On a brighter note, etrials secured record contract awards worth US$9.3 million in Q2, 93.7% more than in the first quarter of 2008. New project bookings – i.e., those expected to start in the next three to six months – of US$6.5 million were 35.4% higher than in the first quarter and 62.5% ahead of Q2 2007.
The company’s backlog as of 30 June 2008 was US$22.3 million, up from US$20.1 million on 31 March 2008 and from US$18.1 million on 30 June 2007.
“Although second-quarter revenue is still below desired levels, increases in the backlog of contracts and an expanded pipeline of contracts point to improved revenue growth in 2009,” Piccirillo commented. “At the same time, our re-engineering initiatives continue to advance and we expect revenue in the second half of 2008 to be equal to or slightly higher than the first half of 2008.”
The growth in backlog, bookings and awards were all early indicators that etrials’ new sales organisation and selling strategies were beginning to take effect, Piccirillo added. In June the company launched a revised corporate branding and product repositioning programme at the Drug Information Association’s annual meeting in Boston, emphasising etrials’ integrated solutions capabilities.
“Our strategy of aligning integrated solutions with customer needs is positioning etrials to capture an increasing share of the growing demand for eClinical solutions, particularly in the mid-tier market,” Piccirillo said.
