eResearchTechnology, the US-based supplier of centralised electrocardiographic, eClinical technology and electronic patient-reported outcomes services, lifted its net revenues by 43.4% to US$35.5 million in the second quarter ended 30 June 2008.
Operating income for the quarter was 72.2% higher at US$10.8 million while net income rose by 60.9% to US$6.7 million. That included a loss of US$0.3 million from the operations and integration of Covance Cardiac Safety Services (CCSS), the centralised electrocardiogram (ECG) business acquired in December 2007.
eResearch Technology (eRT) recorded a gross margin of 57.0% for Q2 2008, compared with a 53.9% margin in the second quarter of 2007. The figure for the latest quarter included a gross margin of 21.6% for CCSS, which generated net revenues of US$3.0 million in Q2. Costs associated with these revenues and the integration of the ECG business were US$2.4 million. According to eRT, the integration of CCSS is around three months ahead of schedule.
The main driver of revenue growth in the second quarter was the company’s services segment, where net revenues jumped 55.9% to US$27.4 million, helped by an “outstanding” performance from the core cardiac safety business. Site-support revenues were 9.5% higher at US$7.2 million and the licences segment was 50.0% ahead at US$870,000. Compared with the first quarter of 2008, margins increased in all three of these operating segments, eRT noted.
New bookings were worth US$49.0 million in the latest quarter, 42.0% more than in the second quarter of 2007 and giving a book-to-bill ratio (net new business divided by revenue) of 1.4, the same as in last year’s quarter. The new bookings included a record 15 new Thorough ECG study agreements, valued at just over US$900,000 each on average.
The annualised cancellation rate for Q2 2008 was 18.1% versus an annualised rate of 17.6% for the year-before quarter. Backlog reached a record US$157.9 million, US$6.5 million more than at the end of the first quarter.
Strong pipeline
“Our pipeline of new opportunities is strong, reflecting the continued emphasis on cardiac safety and eRT’s reputation for quality, medical and scientific leadership, project execution and technology innovation,” said Dr Michael McKelvey, president and chief executive officer of eResearchTechnology.
“The pricing environment continues to be stable,” he added. “We continue to see expanded opportunities with all of our CRO [contract research organisation] key partnerships and Phase I units. While there are many areas in which we need to continue to improve, the first half of the year has been an excellent start to the year.”
eRT confirmed its previously issued guidance forecasting revenues of US$133.0 to US$140.0 million for the full year, while net earnings per diluted share are now expected to fall between US$0.46 and US$0.49, as opposed to the previous guidance of US$0.44 to US$0.49.
eResearchTechnology’s confidence that it can spin out the growth trend of the last few years is reflected in the company’s plans to move its corporate headquarters and US-based core laboratory to a new, bigger location in Philadelphia by the end of this year. The move should give eRT around 60,000sq ft of space compared with about 40,000sq ft in its current headquarters.
