eResearchTechnology (eRT), the US-based supplier of centralised electrocardiographic, eClinical technology and electronic patient-reported outcomes services, has delivered another quarter of strong growth, with net revenues up by 41.5% to US$33.9 million and operating income nearly doubled (+96.8%) to US$10.5 million.
The revenue figure for the third quarter was slightly behind the US$35.5 million recorded for the second quarter, which eRT blamed on slower activity in the summer months and the impact of working down backlog from Covance Cardiac Safety Services (CCSS), the centralised electrocardiogram business acquired in December 2007. CCS generated net revenues of US$1.9 million from acquired backlog during the quarter.
eRT has also narrowed the range of its revenue guidance for the whole of 2008, from the US$133.0-US$140.0 million previously issued and confirmed at the second-quarter stage, to US$134-US$137 million now. At the same time, the company has raised its guidance for diluted net earnings per share (EPS), from US$0.46 to US$0.49 previously to a more optimistic US$0.47 to US$0.50.
While eRT’s net revenues for the third quarter trailed the analyst consensus of US$35 million, reported EPS of US$0.13, up by 85.7% on the year-before period, were one cent higher than the consensus. The company’s gross margin improved from 48.0% to 56.3%, including the impact of CCSS’ operating results and the integration of the business into eRT.
CCSS incurred revenue costs of US$1.7 million during the latest quarter, including US$680,000 in depreciation and amortisation of acquired assets. eRT’s operating income for Q3 included a loss of US$505,000 from the CCSS operations and integration.
New bookings were worth US$43.0 million in the third quarter compared with US$35.5 million in the same quarter of 2007 (+21.1%). eRT had a backlog of US$159.2 million as of 30 September, up from US$157.9 million at 30 June 2008, and the book-to-bill ratio was 1.3 versus 1.4 in the second quarter.
“We continue to execute very well on our projects,” commented president and chief executive officer Dr. Michael McKelvey. “We completed the integration of the CCSS acquisition, which was a tremendous accomplishment by our staff. Our sales force reports a healthy pipeline of new opportunities, reflecting the continued emphasis on cardiac safety and eRT’s reputation for quality, medical and scientific leadership, project execution, and technology innovation. The pricing environment continues to be stable.”
In the current economic and financial environment, McKelvey added, “we feel that our strong balance sheet and cash flow, the continued importance of cardiac safety in clinical trials, and our established reputation for quality, project management, and cost-effective performance will be important contributors to our business going forward”.
