Phase Forward Reports Second Quarter 2009 Results

WALTHAM, Mass.--Phase Forward Incorporated (NASDAQ: PFWD), a leading provider of data management solutions for clinical trials and drug safety, today announced its financial results for the second quarter of 2009.

GAAP revenues for the second quarter of 2009 were $52.5 million, a 29% increase from $40.9 million in the second quarter of 2008. Within total revenues, InForm™ license, application hosting and other related revenues were $38.2 million, representing 71% of second quarter total non-GAAP revenues and an increase of 23% from $31.1 million in the prior year period.

Bob Weiler, chairman and chief executive officer, remarked, “The company delivered better-than-expected financial results in the second quarter, in addition to renewing and expanding some of our largest customer relationships and launching a major new release of our market-leading EDC solution, InForm GTM. With the growing adoption of EDC and globalization of clinical research, end-user requirements have changed dramatically in recent years. We believe InForm GTM is uniquely positioned to respond to this new user paradigm and support trial management on a global basis.”

Weiler added, “Customers are increasingly looking for a broader, end-to-end, integrated clinical research suite (ICRS) from a single, trusted vendor. We believe that Phase Forward has the broadest and deepest ICRS offering in the market place as a result of our market leading EDC solution, combined with our suite of safety solutions, interactive response technologies and clinical data repository and analysis platforms. In addition, our acquisition of Maaguzi’s ePRO and late phase solutions rounds out our ICRS offering, while our pending acquisition of Covance’s IVRS/IWRS business will add further momentum to our IRT efforts and result in the two largest CROs in the world recommending Phase Forward as their preferred solutions provider. As a result, we are increasingly optimistic about Phase Forward’s long-term market opportunity and leadership position.”

For the second quarter of 2009, GAAP income from operations was $3.1 million, compared to $4.2 million in the second quarter of 2008. GAAP net income for the period was $2.2 million, or $0.05 per diluted share, compared to $0.08 per diluted share in the second quarter of 2008.

For the second quarter of 2009, non-GAAP revenues were $53.5 million, which excludes a $968,000 purchase accounting adjustment to record assumed acquisition deferred revenues and backlog at fair value. Non-GAAP income from operations was $8.6 million, representing an increase of 34% from the prior year period and a non-GAAP operating margin of 16%. Non-GAAP net income for the period was $5.6 million, or $0.13 per diluted share, representing an increase from non-GAAP net income of $5.2 million, or $0.12 per diluted share, in the second quarter of 2008.

The attached table presents a reconciliation of GAAP to non-GAAP revenues, income from operations and net income and net income per share applicable to common stockholders for the three and six months ended June 30, 2008 and 2009. Non-GAAP results exclude the impact of stock-based compensation expense, amortization of intangible assets associated with acquisitions, the purchase accounting adjustment to record assumed acquisition deferred revenues and backlog at fair value and restructuring expenses.

Total cash, cash equivalents and investments were $168.7 million at the end of the second quarter, compared to $178.1 million at the end of the prior quarter. During the quarter, the company generated $9.2 million in cash flows from operations, while it paid $6.3 million for capital expenditures and approximately $14.0 million for the Waban acquisition. Total deferred revenues were $91.1 million at the end of the quarter, compared to $95.8 million at the end of the prior quarter and $82.7 million at the end of the second quarter of 2008.

Second Quarter and Recent Business Highlights

• The company today announced the acquisition of Maaguzi, an innovative provider of internet-based electronic Patient Reported Outcomes (ePRO) and health outcomes study solutions for the life sciences industry.
• In July 2009, the company announced that it signed an agreement to purchase the Interactive Voice & Web Response Services (IVRS/IWRS) business of Covance Inc. (NYSE: CVD) for $10.0 million in cash. As part of the transaction, Phase Forward and Covance have also agreed to enter into a multi-year marketing agreement to provide Phase Forward’s market leading InForm electronic data capture solution and Clarix™ interactive response technology as the preferred solutions to Covance clients. Phase Forward expects the purchase, which is subject to customary closing conditions, to be completed by the middle of August 2009.
• The company announced the immediate availability of the InForm Global Trial Management (GTM) eClinical solution. Responding to changes in user demands for EDC solutions, InForm GTM provides a completely redesigned interface that sets a new standard for eClinical solutions, and an integrated, unified environment for use in regional and multi-language global trials.
• The company continued to enhance its suite of products through the launch of Empirica™ Study, formerly the Clinical Trials Signal Detection product (CTSD™), which helps clinical and safety teams improve their understanding of a product’s emerging safety profile during clinical development, and the release of WebSDM™ Release 3.0 for the validation and review of submission data in CDISC Study Data Tabulation Model (SDTM) format.
• The Immune Tolerance Network (ITN) will implement Phase Forward's recently acquired Waban Statistical Computing Environment (SCE), Waban Clinical Data Repository (CDR) and Waban Submission Metadata Manager (SMM) to further their biomarker discovery program. Headquartered at the University of California San Francisco, The Immune Tolerance Network is an international research consortium that aims to accelerate the clinical development of immune tolerance therapies for use in transplantation, autoimmune diseases and allergy and asthma.
• The company’s CRO-related non-GAAP revenues grew 50% year-over-year during the second quarter. During this period, the company announced an agreement with INC Research for InForm and signed a multi-year, multi-million dollar agreement with Everest Clinical Research Services for InForm and Central Designer.

Financial Outlook

The following statements are based on current expectations and the company assumes no obligation to update or confirm them. These statements are forward-looking and inherently uncertain. Actual results may differ materially as a result of the factors identified below and the factors identified in our public filings made with the Securities and Exchange Commission, or other factors.

For the third quarter of 2009, the company expects non-GAAP revenues to be between $53.0 and $54.5 million, which includes an expected contribution of between $500,000 and $1.3 million related to the recently announced acquisitions of Covance’s IVRS/IWRS business and Maaguzi. The company expects non-GAAP operating income to be between $5.5 and $6.2 million. Non-GAAP EPS is expected to be between $0.09 and $0.10. GAAP EPS is expected to be between $0.00 and $0.01, including the purchase accounting adjustments from our acquisitions to record the assumed deferred revenues and backlog at fair value, non-cash expenses associated with stock-based compensation expense and the amortization of intangible assets. The guidance includes approximately $0.02 to $0.03 per share dilution on a non-GAAP basis and approximately $0.04 per share dilution on GAAP EPS basis related to the acquisitions of Covance’s IVRS/IWRS business and Maaguzi. The expected EPS reflects an estimated tax rate of approximately 37%.

For the full year 2009, the company expects non-GAAP revenues to be between $214.5 and $217.5 million. This includes an expected contribution of between $2.5 and $3.5 million related to the acquisitions of Covance’s IVRS/IWRS business and Maaguzi. On a non-GAAP basis, operating income is expected to be between $30.5 and $32.0 million. The company’s non-GAAP EPS guidance is between $0.47 to $0.50, after taking into consideration expected dilution of $0.04 to $0.05 per share related to the Covance IVRS/IWRS business and Maaguzi acquisitions. GAAP EPS is expected to be between $0.17 and $0.20, including expected dilution of $0.07 to $0.08 per share related to the acquisitions of Covance’s IVRS/IWRS business and Maaguzi as well as the purchase accounting adjustments from our acquisitions to record the assumed deferred revenues and backlog at fair value, non-cash expenses associated with stock-based compensation expense, the amortization of intangible assets, and restructuring expenses. The expected full year EPS reflects an estimated tax rate of approximately 37%.

Conference Call

The company plans to host its investor conference call today at 5:00 p.m. ET to discuss its financial results for the second quarter 2009 and its outlook for the third quarter and full year 2009. The investor conference call will be available via live webcast on Phase Forward’s website at www.phaseforward.com under the tab “Investors.” To participate by telephone, the domestic dial-in number is 888-679-8040 and the international dial-in is 617-213-4851. The access code is 87060630. Investors are advised to dial into the call at least ten minutes prior to the call to register. The webcast will be available for replay until Thursday, August 27, 2009 on the “Investors” page of Phase Forward’s website.

About Phase Forward

BiomedReports is not paid or compensated to report news and developments about publicly traded companies. Full disclosure can be read in the About Us Section

---

Add this page to your favorite Social Bookmarking websites