FOR IMMEDIATE RELEASE
Net revenue increased 27% versus prior year quarter to $35.2 million
Non-GAAP net income* of $3.5 million versus prior year loss of $2.1 million
GAAP net income of $1.6 million versus prior year loss of $3.4 million
NEW YORK, N.Y. – November 12, 2009 – Medidata Solutions (NASDAQ: MDSO), a leading global provider of hosted clinical development solutions, today announced its financial results for the third quarter ended September 30, 2009.
“Again this quarter we saw strong demand for our innovative solutions as evidenced by customer renewals and new customer wins in all geographies,” noted Tarek Sherif, chairman and chief executive officer of Medidata Solutions. “Many of the world’s leading life science companies are choosing Medidata’s Rave platform for its rich EDC functionality as well as its ability to seamlessly exchange data with their other key clinical systems through the use of industry standards. The Rave platform improves clinical operation efficiency today and serves as a foundation for global eClinical infrastructure for customers looking to maximize their long-term R&D investments.”
Third Quarter Financial Highlights
Net revenues for the third quarter of 2009 were $35.2 million, an increase of $7.4 million, or 27%, compared with $27.8 million in the third quarter of 2008. The increase in revenues was primarily due to a $6.8 million, or 36%, increase in revenues from application services.
Non-GAAP operating income* for the third quarter of 2009 was $6.8 million, compared with $0.4 million in the third quarter of 2008. Non-GAAP net income for the third quarter of 2009 was $3.5 million, or $0.15 per diluted share, compared with a loss of $2.1 million, or $0.32 per diluted share, in the third quarter of 2008.
For the third quarter of 2009, GAAP operating income was $2.6 million, compared with a loss of $2.9 million in the third quarter of 2008. GAAP net income for the period was $1.6 million, or $0.06 per diluted share, compared with a loss of $3.4 million, or $0.51 per diluted share, in the third quarter of 2008.
“Our results this quarter underscore the strength of our execution, the scalability of our business model and our ability to drive both top and bottom line growth. Medidata’s recurring revenue model and visibility through backlog give us confidence in our ability to deliver profitable growth,” commented Bruce Dalziel, chief financial officer.
Total cash and cash equivalents were $86.9 million at the end of the third quarter. During the quarter, the company prepaid the outstanding balance of its $15.0 million term loan under its existing credit facility and has no long-term debt as of the end of the quarter. Year to date, the company generated $23.7 million in cash flows from operations.
Third Quarter Business Highlights
Medidata welcomed new innovative pharmaceutical, biotechnology, medical device, government, non-profit institutions and contract research organizations to its customer base. Revenue grew across all products and geographies, and the company expanded relationships with existing customers. New customers included ArthroCare Corporation and Eurand Pharmaceuticals. The company also saw increasing adoption in the existing customer base, with Application Services follow-on business and renewals from large and small biopharma companies. Building on successful initial studies with Medidata Rave®, BioMarin and Seattle Genetics expanded existing arrangements with Medidata through new multiple-study contracts. Also renewing with Medidata’s Trial Planning Products were leading pharma companies Bristol–Myers Squibb and Shire Laboratories.
The company had a strong quarter in its CRO partner program, ASPire to Win®, signing two new partners: Agrex, Inc., a top CRO based in Tokyo and Osaka; and inVentiv Clinical Solutions, a CRO company owned by inVentiv Health, a provider of commercialization services to the global pharmaceutical and healthcare industries. Three other CRO partners attained the highest level of Medidata accreditation, Medidata Accredited Plus. These CRO partners—which include global CROs Quintiles, Parexel, ICON, INC Research, PRA, EPS and CMIC, among others—can now serve as a sponsor’s one-stop shop for Medidata Rave implementation services, including end user training, study build, reporting, outputs, integrations and migrations.
The U.S. Department of Interior on behalf of the National Institute of Health’s National Cancer Institute (NCI) has signed a multi-year agreement to make Medidata’s flagship product, Rave, available for use throughout the NCI Clinical Research Enterprise—the NCI and NCI-supported not-for-profit research institutions that conduct cancer research throughout the country and abroad. Medidata Rave is expected to be broadly adopted among these research institutions during the next several years, as it is integrated as a critical component of its cancer Biomedical Informatics Grid® (caBIG®). With this initiative, NCI aims to create an advanced information-sharing network that unites the cancer research community in its search for breakthroughs in the detection, diagnosis, treatment and prevention of cancer.**
Mr. Sherif commented, “After a competitive bidding process, we are pleased to be working with the National Cancer Institute to support its ongoing efforts to revolutionize cancer research. These efforts include some of the world’s most complex trials in oncology. It is our proven ability to handle complex trials and scale across development programs that continues to drive adoption among many of the world’s most sophisticated medical research organizations. Medidata is well-positioned to continue our history of steady execution in meeting our clients’ needs, and thereby growing a strong, scalable and profitable business.”
Financial Outlook
For the fourth quarter of 2009, the company expects revenues to be between $35.2 and $36.2 million. The company expects non-GAAP operating income to be between $5.1 and $6.1 million. Based on current estimates, this would equate to a GAAP operating income of $0.6 and $1.6 million. Non-GAAP net income is expected to be between $2.3 and $3.3 million. Based on current estimates, this would equate to a GAAP net income of between $0.4 and $1.4 million.
For the full year 2009, the company is increasing its previous guidance and now expects revenues to be between $138 and $139 million. Non-GAAP operating income is expected to be between $22.0 and $23.0 million. Based on current estimates, this would equate to GAAP operating income between $6.3 and $7.3 million. Non-GAAP net income is expected to be between $10.5 and $11.5 million. Based on current estimates, this would equate to GAAP net income between $3.8 and $4.8 million.
Total remaining backlog for 2009 was $33.1 million at the end of the third quarter. Remaining year backlog represents the amount of contractual revenue already booked, which is expected to be recognized during the remainder of the year.
While changes in the stock price could change the fully diluted share count, for modeling purposes the company is assuming 23.9 million and 20.5 million fully diluted shares in the fourth quarter and full year, respectively.
Conference Call
The company plans to host its investor conference call today at 5:00 p.m. Eastern Time to discuss its financial results for the third quarter 2009 and its outlook for the fourth quarter and full year 2009. The investor conference call will be available via live webcast on the “Investor” section of Medidata’s Web Site at http://investor.mdsol.com. To participate by telephone, domestic participants may dial 888.378.0337 and international participants may dial 719.325.2173. Those interested in participating in the conference call should dial in at least 10 minutes prior to the call to register. Participants can also join the call via a simultaneous live audio webcast, which will be made available on the “Investor” section of Medidata’s Web site at http://investor.mdsol.com. A replay of the conference call will be accessible until Thursday, November 26, 2009 by dialing 888.203.1112 domestically or 719.457.0820 internationally and using passcode 6391430. An archive of the call will also be hosted on the “Investor” section of Medidata’s Web site at http://investor.mdsol.com for a limited period of time.
About Medidata Solutions Worldwide
Medidata Solutions (www.mdsol.com) is a leading global provider of hosted clinical development solutions that enhance the efficiency of customers’ clinical development processes and optimize their research and development investments. Medidata products and services allow customers to achieve clinical results more efficiently and effectively by streamlining the design, planning and management of key aspects of the clinical development process, including protocol development (Medidata Designer®), investigator benchmarking and budgeting (Medidata Grants Manager™), contract research organization (CRO) benchmarking and budgeting (Medidata CRO Contractor™), and the capture, management, analysis and reporting of clinical trial data (Medidata Rave®). Medidata’s diverse customer base spans pharmaceutical, biotechnology and medical device companies, academic institutions, CROs and other research organizations, and includes more than 20 of the top 25 global pharmaceutical companies.
Cautionary Statement
Certain statements made in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks and uncertainties about Medidata Solutions, Inc. (“Medidata”), including but not limited to statements about Medidata’s forecast of financial performance, products and services, business model, strategy and growth opportunities, and competitive position. You are cautioned that such statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will have been achieved. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in these statements. In particular, the risks and uncertainties include, among other things, risks associated with possible fluctuations in our financial and operating results; errors, interruptions or delays in our service or our Web hosting; the financial impact of any future acquisitions; our ability to continue to release, and gain customer acceptance of, new and improved versions of our products; changes in our sales and implementation cycles; competition; our ability to retain and expand our customer base or increase new business from those customers; our ability to hire, retain and motivate our employees and manage our growth; regulatory developments; litigation; and general developments in the economy. For additional disclosure regarding these and other risks faced by the Company, see disclosures contained in Medidata’s public filings with the Securities and Exchange Commission including, the “Risk Factors” section of Medidata’s IPO prospectus filed on June 25, 2009 and Quarterly Report on Form 10-Q that will be filed for the quarter ended September 30, 2009. You should consider these factors in evaluating the forward-looking statements included in this press release and not place undue reliance on such statements. The forward-looking statements are made as of the date hereof, and Medidata undertakes no obligation to update such statements as a result of new information.
*Non-GAAP Financial Information
Medidata provides Non-GAAP operating income, net income, and net income per share applicable to common stockholders data as additional information for its operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from Non-GAAP measures used by other companies. Non-GAAP operating income excludes the impact of depreciation, amortization of purchased intangible assets and acquisition-related charges and stock-based compensation expense. Non-GAAP net income excludes the impact of amortization of intangible assets associated with acquisitions and stock-based compensation expense. Management uses these Non-GAAP measures to evaluate its financial results, develop budgets, manage expenditures, and as an important factor in determining variable compensation. In addition, investors frequently have requested information from management regarding depreciation and amortization and non-cash, share-based compensation charges and management believes, based on discussions with investors, that these Non-GAAP measures enhance investor’s ability to assess Medidata’s historical and project future financial performance. While management believes these Non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of Non-GAAP financial measures. One limitation of Non-GAAP operating income is that it excludes depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Medidata compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the Non-GAAP financial measures to their most comparable GAAP financial measures. Investors are encouraged to review the reconciliations of these Non-GAAP financial measures to the comparable GAAP results, which are attached to this press release.
**NCI Contract Award
The NCI contract award to Medidata is presently the subject of a bid protest pending before the Government Accountability Office (GAO). Medidata is continuing to perform work under the contract according to the award terms and schedule. A decision on the protest from the GAO is expected on or around December 14, 2009.
Investor Contact:
Hulus Alpay
Medidata Solutions
212.419.1025
halpay@mdsol.com
Media Contact:
Susan McCarron
Lois Paul & Partners
781.782.5767
Susan_McCarron@lpp.com