SOURCE: DATATRAK International , Inc.

DATATRAK International , Inc.

November 11, 2015 19:17 ET

DATATRAK International, Inc. Reports Third Quarter Results of 2015

Posts Highest Quarter of New Contract Sales in Company's History; Sixth Consecutive Quarter of Record Setting Backlog of Over $31 Million

CLEVELAND,OH--(Marketwired - November 11, 2015) - DATATRAK International, Inc. (OTCQX: DTRK), a leader in cloud-based, unified dClinical® technologies and related services for the clinical trials industry, today announced its operating results for the third quarter 2015.

Third Quarter Highlights:

  • Signed largest contract in Company history with Top 10 Global Medical Device Company
  • Q3 2015 new contract sales increased 13% over prior year period, highest in Company's history
  • Q3 2015 revenue from Enterprise Agreements increased 13% compared to same period 2014
  • Sixth consecutive quarter of record backlog, ending the third quarter of 2015 at over $31 million, a 21% increase over backlog at December 31, 2014
  • Book-to-bill ratio of 3.05 at September 30, 2015, up from 2.28 at September 30, 2014, reflecting a continuing transition to a longer, more stable revenue stream with more Enterprise Agreements and large platform wins
  • Gross profit margin increased to 80% for Q3 2015
  • Number of active trials increased 88% year-over-year

"Our third quarter performance is evidence of our success in executing against our strategic growth plans, funded through organic operational cash flows and NOT through the use of debt or dilutive equity raises. This team is putting in the sweat equity to drive growth AND preserve shareholder value," stated Laurence P. Birch, DATATRAK'S Chairman and CEO. "We appreciate the patience and support of our many long-term shareholders as we continue to capitalize on these growth opportunities and see the Company's strategic transition through to fruition. We are also thankful as well for our dedicated employees who execute against the strategy every day."

"As we've stated previously, we are starting to see the shift in our revenue model as a longer term, repeatable revenue base takes a larger foothold -- this quarter we started to see an increase in the revenue from enterprise agreements," continued Birch. "The recently announced contract with a Top 10 Global Medical Device organization led the charge in our achievement of the largest quarter of new contract sales in recorded history. It also validates our evolving sales strategy and the investment we are making in developing our new UX CTMS 360™ product -- a product that allows us to enter a new $1.5 billion market."

"Our leading growth indicators are mapping out the path to profitability," stated Jennifer W. Mabe, DATATRAK's Chief Financial Officer. "Keeping in mind that our growth is funded by utilizing operational cash flows in a capital constrained environment and we are experiencing a significant evolution of our revenue model, one can appreciate that this transition takes persistence and patience. As the sales model evolves, so does our support structure as we transform the organization from a services delivery focus to one focused on training, empowering and supporting our enterprise clients. Furthermore, in the quarter, we executed against our strategy while increasing our gross profit margin percentage. Of particular interest -- on a non-GAAP basis, excluding expenses related to the contested proxy election and other legal fees, the company posted positive operating income -- the organization is performing soundly from an operational perspective."

Birch concluded, "Our journey began in 2009 with a broken company and is at an inflection point in the growth story -- we've come a long way in establishing a profile of success.We have a sophisticated level of client engagement attracting those who question the status quo of lesser technologies. We've doubled our average contract value and tripled the contract backlog. Our marketing efforts have established credibility, brand promise and industry thought leadership. We have an effective CRO strategy and a strong global client base. We've achieved all of this while continuing to deliver innovative technologies that safely accelerate clinical trials. We look forward to moving beyond the distractions of the recent proxy contest and focusing on the growth opportunities and options before us."

Financial Highlights:

The Company's revenue decreased 2% for the three months ended September 30, 2015 compared to the three months ended September 30, 2014. As stated previously, the decrease in revenue is due to a variety of factors, including a lengthening sales cycle, drug program sponsor delays, the extension of an enterprise license agreement, which required DATATRAK to recognize the new contract revenue over a longer period of time, affecting short-term revenue, and the tapering off of a significant long-term contract that is nearing completion. The recently announced 5-year agreement with a global device manufacturer mitigated some of the above mentioned reasons for the decrease in revenue and provided a significant influx of cash to continue to fund growth initiatives. Direct costs decreased by 6% during this same time period due to lower headcount and the outsourcing of some clinical data management work as we strategically phase out services that do not support our ongoing business model. The Company's gross margin was 80% for the third quarter of 2015 compared to 79% for the third quarter of 2014. SG&A expenses decreased by $189,000, or 8%, to $2,318,000 from $2,507,000 for the three months ended September 30, 2015 and 2014, respectively. The drop in SG&A costs was mainly due to lower employee costs, which was primarily affected by the reversal of previously accrued but unpaid executive incentives. This compensation is no longer expected to be paid as a result of lower than anticipated earnings. The decrease was partially offset by an increase in legal costs, a substantial portion related to patent defense, and increased rent expense due to the opening of the Chicago office. As a result, DATATRAK's loss from operations for three months ended September 30, 2015 was $(265,000) compared to a loss from operations of $(397,000) for the corresponding period in 2014.

DATATRAK's backlog at September 30, 2015 was $31.4 million compared to a backlog of $26.0 million at December 31, 2014, which is a 21% increase. Backlog consists of future value from authorization letters to commence services, statements of work, technology and services agreements, change orders and other customer contracts, billed and unbilled.

All contracts are subject to possible delays or cancellation or can change in scope in a positive or negative direction. Therefore, current backlog is not necessarily indicative of the Company's future quarterly or annual revenue. Historically, backlog has been a poor predictor of the Company's short-term revenue.

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About DATATRAK International, Inc.

DATATRAK International is a worldwide technology and services company delivering unified dClinical® solutions and related services for the clinical trials industry. DATATRAK built its multi-component, comprehensive solution on a single, unified platform and expanded this concept to include services delivery via DATATRAK's Clinical and Consulting Services group. The Company delivers a complete portfolio of software products designed to accelerate the reporting of clinical research data from sites to sponsors and ultimately regulatory authorities, faster and more efficiently than loosely integrated technologies. The DATATRAK ONE® software solution, deployed worldwide through an ASP or Enterprise Transfer offering, supports Preclinical and Phase I - Phase IV drug and device studies in multiple languages throughout the world. DATATRAK is located in Chicago, Illinois; Cleveland, Ohio; Bryan, Texas; Cary (RTP), North Carolina; and Plymouth, Minnesota. For more information, visit http://www.datatrak.com.

Except for the historical information contained in this press release, the statements made in this release are forward-looking statements. These forward-looking statements are made based on management's expectations, assumptions, estimates and current beliefs concerning the operations, future results and prospects of the Company and are subject to uncertainties and factors which are difficult to predict and, in many instances, are beyond the control of the Company, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. For a list of certain factors that may cause actual results to differ materially from those contemplated in these forward looking statements, please see the Company's report filed with the OTCQX Market on March 13, 2015 announcing its results for the full-year period ended December 31, 2014. The Company undertakes no obligation to update publicly or revise any forward-looking statement whether as a result of new information, future events or otherwise.

 
DATATRAK International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Data
(Unaudited)
  September 30, 2015  December 31, 2014
Cash and cash equivalents $1,955,359  $3,510,499
Certificate of deposit 300,563  300,000
Accounts receivable, net 1,276,998  1,143,045
Property & equipment, net 835,274  508,895
Other 425,360  722,711
 Total assets $4,793,554  $6,185,150
      
Accounts payable and other current liabilities $1,982,824  $1,900,258
Deferred revenue 6,829,277  6,170,711
Other long-term liabilities 50,419  67,701
Shareholders' deficit (4,068,966)  (1,953,520)
 Total liabilities and shareholders' deficit $4,793.554  $6,185.150
      
DATATRAK International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
  
  For the 3 Months Ended September 30,
  2015  2014
Revenue $2,638,554  $2,694,547
Direct costs 534,375  567,107
 Gross profit 2,104,179  2,127,440
      
Selling, general and administrative expenses 2,318,306  2,506,635
Depreciation and amortization 50,394  17,636
 Loss from operations (264,521)  (396,831)
      
Interest income 281  236
Interest expense (4,186)  (3,586)
 Net loss $(268,426)  $ (400,181)
  Net loss per share:     
   Net loss per share, basic and diluted $ (0.18)  $ (0.28)
   Weighted-average shares outstanding, basic and diluted 1,510,577  1,437,072
      

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