DATATRAK International, Inc. Reports Second Quarter Results of 2017
CLEVELAND, August 3 /PRNewswire/ – DATATRAK International, Inc. (OTC Markets: DTRK), a leader in cloud-based technologies for the life sciences industry, today announced its operating results for the second quarter of 2017.
DATATRAK had income from operations for the three months ended June 30, 2017 of $153,000 compared to $330,000 for the three months ended June 30, 2016. While the Company experienced a decrease in revenue of $496,000, from $2,402,000 for the three months ended June 30, 2016 to $1,906,000 for the three months ended June 30, 2017, decreases in direct and SG&A expenses allowed the Company to report income from operations. The decrease in revenue was due to the Company falling short of its sales goal during 2016. The top-line is still feeling the effect of the re-building of the sales department, which took a toll on the pipeline and takes time to reestablish. Direct costs decreased by 12% during the quarter ended June 30, 2017 compared to the quarter ended June 30, 2016 due to lower employee and clinical data management costs. The Company’s gross profit margin was 82% for the three months ended June 30, 2017 compared to 84% for the three months ended June 30, 2016. SG&A expenses decreased by $376,000, or 23%, for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. The largest decrease in SG&A expenses was in legal costs, due to the settlement of litigation. The Company also had decreases in office rent, due to the sublease of the Chicago office and the assignment of the North Carolina office lease in 2016, and accounting fees. Employee costs increased due to staffing and a lower level of capitalized software development during the three months ended June 30, 2017 compared to three months ended June 30, 2016.
DATATRAK’s backlog at June 30, 2017 was $21.1 million compared to a backlog of $22.4 million at December 31, 2016, which is a 6% decrease. 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 not always been an accurate predictor of the Company’s short-term revenue.
In the past quarter, DATATRAK’s announcement of the Enterprise Cloud has generated a tremendous increase in the number of Request For Information (“RFI”) across pharma, device and academic institutions which are now looking for more comprehensive end-to-end solutions.
Industry trends show growing frustration in the market within Life Science companies that are concerned with the high operational costs of supporting layers of redundant and disparate systems across their enterprise. They support low cost early stage EDC systems that promote quick deployments with limited capabilities. The lack of medical coding, randomization, supply management features, and design functionality frequently results in a need to integrate with other products, which makes these systems difficult to deploy and impossible to scale. Many of these vendors are in a position where they are forced to invest millions of dollars over the next few years to re-engineer their integrated products into modern, unified, and scalable cloud offerings.
Equal frustrations are building with “established” system(s) that offer more robust solutions at excessively inflated prices. These come with lengthy contracts, extended deployment timelines, change requests, and reporting across multiple product versions that fail to provide the benefits originally promised.
Recently, new vendor(s) are entering the market making large promises, but offer immature products. These same limitations carry over into CTMS systems that cannot support competing EDC trials and require significant customization to meet even the most basic requirements.
“DATATRAK has maintained its vision of creating a comprehensive solution through years of product development,” says Jim Bob Ward, President and CEO of DATATRAK. “This has been driven by industry operational requirements necessary for the eventual offering of our Enterprise Cloud solution as a disruptive technology.”
“The DATATRAK vision continues to be that we build and own a multilingual and multi-tenant enterprise platform,” says Tim Lyons, Vice President of Product Development and Operations. “Above all, we will maintain unified access to our clinical applications, database and workflows to ensure scalability and operational efficiencies.”
Earlier this year, DATATRAK announced its Enterprise Cloud with the addition of several new features and modules to the eClinical platform. These included medical image and device capture, open API’s, and Business Analytics for EDC and CTMS 360 products. With the Enterprise Platform, DATATRAK is able to deliver a larger suite of products, using one interface, one login, and one shared source of data to provide data access, quick study startup, increased patient safety, reduced study timelines, all of which result in lower trial execution costs for customers. Each product is designed to be configured by our customers, to meeting the needs of their trial without the need for customized development.
“It is interesting to see competitors adjust their messaging in an attempt to adopt our ‘Unified’ solution with variations of our ‘DATATRAK ONE’ marketing intellectual properties,” says Scott DeMell, Vice President of Sales for DATATRAK. “Unlike other systems, we didn’t start as a single product with the plan to expand into the enterprise; we started out with an enterprise platform and built out key clinical applications. Now we are seeing other vendors scrambling to re-develop their platform to match ours.”
This is not a new initiative for DATATRAK. Due to its approach of organic development, DATATRAK believes it is currently years ahead in developing a robust and seamless enterprise platform, with highly collaborative workgroup functionality for the clinical industry.
“Our industry is changing rapidly,” says Ward. “Our discussions with industry leaders today are now focused on the Cloud Enterprise and the need for innovative, long-term solutions that provide scalability with more productivity at lower costs.”
Moving forward, DATATRAK will work with industry subject matter experts to ensure its continued development of the DATATRAK ONE platform aligns with the needs of its clients and partners.
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About DATATRAK International, Inc.
DATATRAK International is a worldwide technology and services company delivering unified eClinical 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 Cleveland, Ohio and College Station, Texas. 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. All statements that address operating performance, events or developments that management anticipates will occur in the future, including statements related to future revenue, profits, expenses, cost reductions, cash management alternatives and working capital requirements, strategic alternatives, raising additional funds, income and earnings per share or statements expressing general opinion about future results, are 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 OTC Markets on March 2, 2017 announcing its results for the full-year period ended December 31, 2016. 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
|June 30, 2017||December 31, 2016|
|Cash and cash equivalents||$1,830,529||$2,465,721|
|Certificate of deposit||302,445||301,316|
|Accounts receivable, net||647,400||682,252|
|Property & equipment, net||1,473,029||1,598,541|
|Accounts payable and other current liabilities||$2,527,972||$2,002,153|
|Other long-term liabilities||158,008||164,102|
|Total liabilities and shareholders’ deficit||$4,576.334||$5,242.826|