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eResearchTechnology Reports First Quarter 2008 Results

Q1 2008 Net Revenues - $33.7 million vs. $21.1 million in Q1 2007 - an

increase of 59.7%; a record for eRT Q1 2008 Diluted Net Income per Share - $0.11 vs $0.04 in Q1 2007 - an

increase of 175.0%

Q1 2008 New Bookings increase to $50.1 million; a record for eRT

Increasing 2008 Guidance

PHILADELPHIA, May 5/PRNewswire-FirstCall/ -- eResearchTechnology, Inc. (eRT), (Nasdaq: ERES), a leading provider of centralized ECG and eClinical technology, ePRO and other services to the pharmaceutical, biotechnology, medical device and related industries, announced today results for the quarter ended March 31, 2008.

Highlights for the first quarter of 2008 were:

-- Record quarterly net revenues of $33.7 million, including $3.3 million

of net revenues from Covance Cardiac Safety Services, Inc. (CCSS), a

59.7% increase from the first quarter of 2007;

-- Diluted net income per share of $0.11, up 175.0% from the first quarter

of 2007;

-- Gross margin of $17.7 million for a gross margin percentage of 52.5% up

4.9 percentage points from the first quarter of 2007. The gross margin

percentage was negatively impacted by CCSS, which generated net

revenues of $3.3 million while incurring expenses of $3.2 million;

-- Income before income taxes margin percentage of 26.5%, up 9.2

percentage points from the first quarter of 2007. The income before

income taxes margin percentage was negatively impacted by CCSS and the

integration of CCSS into eRT, which combined generated a loss before

income taxes of $1.4 million;

-- Record bookings of $50.1 million, compared to $29.7 million for the

first quarter of 2007;

-- Bookings included seven new Thorough ECG study agreements valued at an

average of slightly greater than $1 million each;

-- The backlog was a record $151.4 million, a net increase of

$11.2 million from December 31, 2007;

-- The cancellation rate was an annualized 15.6% as compared to an

annualized cancellation rate of 15.0% in the first quarter of 2007.

"We are extremely pleased with the first quarter results where we saw record quarterly revenue, transactions, bookings and backlog for eRT," commented Dr. Michael McKelvey, President and CEO of eRT. "We continue to execute very well on our projects. The integration of the CCSS acquisition is proceeding on schedule, and we are meeting with clients to begin the transition process of individual studies. Our services revenue grew by 80.9%, driven by outstanding growth in our core cardiac safety business. Bookings were strong across all phases, but especially in Phase I and Phase III studies. The quarter again demonstrated the leverage in our business model as evidenced by expanding gross margins and net income growth."

The Company reported revenues of $33.7 million for the first quarter of 2008, an increase of 59.7% from $21.1 million in the first quarter of 2007. Net income was $5.7 million for the first quarter of 2008, an increase of 155.6% from $2.2 million for the first quarter of 2007. Diluted net income per share was $0.11 for the first quarter of 2008, up $0.07 from the $0.04 in the first quarter of 2007.

eRT ended the quarter with $48.9 million in cash, cash equivalents and investments, an increase of $2.0 million from $46.9 million at December 31, 2007. Operations generated $7.6 million, which was partially offset by payments to Covance under the terms of the CCSS acquisition.

"Our pipeline of new opportunities is strong, reflecting the continued emphasis on cardiac safety and eRT's reputation for quality, medical and scientific leadership, project execution and technology innovation," continued Dr. McKelvey. "The pricing environment continues to be stable. The Exclusive Marketing Agreement with Covance is adding to our pipeline, as are our continued strong relationships with other key partnerships with CROs and Phase I units. While there are many areas in which we will continue to work to improve, the first quarter was an excellent start and bodes well for the remainder of 2008."

2008 Guidance

The Company issued guidance for the second quarter of 2008 and for the full year 2008. eRT expects to report revenues of between $34.0 million and $36.0 million and diluted net income per share of between $0.10 to $0.12 for the second quarter ending June 30, 2008. For the full year 2008, the Company is increasing its guidance for revenue to between $133.0 million and $140.0 million and diluted net income per share to between $0.44 to $0.49; previously issued guidance for revenue was between $130.0 million and $137.0 million and for diluted net income per share was between $0.42 to $0.46.

Dr. McKelvey and Richard Baron, the Company's Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 5:00 p.m. EDT on May 5, 2008. Interested participants should call 800-322-5044 when calling within the United States or 617-614-4927 when calling internationally. Please use pass code 13961971. There will be a playback available until May 12, 2008. To listen to the playback, please call 888-286-8010 when calling within the United States or 617-801-6888 when calling internationally. Please use pass code 12540628 for the replay.

This call is being webcast by Thomson Financial and can be accessed at eRT's web site at . The webcast may also be accessed at Thomson's Institutional Investor website at . The webcast can be accessed until May 5, 2009 on either site.

About eResearchTechnology, Inc.

Based in Philadelphia, PA, eResearchTechnology, Inc. ( ) is a provider of technology and services to the pharmaceutical, biotechnology and medical device industries on a global basis. The Company is a market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The Company is also a leader in providing technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of clinical data in all phases of clinical development.

Statements included in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, including, but not limited to, 2008 financial guidance, involve a number of risks and uncertainties such as the Company's ability to obtain new contracts and accurately estimate net revenues due to uncertain regulatory guidance, variability in size, scope and duration of projects, and internal issues at the sponsoring client, integration of acquisitions, competitive factors, technological development, and market demand. As a result, actual results may differ materially from any financial outlooks stated herein. Further information on potential factors that could affect the Company's financial results can be found in the Company's Reports on Form 10-K and 10-Q filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

eResearchTechnology, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share amounts)

Three Months Ended March 31,

2007 2008

(unaudited) (unaudited)

Net revenues:

Licenses $782 $625

Services 13,968 25,273

Site support 6,334 7,775

Total net revenues 21,084 33,673

Costs of revenues:

Cost of licenses 66 200

Cost of services 6,790 10,514

Cost of site support 4,195 5,268

Total costs of revenues 11,051 15,982

Gross margin 10,033 17,691

Operating expenses:

Selling and marketing 2,538 3,323

General and administrative 3,469 4,873

Research and development 925 999

Total operating expenses 6,932 9,195

Operating income 3,101 8,496

Other income, net 550 427

Income before income taxes 3,651 8,923

Income tax provision 1,403 3,177

Net income $2,248 $5,746

Basic net income per share $0.04 $0.11

Diluted net income per share $0.04 $0.11

Shares used to calculate basic net

income per share 50,198 50,638

Shares used to calculate diluted net

income per share 51,431 51,894

eResearchTechnology, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

December 31, 2007 March 31, 2008

ASSETS (unaudited)

Current assets:

Cash and cash equivalents $38,082 $40,568

Short-term investments 8,797 8,342

Accounts receivable, net 26,718 26,914

Prepaid income taxes 743 -

Prepaid expenses and other 3,087 3,197

Deferred income taxes 901 899

Total current assets 78,328 79,920

Property and equipment, net 33,347 30,826

Goodwill 30,908 31,737

Intangible assets 3,849 3,398

Deferred income taxes 1,011 1,375

Other assets 253 146

Total assets $147,696 $147,402


Current liabilities:

Accounts payable $3,505 $2,869

Accrued expenses 12,103 7,710

Income taxes payable 2,352 1,675

Current portion of capital lease

obligations 1,097 394

Deferred revenues 13,905 13,555

Total current liabilities 32,962 26,203

Capital lease obligations, excluding

current portion 48 -

Other liabilities 1,174 1,167

Total liabilities 34,184 27,370

Stockholders' equity:

Preferred stock-$10.00 par value,

500,000 shares authorized, none

issued and outstanding - -

Common stock-$.01 par value,

175,000,000 shares authorized,

58,870,291 and 58,918,095 shares

issued, respectively 589 589

Additional paid-in capital 87,957 88,734

Accumulated other comprehensive

income 1,679 1,676

Retained earnings 85,477 91,223

Treasury stock, 8,247,119 shares

at cost (62,190) (62,190)

Total stockholders' equity 113,512 120,032

Total liabilities and

stockholders' equity $147,696 $147,402

eResearchTechnology, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)


Three Months Ended March 31,

2007 2008

Operating activities:

Net income $2,248 $5,746

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation and amortization 3,215 4,344

Cost of sales of equipment 383 414

Provision for uncollectible accounts - 30

Share-based compensation 483 470

Changes in operating assets and

liabilities exclusive of CCSS acquisition:

Accounts receivable 1,654 (222)

Prepaid expenses and other (681) (11)

Accounts payable (2,209) (984)

Accrued expenses 84 (1,548)

Income taxes 1,395 (299)

Deferred revenues (398) (344)

Net cash provided by operating

activities 6,174 7,596

Investing activities:

Purchases of property and equipment (2,490) (1,430)

Purchases of investments (26,633) -

Proceeds from sales of investments 24,842 455

Payments for acquisition - (3,673)

Net cash used in investing

activities (4,281) (4,648)

Financing activities:

Repayment of capital lease obligations (40) (751)

Proceeds from exercise of stock options 879 189

Stock option income tax benefit 109 103

Net cash provided by (used in)

financing activities 948 (459)

Effect of exchange rate changes on cash 7 (3)

Net increase in cash and cash equivalents 2,848 2,486

Cash and cash equivalents, beginning

of period 15,497 38,082

Cash and cash equivalents, end of period $18,345 $40,568

SOURCE eResearchTechnology, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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