New Contract Sales up at DATATRAK

New Contract Sales up at DATATRAK

Ken Nagy, CFA

On November 9, 2011, DATATRAK International, Inc. (DATA), a technology and service provider of electronic clinical trial technology solutions for the clinical trials industry, reported third quarter fiscal 2011 results with a nearly 13 percent year over year increase in sales with revenue expanding to $2.050 million during the three months ended September 30, 2011.

The strong and positive trend of continuing new contract sales appears to be an ongoing occurrence with the addition of $2.08 million in new contract sales during the quarter, or a 7 percent increase over new sales during the third quarter of 2010.

The new contracts benefited the current quarter sales results as well as helped DATATRAK increase new sales for the first nine months of 2011 by 28 percent over new sales for the comparable period of 2010.

Gross margin for the three months ended September 30, 2011 remained stable at 83.6 percent compared to 84 percent for the third quarter of 2010.

Still, the Company reported a net loss of $213,991 for the third quarter compared to net income of $48,636 for the comparable quarter of 2010.

The decrease is a direct result of strategic investments in Sales, Marketing and Software Development to position the business for further growth, the additions to DATATRAK's Clinical and Consulting Services and the accrual of management incentive plan awards, as well as costs incurred to protect the Company's intellectual property for customers and partners.

Still, the Company announced an enterprise agreement with a new specialty biologics and Vaccines Company as well as a consulting agreement with an existing biopharmaceutical client during the quarter.

For the nine months ended September 30, 2011, year over year revenues improved by nearly 13 percent or $696,052 to $6.071 million from $5.375 million for the comparable nine months of 2010.

However, net income for the nine months decreased by $655,377 year over year to a net loss of $572,699 for the nine months ended September 30, 2011. This compares to net income of $82,678 for the comparable nine months of 2010.

The decrease for the current nine months was primarily due to lower gross margin, higher selling, general and Administrative expenses as well as the lack of a severance reduction that was received during the nine months ended September 30, 2010.

Gross margin for the nine months decreased to 83.1 percent compared to gross margin of 83.8 percent for the nine months ended September 30, 2010.

Still, it should be noted that DATATRAK’S ending backlog as of September 30, 2011 increased to $11.9 million, its highest balance since 2008. This compares to $11.7 million during the period ending June 30, 2011.

Furthermore, the Company continued its positive cash flow from operations as well as strengthened its balance sheet with a significant improvement to its year over year cash balance.

DATATRAK’s cash balance as of September 30, 2011 increased 75 percent year over year to $2.1 million from $1.2 million as of September 30, 2010.

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