Phase Forward pays a price for prosperity

February 5, 2010 by MassDevice staff

Phase Forward Inc. (NSDQ:PFWD)‎ paid a small price for success during the fourth quarter, as mounting expenses from a flurry of acquisitions swung it into the black.

The Waltham, Mass.-based clinical data management provider reported a net loss of $68,000 for the three months ended Dec. 30, 2009, compared to more than $2 million in net income for the same period in 2008. Full-year net income fell by 38 percent to $8 million, compared with nearly $14 million during Q4 2008.

Officials attributed the bottom-line drop to non-cash expenses including a $2.3 million impairment charge and a $700,000 increase in the amortization of intangible assets resulting from acquisitions.*

Despite the Q4 dip, there was plenty for company officials to celebrate, particularly a 22 percent increase in sales during the quarter and 25 percent sales boost for the full year.

Phase Forward reported $58 million in fourth-quarter sales, compared to $48 million for the same period last year, and $213 million in sales during 2009, compared with $170 million during 2008. The company was particularly successful in driving up its service sales, which rose 31 percent during the year.

PFWD spent a bit of its nest egg to try and shore up its share price, initiating a $40 million stock repurchasing program during the fourth quarter. The company's total cash, cash equivalents and investments were $135.5 million as of Dec. 31, a decrease of $11.7 million from $147.2 million on hand at the end of the prior quarter.

Phase Forward said it expects to post earnings of $56 million to $57.5 million on sales of $240 million to $248 million during the first quarter.

*Correction, Feb. 5, 2010: This article originally referred to a trio of acquisitions in November that were, in fact, contracts rather than buyouts. Return to the corrected sentence.

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