Phase Forward Inc. surprised Wall Street — and maybe even itself — in beating revenue and earnings forecasts for the third quarter.
The Waltham, Mass.-based clinical data management provider reported net earnings of $1.2 million, or 4 cents a share, during the three months ended Sept. 30. Excluding acquisition and other one-time costs, Phase Forward recorded an 11-cent profit, topping its previous guidance for the quarter and also beating consensus analyst estimates by a penny.
Adjusted third-quarter revenues were $53.1 million, rising 24 percent over year-ago levels but missing forecasts by about $500,000. Phase Forward reported a $4.3 million net profit on $43 million in revenues during the September 2008 quarter.
During a conference call with analysts, CEO Bob Weiler said he anticipates continued improvement in business conditions during 2010, but steered clear of providing either top- or bottom-line numbers for the upcoming year.
That reticence, however, barely disguised his optimism.
For example, Weiler said there appears to be a modest surge underway in funding for biotech companies, portending a restart of clinical trials now shelved at development-stage firms. He also suggested a potential jump in business from larger pharmaceutical companies — many of which will have blockbuster drugs coming off patents during the next few years.
Generic competition undoubtedly cut into revenues and margins and pharma executives already are aggressively outsourcing certain activities and looking for additional ways to reduce spending on operations, he said.
“So, anytime you can demonstrate a way how they can hold down their testing costs, that’s a story they’re very interested in hearing,” Weiler told the analysts.
During the quarter, Phase Forward signed Allergan, a Southern California specialty healthcare manufacturer, to a multi-million-dollar, multi-year service pact for its InForm electronic data capture system. It also completed a $10 million acquisition of the interactive response technology arm of Covance Inc. and inked a multi-year marketing deal with Princeton, N.J.-based Covance.
“We’re also very excited about the quarter we’re in now,” Weiler added. To that end, however, Phase Forward held to its fourth-quarter guidance for 12- to 13-cents in adjusted profit on between $58 million to $59.5 million in revenues. Company officials said they plan to issue 2010 guidance when they report fourth-quarter results in early February.
Phase Forward also will host a conference for domestic customers and analysts in Boston next week and has scheduled a similar event during November for clients in Japan.