PHASE FORWARD REPORTS SECOND QUARTER RESULTS

July 26, 2005

Applied Clinical Trials

Achieves 17% Revenue Growth and EPS of $0.05 Versus a Loss in the Prior Year

Waltham, MA – July 25, 2005 – Phase Forward (NASDAQ: PFWD), a leading provider of data management solutions for clinical trials and drug safety, today announced its financial results for the quarter ended June 30, 2005.

Revenues for the 2005 second quarter increased 17% to $20.7 million, from $17.7 million for the same quarter of 2004. On a GAAP basis, income from operations was $2.0 million in the 2005 second quarter versus $946,000 for the prior year's comparable quarter. On a non-GAAP basis, income from operations for the second quarter of 2005 grew 49% to $2.1 million versus $1.4 million for the second quarter of 2004. The attached table presents a reconciliation of GAAP to non-GAAP income from operations for the second quarter of both years.

The GAAP net income applicable to common stockholders for the second quarter of 2005 was $1.8 million, or $0.05 per share, on a diluted basis, compared to a GAAP net loss applicable to common stockholders of $6.2 million, or a loss of $1.70 per share, for the second quarter of the previous year. The net loss for the second quarter of 2004 included a charge of $6.6 million associated with the accretion and dividend on preferred stock. All preferred stock automatically converted into shares of common stock following the completion of the company's initial public offering in July 2004.

Bob Weiler, chief executive officer and president, remarked, "In the second quarter, Phase Forward successfully executed on all of our strategic priorities. We continued to build our market leadership in electronic data capture, serving customers across a range of types, sizes and geographic locations, with a mix of existing and new customers such as Acuity and Veristat.

"Our commitment to integrated solutions was demonstrated by our announcement of plans to combine our solution suite for clinical and safety data management with SAS Drug Development, a clinical trials data integration and analysis solution. By integrating our solutions, we expect customers to benefit from a significant reduction in cost and effort compared to the typical way of exchanging data between systems," Weiler concluded.

In June, the Company announced the appointment of Eve E. Slater, M.D., former Merck Research Laboratories executive and Assistant Secretary for Health, U.S. Department of Health and Human Services, to the company's Board of Directors. The appointment further underscores Phase Forward's commitment to develop and maintain a distinguished Board of Directors, supporting its strategy of helping pharmaceutical, biotechnology, and medical device companies bring needed drugs and therapies to market faster and more safely.

For the first six months of 2005, total revenues rose 19% to $41.3 million compared to $34.7 million for the same period last year. On a GAAP basis, income from operations was $3.9 million for the first six months of 2005 versus $1.8 million for the prior year's comparable period. On a non-GAAP basis, income from operations for the first six months of 2005 was $4.2 million, versus $2.7 million for the same period of 2004. The attached table presents a reconciliation of GAAP to non-GAAP income from operations for the first six months of 2005 and 2004.

The GAAP net income applicable to common stockholders for the first six months of 2005 was $3.3 million, or $0.09 per share, on a diluted basis, compared to a GAAP net loss applicable to common stockholders of $7.7 million, or $2.15 per share, for the first half of the previous year.

2005 Second Quarter Highlights

Business Highlights

  • SAS and Phase Forward entered into a strategic alliance for the planned integration of Phase Forward's solution suite for clinical and safety management with SAS Drug Development. The joint offering is designed to streamline work processes for an enterprise level implementation across the breadth of the drug development continuum and ultimately reduce study lifecycle costs and speed time to market.
  • Phase Forward's new InForm™ Integrated Trial Management (ITM) solution, just released during the second quarter, was selected Best of Show by BIO-IT World as part of this year's Bio-IT World Conference + Expo in May.
  • Agreements were signed with both new and existing customers across all of Phase Forward's products, encompassing companies of all sizes including arrangements with Millennium, Boston Scientific, Otsuka, Acuity, Veristat, and Asklep, among others.
  • The company expanded its standard-setting position, exceeding 850 trials and 75,000 users at over 25,000 sites in more than 100 countries.

Financial Highlights

  • Quarterly revenues and operating income increased on both a sequential basis and year-over-year basis.
  • Gross margin for the second quarter of 2005 increased to $12.6 million, or 61% of revenues, from $10.4 million, or 59% of revenues, for the corresponding period of 2004.
  • The company reported earnings per share for the second quarter of 2005 of $0.05 per share, on a diluted basis, compared to a loss per share of $1.70 for the second quarter of 2004.
  • Cash, cash equivalents and short-term investment balances totaled $65.3 million on June 30, 2005, compared to $58.2 million on December 31, 2004.

Financial Outlook

The following statements are based on current expectations and the company does not undertake any duty to update them. These statements are forward-looking and inherently uncertain. Actual results may differ materially as a result of the factors identified below, the factors identified in our public filings made with the Securities and Exchange Commission, or other factors.

For the third quarter of 2005, the company expects revenues to be between $21.6 and $22.2 million, with approximately 90% anticipated to be recognized from backlog. The company expects gross margin to be between 60% and 62% and operating expenses as a percent of revenues to be between 48% and 50%. Non-GAAP operating income is expected to be between $2.2 million and $2.6 million, with diluted GAAP earnings per share expected to be between $0.06 and $0.07.

The company plans to host its investor conference call today at 5:00 pm ET to discuss its financial results for the second quarter ended June 30, 2005 and its outlook for the third quarter of 2005. The investor conference call will be available via live web cast on Phase Forward's web site at www.phasefoward.com under the tab "Investors." To participate by telephone, the domestic dial-in number is 800-573-4754 and the international dial-in is 617-224-4325. The access code is 89517423. Investors are advised to dial in at least five minutes prior to the call to register. The web cast will be archived from 7:00 p.m. ET on Monday, July 25, until 7:00 p.m. ET on Wednesday, August 31, 2005.

About Phase Forward

Phase Forward is a leading provider of integrated data management solutions for clinical trials and drug safety. The company helps pharmaceutical, biotechnology, and medical device companies bring needed drugs and therapies to market faster and more safely. Phase Forward offers proven solutions in electronic data capture (EDC), clinical data management (CDM), and adverse event reporting (AER). Phase Forward products and services have been utilized in over 10,000 clinical trials involving more than 1,000,000 clinical trial study participants at over 220 organizations worldwide including: AstraZeneca, Biogen Idec, Boston Scientific, Dana-Farber Cancer Institute, Eli Lilly, GlaxoSmithKline, Guidant, Procter & Gamble, Quintiles, Sanofi-Aventis, Schering-Plough Research Institute, and Serono. Additional information about Phase Forward is available at www.phaseforward.com.

Related Content:

News