Published:
Pharsight Achieves $7.6 Million In Quarterly Revenue
MOUNTAIN VIEW, Calif., May 8 /PRNewswire-FirstCall/ -- Pharsight
Corporation (Nasdaq: PHST), a leading provider of software and strategic
services designed to optimize clinical drug development, today announced
financial results for its fiscal fourth quarter and full year 2008, ended
March 31, 2008. Revenue for the fiscal fourth quarter was $7.6 million, a new
quarterly high for the company, and a 5% increase compared with revenue of
$7.3 million in the fourth quarter of fiscal 2007. Revenue for the full
fiscal year was $28.3 million, up 13% from $25.1 million for 2007.
"We finished fiscal 2008 and enter fiscal 2009 very confident about our
ability to generate double digit growth at both the top and bottom line," said
Shawn O'Connor, chairman and chief executive officer of Pharsight. "Our team
is doing an excellent job of developing both our software and our consulting
businesses. On the software side, we grew revenue for the fiscal year by 14%.
We continued to execute our software product development plan and during the
quarter added our 22nd PKS(TM) customer. In addition, we doubled the number
of WinNonlin(R) AutoPilot(TM) customers to six during the quarter. The
market's acceptance of WinNonlin AutoPilot illustrates the strategic benefit
of our ongoing development efforts to increase the operational efficiency of
PK/PD data management."
"Additionally, revenue from our consulting services business, which
includes the Strategic Consulting Services (SCS) and Reporting and Analysis
Services (RAS) units, grew 12% year-over-year and we entered into 10 new
agreements during the quarter," said Mr. O'Connor. "Our RAS offering, now
staffed with 12 people, generated 86% sequential revenue growth over the
fiscal third quarter."
"During fiscal 2008, we positioned Pharsight for accelerated long term
growth," added Mr. O'Connor. "We strengthened our balance sheet, continued to
make investments in our product development and infrastructure and expanded
our consulting service offerings. Based on the progress made during the past
year, we are able to forecast a higher revenue growth rate for fiscal 2009.
In addition, we believe that we will generate increased operating margins and
enhanced profitability for the full fiscal year."
Recent Highlights
Pharsight's recent highlights in its software and consulting services
businesses include:
Software
-- Achieved 14% revenue growth in fiscal 2008 compared with fiscal 2007.
-- Added 22nd PKS customer.
-- Achieved sixth WinNonlin AutoPilot customer within first nine months
since product launch.
-- Added two new DMX customers to bring total to eleven.
Consulting Services
Strategic Consulting Services (SCS)
-- Continued to diversify revenue base with top five customers
representing 59% of revenue compared with 82% in the same period last
fiscal year.
-- Engaged four new customers.
-- Continued to make featured presentations at key industry meetings
including the American Society for Clinical Pharmacology and
Therapeutics (ASCPT) and the American Conference on Pharmacometrics
(ACoP)
Reporting and Analysis Services (RAS)
-- Engaged six new customers.
-- Integrated PKS with WinNonlin and AutoPilot in a validated solution for
regulatory studies.
-- Expanded the RAS team in response to global demand for the group's
services; team now totals 12 professionals.
-- Achieved continued strong revenue growth; RAS revenue up 86% quarter
over quarter.
Additional Financial Results
Gross margin in the fourth quarter of fiscal 2008 was 69%. Operating
expenses were higher during the quarter compared to the same period of fiscal
2007, but were lower as a percentage of revenue for the full fiscal year
compared to the prior fiscal year. Net income attributable to common
stockholders in the fourth quarter of fiscal 2008 was $621,000 or $0.06 per
fully diluted share, compared with $713,000, or $0.09 per fully diluted share
in the comparable period of fiscal 2007. Historical earnings per share
calculations for the quarter and full year have been updated to reflect the
1-for-3 reverse stock split effected in November 2007.
Revenue for the full year of fiscal 2008 was $28.3 million, up 13% from
$25.1 million reported for fiscal 2007. Gross margin for full year 2008 was
66%. GAAP net income for the full fiscal year 2008 was $1.7 million, compared
with $1.9 million for fiscal 2007. For the full year, Pharsight reported a
net loss attributable to common stockholders of $5.5 million, or $0.63 per
share, reflecting the non-cash accounting charge associated with the preferred
stock conversion of $7.0 million during the fiscal second quarter, compared to
net income attributable to common stockholders of $1.1 million, or $0.16 per
fully diluted share, for fiscal 2007. Full year non-GAAP net income
attributable to common stockholders, excluding the non-cash accounting charge
associated with the preferred stock conversion and stock based compensation
charges, was $2.7 million, an increase of 40% compared to the prior fiscal
year. Full year non-GAAP diluted earnings per share, excluding the non-cash
accounting charge associated with the preferred stock conversion and stock
based compensation charges, was $0.29 compared with $0.27 for fiscal 2007.
A reconciliation of GAAP to non-GAAP financial measures is included in the
tables attached to this press release and on Pharsight's website under the
Investor Relations section.
Cash & Liquidity
Pharsight exited the fourth fiscal quarter with cash, cash equivalents and
short-term investments of $17.1 million compared with $14.7 million at the end
of fiscal 2007.
Fiscal 2009 Guidance
The Company is issuing the following guidance for fiscal 2009:
-- Annual revenue growth of approximately 13% to 18% compared with fiscal
2008, or approximately $32 to $33.5 million.
-- Gross margin of approximately 64% to 66% of revenue, depending on the
revenue mix between software, software services and consulting
services.
-- Non-GAAP net income, excluding non-cash expenses associated with
stock-based compensation expense of approximately 11% to 13% of revenue
with non-GAAP fully diluted EPS of approximately $0.34 to $0.41.
-- GAAP net income of approximately 7% to 9% of revenue with GAAP fully
diluted EPS of approximately $0.21 to $0.29.
-- Positive annual net cash flow
"We are very proud of what we set out to achieve and executed during
fiscal 2008," said Will Frederick, senior vice president and chief financial
officer. "We performed to our annual guidance originally provided at the
beginning of the fiscal year, paid off all our debt and successfully re-listed
our common stock on the Nasdaq Capital Market. Additionally, our preferred
shareholders converted their shares into common stock, relieving the company
of the quarterly dividend liability. This year marked our 5th consecutive
year of annual revenue growth and our 4th consecutive year of profitability
and positive annual net cash flow. As we enter the FY09 fiscal year, we have
cash equivalents and short-term investments in excess of $17 million, with no
outstanding debt and a $5 million available credit facility."
While Pharsight expects that over the long-term revenues and gross margin
will increase in response to customer demand, revenue and gross margin in
individual quarters may fluctuate in the future for its software business
based upon timing of completion of large software installations. In addition,
quarterly revenue and gross margin may also be impacted by the Company's
consulting businesses based upon timing of completion of milestones for fixed
fee contracts and related revenue recognition for these activities.
Conference Call
Pharsight management will host a conference call and webcast tomorrow,
May, 9, 2008 at 10:00 a.m. Pacific Time to discuss the Company's 2008 fiscal
fourth quarter and year end results, outlook for fiscal 2009 and current
corporate developments. The dial-in number for the conference call is
800-218-4007 for domestic participants and 303-262-2137 for international
participants. To access the live webcast of the call, go to Pharsight's
website at http://www.pharsight.com and click on the About Pharsight icon.
The webcast can then be accessed under the Investor Relations section. A
taped replay of the conference call will also be available beginning
approximately one hour after the call's conclusion and will remain available
for seven days. This replay can be accessed by dialing 800-405-2236 for
domestic callers and 303-590-3000 for international callers, both using
passcode 11112841#. An archived webcast will also be available at
http://www.pharsight.com.
About Pharsight Corporation
Pharsight Corporation develops and markets integrated products and
services that enable pharmaceutical and biotechnology companies to achieve
significant and enduring improvements in the development and use of
therapeutic products. The company's goal is to help customers reduce the
time, cost and risk of drug development, as well as optimize the post-approval
marketing and use of pharmaceutical products.
Pharsight's approach enhances the fundamental element of drug development
success: strong decision-making. By adopting the Pharsight approach,
customers acquire a new decision-making process with the potential to
systematically improve every level and phase of their business and scientific
processes. Pharsight is headquartered inMountain View, California.
Information about Pharsight is available at http://www.pharsight.com.
Use of Non-GAAP Financial Measures
Pharsight has provided financial information in this release that has not
been prepared in accordance with GAAP. This information includes non-GAAP net
income and net earnings per basic and diluted share, and non-GAAP net income
and diluted earnings per share guidance for fiscal 2008. Pharsight uses these
non-GAAP financial measures internally in analyzing its financial results and
believes they are useful to investors, as a supplement to GAAP measures, in
evaluating Pharsight's ongoing business performance and comparison to prior
periods. Pharsight believes the use of these non-GAAP financial measures
provides an additional tool for investors to use in comparing its financial
measures with other companies in Pharsight's industry, many of which present
similar non-GAAP financial measures to investors. As noted, the non-GAAP
financial measures discussed above exclude the effects of non-cash stock-based
compensation expense and/or a non-cash accounting charge associated with the
preferred stock conversion in the first quarter of fiscal 2008. Non-GAAP
financial measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of these non-GAAP
measures to their most directly comparable GAAP financial measure as detailed
below.
Safe Harbor
This press release includes forward-looking statements, including
statements regarding revenue, gross margin, the demand and market for our
products and services, other growth strategies and opportunities, and our
expectations for revenue and revenue growth, gross margin, operating margin,
net income, diluted earnings per share and annual cash flow for the fiscal
year ending March 31, 2009. These forward-looking statements involve risks
and uncertainties, and factors that could cause actual results to differ
materially include the following: changes in the demand for Pharsight's
products and services; changes in Pharsight's operating strategies, pricing
models or research and development focus; the failure to develop new products
and services or to keep pace with technological changes; the failure of the
market for Pharsight's products and services to develop as expected; the
failure to generate additional sales from existing customers or to generate
sales to new customers; the failure to meet customers' expectations;
uncertainties involved in pharmaceutical drug development; and changes in
government regulation of the pharmaceutical industry. Further information on
potential factors that could affect actual results is included in Pharsight's
Quarterly Report on Form 10-Q, as filed with the Securities and Exchange
Commission on February 14, 2008. All forward-looking statements are based on
information available to Pharsight as of the date hereof, and Pharsight
assumes no obligation to update such statements, whether as a result of new
developments or otherwise.
Drug Model Explorer, DMX, Pharsight, Pharsight Knowledgebase Server, PKS,
PKS Validation Suite, PKS Reporter, PKS Office Client, WinNonlin, WinNonlin
AutoPilot, IVIVC Toolkit for WinNonlin, Trial Simulator and WNL Validation
Suite are trademarks or registered trademarks of Pharsight Corporation.
Financial Tables Follow
PHARSIGHT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
March 31, March 31,
---------------------- ----------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
License $1,601 $1,425 $5,738 $5,402
Renewal 1,882 1,568 7,214 5,652
Maintenance 337 277 1,263 1,001
Services 3,770 3,989 14,127 13,037
--------- --------- --------- ---------
Total revenues 7,590 7,259 28,342 25,092
Cost of revenues 2,384 2,287 9,730 7,731
--------- --------- --------- ---------
Gross profit 5,206 4,972 18,612 17,361
Operating expenses:
Research and
development 1,239 1,255 4,787 4,295
Sales and marketing 1,944 1,749 6,924 6,330
General and
administrative 1,412 1,119 5,501 5,090
--------- --------- --------- ---------
Total operating
expenses 4,595 4,123 17,212 15,715
--------- --------- --------- ---------
Income from operations 611 849 1,400 1,646
Other income 59 105 430 372
--------- --------- --------- ---------
Income before
income taxes 670 954 1,830 2,018
Provision for
income taxes (49) (61) (145) (147)
--------- --------- --------- ---------
Net income 621 893 1,685 1,871
Preferred stock
dividend -- (180) (207) (746)
Deemed dividend from
stock conversion -- -- (6,993) --
--------- --------- --------- ---------
Net income (loss)
attributable to
common stockholders $621 $713 $(5,515) $1,125
========= ========= ========= =========
Net earnings (loss)
per share
attributable
to common
stockholders:
Basic $0.07 $0.11 $(0.63) $0.17
========= ========= ========= =========
Diluted $0.06 $0.09 $(0.63) $0.16
========= ========= ========= =========
Shares used to
compute net
earnings (loss)
per share
attributable to
common
stockholders:
Basic 9,432 6,646 8,759 6,590
========= ========= ========= =========
Diluted 10,037 9,859 8,759 7,187
========= ========= ========= =========
PHARSIGHT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, March 31,
2008 2007
------------- -------------
ASSETS
Current assets:
Cash, cash equivalents and investments $17,099 $14,665
Accounts receivable, net 4,664 3,087
Prepaids and other current assets 541 523
------------- -------------
Total current assets 22,304 18,275
Property and equipment, net 1,581 1,674
Other assets 52 46
------------- -------------
Total assets $23,937 $19,995
============= =============
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $930 $769
Accrued expenses 4,006 3,620
Deferred revenue 8,899 8,289
Current portion of notes payable -- 292
------------- -------------
Total current liabilities 13,835 12,970
Deferred revenue, long term 156 --
Notes payable, less current portion -- 100
Other long term liabilities 105 179
Redeemable convertible preferred stock -- 7,096
Stockholders' equity 9,841 (350)
------------- -------------
Total liabilities, redeemable convertible
preferred stock and stockholders' equity $23,937 $19,995
============= =============
PHARSIGHT CORPORATION
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL MEASURES
(in thousands, except per share)
(Unaudited)
Net income - Non GAAP
Three Months Ended Twelve Months Ended
March 31, March 31,
2008 2007 2008 2007
------------- ------------- ------------- -------------
Net income - GAAP $621 $893 $1,685 $1,871
Stock based
compensation
expenses 374 211 1,255 831
------------- ------------- ------------- -------------
Net income -
Non GAAP $995 $1,104 $2,940 $2,702
============= ============= ============= =============
Net earnings per share - Non GAAP
Three Months Ended Twelve Months Ended
March 31, March 31,
2008 2007 2008 2007
------------- ------------- ------------- -------------
Net income (loss)
attributable
to common
stockholders -
GAAP $621 $713 $(5,515) $1,125
Stock based
compensation
expenses 374 211 1,255 831
Deemed dividend
from stock
conversion -- -- 6,993 --
------------- ------------- ------------- -------------
Net income (loss)
attributable to
common
stockholders -
Non GAAP $995 $924 $2,733 $1,956
============= ============= ============= =============
Shares used to
compute net
earnings per
share attributable to
common stockholders
Basic 9,423 6,646 8,757 6,590
Diluted 10,028 9,859 9,404 7,187
Net earnings per share
attributable to
common stockholders
Basic $0.11 $0.14 $0.31 $0.30
============= ============= ============= =============
Diluted $0.10 $0.11 $0.29 $0.27
============= ============= ============= =============
SOURCE Pharsight Corporation
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