Written by Ken Nagy, CFA

DATATRAK International, Inc. (DATA) is a global technology and services company delivering electronic clinical (eClinical) solutions to support clinical research. Its software suite and service offerings are used to collect, review, report, store and submit to regulatory agencies clinical trial data electronically. While the competition uses an integrated heterogeneous solution (information silos), DATATRAK uses a unified system. The result is seamless communication, optimized data flow and lower costs.

On November 10th 2010, Datatrak (DATA) announced results for the third quarter of fiscal year 2010 ending September 2010.
Revenue 2010 increased to $1,817,587 compared to $1,554,133 in the same period of 2009. Gross profit margin improved to 84% compared to 70% for the three months ended September 30, 2009. The improvement in the Company’s gross margin reflects a 37.4% reduction in direct costs.

As of September 30th 2010 cash stood at $1,172,772 an increase over the December 31, 2009 cash balance of $947,984 – this marked the Second quarter positive cash flow from operations since 2006.
Looking at Backlog, Datatrak (DATA) saw an increase from $9.5 million at December 31, 2009 to $11.4 million at September 30, 2010. This represented the fifth consecutive quarter-over-quarter increase in backlog.

New Business Wins
Third quarter new contracts of $1.921 million represented a 90% increase over new contracts of $1.013 million in the same period of 2009. The firm was also selected by DAIICHI SANKYO EUROPE GmbH for a cardiovascular clinical study encompassing 80 sites and 1,200 patients across Europe

DATA has four characteristics that should enable it to outperform the industry and the competition.

  • Superior Technology
  • A Debt Free Balance Sheet
  • Growing Backlog
  • Increasing Market Share in a Growing Complex Industry

As complexity and regulatory challenges ration up in clinical trials, paper based methods as well as integrated systems will prove more expensive and less reliable.  Investors that buy the stock today they are essentially buying a firm that emerged from the recession of 2008/2009 with no debt, has grown its backlog in four straight quarters, and continues to gain traction in clinical research. 
 

For a full copy of the research report, please email scr@zacks.com with
the ticker DATA as the title.
 

 
DATATRAK INTL (DATA): Free Stock Analysis Report
 
Zacks Investment Research