Datatrak International announced its results for the third quarter 2015. The company’s revenue decreased 2% for the three months ended September 30, 2015 compared to the three months ended September 30, 2014.
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The decrease in revenue is due to a variety of factors, including a lengthening sales cycle, drug program sponsor delays, the extension of an enterprise license agreement, which required Datatrak to recognize the new contract revenue over a longer period of time, affecting short-term revenue, and the tapering off of a significant long-term contract that is nearing completion.
The recently announced 5-year agreement with a global device manufacturer mitigated some of the above mentioned reasons for the decrease in revenue and provided a significant influx of cash to continue to fund growth initiatives.
Direct costs decreased by 6% during this same time period due to lower headcount and the outsourcing of some clinical data management work as we strategically phase out services that do not support our ongoing business model.
The company’s gross margin was 80% for the third quarter of 2015 compared to 79% for the third quarter of 2014. SG&A expenses decreased by $189,000, or 8%, to $2,318,000 from $2,507,000 for the three months ended September 30, 2015 and 2014, respectively.
The drop in SG&A costs was mainly due to lower employee costs, which was primarily affected by the reversal of previously accrued but unpaid executive incentives. This compensation is no longer expected to be paid as a result of lower than anticipated earnings.
The decrease was partially offset by an increase in legal costs, a substantial portion related to patent defense, and increased rent expense due to the opening of the Chicago office.
As a result, Datatrak‘s loss from operations for three months ended September 30, 2015 was $(265,000) compared to a loss from operations of $(397,000) for the corresponding period in 2014.
Datatrak’s backlog at September 30, 2015 was $31.4 million compared to a backlog of $26 million at December 31, 2014, which is a 21% increase. ■