Exhibit 99.1
Media Contact: | Investor Contact: |
Gillian DellaCioppa
(Gdellacioppa@averionintl.com) | Jody Cain (jcain@lhai.com)
Brandi Floberg (bfloberg@lhai.com) |
Averion International Corp. | Lippert/Heilshorn & Associates, Inc. |
(508) 597-6000 | (310) 691-7100 |
For Immediate Release
AVERION REPORTS 2007 SECOND QUARTER FINANCIAL RESULTS
Company Reports Positive Second Quarter Operating Income
from Clinical Research Segment
SOUTHBOROUGH, Mass. – (August 15, 2007) – Averion International Corp. (OTC BB: AVRO), a clinical research organization (CRO) specializing in oncology, medical devices, dermatology and nephrology, today announced financial results for the three and six months ended June 30, 2007.
Second Quarter and Year-to-Date Business and Financial Highlights:
· Clinical research operating income was $817,000, compared with a loss of $46,000 and $13,000 for the second quarter of 2006 and first quarter of 2007, respectively.
· Gross new business awards were $27.5 million for the six months ended June 30, 2007, for a gross book-to-bill ratio of 1.9.
· Clinical research backlog increased to $43.9 million as of June 30, 2007, an increase of 23%, compared with backlog at December 31, 2006. The Company’s net book-to-bill ratio was 1.6 for the six months ended June 30, 2007.
· Net service revenue increased 95%, compared with the second quarter of 2006, largely as a result of the Averion Inc. acquisition on July 31, 2006.
“We are reporting another quarter of expanding growth as we execute against our strategy to reach profitability, strengthen our core CRO offering, and increase our international presence,” said Philip Lavin, PhD, Averion International Chief Executive Officer. “Our net service revenue increased 95%, compared with the second quarter last year, and net service revenue from our clinical research business grew 13%, compared with the first quarter of 2007. The profitability of our clinical research segment continues to improve with reported operating income of $817,000, compared with the $13,000 operating loss reported for that segment in the first quarter of 2007. Our backlog continues to increase with $27.5 million in gross new business awards for the first half of 2007, primarily in our targeted oncology and medical device sectors. We also continue to gain additional operational efficiencies through consolidation of our organization and are pleased with our progress toward our goal of achieving sustainable profitability.”
Averion reported net service revenue for the three months ended June 30, 2007 of $9.3 million, compared with $4.7 million for the three months ended June 30, 2006, an increase of 95%. The increase in net service revenue for the second quarter of 2007 is attributed to the increased clinical research net service revenue associated with the business acquired from Averion Inc.
Direct expenses for the three months ended June 30, 2007 were $5.8 million versus $3.3 million in the prior year period. Direct expenses as a percentage of net revenue decreased to 62% in the second quarter of 2007 from 69% in the second quarter of 2006. The improvement in direct expenses as a percentage of net revenue was principally the result of an increase in the proportion of overall business derived from Averion’s higher margin clinical research segment and an increase in staff utilization for that segment.
Selling, general, and administrative expenses (SG&A) were $3.5 million for the three months ended June 30, 2007, compared with $2.3 million for the three months ended June 30, 2006. As a percentage of net revenues, SG&A expenses decreased to 37% in the second quarter of 2007 from 47% in the comparable prior year period. Increased costs in the second quarter of 2007, compared with the second quarter of 2006 are primarily associated with the increased cost structure associated with the Averion Inc. acquisition and expenses associated with supporting a larger organization. Additionally, Averion incurred $0.3 million in the second quarter of 2007 related to its European operations.
The net operating loss for the three months ended June 30, 2007 was $0.6 million, including corporate restructuring charges of $0.2 million, compared with a net operating loss of $0.9 million for the second quarter of 2006, and a net operating loss of $1.9 million for the first quarter of 2007. The restructuring charges for the second quarter of 2007 of $0.2 million were the result of efforts to improve efficiencies and reduce costs in our staffing services segment.
Net loss for the three months ended June 30, 2007 was $0.6 million, or $(0.00) per share based on 498.5 million weighted average number of basic and fully diluted common shares outstanding. This compares with a net loss for the second quarter of 2006 of $0.9 million, or $(0.01) per share based on 60.4 million weighted average number of basic and fully diluted common shares outstanding.
For the six months ended June 30, 2007, net service revenue was $18.1 million, compared with $9.5 million for the six months ended June 30, 2006. The increase was due primarily to an $11.8 million increase in Averion’s clinical research operation net services revenues, which is attributed to the acquisition of Averion Inc., and partially offset by a $3.2 million decrease in staffing services net service revenues. Net loss for the first six months of 2007 was $2.6 million, or $(0.00) per share based on 498.5 million weighted average number of basic and fully diluted common shares outstanding. This compares with a net loss for the second half of 2006 of $1.8 million, or $(0.03) per share based on 60.4 million weighted average number of basic and fully diluted common shares outstanding.
Averion’s backlog related to its clinical research segment was $43.9 million as of June 30, 2007, an increase of $8.3 million, or 23%, over the reported backlog as of December 31, 2006. The $8.3 million backlog increase was driven by $27.5 million in gross new contract awards and a net book-to-bill ratio of 1.6. Cash and cash equivalents totaled approximately $7.0 million as of June 30, 2007, compared with cash and cash equivalents of $8.1 million as of December 31, 2006.
First Half of 2007 Company Highlights
Corporate Restructuring
· In February 2007, Averion completed cost reduction initiatives that are expected to reduce operating costs by $2.5 million annually and to improve the Company’s financial position and operating results.
· In April 2007, Averion implemented additional integration activities to enhance its business offerings and improve its competitive position. Previously operating as separately branded divisions of Averion, IT&E International and Millennix Inc. now operate and offer their services under the Averion name.
Corporate Achievements
· In January 2007, Averion entered a joint marketing and contract services agreement with India-based CRO Apothecaries Ltd. to expand core oncology competencies and expand its global presence.
· In February 2007, Averion opened three European offices to assist in expanding access to a larger population of patients and to well-trained personnel to run competitively priced international trials.
· In June 2007, Averion received notification from the FDA regarding the 51st FDA approval (for a dermal filler) the Company has supported.
Key Executive Hires
· In January 2007, Averion named Christopher G. Codeanne as Chief Financial Officer. Mr. Codeanne brings CRO and public company experience.
· In March 2007, Averion appointed Glenn E. Deegan as Vice President and General Counsel.
About Averion International Corp.
Averion International Corp. is a full service clinical research organization (CRO) that provides clinical research and staffing services to the pharmaceutical, biotechnology and medical device/diagnostic industries. The Company has a therapeutic focus in oncology, medical devices, dermatology, and nephrology. Averion’s clinical research core competencies are in FDA and product registration support, site selection, project management, medical and site monitoring, data management, biometrics, pharmacovigilance, medical writing, and full clinical trial management services throughout the clinical trials lifecycle. The Company has supported FDA approvals for products in many therapeutic areas including: oncology, medical devices, dermatology, and nephrology. The Company also provides staffing services to help solve many regulatory and validation problems faced by clients throughout the product development lifecycle.
Averion is headquartered in Southborough, Mass. and has additional U.S. office locations in New York, Philadelphia, and San Diego, as well as European offices in Germany, United Kingdom, Austria and operations in Poland. For more information, visit www.averionintl.com.
Forward-Looking Statement
Statements contained in this press release that are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Those risks and uncertainties include, but are not limited to: our ability to attract, retain or integrate key personnel, including scientific and technical personnel; the termination, modification or delay of contracts which would, among other things, adversely impact our recognition of revenue included in backlog; risks associated with our pursuit of strategic acquisitions or investment in new markets; our ability to acquire and integrate new businesses; our dependence on certain industries and clients; our ability to adequately protect sensitive patient information and confidential information of clients; our ability to keep pace with rapid technological changes; fluctuation in our operating results; our ability to recruit suitable volunteers for the clinical trials of our clients; our exposure to exchange rate fluctuations and international economic, political and other risks; our ability to develop and market new services in the U.S., Europe and internationally; the highly competitive nature of our market; our exposure to changes in outsourcing trends in the pharmaceutical and biotechnology industries; the impact of government regulation on our business; whether we can achieve and maintain effective internal controls;
and other risks. Certain of these risks and uncertainties, in addition to other risks, are more fully described in the Company’s annual report on Form 10-KSB for the period ending December 31, 2006 and in the Company’s other periodic reports filed with the Securities and Exchange Commission. These forward-looking statements are made only as of the date of this press release, and the Company assumes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise.
(Tables to Follow)
AVERION INTERNATIONAL CORP.
Consolidated Balance Sheets
| | June 30,
2007 | | December 31,
2006 | |
| | (unaudited) | | | |
Assets | | | | | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 6,955,615 | | $ | 8,097,577 | |
Restricted cash - investigator advances | | 146,251 | | — | |
Accounts receivable (net of allowance for doubtful accounts of $150,512 and $170,798 for 2007 and 2006, respectively) | | 5,091,138 | | 5,788,398 | |
Costs and estimated earnings in excess of related billings on uncompleted contracts | | 1,587,264 | | 1,907,745 | |
Prepaid and other current assets | | 542,521 | | 808,683 | |
Total Current Assets | | 14,322,789 | | 16,602,403 | |
Property and equipment, net | | 1,527,851 | | 1,434,305 | |
Goodwill | | 21,967,579 | | 21,967,579 | |
Finite life intangibles (net of accumulated amortization of $969,167 and $570,041 for 2007 and 2006, respectively) | | 4,213,834 | | 4,612,959 | |
Deposits | | 143,364 | | 144,342 | |
Total Assets | | $ | 42,175,417 | | $ | 44,761,588 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
Current Liabilities: | | | | | |
Accounts payable | | $ | 1,204,775 | | $ | 956,175 | |
Accrued payroll and employee benefits | | 1,030,516 | | 1,299,342 | |
Current portion of capital lease obligations | | 28,359 | | 26,910 | |
Current portion of notes payable | | 1,006,403 | | 978,031 | |
Customer Advances | | 1,573,847 | | 1,043,384 | |
Billings in excess of costs and estimated earnings on uncompleted contracts | | 2,889,358 | | 3,985,114 | |
Deferred rent | | 536,147 | | 557,163 | |
Other accrued liabilities | | 1,866,481 | | 1,098,136 | |
Total Current Liabilities | | 10,135,886 | | 9,944,255 | |
Long-term capital lease obligations, less current portion | | 27,339 | | 41,636 | |
Notes payable, less current portion | | 5,853,298 | | 6,213,795 | |
Total Liabilities | | 16,016,523 | | 16,199,686 | |
| | | | | |
Commitments and contingencies | | | | | |
| | | | | |
Stockholders’ Equity: | | | | | |
Common stock, $.001 par value, 750,000,000 shares authorized, 498,504,330 shares issued and outstanding | | $ | 498,504 | | $ | 498,379 | |
Convertible warrants | | 164,000 | | 164,000 | |
Common stock to be issued | | 856,738 | | 837,363 | |
Additional paid-in capital | | 35,609,757 | | 35,466,055 | |
Other comprehensive loss | | (22,449 | ) | (7,075 | ) |
Retained deficit | | (10,947,655 | ) | (8,396,820 | ) |
Total Stockholders’ equity | | 26,158,894 | | 28,561,902 | |
Total Liabilities and Stockholders’ Equity | | $ | 42,175,417 | | $ | 44,761,588 | |
AVERION INTERNATIONAL CORP.
Consolidated Statements of Operations
(Unaudited)
| | For the three months ended
June 30 | | For the six months ended
June 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
Net service revenue | | $ | 9,273,999 | | $ | 4,746,420 | | $ | 18,077,674 | | $ | 9,490,958 | |
Reimbursement revenue | | 541,303 | | 176,591 | | 1,029,397 | | 391,051 | |
Total revenue | | 9,815,302 | | 4,923,011 | | 19,107,071 | | 9,882,009 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Direct expenses | | 5,773,252 | | 3,293,072 | | 11,696,826 | | 6,901,534 | |
Reimbursable out-of-pocket expenses | | 541,303 | | 176,591 | | 1,029,397 | | 391,051 | |
Sales, general and administrative expenses | | 3,458,820 | | 2,253,023 | | 7,085,654 | | 4,309,375 | |
Depreciation and amortization expense | | 376,809 | | 112,465 | | 755,347 | | 222,799 | |
Restructuring charges | | 242,371 | | — | | 1,012,855 | | — | |
Total operating expenses | | 10,392,555 | | 5,835,151 | | 21,580,079 | | 11,824,759 | |
Net operating loss | | (577,253 | ) | (912,140 | ) | (2,473,008 | ) | (1,942,750 | ) |
| | | | | | | | | |
Other income (expense): | | | | | | | | | |
Interest income | | 80,787 | | 70,409 | | 178,022 | | 134,451 | |
Interest expense | | (146,704 | ) | (11,669 | ) | (293,972 | ) | (21,057 | ) |
Other | | 36,065 | | — | | 38,123 | | — | |
Total other income (expense) | | (29,852 | ) | 58,740 | | (77,827 | ) | 113,394 | |
| | | | | | | | | |
Loss before income taxes | | (607,105 | ) | (853,400 | ) | (2,550,835 | ) | (1,829,356 | ) |
Income taxes | | — | | — | | — | | — | |
Net loss | | $ | (607,105 | ) | $ | (853,400 | ) | $ | (2,550,835 | ) | $ | (1,829,356 | ) |
Weighted average number of common shares outstanding - basic and fully-diluted | | 498,466,957 | | 60,448,875 | | 498,423,137 | | 60,448,875 | |
Net loss per share - basic and fully-diluted | | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.03 | ) |
AVERION INTERNATIONAL CORP.
Consolidated Statements of Cash Flows
(Unaudited)
| | Six Months Ended | |
| | June 30, 2007 | | June 30, 2006 | |
Cash flows from operating activities | | | | | |
Net loss | | $ | (2,550,835 | ) | $ | (1,829,356 | ) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: | | | | | |
Depreciation | | 356,221 | | 64,297 | |
Amortization of finite life intangibles | | 399,125 | | 158,502 | |
Amortization of deferred rent | | (21,016 | ) | 61,959 | |
Bad debt expense | | 91,000 | | — | |
Stock based compensation | | 163,202 | | 233,275 | |
Changes in assets and liabilities: | | | | | |
Restricted cash - investigator advances | | (146,251 | ) | — | |
Accounts receivable | | 607,457 | | 105,291 | |
Costs and estimated earnings in excess of related billings on uncompleted contracts | | 323,378 | | (238,490 | ) |
Prepaid and other current assets | | 238,650 | | (38,715 | ) |
Deposits | | — | | (103,181 | ) |
Accounts Payable | | 244,255 | | 214,107 | |
Accrued payroll and employee benefits | | (270,309 | ) | 99,419 | |
Customer advances | | 530,463 | | 598,757 | |
Billings in excess of costs and estimated earnings on uncompleted contracts | | (1,095,756 | ) | (132,369 | ) |
Other accrued liabilities | | 771,098 | | 22,435 | |
Net cash used by operating activities | | (359,318 | ) | (828,939 | ) |
| | | | | |
Cash flows from investing activities | | | | | |
Purchase of property and equipment | | (448,312 | ) | (112,514 | ) |
Other | | 29,482 | | — | |
Net cash used by investing activities | | (418,830 | ) | (112,514 | ) |
| | | | | |
Cash flows from financing activities | | | | | |
Payments on capital lease obligation | | (643 | ) | (1,721 | ) |
Payments on notes payable | | (344,331 | ) | (30,555 | ) |
Proceeds from issuance of stock | | — | | — | |
Net cash used by financing activities | | (344,974 | ) | (32,276 | ) |
Effect of exchange rate changes on cash | | (18,840 | ) | — | |
| | | | | |
Net decrease in cash and cash equivalents | | (1,141,962 | ) | (973,729 | ) |
Cash and cash equivalents, beginning of period | | 8,097,577 | | 6,414,770 | |
Cash and cash equivalents, end of period | | $ | 6,955,615 | | $ | 5,441,041 | |
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