Exhibit 99.1
COVALENT REPORTS RESULTS FOR 2004
WAYNE, Pa., March 29 /PRNewswire-FirstCall/ -- Covalent Group, Inc.
(Nasdaq: CVGR) today announced its financial results for the fourth quarter
and full year ended December 31, 2004.
Net revenue for the year was $13.6 million compared to $20.8 million for
2003. Net revenue excludes reimbursements for out-of pocket expenses because
they are made at cost and have no impact on net income. Total operating expenses
decreased by $3.3 million to $24.4 million for 2004 compared to $27.7 million
for 2003. The decrease in total operating expenses resulted principally from a
reduction in the level of clinical trial studies conducted by the Company in
2004 and reductions in headcount. Net loss for 2004 was $4.2 million, or a loss
of $0.32 cents per share, compared to a net loss of $562,000, or a loss of $0.04
cents per share, for 2003.
Net revenue for the fourth quarter of 2004 was $2.7 million as compared with
$4.8 million for the comparable prior year period. The decrease of $2.1 million
in net revenue resulted in part from lower new business awards as well as the
winding down of several later stage projects as they completed their development
cycle. Fourth quarter revenues grew sequentially by 41% compared with the third
quarter of 2004. This sequential revenue growth in the fourth quarter reversed a
trend of declining quarterly revenues as reported during the first three
quarters of 2004.
Net expenses for the quarter ended December 31, 2004, excluding the
reimbursement for out of pocket expenses, were $4.1 million versus $5.9 million
for the comparable prior year period, a decrease by approximately $1.8 million.
This decrease was principally due to a $1.4 million reduction in direct expenses
due to reduced clinical trial activity and a $400,000 reduction in selling,
general and administrative expenses (SG&A) due principally to headcount
reductions.
Net loss for the fourth quarter of 2004 was $1.4 million, or a loss of $0.10
per share, compared to net loss of $723,000, or a loss of $0.06 per share, for
the comparable prior year period.
Cash and cash equivalents were $3.2 million as of December 31, 2004,
compared with $2.1 million as of December 31, 2003, an increase of $1.1 million.
This increase was principally the result of an increase in cash flow from
operating activities in the amount of $704,000 combined with proceeds received
from the exercise of common stock options during 2004 and offset by purchases of
property and equipment.
Our backlog as of December 31, 2004 was $15 million compared to $13 million
as of December 31, 2003, an increase of $2 million.
Kenneth M. Borow, M.D., President and Chief Executive Officer, commented,
"Our fourth quarter results continued to be negatively impacted by the
completion of several large legacy studies whose actual costs were in excess of
our original cost estimates. This was further exacerbated by delays in the
timing of final signatures on certain change in scope amendments for existing
contracts. The legacy projects that have created financial challenges for us are
now completed and our results going forward will be based on the current book of
business and backlog that is on more favorable terms than the legacy studies. We
believe that the worst is behind us, and our future financial results will be
substantially improved compared with our quarterly results during each of the
last three quarters of 2004. Our current financial projection for the first
quarter of 2005 is to be at or near break-even."
Dr. Borow continued, "As we move forward, it is important to keep our recent
programmatic successes in perspective. These successes, which act as a base for
new business development, were most evident in multiple therapeutic areas
including cardiovascular diseases, vaccines and biologics, lipid and metabolic
disorders, renal disease, neurology, respiratory diseases, and abnormalities of
bone metabolism. As a direct consequence of our 2004 successes, we believe that
Covalent is well-positioned to compete for several new business opportunities
that could significantly increase the amount of our 2005 new business awards.
The anticipated result of our new business awards combined with a leaner cost
structure, increased backlog and more favorable mix of existing contracts should
reverse the trends that adversely affected financial performance in 2004."
Covalent Group will hold a conference call Wednesday, March 30, 2005 at 9:00
a.m. EST to discuss fourth quarter results. To participate in the live call by
telephone, please dial 888-202-2422 from the U.S., or for international callers,
please dial 913-981-5592. Those interested in listening to the conference call
live via the Internet may do so by visiting the Company's Web site at
http://www.covalentgroup.com. To listen to the live call, please go to the Web
site 15 minutes prior to its start to register, download, and install the
necessary audio software.
An audio replay will be available on the Company Web site for 30 days
through April 29, 2005. A telephone audio replay will also be available for 10
days through April 9, 2005, by dialing 888-203-1112 from the U.S., or 719-457-
0820 for international callers, and entering confirmation code 8757844.
About Covalent Group
Covalent Group is a clinical research organization that is a leader in the
design and management of complex clinical trials for the pharmaceutical,
biotechnology and medical device industries. The Company's mission is to provide
its clients with high quality, full-service support for their clinical trials.
Covalent offers therapeutic expertise, experienced team management and advanced
technologies. The Company has clinical trial experience across a wide variety of
therapeutic areas such as cardiovascular, endocrinology/metabolism, diabetes,
vaccines, biologics, gene therapy, immunology, neurology, oncology, infectious
diseases, gastroenterology, dermatology, hepatology, womens' health and
respiratory medicine. Covalent believes that its leadership in the design of
complex clinical trials, its application of innovative technologies, therapeutic
expertise and commitment to quality offer its clients a means to more quickly
and cost effectively develop products through the clinical trial process. With
its wholly-owned international subsidiary, Covalent Group, Ltd., as well as its
Strategic Partners operating in South America, Eastern Europe, Russia and
Ukraine, and Australia, New Zealand and the Asia-Pacific region, Covalent is
able to meet the global drug development needs of its clients.
This press release contains forward-looking statements identified by words
such as "estimate," "project," "expect," "intend," "believe," "anticipate" and
similar expressions. Actual results might differ materially from those projected
in, expressed in or implied by the forward-looking statements. Potential risks
and uncertainties that could affect the Company's future operating results and
financial condition include, without limitation: (i) our success in attracting
new business and retaining existing clients and projects; (ii) the size,
duration, and timing of clinical trials; (iii) the termination, delay or
cancellation of clinical trials; (iv) the timing difference between our receipt
of contract milestone or scheduled payments and our incurring costs to manage
these trials; (v) outsourcing trends in the pharmaceutical, biotechnology and
medical device industries; (vi) the ability to maintain profit margins in a
competitive marketplace; (vii) our ability to attract and retain qualified
personnel; (viii) the sensitivity of our business to general economic
conditions; (ix) other economic, competitive, governmental and technological
factors affecting our operations, markets, products, services and prices; and
(x) announced awards received from existing and potential customers are not
definitive until fully negotiated contracts are executed by the parties.
Additional information concerning factors that could cause actual results to
materially differ from those in forward-looking statements is contained in
Covalent Group's SEC filings, including its Annual Report on Form 10-K for the
year ended December 31, 2004 and other periodic reports under the Securities
Exchange Act of 1934, as amended, copies of which are available upon request
from Covalent Group's investor relations department.
Investor Relations Contact: Lawrence Hoffman, CPA, Esq.
CFO, Covalent Group, Inc.
(610) 975-9533
Contact us on-line: http://www.covalentgroup.com
Covalent Group, Inc.
Consolidated Statements of Operations
Year Ended December 31,
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2004 2003
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Net revenue $ 13,589,614 $ 20,835,742
Reimbursement revenue 5,387,731 5,793,459
Total Revenue 18,977,345 26,629,201
Operating Expenses
Direct 13,360,367 15,417,144
Reimbursement out-of-pocket
expenses 5,387,731 5,793,459
Selling, general and
administrative 4,942,316 5,650,693
Depreciation and amortization 758,779 877,623
Total Operating Expenses 24,449,193 27,738,919
Income (Loss) from Operations (5,471,848) (1,109,718)
Interest Income 13,625 16,545
Interest Expense (10,425) (12,962)
Net Interest Income (Expense) 3,200 3,583
Income (Loss) before Income Taxes (5,468,648) (1,106,135)
Income Tax Provision (Benefit) (1,245,353) (544,032)
Net Income (Loss) $ (4,223,295) $ (562,103)
Net Income (Loss) per Common Share
Basic $ (0.32) $ (0.04)
Diluted $ (0.32) $ (0.04)
Weighted Average Common and Common
Equivalent Shares Outstanding
Basic 13,238,778 12,746,973
Diluted 13,238,778 12,746,973
Covalent Group, Inc.
Consolidated Balance Sheets
December 31,
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2004 2003
-------------- --------------
Assets
Current Assets
Cash and cash equivalents $ 3,165,986 $ 2,069,687
Restricted cash 145,612 604,185
Accounts receivable, less allowance
of $40,000 5,209,950 5,709,326
and $0 for 2004 and 2003,
respectively
Prepaid expenses and other 158,287 166,322
Prepaid taxes 1,132,315 1,267,501
Costs and estimated earnings in
excess of
related billings on uncompleted
contracts 1,667,947 8,740,964
Total Current Assets 11,480,097 18,557,985
Property and Equipment, Net 1,321,139 1,805,331
Other Assets 21,665 21,665
Total Assets $ 12,822,901 $ 20,384,981
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 1,101,788 $ 3,545,039
Accrued expenses 392,385 263,664
Obligations under capital leases 23,709 24,268
Billings in excess of related costs
and estimated earnings on uncompleted
contracts 1,770,275 1,181,426
Customer advances 1,080,469 3,032,758
Total Current Liabilities 4,368,626 8,047,155
Long Term Liabilities
Obligations under capital leases 63,309 87,018
Other liabilities 581,710 698,050
Deferred income tax - 211,040
Total Long Term Liabilities 645,019 996,108
Total Liabilities 5,013,645 9,043,263
Stockholders' Equity
Common stock, $.001 par value
25,000,000 shares authorized, 13,495,534
and 13,235,483 shares issued and
outstanding respectively 13,496 13,235
Additional paid-in capital 12,017,822 11,372,674
Retained earnings (deficit) (3,933,377) 289,918
Accumulated other comprehensive income 170,289 124,865
Less: 8,268,230 11,800,692
Treasury stock, at cost,
152,932 shares (458,974) (458,974)
Total Stockholders' Equity 7,809,256 11,341,718
Total Liabilities and Stockholders'
Equity $ 12,822,901 $ 20,384,981
SOURCE Covalent Group, Inc.
-0- 03/29/2005
/CONTACT: Lawrence Hoffman, CPA, Esq., CFO, Covalent Group, Inc.,
+1-610-975-9533 /
/Web Site: http://www.covalentgroup.com /