Exhibit 99.1
COVALENT REPORTS RESULTS FOR FIRST QUARTER 2005
WAYNE, Pa., May 16 /PRNewswire-FirstCall/ -- Covalent Group, Inc.
(Nasdaq: CVGR) today announced its financial results for the first quarter
ended March 31, 2005. These results were generally in line with our
previously stated expectations for the quarter.
Net revenue for the first quarter of 2005 was $3.2 million, a decrease of
$2.1 million as compared with the comparable prior year period. This change was
the result of lower clinical trial activity during the first quarter of 2005
compared with the first quarter of 2004. Our first quarter 2005 net revenues
grew sequentially by 21% compared with the fourth quarter of 2004 continuing a
positive revenue trend which began in the fourth quarter of 2004.
Net expenses for the quarter ended March 31, 2005, excluding the
reimbursement for out of pocket expenses, were $3.3 million versus $5.3 million
for the comparable prior year period, a decrease by approximately $2.0 million.
This decrease was principally due to the combination of reduced direct expenses
relating to a lower level of clinical trial activity and reduced selling,
general and administrative expenses (SG&A) due principally to headcount
reductions.
Net loss for the first quarter of 2005 was $98 thousand or ($.01) per share
compared to net income of $27 thousand or $0.00 (breakeven) per share for the
comparable prior year period.
Cash and cash equivalents were $5.2 million as of March 31, 2005 compared
with $3.2 million as of December 31, 2004, an increase of $2.0 million. This
increase resulted from cash provided from operating activities in the amount of
$2.1 million.
Our backlog was approximately $14 million as of March 31, 2005 compared to
approximately $11 million as of March 31, 2004.
Kenneth M. Borow, M.D., President and Chief Executive Officer commented,
"Our first quarter financial results improved significantly compared to the last
three quarters of 2004. We are especially pleased with the continued growth of
our cash position and our strengthening balance sheet. As of March 31, 2005,
compared to one year ago, our cash and cash equivalents have increased by $2.0
million while our backlog is up by $3 million."
Dr. Borow continued, "As we move forward as a company, we believe that
Covalent will continue to build upon its recent programmatic successes. We are
confident that the financial issues relating to the completion of our legacy
clinical trials that impacted negatively on our 2004 financial results are now
behind us. Our results going forward will be based on the current book of
business and backlog which is on much more favorable terms than the legacy
studies. As such, I expect that 2005 will be a stronger year for the Company
than was 2004. I believe that Covalent is very competitive for numerous new
business opportunities that could significantly increase the amount of our 2005
new business awards. The anticipated result of our new business awards, our
leaner cost structure, potential increases in backlog and more favorable mix of
existing contracts should continue to reverse the trends that affected our
financial performance in 2004."
Dr. Borow concluded, "We recognize the need to strengthen our company with
additional resources to resume and sustain growth. We are continuing to
evaluate, as we have done in the past, potential growth strategies including
organic growth as well as mergers and acquisitions with other companies. We
believe that it is important for us to have a broader global 'footprint,'
especially in Central and Eastern Europe, in order to help convert business
development opportunities into signed contracts. We believe that offering our
current and prospective clients the combination of our proven programmatic
development capabilities and a more robust global infrastructure will result in
increased company growth and improved shareholder value. We are committed to our
strategic goals and look forward to a significant improvement in operating
results for the remainder of 2005."
Covalent Group will hold a conference call Tuesday, May 17, 2005 at 9:00
a.m. ET to discuss first quarter results. To participate in the live call by
telephone, please dial (888) 289-0494 from the U.S., or for international
callers, please dial (913) 981-5520. 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
any necessary audio software.
A webcast audio replay will be available on the Company Web site for 30 days
through Thursday, June 16, 2005. A telephone audio replay will also be available
for 10 days through Friday, May 27, 2005, by dialing (888) 203-1112 from the
U.S., or (719) 457-0820 for international callers, and entering confirmation
code 5618459.
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 various regions around the world, 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 Condensed Balance Sheets
March 31, December 31,
2005 2004
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 5,238,881 $ 3,165,986
Restricted cash 147,088 145,612
Accounts receivable, less
allowance of $40,000 2,810,817 5,209,950
at March 31, 2005 and
December 31, 2004
Prepaid expenses and other 334,874 158,287
Prepaid taxes 1,114,463 1,132,315
Costs and estimated earnings
in excess of related billings
on uncompleted contracts 1,081,183 1,667,947
Total Current Assets 10,727,306 11,480,097
Property and Equipment, Net 1,214,075 1,321,139
Other Assets 21,665 21,665
Total Assets $ 11,963,046 $ 12,822,901
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 1,240,912 $ 1,101,788
Accrued expenses 439,073 392,385
Obligations under capital leases 24,335 23,709
Billings in excess of related
costs and estimated earnings on
uncompleted contracts 1,149,774 1,770,275
Customer advances 786,482 1,080,469
Total Current Liabilities 3,640,576 4,368,626
Long Term Liabilities
Obligations under capital leases 56,985 63,309
Other liabilities 552,625 581,710
Total Long Term Liabilities 609,610 645,019
Total Liabilities 4,250,186 5,013,645
Stockholders' Equity
Common stock, $.001 par value
25,000,000 shares authorized,
13,499,534 and 13,495,534 shares
issued and outstanding
respectively 13,499 13,496
Additional paid-in capital 12,024,958 12,017,822
Accumulated deficit (4,031,849) (3,933,377)
Accumulated other comprehensive
income 165,226 170,289
Less: 8,171,834 8,268,230
Treasury stock, at cost,
152,932 shares (458,974) (458,974)
Total Stockholders' Equity 7,712,860 7,809,256
Total Liabilities and Stockholders'
Equity $ 11,963,046 $ 12,822,901
Covalent Group, Inc.
Consolidated Condensed Statements of Operations
Three months ended
March 31,
-----------------------------
2005 2004
----------- -----------
Net revenue $ 3,213,529 $ 5,282,585
Reimbursement revenue 674,272 1,640,133
Total Revenue 3,887,801 6,922,718
Operating Expenses
Direct 2,042,768 3,675,580
Reimbursement out-of-pocket expenses 674,272 1,640,133
Selling, general and administrative 1,146,339 1,323,460
Depreciation and amortization 137,525 253,880
Total Operating Expenses 4,000,904 6,893,053
Income (Loss) from Operations (113,103) 29,665
Interest Income 17,108 757
Interest Expense (2,477) (2,828)
Net Interest Income (Expense) 14,631 (2,071)
Income (Loss) before Income Taxes (98,472) 27,594
Income Tax Provision - 489
Net Income (Loss) $ (98,472) $ 27,105
Net Income (Loss) per Common Share
Basic $ (0.01) $ 0.00
Diluted $ (0.01) $ 0.00
Weighted Average Common and Common
Equivalent Shares Outstanding
Basic 13,344,202 13,085,410
Diluted 13,344,202 13,229,007
SOURCE Covalent Group, Inc.
-0- 05/16/2005
/CONTACT: Investor Relations - Lawrence Hoffman, CPA, Esq., CFO of
Covalent Group, Inc., +1-610-975-9533/
/Web site: http://www.covalentgroup.com /