Earnings call transcript Q4 2022

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Operator

Greetings. Welcome to the Science 37 fourth quarter and full year 2022 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require Operator assistance during the conference, please press star, zero from your telephone keypad. conference recorded. this that note is being Please

I Halper may with turn the now to Steven conference over LifeSci will now begin. Advisors. Steven, you

Steven Halper

in Thank call. Rob, and you for you thank participating all today’s

Coman, Chief Officer. Joining me are Executive and Chief Mike Officer, Financial Zaranek, David

Science financial website. results copy XX, A quarter December for company’s XX released today, on the the press the of XXXX. release Earlier ended is available

Exchange various to within I’d filings Safe actual that company’s pursuant and will that anticipated to implied XX-Q the material begin, uncertainties by could we statements meaning most make XXXX. cause include statements based encourage factors, XX-K of like including call assumptions Securities during this with forward-looking on to of and periodic These you securities management Before federal are or made of recently Risk review involve Private filings. to upon Form that of statements made the for or forward-looking and Reform in Factors and the of laws Harbor the risks of are current Act our Litigation forward-looking the remind Form reports which results you provisions the differ those section We subsequent and a statements. discussion Commission these these our risk filed from materially events Securities estimates

any the information. disclaims on reliance new which You company as to statements undue today, not these forward-looking statements, are and place to cautioned speak only update of for obligation such

ongoing can Information financial for Relations of in planning useful comparable We GAAP of a be Investor evaluate these our SEC materials at the our and measures operational and available believe those most evaluating filings performance. internal in our use are portion the measures purposes. to reconciliation earnings non-GAAP in measures found website about investors.scienceXX.com. that including forecasting on non-GAAP our referenced, measures We to and non-GAAP metrics certain operations

Coman. to David? to like the call turn David over would I now

David Coman

Steve. you thank joining for morning Thanks Good us. everyone and

represent to quarter-over-quarter. exceeded quarter are and results improvements significant report guidance recent We that pleased fourth our most

Fourth which of our quarter from $XX.X $XX.X ahead Fourth $XX.X was finishing negative than and $XX.X million improvement an year XX% the of EBITDA quarter ahead also quarter-over-quarter million, $XX.X adjusted the million, was negative marked expectations. more million, of to year million. revenue at finishing negative expectations was at

the We also customer. with gross in saw which of from repeat bookings a healthy $XX win bookings fourth a sizeable new in rebound included project million, quarter a

the were the call. million, under discussed in bookings impact on we net quarter from the that large scope just third reduction fourth $XX Our includes quarter the which

As we XXXX look funding forward to that the reported previously the more third XXXX, shortfall, consciousness drug for cost particularly year. the of longer providing we year, XXXX revenue the throughout reported industry are project making time, million guidance including booking we in and given million quarter, $XX and the $XX challenges cancellations decision challenges, to

In path like execute take we’ve increase to response steps moments the and to profitability. few these I’d growth revenue to highlight to on to a taken our challenges,

late us new quarter, addition for Officer, gain optimism the in Michael we’re acceleration. measured growth joined the line Shipton, of our to Commercial who starting With Chief third top

growth inside customer As as demand deepening addition hired have in new offering material the all our customers, we of We a China provides accounts value will update, Metasite with Metasite promote the bookings our to our network in evidence additions as company. believe a and growth progress greatest accounts. you seen from of the demand our for our with a for relationships area follow-up. world CRO and we long unique real it additional to throughout is generate of of recent sales expanded Michael differentiation have also term new recent these He may to head prioritized addition greatest generate our our also head in is amongst us of website the and return most XXXX. strategic to Wuxi has

the of are about our hands of Bryenton. We technology at continued Troy Chief infrastructure excited Technology Officer, the maturation our

centralized purchase excited We will to platform workflow the and Vault had we particularly development with which about and and of operational to product drive the are data the efforts systems. some exchange to of clinical Health reduce sciences will capture enhanced These tracking, investigational underway records advanced help recent as efficiencies. accelerate us required electronic life for such data features electronic us medical execute plans manual capabilities allow trials scheduling,

last reported raise to the progress headcount containment additional previously neutral cash announced efforts end having expect to million and $XX toward these capital. EBITDA to cost XXXX negative to without EBITDA of million, continue we reductions objective we and our negative flow positive to that like reach quarter, we the of by With and $XX XXXX achieve

provide I performance. that, regarding Mike Financial additional the to With will financial over now Chief our turn Officer call Zaranek, detail our to

Mike Zaranek

the morning everyone. will the quarter XX, results ended the affirm for good then and David, I XXXX. year our you Thank discuss full and outlook for December period fourth XXXX

COVID-related expand which XXXX fourth of growth fourth from quarter up from underlying our to same decrease both that the it’s of reported the a studies with XXXX quarter we revenues In period revenue to and quarter, continued note the however, XX% fourth year-over-year. prior important periods, represents of $XX.X the million if you business year; XX% exclude

full quarter XX% excluded our if were As we increased noted was earnings ’XX year-over-year. growth in full COVID-related the revenues numbers, both our XX% XXXX studies revenue ’XX release, and Again, from year year fourth year-over-year. up

finished $XX majority project a million revenue and the occurred reconciliation and a represents calls, full for between a the The was our just gross quarter. and in bookings increase related XXXX compared the a our final accounted quarterly to COVID-related significant of the quarter. We bookings difference year the to of which for $XX of the very on which small under percentage year-end bookings, the XXXX much third net backlog. earnings comments of million our gross studies net fourth represented with quarter with Consistent percentage smaller fourth XXXX of

study You in to may earnings the count recall up mentioned had lower points. end project backlog. utilize due fourth quarter, trial third prove a we we the the able realization The this wrap took one with early was project project call, which reconciliation the to being completed to we reduction to final patient on quarter customer associated the release at point

Excluding this final reconciliation, insignificant. were actual cancellations the quarter during

period for $X.X same prior the Adjusted in the period quarter margin quarter to year. the million XX.X% the $X.X last Adjusted profit fourth for for million gross same the gross of was fourth was to XX.X% compared year. compared

that the cost plan remain We announced the of realized an earnings on plan update track call. in actions annual and we approximately third the fourth quarter quarter. Now I wanted savings to provide on for the month reduction on one of cost

third administrative $X.X Selling, a excluding the million quarter, variable versus as million due decrease restructuring as fourth of and general implemented to of $X.X stock-based well expenses the we the program of expenses. was XXXX in compensation million quarter lower $XX.X that

Additionally, administrative compensation of XXXX XX% declined expenses stock-based excluding of the fourth and selling, nearly versus XXXX. quarter general in the fourth quarter

the EBITDA was XXXX. in compensation, quarter $X.X compared was interest, back a by depreciation, a loss we On $XX.X and the adjusted a negative which third improvement our million XXXX we quarter, stock-based to adjusted a sequential which income, other taxes, earnings calculate million other EBITDA originally exceeded million, XXXX quarter full improvement charges, the representing year $X and fourth during XXXX the provided Adjusted $XX.X million of of adding versus first basis, guidance call. quarter non-cash amortization, of EBITDA, the

we quarter, fourth also assets. the In non-cash to took related of impairment $XX million our long-lived a

asset is an model analysis were sustained less as sheet required GAAP and was regarding and long-lived the early date. to in accounting operating the capitalization appropriate we of Under cash value, under book of of during scale the impairment fourth assets perform period performed long-lived an was of this we the carrying market our GAAP the Given our balance recoverability for the stages concluded of quarter. company U.S. standards, analysis a U.S. values than

remain term as software-related robust benefits this life or of charge. platform, the not business Again, a to deliver our necessarily enhanced the of returns stack, our first unified our be and future do quarter is on non-cash investments of impairment reflection remain our projects which of of To customers. was we the XXXX. by technology ability the on in confident further the purchase we We a bulk our both long for on laser which view focused in announced our clear, the which

same the $XX.X part which $XX year last adjusted due large million versus U.S. net non-cash loss the the compared adjusted year. million of net million the $XX.X quarter $XX.X net a fourth an was in quarter loss GAAP $XX.X for of a loss was net ago. loss impairment, In The in fourth GAAP million, to million to period

net Additionally, ended federal million we $XXX carry-forwards. in with cumulative loss XXXX operating

In cash, in quarter, fourth to one-time $XX approximately cash the $XXX.X with million, and cash cash ended $X we turning other restructuring equivalents. costs Now the items quarter some which million included from approximately of million. and burn our was

quarter-over-quarter. Excluding cash sequentially burn these improved our one-time items,

standpoint, in impact the cash which As paid employees reminder, will burn modeling first from year. a qualifying a are bonuses annual quarter, this our to quarter first

a public entered The former from of release, the merger Many earnings shelf have registration we agreement the required we into the filed with was November registration public, agreement effective part that filed with registration last concurrent as companies post-effective morning. for as and purpose. Additionally, and year we shelf a went a shelf prudent of this SEC have rights our statement. shelf an FX by the view registration amendment when this We management tool. and registration financial eligible in began we the

to file transaction. supplement registration As to offering would statement, to a a were be pursuant reminder, that we for if prospectus we an this conduct required

the XXXX. let’s outlook for Now to turn

challenging revenues the in we to to business be In XXXX year. continue the million range full light that expect $XX experience, of $XX of million for we the conditions to

$XX EBITDA expect we $XX adjusted to million. between be to million negative negative Additionally, for XXXX

December As XXX.X approximately had outstanding. million XX, of we shares

having anti-dilutive same. be anticipate and a the we any we the year, and deemed in be basic a diluted counts would GAAP net basis, options currently on share As therefore upcoming converted and expect loss quarter to

point the for In this for David like profitability committed study-related delivered We to at execute to in closing the guidance I’d delivering remain value to COVID for summary, We revenues the long-term for underlying to the and exceeded customers. growth you comments. turn quarter. back call fourth our create if exclude we most shareholders, to our over business recent and continue

David Coman

Thank you Mike.

challenging, across of customers on our stakeholders. employees our overall and see focus remains our resiliency and deliver the environment execute strategy to in driving to by and and iterative improvements We’ll continue the solutions. technology value we proud While I’m our

turn the up questions. to With will call the Operator over that, for now I it open to

Operator

question will [Operator time, this we At session. conducting you. be Thank instructions] a and answer

Lake with Takkinen and Thank proceed Capital first Street from the our line Frank you, is questions. your Markets. question Please of with

Frank Takkinen

thanks curious pursuing intentional bookings for if be contract wanted contract the start business, in taking also that I too. one to the shift of update strong previous calls, for with any just you’ve larger about business. questions. to Was on towards Hey, on and know I switch the first. larger your was could if intentional broader provide a you reason bookings the that’d great talked

David Coman

for and Sure. the calling thanks in, Thanks for question.

result pipeline Yes, our a we’re as seeing Metasite. move larger intentional toward deals in the of

push continue We going customer, to the continue and very in is to an so We and amongst continue very that deals. to so to a see large existing see direction, fourth that. we’re large did quarter terrific, which into deal close we

announced, us. traction more was on I these or With so performance we off pay say as you know, but can and to basis, seeing long build high growing traction like expect I pipeline we’re to strategy, greater also mitigation a a in for think in solution that’s acting we had run. also where expect two Metasite ago, small quality what it a the earnings to starting rescue intention, a and are risk the we continue calls efforts getting we

Frank Takkinen

recognition got bookings help Okay, us think next bridge, in cancellations, the backlog this if this couple about million, the net that’s bridge helpful. quarter. from how the Then to Help $XXX million net we that about you’re years, guide of and and talk calculation in over I incorporating be thinking backlog me maybe I’ve throughout XXXX. $XXX to should the about at thinking

Mike Zaranek

Frank. sure question. Thanks for the Yes,

are Obviously may burn the You’re which multi-year Most that them, $XXX of absolutely expect term of correct are follow-up extend some years. projects. XX/XX/XX. some life backlog of in them almost - all greater of almost as to total five over long the entirely contracts, seven to than million we studies

million starting as be XXXX, If coverage phased the off of to beginning the we’re about which you we the portion implies of of of backlog of in year look with year. XX% at XX% the $XX that expect ’XX, backlog the to converted for

Operator

Thank you.

Smock Blair. the Please coming questions. of next your proceed with Max Our is with line from question William

Christine Rains

Hi, it’s Christine for on Max Smock.

me, give any sales can offerings? one models, another notable Tech first from delivery is there breakdown of a Plus, The you or so then terms in in and one Metasite, terms shift and Thanks. way current of of seeing you’re your full certain mix DCT,

David Coman

being we greatest that that of level towards believe greatest very for I we’re intentional company, and offers our Metasite Yes, the say push the as we’re of would it. amount it differentiation the seeing demand for in

continue expect bookings to pipeline backlog. and ultimately for both that be continue we move the we to primary forward, As to vehicle

Christine Rains

XXXX for disclosed, has is you Great, the implied over then ones. the customers that’s cadence trending couple and rate quarters? last couple sort from then short if you’ve your your really line on of how helpful, talk existing just been top about and this can What renewal Thanks. the bottom guide, and a

Mike Zaranek

revenue Yes, plan terms second that, XX% just the put of in half of that’s current versus the half, first our ’XX first so to revenue a expecting revenues in in half in context half second of and perspective. excess in higher the around we’re more the from guide, some versus the

Operator

Thank is next of Please the your proceed The Cowen. with Rhyee Charles from with you. line TD questions. question

Charles Rhyee

more. David thanks kind - the hires sales that, you additional but the kind what’s mentioned, Mike, question. taking prepared those missed the to kick of below new of about go again comments some just Yes, hires for David, bit, a over the sales in for force? little mandate I start efforts help the and also you Can in

David Coman

and the quarter new world in more that a a brought that can I we think of of somewhat and and of term last that studies with the inside Yes, today. head us good I I and identify real mentioned untouched, with so to generate sales world accounts close and The and evidence evidence, we think opens brought we so really head in, deals real call for world a for we earnings and for in front, inside being of don’t that’s us head those. follow-up close thought was sales a and the the new have long accounts, opportunity hires customers The that evidence. of up door head on that commercial new we leads the new growth intentional growth amongst real relationship

around In so pharma organization have, with. regards relationships to which business to existing current continue mining build customers, we partners we’ve shifted and the the that development both amongst to be that’s CRO very specific we relationships

Charles Rhyee

reps sort that, to many beyond plans think I the do How currently? remember what’s teens. you at the bus-dev in adding point, were one you the And for bus-dev of team? I have

move in groups? now down that of as you If you new you of where costs can have team for the the through just adding remind we’re what’s to two taking at you’re heads and me but is and your assumption obviously what that guide, year,

David Coman

year to expect the don’t that dramatically team on. goes expand We as

that solid we It’s organizing mining really opportunities I think we we’ve place. do be intentional them we those opportunities, way got ultimately the rates demand so bring the solutioning team improve taking have and identifying more win right a the about people that can in in to very opportunities, in. those and with generation, new that

that I more make we what it key are is and and offering, solutioning why Science think deals. the differentiated for better, is we’re to clear to that’s us, XX ensure properly closing

Charles Rhyee

loss, through directional the guidance think year? remember rev that an if Obviously question, qualified think to kind we the of for bonuses from earlier provide Mike, first you indicating you’re go how but an of the know and a quarter, perspective, cadence the we amount we’re of at should to revenue maybe but maybe we employees. in mentioned I quarter; about as least going there’s it, can question should the out extra part in any in model to to terms go about that you Got first EBITDA for first that last rec,

Mike Zaranek

a bonus an point a is the as to impact. of Sure, clarification, burn and item necessarily payout just EBITDA opposed more cash

of the have the phasing to of this the being the do terms as year, we in throughout more second with half, this that’s embedded second half I than expect revenue year guidance. skewing and towards of more In earlier, half revenue mentioned year, XX% than higher of first the

of We in also this expect year. growth the to see second half year-over-year

Operator

Thank you.

Matt Hewitt Craig proceed from Our the Hallum. Please coming of line with next questions. is your with question

Matt Hewitt

But first talking at pharma again a happened pipelines, Good and think pharma look sense your do going, obviously impacted this you been news landscape, that of lot we’re next year I driving spring guess, last importantly that now, the morning, you taking what current your more rationalization of imply your that reprioritization which as does for thank business? and kind remaining year, there’s the of I last fall Maybe trials, of through questions. it’s maybe biotech you to as happened you and just up, pipeline QX now getting results. in about and about talk that really the year for for of that customers, partners get year for, the

David Coman

translated efforts, changing I into within that I short discovery the I and because their think longer that standpoint space a term. from see decision an timelines feeling issues to get don’t industry biotech that are still, with they’re funding we so continue that a they’re making then lot being sense more their spend, we is see lot seeing being more cost a the in intentional pressure

Matt Hewitt

perspective, thinking and be then it, to here over about one helpful. year, there course then maybe gross the of start How from and or we grow color those we those margins. be just the regarding step-down any QX cadence there would see a another Thanks. should Got is question in modeling

Mike Zaranek

taken towards skewing that capacity organization think point, I I of not impacted pull Yes, half perspective excess until have know, versus in improvement up the XXXX, margin--you you been. we where obviously by so costs change around Sure. QX. probably from side. think margin out as standpoint, will But actions of margins our second material that modeling gross to some be we’ve from see we’ve gross some revenue, revenue the the that in more should a the some and on Gross

David Coman

and Yes, so gate then year moving as of progresses. the the flat out up sequentially

Mike Zaranek

Correct.

Matt Hewitt

thank it, you much. Got very

David Coman

Matt. Thanks

Mike Zaranek

back one asked from we we question sorry and that want and - come address, to not to I between the clients. Christine did new Hey, existing were earlier mix regarding

think of or I a one previously at in difference we’ve in quarter, a to we David’s size said current customer project want this two the fourth to make the from particular of but and this, XXXX. top projects quarter for large was the win point, that did can a scale, and bookings a very earlier XX repeat re-emphasize material a terms example pharma in

the look by if by full was stats. gross that It but at the third the vary the so the two. customers, existing from course and the quarter, But to if mix you and were about two-thirds good mix about bookings roughly year skewed XXXX, those say can customer to XXXX, the a look front year for it we full from new between customers XX%, for at new more you existing customers increase were to fair and of overall than throughout able between new

Operator

Please with Our question. proceed from the Evan with your next question is Stover Baird. of line

Evan Stover

got a few. I’ve Hey,

that and change as the a You’ve big tech retention months. big the the you’re dynamics what and in time, in in are and headcount in sales strategic same invest your there? and [ph] to satisfaction you’re talk RIFs you XX kind some At of price, your big you recently. for trying really Obviously well. stock had seeing key change Can about areas employee last the

David Coman

innovative for trial Science employee provide isn’t that come I that many engagement really in and to people closer of think continue because the driver can--is space the Science access primary as to of back the retention can retention for the see reasons, the and proximity to or company. so goes key employees two to and business patients a There idea and clinical company fundamental those themselves, XX. to we XX

blankets organization, We to of them really RIF announced on of we We have about are they’re still intentional had employees I the end on that’s--that and highly always I and that want that year, that we make a understand the few--you to that at they think understood. the that’s think, there. highly stress, puts that that putting so day sure things some being make do very think so sure the know, appreciated, we’re and the warm every

Evan Stover

on of something Okay, had fair now? this, I Monday, early by ’XX. enough. of range runway stepping been cash but flow Just you’re a hear kind that. don’t breakeven guys know I long away the Is It’s didn’t curious on the you if that that reiterating and I from there. missed end EBITDA

David Coman

still That’s plan. our all. at part We not on that. of No, still deliver to intend

Evan Stover

to last Fair partnerships, impact enough. the in of have talk XXX and and if there that’s with either was had curious any think can got renewal, obviously you’ve Science positively I others, out partnership on a me, specifically to shifts, Syneos or XX. Medable more CRO any amongst going Final important channel negatively you than channel specifically days, major them, several XX, those there partnerships or from so but question

David Coman

announced. maintain we relationships to that continue the We have

things of believes and One re-energizing that he the as is he so for about of space bit area commercial Shipton opportunity channel the quite in new tremendously, has a that us. terms because head in comes for of that’s great expansion us great and of that the from believes organization and a invested the Michael that channel CRO

Evan Stover

for you. All right, that’s it Thank me.

David Coman

Thank you.

Operator

turn for will remarks. back the I over At to floor closing Halper Steven you. Thank this time,

Steven Halper

Rob, thank speaking look with forward you everyone. quarter. to you you We and Thank next

Operator

This joining to will everyone conclude Thank today. today’s you conference. us

Thank your your time. disconnect may lines at for participation. this You you

Science 37 (SNCE) 6 Mar 232022 Q4 Earnings call transcript