Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the Science 37 First quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session and will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

pleasure our my LifeSci Steve now Advisors. is to host, introduce Halper, It you, Thank sir.

begin. may You

Steve Halper

operator, you, today's in you call. Thank thank and all for participating

Chief press the quarter David Officer; March website. XX, Science Joining Chief copy ended available released Financial of on A Zaranek, company's the XX for are today, is Officer. results me financial XXXX. Earlier release Coman, Mike Executive the

within would will that Safe begin, Private I pursuant like meaning statements make include of Act during we you made management Litigation to Securities security Before that Harbor federal call statements this forward-looking are the laws the of remind Reform XXXX. provisions which of the to

our Commission differ forward-looking statements. forward-looking or actual of section including could review various and estimates Form with these the cause of involve made XX-Q Securities XX-K from implied or by you Exchange company's uncertainties encourage and These upon the of assumptions to the events those discussion for periodic that are in results statements anticipated filings. recently materially Form current to material most based our reports a subsequent We filed on and factors, risks risk and Risk filings and these Factors

evaluating undue place believe that planning any certain which and and the purposes. to operations for for and We ongoing to operations information. obligation statements we our not in evaluate new performance, non-GAAP on as measures internal company to non-GAAP cautioned of are are these forward-looking statements, disclaims reliance use only You our speak today update forecasting useful these such metrics

in filings available to the a including can and referenced, in Investor of investors.scienceXX.com most be portion on measures our Relations the measures measures materials financial of website those non-GAAP about Information earnings comparable GAAP SEC at found reconciliation

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

David Coman

Thank earnings for our and XXXX thanks joining call. quarter Steve, everyone for first us you,

projects than expected. were revenue and million was XX% adjusted each. million, which loss than million was from of $X first repeat rather more quarter quarter better bookings of including both than More came $XX.X worth four First our $XX.X EBITDA customers,

million just First $XX.X totaled quarter gross net $XX bookings under bookings million. and were

our study no of in previously hold included of previously was was impact two-thirds placed our approximately cancellation single year. and phased has a revenue from guidance. this adjustments referenced in business last on the that was backlog our on As original update The our assumption for stated XXXX month, cancellation not realization

XX we pipeline some of new conditions, continued Today, is top Despite confirming and dollar two emphasis. now quarter, Quarter-over-quarter belt. to our quarters our the under volume Officer it $XX exciting macroeconomic of the are new and $XX pharma, end has Michael Michael of placed progress guidance evidence real-world up challenging in Shipton, opportunities CRO RFP that, see his full channels, had where from the includes XX% at revenue volume, to number pleased our a million. Commercial has first our XXXX approximately million we're specific Chief

leading execute a accelerate In for strategy strategic to including or repeat the is business particularly the drive Excellence our and of COE really our faster Prowisor and backlog. recruiting on important, and business Lambridis, introduced update for have These business last the patient month. exciting Erica Irena equally new growth additions on Quality past additions we are us, team patients to and should important our weeks, two respectively, and announced who running. few we we the of are expected efforts recruitment is quality couple ground new Centers conversion call our hit as

business. help that Metasite us strategy our and offering driving the out is on-track. will fully is this noted COE unique costs going while resources of strategy and Our attention very focus well We to

containment, cost As million, which our are provided EBITDA quarter. XX% to $XX of a result to updating to EBITDA guidance loss million to our represents compared in we continued commitment nearly range in XXXX last of $XX be this strategy the for a and adjusted previous guidance improvement our the

who call the companies our technology. of Head Technology our the incredible to Chief technology our that managing been Interoperability, has well as came update Head including heads, and Technology new our and newest background Buitendach; noted new brought being Christiaan some offshore We leadership creation and and last the Architecture joined analytics. our made by IQVIA, integrating of experience work us possible great with Thermo Fisher, of that Javara, Officer, He Paul Kalin; Operations, Bryenton, who COEs fall. from in on ample business talent, Troy include Richardson, and conducted has our teams and Syneos data now team, of effectively hires near member Jeff us These significant in as by

of with Speaking to pleased addition that year. integration workflows very new of integrations, are technology additional to the delivery efficiencies we and team capabilities, scheduling going Vault are in this Vault model the we the The material of acquired earlier expected forward. lead the assets our

tough renewed ability coming topline accelerate growth to summary, in solid into once again. optimism year behind with us, our putting we're a XXXX In results and

our the goal We have give by us will without EBITDA having some hand. we XXXX, of impact of to that raise on changes capital cash ample that end our transformative adjusted cost reach positive infrastructure, already structure. are These and with producing our a confidence additional made to on significant changes

use to for it Mike, highlights and to recent products clinical attention from for devices. regarding by I before the biological the the decentralized wanted the financial draft over guidance issued quarter, drugs, Now to call trials your the turning of FDA

to It the our model regards operating DCT and codify give the recruitment, clinical diversity more sponsors diversity, makes research. Overall, drug deliver of that centricity. regulations patient-friendly reinforces the Metasite complies to to XX means with fully executing retention commitment great the more in endorses a for of to faster, standard should guidance going FDA patient practice. which guidance to Their inclusive, as to Science operational and reinforces areas approach great FDA's forward with comfort draft strides ambiguity research on clinical our as believe draft benefits best and It we development. through in the doubles-down procedures

Of we'll win full is guidance, for final even to course, draft and for for XX, believe have we guidance Science everywhere. sponsors our a but this big the wait patients

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

Mike Zaranek

results first XXXX, for Thank discuss everyone. then XX, full you, David, quarter will March outlook good XXXX. the ended I period and affirm morning, we'll our and year the for

our was same a first quarter, the year. revenues of In expectations. ahead XX% last represents of $XX.X million from which the It we period reported decrease

of and year-over-year the gross increased underlying and with revenues is business. million which our of a mitigation the testament to bookings However, COVID-related bookings. finished XX%, work, $XX.X quarter the We excluding first COVID growth net $XX.X of million

we in $XX the on the we for realization stops XXXX program investigational update As multiple plus call program discussed sponsor relate last previously guidance. which mid-April, four and million was to single a from years. business The of our had prepared in over two-thirds the adjustments the approximately XXXX and on starts directed pause

year-to-date at customer total in XXXX in the not revenue first of which exited million only completely COVID-related this XXXX the XXXX, plus in the phase and point of revenue The historical backlog practice. backlog. represent million with the from guidance. So, or approximately was projects it $XXX.X We with of terminated program $XX.X quarter we combined removed ultimately backlog. consistent backlog total first the for our the phase total realized included quarter XX% program backlog

as This we year. depreciation compensation depreciation, million period first effectively last or improvement XX% Adjusted same down same stock-based quarter. XX.X% million to quarter, million Adjusted compared a was taxes, first the last $XX.X a charges $X.X flat in same XX% stock-based were income of gross back prior for Selling, and quarter quarter other the period in first the general comp, calculate million the to was million the and and interest, administrative margin compared representing expenses $X.X the which was Adjusted XXXX. was from to non-cash compared quarter, by XX.X% year. the $XX.X EBITDA, first profit amortization, period in excluding other approximately loss the for gross of year. $X.X the of adding in

of U.S. less and was was recall $XX.X result factors ago, our which on $XX.X loss potential net income adjusted related sustained for than the loss a and first the net our this our non-cash longer which compared a adjusted The cash quarter was book-value of million first $XX.X liability. the net not quarter. the earn-out of does million period. GAAP an of market period assessment to for in $XX.X GAAP the Amongst a you other first the the us reflect in U.S. accounting our same of we view capitalization loss $XX.X non-cash $X.X million to year. a the of to GAAP million last positive fourth which value of fair in impairment reversal and cited assets record versus with long-lived million included required the call, is term platform. quarter year earnings a quarter Consistent an net necessarily million things, if was This

at In Now, turning quarter, burn million our to and cash cost, one-time included our the $XX.X was $XX including with cash cash. We in approximately cost first items which restructuring the ended payments bonus cash seasonal million and and with the equivalents. quarter Health announced annual previously of the fourth excluding burn quarter cash in-line platform approximately $XX was million. these cash the Vault to purchase payout, related Cash actions.

options we units. offer company period of $XX.X As money outstanding best we filings, on noted million date. April The restricted the for million over options. grant a stock in for tender exchange a of completed $X.X three-year approximately certain our as SEC The out XX,

count exchange dilutive on of as outstanding been a per during to for calculation restricted company earnings the stock per no Future share. loss in our will share include previously share units was earnings the a these quarters anti-dilutive first had and our quarter. had options the dilutive position, impact component As

update late to received wanted trading notification we below an We in December, share. on NASDAQ per the to also relating stock $X our from provide

in we June several our if with continued deadline, prior listing a late June XX not you December the we to If the At X-K compliance consider, met compliant of filed we XX, point NASDAQ afforded necessary. which to December to regain the XXXX requirements have we the at we that end the As deadline to requirements. will have compliance become would may are XXXX, have push to seek extension, until XXX-day intend which options, seen XXXX. which

for guidance $XX the revenue Now let's XXXX. turn are This the reconfirming we to outlook morning, of million $XX XXXX to million.

First bookings and our continue into slightly were revenues our and strong expectations backlog. visibility phase quarter to we above consistent gross or have

or Centers year. We the COEs positive to have previously, announced of we effect and the that profitability our expect of restructuring introduction this a our Excellence corresponding on

$XX these that savings noted a would additional relative our EBITDA million are that As we for $XX our range adjusted changes business savings our on million in call. reminder, to million $XX million XXXX earnings update the in call to in incremental $XX to million. quarter fourth of These of million latest announced negative to $XX adjusted provide EBITDA from guidance reflected of guidance we XXXX in original an April, loss $X negative our

that these the a occurred in realize to third of benefit second respectively. partway terms fourth savings both the quarter planned the Given of savings through quarters full in the the and then the expect partial second actions a quarter benefit in and we from restructuring,

cost bookings evidenced additional and our we as We to recruitment path the Finally, flow. recent the provide taken our XXXX. of more leading point, have we quality a clear we wanted see into end impact on and second remain our of some patient to reduce conversion quarter. are improvements expected increase backlog in To profitability industry action our to RFP we predictable yield in albeit with The the cash a of by recent investments finer the optimistic ensure highly burn. profitability partial function revenue execute and while by provide growth color dramatically about we to revenue to restructurings

to quarter adjusted mid we the full quarterly gross range second to low on the XX% XX% expect the the impact of Over improve the half. the course from the in margins the to range in low first year,

expect cash reduction reduction to cash in burn, see Additionally, less with rate to more we a a SG&A of and than exiting sequential $XX the a fourth burn dramatic XXXX million. quarter

of XX% in year SG&A to higher help investments XXXX a ample additional no relatively we As technology QX level expand making gross capital on having and us cash progress debt. this margins are gross expect the we will without on quarterly positive delivering hand profit ending we raising EBITDA plus XXXX, and fixed

and bookings by initiatives. XXXX gross In summary, we encouraged first are cost quarter our structure

of path efficiencies will provide and profitability. the and we that company provide cost down the and optimistic are our company we our forward, Going we march model our will Centers about customers as of -- Excellence to for

At closing call the this for point, turn David like comments. I'd over back to to

David Coman

between our of confidence as We're to not and highly technology the commercial you, our recruitment, for and do cash recent Thank protecting our margins leadership our improving improve Mike, cash position, patients, to traction, shareholders. restructuring made patient We benefit grew on enhancements focused view and this the this quarter. our sponsors and quality optional. runway

We expect positioned business to to transition out for stakeholders. of that our company is much of period and value a come create as well our key profitably this scale stronger

back the and With that, questions we'll over for it turn it up now open to operator.

Operator

session. Instructions]. question-and-answer you. now conducting Thank be [Operator We'll a

question comes Rhyee first from Please with Our TD ahead. Cowen. go Charles

Charles Rhyee

about you're just questions talk obviously large to the with somewhat right Whether now starting want guys. a volume of draft seeing a little this guidance, markets, bit what expected. talk the about of of little into the bit the taking I inquiries the has the character Thanks have for Maybe you're increased think discussions Science? to terms in David, now.

from just you you to the you very Maybe market could the capabilities of differentiate could us some of bit do well. guys if space the pipeline? positioned both extensive other yourselves players then small more and little in them maybe remind how on there's remind a who how have some CROs, obviously secondly, And certainly us if claim see and as larger the you PCP yourselves in just

David Coman

for Charles. the Thanks question, Sure.

remain delays We've you could if cycles, the think really just in forward. XXXX. terms same think longer overall back environment, sales we general experience But been conservatism funding themes for I didn't that macroeconomic that take in as pleased we've have been relates on about project to the traction the the of I in going doing to our planned last and particularly it that on team focusing and and seeing some and CRO top that volume channels. Michael quarters Shipton RWE we're work for XX the pharma, talking several the start RFP his channel that

I think significant those some have been with providing traction. us

-- So quality And rates and win think very the I the business all think is I quality up up. that's our mean, flow positive. I

codify look the we And for like being lot favorable we read of really our I it, Science regards In as to but not compare that for for SOPs us, patients. place there. to to it us that out been the really and have guidance, FDA we at for also that has in just does super a sponsors relative XX and that handbook. -- like we as through today it reads almost ambiguity

So us we move what that means forward. excited as about for

[rough] the just guidance (ph) out. Now came

rate just little certainly to it'll win should digesting think people us of I help from a for take the it start time So a it, immediate time but perspective. in bit

The in to second I regard ourselves environment. the competitive yes, Metasite question was solution. framed in have And we a the nice place with still really think

competitive a there decentralization a solutions of third advertised being point be as solution or to nursing nurse out out there a If a combining from could are standpoint, there with you technology look solution party solution. just is lot what solution at a

decentralized fact have to know the to arm technology they people fully call clinical that really what order deliver clinical that doing to I in everything decentralized a is or but place we we But and be centralize do centralizing we're one into trial. research, processes able the -- of

really standpoint. I puts nice us place competitive think a that in from a

out on XXXX takes XX up one something XX their trying companies to Science error. that mean, had the be been something able website. but to smaller we've we're way and to replicate like and of a and it's no and execute doing But expensive like we're decentralized less longer gone this to be or model. scale. fully flattery XX doing a that are trials Science clinical catch even little I we're while able XX that for of I since think actually Science that the a There have like through -- Science going it's out on trial to bit. are couple can. puts companies And I there take We're doing that recently came know to

Charles Rhyee

been about some the capabilities. DCT lot their peers about that have a talking larger of What of them

For or in for difficult when going does more a capabilities you pharma the it sponsors challenge do all of you you larger to sponsors, do starting to what make you're that explain feel different the understand players?

David Coman

Yeah.

I is in more I that the pioneer think interest and market recent think in this us as The traction gets the helping continue space us. be think our that we better to terms the traction. perceived and all leader the that's I as all for and model of matures,

We I people of execute the trials only entity we on have all everything mean, that in processes, into the to combined the that company we're or scale be has place. are different one technology, bit all to clinical a Metasite one the scale. in the really model able decentralized

As as and partners I as great see we us. continue CROs, CROs that particular know for in to mentioned you far

CROs to channel As prepared noted for I in continue a really the comments, good us. be

think for area In us today. of an fact, traction that's I

previous discussions, partnerships came embraced embraced from CRO the back. and really and Again, the Michael has from environment they've it CRO

Thanks, been Charles. a for partnership So it's good us.

Operator

Our with ahead. Please question comes Blair. from next William go Smock Max

Unidentified Analyst

on Max. morning. questions. for (ph) our Thanks taking It's [Christine] for Good

is Our first pipeline. around question your

versus you Thanks. You the for bookings update have a win wins from the from coming customers? rate mentioned percent thoughts RFPs as a up customers can of XX% rest but year existing quantitative and on on new

David Coman

for We sign and we don't really gone year can tell note a recent we a have that we traction revenue for guidance in across I months anecdotally win channels, did that our you and all provide revenue our significantly. I haven't win guidance rates. for up rates up bookings we be the second believe for that's good on us. we're and think Well, provided did lot give consistently productivity. half seeing of will of And the historically

greater XX% XX%, for forecast than guidance or original the original think I half. first the

know, helps you you terms hopefully that going of forward. So, in growth

Mike Zaranek

on a for base. new sure but the repeat first look of sign, about XX% new opportunity an repeat the for opportunity. ratio not quarter, right there's customers between And positive for repeat the also in I that then customers, but an a gross the and versus that the we new customers at grow is as there to accounted the certainly bookings. total I'm us answer mean, customer

pretty repeat customer numbers in coming With strongly. the

Unidentified Analyst

but And really is, of helpful. a includes last plan then those XXs employees. our of these is That's a one How these from employees Great. given XXXX Science COE's as elimination net positions. new the U.S. maintain regions do base second addition reduction XXX to in three Europe In given and ramp. restructuring plan and productivity Slovakia, Pakistan India, you XXX levels and expected this add

David Coman

we really have shifting the model. may the we're a Yes, execute offshore company when the the actually we're in COE that U.S. to in We do some to move advantage in of we first into not near the did regards strategy forward, opportunity to taking done model, of And take we and this. Centers this to take to resources out capacity past. Excellence in as executed excess all the

hit this and ground additional the as us. to to as brought most as strong executing be lower for that transition new And gives of She's us possible. that Quality, to this we've the at So who able in to running a we're humanly notably made as really in as be the introduction technology the possible bring scale to is And leadership that effectively Irena, efficiently make cost. able on our we leadership ensure significantly investments also flexibility of on exciting. Head resources

Operator

Craig-Hallum Group. comes question with Hewitt next ahead. from Capital Please Our go Matt

Matthew Hewitt

that opportunities first take for morning. cost Good the the been up, margin not the to for year. there some Maybe you up you curious, or all this has that and gross improvement areas? is in Thank year spoke next efficiency for in but to questions. some side pricing taking only I'm

David Coman

from you if certainly able been jump significant want cost There's start we've me a to Let standpoint. Mike. do a that pure to in, expansion

actions those us And so top we opportunity able execute to line But that. is there -- to have be we made well. a as for

bookings, up it twofold. of starting revenue, see we're about to growth I volume mentioned. going in think I of One that as growth of and is RFP terms

to some also we off our that knock our be introduction our we of potentially and activities board. of patient effect a backlog accelerate based to ability recruitment with with So coming expect expect nice on revenues Erica of the to increase on

has us. pricing focus really area sure not of the I'm been for

we've got pricing the I of in XXXX. adjustments marketplace We those late think today. in made competitive some

don't a both a but there, definitely, component there it? and so And change is growth see to cost expect reduction a to

Mike Zaranek

characterize I round mean it out restructuring. I we One, forms. took say, capacity would latest in I'd Yes, in just four excess this to

from of margin processes existing in on Two, we some the David you streamline half bump up what as back improvements we're Three, we think the So, then this in terms you our yield that implying as new as the on the uplift if adjusted four, additional David effectively will which Irena, we making of the benefits margin. referenced And about the provide terms And business. we're front, believe technology gross year. guidance, at scale believe get the get will look we a of of that. to that's that will of mentioned, we here investments that some hires Erica should margin. and some some

Matthew Hewitt

what COVID Thank second growth your Is million comps. through Got net $XX are reported the tough here then a Thank last I related quarter That's of opportunity in an And pretty show you. be you. it. do would in some close. getting maybe to for year. think you thoughts? much you the a you're helpful. But there think you'd bookings second question,

David Coman

the where driving COVID growth, world volume up. in is And that pointing overall think think is us. for I is this arrow I a

strip revenue out maybe of prepared remarks that you in year-over-year some have noted our is XX% up think COVID. if I So you the about

RFP when in a think underlying we growth, the so look that's at non-COVID And still are I there. world. And fundamentals

Operator

comes Please ahead. from go Street Markets. Takkinen question Frank Lake with Capital next Our

Frank Takkinen

a normalized about ask could the more are rate to XX a time thinking projects months Hey, quarter, other hold any I if this next was in going on could the hoping And taking you're there's of forward? out specifically, clearly side so? the how of occurred cancellation the thanks for cancellations to that I that questions. equation, speak polynomial on or backlog one but maybe

David Coman

Sure. Good morning, Thanks Frank. for the question.

XX% I where see you XXXX think at over we volatility. historically we've would we and that expect XX% negative we to land. difference cancellation remind can is industry cancellation norms our what particular a Obviously approach XX% in project quarter XX% size, we're just to then a that I time current But or of XX%. suspect said is perspective our we underscore of rate volatility cancellation the going below then sort term, positive some that XXXX. about in to XX% a and point, One to make longer to from had rates rate we'll just rate a in have

light sit changes backlog we in trends from course I the perspective of regarding adjust as other of well. the think this occur. there, here terms recent if specific question that each been practice changes month with we've since in to has those backlog our when risk review and anything a and consistent In companies and We the the gotten in projects, in else backlog industry, any of the the in

Frank Takkinen

$XX.X SG&A the cost this reach half recognition comment of expect the Can speak then an second cost after those Okay. That's you helpful. cuts at in should year. to rate and that you quarterly million implementations, recognition see quarter adjusted versus implemented? this are in cuts to the we the of QX, about the partial And heard then full I cut thinking cost

David Coman

the what of guidance as of But say the would in Yes, savings. I million as mix a SG&A. from that given I that. was well million revenues $XX cost both to don't $X is cost think out we've on additional That

this the remarks obviously perspective. the the this that a the with dollar So majority we we to the expectation reason restructuring timeframe I in QX remainder a SG&A did occur the partial from impact restructuring year of because XXXX decline as is sequential of in we've the our mentioned remainder gotten of is over prepared a will have here the And of April in rest the over year.

Mike Zaranek

So and [other quarter quarter] QX. versus (ph) in QX partial

Frank Takkinen

the Thanks question. Got taking it. Perfect. for

David Coman

Thanks, Frank.

Mike Zaranek

Thanks, Frank.

Operator

[Operator Instructions].

next question TD Cowen. go ahead. Please Charles Our comes from with Rhyee

Charles Rhyee

Yes. half first quarter said second just second on I guidance, coming the think revenue you have higher think -- half. Mike, in the XX% about question. I one I than follow-up last

Given what give quarter sense saw should we in we the the us year? rest first about you results, the think the how to can cadence of a

Mike Zaranek

absolutely Yeah, XX% be second said out we we original sure. our gave guidance, right. first And would Yes, whenever up half versus half.

same We also that a in the where revenues first mentioned the earlier the quarter guidance reaffirming obviously in previously. came revenues our of holding in And we're prepared remarks revenue better. bit was

David So versus first quarter it won't be as mentioned quite significant as pronounced, but it quarter. pretty will still second be

Charles Rhyee

Okay.

the but still half slope higher less, a little still full of just half. first year, than just it's bit second maybe it's So

Mike Zaranek

Yes, yes.

Charles Rhyee

Thanks. Perfect. Okay.

David Coman

Charles. Thanks,

Mike Zaranek

Thank you.

Operator

There like David no time. Coman, over to CEO floor are would remarks. further this back to I at turn questions closing the for

David Coman

right. All

the to say quarter. like us Just joining you and to talk we'll in everybody next thanks for

Operator

teleconference. today's concludes This

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

Science 37 (SNCE) 15 May 232023 Q1 Earnings call transcript