Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Science 37 Second Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Steven Halper LifeSci Advisors. Please go ahead.

Steven Halper

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

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

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

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

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

at now portion those can turn available a including materials filings website the David of be Investor in SEC over referenced, measures our GAAP the the in and to measures financial on Coman. our call reconciliation investors.scienceXX.com. non-GAAP like about David? Relations found most to would Information comparable to measures I of earnings

David Coman

investing several metasite in really unit laser-focused recruitment model, fully thank these you, all than to past to on quality today pay patient for implemented up pleased started dollar as earnings our you, report to offshore I’m call. as for is support commercial discussed becoming shedding our economics transforming Steve, medicate over calls, us and investing the the that the key near including second quarters we’ve and on excellence quarter XXXX strategies Thank proposition, joining and the and more Quarter-over-quarter, differentiators, RFP don’t volume XX%. our our really of value in improve have expenses that dividends. centers everyone,

than Our XX%. are more gross up bookings

net XX%. up Our bookings nearly are

is up revenue XX%. Our nearly

better Our burn gross XX% lower. than XX points is margins is than percentage are and higher. cash more EBITDA more XX% our nearly

of backlog in You’ll note some our that this released quarter. our we press release

was total were we site to adjustment about million Our XXXX risk contracted of only sites in were and our when supplement compensated million, services. $XX.X bookings XX% COVID XXXX used the best activity, mitigation traditional or where $XX.X comes studies from we and

these these rates poor site Given agreed with second sponsors in the to contracts for adoption discontinue the incredibly our we studies, quarter.

do not While we free this impact and for quarter of P&L XXXX guidance. enabled some material have our our had our little on very some closeout carrying studies. They had and these part on up revenue expectations low in accelerate provisions, modest us as costs second to a impact cases

have we watching are about in We in mitigation risk closely. similar $X work our backlog very million COVID that

million or not unlike watching in CROs. year, clinical backlog this other may handful our totaling value sites $XX a We’re of also that amended studies about contract be traditional in trial

backlog call or note important expectations. pipeline endpoint these what our and execution amendments with these risk sponsor detection, phased None our The quality watching we’re these sponsor anticipated and prioritization. It’s adjustments potential we’ve to funding these reason potential adjusted related. have our include early for that adjustments, potential or of that guidance we we

Pulling fourth the our the quarter gross half the expect to this be gross between together of our given XX% and We a beyond. in perspective, we with and from to average industry in the weighting second rate our of around bookings year bookings forward-looking volume, expect in normalized the seasonality. XX% increasing exceed of XXXX given realization heavier half RFP bookings first

to that acceptance gross account revenue, draft forward-looking documents for and bookings greater a half accelerate, we diversity. recent the continues clinical we the continued RFP participant first are decentralized trials regarding taking flow for need greater expected. regards given expect In momentum to into were the and guidance than the FDA of

which we guidance With to expect much As range. the we’re previous our million our on loss than raising of be cost continued EBITDA to of a result, management, $XX XXXX million end previous approximately a top was approximately revenue is guided stronger XXXX $XX our our focus which guidance.

we during recall, million set release, be the expected quarter’s the fourth $XX of first XXXX. you to rate our cash earnings of quarter quarterly in burn If

less the Given over our XXXX than of cost less of than this the of million to burn of containment year, $XX with $XX in efforts now half expecting date on and more second first million exiting third quarter performance cash and $XX to we’re cash hand. XXXX half XXXX million than

and and having raise in additional with that capital. communication we our cash expect been to a expect to have EBITDA positive with to revenue ample growth on quarter hand approach in XXXX, the consistent continued XXXX bookings of exit similar We without cash fourth management

the to strategy this have changes. to starting objective, of we’re see We these effects the positive achieve implemented and right

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

Mike Zaranek

I’m everyone. start June report quarter good ended the results full and metric financial XXXX. of XXXX. the each sequentially we’ll you, the have pleased outlook that for David, improved in will key discuss Thank quarter discuss in to the XXXX, quarter second then second our for we XX, To I with, morning, year

cost basis $XX.X $XX.X the While finished gross pleased sequential the second over quarter particularly the consistent quarter. months, XX have to in million in with bookings. our reported are growth improvements revenue we’ve we bookings past net million added to We in and

adjustments $XX.X of pandemic comes this to quarter the single million a follow-up greater than As from COVID with remaining. study second mitigation COVID years contracted the were of that related David million mentioned, nearly mitigation X solutions approximately during $XX.X

second led revenue to during minimal such, previous second As relative these quarter made guidance. adjustments quarter implications the our

less COVID Excluding our our review second to It mitigation we XX% XX%, adjustments, basis. industry $XXX time. we approximately important the quarter note is remaining that with XX, rate a million was standard status expect COVID was in the work. as industry on of XX% XXXX, than over June to lower mitigation of is that Consistent monthly there backlog cancellation for $X cancellation practice, million rate the of no than project which contracted

that about our $XX million handful monitoring project aggregate clear, totaling degree our mentioned, out we are have as contract a of are and And David studies years. entire a guidance which have multiple of derisked in spans to in revenue high portfolio, be value, visibility near-term these we To there of revenues. over

new period our of $X.X million X% due million, $X.X same quarter sequential the up accelerate or was discussed this quarter. from increase Much our to and recruitment second period the of ability for as down million, sequentially. quarter. or of million gross Second was quarter or $X.X million $X.X Adjusted $XX.X the decrease revenues XX.X% compared profit prior or last impact and we same to was X% was to XX% that prior $X.X which the of patient year strategies million were the the the year which revenue improvement versus first given

patient higher Adjusted was achieving last the X.X the we points XX.X recruitment was first same points margin gross of year efforts, utilization for improvement as our as on XXXX. Much up previously. quarter XX%, margin increased up from of which result and spoke was about well percentage percentage which quarter the from the gross of period this rates velocity

down Moving second depreciation quarter. million $XX.X excluding million of or sequentially. This over in than compared $X.X million XX% from year or the last the general administrative and to $X.X same was Selling, down SG&A. compensation million more XX% stock-based and period to were expenses, $X.X and

our SG&A don’t improvement strategy. of the shedding that our was in result addition in of offshore excellence of to we in costs centers support implementing which our April, announced strategy, metasite Much

overall For as define company. quarter basis, marks second EBITDA our and first in perspective, as quarter public XXXX revenue was difference we XXXX, which the operating our cost fourth adjusted the to compared XX% which a between nearly a of of quarter the reduction

in a was representing the made back charges our or depreciation, This adding of and significant years. business best in the to as strides move $X.X costs year interest, X in performance path $X.X sequential taking calculate of taxes, towards we we’ve the adjusted quarter, forward prior XX% loss the out income, compared planned, improvement. by a other which $X.X amortization, million million EBITDA we XX% improvement period stock-based or same is noncash quarterly as million profitability. and to So other Adjusted EBITDA, compensation in

of On other things, noncash for our this the versus a compared second Among adjusted long-lived basis, our on ago. assessment earnings in $X.X book second The reflect to This our cash cited GAAP to of $X.X GAAP view net million does million net and not the second million the a loss a than we Consistent an a and of platform our be loss value a related sustained an value U.S. of its quarter. second million U.S. longer-term GAAP a for with the charge in year. result of loss loss or the represented was same market us period capitalization, period the record is of adjusted which loss last XXXX continues accounting in factors quarter year $XX.X potential. call, of was first the quarter required impairment to net of the $XX.X quarter time. which assets quarter million, $X.X net to less

million which cash difference million. XX the turning and our the was ended quarter approximately sheet second March We and cash. to Now June equivalents. cash $XX.X cash balance cash in XX cash equivalents In quarter, from burn, the $XX in with is to

approximately in such first restructuring XXXX. Cash related million This these excluding $XX.X to previously quarter sequential improvement payments of included greater the $X approximately $X.X a actions. was as which million announced onetime of versus burn, items, is cash than million, costs

XXXX. turn Now let’s to outlook the for

increases bookings, of $XX our the volume $XX David noted tailwinds FDA our million are million. recent stronger-than-expected $XX As year RFP end approximately full revenue updating million range to guidance from the previous given positive that preliminary previously, from the top we some to range of guidance and of documents XXXX gross

or second even the than recruitment flat roughly patient be quarter to quarter of some potentially revenues backlog quarter into a through third accelerated third second quarter lighter little as velocity. our expect we better We the

quarter revenue on new starts project to our and And we higher ramps. fourth our of a on the be timing study expect sequentially basis based

current facility, XXXX. in we While XXXX a our providing momentum we will later revenue expect guidance until growth date, continuing off hold and given solid

the from margin mid-XX% gross we top improve in second range that XXXX this the our we indicated the at in in of the low the our the expected low range half call during year. to in remainder expect quarter, to end of we XXXX. XX% second XX% achieved adjusted stay quarter the earnings Turning We of range and to guidance to margins gross first the for quarterly mid-XX% last to range of that

On exiting a the fourth the we to a first more also less million. and SG&A see in of in a expected quarter indicated we with call, burn quarter burn dramatic reduction cash reduction than earnings $XX sequential cash

of cash quarter David X of burn million, the be schedule. to standpoint we third ahead $XX tracking anticipate ahead and this noted, As than our expectation from now less quarter are an in

thus be cash $XX of on burn million, more expect for less hand. half We XXXX to full than XXXX, than $XX million our second of cash exiting the with

to fourth quarter hand, and year flow, second we XXXX delivering into gross on progress are quarterly of expand in In encouraged raised with we and investments that gross positive summary, utilization gross further ending margins improvements adjusted level to needing additional ample continued higher with thereby in technology, profit expect of capital. greater on quarter help initiatives. our a to have cash increases the XX% our we a bookings process exiting fixed relatively XXXX, or us and by As cash EBITDA and XXXX without SG&A, cost

the down towards Going forward, profitability. march path are optimistic we as we

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

David Coman

been We’ve Mike. you, with have and our intentions. on these calls Thank about been highly intentional strategy our explicit

desired the outcomes Our pleased strategy clearly the with business and momentum. recent and the actions we’re having we’ve taken are and results,

raise by open to of now positive of financial are without the optimistic of EBITDA on cash adjusted it We’re for our flow future the track With reach quarter and capital. and up to goal having that, XXXX fourth the end questions. about additional we’ll

Operator

[Operator Charles Instructions] question Our & from Rhyee Cowen first Co. comes with

Charles Rhyee

if And stretching. you improve. that starting Guys, longer like talked were were and sent or that This we’ve with, here congrats you we it the sales cycle that’s to now, on the bookings to past, is the that start that to through acceleration anniversaried think cycle about looks was lengthening I is Maybe of in taking things you’re deals about and this guess are accelerating sales cycle again. see market kind gross dynamics signal that the a to shorten sort can sales talk of starting are seeing. what --

David Coman

really increasing. don’t volume honest, see cycle, our our still in true. still is normal the much news I’ve that’s I to is being length that about Good the of It’s think new we Yes. be I think frankly. long. and RFP in change, And talked the past calls, sales that

volume. dollar first I I prepared talked in about in up talked from the quarter, a over increase XX% RFP XX%. about our That’s remarks,

cycle RFP to acceleration So in still sales we’re seeing has that dollar volume, in. but kick an our

that that you think, a think provides us. a little perspective. new bit I of I hopefully normal, is for So it

Charles Rhyee

helpful. what -- is you RFP there looks full being from specifically guys sponsors in to it of seeking you? Maybe metasite, kind give sort And help is the for sense it volume, through That’s to like. the us of any given Is you talk Okay. what higher trials DCT mix this terms really of with just a -- are it. can

David Coman

in -- We the we we made Michael metasite and the in proposition super that brought that. as for mean intentional be value decision in really about to I run back to Yes. key commercial single-minded the date our to shop us. shipped

to the CRO particular. into channels also in and attention also dig channel made RWE the we the Now

of And both so different areas those we’re seeing uptick as in an well.

evidence. and the continue value As continue world strategy proposition metasite the partner our we about thinking the of in real

Charles Rhyee

take they’re your you mean, talk correct about areas they’re kind with far any of particularly I parts the help asking my me the of when of particular one it’s give what supplement guys that as Can doing platform platform us on -- certain at that there I’m any understanding, to elements pick there parts as other a of to sense, And you are other? lots still or preference focused versus you or way is could wrong, if once. Metasite, right?

David Coman

us bringing a really It’s in as virtual site.

entire proposition diversity greater may more they faster a or Ultimately, trial. to have enroll back traditional the a to as So site supplementing experience. what with be order site single value network in acting patient-friendly comes able a to enrollment, the and

Charles Rhyee

take left could Great. mentioned ask you just just said then Mike, COVID-related you, And the you $XX charge chance because to clarify, work backlog, Okay. million the if probably I refers can you kind is I question of not -- another in million to maybe happen? that’s reason guess to? -- not that And of that of there’s $X clarify $XX what ongoing and a million that are just any might against the

Mike Zaranek

Yes, sure.

we in relates Charles. to just as this like thanks, monthly it through companies think clear, space, entire all portfolio going a on I mean project basis. the project super monitor be do by to million, So I $XX the

that, might faster you that those opportunities multiple watch we’re where risk. to also there of do part million might of a the slower project over in in that prepared is or the opportunities attempting our monitoring. identify burn where be identify What spans at the the have that those list to be and be were burn we aggregate on As we might there’s that $XX about years remarks terms you identify

the at our the necessarily that updated mean and a That guidance what the -- we It portfolio, seeing of necessarily but monitor being of those the those sort opportunities. risk-adjusted we’re business will take list. view as on are doesn’t roughly canceled. there said, they That doesn’t in aggregates thing, be rather look mean

derisked related And in term our we specific to so perspective, think projects. those from we’ve the revenues the near

Operator

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

Frank Takkinen

Congrats half stronger over whether the than be revenue spoke to on that in you gross know perspective, if were peering comment relation range? to of some expectations, I not, be to you could, you likelihood Xx you in talk the bookings was if was have first there. one, it progress but you there is I year. going quarter. clarify I likely heard that the expect hoping half I from And strongest don’t net? think versus seasonality was then book-to-bill we could recognition the in mentioned to bookings QX a second or to that a you get as exit QX guided bookings that David, to think that QX the to

David Coman

first. growth the in gross to thanks be second. Well, bookings. question, that. second about net I relative in go expect terms talking a with the for Yes, associated half bookings the Frank. for to the We’ll to there’ll seasonality I’m sequential do see We than of in believe

than Third quarter fourth. were holidays traditionally and volume quarter is not lower given the

quarters, be larger be I and second the the back combination So expect quarter. to X to first I weighted that of than the and the expect

of terms adjustments, net determined. still be to In

that I in we remarks of through, will provide were prepared our all come that that some risk that does. we’re suspect things at some to don’t I what it that. provide that it’s might but to looking tried possible think

does. little telegraph case I’m to trying you for So it a bit in

as you’re So well. you know models we’re preparing looking as your what at

Mike Zaranek

not consistent thing documented just formal if the receive mean, to cancellation clear, typically backlog to remove we that. I add could be with we until And I project one notice. the our would policy,

David Coman

come $XX uptick half second the represents the year. half the Certainly, as first question second full of year. well. of In slight weighted to which recognition terms We was of of a do revenue about the around in year million, the back-end from expect that part for the aligned

for third half And expect likely total, little I reason But may higher. more down to second revenue we’re actually be to a we in to revenue. we come for accelerate had in third as if accelerating that goes is a we’ll second the all well, just really quarter. said had in terms Mike be revenue quarter It fourth even bit continue. in strong the what of continue quarter. revenues think and quarter think the I flat that, And third

Frank Takkinen

portion Okay. million out And That’s $XX years. you is one helpful. COVID then multiple to on just Can that follow-up over the what in parse aggregate maybe question related? Charles’ of

Mike Zaranek

Yes.

mean we COVID the of sort talked distinct $XX So that about I related, was the I $X separate and think from million million.

outline $X of the to is and in want distinct you separate $XX if sort COVID which million. the mitigation risk is So million,

Frank Takkinen

it. Got

then one customer me, any relation in macro, to of across noticing? And just broader different or strength for guys that last Okay. are pockets weakness particular you profiles

David Coman

I when we’re don’t it where the to -- be with another if intention a guess that in regards metasite there’s lot be really think for intentional think set the you in I model, CRO about anything pops in makes would -- nicely mean what to do. it to except traction. which know just really out out. And seem we we sense really site CROs the I world, the trying they’re maybe in slots I getting I we’re to more to

uptick do the we an there CROs. see So

strength continue in a some We even see well. to small pharma as

Operator

Our next William Smock question from comes with Max Blair.

Christine Rains

Christine Max on It’s for Smock. Rains

is, you customers quarter, accounted of one gross total bookings. for XX% first the last your The repeat indicated

customers use real-world currently to that with wins and areas kind into repeat you with just this see just this a of new what percentage solutions opportunity you’re cross-selling and on your how given what do curious evidence, leaning quarter you’re of targeting of of much Just and relatedly, customers increase average overall customers kind your existing like number your there? was strategy your

David Coman

we’re had large -- customer, was we would say -- Yes. actually very one this predominantly and about. customers new new excited I is which quarter,

new pretty XX And months, So I over customers. more that’s it’s a -- -- like existing XX-XX good we probably mix. last versus think the

talking I’d way. grow, to work can that the traction new kind of Yes. As inside in providing the and happy in customers, into that that, who organization we’re network expanding terms with put Michael to sales. leads has of we with But more see place like that ultimately see of our super sales it back and to [BD] goes again, with turn the

study lend the of continues a that that from composition mean as happens to become could well our we’re It really super to study. space itself the know, on staying focused graduation of RWE expanding a into In Phase focus. metasite work, a real and world to terms existing customers IV with in Phase be the you a III

we our like there with base. And opportunity existing so that

Christine Rains

of excluding for winning Great. for of top And to awarded or what’s last trying that’s to your amendments. through just roughly contracts backlog duration current longer duration get your notable Can XXXX. $XX one us. been just line Are you seeing most into million visibility walk the backlog shift any of that you’ve average you sense bigger contracts? of towards growth Just vulnerable visibility a kind

David Coman

maybe the about Mike. you and just contracts talked I’ll about backlog, talk the

increase value, contract size larger is pipeline, for than to which contribute in in exactly because to we what continue our can that hoped we what dollar more drive volumes. the past, is So going could we’re to volumes which does we ultimately adding patient larger

that. seeing definitely we’re So

Mike Zaranek

not Yes. from to currently evidence And how tend to backlog, here it the where of a sort in wildcard as burn mentioned, But the demand on, much what’s I perspective. of David in so in a terms historically we’re from duration change think on material be duration. real-world more seeing as we’ve and those longer side, is relates the been

Operator

Matt question next Craig-Hallum comes Our with from Instructions] Capital [Operator Group. Hewitt

Matt Hewitt

Congratulations on clarification. one Maybe the of point progress.

an in volume. So dollar you’re increase RFP seeing

here backlog? maybe is other these over of providers feeding past what’s the trials, getting the programs that the One lack a the clinical quarter that and their RFP you’re what’s dollar attention there’s and priorities in what or towards that shifting their you’re biotech later-stage return resources, later-stage service larger seeing also driving earlier-stage the where hearing more they’re programs, in more pipelines, of things is from shift of been been a X increased from pharma is volume is we’ve that’s

David Coman

pretty the what’s Michael had that priorities is started as on I of ago, about when that he’s spot materializing side how for we’re fishing in sure us. function pharma X not for noted RWAs of versus months a much declarative because I’m a about being good the what

direction. we’ve that push organization positioned really that to so And in amongst sales our

we’re definitely heavy very we’re IIIs movement a IVs. I of evolution used the the more seeing mean in So guess Phase II seeing Phase and a We to sort company. be I never but from, of lot

Matt Hewitt

realize And days, have are then for early potential And very starting the I that it. you a given diversity but Are you it’s that Got maybe driver? Are to conversations? bit FDA to mandate starting customers of to whatnot. see you bringing up? and coming as a little

David Coman

I a just when would I something, of there’s And back to say that the conversation a guidance need out, on to starting part interesting, it the think do for came we starting I of that reaction real. be diversity to to versus back be is different think little permission that execute was be bit gave that is revelation from something the them to able that past. bit a may sponsors do was of little which trial holding guidance, more bit to little being which been in decentralization decentralized different, they we clinical think the a I but have a

So I for some become starting good of are pushing to tailwinds the think hand-to-hand them us. X

Operator

further Thank floor back would to closing for Coman, over you. Officer, turn to Executive this David time. Chief There are comments. at the like I no questions

David Coman

all for it I in thanks again now. We’ll the All and let appreciate questions for you right. cut questions, off to we’ll talk Well, the you quarter. Thank the you. today.

Operator

now The conference concluded. has

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

Science 37 (SNCE) 8 Aug 232023 Q2 Earnings call transcript