Science 37 (SNCE) 7 Nov 232023 Q3 Earnings call transcript

Greetings, and welcome to the Science 37 Third Quarter 2023 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Halper from LifeSci Advisors. Thank you, Steve.

begin. may You

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

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

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

our David for the most performance. of for to turn update in evaluate portion measures earnings statements as now non-GAAP can evaluating our speak website purposes. You referenced, in and are of such Relations financial forecasting these cautioned non-GAAP We ongoing not information. to the internal in obligation operations investors.sienceXX.com. I to to including our materials our David? the metrics use a Information non-GAAP on and those reconciliation GAAP that these Coman. of certain measures on today, only call to like useful available disclaims Investor filings over place statements, which We undue operational found be planning and the at to measures SEC about forward-looking are reliance company measures believe any comparable would and new

our than the as place plans EBITDA of gross and adjusted excellence of became the quality our cash path same thank of another half. significant These XX%, us today in elimination profit strategy. growth constant XXXX positive support of of laser-focused result our report to on the quarter management solid end revenue for Thank for second and quarter revenues you, to earnings everyone, relatively our margins third model, on XX%, quarter the improvements including improvement of breakeven recruitment flow and of to time, gross we implementation we EBITDA as the achieved and on put XX%, I'm call. the investments centers we by expected, profitability expenses pleased are quarter, and XXXX. Compared while cash with and more of and Steve, and and offshore patient third higher adjusted progress remained our in above Metasite cash joining cut near you, significantly at don't burn the in that

we've do oncology improvement, gross lower therapeutic significantly made existing crushing up conversion quarter improving community sources which us aligning cost ongoing our process was helped its able providers, We've and in is $XX.X reason part gaining more satisfaction. and for recruitment big than were patient patients patient from our it with on per customer been the particular, rates to highest improvement. Gross that level for which this a going XX% first year, customer to addition bookings of more patient right year, million, in several drive rates, our and than the continued Similar than XX% prior margin third recruited contracts, of our for prior trends result our since the at years as expect our is in is work through public. but in more cardiovascular. What's Focusing and including we investments fourth we've significantly by the was versus areas, down more to of quarter, decision-making. which seen to on much previous quarter, CNS, accelerate the delays diagnostic been patient XX% in We're the enrollment has we've across in stronger quarter to seasonality a similar now studies revenue able recruitment result. from last a a enrollment respiratory,

delays now we expected bookings and will expect third have between to that As XXXX our impact year, revenue the we year. $XX modest our for $XX achieve million out a quarter on close the we're and million

Financial and than quarter, the have been our XXXX additional cash details. ample in exit of we We with cash of third our of Chief having communication continued more with expect and qualified RFP on without the provide XX% million guidance also management. a volume from pipeline than to cash to to revenue for burn for our on XXXX over exiting in quarter million. reiterating additional year of we progress was to turn for more hand. With $XX positive of a loss we with a are a adjusting Zaranek, raise and to approach hand guidance fourth I'll fourth sales that million EBITDA expect second and similar the it to million was continue cash less previous anticipate that, on consistent And capital. With Officer, $XX.X than $XX growing We're than the bookings call continued to loss higher EBITDA half growth Mike XXXX, quarter that expense we $XX our the

ended our full XX, David, morning, I'll the and we'll September everyone. the and good you, discuss quarter Thank for provide year XXXX. XXXX, then outlook

backlog million quarter $XXX.X in third with prior higher September which beginning XXXX of David $X the our X.X% end period $XXX.X million year. the the $X.X was at quarter. backlog, also third year. gross for million the to approximately the XX% for million, bookings reflected As same million which adjustments, realization of cancellations the or backlog were and prior same period ended in $XX.X compared which than mentioned, of The quarter of represented the the We

third million, prior the sequentially Third quarter which or the period $XX.X or of year lower was increase million the $XXX,XXX second the for X% XX% $X.X lower gross $X.X $X.X prior the X% period versus million, same or the million quarter quarter. quarter. We about and of to revenues were the of was gross XX.X%, percentage points XX% from up and profit margin $X.X same was our quarter. up an compared the million and year year, than Similar Adjusted particularly efforts quarter of to were XXXX. than period second the result pleased XX.X with rates continued of the much which across was our second to and, the patient adjusted utilization same improvement in this up gross from X.X fourth lesser is a points margin organization. for second recruitment the quarter, improvements or of the extent, This last percentage

to a improvement a result to be $X.X in million our assets of a basis, second third for call, the was second more $X.X or SG&A. noncash U.S. loss was required and book loss $X.X realization XX% XX% the our a depreciation relates quarter's XX%. Consistent third April period and, worth EBITDA million long-lived GAAP to the stock-based XX% we've continues charges to million of cost net other a for GAAP represents year, bookings quarter was of year a to interest, excluding an a loss same or charge which Most capitalization, the between a GAAP period, as year third sequentially. our the EBITDA public period earnings adjusted quarter reduction compensation which and net activities. Adjusted cost Selling, over XX% $X.X the the since of compared best sustained we lesser been U.S. full able than of compensation adding cited same This in U.S. this over the compared adjusted quarterly which adjusted accruals, quarter. with expenses, and other the our impairment the improvement income, last improvement performance in third quarter period net the define record XX% by $X.X quarter X incentive EBITDA, from this of in million Over decline a depreciation, net million time. On last $XX.X by and calculate million our ago. market a down a to and administrative basis ago extent, becoming related SG&A year. year sequential representing to same general us were things, adjusted more difference factors of the or of which a almost in than value reduce revenue noncash performance approximately million is of Moving quarter. quarter. back $XX.X book million adjusted quarter compared period loss million and to on of a quarter, The our or million restructuring versus for year-over-year. to $XX.X cash Among and third third prior loss and represents stock-based million, million the we we than improvement with the $X.X compensation $XX.X $X.X quarter XX.X% amortization, in compared was a the second other company third to years taxes, less loss This the which down represented $X.X the to compared prior actual

the was quarter cash other which in effectively burn, September Now and cash sequential represents the million burn turning to cash. we half quarter. on a We from ended In million, million the sequential difference to $X.X equivalents. versus sheet approximately cash cash our In equivalents $XX approximately a between with in third improvement XXth, second quarter, cash which XXth June is balance our basis. approximately cut and cash of words, $X.X the

for XXXX. Now to let's the turn outlook

of previously, As updated full guidance are we year David providing XXXX $XX revenue to million $XX million. noted

commentary upper and previous We expansion the was previous relative in quarter come margin margins in expect expectations. margins XX% This range. to range. the fourth historical to in, Our reflects gross around mid-XX% results to now gross mid

we third studies quarter. pass-through However, expect higher in results for the several quarter revenues not fourth to high part margin our to do related expected record repeat gross to due in adjusted

have and a or our impact can As project we've material to previously scale, results. single size at two stated, a current our

our an now EBITDA versus quarter increases $X.X to guidance expect we to approximately are of still in outperform an forecasting addition, accruals our million. third part guidance. million we in million adjusted Instead, of increase improvement compensation to $XX.X and SG&A EBITDA incentive from $XX quarter, in the In fourth loss, adjusted due negative previous expected the previous

of burn guidance and less than Consistent our remain to earnings to cash year on of second hand. more the flow. XXXX second with track over cash we exit on quarter on to the with cash million, achieve expect $XX than million Moving we half call, $XX

quarter While in for we the we when XXXX. qualified more report our XXXX continued was higher our will RFP we than the volume, do which initial quarter it visibility, fourth provide quarterly the and given same pipeline, backlog growing XX% third quarter, at XXXX earnings, progression than point our expect sales the growth fourth is on phased guidance, in revenue

the are investments delivering We adjusted our utilization and more value margins we patient with profit rates recruitment technology year on or gross as full targeting efficiencies higher optimistic realize in front, In continue I'd our as of XXXX the over comments. the gross continued David increases remain to a XX% are from to encouraged back the to leverage summary, profitability. At path third we on this towards point, turn like and call to by closing XXXX for quarter we continue SG&A. results

commercial our taking look We're remain goals. our strong a We to to the financial of focused on Mike. third the execute you, results pleased end from are and year our strategy we actions the of and we Thank quarter, with forward the team.

to on of it to and flow of our by raise that, EBITDA open for the adjusted reach goal up without positive We XXXX quarter additional fourth financial track with questions. having I'll are cash capital. And

first Charles Rhyee from comes question and Our Instructions] [Operator Cowen from Company.

the Wanted for quickly on ask the to bookings quarter.

it last a know good I cancellations, the was chunk COVID On related. of quarter,

related? in I think quarter, backlog about from still COVID the on $X be we're how million In COVID the much X.X, could canceled. was of expecting current that that

million. $X About

So for $X had about the that the may what at about presented if comprises quarter, you now earlier we endpoint mitigation be to that and our a shrank COVID risk list reprioritized. reach work in proportion we last take million in in $XX and million adjustments look quarter your watch studies

So in guidance this as we've past, our anticipated done adjusted already the backlog we've accordingly. and and

delays in the and would mentioned seasonality, kind else then you that, but the decision-making. talked bigger about looks a Okay. That's I expected. helpful. bit sequential of And David, than I you secondly, drop in understand Anything have little

the having be of into are of hearing of you you're like conversations what If kind what causing might sponsors sort go delays? some could that from you're these

sort us some are this. the about you quarter? of seeing And -- give a we'll you how what gives thinking strong fourth can confidence you're that you but that quarter, fourth You signs what expect see maybe of

to Well, and level a decision-making the higher And large. make be our the do is very deal such, at organizations sizes continue to time those decisions continue increase. the within to as

we sometime today. of It commercial so But up delays when And the from starting have hard the to within to the larger push getting decision like talk in into expected off quarter net in making. some ended we're had in that deals to And about you're fourth close effect participating bookings does to we quarter. pushed we'll things a the quarter. try that third standpoint continue

to And sort phased thing mentioned QX, than sit at now, to we about same in sales remarks, point point in pipe. time add one, qualified this at of the it's as right where in At look the of higher sort XX% was one it to we that, the quarterly QX. in if prepared you amplify

us gives to some strong and bookings up we a visibility So close that QX increased perspective. as level from look out

Matt Hewitt Craig-Hallum. from comes question next Our from

step gross Maybe sustainable, there, here and the of first And that's Obviously, both up like Very QX, on a in sounds strong it little but improvement bit sequentially. a maybe at year-on-year even further margins. made that not and standpoint, only congratulations. fiscal a you've sustainable, are look repeatable of 'XX they the market? but out, we recruitment to are changes segments start these as other from back into

are you I repeatable that? market, other they understand the Can -- clarify? Not segments part sure in the of of

roll I recruitment areas so mean, out other you efforts that called those expand, there? market there some respiratory, you could obviously, CNS, the cardiac, and mentioned Well, out are you opportunity

ability therapeutic pass-through were dip And expenses performance that ability that little a able we the the we XX.X% have driven well. the as expect as we've to in that think or some utilization the don't have in to the go third at the bit rates the specific driven to additional quarter, by XXXX to able is a recruitment we the be execute we to terms our we that it's into throughout quarter. But that's of from above been expect higher patient do I It's which going we've of year. do margins by We to XX% Yes. gain to improvements than make, able been and our have. as driven our range achieve increased technology in higher fourth been. and recognize by our that

the term into So And yes, in mid-XXs. as as forward site, that be expect future. frankly, I improve do a we to move tech-enabled expect we long that the to for

And separate great. That's maybe then question. one

What out, that dime, result pharma -- encouraging has a draft we're Is industry to draft on move So of changed came a guidance see doesn't we're but when changing now do as trials. that couple of now decentralized should about the be removed from guidance? that a couple we of FDA quarters fiscal the a or look excited removed. we you quarters something 'XX. what as Obviously,

Yes. Thanks, Matt.

us. to momentum expect for to continue that We have

important way draft think, that economic of As it And terms super past, it question, do. you trying perspective. at from being which a the I've we're if that's written, buyer model in been the validates look that's it provided, data calls, been the previous in validates I the said to guidance, on the an earnings has is what

able the operations it a to like look execute, you in order at manual. it requires to XX reads Science SOPs be that If

have to them have the with it's we're about to that So be reference confidence the to regards circled sentiment them sponsor/customer behind that confidence. back it, pleased super it. In we with Metasite had fact a and which gives able there, definitely conversations to execute that guidance

just to to we so increase we And into forward and continue beyond. XXXX go that's as believe going

comes with William Our Blair. Smock from next question Max

year to can year. Max say full top for not guidance, is expected definitely I give hear next It's growth Smock. happy curious, for to you're and hoping top broad on range a more color give appreciate, while Christine prepared line expectations but Rains you XXXX on for line you for was I year, we're next

detailed the we'll come the We call, guidance increased we fourth you us tell quarter more increased throughout when you between qualified for provide quarter can Well, us. quarter's the to that XX%. tell as earnings and we volume can we third year, RFP next what over for pipeline the

ultimately in terms foreshadow bookings XXXX. that for which throughout will a we so And of good increase improvement future have in us as growth, an revenue is

don't if I color that, have add more know Mike. to any to you on

said that . No, I think it you well.

Okay.

cancellations Great. And customer hoping the talk then can size and bookings I and development in you about relative was phase by quarter.

if we have of that do what pointed is shared area had that share can mitigation out COVID some work we we've risk. on I we as don't of risk know that. any the think that I specifics an

As we areas. at section, a is are $X all pharma. therapeutic think, about our said -- in that earlier, different customer across Most studies it's of million types I those most that discussed of -- risk. within cross The was we remainder large

He down $X COVID mitigation of the David to talked going going remarks, in million the level other stuff. $XX $X the said about the $XX on list the as about prepared then And on watch projects down million earlier has million. from And on to decreased. the million

single previously, a or that. two have monitor results. to And continuing we're can the on So impact discussed we material study as a

going but right the it's direction. in Yes,

right the sure. In direction, for

Street. Frank comes question Takkinen next Lake from Our from

Frank. for on Cox Nelson is This

here. lot quickly, a been of have Just my answered questions

of customers in to to as So that point just can want XXXX, be into speaking, to strength particular anything broadly that point just we thank relation or but ask would just your helpful. to move weakness pockets I and any you, you out

I made Metasite. site to would deliver. a time be proposition. of able to order year shift larger I be terms to take strategic say our about in a value of this on last to focus advantage a in tech-enabled It's our it ability the super back take trial clinical We to market, focused

And traction a to bigger some I frankly, that. starting we're market. on think see it's

it's look DCT you is spent, which sites billion. what's $X being If alone, versus alone, billion U.S. about $X at about

billion. If that's you that's take Europe, account into $XX -- another

a market left ultimately place a site, larger now is members direction value and testament the further we've access speed traditional a is our being to traditional we've site the offer different think model Society can everybody time. trial opportunity. that great but your can you questions. being something other which patients that provide, as actually think thank is We of that going which I the assume to makes put bit proposition acceptance we're And we've became gone there's I much a us I just for recognized So complement to I'm as think clinical this to with which a the resonating of and that and And in from to Research a no site network. Operator? for a Sites, site no Clinical sponsors.

David like back our would I over This to floor closing to comments. session. for concludes question-and-answer the turn

today, appreciate today. to another Thanks joining thank good Okay. everybody just I'd us like and the quarter. for for questions

This teleconference. concludes today's

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