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Mike McKelvey - President and CEO

Rick Baron - EVP and Chief Financial Officer


Jim Kumpel - Friedman, Billings, Ramsey and Company

George Hill - Leerink Swann

Jeff Schmidt - Sidoti and Company

eResearchTechnology Inc. (ERES) Q3 2007 Earnings Conference Call November 1, 2007 5:00 PM ET


Good day ladies and gentlemen. And welcome to the Third Quarter 2007 eResearchTechnology’s Earnings Conference Call. My name is [Angelique], and I’ll be your coordinator for today.

At this all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s. (Operator Instructions)

I would now like to turn the presentation over to your host for today's conference, Mr. Mike McKelvey, President and CEO. Please proceed.

Mike McKelvey

Thank you, Angelique. Good afternoon. Thank you for joining us for eResearchTechnology's third quarter earnings conference call. A press release announcing the third quarter of 2007 results was released this afternoon and is available on most financial websites. Joining me today is Richard Baron, Chief Financial Officer of eResearch.

Prior to beginning the call, I would like to read the forward-looking events statement. Statements included on this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements including, but not limited to, 2007 financial guidance involve a number of risks and uncertainties, such as the company's ability to obtain new contracts and accurately estimate net revenues due to uncertain regulatory guidance, variability in size, scope and duration of projects, internal issues at sponsoring clients, competitive factors, technological development and market demand.

As a result, actual results may differ materially from any financial outlook stated during this call. Further information on potential factors that could affect the company's financial results can be found in the company's reports on forms 10-K and 10-Q filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

I will first give highlights for the third quarter and details on new bookings. Rick will then discuss the financials for the quarter and provide guidance for the fourth quarter of 2007 and the full year.

I will then comment on we are performing on the 2007 strategic plan. We will then open up the call to questions.

We are pleased with the progress that was made during the quarter in the overall business environment. We are executing well on our projects, as well as, key components of our strategic plan. We saw good growth in our financial metrics on a year-over-year basis.

Our business exhibits seasonality, as sponsors sometimes are reluctant to start new trials especially thorough ECG trials in the summer months when enrollment and subject participation maybe impacted by vacations.

This results in slower revenue growth in the third quarter, as compared to the other quarters this was reflected in the third quarter. Unless otherwise indicated, all comparisons represent changes between the third quarter of 2007 and the third quarter of 2006.

Highlights of the quarter were, our revenue of $24 million for the third quarter of 2007 was at the bottom end of our previously issued guidance for the quarter of $24 million to $26 million, this represents a 7.9% growth rate from last year.

The third quarter of last year included $1.2 million in revenue with no associated costs from ending one of our franchise agreements. This revenue also would have affected both the gross margin and operating margins favorably for the same amount during the period. Excluding this the third quarter's growth rate would have been 14%.

On a segment basis, our core cardiac safety services showed strong growth. Our core services revenue consisting mostly of cardiac safety services grew by 13.5%, representing a strong increase in volume offset by a decline in average ECG pricing.

Site support revenue declined by 3.7%, reflecting a decline in equipment sales relative to last year, excluding equipment sales, site support revenues increased 10.9%. License revenue increased 8.1%.

We were able to leverage our SG&A structure to produce improved bottom line results as demonstrated by pretax income for the third quarter was $5.9 million, up 53.5% from last year. Net income for the third quarter was $3.6 million, up 50.3% from last year.

Our net income per diluted share in the third quarter was $7.2, which was slightly above the bottom end of our guidance this represented a growth of 49% from last year. Our net income per diluted share for the nine months ending September 30, 2007 was $0.20, which is $0.04 greater than the net income per diluted share for the full year 2006.

Our margins remained healthy. Our gross margin percentage in the third quarter was 48%, down from 49.2% in the third quarter of 2006. There were three reasons for the decline in margins from last year, first, increased amortization and expense associated with the bringing online of EXPeRT 2.

Second, higher levels of revenue from our new consulting practice a precursor of future new business, which have a lower margin and third, the fact that the third quarter of last year included revenue with no associated costs of $1.2 million from the ending of a franchise agreement. Excluding this revenue, the gross margin in 2006 would have been 46.6%.

Pretax income margin in the third quarter increased to 24.8% from 17.4% in the third quarter of 2006, an increase of 740 basis points. Net income margin in the third quarter increased to 15.5%, up from 11.1% last year.

The increase in new business was surprisingly strong, given the general trend in summer months for organizations to slow down their contracting activities. We recorded new bookings of $35.5 million for the quarter, compared to $25.3 million in the third quarter of 2006 and $34.5 million in the second quarter of 2007. This is the fourth quarter in a row where new bookings have increased quarter-over-quarter.

The book-to-bill ratio in the third quarter was $1.5, up from $1.4 in the second quarter and up from $1.1 in the third quarter of 2006.

This has led to our backlog growing to $115 million, up 23% from a year ago. Our cancellation rate in the quarter was 13.4%, slightly lower than the 17% in the past couple of quarters.

As we have discussed in previous calls, we look at our cardiac safety business in two pieces, routine trials and thorough ECG trials. Routine trials use ECGs as part of regular Phase I through IV trials. Thorough ECG trials are intense, definitive tests for the prolongation of the QT interval based on the ICH E14 guidance.

Overall, new bookings increased 39% from a year ago, with thorough bookings increased by 67% and routine bookings increasing by 23%. We signed seven new thorough ECG trials within the quarter.

These thoroughs all using the semi-automatic method had an average value slightly over $1 million. This was the second quarter in a row where the average price of new thorough ECG trials has been over $1 million, a significant increase from the average value of $630,000 for thorough ECG bookings recorded in the second half of 2006 and the first quarter of 2007.

The main reason for this increase is that the thorough ECG trials signed in the last two quarters have more robust trial designs, which involve more ECGs. We need to have data for at least two more quarters before we can evaluate whether we anticipate that this trend will continue.

For routine bookings, Phase I, II and III all saw growth rates of more than 20% with the strongest growth coming in Phase II. The percentage of bookings using the manual methodology fell to 25%, down from 50% a year ago. This reflected a mix shift in projects of clients that before using the manual methodology and is generally indicative of the trend that we've been forecasting for some time.

We are moving toward giving more color on the general trend of transactions pricing as opposed to bookings prices. Transactions prices, which drive our revenue, are the combination of past bookings prices, past discounting and other factors. We feel the trends and transaction prices are of more interest than trend and bookings prices.

However, being the only company in our space that reports detailed financial quarterly results, we feel that we need to be somewhat guarded in the specificity of pricing discussions. Average prices are also subject to substantial mix shifts among transactions utilizing the manual and semi-automatic method, halters and types of trial.

That being said, this quarter saw an increase in transaction prices for the first time in over two-and-a-half years. This reflected the fact that bookings prices have been higher than transaction prices for the past four quarters and our backlog has an increasingly higher proportion of higher priced transactions.

This reflects the large number of Phase III transactions booked over the past two years, many of which utilized the manual methodology. While we anticipate quarter-to-quarter fluctuations in prices, recent trends in prices according point to a flattening of previous price declines and our potential slight increases in the future.

Our ePro businesses, we're sitting on schedule. We signed our first ePro contract with a large pharmaceutical company. There is a healthy pipeline of new opportunities that we are pursuing.

However, like all businesses that are relatively new, it takes some time to convert these efforts into signed contracts and subsequently into revenue. Our eClinical business is also seeing some increases in its pipeline and opportunities.

We signed a large new contract in our eClinical group, and are focusing on what we call EDC now, a standards-based, quick-billed EDC development environment. Our investment in eClinical is proceeding on schedule.

We have made some good progress on integrating the sales effort of our cardiac safety,

eClinical, and ePro lines of business, and this is resulting in an increased visibility to more opportunities, especially in our international markets.

Let me now turn the call over to Rick for some more details on our financials for the third quarter and an update on guidance for the fourth quarter and for the full year 2007.

Rick Baron

Thank you, Mike. I would like to review our results for the third quarter of 2007. As has been our practice, we included the financial statements, which include a reconciliation of GAAP and non-GAAP information with our press release issued earlier today.

As Mike mentioned earlier in the conference call, we reported third quarter 2007 revenues of $24 million, an increase of 7.9% from the $22.2 million for the third quarter of 2006.

The Company reported net income of $3.7 million for the third quarter of 2007, a 50.3% increase from the $2.5 million in the third quarter of 2006. These results translated into net income per diluted share of $0.07 in the third quarter of 2007, compared with $0.05 for the third quarter of 2006.

Our total revenue consisted of three major components. These include license revenue, which was approximately $651,000 for the third quarter of 2007, as compared to approximately $602,000 for the third quarter of 2006 or an 8.1% increase year-to-year.

Service revenue, which consists mainly of cardiac safety revenue, was $16.5 million for the third quarter of 2007, as compared to $14.5 million for the third quarter of 2006, or a 13.5% increase year-to-year.

And finally, site support revenue which was $6.9 million for the third quarter of 2007, as compared to $7.1 million for the third quarter of 2006, a decrease of 3.7% year-to-year.

Our gross margin was $11.5 million, for a gross margin percentage of 48% of revenue for the third quarter of 2007, as compared to $10.9 million for a gross margin percentage of 49.2% for the third quarter of 2006.

The components of gross margin and gross margin percentage are as follows, license gross margin was approximately $581,000 for a gross margin percentage of 89.2% for the third quarter of 2007, as compared to approximately $527,000 for a gross margin percentage of 87.5% for the third quarter of 2006.

The increase in license gross margins was due to an increase in product sales for the third quarter of 2007. Service gross margin was $8.9 million for a gross margin percentage of 54% for the third quarter of 2007, as compared to $7.8 million or 54% for the third quarter of 2006.

The increase in service gross margin was predominantly due to higher levels of revenue achieved during the quarter. Site support gross margin was $2 million for a gross margin percentage of 29.6% for the third quarter of 2007, as compared to $2.6 million or 36.2% for the third quarter of 2006.

Operating expenses for the third quarter of 2007 were $6.1 million, or 25.6% of revenues. Included in these Q3 2006 operating expenses were $714,000 of expenses associated with management transition.

We continue to see improved operating leverage as the levels of operating expenses as the percentage of revenue have continued to improve. Selling expenses were $2.5 million for the third quarter of 2007, essentially unchanged from the third quarter of 2006.

Costs for the same in site of increased sales to the changes we made in our overall commission structure and other costs. General administrative expenses were $2.5 million for the third quarter of 2007, as compared to $3.9 million for the third quarter of 2006, which included $714,000 of management transition costs.

Even after excluding those transition costs, total G&A for the third quarter of 2007 decreased as compared to the third quarter of 2006 partly due to lower labor costs.

Research and development expenses were $1.1 million for the third quarter of 2007, as compared to $1 million for the third quarter of 2006. The Company's tax rate was 37.7% for the third quarter of 2007 as compared to 36.3% for the third quarter of 2006.

The tax rate in the third quarter of 2006 was lower due to an adjustment of the year-to-date effective tax rate due to our re-forecast of tax-exempt interest income.

Net income for the third quarter of 2007 was $3.7 million, or $0.07 per diluted share. For the third quarter of 2006, net income was $2.5 million or $0.05 per diluted share. Excluding the effect of management transition charges for the quarter, net income for the third quarter of 2006 would have been $2.9 million or $0.06 per diluted share.

At September 30, 2007 our accounts receivable increased to $21.8 million and DSO to 85.5 days from $20.2 million and DSO was of 76.2 days in June -- as of June 30, 2007. We ended the quarter of 2007 with $71 million in cash, cash equivalents, and investments, an increase from $63.4 million at June 30, 2007.

The increase in cash was predominantly due to net cash from operations. During the third quarter of 2007, eRT did not purchase any shares of its common stock under the stock repurchase program.

Guidance for the fourth quarter of 2007 and for the year ending December 31, 2007 we anticipate the revenues for the fourth quarter of 2007 will be in the range of $27 million to $28.5 million.

We also anticipate that the earnings per diluted share for the fourth quarter will be approximately $0.09 to $0.11 For the year ending December 31, we anticipate the revenues will be near the mid-point of our previously issued guidance of $95 million to $103 million.

We are raising our diluted earnings per share guidance to a range of $0.29 to $0.31 per diluted share for the year ending December 31, 2007.

I will now turn the call back to Mike for some observations on the 2007 strategic plan.

Mike McKelvey

Thank you, Rick. I would now like to give an update on our progress for some key elements of our strategic plan for 2007. First our goal of staying the number one firm in the cardiac safety core laboratory field. With our reputation for quality, on-time performance, medical insight, and on-budget performance, we believe that we remain the leaders in the field.

Second, improve the cost structure of our business. As reported previously, we undertook an efficiency improvement program to better align the cost structure of our business. This program was successfully launched in February and we are continuing its implementation.

EXPeRT 2 continues to perform very well. In the third quarter, 64% of our transactions were processed through EXPeRT 2 and we have been able to reap the efficiency benefits of this.

We have also completed the integration of our project management and data management organizations into one integrated group, which we believe has improved the efficiency of our project delivery.

Third, create the eRT consulting practice. We launched the eRT consulting practice in February and the reaction by the market has been favorable. In the third quarter, we had an outstanding increase in bookings and revenue from this group.

Clients continue to express a great deal of interest in our one-stop shop approach. While the margins in this business are significantly lower than our other cardiac safety businesses, the consulting practice does increase our ability in large projects and add value to our clients.

Four, expand sales activity outside of the US. We believe that there is a large and growing market for our services outside of the US. We have expanded our sales force in Europe with some in-country sales professionals.

In addition, we have expanded our relationships with key partners in Japan and are actively exploring the expansion of our sales and marketing activities elsewhere in the Far East and Australia and in South America.

Fifth, sales and marketing, we plan to launch our new website this month and are active in preparing podcasts and seminars related to cardiac safety. We have added two sales individuals to our eClinical and ePro sales and marketing group and continue to integrate the sales and marketing efforts of cardiac safety, eClinical and ePro to leverage our worldwide sales and marketing force.

And sixth, market powered by eRT services. We have made some good inroads in establishing more in-depth relationships with several key partners that are increasing our sales channels and increasing visibility into new sales opportunities.

This is one reason why our bookings have remained healthy over the past few quarters and give us hope for continued success in the future.

I would now like to open the line for questions.

Questions and Answers


(Operator Instructions) Your first question comes from the line of Jim Kumpel, Private Investor. Please proceed.

Jim Kumpel - Friedman, Billings, Ramsey and Company

Yes. Actually I am reached itself heard eRT but I guess, invest as well. Thank you. Good evening guys. I think the first question obviously that's going to come to mind is all of the factors behind the gross margin decline, which was really significant relative to second quarter.

I'm not concerned with the year-over-year comparisons, but can you talk about the impact of the shift from manual to semi-automated and what gives you comfort that we're going to be back up into the low to mid-50s in the fourth quarter?

Mike McKelvey

Thanks Jim. This is Mike. The main reason for the reduction in the gross margin from the second to the third quarter was a mix shift between a higher level of consulting revenue and site support revenue. We had an excellent quarter in terms of consulting revenue and that has a very low margin just almost by definition as the site support revenue.

And so when you move from low revenue site support and consulting away from higher margin cardiac safety transactions that was the predominant reason for the reduction in the gross margin.

So we feel comfortable once the mix shift gets back to the level or the mix that it was in the second quarter that you'll see margins back in the direction or above those margins in the second quarter soon.

Jim Kumpel - Friedman, Billings, Ramsey and Company

I guess what gives you comfort that that mix is going to return to second quarter levels and how much of a drain is consulting relative to the higher margin cardiac safety stuff?

Mike McKelvey

It's not that large of a number. It just happened to have a fairly large, or fairly significant increase in the third quarter. And so based on what we're looking at as our projections based on the guidance we gave for the fourth quarter, would have a more significant growth in the cardiac safety transactions part of the business.

Rick Baron

And Jim, if you know, in previous calls what we've said about the margin as we would exit the year is that it would be in the mid-50s. We still feel very comfortable that that would be the range that we are exiting the year at.

Jim Kumpel - Friedman, Billings, Ramsey and Company

Were you at all surprised by how the third quarter developed in terms of the gross margin?

Rick Baron

No. We actually are very proud of the fact that with that and with the mix of revenue. We were also able to manage the Company in a way having done the cost efficiencies prior in the year and those types of things that the EPS, the bottom line also held up very nicely.

Jim Kumpel - Friedman, Billings, Ramsey and Company

I guess it looks like for the fourth quarter, you guys are giving a range of revenues and an EPS outlook that kind of brackets where the consensus numbers are. And I guess I wanted to just understand if you experienced certain project starts that got pushed from the third quarter into the fourth quarter or if it really was just all about pricing and mix.

Rick Baron

Well, I think the nature of this business is that it always will have some projects that slide into one quarter or back into the other quarter. That's just part of the nature. That is something that has historically plagued the Company. At this point, that is not part of any issue that is here and it is simply the mix shift.

I also think that if you took a look at the guidance that we've been giving as far as exiting the year and the way we've been giving it throughout the year. You would also take note that part of the issue with the third quarter was anticipated in advance.

Any issue with slightly lower ECG revenue or service revenue clearly is also the seasonality of the business. The risk in the third quarter as we've said before and most likely will repeat is that in the third quarter the risk is either a slight delay in starting projects because of the August timeframe, the August-September timeframe or under enrollment because for whatever reason, people prefer to be on vacation than in the Phase I beds.

And I'm sure that a little bit of the low end of the range was attributed to that but all projects started as we anticipated with perhaps slightly lower enrollment which is not something that we have control over.

Jim Kumpel - Friedman, Billings, Ramsey and Company

Okay. And I guess, last question will focus on free cash flow and cash flows and DSOs basically. So can you just give us the numbers on operating cash flows and free cash flow and then talk a little bit about why the DSOs have kind of continued the slight march upward?

Rick Baron

As I said that the DSOs again are consistent with the prior quarters. It has been a slight march up. It is due to just the nature of the business with whom we are operating. Historically, at least for the three years prior to August or September I guess of last year, we have been operating under the franchise agreement.

And that arrangement on a comparable basis, payments were made in advance. Therefore DSOs were in fact significantly lower because you had cash in advance and the day you billed was the day you were able to recognize the preferred revenue.

So on a historic basis, let's go this quarter back to the prior quarter probably would have been most unfavorable comparison just because of the timing of the ending of the franchise agreement.

Over the past two quarters, I believe, we have seen some slippage. That slippage is really due to either slightly different terms provided, nothing of any kind of reportable or any kind of an event along those lines or the nature of some of our transactions is that there are milestone payments and that type of thing that need to be applied to either to future or backwards into a time as to when you can bill for those items.

So from our perspective, there are no significant increases in risk associated with bad debt expense. Our reserve has stayed reasonably stable over the course of the year-and-a-half that I've been here.

Jim Kumpel - Friedman, Billings, Ramsey and Company

And the free cash flow and the operating cash flow numbers?

Rick Baron

Yes. I'm sorry. Operating cash flow from this quarter was approximately $10 million compared to $6 million in the June quarter and compared to about $2.8 million in the prior year's quarter. So operating cash flow is very strong. The net cash obviously indicated was the increase period-to-period.

Jim Kumpel - Friedman, Billings, Ramsey and Company

And that's your free cash flow?

Rick Baron


Jim Kumpel - Friedman, Billings, Ramsey and Company

Okay. Thank you.


Your next question comes from the line of George Hill of Leerink Swann.

George Hill - Leerink Swann

Hey. Good afternoon guys, can you hear me, okay.

Mike McKelvey

Yes. We can hear you fine George. How are you doing?

George Hill - Leerink Swann

Pretty good. Just a first quick question would be. Did I hear right that the percent of manual was 25% of the total?

Mike McKelvey

Of the total bookings for the quarter, yes, you did hear that.

George Hill - Leerink Swann

And I guess, I know you guys have given guidance for the full year and those numbers -- it kind of seems to be falling off a cliff. Can you say whether this is a trend you kind of see persisting at this point and whether this is something that you saw some short-term change in the market?

Is it something you expect to rebound?

Mike McKelvey

No. I think you'll see a rebound from that. I think it's a it's really a mix shift of the projects that happened to come in that quarter. Now remember these are bookings and these are not this is not revenue.

And it just happened to be the mix shift of bookings from those clients that had projects using the manual methodology. We don't see that falling off a cliff, as you said, but we see sort of rebounding back not necessarily up to where it was in the previous quarter, but back in that direction or so.

Rick Baron

And also just to remind people on the line that a couple of things about the way that we've provided guidance in this area over time and the results. In the past several quarters, we have hit a surprising 50-50 type of bookings in this area.

So we have had the benefit of higher bookings, at the same time that we enjoyed the benefit of that, we also reminded people that over time, that percentage would be reduced over time.

So this is -- as we said the last quarter two quarters weren't a trend in the 50-50 we also don't feel that this is. Over the course of the year, we're very comfortable with the average bookings in this area.

George Hill - Leerink Swann

Yes. Can you say what percentage of manual was in the routine last quarter?

Mike McKelvey

The percentage of manual overall, we didn't break it down into routine in rows were 50%.

George Hill - Leerink Swann

Okay. And just – I’m just chancing down a little bit, what about the big deal that you guys won in the eClinical space?

Can you put a little more color on that around maybe which client was involved or how big that was?

Rick Baron

No. We don't really talk about those individual clients. So the importance to us was more the initial activity in it as opposed to the name of the client, it's just not something that we put out there. Since, it was the first in that specific area.

George Hill - Leerink Swann

And I guess with reference to the consulting contract, I guess can you give us a little more color on what people are recruiting you guys and asking you guys to do?

Rick Baron

A large amount of the work is around thorough and consulting and thorough design, primarily in the smaller to medium-sized biotechs.

Most of the large pharmaceutical companies have their medical staffs well attuned to that, so it's primarily in the thorough and maybe the large Phase III trial design for smaller to medium-sized biotechs.

George Hill - Leerink Swann

Okay. And my last question would be can you provide a little more color on the falloff in the SG&A line that happened in the quarter?

Was that a headcount thing or was that a comp thing?

Rick Baron

The falloff on a comparative year-to-year basis is really due to two items. Some of it on a year-to-year basis, it was predominantly headcount in that we did make those adjustments as of the end of -- somewhere in the February timeframe.

There is a bit of seasonality, if you would in the business in that the June quarter does include costs associated with our larger show the DIA and some other minor shows at that point in time.

So there is that. This is the level we feel, though that we can sustain.

George Hill - Leerink Swann

Okay. All right. Thank you.


(Operator Instructions) You do have a question from the line of Jeff Schmidt of Sidoti and Company.

Jeff Schmidt - Sidoti and Company

Good evening guys. Is there any way you could give us the cardiac safety line as either as a percent of services or do we have to wait for the Q?

Rick Baron

Our traditional reporting is really limited to the services in total.

Jeff Schmidt - Sidoti and Company

Okay. And can you kind of touch on your plans for the cash now that it's up to $70 million?

Rick Baron

I'm sorry?

Jeff Schmidt - Sidoti and Company

Touch on the plans for cash?

Rick Baron

Consistent with where we've been over the past several quarters it is something that we're evaluating the alternatives to for the uses of it, which would include the buyback, which would also include potential investments.

That would be the use of cash Jeff. Also, I misspoke, let me also give you a little bit of more color on the cardiac safety and other components of the services revenue.

During the quarter, we had $14.9 million of cardiac safety revenue. Approximately $700,000 of the consulting and training, software maintenance consisted of $850,000 for the total services revenue.

Jeff Schmidt - Sidoti and Company

Okay. Thanks. And just -- in your press release, you mentioned that you have been working closely with some more CROs.

Can you just kind of discuss how the market is moving towards that and how you see that affecting your business?

Mike McKelvey

Well, we used -- the majority of our sales are directly to the pharmaceutical companies, but increasingly we use partners, whether they're CPU units or clinical pharmacology units or some of the larger or even the smaller CROs.

And so we're just looking for a number of different opportunities to work with key value market participants.

Jeff Schmidt - Sidoti and Company

Is there a pricing difference on a royalty there when you get referrals from other CROs?

Mike McKelvey

No. In most cases we don't have a referral or royalty arrangement. Sometimes it's a symbiotic relationship or we will give them leads for example with Phase I units or even sometimes in the Phase II or III

And then they will utilize our services. So it's really more of a symbiotic relationship in that sense.

Jeff Schmidt - Sidoti and Company

Okay. I guess my last question is the cancellation rates seemed pretty low this quarter. Is there anything that contributes to that or is there anything that we should read into there?

Mike McKelvey

No. I think we -- you know it bounces around. For those -- to forecast the cancellation rate if fairly difficult, but again, that's a fully loaded cancellation rate.

So that includes trials that have ended and haven't enrolled as much as we thought. So there really was nothing big about that. We're happy with the numbers.

Rick Baron

And the guidance historically on that has been in the 15% to 20% range. We however, have averaged closer to the 17% outside of this quarter.

Jeff Schmidt - Sidoti and Company

Okay. Thanks guys.

Mike McKelvey

Okay. Thank you.


(Operator Instructions) There are no further audio questions in the queue. We'll turn it over to Dr. Mike McKelvey for closing remarks. Please proceed, sir.

Mike McKelvey

Thank you. Thank you all very much for your attention today and your involvement in the Company. We appreciate your vote of confidence throughout the years.

Rick and I as well as the other members of the Company's management team are deeply to the Company and continuing the Company's momentum and progress in generating future results.

We hope you have a great evening and a great weekend. And we'll talk to you next quarter. Thank you.


Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the presentation. You may now disconnect. Thank you and have a great day.

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