DATATRAK fourth quarter revenue increases to 38%

DATATRAK International, Inc. (OTCQX: DATA), a technology and services company focused on global eClinical solutions for the clinical trials industry, today announced its operating results for the fourth quarter and full year of 2010. Highlights of the fourth quarter of 2010 include: $2.0 million revenue, $11.2 million backlog and continued profitability.

"Our solid financial results continue to demonstrate that 2010 marked a new beginning for DATATRAK," noted Laurence P. Birch, DATATRAK's Chairman of the Board and CEO. "The last year was significant in DATATRAK's history. Compared to the last several years, 2010 was marked by record quarters of new contracts, revenue and most notably, profitability.  We successfully executed our 2010 strategy of business stability, including investing in additional resources paramount to our growth plans for 2011."

Corporate Highlights:

• Fourth consecutive quarterly profit – ending 2010 profitably, a significant improvement as compared to a loss of $(1.9) million in 2009
• Revenue for the fourth quarter of 2010 increased 38% over the fourth quarter of 2009 – the highest quarterly revenue in two years
• Sales pipeline expansion – fourth quarter of 2010 new contracts of over $3 million was the highest quarter in 3 years
• Backlog increased to $11.2 million at December 31, 2010 from $9.5 million at December 31, 2009
• Cash balance at December 31, 2010 increased over the cash balance at December 31, 2009
• Gross profit margin increased to 85% for the fourth quarter of 2010 compared to 73% for same period in 2009
• First positive annual EPS since 2005
• Announced the formation of a new services group – DATATRAK Clinical and Consulting Services™, focused on promoting our Connect Partners' services and supporting clients' clinical data management and design needs
• Strengthened corporate leadership with two notable appointments:
  • Chris Wilke named Chief Technology Officer to drive the DATATRAK ONE™ vision
  • William (Bill) Gluck, PhD, a thirty-year clinical trial industry veteran, named as the company's Vice President of Clinical and Consulting Services
• Continued focus on Sales and Marketing efforts with attendance at several high profile trade shows, including the inaugural exhibition at the 2010 ASCO meeting in June, which featured the introduction of DATATRAK's oncology-specific solution
• Recognized as a company creating significant value with the selection as a 2010 Crain's Leading EDGE award winner
• Continued development of relationship with Japanese partner, NTT DATA
  • Participation at the 13th Annual DIA Workshop in Japan for Clinical Data Management with NTT DATA
  • Expanded reach in Japan with signing of NTT DATA's first Enterprise Transfer client
• Continued commitment to our clients – delivering eClinical excellence through the development of new products and system enhancements that address the needs of our complex industry
  • Premiered the release of DATATRAK's Safety Case Manager at the 46th Annual DIA Meeting in June
  • Announced DATATRAK eClinical's® compatibility with the Apple® iPad™
  • Expansion of the Company's industry standards library to include CDISC CDASH field naming in addition to the existing CDISC STDM, E2B and HL7 export components
  • Delivered new Cross-Trial Reporting functionality to increase visibility of performance metrics across studies
  • Delivered advancements to the Local Laboratory Data component to improve trial efficiencies surrounding range and export management
• Expanded international reach of Connect partners
  • Extended network of Connect partners into India with signing of CRO Kreara Solutions Pvt Ltd
  • Signed 3-year Enterprise License with Portuguese CRO, Keypoint – Consultoria Cientifica, Lda.
  • Co-sponsored a seminar in Tel Aviv, Israel with Connect partner, PFC Pharma Focus
• In August, announced Safe Harbor certification for the EU and Switzerland
• Strengthened Investor Relations outreach
• Presentations at OneMedForum events in San Francisco and New York
• Presentation at the Rodman and Renshaw 12th Annual Healthcare conference
• Announced that Zacks Investment Research initiated coverage on the Company

"We stated a year ago that 2010 would be focused on capitalizing on previous restructuring efforts, remaining client-centric, continuing to deliver cutting edge technologies and expanding our sales and marketing initiatives," continued Birch. "We maintained this focus throughout 2010, and the successes are evident in our financial results.  We look forward to converting these successes into re-growth of the organization in 2011 and firmly establishing DATATRAK's patented technology as the industry's leading unified software suite."

Financial Highlights:

Revenue for the fourth quarter of 2010 increased 38% to $2,015,000 compared to $1,464,000 in the same period of 2009. Gross profit margin increased to 85% for the three months ended December 31, 2010 compared to 73% for the last three months of 2009. The increase in the Company's gross margin reflects the increase in revenue and a 23% reduction in direct costs.

DATATRAK's income from operations in the fourth quarter of 2010 was $23,000 compared to a loss from operations of $(655,000) in the same quarter of the prior year. The 2010 fourth quarter income from operations includes: (i) severance expense of $10,000, (ii) research and development expense of $207,000, (iii) stock compensation expense of $71,000, and (iv) non-cash items of $118,000. The 2009 fourth quarter loss from operations includes: (i) severance expense of $46,000, (ii) research and development expense of $280,000, (iii) stock compensation expense of $39,000, and (iv) non-cash items of $326,000.

For the year ended December 31, 2010, revenue increased 7% to $7,391,000 compared to $6,935,000 in the same period of 2009. Direct cost and selling, general and administrative expenses decreased a combined $623,000, or 8%, for full year 2010 compared to full year 2009. Gross profit margin improved to 84% for the twelve months ended December 31, 2010 compared to 74% for the same time period of 2009. The improvement in margin reflects the increase in revenue coupled with a 34% reduction in direct cost.

For the year ended December 31, 2010, DATATRAK's income from operations was $113,000 compared to $(1,898,000) for the year ended December 31, 2009. The 2010 income from operations of $113,000 includes: (i) reversal of severance expense of $172,000, (ii) research and development expense of $918,000, (iii) stock compensation expense of $268,000, and (iv) non-cash items of $448,000. The 2009 loss from operations of $(1,898,000) includes: (i) severance expense of $551,000, (ii) research and development expense of $1,067,000, (iii) stock compensation expense of $77,000, and (iv) non-cash items of $686,000.

DATATRAK's backlog at December 31, 2010 was $11.2 million compared to a backlog of $9.5 million at December 31, 2009. Backlog is defined as the remaining value of signed contracts or authorization letters to commence services. The Company does not include in its backlog potential contracts or authorization letters that have passed the verbal stage but have not been signed. All contracts are subject to possible delays or cancellation or can change in scope in a positive or negative direction. Therefore, current backlog is not necessarily indicative of the Company's future quarterly or annual revenue. Historically, backlog has been a poor predictor of the Company's short-term revenue.