DATATRAK International, Inc. Announces Third Quarter Results for 2010

CLEVELAND, Nov. 10, 2010 /PRNewswire-FirstCall/ -- 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 third quarter of 2010: $1.8 million revenue, $11.4 million backlog, and continued profitability, resulting in a cash increase over second quarter 2010.

“DATATRAK’s solid third quarter results are a direct indicator of the Company’s re-emergence in the marketplace,” stated Laurence P. Birch, DATATRAK’s Chairman and CEO. “We’ve invested heavily in additional resources with the hiring of a VP of Marketing and a VP of Clinical and Consulting Services; these new hires are strategic to our growth plan for 2011. Execution of our current business strategy is proving successful as evidenced by our continued profitability, increasing backlog and positive cash flows. Expansion into top-20 Pharma illustrates DATATRAK’s viability as a contender in the clinical trial market space and lends further credibility to the DATATRAK ONE solution.”

Business Highlights:

• Third consecutive quarterly profit
• Second quarter positive cash flow from operations since 2006, allowing us to continue to invest in the growth of the company
• First positive year-to-date EPS since 2005
• Revenue for third quarter 2010 increased 17% over the third quarter of the previous year
• The 2010 third quarter gross profit margin of 84% is a significant increase over the 70% of same quarter of 2009
• Continued increase in backlog
  • Backlog increased from $9.5 million at December 31, 2009 to $11.4 million at September 30, 2010
  • Represented the fifth consecutive quarter-over-quarter increase in backlog
• Sales pipeline expansion
  • 2010 third quarter new contracts of $1.921 million represented a 90% increase over new contracts of $1.013 million in the same period of 2009
  • DAIICHI SANKYO EUROPE GmbH selected DATATRAK’s eClinical platform for a cardiovascular clinical study encompassing 80 sites and 1,200 patients across Europe
• No non-operating debt
• Secured Safe Harbor Certification for EU and Switzerland
• Completed private placement of 357,857 common shares to Directors and Management
• Presented at Rodman and Renshaw’s 12th Annual Healthcare Conference
• Zacks Investment Research, a leading provider of independent equity research, initiated coverage on the Company, effective September 13, 2010

Financial Highlights:

Revenue for the third quarter of 2010 increased to $1,818,000 compared to $1,554,000 in the same period of 2009. Gross profit margin improved to 84% for the three months ended September 30, 2010 compared to 70% for the three months ended September 30, 2009. The improvement in the Company’s gross margin reflects the increase in revenue and a 37% reduction in direct costs.

For the three months ended September 30, 2010, DATATRAK’s income from operations was $53,000 compared to a loss from operations of $(420,000) in the third quarter of the prior year. Selling, general and administrative expenses increased slightly by $9,000 in the third quarter of 2010 compared to the third quarter of 2009. Net income for the third quarter of 2010 was $49,000, or $0.00 per share on both a basic and diluted basis compared to a net loss of $(424,000) in the third quarter of 2009, or $(0.03) per share on both a basic and diluted basis.

For the nine months ended September 30, 2010, DATATRAK’s revenue decreased slightly by $95,000, or 2%, to $5,376,000, from $5,471,000 in the first nine months of 2009. Net income for the first nine months of 2010 was $83,000, or $0.01 per share on a basic and diluted basis, compared to a net loss of $(1,251,000), or $(0.09) per share on a basic and diluted basis, reported for the same period of 2009. Despite the decline in revenue, gross profit margin improved to 84% in the first nine months of 2010 compared to 74% in the same period of last year. Compared to the prior year nine months, combined direct cost and SG&A expenses decreased approximately $559,000, or 9%, in the nine months of 2010.

About DATATRAK International, Inc.

DATATRAK International is a worldwide technology and services company delivering eClinical solutions and related services for the clinical trials industry. DATATRAK built its multi-component, comprehensive solution on a single, unified platform and expanded this concept to include services delivery in DATATRAK ONE, the seamless delivery of product and services. The Company delivers a complete portfolio of software products designed to accelerate the reporting of clinical research data from sites to sponsors and ultimately regulatory authorities, faster and more efficiently than loosely integrated technologies. The DATATRAK eClinical software solution, deployed worldwide through an ASP or Enterprise Transfer offering, has successfully supported hundreds of international clinical trials involving thousands of clinical research sites and encompassing tens of thousands of patients in 67 countries. DATATRAK has offices located in Cleveland, Ohio, and Bryan, Texas. For more information, visit http://www.datatrak.net.

Except for the historical information contained in this press release, the statements made in this release are forward-looking statements. These forward-looking statements are made based on management’s expectations, assumptions, estimates and current beliefs concerning the operations, future results and prospects of the Company and are subject to uncertainties and factors which are difficult to predict and, in many instances, are beyond the control of the Company, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. For a list of certain of the factors that may cause actual results to differ materially from those contemplated in these forward looking statements, please see the Company’s quarterly report filed with the Pink OTC Markets on August 13, 2010 announcing its results for the three-month period ending June 30, 2010. The Company undertakes no obligation to update publicly or revise any forward-looking statement whether as a result of new information, future events or otherwise.