On August 5, 2021 Certara, Inc. (Nasdaq: CERT), a global leader in biosimulation, reported its financial results for the second quarter of fiscal year 2021 (Press release, Certara, AUG 5, 2021, View Source [SID1234586604]).
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Highlights:
Revenue was $70.1 million, representing growth of 15% over the second quarter of 2020
Net loss was ($2.9) million, compared to a net income of $2.8 million in the second quarter of 2020
Adjusted EBITDA was $25.5 million, representing growth of 1% over the second quarter of 2020
Announced agreement to acquire Pinnacle 21, a leader in data standardization software for pharmaceutical clinical data, for $310 million in cash and stock, with a closing expected in early Q4 of 2021
Raised 2021 guidance from $283 million to $289 million of revenue, $101 million to $103 million of Adjusted EBITDA, and $0.21 to $0.25 of Adjusted Diluted Earnings Per Share. Updated guidance does not include the impact of the Pinnacle 21 acquisition
"Our second quarter results reflect continued momentum from increased adoption of our proprietary end-to-end platform and the launch of new software capabilities to expand use cases of biosimulation worldwide," said William F. Feehery, Chief Executive Officer of Certara. "Earlier today, we announced the strategic and accretive deal to acquire Pinnacle 21, our largest to date. This expansion of Certara’s quantitative tools and solutions will further help researchers and regulators answer critical questions throughout the drug development life cycle."
Second Quarter 2021 Results
"In the second quarter, Certara’s differentiated portfolio of software and technology-driven services delivered strong financial performance. Looking forward, we remain well-positioned to achieve our stated long-term goals of mid-teens revenue growth and Adjusted EBITDA margin expansion. With reported trailing twelve-month bookings growth of 26%, we have a high level of visibility towards realizing our business and financial plans for the year," said Andrew Schemick, Chief Financial Officer.
Total revenue for the second quarter of 2021 was $70.1 million, representing year-over-year growth of 15%. The revenue growth was driven by both technology-driven services and software licenses and subscriptions.
Total cost of revenue for the second quarter of 2021 was $27.5 million, an increase from $20.6 million in the second quarter of 2020, primarily due to a $3.9 million increase in employee related costs and a $1.4 million increase in stock-based compensation costs.
Total operating expenses for the second quarter of 2021 were $37.3 million, an increase from $26.9 million in the second quarter of 2020, primarily due to a $5.6 million increase in stock-based compensation expense and a $2.1 million increase in employee related costs. The remaining increases were due to increases in refinancing costs, acquisition related costs and D&O insurance costs.
Net loss for the second quarter of 2021 was ($2.9) million, compared to a net income of $2.8 million in the second quarter of 2020. The loss was primarily due to a $7.0 million increase in stock-based compensation expense.
Diluted Earnings Per Share for the second quarter 2021 were ($0.02), as compared to $0.02 in the second quarter of 2020.
Adjusted EBITDA for the second quarter of 2021 was $25.5 million compared to $25.3 million for the second quarter of 2020, representing 1% growth. Adjusted EBITDA for the second quarter of 2020 included the benefit of the completion of high margin projects and lower SG&A costs during the start of the pandemic, which when combined with public company costs incurred in 2021, led to a challenging comparison in the quarter. See note (1) in the section A Note on Non-GAAP Financial Measures, below, for more information on Adjusted EBITDA. Adjusted Net Income for the second quarter of 2021 was $5.6 million compared to $3.8 million for the second quarter of 2020. Adjusted Diluted Earnings Per Share for the second quarter 2021 was $0.03 compared to $0.02 for the second quarter of 2020. See note (2) in the section A Note on Non-GAAP Financial Measures, below, for more information on Adjusted Net Income and Adjusted Diluted Earnings Per Share.
2021 Financial Outlook
Certara is updating its previously reported guidance for full year 2021, not including the impact of the Pinnacle 21 acquisition, by raising the ranges for revenue, Adjusted EBITDA and Adjusted Diluted Earnings Per Share. We expect the following:
Full year 2021 revenue to be in the range of $283 million to $289 million;
Full year 2021 Adjusted EBITDA to be in the range of $101 million to $103 million;
Full year 2021 Adjusted Diluted Earnings Per Share is expected to be in the range of $0.21 to $0.25;
Fully diluted shares for 2021 will be 153 million to 155 million; and
Effective annual tax rate for 2021 will be in the range of 40% to 45%.
Webcast and Conference Call Details
Certara will host a conference call today, August 5, 2021, at 5:00 p.m. ET to discuss its second quarter 2021 financial results and the impact of the Pinnacle 21 acquisition. The dial-in numbers are (833) 360-0946 for domestic callers or (914) 987-7661 for international callers, followed by Conference ID: 2728807. A live webcast of the conference call will be available on the "Investors" section of the Company’s website at View Source The webcast will be archived on the website following the completion of the call for approximately one year.