Science 37 Holdings, Inc. (Nasdaq: SNCE), (“Science 37”) the Agile Clinical Trial Operating System™, today reported its financial results for the quarter ended June 30, 2022.

"We made meaningful strides across our strategic priorities in the second quarter and our pathway to profitability. We believe this commitment has materialized into strong revenue growth, sales pipeline expansion, and notably, margin improvement and sustainable cash burn,” said David Coman, Chief Executive Officer of Science 37. “We remain focused on leading the way as a pioneer in agile clinical trials with an eye on our objective of long-term profitability, and we are confident that Science 37 is well-positioned to deliver durable value for our shareholders.”

Quarterly Financial Highlights

  • Revenue was $19.3 million for the quarter ended June 30, 2022, a 54% increase compared to the same period in 2021.
  • Net bookings were $25.4 million for the quarter ended June 30, 2022, compared to $44.1 million for the same period in 2021.
  • Adjusted gross profit(1) was $5.9 million for the quarter ended June 30, 2022, compared to $5.4 million for the same period in 2021. Adjusted gross margin(1) was 30.6% for the quarter ended June 30, 2022, compared to 43.2% percent for the same period in the prior year, and up from 17.2% for the first quarter of 2022.
  • Net loss was $5.8 million for the quarter ended June 30, 2022, resulting in loss per share of $0.05, compared to a net loss of $7.7 million in the same period in 2021, or loss per share of $1.07. Net loss for the quarter ended June 30, 2022 included a non-cash gain of $20.9 million resulting from revaluation of the earn-out liability.
  • Adjusted net loss(1) was $20.9 million for the quarter ended June 30, 2022, compared to an adjusted net loss of $7.2 million in the same period in 2021.
  • Adjusted EBITDA(1) was $(16.5) million for the quarter ended June 30, 2022, compared to $(5.4) million in the same period in 2021. Adjusted EBITDA for the quarter ended June 30, 2022 showed a 17% improvement from the first quarter of 2022 that had an Adjusted EBITDA of $(19.8) million.
  • Cash and Cash Equivalents as of June 30, 2022 were $148.3 million.

Net bookings for the quarter ended June 30, 2022 were impacted by a strategic shift in sales strategy to focus on larger studies, which generally have a longer bookings conversion timeline.

The decreases in adjusted gross margin, adjusted EBITDA and adjusted net loss for the quarter ended June 30, 2022 as compared to the quarter ended June 30, 2021 were primarily due to the planned ongoing investments in our operating system and commercialization of the products to support expansion of existing and new commercial opportunities, investment in patient recruitment capabilities, as well as the additional cost burden as a result of becoming a publicly traded company in the fourth quarter of 2021.

(1) Adjusted gross profit, adjusted gross margin, adjusted net loss and adjusted EBITDA are non-GAAP financial measures. For a reconciliation to the most directly comparable GAAP measure, please refer to "Reconciliation of GAAP to non-GAAP measures" section included in this press release.

Full Year 2022 Financial Outlook

Science 37 is providing revenue guidance of $76 million to $86 million and adjusted EBITDA guidance of $(65) million to $(69) million for the fiscal year ending December 31, 2022.

The foregoing 2022 Financial Outlook statement represents management's current estimate as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.

Science 37 has not provided a quantitative reconciliation of adjusted EBITDA guidance to net (income) loss on a forward-looking basis within this press release because the Company is unable, without unreasonable efforts, to provide reconciling information with respect to interest income, depreciation, amortization, stock-based compensation, restructuring costs and change in fair value of the Earn-Out liability, all of which are adjustments to adjusted EBITDA. These items, which could materially affect the computation of forward-looking GAAP net income (loss), are inherently uncertain and depend on various factors, some of which are outside of the Science 37’s control.

Webcast and Conference Call Details

Science 37 will host a conference call today, August 11, 2022, at 8:30 a.m. ET to discuss its second quarter 2022 financial results. The conference call can be accessed by registering online for dial-in information or via live audio webcast at: https://investors.science37.com/news-events/events-presentations. Participants interested in dialing in to the conference call are requested to register at a minimum 15 minutes before the start of the call to obtain a unique pin for the call.

A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

About Science 37

Science 37’s mission is to enable universal access to clinical research—making it easier for patients and providers to participate from anywhere and helping to accelerate the development of treatments that impact patient lives. As a pioneer of decentralized clinical trials, the Science 37 Agile Clinical Trial Operating System (OS) supports today’s more agile clinical research designs with its full stack, end-to-end technology platform and specialized networks of patient communities, telemedicine investigators, mobile nursing, remote coordinators, community providers, and data and devices. Configurable to enable almost any study type, the Science 37 OS enables up to 15x faster enrollment, 28% better retention and 3x more diverse patient population, as compared to the traditional site-centric clinical trial model, with industry-leading workflow orchestration, evidence generation and data harmonization. For more information, visit https://www.science37.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding the products offered by Science 37, its sales pipeline expansion and the markets in which it operates and expects to enter, and Science 37’s anticipated growth and profitability, cash burn rate, projected future results, and revenue and adjusted EBITDA guidance for fiscal year 2022. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) the ability to maintain the listing of Science 37’s securities on Nasdaq, (ii) volatility in the price of Science 37’s securities due to a variety of factors, including changes in the competitive and highly regulated industries in which Science 37 operates, variations in performance across competitors, changes in laws and regulations affecting Science 37’s business and changes in its capital structure, and general economic and financial market conditions, including fluctuations in currency exchange rates, economic instability, and inflationary conditions, (iii) the ability to implement business plans, forecasts, and other expectations, and to identify and realize additional opportunities, (iv) the risk that Science 37 may never achieve or sustain profitability, (v) the risk that Science 37 will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all, and (vi) the potential adverse effects of the ongoing global COVID-19 pandemic. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 22, 2022 and in our other documents filed by Science 37 from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Science 37 assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Science 37 does not give any assurance that Science 37 will achieve its expectations.

Use of Non-GAAP Financial Measures and Key Performance Measures

In addition to the financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), this press release contains certain non-GAAP financial measures, including adjusted gross profit, adjusted gross margin, adjusted EBITDA and adjusted net income (loss). A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s financial performance that excludes or includes amounts from the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets, or statements of cash flows of the Company. Please refer to the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures included in this press release and the accompanying tables contained at the end of this release.

The Company defines adjusted gross profit as gross profit excluding stock-based compensation expense. The Company defines adjusted gross margin as gross margin excluding stock-based compensation expense.

The Company defines adjusted net income (loss) (including adjusted diluted earnings per share) as net income (loss) (including diluted earnings per share) excluding transactions that the Company believes are not representative of its core operations, namely: restructuring and other costs; transaction and integration-related expenses; stock-based compensation expense; other income (expense), net; and gain or loss on extinguishment of debt.

EBITDA represents earnings before interest, taxes, depreciation, and amortization. The Company defines adjusted EBITDA as EBITDA, further adjusted to exclude expenses and transactions that the Company believes are not representative of its core operations, namely: restructuring and other costs; transaction and integration-related expenses; stock-based compensation expense; other income (expense), net; and gain or loss on extinguishment of debt.

Each of the non-GAAP measures noted above are used by management and the Board to evaluate the Company's core operating results because they exclude certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the core operations of the business.

Management believes that adjusted gross profit, adjusted gross margin, adjusted EBITDA and adjusted net income (loss) are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical periods. In addition, these measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance.

Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. Also, other companies might calculate these measures differently.

This press release also contains certain key performance measures which we use to evaluate our business and results, measure performance, identify trends, formulate plans and make strategic decisions. We believe that the presentation of such metrics is useful to the Company’s investors because they are used to measure and model the performance of companies such as ours. Net bookings represent new business awards, net of contract modifications, contract cancellations, and other adjustments. Net bookings represent the minimum contractual value for the initial planned duration of a contract as of the contract execution date. The minimum fixed fees, upfront implementation fees and technology and support fees are included in net bookings. Estimates of variable revenue for utilization in excess of the contracted amounts is not included in the value of net bookings. Net bookings vary from period to period depending on numerous factors, including customer authorization volume, sales performance and the overall health of the life sciences industry, among others.

Contacts:

INVESTOR RELATIONS:Caroline PaulGilmartin Groupinvestors@science37.com

MEDIA INQUIRIES:Drew BustosScience 37Phone: (610) 417-6953Email: pr@science37.com

SCIENCE 37 HOLDINGS, INC. and SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)

  Three Months Ended June 30,   Six Months Ended June 30,
(In thousands, except per share data)   2022     2021       2022       2021  
Revenue $ 19,275   $ 12,547     $ 37,961     $ 24,986  
               
Operating expenses:              
Cost of revenue   13,842     7,289       29,828       15,928  
Selling, general and administrative   28,183     11,382       58,337       20,545  
Depreciation and amortization   4,230     1,776       7,699       3,273  
Total operating expenses   46,255       20,447       95,864       39,746  
               
Loss from operations   (26,980 )     (7,900 )     (57,903 )     (14,760 )
               
Other income (expense):              
Interest income   95     1       189       1  
Sublease income   240     181       479       214  
Change in fair value of earn-out liability   20,900             96,400        
Other income (expense), net   (88 )   3       (105 )     4  
Total other income (expense), net   21,147       185       96,963       219  
Income (loss) before income taxes   (5,833 )     (7,715 )     39,060       (14,541 )
Income tax expense (benefit)               (1 )      
Net income (loss) $ (5,833 )   $ (7,715 )   $ 39,061     $ (14,541 )
               
Earnings (loss) per share:              
Basic $ (0.05 ) $ (1.07 )   $ 0.34   $ (2.32 )
Diluted $ (0.05 )   $ (1.07 )   $ 0.31     $ (2.32 )
               
Weighted average common shares outstanding:              
Basic   115,995     7,187       115,693       6,258  
Diluted   115,995     7,187       126,185       6,258  
                               

SCIENCE 37 HOLDINGS, INC. and SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

  (unaudited)    
(In thousands, except share data) June 30,2022 December 31,2021
Assets      
Current assets:      
Cash and cash equivalents $ 148,329   $ 214,601  
Accounts receivable and unbilled services, net   13,173     10,699  
Prepaid expenses and other current assets   7,810     7,403  
Total current assets   169,312       232,703  
Property and equipment, net   1,225     1,393  
Operating lease right-of-use assets   1,519     2,086  
Capitalized software, net   37,298     24,290  
Other assets   152     326  
Total assets $ 209,506     $ 260,798  
Liabilities, redeemable convertible preferred stock and stockholders’ equity      
Current liabilities:      
Accounts payable $ 9,238   $ 12,819  
Accrued expenses and other liabilities   11,698     17,073  
Deferred revenue   5,213     5,130  
Total current liabilities   26,149       35,022  
Non-current liabilities:      
Deferred revenue   2,390     2,478  
Operating lease liabilities   1,028     1,322  
Other long-term liabilities   1,592     1,477  
Long-term earn-out liability   2,500       98,900  
Total liabilities   33,659       139,199  
       
Redeemable convertible preferred stock:      
Redeemable convertible preferred stock, $0.0001 par value; 100,000,000 shares authorized, 0 issued and outstanding at June 30, 2022 and December 31, 2021, respectively        
Stockholders’ equity:  
Common stock, $0.0001 par value; 400,000,000 shares authorized, 116,252,431 and 114,991,026 issued and outstanding at June 30, 2022 and December 31, 2021, respectively   12     11  
Additional paid-in capital   338,825     323,666  
Accumulated other comprehensive income   27        
Accumulated deficit   (163,017 )   (202,078 )
Total stockholders’ equity   175,847       121,599  
Total liabilities, redeemable convertible preferred stock and stockholders’ equity $ 209,506     $ 260,798  
               

SCIENCE 37 HOLDINGS, INC. and SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)

  Six Months Ended June 30,
(In thousands)   2022       2021  
Cash flows from operating activities:      
Net income (loss) $ 39,061     $ (14,541 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Depreciation and amortization   7,699       3,273  
Non-cash lease expense related to operating lease right-of-use assets   567       878  
Stock-based compensation   13,687       915  
Gain on change in fair value of earn-out liability   (96,400 )      
Gain on foreign currency exchange rates   104        
Provision for doubtful accounts   32       125  
Changes in operating assets and liabilities:    
Accounts receivable and unbilled services   (2,507 )     4,937  
Prepaid expenses and other current assets   (378 )     (1,719 )
Other assets   94       (142 )
Accounts payable   (6,250 )     (1,162 )
Accrued expenses and other current liabilities   (5,879 )     (2,814 )
Deferred revenue   (5 )     907  
Operating lease liabilities   (294 )     (605 )
Other, net   115       945  
Net cash used in operating activities   (50,354 )     (9,003 )
Cash flows from investing activities:  
Payments related to capitalized software development costs   (16,228 )     (6,117 )
Purchases of property and equipment   (159 )     (385 )
Net cash used in investing activities   (16,387 )     (6,502 )
Cash flows from financing activities:  
Proceeds from stock option exercises   472       1,133  
Net cash provided by financing activities   472       1,133  
Net decrease in cash and cash equivalents   (66,269 )     (14,372 )
Effect of foreign currency exchange rate changes on cash   (3 )      
Cash and cash equivalents, beginning of period   214,601       33,483  
Cash and cash equivalents, end of period $ 148,329     $ 19,111  
Supplemental disclosures of non-cash activities  
Balance in accounts payable, accrued expenses and other current liabilities, and capitalized stock-based compensation related to capitalized software and fixed asset additions $ (4,152 )   $ (948 )
Right-of-use asset obtained in exchange for operating lease liabilities $     $ (1,305 )
Balance in prepaid expenses and other current assets related to stock option exercises $ 28     $  
               

SCIENCE 37 HOLDINGS, INC. and SUBSIDIARIESReconciliation of GAAP to Non-GAAP Measures(Unaudited)

The following table provides reconciliation of adjusted gross profit and adjusted gross margin to gross profit and gross margin, the most directly comparable GAAP measures, respectively:

  Three Months Ended June 30,   Six Months Ended June 30,
(In thousands)   2022       2021       2022       2021  
Revenue $ 19,275     $ 12,547     $ 37,961     $ 24,986  
               
Gross profit $ 5,433     $ 5,258     $ 8,133     $ 9,058  
Stock-based compensation (2) $ 462   $ 162   $ 976   $ 217  
Adjusted gross profit $ 5,895     $ 5,420     $ 9,109     $ 9,275  
               
Gross margin   28.2 %     41.9 %     21.4 %     36.3 %
Adjusted gross margin   30.6 %     43.2 %     24.0 %     37.1 %
                               

The following table provides reconciliation of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure:

  Three Months Ended June 30,   Six Months Ended June 30,
(In thousands)   2022       2021       2022       2021  
Net income (loss) $ (5,833 )   $ (7,715 )   $ 39,061     $ (14,541 )
Interest income   (95 )     (1 )     (189 )     (1 )
Depreciation and amortization   4,230       1,776       7,699       3,273  
Other income (1)   (21,052 )     (184 )     (96,774 )     (218 )
Stock-based compensation   6,130       690       13,687     915  
Franchise taxes   127             179        
Provision for income taxes               (1 )      
Adjusted EBITDA $ (16,493 )   $ (5,434 )   $ (36,338 )   $ (10,572 )

The following table provides reconciliation of adjusted net loss to net income (loss), the most directly comparable GAAP measure:

  Three Months Ended June 30,   Six Months Ended June 30,
(In thousands)   2022       2021       2022       2021  
Net income (loss) $ (5,833 )   $ (7,715 )   $ 39,061     $ (14,541 )
Interest income   (95 )     (1 )     (189 )     (1 )
Other income (1)   (21,052 )     (184 )     (96,774 )     (218 )
Stock-based compensation expense   6,130       690       13,687     915  
Adjusted net loss $ (20,850 )   $ (7,210 )   $ (44,215 )   $ (13,845 )

_____________________________________(1)   Includes a gain of $20.9 million and $96.4 million recorded for the three and six months ended June 30, 2022 associated with the change in the fair value of the earn-out liability. (2)   Represents the portion of total stock-based compensation recorded within cost of revenues.

 

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