Shares of Phase Forward (NASDAQ:PFWD) have gone nowhere this year. Nonetheless, the company's business continues to hum, and its target market appears to be increasingly embracing its products.

Phase Forward develops software that helps health-care companies such as MedImmune (NASDAQ:MEDI), GlaxoSmithKline (NYSE:GSK), and Merck (NYSE:MRK) manage the complex process of clinical trials. Its fiscal first-quarter revenue increased 27% to $30.1 million, while license revenue increased 22% to $11 million. Phase Forward got a particular boost from a major contract with Abbott Laboratories (NYSE:ABT) for two trials.

Its net income for Q1 also increased 66% to $3.5 million, or $0.10 per share. Cash flow from operations was a healthy $14.8 million, and the company's bank account totals $81.8 million

With all that cash, Phase Forward will likely ramp up acquisitions, if the hints management dropped on its latest conference call were any indication. The company's last deal absorbed Lincoln Technologies in 2005, providing key visual tools and statistical databases.

Phase Forward's recent expansion of its deal with Quintiles also proved successful. The latter company is a leading contract research organization that organizes clinical trials. The extension should help boost revenues while further validating Phase Forward's technology.

The tough part of Phase Forward's business is convincing customers that they need its offerings. Increased government regulation is helping to ease that reluctance, as are the importance of digital data collection and drug companies' need to get products to market as quickly as possible. Given this growing market, its marquee customer list, and its strong offerings, Phase Forward is nicely positioned to find a place with many more customers.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 3,449 out of 27,827 in CAPS. The Fool has a disclosure policy.