Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in Medidata Solutions (MDSO) surged higher by 20% after the company reported sales and earnings per share that outpaced analysts expectations.
So What: The healthcare IT maker reported that first quarter sales grew 20.6% to $92.44 million. That was $1.39 million better than Wall Street analysts were forecasting. Medidata Solutions also announced that its first quarter EPS totaled $0.17, which was $0.03 better than analysts estimates and $0.06 better than a year ago.
The company's strength came thanks to the addition of a record 39 new customers in the quarter. Medidata Solutions' subscription backlog of business also improved by 19% year-over-year to $229 million.
Now What: Clearly, the company's software, which is used to efficiently run clinical drug trials, is resonating with drugmakers. Overall, more than 500 drug and biotechnology companies are relying on Medidata Solutions' cloud-based software and analytics to cut down development timelines and save money.
As a result, Medidata Solutions expects that its full year revenue will grow by between 17% and 23% to a range of $392 million to $412 million and that its non-GAAP net income will reach between $90 million and $96 million. For comparison, non-GAAP operating income totaled $74.2 million last year.
In addition to the company's compelling results and forecast, investors should also know that Medidata Solutions' balance sheet appears to be in good shape, too.
Medidata Solutions exited the first quarter with $465.8 million in cash and cash-like securities, up $62.3 million year-over-year, and a current ratio, which measures the ability of a company to pay off its short term financial obligations, that is a rock-solid 3.77.
Since drug development is expensive and time-consuming and more drugs are in development now than a decade ago, demand for Medidata Solutions' products should remain strong, and that could mean that this company is an intriguing investment.