1st Quarter Results

    RNS Number : 3654U
  Research Pharmaceutical SRV, Inc
  14 May 2008
   

    14 May 2008

    Embargoed for 7.00 a.m.

    ReSearch Pharmaceutical Services, Inc.
    Unaudited Quarterly Report for the period ended March 31, 2008

    ReSearch Pharmaceutical Services, Inc.("RPS" or the "Company"), a leading provider of integrated clinical development outsourcing
solutions to the bio-pharmaceutical industry, is pleased to announce its unaudited  first quarter results for the three month period ended
March 31, 2008. These statements include unaudited comparative results for RPS which merged with Cross Shore Acquisition Corporation ("Cross
Shore") on August 30, 2007.

    In addition, RPS announces that it has today filed a Form 10-Q in the U.S., as required by the Securities and Exchange Commission
("SEC"). A copy of the Form 10-Q is available on our website (www.rpsweb.com)

    Financial highlights for the three months to 31 March 2008

    *     Net revenues for the first quarter of 2008 of $38.0 million grew $12.0 million or 46.1% as compared to the same period in 2007
    *     EBITDA for the first quarter of 2008 of $2.6 million grew $1.0 million or 63% as compared to the same period in 2007. As a
percentage of net revenues, EBITDA grew from 6.2% for the three months ended March 31, 2007 to 6.9% during the three months ended March 31,
2008
    *     Net income before provision for income taxes for the first quarter of 2008 of $2.3 million compared with net loss before benefit
for income taxes of $2.5 million for the same period in 2007
    *     As at March 31, 2008 the Company had approximately $6.2 million in cash plus $15 million of unused bank line availability

    A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure are located at the end of
this press release.

    Operational highlights for the three months ended 31 March 2008

    The first quarter of 2008 results demonstrate the continuing growth of the Company reflecting the addition of new business wins as well
as growth within existing client contracts.

    For further information please contact:

    ReSearch Pharmaceutical Services, Inc.             [phone]
    Dan Perlman, Chief Executive Officer
    Steven Bell, Chief Financial Officer

    Nominated Adviser and UK Broker:                   [phone]
    Arbuthnot Securities Limited
    James Steel / Richard Tulloch
      ReSearch Pharmaceutical Services, Inc.
    Unaudited Quarterly Report to September 30, 2007

    Background on RPS

    ReSearch Pharmaceutical Services, Inc. ("RPS" or the "Company") was incorporated in Delaware on January 30, 2006 as Cross Shore
Acquisition Corporation ("Cross Shore"), a blank check company formed to serve as a vehicle for the acquisition of a then unidentified
operating business engaged in the delivery of business services to consumers and companies in the United States. On April 24, 2006 Cross
Shore consummated its initial public offering on the Alternative Investment Market ("AIM") of the London Stock Exchange, and on April 26,
2007, entered into an Agreement and Plan of Merger (the "Merger Agreement") with ReSearch Pharmaceutical Services, Inc. ("Old RPS"). Upon
the completion of the merger with Old RPS on August 30, 2007, Cross Shore changed its name to ReSearch Pharmaceutical Services, Inc. Prior
to the merger with Old RPS, Cross Shore had no operating business other than searching for an acquisition target.

    Headquartered in Ft. Washington, Pennsylvania, with subsidiary offices across Latin and South America, RPS is a leading provider of
integrated clinical development outsourcing solutions to the bio-pharmaceutical industry. RPS provides services in connection with the
design, initiation and management of clinical trials programs that are required to obtain regulatory approval to market bio-pharmaceutical
products. RPS introduced the Pharmaceutical Resource Organization ("PRO") model to address the challenges facing the drug development
industry, which continues to grow rapidly but is facing increasing pressures to control costs and improve effectiveness. The PRO model
combines the expertise of a clinical research organization ("CRO") with the capabilities of the industry's largest sourcing engine enabling
RPS to provide a unique service offering that addresses the challenges and meets the needs of the expanding, global clinical drug
development market.

    Operating review of the three months ended 31 March 2008 compared to three months ended 31 March 2007

    *     Revenues: Service revenues increased 46.1% to $38.0 million for the three months ended March 31, 2008 from $26.0 million for the
three months ended March 31, 2007 as the Company generated additional business from existing and new customers. The majority of the increase
is related to the continued build from existing contracts with several pharmaceutical companies in our Clinical Master Service Provider
("CMSP") programs. CMSP revenue for the three months ended March 31, 2008 grew 85.3% over the comparable prior period, and accounted for
61.4% of our total service revenue for the three months ended March 31, 2008. 
    Reimbursement revenues and offsetting reimbursable out-of-pocket costs fluctuate from period to period due primarily to the level of
pass-through expenses in a particular period. Reimbursement revenues and reimbursable out-of-pocket costs increased 8.5% to $3.8 million
during the three months ended March 31, 2008 from $3.5 million during the three months ended March 31, 2007. The increase is due primarily
to an increase in the number of staff incurred expenses on client programs.

    *     Direct Costs: Direct costs increased 49.7% to $28.3 million or 74.4% of service revenues for the three months ended March 31, 2008
as compared to $18.9 million or 72.6% of service revenues for the three months ended March 31, 2007. The increase in direct costs is
directly correlated with the increase in revenues as described above. The primary costs included in direct costs are operational staff
payroll and related taxes and benefits.

    *     Selling, general and administrative expenses: Selling, general and administrative expenses ("SG&A") increased 29.1% to $7.1
million for the three months ended March 31, 2008 from $5.5 million for the three months ended March 31, 2007 to support the increase in
revenues. The primary reason for the increase in SG&A costs was an increase in the number of corporate personnel, which resulted in
increases in employee-related costs such as new salaries, as well as increases in salaries for existing employees, bonuses, commissions,
health benefits and payroll taxes to $4.3 million for the three months ended March 31, 2008 as compared to $3.6 million for the three months
ended March 31, 2007. Although the total increased during the periods, as a percentage of service revenues, SG&A expenses decreased to 18.7%
for the three months ended March 31, 2008 as compared to 21.2% for the three months ended March 31, 2007. The decrease is attributable to
the Company's ability to leverage fixed infrastructure costs and contain semi-variable overhead costs at a slower rate of growth than revenues. 

    *     Depreciation and amortization expense: Depreciation and amortization expense increased 103.0% to $0.4 million for the three months
ended March 31, 2008 as compared to $0.2 million for the three months ended March 31, 2007 due primarily to an increase in the depreciable
asset base.

    *     Income from operations: Income from operations increased to $2.2 million for the three months ended March 31, 2008 as compared to
income from operations of $1.4 million for the three months ended March 31, 2007. The increase is attributable to growth in revenues in
excess of the corresponding growth in direct costs and SG&A costs as described above.

    *     Interest income and expense: Interest income increased to $91,000 during the three months ended March 31, 2008 due to the level of
investable cash on hand subsequent to the Company's August 30, 2007 merger with Cross Shore. Interest expense decreased to $51,000 for the
three months ended March 31, 2008 from $3.9 million during the three months ended March 31, 2007. The decrease is due to the payoff of the
outstanding balance on the Company's line of credit and the outstanding notes payable subsequent to the merger with Cross Shore on August
30, 2007. Interest expense from the three months ended March 31, 2007 includes a $3.6 million non-cash charge to mark the Company's put
warrant liability to market during the period. The put warrants were exchanged for shares of Cross Shore common stock in connection with the
Cross Shore merger on August 30, 2007.

    *     Provision for income taxes: The provision for income taxes for the three months ended March 31, 2008 increased to $1.0 million
versus a benefit of $5.7 million for the three months ended March 31, 2007. The Company's effective tax rate for the three months ended
March 31, 2007 was significant as the interest charge related to the put warrant liability is non-deductible for income tax purposes.
Accordingly, the income tax benefit recorded in the three months ended March 31, 2007 is reflective of that rate. The provision for income
taxes recorded during the three months ended March 31, 2008 is reflective of the Company's recurring effective tax rate. 

    *     Net income (loss):  As a result of the factors discussed above, net income for the three months ended March 31, 2008 decreased to
$1.3 million or $0.04 per share, basic and diluted, from net income for the three months ended March 31, 2007 of $3.2 million or $0.57 per
basic share and $0.19 per diluted share. 

    Balance Sheet and Cash Flow

    The Company maintains a working capital line of credit with a bank, with a maximum potential borrowing capacity of $15.0 million. At
March 31, 2008, there were no outstanding borrowings under this facility. Interest on outstanding borrowings under this facility is at the
Federal Funds open rate, plus 1/2 % (5.25% at March 31, 2008). The credit facility contains various financial and other covenants, including
a prohibition on paying dividends or distributions (other than dividends or distributions payable in our stock). At March 31, 2008, the
Company was in compliance with these covenants. The facility is secured by all of the assets of the Company. At March 31, 2008, the Company
had available cash and cash equivalent balances of $6.2 million and working capital of $32.1 million, which the Company believes will
provide sufficient liquidity for the next twelve months.

    During the three months ended March 31, 2008, the Company's operating activities used cash of $3.8 million, a decrease of $4.6 million
from the corresponding amount for the three months ended March 31, 2007. The operating activities use of cash during the three month period
can be attributed to an increase in accounts receivable, net of allowance for doubtful accounts of $5.5 million, or 17.2%, to $37.6 million
at March 31, 2008 from $32.1 million at December 31, 2007 primarily related to the increase in revenues during the period as well as the
timing of cash collections. In addition, during the three months ended March 31, 2008, the Company used cash in other operating assets and
liabilities of $0.9 million consisting primarily of $0.1 million in prepaid expenses and other assets, $0.4 million in other assets and $0.4
million in accounts payable. 

    These uses of cash were offset by net income for the three months ended March 31, 2008 of $1.3 million along with favorable changes in
other operating assets and liabilities of $0.9 million consisting of $0.5 million in customer deposits, $0.4 million in deferred revenue and
$0.1 million in accrued expenses.

    Cash used in investing activities for the three months ended March 31, 2008 totaled $0.7 million, consisting primarily of the increase
in restricted cash of $0.5 million and the purchase of property and equipment totaling $0.3 million.

    Cash used in financing activities for the three months ended March 31, 2008 totaled $0.3 million, consisting primarily of principal
payments on capital lease obligations.

    SEC Filings

    RPS has today filed with the United States Securities and Exchange Commission a quarterly report on Form 10-Q, which details the
Company's business operations along with detailed financials statements. 

    Further details relating to RPS, its operations and its accounting and operating policies, are set out in the Form 10-Q, copies of which
can be obtained from the Company's website at www.rpsweb.com.

    Supplemental non-GAAP financial information

    EBITDA is defined as net income (loss) before interest expense, income taxes and depreciation and amortization. The Company believes
that net income is the most directly comparable GAAP measurement to EBITDA. EBITDA is presented because the Company believes it is useful to
investors as a widely accepted financial indicator of a company's ability to service and/or incur indebtedness and because such disclosure
provides investors with additional criteria used by the Company to evaluate our operating performance and the performance bonuses of certain
of our employees. EBITDA is not defined under GAAP, should not be considered in isolation or as a substitute for a measure of our liquidity
or performance prepared in accordance with GAAP and is not indicative of income from operations as determined under GAAP. EBITDA and other
non-GAAP financial measures have limitations which should be considered before using these measures to evaluate the Company's liquidity or
financial performance. EBITDA does not include interest expense, income tax expense or depreciation and amortization expense, which may be necessary in evaluating the Company's operating
results and liquidity requirements or those of businesses we may acquire. The Company's management compensates for these limitations by
using EBITDA as a supplement to GAAP results to provide a more comprehensive understanding of the factors and trends affecting our business
or any business we may acquire. Our computation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures
provided by other companies, because not all companies calculate this measure in the same fashion.

    The following table and related notes reconciles net income to EBITDA:
                                            (in thousands)
                                          Three months ended
                                              March 31,
                                           2008       2007
                                                   
 Reconciliation of net income to EBITDA:           
 Net income                                $1,323     $3,230
 Provision for income taxes                   963    (5,734)
 Interest (income) expense, net              (40)      3,931
 Depreciation and amortization                365        180
 EBITDA                                    $2,611     $1,607

    Daniel M. Perlman, Chairman and CEO
    13 May, 2008


    Financial Data
    ReSearch Pharmaceutical Services, Inc. and Subsidiaries
    Condensed Consolidated Balance Sheets

                                                     March 31,    December 31,
                                                        2008          2007
 Assets                                             (unaudited)
 Current assets:
 Cash and cash equivalents                           $6,172,780   $11,060,255 
 Restricted cash                                      1,776,384     1,321,877 
 Accounts receivable, less allowance for doubtful    37,645,378    32,117,662 
 accounts of $594,000 at March 31, 2008 and
 $547,000 at December 31, 2007 respectively.
 Prepaid expenses and other current assets            1,773,284     1,671,674 
 Total current assets                               $47,367,826   $46,171,468 

 Intangible assets, net                                 275,536       275,536 
 Property and equipment, net                          4,070,766     3,343,371 
 Other assets                                           609,587       253,471 
 Deferred tax asset                                     375,173       375,173 
 Total assets                                       $52,698,887   $50,419,019 

 Liabilities and stockholders' equity
 Current liabilities:
 Accounts payable                                    $1,001,737    $1,442,881 
 Accrued expenses                                     6,440,545     6,489,902 
 Customer deposits                                    1,776,384     1,321,877 
 Deferred revenue                                     5,383,009     5,026,042 
 Current portion of capital lease obligations           663,687       536,106 
 Total current liabilities                          $15,265,361   $14,816,808 

 Customer deposits                                    4,500,000     4,500,000 
 Other liabilities                                      281,701       258,860 
 Capital lease obligations, less current portion        831,938       414,002 
 Total liabilities                                  $20,879,001   $19,989,670 


 Stockholders' equity:
 Common stock, $.0001 par value:                          3,254         3,220 
 Authorized shares - 150,000,000 at March 31, 2008
 and December 31, 2007, respectively, issued and
 outstanding shares - 32,542,388 and 32,199,223 at
 March 31, 2008 and December 31, 2007,
 respectively.
 Additional paid-in capital                          36,190,975    36,078,600 
 Accumulated other comprehensive income                   5,384        50,305 
 Accumulated deficit                                 (4,379,727)   (5,702,776)
 Total stockholders' equity                         $31,819,886   $30,429,349 
 Total liabilities and stockholders' equity         $52,698,887   $50,419,019 


    ReSearch Pharmaceutical Services, Inc. and Subsidiaries
    Condensed Consolidated Statements of Operations

                                                    Three Months Ended March 31,

                                                         2008             2007
                                                             (unaudited)

 Service revenue                                        $38,047,853   $26,042,221 
 Reimbursement revenue                                    3,794,541     3,498,340 
 Total revenue                                           41,842,394    29,540,561 

 Direct costs                                            28,316,024    18,918,286 
 Reimbursable out-of-pocket costs                         3,794,541     3,498,340 
 Selling, general, and administrative expenses            7,120,510     5,516,859 
 Depreciation and amortization                              365,295       179,917 
 Income from operations                                   2,246,024     1,427,159 

 Interest expense                                            50,526     3,930,988 
 Interest income                                             90,846              -
 Net income (loss) before provision for income            2,286,344    (2,503,829)
 taxes
 Provision (benefit) for income taxes                       963,295    (5,733,769)
 Net income                                              $1,323,049    $3,229,940 

 Accretion of preferred stock                                     -      (121,200)
 Net income applicable to common shares                  $1,323,049    $3,108,740 

 Net income per common share:
 Basic                                                        $0.04         $0.57 
 Diluted                                                      $0.04         $0.19 

 Weighted average number of common shares outstanding:
 Basic                                                   32,429,807     5,501,674 
 Diluted                                                 34,019,774    16,973,160 


    ReSearch Pharmaceutical Services, Inc. and Subsidiaries
    Condensed Consolidated Statements of Cash Flows

                                                 Three Months Ending March 31,
                                                     2008            2007
                                                          (unaudited)
 Net income                                        $1,323,049      $3,229,940 
 Adjustments to reconcile net income to net
 cash (used in) provided by operating
 activities:
 Depreciation                                         365,295          95,875 
 Amortization of intangible assets                          -          84,042 
 Amortization of debt discount                              -          46,284 
 Interest charge related to put warrant                     -       3,570,918 
 liability
 Stock-based compensation                             130,215          17,697 

 Changes in operating assets and liabilities:
 Accounts receivable                               (5,527,716)       (486,706)
 Income taxes payable/recoverable                     452,000      (5,733,769)
 Prepaid expenses and other current assets           (101,610)       (478,050)
 Other assets                                        (356,116)         19,089 
 Accounts payable                                    (441,144)       (163,418)
 Accrued expenses                                    (501,357)        162,569 
 Customer deposits                                    454,507         176,888 
 Deferred revenue                                     356,967         233,707 
 Other liabilities                                     22,841               - 
 Net cash (used in) provided by operating          (3,823,068)        775,066 
 activities

 Investing activities
 Change in restricted cash                           (454,507)        557,596 
 Purchase of property and equipment                  (292,429)       (174,266)
 Net cash (used in) provided by investing            (746,936)        383,330 
 activities

 Financing activities
 Net borrowings (repayments) on lines of credit              -       (429,247)
 Principal payments on capital lease                 (254,743)         (6,256)
 obligations
 Merger consideration, net of fees paid               (17,880)              - 
 Net cash used in financing activities               (272,623)       (435,503)
 Effect of exchange rates on cash and cash            (44,847)          9,947 
 equivalents
 Net change in cash and cash equivalents           (4,887,475)        732,840 
 Cash and cash equivalents, beginning of period    11,060,255         197,024 
 Cash and cash equivalents, end of period          $6,172,780        $929,864 

 Supplemental disclosures of cash flow
 information
 Cash paid during the period for:
 Interest                                             $239,582       $360,070 
 Income taxes                                         $500,000        $22,246 
 Supplemental disclosures of noncash financing
 activities
 Accretion of preferred stock dividends                     $-       $121,200 
 Acquisition of fixed assets under capital            $800,261             $- 
 leases

    NOTES

    The unaudited results contained herein reflect the operations of RPS only and do not contain any operating results for Cross Shore.
Comparative results for 2007 reflect the results of Old RPS prior to its merger with Cross Shore.

    The functional currency of RPS is U.S. dollars because that is the currency of the primary economic environment in which the company
operates. These unaudited financial statements are presented in U.S. dollars.

    The unaudited financial statements are presented in conformity with accounting principles generally accepted in the United States and
have been prepared using the same accounting policies as set forth in the financial statements for the year ended December 31, 2007.

    CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
    This document contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by words such as "anticipates", "intends", "plans", "seeks", "believes", "estimates", "expects"
and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on the
Company's current expectations and assumptions regarding its business, financial condition, the economy and other future conditions. Because
forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. The Company's actual results may differ materially from those contemplated by the
forward-looking statements. The Company cautions you therefore that you should not rely on any of these forward-looking statements as
statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional,
national or global political, economic, business, competitive, market and regulatory conditions including: our ability to identify
liabilities associated with RPS; our ability to manage pricing and operational risks; our ability to manage foreign operations; changes in
technology; and our ability to acquire or renew contracts. Any forward-looking statement made in this document speaks only as of the date on
which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not
possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement,
whether as a result of new information, future developments or otherwise, unless otherwise required to do so by law or regulation.
This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
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