NEW YORK, Nov 12, 2009 (BUSINESS WIRE) ----Medidata Solutions (NASDAQ: MDSO), a leading global provider of hosted clinical development solutions, today announced its financial results for the third quarter ended September 30, 2009.

"Again this quarter we saw strong demand for our innovative solutions as evidenced by customer renewals and new customer wins in all geographies," noted Tarek Sherif, chairman and chief executive officer of Medidata Solutions. "Many of the world's leading life science companies are choosing Medidata's Rave platform for its rich EDC functionality as well as its ability to seamlessly exchange data with their other key clinical systems through the use of industry standards. The Rave platform improves clinical operation efficiency today and serves as a foundation for global eClinical infrastructure for customers looking to maximize their long-term R&D investments."

Third Quarter Financial Highlights

Net revenues for the third quarter of 2009 were $35.2 million, an increase of $7.4 million, or 27%, compared with $27.8 million in the third quarter of 2008. The increase in revenues was primarily due to a $6.8 million, or 36%, increase in revenues from application services.

Non-GAAP operating income* for the third quarter of 2009 was $6.8 million, compared with $0.4 million in the third quarter of 2008. Non-GAAP net income for the third quarter of 2009 was $3.5 million, or $0.15 per diluted share, compared with a loss of $2.1 million, or $0.32 per diluted share, in the third quarter of 2008.

For the third quarter of 2009, GAAP operating income was $2.6 million, compared with a loss of $2.9 million in the third quarter of 2008. GAAP net income for the period was $1.6 million, or $0.06 per diluted share, compared with a loss of $3.4 million, or $0.51 per diluted share, in the third quarter of 2008.

"Our results this quarter underscore the strength of our execution, the scalability of our business model and our ability to drive both top and bottom line growth. Medidata's recurring revenue model and visibility through backlog give us confidence in our ability to deliver profitable growth," commented Bruce Dalziel, chief financial officer.

Total cash and cash equivalents were $86.9 million at the end of the third quarter. During the quarter, the company prepaid the outstanding balance of its $15.0 million term loan under its existing credit facility and has no long-term debt as of the end of the quarter. Year to date, the company generated $23.7 million in cash flows from operations.

Third Quarter Business Highlights

-- Medidata welcomed new innovative pharmaceutical, biotechnology, medical device, government, non-profit institutions and contract research organizations to its customer base. Revenue grew across all products and geographies, and the company expanded relationships with existing customers. New customers included ArthroCare Corporation and Eurand Pharmaceuticals. The company also saw increasing adoption in the existing customer base, with Application Services follow-on business and renewals from large and small biopharma companies. Building on successful initial studies with Medidata Rave(R), BioMarin and Seattle Genetics expanded existing arrangements with Medidata through new multiple-study contracts. Also renewing with Medidata's Trial Planning Products were leading pharma companies Bristol-Myers Squibb and Shire Laboratories.

-- The company had a strong quarter in its CRO partner program, ASPire to Win(R), signing two new partners: Agrex, Inc., a top CRO based in Tokyo and Osaka; and inVentiv Clinical Solutions, a CRO company owned by inVentiv Health, a provider of commercialization services to the global pharmaceutical and healthcare industries. Three other CRO partners attained the highest level of Medidata accreditation, Medidata Accredited Plus. These CRO partners -- which include global CROs Quintiles, Parexel, ICON, INC Research, PRA, EPS and CMIC, among others -- can now serve as a sponsor's one-stop shop for Medidata Rave implementation services, including end user training, study build, reporting, outputs, integrations and migrations.

-- The U.S. Department of Interior on behalf of the National Institute of Health's National Cancer Institute (NCI) has signed a multi-year agreement to make Medidata's flagship product, Rave, available for use throughout the NCI Clinical Research Enterprise -- the NCI and NCI-supported not-for-profit research institutions that conduct cancer research throughout the country and abroad. Medidata Rave is expected to be broadly adopted among these research institutions during the next several years, as it is integrated as a critical component of its cancer Biomedical Informatics Grid(R) (caBIG(R)). With this initiative, NCI aims to create an advanced information-sharing network that unites the cancer research community in its search for breakthroughs in the detection, diagnosis, treatment and prevention of cancer.**

Mr. Sherif commented, "After a competitive bidding process, we are pleased to be working with the National Cancer Institute to support its ongoing efforts to revolutionize cancer research. These efforts include some of the world's most complex trials in oncology. It is our proven ability to handle complex trials and scale across development programs that continues to drive adoption among many of the world's most sophisticated medical research organizations. Medidata is well-positioned to continue our history of steady execution in meeting our clients' needs, and thereby growing a strong, scalable, profitable business."

Financial Outlook

For the fourth quarter of 2009, the company expects revenues to be between $35.2 and $36.2 million. The company expects non-GAAP operating income to be between $5.1 and $6.1 million. Based on current estimates, this would equate to a GAAP operating income of $0.6 and $1.6 million. Non-GAAP net income is expected to be between $2.3 and $3.3 million. Based on current estimates, this would equate to a GAAP net income of between $0.4 and $1.4 million.

For the full year 2009, the company is increasing its previous guidance and now expects revenues to be between $138 and $139 million. Non-GAAP operating income is expected to be between $22.0 and $23.0 million. Based on current estimates, this would equate to GAAP operating income between $6.3 and $7.3 million. Non-GAAP net income is expected to be between $10.5 and $11.5 million. Based on current estimates, this would equate to GAAP net income between $3.8 and $4.8 million.

Total remaining backlog for 2009 was $33.1 million at the end of the third quarter. Remaining year backlog represents the amount of contractual revenue already booked, which is expected to be recognized during the remainder of the year.

While changes in the stock price could change the fully diluted share count, for modeling purposes the company is assuming 23.9 million and 20.5 million fully diluted shares in the fourth quarter and full year, respectively.

Conference Call

The company plans to host its investor conference call today at 5:00 p.m. Eastern Time to discuss its financial results for the third quarter 2009 and its outlook for the fourth quarter and full year 2009. The investor conference call will be available via live webcast on the "Investor" section of Medidata's Web Site at http://investor.mdsol.com. To participate by telephone, domestic participants may dial 888.378.0337 and international participants may dial 719.325.2173. Those interested in participating in the conference call should dial in at least 10 minutes prior to the call to register. Participants can also join the call via a simultaneous live audio webcast, which will be made available on the "Investor" section of Medidata's Web site at http://investor.mdsol.com. A replay of the conference call will be accessible until Thursday, November 26, 2009 by dialing 888.203.1112 domestically or 719.457.0820 internationally and using passcode 6391430. An archive of the call will also be hosted on the "Investor" section of Medidata's Web site at http://investor.mdsol.com for a limited period of time.

About Medidata Solutions Worldwide

Medidata Solutions (www.mdsol.com) is a leading global provider of hosted clinical development solutions that enhance the efficiency of customers' clinical development processes and optimize their research and development investments. Medidata products and services allow customers to achieve clinical results more efficiently and effectively by streamlining the design, planning and management of key aspects of the clinical development process, including protocol development (Medidata Designer(R)), investigator benchmarking and budgeting (Medidata Grants Manager(TM)), contract research organization (CRO) benchmarking and budgeting (Medidata CRO Contractor(TM)), and the capture, management, analysis and reporting of clinical trial data (Medidata Rave(R)). Medidata's diverse customer base spans pharmaceutical, biotechnology and medical device companies, academic institutions, CROs and other research organizations, and includes more than 20 of the top 25 global pharmaceutical companies.

Cautionary Statement

Certain statements made in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks and uncertainties about Medidata Solutions, Inc. ("Medidata"), including but not limited to statements about Medidata's forecast of financial performance, products and services, business model, strategy and growth opportunities, and competitive position. You are cautioned that such statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will have been achieved. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in these statements. In particular, the risks and uncertainties include, among other things, risks associated with possible fluctuations in our financial and operating results; errors, interruptions or delays in our service or our Web hosting; the financial impact of any future acquisitions; our ability to continue to release, and gain customer acceptance of, new and improved versions of our products; changes in our sales and implementation cycles; competition; our ability to retain and expand our customer base or increase new business from those customers; our ability to hire, retain and motivate our employees and manage our growth; regulatory developments; litigation; and general developments in the economy. For additional disclosure regarding these and other risks faced by the Company, see disclosures contained in Medidata's public filings with the Securities and Exchange Commission including, the "Risk Factors" section of Medidata's IPO prospectus filed on June 25, 2009 and Quarterly Report on Form 10-Q that will be filed for the quarter ended September 30, 2009. You should consider these factors in evaluating the forward-looking statements included in this press release and not place undue reliance on such statements. The forward-looking statements are made as of the date hereof, and Medidata undertakes no obligation to update such statements as a result of new information.

*Non-GAAP Financial Information

Medidata provides Non-GAAP operating income, net income, and net income per share applicable to common stockholders data as additional information for its operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from Non-GAAP measures used by other companies. Non-GAAP operating income excludes the impact of depreciation, amortization of purchased intangible assets and acquisition-related charges and stock-based compensation expense. Non-GAAP net income excludes the impact of amortization of intangible assets associated with acquisitions and stock-based compensation expense. Management uses these Non-GAAP measures to evaluate its financial results, develop budgets, manage expenditures, and as an important factor in determining variable compensation. In addition, investors frequently have requested information from management regarding depreciation and amortization and non-cash, share-based compensation charges and management believes, based on discussions with investors, that these Non-GAAP measures enhance investor's ability to assess Medidata's historical and project future financial performance. While management believes these Non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of Non-GAAP financial measures. One limitation of Non-GAAP operating income is that it excludes depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Medidata compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the Non-GAAP financial measures to their most comparable GAAP financial measures. Investors are encouraged to review the reconciliations of these Non-GAAP financial measures to the comparable GAAP results, which are attached to this press release.

**NCI Contract Award

The NCI contract award to Medidata is presently the subject of a bid protest pending before the Government Accountability Office (GAO). Medidata is continuing to perform work under the contract according to the award terms and schedule. A decision on the protest from the GAO is expected on or around December 14, 2009.

MEDIDATA SOLUTIONS, INC.
   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
   (Amounts in thousands, except per share data)
   Three Months Ended              Nine Months Ended
   September 30,                   September 30,
   2009            2008            2009             2008
   Revenues
   Application services                         $   25,957      $   19,132      $   74,145       $   52,029
   Professional services                            9,260           8,678           28,702           22,513
   Total revenues                                   35,217          27,810          102,847          74,542
   Cost of revenues
   Application services                             6,006           5,226           17,521           14,590
   Professional services                            6,458           7,364           19,910           23,815
   Total cost of revenues                           12,464          12,590          37,431           38,405
   Gross profit                                     22,753          15,220          65,416           36,137
   OPERATING COSTS AND EXPENSES:
   Research and development                         5,608           4,982           16,894           14,632
   Sales and marketing                              6,709           6,018           20,167           17,654
   General and administrative                       7,814           7,096           22,672           20,047
   Total operating costs and expenses               20,131          18,096          59,733           52,333
   OPERATING INCOME (LOSS)                          2,622           (2,876 )        5,683            (16,196 )
   INTEREST AND OTHER EXPENSE (INCOME):
   Interest expense                                 908             401             1,747            1,493
   Interest income                                  (10    )        (33    )        (73     )        (99     )
   Other (income) expense, net                      (44    )        4               (36     )        (212    )
   Total interest and other expense, net            854             372             1,638            1,182
   INCOME (LOSS) BEFORE INCOME TAXES                1,768           (3,248 )        4,045            (17,378 )
   PROVISION FOR INCOME TAXES                       219             147             602              481
   NET INCOME (LOSS)                            $   1,549       $   (3,395 )    $   3,443        $   (17,859 )
   EARNINGS (LOSS) PER SHARE:
   Basic                                        $   0.07        $   (0.51  )    $   0.26         $   (2.72   )
   Diluted                                      $   0.06        $   (0.51  )    $   0.17         $   (2.72   )
   WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
   Basic                                            22,364          6,958           12,318           6,712
   Diluted (1)                                      23,846          6,958           19,693           6,712
   (1) Diluted shares for the the third quarter of 2009 were
   23,845,594, as compared to 6,957,555 in the third quarter of 2008.
   The change is a result of common stock equivalents which were
   excluded from the calculation of dilutive loss per share in prior
   year since the effects are anti-dilutive.
   

MEDIDATA SOLUTIONS, INC.
   Reconciliation of GAAP Operating Income and GAAP Net Income to
   Non-GAAP Operating Income and Non-GAAP Net Income
   (unaudited)
   (Amounts in thousands, except per share data)
   Three Months Ended             Nine Months Ended
   September 30,                  September 30,
   2009           2008            2009            2008
   OPERATING INCOME (LOSS) :
   GAAP operating income (loss)                      $   2,622      $   (2,876 )    $   5,683       $   (16,196 )
   GAAP operating margins                                7.4   %        (10.3  )%       5.6    %        (21.7   )%
   Depreciation and amortization        2,669          2,401           7,810           6,470
   Stock-based compensation             1,505          870             3,428           2,235
   Non-GAAP operating income (loss)                  $   6,796      $   395         $   16,921      $   (7,491  )
   Non-GAAP operating margins                            19.3  %        1.4    %        16.5   %        (10.0   )%
   NET INCOME (LOSS):
   GAAP net income (loss)                            $   1,549      $   (3,395 )    $   3,443       $   (17,859 )
   Amortization                         457            406             1,370           880
   Stock-based compensation             1,505          870             3,428           2,235
   Non-GAAP net income (loss)                        $   3,511      $   (2,119 )    $   8,241       $   (14,744 )
   GAAP basic earnings (loss) per share              $   0.07       $   (0.51  )    $   0.26        $   (2.72   )
   GAAP diluted earnings (loss) per share            $   0.06       $   (0.51  )    $   0.17        $   (2.72   )
   Non-GAAP basic earnings (loss) per share          $   0.16       $   (0.32  )    $   0.65        $   (2.25   )
   Non-GAAP diluted earnings (loss) per share        $   0.15       $   (0.32  )    $   0.42        $   (2.25   )
   

The table above presents a reconciliation of GAAP to non-GAAP operating income, net income and net income per share applicable to common stockholders for the three months and nine months ended September 30, 2009 and 2008. Non-GAAP operating income excludes the impact of depreciation, amortization of intangible assets associated with acquisitions and stock-based compensation expense. Non-GAAP net income excludes the impact of amortization of intangible assets associated with acquisitions and stock-based compensation expense.

MEDIDATA SOLUTIONS, INC.
   CONDENSED CONSOLIDATED BALANCE SHEET
   (Amounts in thousands, except per share data)
   September 30,   December 31,
   2009            2008
   (unaudited)
   ASSETS
   CURRENT ASSETS:
   Cash and cash equivalents                                             $     86,900    $     9,784
   Accounts receivable, net of allowance for doubtful accounts of
   $400 and $309, respectively                                                 19,566          25,198
   Prepaid commission expense                                                  3,270           3,330
   Prepaid expenses and other current assets                                   2,906           5,950
   Deferred income taxes                                                       303             303
   Total current assets                                                        112,945         44,565
   Restricted Cash                                                             532             545
   Furniture, fixtures and equipment, net                                      11,840          13,599
   Goodwill                                                                    9,799           9,799
   Intangible assets, net                                                      4,860           6,230
   Other assets                                                                481             452
   TOTAL ASSETS                                                          $     140,457   $     75,190
   LIABILITIES AND STOCKHOLDERS' EQUITY
   CURRENT LIABILITIES:
   Accounts payable                                                      $     1,787     $     3,316
   Accrued payroll and other compensation                                      8,668           7,902
   Accrued expenses and other                                                  3,853           3,469
   Deferred revenue                                                            81,636          69,834
   Capital lease obligations                                                   3,508           4,388
   Current portion of debt obligation                                          -               1,500
   Total current liabilities                                                   99,452          90,409
   NONCURRENT LIABILITIES:
   Deferred revenue, less current portion                                      22,603          31,787
   Capital lease obligations, less current portion                             1,080           2,672
   Long-term debt                                                              -               12,866
   Other long-term liabilities                                                 446             611
   Total noncurrent liabilities                                                24,129          47,936
   Total liabilities                                                           123,581         138,345
   CONVERTIBLE REDEEMABLE PREFERRED STOCK:
   Series B, par value $0.01 per share; None authorized, issued and
   outstanding at
   September 30, 2009; 1,336 shares authorized, issued and outstanding,
   and liquidation value of $1,101 at December 31, 2008                        -               1,099
   Series C, par value $0.01 per share; None authorized, issued and
   outstanding at
   September 30, 2009; 181 shares authorized, issued and outstanding,
   and liquidation value of $179 at December 31, 2008                          -               179
   Series D, par value $0.01 per share; None authorized, issued and
   outstanding
   at September 30, 2009; 2,752 shares authorized, issued and
   outstanding,
   and liquidation value of $11,986 at December 31, 2008                       -               11,967
   COMMITMENTS AND CONTINGENCIES
   STOCKHOLDERS' EQUITY (DEFICIT):
   Convertible preferred stock, Series A, par value $0.01 per share;
   None authorized,
   issued and outstanding at September 30, 2009; 2,385 shares
   authorized,
   issued and outstanding, and liquidation value of $1,193 at December    -            24
   31, 2008
   Common stock, par value $0.01 per share; 25,000 shares authorized,
   22,664 shares
   issued and outstanding at September 30, 2009; 20,000 shares
   authorized, 7,532 shares
   issued and 7,035 shares outstanding at December 31, 2008               227          75
   Additional paid-in capital                                             111,942      22,433
   Treasury stock, none and 497 shares, respectively                      -            (6,000  )
   Accumulated other comprehensive loss                                   (198    )    (389    )
   Accumulated deficit                                                    (95,095 )    (92,543 )
   Total stockholders' equity (deficit)                                   16,876       (76,400 )
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 140,457    $ 75,190
   

MEDIDATA SOLUTIONS, INC. AND SUBSIDIARIES
   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
   (Amounts in thousands)
   Nine Months Ended
   September 30,
   2009              2008
   CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                     $      3,443      $      (17,859 )
   Adjustments to reconcile net income (loss) to net cash provided by
   operating activities:
   Depreciation and amortization                                                7,810             6,470
   Stock-based compensation                                                     3,428             2,235
   Write-off of acquired research and development costs                         -                 700
   Deferred income taxes                                                        42                -
   Amortization of debt issuance costs                                          420               181
   Changes in operating assets and liabilities:
   Accounts receivable                                                          5,632             (2,470  )
   Prepaid commission expense                                                   60                (817    )
   Prepaid expenses and other current assets                                    (212    )         326
   Other assets                                                                 (54     )         37
   Accounts payable                                                             (885    )         (4,769  )
   Accrued payroll and other compensation                                       766               1,721
   Accrued expenses and other                                                   632               1,692
   Deferred revenue                                                             2,618             19,971
   Other long-term liabilities                                                  7                 125
   Net cash provided by operating activities                                    23,707            7,543
   CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of furniture, fixtures and equipment                               (3,442  )         (2,913  )
   Decrease in restricted cash                                                  13                -
   Fast Track acquisition related costs                                         -                 (625    )
   Cash and cash equivalents acquired through acquisition                       -                 1,049
   Net cash used in investing activities                                        (3,429  )         (2,489  )
   CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from exercise of stock options                                      20                60
   Repayment of obligations under capital leases                                (3,658  )         (3,059  )
   Proceeds from initial public offering, net of underwriting discounts         82,026            -
   and commissions
   Payment of costs associated with initial public offering                     (4,288  )         (1,773  )
   Payment of preferred stock accumulated accrued dividends                     (2,282  )         -
   Proceeds from debt obligation                                                -                 15,000
   Repayment of debt obligation                                                 (15,000 )         (10,958 )
   Payment of debt issuance costs                                               -                 (552    )
   Net cash provided by (used in) financing activities                          56,818            (1,282  )
   NET INCREASE IN CASH AND CASH EQUIVALENTS                                    77,096            3,772
   EFFECT OF EXCHANGE RATE CHANGES ON CASH
   AND CASH EQUIVALENTS                                                         20                (39     )
   CASH AND CASH EQUIVALENTS -- Beginning of period                             9,784             7,746
   CASH AND CASH EQUIVALENTS -- End of period                            $      86,900     $      11,479
   

SOURCE: Medidata Solutions

   Investor Contact: 
   Medidata Solutions 
   Hulus Alpay, 212-419-1025 
   halpay@mdsol.com 
   or 
   Media Contact: 
   Lois Paul & Partners 
   Susan McCarron, 781-782-5767 
   susan_mccarron@lpp.com
   

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