Medidata Solutions Reports Record Third Quarter 2009 Results

"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

For full details on Medidata Solutions Incorporated (MDSO) MDSO. Medidata Solutions Incorporated (MDSO) has Short Term PowerRatings at TradingMarkets. Details on Medidata Solutions Incorporated (MDSO) Short Term PowerRatings is available at This Link.