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Financial report summary
?Competition
MedableRisks
- Science 37 has a limited operating history on which to assess the prospects for Science 37’s business, Science 37 has generated limited revenue from sales of Science 37’s products and related services and Science 37 has incurred losses since inception. Science 37 anticipates that it will continue to incur significant losses as it continues to commercialize its existing products and services and seeks to develop and commercialize new products and services.
- If Science 37 fails to manage its growth effectively, its business, operating results and financial condition would be adversely affected.
- Science 37 may experience significant quarterly and annual fluctuations in its results of operations due to a number of factors.
- Science 37 may need to raise additional capital, and such additional capital may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force Science 37 to delay, limit or terminate Science 37’s product commercialization or development efforts or other operations.
- Science 37’s actual operating results may differ significantly from guidance provided by its management.
- The potential loss or non-renewal of Science 37’s contracts, any delay or halt in its customers’ clinical trials or non-payment by its customers for services that Science 37 has performed, could negatively affect its business and financial results.
- Science 37’s backlog may not convert to revenue at a predictable rate, or at all.
- If Science 37 is unable to successfully develop and market new services or enter new markets, Science 37’s growth, results of operations or financial condition could be adversely affected.
- Science 37 may be unsuccessful in achieving broad market education and changing potential customers’ habits.
- Science 37’s relationships with existing or potential customers who are in competition with each other may adversely impact the degree to which other customers or potential customers use its services, which may adversely affect its results of operations.
- If Science 37 is unable to attract suitable patients, investigators and mobile nurses for its clinical trials, its clinical development business may suffer.
- If Science 37 loses the services of key personnel or is unable to recruit and retain experienced personnel, its business could be adversely affected.
- We face risks arising from the restructuring of our operations.
- Science 37’s insurance may not cover all of its indemnification obligations and other liabilities associated with its operations.
- Science 37 derives a significant percentage of its revenues from a concentrated group of customers and the loss of one or more major customers could materially and adversely affect its business, results of operations or financial condition.
- Litigation and other legal proceedings against Science 37, which may arise in the ordinary course of Science 37’s business, could be costly and time consuming to defend.
- Science 37’s operations might be affected by the occurrence of natural disasters, pandemics, or other catastrophic events.
- Unfavorable general economic conditions could negatively affect Science 37’s business, results of operations and financial condition.
- Our business could be adversely impacted by inflation.
- Science 37 faces significant competition, which could cause Science 37 to lose business or achieve lower margins.
- Science 37 depends entirely on the clinical trial market, and a downturn in this market could cause its revenues to decrease.
- Consolidation among Science 37’s customers may cause Science 37 to lose customers, decrease the market for its products and services and result in a reduction of its revenues.
- Outsourcing trends in the biopharmaceutical industry and changes in spending and research and development budgets could adversely affect Science 37’s operating results and growth rates.
- Science 37’s estimate of the market size for its products and services may prove to be inaccurate, and even if the market size is accurate, there can be no assurance that its business will serve a significant portion of the market.
- Climate change may have a negative impact on our business.
- Science 37’s business depends on the continued effectiveness and availability of its information systems, including the information systems Science 37 uses to provide its services to its customers, and failures of these systems may materially limit its operations.
- A failure or breach of Science 37’s or its vendors’ IT systems or technology could result in sensitive customer information being compromised or otherwise significantly disrupt its business operations, which would negatively materially affect its reputation and/or results of operations.
- Science 37’s products and services are subject to rapid technological changes and evolving industry standards. If Science 37 does not keep pace with rapid technological changes, its products and services may become less competitive or obsolete, which could have a material adverse effect on its business, results of operations and financial condition.
- Science 37’s proprietary software may not operate properly, which could damage its reputation, give rise to claims against Science 37 or divert application of its resources from other purposes, any of which could harm Science 37’s business, results of operations and financial condition.
- Science 37 has only a limited ability to protect its intellectual property rights, both domestically and internationally, and these rights are important to its success.
- Science 37 may be subject to claims that it or its technologies infringe upon the intellectual property or other proprietary rights of a third party. Any such claim may require Science 37 to incur significant costs, to enter into royalty or licensing agreements, or to develop or license substitute technology.
- Confidentiality arrangements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.
- Science 37 may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable solutions or the generation of significant future revenues.
- Science 37 relies on third parties for important products, services and licenses to certain technology and intellectual property rights, and there might be problems with such products or services or it might not be able to continue to obtain such products, services and licenses.
- Science 37 relies on third parties to provide certain data and other information to Science 37. Science 37’s suppliers or providers might increase its cost to obtain, restrict its use of, or refuse to license data, which could lead to its inability to access certain data or provide certain services and, as a result, materially and adversely affect its operating results and financial condition.
- Science 37’s products and services utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect its business.
- Due to the global nature of Science 37’s business, Science 37 is subject to various anti-corruption laws, including the United States Foreign Corrupt Practices Act (the “FCPA”), the United Kingdom Bribery Act (the “UK Bribery Act”) and various international anti-corruption laws, and any allegation or determination that Science 37 violated these laws could have a material adverse effect on its business.
- Science 37’s employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on its business.
- If Science 37 fails to comply with certain healthcare laws, including fraud and abuse laws, Science 37 could face substantial penalties and its business, results of operations, financial condition, and prospects could be adversely affected.
- Extensive governmental regulation of the clinical trial process and Science 37’s products and services could require significant compliance costs and have a material adverse effect on the demand for its solutions.
- Science 37 may face political, legal and compliance, operational, regulatory, economic and other risks associated with the international expansion of its operations that Science 37 does not currently face or that are more significant than in its domestic operations.
- Changes in U.S. tax laws, and the adoption of tax reform policies or changes in tax legislation or policies in jurisdictions outside of the United States, could adversely affect Science 37’s operating results and financial condition.
- Certain U.S. state and local tax authorities may assert that Science 37 has a nexus with such states or localities and may seek to impose state and local income taxes on its income allocated to such state and localities.
- Taxing authorities may successfully assert that Science 37 should have collected or in the future should collect sales and use or similar taxes for its services which could adversely affect Science 37’s results of operations.
- Science 37’s ability to use net operating losses (“NOLs”) to offset future income may be subject to certain limitations.
- Science 37’s reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
- There can be no assurance that we will be able to regain compliance with the continued listing requirements of Nasdaq.
- Science 37 incurs significant costs due to operating as a recently public company and its management is required to devote substantial time to complying with the regulatory requirements placed on public companies.
- Failure to maintain an effective system of internal control over financial reporting may have an adverse effect on Science 37’s stock price.
- Because the Company became a public reporting company by means other than a traditional underwritten initial public offering, the Company’s stockholders may face additional risks and uncertainties.
- The Sponsor, stockholders of Legacy Science 37 and the PIPE Investors beneficially own a significant equity interest in the Company and may take actions that conflict with the interests of the Company and its other stockholders.
- We may issue additional shares of common stock or other equity securities, in certain circumstances, without your approval, which issuances would dilute your ownership interests and may depress the market price of your shares.
- The market price of our common stock has been and may continue to be highly volatile.
- Volatility in the Company’s share price could subject the Company to securities class action litigation.
- Since we have no current plans to pay regular cash dividends on the Company’s common stock, stockholders may not receive any return on investment unless they sell their common stock for a price greater than that which they paid for it.
- Future sales of shares of the Company’s common stock may depress its stock price.
- Delaware law and, the Company’s Charter and Bylaws contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
- LSAQ entered into a Director Nomination Agreement with certain of Legacy Science 37 stockholders which, together with the Company Bylaws, provides such stockholders with certain governance rights with respect to the Company.
- The provision of the Company Bylaws requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
- We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our shares less attractive to investors.
Management Discussion
- For the three months ended September 30, 2023, our revenue decreased by $1.4 million, or 8.4%, to $14.9 million, as compared to $16.2 million for the same period in 2022. For the nine months ended September 30, 2023, our revenue decreased by $9.9 million, or 18.2%, to $44.3 million, as compared to $54.2 million for the same period in 2022. The decrease in revenues was primarily driven by reduced opening backlog coverage related to prior year net booking declines, as well as changes in revenue contributions derived from study specific life-cycles.
- For the three months ended September 30, 2023, cost of revenue decreased by $3.2 million, or 26.2%, to $9.0 million, as compared to $12.2 million for the same period in 2022. For the nine months ended September 30, 2023, cost of revenue decreased by $11.9 million, or 28.4%, to $30.0 million, as compared to $42.0 million for the same period in 2022. The decreases were primarily in salaries and wages and third-party contractor costs resulting from the Company’s cost reduction program.
- Selling, general and administrative expenses decreased by $9.7 million, or 39.8%, to $14.7 million for the three months ended September 30, 2023 as compared to $24.5 million for the same period in 2022. Selling, general and administrative expenses decreased by $31.0 million, or 37.4%, to $51.8 million for the nine months ended September 30, 2023 as compared to $82.8 million for the same period in 2022. The primary decreases were in salaries and wages, professional fees and consulting related to the Company’s cost reduction program.