Medidata Solutions Provides Update on Tax Position and Litigation Settlement

Medidata Solutions (NASDAQ: MDSO) today announced an update with respect to its tax position and litigation settlement with DataSci. Reversal of Income Tax Valuation Allowance In its fourth quarter ended December 31, 2011, Medidata recorded a non-cash GAAP tax benefit of approximately $19 million, or $0.77 per diluted share, resulting from the reversal of the majority of the Company's valuation allowance previously recorded against its net domestic deferred tax assets. The recognition of this tax benefit follows from an accounting based determination that Medidata's domestic operations have achieved sustainable profitability and are expected to continue to be profitable for a reasonable period. This non-cash tax benefit represents 87 percent of the valuation allowance previously recorded against the company's net domestic deferred tax assets. Medidata expects that its effective income tax rate will range from 38% to 42% and its cash income tax expense will range from 28% to 32% of its taxable income for 2012. “We are very pleased to have achieved sustainable profitability as defined by GAAP and expect to continue to deliver profitable growth for the foreseeable future,” said Cory Douglas, chief financial officer. Litigation Settlement with DataSci In its fourth quarter ended December 31, 2011, Medidata also entered into a litigation settlement with DataSci. The settlement relates to a lawsuit filed by DataSci in 2009 alleging breach of contract for failing to pay royalties under a prior license and settlement agreement executed between the parties in June 2007. As part of the settlement, Medidata paid a one-time, lump-sum payment in the amount of $6.3 million to settle the matter and obtained an irrevocable, fully-paid, worldwide, non-exclusive license to DataSci patents related to the litigation. The settlement will result in a pre-tax charge of $6.3 million, or $0.26 per diluted share, in the fourth quarter.