Covance Reports Second Quarter Financial Results

Covance has reported GAAP earnings for its second quarter ended June 30, 2009 of $0.67 per diluted share, inclusive of a $0.01 per share gain related to the sale of its centralized ECG business in 2007. Excluding the gain on sale, earnings were $0.66 per diluted share.

The company has posted a total revenues of $489.2 million, as compared to previous years’ $461.8 million. The net revenues showed a change of 6.7% to $466 million, as compared to $436.9 million for Q2, 2008. It also recorded a net income of $43 million, as compared to $50.9 million, a decline of 15.5%.

Joe Herring, chairman and chief executive officer of Covance, said: On a consolidated basis, second quarter net revenues grew 6.7% year-on-year (13.1% excluding the impact of foreign exchange), operating margin expanded sequentially to 12.9%, and EPS of $0.66 exceeded our second quarter expectation. In Early Development, revenues grew 3.8% from the first quarter and operating margins were 13.6%, despite toxicology results declining sequentially as we previously forecasted. Toxicology results are on track for sequential improvement in the third quarter, based upon scheduled backlog. In Late-Stage Development, very strong demand led to accelerated revenue growth of 19.0% in the quarter (26.4% excluding the impact of foreign exchange) and operating margin of 24.6%, a 200 basis point increase above last quarter’s record high.

To reflect the weakening of the US dollar and a slightly lower tax rate, we are upwardly adjusting our 2009 revenue growth target to the mid- to upper-single digits and our earnings per share target to a range of $2.60 to $2.80 per share (excluding gains on the sales of our centralized ECG and IVRS service lines and using June 30 exchange rates), versus our previous targets of single-digit revenue growth and earnings of $2.50 to $2.70 per share, he added.