Covance Ups Guidance as Early- and Late-Stage Revenues Improve in Q2
Covance reported an increase in both early- and late-stage drug development revenues for the second quarter of 2009 compared with the first quarter, but early-stage revenues remain significantly lower than the same period last year.
Early-stage net revenues were $199.8 million in the second quarter—a $7-million increase over the first quarter—but a drop from $213.1 million in Q2 2008. The contract research organization (CRO) attributed the decrease in revenues to a lower demand in toxicology in 2009. The early-stage segment’s operating income declined 50% from the same period last year to $27.1 million.
Late-stage development revenues and income were up in the second quarter, compared with both the first quarter 2009 and Q2 of last year. Late-stage revenues grew 19% to $266.3 million, compared to $223.8 million in the second quarter 2008, and operating income increased 52.4% to $65.5 million compared to $43 million prior year.
Covance’s overall revenues climbed 6.7% from the same period last year. Revenues for the quarter were $489.2 million, compared with $461.8 million in Q2 2008. Profits for the CRO were down 15.5% to $43 million from $50.9 million in 2008. Earnings per share also fell 16% to $0.67 per share.
The company expects sequential growth to continue in the third quarter, said Covance chairman and CEO Joe Herring.
“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," Herring said in a company statement.