Covance Reports 23% Earnings Growth in 2Q
Covance reported after the bell Wednesday that its second quarter earnings jumped 22.7% to 79 cents per diluted share compared with the second quarter of 2007. The contract research organization said the earnings excluded one cent per share gain from the sale of its centralized ECG business in 2007.
"In the second quarter Covance continued to capitalize on favorable market dynamics and delivered a strong, broad-based financial performance, including net revenue growth of 14.6% and record operating margin of 15.4%," said Joe Herring, chairman and chief executive officer of Covance.
The company said its backlog surpassed $3 billion. In early trading Thursday, Covance’s shares were up 1.3% to $89.78.
"Early Development revenues grew 5.5% sequentially and operating margins increased 40 basis points from last quarter to 25.4% as new toxicology space started coming online and several phase I projects that were delayed out of the first quarter were initiated,” Herring said. “ In Late-Stage Development, central laboratory and clinical development drove robust segment results, including year-over-year revenue growth of 17.8% and exceptional operating margins of 19.2%.”
The company's Early Development segment includes preclinical toxicology, analytical chemistry, clinical pharmacology services, and research products. Early Development net revenues for the second quarter grew 11.5% year-over-year to $213.1 million, compared with $191.1 million in the second quarter of 2007 and $202.0 million last quarter. Year-over-year revenue growth was led by toxicology and chemistry services. The strong sequential growth of 5.5% was driven by an increase in study starts in clinical pharmacology and the addition of new capacity in North America toxicology.