Total sales rose 12.7 per cent to $375.9m (€275.8m) in the quarter ended 31 March 2007, up from $333.5m. Meanwhile, operating income was $52.0m, a 13.5 per cent increase from $45.8m last year.
The company said its Early Development team delivered "exceptional" revenue growth of 25.8 per cent.
Sales in the segment totalled $179.2m in the quarter, compared to $142.4m in the previous year, while operating income rose 23 per cent to $43.7m during the period.
These strong results were broad-based across toxicology, chemistry, and clinical pharmacology, the company said.
"We were especially pleased to see our eight new clinical pharmacology sites produce very strong sequential revenue growth and achieve profitability in the quarter," said Joe Herring, the company's CEO in a statement.
The CRO last May bought the eight early phase clinical development sites of Radiant Research for approximately $65m in a bid to expand its clinical pharmacology bed capacity and broaden its access to special patient populations for Phase Ib/IIa clinical studies. This move seems to have paid off.
In contrast, Late-Stage services results were below the company's expectations as revenues grew only 0.6 per cent to reach $179.1m while operating income fell 8.7 per cent to $29.2m.
The Late-Stage Development segment includes central laboratory, Phase II-III clinical development, commercialisation services and cardiac safety services.
Herring said the poor performance of the business was due to lower than anticipated kit volumes in the firm's central laboratory services in the first quarter.
"Our analysis indicates kit volumes are being impacted by a change in the therapeutic mix of our wins to studies of longer duration and a shift of clinical trials to emerging geographies which take longer to initiate," he said.
Difficulties in the central laboratory segment are not new. Covance also experienced a lower testing volume during the fourth quarter of 2006, attributed to "slow enrolment in large Phase III clinical trials."
The company said at the time that this slow enrolment was not specific to Covance, but was a global phenomenon.
Despite this, the firm said earlier this year that "robust central laboratory orders gives us confidence that volumes will ramp up as the year progresses".
The company announced the launch of a new central laboratory in China earlier this year in order to meet the growing demand for clinical trials conducted in the region. The new facility will be up and running to support clinical trials by the end of the year.
"All of our major clients are conducting clinical trials in China and the demand is growing," Deborah Tanner, president of Covance Central Laboratory Services, told Outsourcing-Pharma.com in January.
"We made the decision to build a central laboratory in China to support our clients' global drug development needs in the Asia-Pacific region."
Meanwhile, Herring stressed that orders in central labs continue to be strong which should drive revenue growth, and was optimistic about the future of the business, saying that the company has already seen improvements with increases in kit volumes in March and further increases in April.
The company said strong sales gives it continued confidence in achieving its full-year targets of low- to mid-teens revenue growth.