Covance posts healthy 3Q growth

By Kirsty Barnes

- Last updated on GMT

Related tags: Cent, Generally accepted accounting principles, Revenue

Covance is feeling positive after reporting healthy growth in both
business units for the third quarter, with its early phase segment
continuing to have the edge over its late stage unit.

Operating income for the company's Early Development segment rose 28.4 per cent to $51.8m (€36.0m), on revenue growth of 19.2 per cent, reaching $199.5m. Operating margin also expanded 26.0 per cent from 24.1 per cent in the third quarter of 2006. Covance attributed the unit's surge in sales to strong performances in toxicology, chemistry services, and clinical pharmacology. During the third quarter this division opened two new facilities: a preclinical ABSL-2 facility was added in North America to support the growth in vaccine research services; and an expansion was made to its preclinical facility in Muenster, Germany. Meanwhile, the Late-Stage Development segment saw revenue grow 12.9 per cent to $196.5m, "driven by another very strong performance in clinical development and improved year-on-year growth in central labs".​ Obviously this inspired confidence in the firm to branch out further - during the third quarter Covance opened a new central laboratory in Shanghai, China. During the period, operating income also increased 13.1 per cent to $34.4m although operating margins for the third quarter remained firmly stuck at 17.5 per cent. The business as a whole saw its revenues climb to $396.0, up by 16 per cent from the comparable 2006 quarter, while operating profit jumped 23 per cent to $60.1m, as did pre-tax profit, hitting $62.6m. Operating profit edged up 0.8 percentage points to 15.2.

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