Covance ($CVD) posted 9.3% revenue growth and a 34.9% jump in profits last quarter, and now the CRO heavyweight is increasing its expectations for the full year.
The company reported revenue of $580 million, up from $530.8 million in the same period last year, and net income came in at $48.2 million, an increase over 2012's $35.7 million. Late-stage development, covering Phase IIb-IV, carried Covance to a strong quarter, swelling 16.8% to $372.9 million in revenue thanks to 20% growth in central laboratories and 18% growth in clinical development.
But Covance continues to struggle with its early-stage business, which declined another 2.1% on the quarter to $207.3 million in sales. The CRO has been shuffling the business unit in an effort to drive efficiency, and Covance blames some of Q1's decline on the closure of early-stage facilities in Switzerland and Hawaii, reporting $3.6 million in restructuring costs. Covance also divested from eClinical outfit BioClinica, which was bought by JLL Partners last quarter, cashing out its share for $17.1 million.
Still, Covance is projecting modest increases in early development revenue from here on out, and the strong start to the year led the CRO to increase its full-year revenue projections into "the high-single-digit range," CEO Joe Herring said.
"We continue to win in the marketplace as evidenced by our adjusted net orders of $716 million in the quarter, representing an adjusted net book-to-bill of 1.23 to 1," Herring said in a statement.
Covance is now focusing on high-growth areas to drive future revenue, which so far means investing in clinical IT capacity and upping its presence in emerging markets. Last month, the CRO expanded its Singapore core lab capacity by 50%, counting on a jump in demand for drug development services in the Asia Pacific region.
- read Covance's full results