Covance swings to profit despite tough early-phase market

CRO Covance ($CVD) rode a rise in revenue to $41 million in net profit in the second quarter, beating out a year-ago loss and weathering the sliding demand for early-stage outsourcing.

Revenue came in at $592.3 million for the New Jersey company, a 9.1% increase over the same period last year. Covance's late-stage development segment grew 16.9% to $377.7 million on the quarter thanks to better-than-expected sales in central lab services, the company said. Within that business, clinical development revenue jumped 13% and delivered a record number of orders.

As for early-stage services, Covance's revenue declined 2.3% to $215 million in the face of global market stagnation. Discovery support and pharmaceutical chemistry services continued their slumps, but nutritional chemistry, clinical pharmacology and toxicology all posted revenue gains to dull the impact of softening demand, the company said.

The $41 million in net income far outpaces the $12.7 million loss Covance reported in the same period last year, a gain due to both better sales and a drop in charges. The CRO spent about $6 million on its ongoing restructuring efforts in Q2, down from last year's $9.2 million, as Covance recovers from facility closures and layoffs in its early-stage business.

The company is still expecting full-year revenue growth in the "high-single digit range," CEO Joe Herring said, and Covance has raised the low end of its 2013 earnings per share guidance, now predicting between $3.10 and $3.20.

- read Covance's full results