Despite an uptick in revenue, Covance ($CVD) reported a $12.7 million loss in net income for the second quarter, as mounting restructuring costs put a damper on the company's earnings.
The Q2 slump has led Covance to scale back the high end of its 2012 earning projections by 10 cents, predicting to make between $2.50 and $2.70 per share.
The CRO announced cuts and closures for some of its facilities around the globe this quarter, resulting in asset impairment charges of $38.7 million on the quarter. The charge, combined with restructuring costs that more than doubled to $9.7 million, was enough to negate Covance's roughly $37 million revenue increase.
Driving the decline was Covance's flagging early-stage development unit, which saw its revenues decline by 5.2% in the quarter, a drop the company blames on shrinking demand for its toxicology and research products. The late-stage unit, on the other hand, reported a revenue boost of 12.8% thanks to Covance's clinical development business and central laboratories.
Despite the Q2 loss, analysts are optimistic about Covance's future earnings, Outsourcing-Pharma reports. Subtracting the one-time asset impairment charges, the hit in profits wasn't so bad, and the continued growth of the late-stage unit bodes well, analysts said.