Global CRO Covance ($CVD) rode a spike in demand for its late-stage services to a solid third quarter, increasing its revenue guidance and counting on a bump in business to light the way for Q4.
Net revenue rose 11.4% to $606.7 million on the quarter, as Covance's booming late-phase division more than made up for struggles in preclinical services, boosting its net income 16.9% to $44.2 million. Now, after booking orders of $732 million in Q3, Covance is expecting 10% annual revenue growth--above the "high-single-digit range" CEO Joe Herring initially forecasted--and raising its earnings per share guidance as much as 3.2% to $3.10.
"Our better-than-expected results in the third quarter were driven by exceptional performance in our central laboratory and continued strong results in clinical development," Herring said, adding that Covance's "strong commercial execution" has set it up to surpass estimates for the full year.
The company's late-stage development revenue leapt 19.2% to $386.4 million on the quarter, thanks to a 26% boost in central laboratories and 14% growth in clinical development. That helped offset continued flatness in Covance's early-stage unit, which sat roughly unchanged at $220.4 million as declines in discovery support and pharmaceutical chemistry offset growth in clinical pharmacology and research products.
But Covance is still expecting sequential growth in both segments for the fourth quarter, Herring said, counting on better-than-forecasted orders to pull up long-ailing units like toxicology and deliver a solid end to the year.
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