PRINCETON, N.J., Nov. 3, 2014 /PRNewswire/ -- Covance Inc. (NYSE: CVD) today reported results for its third quarter ended September 30, 2014. Net revenue was $627 million, representing 3.4% growth from the third quarter of 2013. On a GAAP basis, the company reported earnings of $1.16 per diluted share in the third quarter. The company reported pro forma earnings per diluted share of $0.98, up 18.2% over the third quarter of 2013. Pro forma results exclude a gain on sale of the antibody products service line totaling $13.4 million, or $0.21 per share net of tax, and charges associated with restructuring and other cost reduction actions totaling $3.2 million or $0.03 per share. In a separate announcement, Covance also announced today that it has entered into a definitive agreement with Laboratory Corporation of America® Holdings (NYSE: LH), under which LabCorp will acquire Covance. As a result, Covance will not be holding its previously scheduled earnings conference call.
"In the third quarter, our Early Development segment revenue growth was in-line with our expectations. This was partially offset by lower-than-expected growth in our Late-Stage Development segment and the strengthening of the US dollar late in the quarter, resulting in consolidated revenue growth of 3.4%. Operating income and margins in the quarter reflect further leverage in Early Development, continued strong margins in Late-State Development, and lower corporate expense, leading to pro forma operating margins of 12.7% and pro forma EPS growth of 18.2% to $0.98," said Joe Herring, Chairman and Chief Executive Officer. "Commercial performance in the quarter was solid, with third quarter adjusted net orders of $752 million resulting in an adjusted net book-to-bill of 1.20 to 1.
"In Early Development, revenue of $234.8 million grew 6.6% year-on-year and pro forma operating margin increased 120 basis points year-on-year and 100 basis points sequentially to 14.3%. These results were driven by continued strength in clinical pharmacology services and growth in demand for toxicology.
"Late-Stage Development third quarter revenue grew 1.5% year-on-year to $392.3 million and pro forma operating margins were 22.3%, versus 22.6% in the third quarter of 2013. Central laboratories revenue grew approximately 3% year-on-year versus an exceptional third quarter of 2013 and was offset by an unexpected decline in clinical development revenue due to the combined impact of cancellations and continued slow backlog conversion.
"The significant strengthening of the US Dollar since June 30, 2014 is expected to dampen fourth quarter revenue by approximately $20 million and diluted earnings per share by approximately $0.05 versus our prior expectation. Using September 30 exchange rates, we expect fourth quarter revenue to be in the range of $625 million to $635 million and diluted earnings per share to be in the range of $0.95 to $0.98, which would bring full-year earnings per share to $3.78 to $3.81 (excluding gains on sale, costs associated with our restructuring activities, and asset impairment charges)."
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"In the third quarter, our Early Development segment revenue growth was in-line with our expectations. This was partially offset by lower-than-expected growth in our Late-Stage Development segment and the strengthening of the US dollar late in the quarter, resulting in consolidated revenue growth of 3.4%. Operating income and margins in the quarter reflect further leverage in Early Development, continued strong margins in Late-State Development, and lower corporate expense, leading to pro forma operating margins of 12.7% and pro forma EPS growth of 18.2% to $0.98," said Joe Herring, Chairman and Chief Executive Officer. "Commercial performance in the quarter was solid, with third quarter adjusted net orders of $752 million resulting in an adjusted net book-to-bill of 1.20 to 1.
"In Early Development, revenue of $234.8 million grew 6.6% year-on-year and pro forma operating margin increased 120 basis points year-on-year and 100 basis points sequentially to 14.3%. These results were driven by continued strength in clinical pharmacology services and growth in demand for toxicology.
"Late-Stage Development third quarter revenue grew 1.5% year-on-year to $392.3 million and pro forma operating margins were 22.3%, versus 22.6% in the third quarter of 2013. Central laboratories revenue grew approximately 3% year-on-year versus an exceptional third quarter of 2013 and was offset by an unexpected decline in clinical development revenue due to the combined impact of cancellations and continued slow backlog conversion.
"The significant strengthening of the US Dollar since June 30, 2014 is expected to dampen fourth quarter revenue by approximately $20 million and diluted earnings per share by approximately $0.05 versus our prior expectation. Using September 30 exchange rates, we expect fourth quarter revenue to be in the range of $625 million to $635 million and diluted earnings per share to be in the range of $0.95 to $0.98, which would bring full-year earnings per share to $3.78 to $3.81 (excluding gains on sale, costs associated with our restructuring activities, and asset impairment charges)."
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