Covance Reports 3Q07 Earnings of $0.69 Per Share.

- Net Revenue Growth Accelerates to 16.0%; Backlog Grows 26.5% to $2.6B; Record OM of 15.2% -

PRINCETON, N.J., Oct. 24 /PRNewswire-FirstCall/ -- Covance Inc. today reported earnings for its third quarter ended September 30, 2007 of $0.69/diluted share, representing 17.0% growth on a GAAP basis and 25.0% on a pro forma basis, after excluding an income tax gain of $0.04 per diluted share in the third quarter of 2006.

"In the third quarter, our business model continued to deliver strong results as we accelerated net revenue growth to 16.0%, expanded operating margins to a record 15.2%, and produced EPS growth of 25.0%. We also delivered strong net orders of $493 million in the quarter and 26.5% growth in backlog to $2.6 billion, as demand for our broad portfolio of services continued to be robust," said Joe Herring, Chairman and Chief Executive Officer. "Early Development net revenue growth was again very strong at 19.2% and operating margins increased both year-on-year and sequentially to 26.0%. In Late-Stage Development, year-on-year net revenue growth accelerated to 12.9% and operating margins expanded to 17.5%, marking the second consecutive quarter of increased profitability in the segment.

"Even as we deliver on our near-term financial targets and client projects, we are accelerating investments in capacity, talent, and IT systems to support future growth. During the third quarter we opened four new Covance facilities across three continents. In North America, we added a preclinical ABSL-2 facility to support the growth in vaccine research services. In Europe, we opened yet another expansion at our Muenster, Germany preclinical facility. In Asia, we opened two facilities -- a state-of-the-art central laboratory in Shanghai to support global clinical trials and a nutritional chemistry laboratory in Singapore to provide food safety testing services.

"Our strong financial performance over the first three quarters of this year leads us to raise our full-year 2007 earnings target to $2.65 per diluted share. Looking forward to 2008, based upon our strong performance again this quarter and our expanding backlog, we are again targeting revenue growth in the low- to mid-teens range and diluted earnings per share growth of 20%."

 
  Selected Consolidated Results 
 
  ($ in millions except EPS) 
                         3Q07    3Q06   Change  2007 YTD  2006 YTD  Change 
  Total Revenues        $414.7  $356.2          $1,195.8  $1,047.0 
  Less: Reimbursable 
   Out-of-Pockets        $18.7   $14.7             $60.4     $49.8 
  Net Revenues          $396.0  $341.5   16.0%  $1,135.4    $997.2   13.9% 
  Operating Income…