(RTTNews) - Drug development services company Covance Inc. (CVD: News ), Wednesday reported a modest decline in net profit for the third quarter, reflecting lower demand for its early development services, even as revenues grew 8% from last year. Nevertheless, earnings were in line with Street expectations, while revenues were ahead of market projections. Covance also provided earnings forecast for the fourth quarter of fiscal year 2009.

For the third quarter, the Princeton, New Jersey-based company's net income slipped a modest 0.1% to $51.06 million from 51.11 million in the year-ago quarter. On a per share basis, earnings slid 0.8% to 0.79 from 0.80 last year.

Results for the third quarter include a $0.09 per share gain related to the sale of its IVRS business and $0.03 per share from favorable income tax resolutions.

Excluding one-time items, net income dropped 15.6% to $43.12 million from $51.11 million in the previous-year quarter. On a per share basis, earnings decreased 16.3% to $0.67 from $0.80 in the prior-year quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.67 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.

In the preceding second quarter, Covance reported a net income that declined to $42.99 million or $0.67 per share from $50.87 million or $0.80 per share in the same quarter last year.

Total revenues for the recent third quarter increased to $483.72 million from $467.37 million in the same quarter last year, while net revenues rose 8% to $475.28 million from $440.11 million in the year-earlier period. Analysts expected the company to report revenue of $468.80 million for the quarter.
For the preceding second quarter, net revenues increased to $466.0 million from $436.0 million in the prior year quarter

Revenues reimbursable Out-of-Pockets for the third quarter were $18.44 million, compared to $27.26 million last year.

Segment-wise, net revenues for Early Development, which includes preclinical toxicology, analytical chemistry, clinical pharmacology services, and research products. decreased 8.8% year-over-year to $196.4 million, while operating income plunged 59.1% from last year. Net revenues for Late-Stage Development segment, which includes central laboratory, Phase II-III clinical development grew 24.1% to $278.9 million from last year, while operating income rose 55.6% from the previous-year quarter.

Operating income for the quarter declined 17.4% year-over-year to $57.80 million, while operating margin contracted to 12.2% from 15.9% in the year-earlier period.

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