Covance Inc. (CVD), a drug development services company, on Wednesday reported lower profit for the fourth quarter, weighed down by charges. Adjusted earnings matched Wall Street view. The company issued unimpressive outlook for the first quarter and full year, sending the shares nearly 5 percent in the extended trading.
Net income declined to $21.14 million or $0.35 per share from $28.38 million or $0.45 per share in the prior year.
The company recorded around $0.41 per share in charges in the latest results, including $0.10 for the completion of restructuring actions, $0.11 for the termination of a research products inventory supply agreement and inventory write down, and $0.20 for the impairment of a related equity investment. These charges were partially offset by a gain of $0.03 from favorable income tax developments.
Excluding items, earnings per share increased to $0.73 from $0.56. On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter rose to $532.48 million from last year's $491.51 million. Analysts had consensus revenue estimate of $544.92 million for the quarter.
In Early Development, which includes preclinical toxicology, analytical chemistry, clinical pharmacology, discovery support, and research products, fourth quarter net revenues grew 6.3 percent year-on-year to $234.5 million.
In Late-Stage Development, net revenues improved 10 percent year-on-year, driven by the continued strong performance in clinical development services.
Adjusted net orders in the fourth quarter touched a record $759 million
For the full year, net income increased to $132.19 million or $2.16 per share from $68.25 million or $1.06 per share in the prior year. Net revenues increased to $2.096 billion from $1.926 billion. Analysts estimated earnings of $2.70 per share on revenues of $2.11 billion.
In the first quarter of 2012, the company expects a modest sequential increase in net revenues as it expects a sequential decline in Early Development net revenue, to be offset by an increase in Late-Stage net revenues.
Early Development earnings are estimated to be lower due to the expected lower level of revenue, and the company sees earnings per share for the quarter in the low $0.60 range. Wall Street looks for first-quarter earnings of $0.67 per share and revenues of $533.82 million.
For full year 2012, the company expects mid-single digit year-on-year revenue growth and earnings per share in the range of $2.50 to $2.80. Analysts expect the company to report earnings of $2.94 per share on revenues of $2.20 billion for fiscal 2012.
In a separate press release, Covance said that its Board has authorized the repurchase of up to $300 million of its outstanding common stock. This authorization is in addition to the 800,000 shares remaining under a previously-announced repurchase authorization, representing about 10 percent of the company's common stock
CVD closed on Wednesday at $47.15, up $1.03 or 2.23 percent, on 883,520 shares, but fell 4.6 percent in the extended trade.
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