Drug development services company Covance Inc. (CVD), Wednesday reported a decline in net profit for the fourth quarter, reflecting lower demand for its early development services, notwithstanding the 10% revenue growth over last year. Further, earnings missed Street expectations by a penny, while revenues were ahead of market projections. Covance also provided earnings forecast for fiscal year 2010.
The Princeton, New Jersey-based company reported net income for the fourth quarter of $41.5 million or $0.64 per share, compared to $45.7 million or $0.72 per share in the year-ago quarter.
Excluding gain on sale and favorable income tax resolutions, the company's fourth quarter net income was $41.5 million or $0.64 per share from $45.6 or $0.75 per share in the same quarter last year.
On average, sixteen analysts polled by Thomson Reuters expected the company to earn $0.65 per share for the quarter. Analysts estimates typically exclude special items.
Net revenues for the quarter increased 10.6% to $485.1 million from $438.6 million in the prior-year quarter. Thirteen analysts had a revenue consensus of $480.98 million for the fourth quarter.
In the immediately preceding quarter, Covance reported a net income that declined to $51.06 million or $0.79 per share reflecting lower demand for its early development services, even as revenues grew 8% to $483.72 million from last year.
Amongst others in the industry, Charles River Laboratories Int'l Inc. (CRL), is slated to release its fourth quarter results on February 8. On average, 15 analysts on consensus currently expect the company to report earnings of $0.44 per share on revenues of $291.16 million for the quarter.
Revenues reimbursable Out-of-Pockets for the third quarter were $22.2 million, compared to $25.2 million last year.
Segment-wise, net revenues for Early Development, which includes preclinical toxicology, analytical chemistry, clinical pharmacology services, and research products, decreased 5.2% year-over-year to $203.1 million, while operating income plunged 49.6% from last year.
Net revenues for Late-Stage Development segment, which includes central laboratory, Phase II-III clinical development grew 25.6% to $281.9 million from last year, while operating income rose 45.0% to $63.8 million from the previous-year quarter.
Operating income for the quarter declined 13.6% year-over-year to $54.9 million, while operating margin contracted to 11.3% from 45.7% in the year-earlier period.
Total costs and expenses for the quarter were $452.46 million, compared to $400.34 million last year. Cost of revenue reimbursable was $337.90 million, up from $294.68 million in the same quarter last year.
The company's backlog at December 31, 2009 grew 12.3% year-over-year to $4.87 billion, compared to $4.33 billion at December 31, 2008 . Foreign exchange negatively impacted sequential backlog growth by $61.3 million. Adjusted net orders were $643 million in the fourth quarter of 2009.
At December 31, 2009, cash and cash equivalents were $289 million, compared to $266 million at December 31, 2008.
For the fiscal year 2009, the company's net income was $175.9 million or $2.73 per share compared to $196.8 million or $3.08 per share for fiscal 2008. Excluding gain on sale and favorable income tax resolutions, the company's full year net income was $167.5 million or $2.60 per share from $194.1 or $3.03 per share for fiscal 2008.
Net revenue for fiscal 2009 was $1.87 billion, up 8.1% from $1.73 billion for fiscal 2008.
Analysts were looking for earnings of $2.61 per share on revenues of $1.86 billion for fiscal 2009.
Looking ahead to the full year 2010, the company expects revenue growth to be approximately 10% over 2009 and earnings in the range of $2.50 - $2.75 per share. Analysts currently anticipate the company to earn $2.90 per share on revenue of $2.04 billion for the full year.
CVD closed Wednesday's regular trading at $58.90, down $0.40 or 0.67%, on a volume of 1.58 million shares on the NYSE. In after hours, the stock further lost $1.60 or 2.72%, trading at $57.30. In the past 52 weeks, the stock trended in a broad range of $32.31 - $60.54, with a three-month average volume of 0.68 million shares.
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