NEW YORK, July 29 (Reuters) - Clinical testing company Covance Inc on Wednesday reported better-than-expected second-quarter results, although higher expenses more than offset growing revenue, and raised its profit and revenue-growth forecasts for full-year 2009.
Separately, Covance said it would buy Merck & Co's gene-expression laboratory in Seattle and provide Merck with gene-analysis services worth $145 million over the next five years.
'We believe this acquisition establishes Covance as the largest genomics service provider in the world,' Covance said in a release.
The Princeton, New Jersey-based company said its profit fell 16 percent to $43 million, or 67 cents per share, from $51 million, or 80 cents per share, in the year-earlier quarter.
Excluding special items, Covance -- which conducts preclinical and clinical trials for drugmakers -- earned 66 cents per share in the quarter. Analysts on average expected 63 cents per share, according to Reuters Estimates.
Net revenue rose almost 7 percent to $466 million, well above the Reuters Estimates forecast of $448 million, fueled by strong sales gains for the company's late-stage development segment. The segment includes central laboratory services, as well as mid- and late-stage clinical studies.
But revenue from Covance's early development segment fell sharply, hurt by lower demand for toxicology studies. Such studies, typically conducted in animals, help assess possible side effects of experimental medicines.
Covance did not disclose the price it will pay for the Merck facility, which conducts a variety of types of gene analysis, including gene sequencing.
By analyzing genes and genetic mutations, such services are meant to help drugmakers tailor their drugs to individuals -- an emerging field known as personalized medicine.
The company said its profit and revenue picture should improve later this year, assuming a weakening of the dollar and a slightly lower tax rate.
It raised its full-year earnings forecast to between $2.60 and $2.80 per share, excluding special items, from a prior forecast of $2.50 to $2.70 per share. It now expects 2009 revenue to grow in the mid- to upper-single digit range, from its earlier projection of single-digit revenue growth.
Covance shares were unchanged in after-hours activity, from their closing price of $50.15 on the New York Stock Exchange.
(Reporting by Ransdell Pierson; editing by Gunna Dickson) Keywords: COVANCE/ (Reuters Messaging: ransdell.pierson.reuters.com@reuters.net; 646-223-6034; ransdell.pierson@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Separately, Covance said it would buy Merck & Co's gene-expression laboratory in Seattle and provide Merck with gene-analysis services worth $145 million over the next five years.
'We believe this acquisition establishes Covance as the largest genomics service provider in the world,' Covance said in a release.
The Princeton, New Jersey-based company said its profit fell 16 percent to $43 million, or 67 cents per share, from $51 million, or 80 cents per share, in the year-earlier quarter.
Excluding special items, Covance -- which conducts preclinical and clinical trials for drugmakers -- earned 66 cents per share in the quarter. Analysts on average expected 63 cents per share, according to Reuters Estimates.
Net revenue rose almost 7 percent to $466 million, well above the Reuters Estimates forecast of $448 million, fueled by strong sales gains for the company's late-stage development segment. The segment includes central laboratory services, as well as mid- and late-stage clinical studies.
But revenue from Covance's early development segment fell sharply, hurt by lower demand for toxicology studies. Such studies, typically conducted in animals, help assess possible side effects of experimental medicines.
Covance did not disclose the price it will pay for the Merck facility, which conducts a variety of types of gene analysis, including gene sequencing.
By analyzing genes and genetic mutations, such services are meant to help drugmakers tailor their drugs to individuals -- an emerging field known as personalized medicine.
The company said its profit and revenue picture should improve later this year, assuming a weakening of the dollar and a slightly lower tax rate.
It raised its full-year earnings forecast to between $2.60 and $2.80 per share, excluding special items, from a prior forecast of $2.50 to $2.70 per share. It now expects 2009 revenue to grow in the mid- to upper-single digit range, from its earlier projection of single-digit revenue growth.
Covance shares were unchanged in after-hours activity, from their closing price of $50.15 on the New York Stock Exchange.
(Reporting by Ransdell Pierson; editing by Gunna Dickson) Keywords: COVANCE/ (Reuters Messaging: ransdell.pierson.reuters.com@reuters.net; 646-223-6034; ransdell.pierson@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.