Covance Agrees to Enter Strategic Relationship with eResearchTechnology to Offer its Clients eRT's Centralized Cardiac Safety Services
- Covance Sells Centralized ECG Business; Enters Exclusive Ten Year Marketing Agreement with eRT -
PRINCETON, N.J., Nov. 27 /PRNewswire-FirstCall/ -- Covance Inc. (NYSE: CVD) announced today that it has agreed to sell its centralized ECG business to eResearchTechnology (eRT) and enter into a ten year marketing agreement to offer its clients cardiac safety services through eRT's robust centralized ECG platform. The transactions are expected to be completed on or before November 28, 2007.
"Covance remains fully committed to providing our clients with integrated drug development solutions, including critical cardiac safety data in clinical projects," said Joe Herring, Chairman and CEO of Covance. "Under the new marketing arrangement, we believe our clients will benefit from eRT's industry-leading centralized ECG services. The transaction also allows Covance's management team to focus more attention and investments on growing our service offerings in the larger markets we serve."
"By engaging in this long-term strategic relationship with the world's largest publicly-traded CRO, eRT is extending its leadership position in the area of cardiac safety," said Dr. Michael McKelvey, President and CEO of eRT. "The scale, expertise, and ancillary technology benefits that will be derived from the acquisition will allow us to provide better and more cost-effective services to our valued clients and to the drug development industry."
In exchange for its centralized ECG business, which accounted for less than 2% of the company's annual net revenues, Covance disclosed that it has received an upfront cash payment from eRT of approximately $35 million with the opportunity to receive up to an additional $14 million in contingent consideration relating to the transferred backlog as well as from revenues generated from new contracts secured under the long-term marketing arrangement. In addition, Covance expects to receive certain referral fees over the term of the marketing agreement.
Covance is maintaining its full-year 2007 earnings target of $2.65 per diluted share, excluding any gain resulting from the sale of its centralized ECG business. In 2008, Covance continues to target revenue growth in the low- to mid-teens range and diluted earnings per share growth of 20%, excluding any gain resulting from any future contingent consideration received from the sale of the centralized ECG business.
Covance, with headquarters in Princeton, New Jersey, is one of the world's largest and most comprehensive drug development services companies with revenues over the last twelve months of approximately $1.5 billion, global operations in more than 20 countries, and approximately 8,700 employees worldwide. Information on Covance's products and services, recent press releases, and SEC filings can be obtained through its website at www.covance.com.
Based in Philadelphia, Pennsylvania, eResearchTechnology, Inc. (http://www.eRT.com) is a provider of technology and services to the pharmaceutical, biotechnology, and medical device industries on a global basis. The Company is a market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The Company is also a leader in providing technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of clinical data in all phases of clinical development.
Statements contained in this press release, which are not historical facts, such as statements about prospective earnings, savings, revenue, operations, revenue and earnings growth and other financial results are forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements including the statements contained herein regarding anticipated trends in the Company's business are based largely on management's expectations and are subject to and qualified by risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, without limitation, competitive factors, outsourcing trends in the pharmaceutical industry, levels of industry research and development spending, the Company's ability to continue to attract and retain qualified personnel, the fixed price nature of contracts or the loss of large contracts, risks associated with acquisitions and investments, the Company's ability to increase order volume, the pace of translation of orders into revenue in late-stage development services, and other factors described in the Company's filings with the Securities and Exchange Commission including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the Company's expectations.