- 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
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.