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COVANCE REPORTS STRONG 1Q99 FINANCIAL RESULTS
Pharmaceutical Outsourcing Continues to
Drive Impressive Growth |
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First Quarter Highlights:
- Net revenues up 25%
- Strong top-line performance
in both early and late-stage development segments
- Net income up 25.8%
- Covance named as highest rated CRO by
clinical investigators, according to industry survey
- Signed long-term commercial production contract with Centocor Inc., a leading biopharmaceutical company
Princeton, NJ, April
20 —
Covance Inc. (NYSE: CVD - news), one of the world's largest and most comprehensive drug development services
companies, today announced strong financial results for its first quarter
ended March 31, 1999. Management commented that these results represent the
ninth consecutive quarter that Covance has delivered solid, balanced,
diversified growth since becoming an independent public company in January
1997.
Net revenues for the first quarter of 1999 were $ 210.6 million, up
25% compared to $168.5 million for the first quarter of 1998. Excluding the
impact of acquisitions, net revenues increased 22.3%. Covance continued to
experience strong demand in both its early and late-stage development
businesses this quarter. Early development services, comprised of preclinical
and Phase I clinical trial services, posted revenue gains of 15% for the first
quarter. Late-stage development services, comprised of clinical trials
management and support services, grew 30% over the prior year.
Operating income for the first quarter of 1999 was $24.2 million, up
19.0%, compared to $20.3 million for the first quarter of 1998. Net income
for the first quarter of 1999 was $13.1 million or $0.22/diluted share, up
25.8% compared to $10.5 million or $0.18/diluted share for the first quarter
of 1998.
"We are pleased to report that the pharmaceutical industry's demand for
high quality drug development services remains strong and continues to fuel
Covance's impressive financial growth," said Chris Kuebler, Chairman and CEO
of Covance. "We are confident in our ability to continue to achieve our
financial targets throughout 1999 and to create new opportunities to ensure
long-term growth in this dynamic and rewarding marketplace."
Pharmaceutical companies today face significant pressures to improve the
number, quality and commercial value of the drugs emerging from their
pipelines. Industry sources estimate that for top pharmaceutical companies to
meet their growth estimates through 2005, they must collectively launch at
least 24 new drugs — each earning between $1 billion to $1.5 billion — in
the next seven years. Increasingly, drug development outsourcing is being
recognized as a solution for pharmaceutical companies to optimize the
productivity and value of their R&D investments.
In addition to its strong financial performance, Covance also reported
that CenterWatch, a leading industry trade publication, announced that Covance
was the highest rated contract research organization (CRO) according to a 1998
survey of 395 clinical investigator sites. Covance was named "best overall"
CRO when the poll was first published in 1997.
Also, in the first quarter of 1999, Covance signed an agreement with
Centocor Inc. for the commercial production of Centocor's drug Retavase(TM)
(recombinant reteplase). Since Covance began operations at its
state-of-the-art biomanufacturing facility in 1997, it has produced proteins
for use in preclinical evaluation and clinical trials. The agreement with
Centocor represents the first long-term commercial production contract for
Covance's biomanufacturing business.
Covance, with headquarters in Princeton, New Jersey, is one of the world's
largest and most comprehensive drug development services companies with 1998
revenues of $732 million, operations in 17 countries, and approximately
7,300 employees worldwide. Covance's purpose is to lead advancements in drug
development through science, service, and shaping solutions. Information on
Covance's products and services, recent press releases and SEC filings can be
obtained from our Investor Relations pages.
Statements contained in
this press release which are not historical facts
may be considered forward-looking statements as that term is defined in the
Private Litigation Reform Act of 1995. Such forward-looking statements
including the statements contained herein regarding anticipated trends in the
Company's business are based largely on Covance's expectations and are subject
to a number of risks and uncertainties, certain of which are beyond Covance's
control. Actual results could differ materially from these forward-looking
statements as a result of a variety of factors including the risk factors
described in Covance's filings with the Securities and Exchange Commission
such as (i) Covance has only recently been operating as a separate independent
company, (ii) changes in regulations governing the drug development process,
and (iii) the fixed price nature of contracts or the loss of large contracts.
In light of these risks and uncertainties, there can be no assurance that any
forward-looking information contained in this press release will in fact
transpire. |
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COVANCE INC.
INCOME STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
1999 1998
(Dollars in thousands)
March 31, December 31,
1999 1998
CONDENSED BALANCE SHEET DATA
Cash and cash equivalents $20,073 $19,263
Accounts and unbilled
receivables $ 194,941 $ 180,734
Total Current Assets $ 287,250 $ 274,489
Total Assets $ 627,489 $ 593,415
Total Current Liabilities $ 191,980 $ 193,001
Long-term debt $ 169,167 $ 149,909
Total Liabilities $ 387,996 $ 368,400
Total Stockholders' Equity $ 239,493 $ 225,015
COVANCE INC.
CONDENSED CASH FLOW DATA
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Dollars in thousands)
Three Months Ended March 31
1999 1998
CONDENSED CASH FLOW DATA
Cash flows from net
earnings adjusted
for non-cash activity $ 25,639 $ 20,667
Changes in operating
assets and liabilities (12,460) (12,408
Net cash provided by
operating activities 13,179 8,259
Capital expenditures (20,196) (9,957)
Acquisition of businesses (15,133) --
Other, net 301 10
Net proceeds from
(repayment of) debt 20,000 (10,000)
Cash provided by stock
issued under
employee benefits plans 2,659 1,391
Net change in cash
and cash equivalents 810 (10,297)
Cash and cash equivalents,
beginning of period 19,263 28,027
Cash and cash equivalents,
end of period $ 20,073 $ 17,730
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