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COVANCE REPORTS $0.21/SHARE FOR 3Q 1999 EXCLUDING RESTRUCTURING CHARGE

Princeton, NJ, October 19, 1999 — Covance Inc. (NYSE: CVD) today reported earnings for its third quarter ended September 30, 1999 of $0.21/diluted share, excluding a one-time restructuring charge of $7.7 million pre-tax ($4.6 million after tax).

"While we continue to deliver expected results in many of our businesses, we have experienced shortfalls in our clinical development and central laboratory services, which we announced in early September," said Chris Kuebler, Chairman and CEO. "We are implementing action plans to drive stronger financial results which we expect to be evident by the second half of next year. These actions include the previously announced steps to restructure our clinical development services under a global management structure, create a unified sales force for clinical development and clinical support services, and introduce new service offerings in our central laboratory. We believe these actions will enhance our efficiency and strengthen our competitive position in the growing contract drug development market."

3Q and YTD'99 Financial Results (excluding special charges)
Net revenues for the third quarter of 1999 increased 9.2% to $198.9 million, compared to $182.2 million in 1998. Year-to-date net revenues increased 17.2% to $624.6 million, compared to $532.8 million for the prior year.

Operating income for the third quarter of 1999 was $23.1 million resulting in an operating income margin of 11.6% compared to 13.3% in 1998. Year-to-date operating income was $75.5 million resulting in an operating income margin of 12.1% compared to 12.9% for the same period in 1998.

Net income for the third quarter of 1999 was $12.3 million or $0.21/diluted share, compared to $13.1 million or $0.22/diluted share for 1998. Year-to-date net income was $40.8 million or $0.69/diluted share, up 12.3% from $36.4 million or $0.62/diluted share for the same period in 1998.

Segment Results (excluding special charges)
Early Development Segment

($ in millions)	3Q'99	3Q'98	change	YTD'99	YTD'98	change
Revenues	$68.0	$61.4	10.8%	$202.9	$180.0	12.7%
Costs/Expenses	55.9	51.3	8.9%	171.5	152.3	12.6%
OM%	17.8%	16.4%		15.5%	15.4%

The Company's Early Development segment, which includes preclinical and Phase I clinical trial services, performed in line with expectations. Operating margins for the quarter and year-to-date were positively impacted by expense management and stronger margins from an acquired business.

Late-Stage Development Segment

($ in millions)	3Q'99	3Q'98	change	YTD'99	YTD'98	change
Revenues	$130.9	$120.8	8.4%	$421.7	$352.7	19.6%
Costs/Expenses	119.9	106.6	12.5%	377.6	311.5	21.2%
OM%	8.4%	11.8%		10.5%	11.7%

The Late-Stage Development segment includes clinical development, clinical support services, biomanufacturing, and commercialization services. As announced previously, slower revenue growth in Late-Stage Development for the quarter was due to lower clinical orders, the impact of a major contract cancellation due to molecule performance and the reduction in scope of another large program related to sponsor funding pressures. The shortfall in clinical development revenues was compounded by a leveling off of growth in the central laboratory business after exceptionally strong performance in the first half of this year and in 1998.

Management indicated that operating margins in Late-Stage Development declined primarily due to the impact of excess staffing in clinical development.

Restructuring Charge

During the quarter, the Company announced it would consolidate its regionally based Phase III clinical services under one global management structure to improve its global competitiveness, optimize capacity utilization, and enhance quality and service worldwide. Primarily as a result of this action, Covance recorded a restructuring charge in the third quarter of approximately $7.7 million pre-tax related to a permanent work force reduction of approximately 165 redundant managerial and staff positions. The Company anticipates annual pre-tax savings of approximately $8.0-$9.0 million.

Corporate Information

In September 1999, the Covance Board of Directors authorized the repurchase of up to 5 percent, or approximately 3.0 million shares, of the Company's common stock. The Company has repurchased approximately 500,000 shares to date.

The Company recorded backlog, consisting of signed contracts, signed letters of intent and verbal contracts where work has commenced, at the end of the third quarter of approximately $812 million, versus $780 million at December 31, 1998.

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 currently in 17 countries, and approximately 7,700 employees worldwide. Information on Covance's products and services, recent press releases, and SEC filings can be obtained in this "About Covance" section.

Information provided herein, which is not historical information, such as statements about prospective earnings, revenue and earnings growth, 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, the Company's ability to continue to attract and retain qualified personnel, the fixed price nature of contracts or the loss of large contracts, the success of the Company's reorganization, and other factors described in the Company's filings with the Securities and Exchange Commission including quarterly reports on Form 10-Q and Annual Report on Form 10-K and available at "earnings/filings" above. No assurance can be given that the Company will be able to realize the net revenues included in backlog. Covance believes that its aggregate backlog is not necessarily a meaningful indicator of future results. Covance makes no representations or warranties as to the accuracy of the information contained herein and expressly disclaims any obligation to update such information.


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                                 COVANCE INC.
                                  PROFORMA*    
              INCOME STATEMENTS - EXCLUDING SPECIAL CHARGES
      FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
              (Dollars in thousands, except per share data)
                                 (UNAUDITED)
 
 
                            Three Months Ended                Nine Months Ended
                               September 30                      September 30
                                1999 (a)       1998           1999(b)      1998    
                                  
                                  
Net revenues                  $198,920     $182,187        $624,612    $532,785 
    
 Costs and expenses:                        
  Cost of revenue              134,643      119,366         416,979     351,433 
  Selling, general &  
   administrative expense       28,912       29,058          97,106      85,395 
 Depreciation 
  and amortization              12,243        9,488          35,035      27,066 
    Total                      175,798      157,912         549,120     463,894 
 
 
 Income from operations         23,122       24,275          75,492      68,891 
 
 
Other expense, net: 
 Interest expense, net           2,682        1,787           7,087       5,290  

Other expense                     (22)           16              59         203 
Other expense, net               2,660        1,803           7,146       5,493 


Income before taxes and 
 equity investee results        20,462       22,472          68,346      63,398 
                                
Taxes on income                  8,124        9,329          27,503      26,577

Equity investee loss               -             80               -         438 
                                
Net income                     $12,338      $13,063         $40,843     $36,383 
  
Basic earnings per share         $0.21        $0.22           $0.69       $0.63 
                                
Weighted average shares                                 
 outstanding-basic          58,946,003   58,154,402      58,753,481  57,961,092 
                                
Diluted earnings per share       $0.21        $0.22           $0.69       $0.62 
                                
Weighted average shares                                 
 outstanding-diluted        59,033,962   59,010,297      59,332,078  58,539,706 
 
 
* Excluding special charges as set forth in notes (a) and (b) below.


(a) Income statement for the three months ended September 30, 1999 excludes a 
restructuring charge incurred in Q3 totaling $7,719 ($4,631 after tax).

(b) Income statement for the nine months ended September 30, 1999 excludes a 
one-time charge incurred in Q2 1999 in connectionwith a terminated merger 
totaling $5,249 ($3,150 after tax) and a restructuring charge incurred in Q3 
totaling $7,719 ($4,631 after tax).                


                                COVANCE INC.
                 INCOME STATEMENTS - INCLUDING SPECIAL CHARGES
       FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                 (Dollars in thousands, except per share data)
                                (UNAUDITED)
                         
                                Three Months Ended         Nine Months Ended
                                   September 30              September 30
                                1999         1998         1999          1998

Net Revenues                  $198,920     $182,187     $624,612      $532,785 

Costs and expenses:
 Cost of revenue               134,643      119,366      416,979       351,433 
 Selling, general &
  administrative expense        28,912       29,058       97,106        85,395 
 Depreciation and
  amortization                  12,243        9,488       35,035        27,066 
 Restructuring charge            7,719          -          7,719          -
 Merger-related costs              -            -          5,249          -   
   Total                       183,517      157,912      562,088       463,894


Income from operations          15,403       24,275       62,524        68,891

 Other expense, net:
 Interest expense, net           2,682        1,787        7,087         5,290  
 Other expense                     (22)          16           59           203 
 Other expense, net              2,660        1,803        7,146         5,493 

Income before taxes and
 equity investee  results       12,743       22,472       55,378        63,398 

Taxes on income                  5,037        9,329       22,317        26,577 

Equity investee loss                -            80         -              438 

Net income                      $7,706      $13,063      $33,061       $36,383 

Basic earnings per share         $0.13        $0.22        $0.56         $0.63 

Weighted average shares
 outstanding-basic          58,946,003   58,154,402   58,753,481    57,961,092 

Diluted earnings per
 share                           $0.13        $0.22        $0.56         $0.62 

Weighted average
 shares 
 outstanding -  diluted     59,033,962   59,010,297   59,332,078    58,539,706 


                        COVANCE INC.
                 CONDENSED BALANCE SHEET DATA
           SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 
                   (Dollars in thousands)
    
    
                                   September 30,  December 31,
                                       1999          1998
                                           (UNAUDITED)

CONDENSED BALANCE SHEET DATA                
                
Cash and cash equivalents           $12,398       $19,263 
Accounts and unbilled receivables  $209,072      $180,734 
Total Current Assets               $300,857      $274,489 
Total Assets                       $690,959      $593,415 
                
                
Total Current Liabilities          $187,115      $193,001 
Long-term debt                     $209,167      $149,909 
Total Liabilities                  $422,805      $368,400 
Total Stockholders' Equity         $268,154      $225,015 


                

                         COVANCE INC.
                  CONDENSED CASH FLOW DATA
    FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                   (Dollars in thousands)
                        (UNAUDITED)
             
CONDENSED CASH FLOW DATA        Nine Months Ended September 30
                                       1999          1998
                
 Cash flows from net earnings 
  adjusted for non-cash activity    $83,497       $70,891 
   
 Changes in operating assets
   and liabilities                 (49,850)       (41,581)
   
  Net cash provided
   by operating activities           33,647        29,310
                
 Capital expenditures               (90,091)      (46,037)
 Contingent purchase price 
  paid in connection with 
  prior acquisitions                (16,830)           -   
  
  Other, net                            635           122 
                
  Net proceeds from                  60,000        (5,000) 
    (repayment of) debt
                
  Cash provided by stock 
   issued under employee                
   benefit plans                      5,774         5,053 
                
  Net change in cash 
   and cash equivalents              (6,865)      (16,552)
                
  Cash and cash equivalents, 
   beginning of period               19,263        28,027 
                
  Cash and cash equivalents, 
   end of period                    $12,398       $11,475 
   
  
   
  SOURCE  Covance Inc.