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COVANCE ACHIEVES EARNINGS OF $0.31/SHARE; OPERATING MARGINS CONTINUE TO INCREASE
OM% at 12.8%; $32.1M in Net Cash Generation; Backlog Grows $19.5M in Q3

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Princeton, New Jersey, October 22, 2003 — Covance Inc. (NYSE: CVD) today reported earnings for its third quarter ended September 30, 2003 of $0.31/diluted share, 24% growth over the same period in 2002.

"Covance delivered strong earnings growth and cash flow in the third quarter as ongoing productivity improvements drove increased profitability and earnings," said Chris Kuebler, Covance's Chairman and CEO. "This quarter's results were led by Early Development, which posted exceptionally strong operating margins of 22.0%, top line growth of 11.6%, and strong new order flow. In Late-Stage Development, revenue was flat versus the prior year as a result of below target net order generation in the first half of the year. However, Late-Stage Development orders improved both sequentially and year-over-year, and operating margins were 14.8% this quarter. Cash flows in the quarter were once again very robust, driving a $32.1 million increase in our cash balance to a record $111 million. We continue to remain confident in our ability to achieve our full-year 2003 EPS target of $1.20 per share and our full-year 2004 EPS target of at least $1.41 per share."

"Over the past 18 months we have stressed operational excellence at Covance, specifically our people, process, and client approach," said Joe Herring, Covance's President and COO. "We continued to reap the benefits of these efforts as demonstrated in our increasing levels of revenue per employee and OM per employee, as well as by our growing operating margins. During the third quarter, margins increased 80 basis points sequentially and 150 basis points year-over-year to 12.8%. Process efficiency initiatives are expected to drive even further advances in productivity and profitability in the future — a few specific examples of ongoing efforts will be provided during our third quarter investor conference call. On the commercial front, we continue to see an increasing number of large, multi-capability projects that can leverage our broad portfolio of drug development services. Net orders have increased for the second quarter in a row, driving a $19.5 million sequential increase in our backlog. We anticipate continued growth in net orders and backlog, based upon improving market dynamics."

Consolidated Results

($ in millions except EPS)	3Q03	3Q02*	Change	2003 YTD	2002 YTD	Change
Net Revenues	$232.0	$221.0	5.0%	$699.2	$648.8	7.8%
Reimbursable Out-of-Pockets	$7.9	$9.9		$26.0	$30.2
Total Revenues	$239.9	$230.9		$725.2	$679.0
Costs and Expenses	$202.2	$196.1	3.1%	$613.7	$582.3	5.4%
Reimbursable Out-of-Pockets	$7.9	$9.9		$26.0	$30.2
Total Costs and Expenses	$210.1	$206.0		$639.7	$612.5
Operating Income	$29.8	$24.9	19.8%	$85.5	$66.5	28.6%
Operating Margin %	12.8%	11.3%		12.2%	10.3%
Net Income	$19.5	$15.4	26.8%	$55.7	$40.3	38.3%
Diluted EPS	$0.31	$0.25	24.0%	$0.89	$0.65	36.9%

* 2002 net income and diluted EPS amounts have been reduced to exclude the $6.5 million ($0.11/diluted share) favorable income tax reserve reversal reported during the third quarter of 2002.

Net revenues for the third quarter of 2003 increased 5.0% to $232.0 million compared to $221.0 million in the third quarter of 2002. Year-to-date net revenues increased 7.8% to $699.2 million compared to $648.8 million in the prior year.

Costs and expenses for the third quarter of 2003 increased 3.1% to $202.2 million compared to $196.1 million in the third quarter of 2002. Year-to-date, costs and expenses increased 5.4% to $613.7 million compared to $582.3 million in the prior year.

Consolidated operating income for the third quarter of 2003 increased 19.8% to $29.8 million compared to $24.9 million in the third quarter of 2002. Operating margin for the third quarter of 2003 was 12.8% compared to 11.3% for the third quarter of last year and 12.0% in the previous quarter. Year-to-date, operating income increased 28.6% to $85.5 million compared to $66.5 million in the prior year.

Net income for the third quarter of 2003 increased 26.8% to $19.5 million or $0.31/diluted share compared to $15.4 million or $0.25/diluted share for the third quarter of last year. Year-to-date, net income increased 38.3% to $55.7 million or $0.89/share compared to $0.65/share for the same period in 2002.

Operating Segment Results
Early Development

($in millions)	3Q03	3Q02	Change	2003 YTD	2002 YTD	Change
Net Revenues	$104.7	$93.8	11.6%	$303.3	$270.6	12.1%
Operating Income	$23.1	$18.2	26.8%	$61.3	$49.3	24.5%
Margin %	22.0%	19.4%		20.2%	18.2%%

The Company's Early Development segment includes preclinical toxicology, analytical chemistry, and Phase I clinical trial services. Early Development net revenues for the third quarter of 2003 grew 11.6% to $104.7 million compared to $93.8 million in the third quarter of 2002 and $98.7 million last quarter. Contributing to top line growth were strong performances by European toxicology, global chemistry, and global Phase I clinical services. Year-to-date, net revenues grew 12.1% to $303.3 million compared to $270.6 million in the prior year.

Operating income for the third quarter of 2003 increased 26.8% to $23.1 million compared to $18.2 million for the third quarter of last year. Operating margin for the third quarter of 2003 was a record at 22.0% versus 19.4% in the third quarter of the prior year and 19.5% last quarter. Operating margin improvement was broad-based, including strong profitability in global toxicology, global chemistry, and global Phase I clinical services. Year-to-date, operating margins were 20.2% compared to 18.2% in the prior year. Early Development's full-year operating margins are expected to increase again in 2004.

Late-Stage Development

($in millions)	3Q03	3Q02	Change	2003 YTD	2002 YTD	Change
Net Revenues	$127.3	$127.2	0.1%	$395.8	$378.2	4.7%
Operating Income	$18.8	$18.2	3.5%	$58.9	$48.8	20.7%
Margin %	14.8%	14.3%		14.9%	12.9%

The Late-Stage Development segment includes central laboratory, Phase II-III clinical development, commercialization services (comprised of Phase IV studies and health economic and outcomes services), and central diagnostic services. Late-Stage Development net revenues for the third quarter of 2003 increased 0.1% to $127.3 million compared to $127.2 million in the third quarter of 2002. Year-to-date, revenues increased 4.7% to $395.8 million compared to $378.2 million in the prior year. In spite of sequential improvement in central laboratories net order generation, revenue growth in the near term is expected to continue to be impacted by low central laboratory net order generation experienced in the first half of 2003.

Operating income for the third quarter of 2003 increased 3.5% to $18.8 million compared to $18.2 million in the third quarter of the prior year. For the third quarter of 2003, operating margin was 14.8%, up from 14.3% for the third quarter last year. Year-to-date, operating margins were 14.9% compared to 12.9% in the prior year. Margin improvements for the third quarter and year-to-date were primarily driven by strong margins in central laboratory services. Operating margins for Late-Stage Development are expected to continue to increase in 2004 due to further advances in productivity.

Corporate Information

The Company's backlog was $1,090 million at September 30, 2003 compared to $1,071 million at June 30, 2003 and $1,083 million at September 30, 2002. Backlog increased sequentially in both Early Development and Late-Stage Development.

The Company reported an increase of $32.1 million in cash and cash equivalents in the quarter to $110.9 million at September 30, 2003 from $78.8 million at June 30, 2003 and continues to have no debt outstanding. In the third quarter, operating cash flows were very strong at $57.9 million. Capital spending in the quarter was $28.3 million and included the strategic purchase of our central laboratory facility in Geneva, Switzerland at a cost of $18.8 million.

"Not only did we take advantage of the opportunity to lock up this strategically important facility, but we expect that our carrying costs will be lower going forward," said Bill Klitgaard, Covance's Chief Financial Officer. Covance now expects to have full-year 2003 capital spending of approximately $65 million and to achieve full-year 2003 net cash generation in the range of the previously announced $80 million target, including the purchase of the Geneva facility.

Net Days Sales Outstanding (DSO) were 49 days at September 30, 2003 versus 50 days at June 30, 2003 and 42 days at September 30, 2002.

Covance, with headquarters in Princeton, New Jersey, is one of the world's largest and most comprehensive drug development services companies with 2002 net revenues of $883 million, global operations in 18 countries, and approximately 6,700 employees worldwide. Much more informtaion about Covance can be found throughout the site, including our products and services, other recent press releases, and SEC filings.

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 profitability of its clinical development services and to increase order volume in central laboratory and commercialization services, continued growth in demand for bioanalytical services and Covance's ability to provide these services on a large scale basis, 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.


	SEC Filings

	Annual Reports

	Quarterly Reports

	Press Releases



Financial Exhibits follow

                            COVANCE INC.

                 PROFORMA UNAUDITED INCOME STATEMENTS

     FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

             (Dollars in thousands, except per share data)


                              Three Months Ended September 30  Nine Months Ended September 30
                                            2003      2002(a)               2003      2002(a)
Net revenues                         $   231,954  $   220,968        $   699,188  $   648,756
Reimbursable out-of-pockets                7,897        9,924             26,057       30,247
    Total revenues                   $   239,851  $   230,892        $   725,245  $   679,003

Costs and expenses:
  Cost of revenue                        154,789      152,568            473,517      452,924
  Reimbursed out-of-pocket expenses        7,897        9,924             26,057       30,247
  Selling, general and administrative     36,109       33,201            106,251       98,681
  Depreciation and amortization           11,263       10,329             33,874       30,640
    Total                                210,058      206,022            639,699      612,492

Income from operations                    29,793       24,870             85,546       66,511

Other (income) expense, net:								
  Interest expense, net                       27          260                211          745
  Foreign exchange transaction loss          313          541                334        1,919
  (gain), net
    Other (income) expense, net              340          801                545        2,664

Income before taxes                       29,453       24,069             85,001       63,847

Taxes on income                           10,035        8,686             29,658       23,584

Equity investee earnings                      92            -                339            -

Net income                           $    19,510  $    15,383        $    55,682  $    40,263

Basic earnings per share             $      0.32  $      0.26        $      0.90  $      0.67

Weighted average shares outstanding   61,679,462   60,076,986         61,569,954   60,294,923
- basic
Diluted earnings per share           $      0.31  $      0.25        $      0.89  $      0.65

Weighted average shares outstanding   62,674,600   61,192,298         62,734,837   61,613,852
- diluted

(a) 2002 adjusted to exclude the reversal of a $6.5 million income tax reserve relating
primarily to the favorable settlement of a longstanding multi-year foreign income tax audit.




                            COVANCE INC.
 
                     CONSOLIDATED BALANCE SHEETS

              SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

                       (Dollars in thousands)


                                     September 31    December 31
                                             2003           2002	
                                       (UNAUDITED)			
ASSETS
Cash & cash equivalents               $   110,916   $    75,913 	
Accounts receivable, net                  142,740       159,368 	
Unbilled services                          49,990        39,073 
Inventory                                  38,613        40,472 
Deferred income taxes                          67         1,839 
Prepaid expenses and other current assets  40,471        28,721 
    Total Current Assets                  382,797       345,386 

Property and equipment, net               277,455       258,407 
Goodwill, net                              56,876        56,805 
Other assets                               15,952        16,405 
    Total Assets                      $   733,080   $   677,003 

LIABILITIES and STOCKHOLDERS' EQUITY				
Accounts payable                      $    19,173   $    24,123 
Accrued payroll and benefits               51,861        57,803 
Accrued expenses and other current         36,121        40,828
 liabilities
Unearned revenue                           67,830        91,681 
Income taxes payable                        5,516             -   
    Total Current Liabilities             180,501       214,435 
				
Deferred income taxes                      19,352        16,432 
Other liabilities                          15,996        14,469 
    Total Liabilities                     215,849       245,336 
				
Common stock                                  655           637 
Paid-in capital                           183,611       147,745 
Retained earnings                         374,791       319,109 
Cumulative translation adjustment           9,643         1,714 
Treasury stock                            (51,469)      (37,538)
    Total Stockholders' Equity            517,231       431,667 

    Total Liabilities and            $    733,080   $   677,003 
    Stockholders' Equity




                           COVANCE INC.
				
                CONSOLIDATED STATEMENTS OF CASH FLOWS

        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

                      (Dollars in thousands)

                            (UNAUDITED)

                                         Nine Months Ended September 30
                                                     2003          2002
Cash flows from operating activities:
  Net income                                  $    55,682   $    46,763
  Adjustments to reconcile net income to net			
  cash provided by operating activities:				
    Depreciation and amortization                  33,874        30,640 
    Stock issued under employee benefit             9,886         7,813
    and stock compensation plans
    Deferred income tax provision                   4,692           500 
    Other                                             255           793 
Changes in operating assets and liabilities,
net of businesses sold:				
  Accounts receivable                              16,628        14,512 
  Unbilled services                               (10,917)         (323)
  Inventory                                         1,859          (535)
  Accounts payable                                 (4,950)       (4,043)
  Accrued liabilities                             (10,649)        9,214 
  Unearned revenue                                (23,851)      (23,544)
  Income taxes payable                              5,516        12,793 
  Other assets and liabilities, net                 2,233         4,429 
Net cash provided by operating activities          80,258        99,012 

Cash flows from investing activities:
  Capital expenditures                            (48,726)      (38,545)
  Acquisition of business, net of cash acquired         -        (2,796)
  Other, net                                          (18)            1 
Net cash used in investing activities             (48,744)      (41,340)

Cash flows from financing activities:
  Net (repayments) borrowings under revolving           -       (15,000)
  credit facilities
  Stock issued under employee stock purchase       17,420         4,483
  and option plans
  Purchase of treasury stock                      (13,931)      (16,420)
Net cash provided by (used in) financing            3,489       (26,937)
activities
Net change in cash and cash equivalents            35,003        30,735 

Cash and cash equivalents, beginning of period     75,913        35,404 

Cash and cash equivalents, end of period     $    110,916   $    66,139 




                            COVANCE INC.

                 INCOME STATEMENTS - INCLUDING SPECIAL ITEMS

      FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

              (Dollars in thousands, except per share data)

                             (UNAUDITED)


                              Three Months Ended September 30  Nine Months Ended September 30
                                            2003         2002               2003         2002
Net revenues                         $   231,954  $   220,968        $   699,188  $   648,756
Reimbursable out-of-pockets                7,897        9,924             26,057       30,247
    Total revenues                   $   239,851  $   230,892        $   725,245  $   679,003

Costs and expenses:
  Cost of revenue                        154,789      152,568            473,517      452,924
  Reimbursed out-of-pocket expenses        7,897        9,924             26,057       30,247
  Selling, general and administrative     36,109       33,201            106,251       98,681
  Depreciation and amortization           11,263       10,329             33,874       30,640
    Total                                210,058      206,022            639,699      612,492

Income from operations                    29,793       24,870             85,546       66,511

Other (income) expense, net:								
  Interest expense, net                       27          260                211          745
  Foreign exchange transaction loss          313          541                334        1,919
  (gain), net
    Other (income) expense, net              340          801                545        2,664

Income before taxes                       29,453       24,069             85,001       63,847

Taxes on income                           10,035        2,186             29,658       17,084

Equity investee earnings                      92            -                339            -

Net income                           $    19,510  $    21,883        $    55,682  $    46,763

Basic earnings per share             $      0.32  $      0.36        $      0.90  $      0.78

Weighted average shares outstanding   61,679,462   60,076,986         61,569,954   60,294,923
- basic

Diluted earnings per share           $      0.31  $      0.36        $      0.89  $      0.76

Weighted average shares outstanding   62,674,600   61,192,298         62,734,837   61,613,852