Two leading global players in the contract research sector have delivered strong revenue and income growth in their latest quarterly reports.
At Covance, based in Princeton, New Jersey, operating income for the fourth quarter ended 31 December 2013 rose by 27.5% year on year to US$55.0 million, while net revenues were 10.8% ahead at US$623.1 million.
Excluding one-off costs from restructuring and other items (e.g., facilities closed during 2012), operating income for the latest quarter gained 23.2% to US$64.7 million.
Diluted earnings per share for the fourth quarter were up by 30.5% to US$0.80, or by 18.6% to US$0.87 if the special items were stripped out.
Beat targets
Covance said it continued to benefit during 2013 from market-share gains in central laboratories, strong operational delivery in clinical development, improving market conditions in toxicology, and the successful execution of its ongoing strategic information-technology projects.
These factors helped the company to exceed “significantly” its financial targets for the year.
For 2014, Covance is projecting year-on-year revenue growth in the 6-10% range and pro-forma diluted earnings per share (excluding costs from ongoing restructuring activities) of US$3.65 to $US4.00, assuming foreign-exchange rates remain at year-end 2013 levels.
Genomics laboratory sale
At the end of January 2014, Covance sold its high-complexity genomics laboratory in Seattle, US to Laboratory Corporation of America Holdings (LabCorp).
It also entered into a five year services agreement under which Covance will collaborate with LabCorp to continue offering the laboratory services to its clients.
Covance expects to report a small gain on the sale in its first quarter ending 31 March 2014, which will be excluded from pro-forma earnings per share.
PAREXEL second quarter
Over at fellow US biopharmaceutical-services provider PAREXEL International, operating income for the second quarter of fiscal 2014 jumped 48.4% year on year to US$46.7 million.
Consolidated service revenues for the quarter ended 31 December 2013 were 15.4% higher at US$487.1 million.
Revenue gains were driven by growth of 11.9% in Clinical Research Services, 11.3% in PAREXEL Consulting & Medical Communications Services, and 22.9% in the technology-solutions arm, Perceptive Informatics.
Diluted earnings per share for Q2 of fiscal 2014 were US$0.49, up by 36.1% over the same quarter last year.
Full-year forecast
PAREXEL is expecting full-year revenues to reach US$1.920 to US$1.930 billion – a more optimistic spread than in the adjusted guidance it issued on 13 January 2014, which was for revenues of US$1.895 to US$1.925 in fiscal year 2014.
Earnings per share for the full year are projected at US$1.99 to US$2.09, compressing slightly the guidance of US$1.97 to US$2.11 given on 13 January.
