US-based contract research organisation (CRO) Kendle has raised its guidance for full-year service revenues and earnings per share after delivering a compelling second-quarter performance, with growth of 30% and 49% respectively in net revenues and operating profit.

Net service revenues for the three months ended 30 June 2008 – which excluded reimbursable out-of-pocket costs – were US$127.0 million, 29.8% higher than in the second quarter of 2007. The acquisition in early June of DecisionLine Clinical Research Corporation, a privately owned CRO based in Toronto, Canada and specialising in Phase I studies, contributed around 2% of the revenue increase.

Operating income jumped 47.8% to US$16.1 million, generating net income of US$7.8 million (+80.9%) and diluted earnings per share (EPS) of US$0.52 (+79.3%). The operating margin was 12.7% of net service revenues, compared with an 11.1% margin in Q2 2007.

As in the first quarter, the main engine of revenue growth was late-stage clinical development services, where net service revenues rose by 29.1% year on year to US$116.1 million and operating income was 49.4% ahead at US$28.6 million.

Boosted by the DecisionLine acquisition, the much smaller early-stage business made a strong showing, with operating income more than doubled from US$960,000 to US$2.15 million as net service revenues advanced 55.2% to US$8.64 million.

Support and other services again registered an operating loss – US$14.7 million this time around, against a US$9.24 million loss in the second quarter of 2007. Net service revenues in this segment dipped 3.2% to US$2.22 million.

Taken by geographic region, 45% of Kendle’s overall net service revenues in the latest quarter came from North America, 44% from Europe, 8% from Latin America and 3% from the Asia/Pacific region. That compared with a more US-centric breakdown in Q2 2007, when 50% of net service revenues were generated in North America, 42% in Europe, 5% in Latin America and 3% in Asia/Pacific.

New business awards were worth US$204 million in the second quarter of 2008, a 24% increase over the same period last year. Contract cancellations for the quarter were US$27 million. As of 30 June, total new business authorisations came to around US$979 million, 13% more than at 31 December 2007 and up by 29% year on year.

The net book-to-bill ratio for the three months to 30 June 2008 was 1.4 to 1 – about par for the course among the leading CROs, according to a recent report from analysts at Turner Investment Partners.

Kendle’s revised guidance for full-year net service revenues is US$490-US$500 million, up from the previous projection of US$450-US$460 million. The guidance for diluted EPS in 2008 is now US$2.00-US$2.15, compared with US$1.90-US$2.07 previously.