COVANCE ANNOUNCES RECORD RESULTS & RAISES 2006 EPS TARGET

Princeton, New Jersey, January 25, 2006 — Covance Inc. (NYSE: CVD) today reported fourth quarter earnings of $0.54/diluted share, up 28.6% year-over-year, after adjusting for the impact of a one-time $4.4 million repatriation-related income tax charge. This income tax charge of approximately seven cents per share was associated with the repatriation of $103 million of accumulated foreign earnings under the American Jobs Creation Act. Full-year earnings on the same basis were $1.94/diluted share, a 27.6% increase over full-year 2004. GAAP earnings for the fourth quarter ended December 31, 2005 were $0.47/diluted share and full-year earnings were $1.88/diluted share.

"I congratulate the entire Covance team for delivering a fifth consecutive year of at least 25% earnings growth for our shareholders. Outstanding project delivery for clients led to continued strong repeat work and record orders of $434 million in the fourth quarter, driving backlog to $1.67 billion," said Joe Herring, Covance's Chairman and Chief Executive Officer. "The fourth quarter's robust revenue growth of nearly 20% and record operating margins of 15.0% were broad-based and featured continued strong performances by our market-leading toxicology services and central laboratory services. Our Early Development segment achieved exceptionally strong revenue growth of 24.1% and operating margin of 25.0%, and our Late-Stage Development segment grew revenues 16.4% and increased its operating margin 50 basis points sequentially to 16.2%. Strong order flow over the past two years translated into a doubling of our full-year top-line growth rate to 16.9%. Fourth quarter orders included two dedicated capacity contracts totaling approximately $34 million, consisting of the extension of an existing contract and a smaller, new contract with a top ten pharmaceutical client."

"Looking forward, we will continue to focus on our three service-based strategies: delivering operational and service excellence for our clients; creating integrated drug development solutions that reduce the time and cost of drug development; and driving more strategic, partner-based outsourcing. Continued successful execution of these strategies leads us to raise our 2006 earnings target from at least $2.30 per share to at least $2.33 per share (excluding the impact of expensing stock options under SFAS 123(R), which we estimate to be approximately $0.16 to $0.18 cents per share in 2006)."
To read the entire release, please visit http://www.covance.com/news/pressrel/2006/060125.php