Kendle decreases 2006 revenue, EPS guidance to account for delays in Charles River acquisition

By Jennifer Lanning Drey

Eugene, Ore., Sept. 14 - Kendle International reduced its most recent revenue guidance for 2006 by $15 million as a result of the delays it experienced in closing on the acquisition of the clinical services division of Charles River Laboratories International, Inc., according to Karl Brenkert, Kendle's chief financial officer.

The updated guidance, detailed during a company conference call held Thursday, also reflects a $0.015 reduction in earnings per share for the year, Brenkert said.

The company now projects 2006 revenues will be between $285 million and $295 million and pro forma earnings per share before stock option expenses to be $1.45 to $1.55, he said.

"The primary reason for the slight reduction in guidance from that issued in May is the delay in closing the acquisition," he added.

The Charles River CS acquisition was expected to be complete in June, but did not close until mid-August.

Although Kendle expects its overall sales to be strong in the third quarter, Candace Kendle, chief executive officer of the company, said Charles River CS' sales were slowed significantly following the announcement of the sale.

In particular, a delay in "a very sizable award from a major pharmaceutical company" has reduced Charles River CS revenues to date, she said. However, the company expects that project to be back on track by the fourth quarter, she added.

In the future, Kendle will no longer separate Charles River CS and Kendle sales and revenues.

Despite the delays, Kendle said she believes the Charles River CS acquisition is helping the company achieve its long-term goal of being awarded larger and more global projects to manage.

"More than at any other time in the history of the CRO industry, global breadth and depth matter," she said.

Brenkert also said Thursday that the acquisition will take two years off Kendle's timeline for meeting its goal of generating $500 million in annual revenue.

Kendle is a Cincinnati-based clinical research organization.

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