By Tess Stynes
Cardinal Health Inc.'s (CAH) fiscal fourth-quarter earnings rose 16% as the drug distributor benefited from improved margins, though revenue was flat.
For the new fiscal year, the company projected per-share earnings of $3.35 to $3.50, below recent views of analysts polled by Thomson Reuters for $3.54.
Cardinal Health, the second-biggest drug distributor in the U.S. by sales, has reported stronger revenue lately amid a string of acquisitions. Some purchases in recent years include include a diverse range of businesses, including China's largest pharmaceutical importer, a distributor of nursing-home supplies and a specialty pharmaceutical services company.
Cardinal recently lost some business as Express Scripts Holding Co. (ESRX) chose rival AmerisourceBergen Corp. (ABC) to distribute about $18.5 billion in medication annually. Such big wholesale contracts typically draw lots of attention when they come up for renewal, though the impact on the bottom line may be less dramatic.
Looking ahead, Cardinal faces contract renewals at its biggest customers, CVS Caremark Corp. (CVS) and drug-store chain Walgreen Co. (WAG)., over the next year.
For the quarter ended June, Cardinal reported a profit of $236 million, or 68 cents a share, up from $203 million, or 57 cents a share, a year earlier. Excluding acquisition and restructuring related expenses and other items, earnings from continuing operations were up at 73 cents from 60 cents.
Revenue was flat to $26.8 billion. Analysts polled by Thomson Reuters most recently projected earnings of 72 cents on revenue of $27.25 billion.
Gross margin rose to 4.2% from 3.9%.
The company's pharmaceutical business, its largest by revenue, reported revenue fell 1% to $24.3 billion mostly on conversions to generic from branded drugs. Segment earnings increased 15% to $354 million.
Its medical business, which provides medical and surgical products and services to hospitals, doctors' offices and other health care providers, is the smaller of Cardinal Health's core businesses. The segment reported revenue rose 5% to $2.4 billion and segment earnings improved by 2% $79 million.
Shares closed Wednesday at $42.53 and were inactive premarket. The stock is up roughly 4.7% this year.
Write to Tess Stynes at [email protected]
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