Cardinal Health Inc.'s (CAH) fiscal third-quarter earnings rose
3.6% amid a tax benefit and as stronger margins offset lower
pharmaceutical sales revenue.
For the fiscal year, the company raised its per-share earnings
estimate to $3.67 to $3.71, from its previous estimate for $3.42 to
$3.50.
The company's board also authorized a 10% increase in Cardinal's
quarterly dividend to 30.25 cents a share.
Cardinal Health was dealt a blow in March as Walgreen Co. (WAG)
and European drug giant Alliance Boots GmbH formed an alliance with
rival drug wholesaler AmerisourceBergen Corp. (ABC) that could give
the companies an advantage in demanding lower prices from drug
makers. The distribution pact with AmerisourceBergen replaces
Cardinal's contract with Walgreen that expires in August.
Last year, Cardinal also lost its contract with
pharmacy-benefits manager Express Scripts Holding Co. (ESRX) to
AmerisourceBergen. For the latest quarter, Cardinal's
pharmaceutical segment reported revenue declined 10% mostly on the
nonrenewal of the Express Scripts contract and brand-to-generic
conversions, though segment earnings were up 12%.
For the quarter ended March 31, Cardinal Health reported a
profit of $345 million, or $1 a share, up from $333 million, or 95
cents a share, a year earlier. Excluding deferred tax liability
impacts and other items, adjusted earnings from continuing
operations rose to $1.20 from 94 cents. Revenue decreased 8.8% to
$24.55 billion.
Analysts polled by Thomson Reuters most recently projected
earnings of 95 cents on revenue of $24.72 billion.
Gross margin rose to 5.3% from 4.5%.
The medical segment improved 3% with a boost from acquisitions.
Segment profit grew 12%.
Walgreen has been one of Cardinal's two largest customers, along
with CVS Caremark Corp. (CVS), where Cardinal also faces a
near-term contract renewal battle.
"Our organization is successfully innovating and adapting our
business lines and portfolio to an evolving market, with a focus on
establishing a strategic edge in areas of higher growth," Chief
Executive George Barrett said Thursday, pointing to the company's
recent $2.1 billion acquisition of AssuraMed Holding Inc., which
sells medical supplies directly to patients.
The deal is expected to provide Cardinal with reach into a
growing home-care market. While Cardinal has a medical segment that
distributes an array of medical, surgical and lab products, that
business has been focused on hospitals and other professional
customers.
Shares closed Wednesday at $43.94 and were inactive
premarket.
Write to Tess Stynes at tess.stynes@dowjones.com
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