By Melodie Warner
Cardinal Health Inc. (CAH) swung to a fiscal fourth-quarter loss
as the drug wholesaler booked a large write-down on its
nuclear-pharmacy-services division, though adjusted earnings
climbed more than expected.
The company said a decline in demand for certain products,
particularly low-energy diagnostics, led to the write-down of $799
million in goodwill.
Cardinal lost its contract with pharmacy-benefits manager
Express Scripts Holding Co. (ESRX) last year to rival
AmerisourceBergen Corp. (ABC). Cardinal was dealt another blow in
March when Walgreen Co. (WAG) and European drug giant Alliance
Boots GmbH agreed to get their branded and generic pharmaceutical
products from AmerisourceBergen. That distribution pact replaces
Cardinal's contract with Walgreen that expires this month.
Meanwhile, Cardinal renewed its distribution agreement with CVS
Caremark Corp. (CVS) in April, lifting a shadow for the drug
wholesaler, and also acquired the medical-supplies provider
AssuraMed for $2.07 billion in March as it looks to diversify its
offerings.
For the quarter ended June 30, Cardinal Health reported a loss
of $586 million, or $1.72 a share, compared with a profit of $236
million, or 68 cents a share, a year earlier. Excluding items such
as asset impairment charge of $799 million related to the
nuclear-pharmacy-services division, restructuring and acquisition
charges, adjusted earnings from continuing operations rose to 79
cents from 73 cents. Revenue declined 5% to $25.42 billion.
Analysts polled by Thomson Reuters had most recently forecast
per-share earnings of 77 cents on revenue of $24.56 billion.
Gross margin improved to 4.9% from 4.2%.
The pharmaceutical segment's revenue declined 6.2% and its
earnings were up 11%.
The medical segment, which provides medical and surgical
products and services to hospitals, doctors' offices and other
health-care providers, posted an 11% revenue increase and the
segment's earnings climbed 31%.
Cardinal also estimated fiscal 2014 earnings from continuing
operations at $3.45 to $3.60 a share, while analysts surveyed by
Thomson Reuters expect $3.55 a share.
Shares closed Wednesday at $50.09 and were inactive premarket.
The stock has climbed 22% so far this year.
Write to Melodie Warner at melodie.warner@wsj.com
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