CAH Cardinal Health Inc

By Joshua Jamerson 

Cardinal Health Inc. cut its profit forecast for its current year amid a drop in generic drug prices, which the company says is pressuring the bottom line in its pharmaceutical segment.

The company had already lowered its outlook in October when it warned that the slowing pace of branded drug-price increases and lower pricing for generics was denting results, with Chief Executive George Barrett calling the company's operating environment "very challenging" as drugmakers react to criticism of high drug prices.

For Cardinal Health's year ending in June, the company now projects adjusted earnings from continuing operations in a range of $5.35 to $5.50 a share from an earlier outlook of $5.40 to $5.60 a share. The company said it expects high-single digit deflation in generic drug prices for its full year.

Cardinal and other distributors act as middlemen between drugmakers and pharmacies. Their contracts with branded pharmaceutical companies often allow them to benefit from rising drug prices, but as some branded drugmakers rein in increases the benefit to distributors like Cardinal gets squeezed.

For the company's second quarter, which ended in December, pharmaceutical segment revenue rose 5% to $29.74 billion, though segment profit fell 14%. Meanwhile, while medical segment revenue grew 8% to $3.41 billion, and profit in the segment jumped 50%.

In all, Cardinal Health reported net income of $324 million, or $1.02 a share, compared with $326 million, or 98 cents a share, a year prior. Excluding certain items, per-share earnings rose to $1.34 from $1.30.

Revenue increased 5% to $33.15 billion. Analysts polled by Thomson Reuters expected per-share profit of $1.23 and revenue of $33.55 billion.

Shares, which have climbed 15% in the past three months but are down 0.8% from a year ago, were inactive premarket.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

February 07, 2017 08:05 ET (13:05 GMT)

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