Cardinal fiscal 3Q profit climbs nearly 4 percent
DUBLIN, Ohio (AP) — Cardinal Health Inc.'s fiscal third-quarter net income climbed nearly 4 percent, as a $64 million tax settlement gain helped the health care products distributor balance the loss of a key client.
The Dublin, Ohio, company also said Thursday that it was hiking its 2013 earnings forecast. Company shares climbed in morning trading.
Cardinal said an agreement with tax authorities led to a revaluation of a deferred tax liability, which led to the gain. That helped counter a 10 percent drop in revenue to $22.1 billion from the company's largest segment, pharmaceutical. The decline was driven in part by Express Scripts Holding Co.'s decision not to renew a contract with Cardinal.
Express Scripts is the nation's largest pharmacy benefits manager.
Cardinal distributes pharmaceuticals and medical supplies and makes products like gloves and gowns for surgery.
Overall, Cardinal earned $345 million, or $1 per share, in the quarter. That compares with net income of $333, or 95 cents per share, in last year's quarter. Adjusted earnings totaled $1.20 per share.
Total revenue fell 9 percent to $24.55 billion.
Analysts surveyed by FactSet expected, on average, earnings of 96 cents per share, on $24.75 billion in revenue.
While the company's revenue declined, its cost of products sold dropped at a slightly steeper rate of 9.5 percent to $23.26 billion. The company's distribution, selling and administrative expenses also climbed 4 percent to $712 million.
Cardinal said it now expects adjusted earnings for its fiscal year, which ends in June, to range between $3.67 to $3.71 per share. That's up from its forecast in February for earnings of $3.42 to $3.50 per share. The new outlook includes a gain of 18 cents per share from the tax settlement.
Analysts expect, on average, earnings of $3.50 per share.
Company shares jumped 3.6 percent, or $1.57, to $45.51 in morning trading. The stock price has ranged between $36.91 and $47.23 over the past 52 weeks.
The price of Cardinal shares climbed about 7 percent in the first four months of the year, even though the stock dove in March after the company failed to renew a another key contract with drugstore chain Walgreen Co. That contract ends in August, and Cardinal has said Walgreen generated about 21 percent of fiscal 2012 revenue.
Cardinal's $2 billion acquisition of medical supplies distributor AssuraMed is expected to partially fill that hole.