Leading distributor of pharmaceuticals and medical supplies
) posted second-quarter fiscal 2013 adjusted (excluding one-time
charges and gains) earnings per share from continuing operations
of 93 cents, thereby beating the Zacks Consensus Estimate of 85
cents as well as the year-ago earnings of 81 cents per share.
Net earnings were $303 million (88 cents per share), up 16%
year over year.
Revenues in the fiscal second quarter were $25,232 million,
down 7% on a year-over-year basis, beating the Zacks Consensus
Estimate of $24,598 million. The decline in revenues was due to
the prominent brand-to-generic conversions in the pharmaceutical
industry as well as failure to renew the contract with
Express Scripts Holding Company
Pharmaceutical segment which is Cardinal's mainstay, witnessed
8% year over year decline in revenues, grossing $22,747 million
in the quarter, owing to brand-to-generic conversions as well as
non-renewal of contract with Express Scripts. The decline was
partly offset by new clients.
Sales from the smaller Medical segment clambered 3% year over
year to $2,487 million in the quarter, on the back of an extra
day of sales and contributions from the Futuremed
Gross margin in the fiscal second quarter edged up to 4.9%
from 4.1% in the year-ago quarter. Company-wide adjusted
operating earnings increased 10.5% year over year to $525 million
in the quarter.
Pharmaceutical segment profit surged 12% year over year to
$441 million, reflecting robust performance by generics partly
offset by weakness in the nuclear operation. Segment profit
margin improved to 1.9%, up from 1.6% in the prior-year
Profit for the Medical segment improved 11% to $94 million.
Segment profit margin was 3.8% in the quarter, higher than 3.5%
in the year-ago quarter on account of positive effect of
acquisitions, preferred products and commodity prices partly
offset by weakness in volumes and client mix.
Cardinal exited fiscal second quarter with cash and
equivalents of about $2,255 million, roughly flat since the start
of the fiscal year on July 1, 2012. Long-term obligations
(without current portion) stood at $2,423 million, on December
31, 2012, roughly flat over the same time frame.
For fiscal 2013, Cardinal narrowed its forecast for adjusted
earnings per share from continuing operations to a band of $3.42
and $3.50 from $3.35 to $3.50 earlier.
Cardinal Health is ranked among Fortune 500 companies. With
over $100 billion in annual sales, the company remains one of the
largest distributors of pharmaceuticals and medical supplies in
the U.S., with a diversified product portfolio, which may partly
insulate it from the current economic uncertainty.
Cardinal stands to gain from the gradual shift in mix from
bulk to the higher margin non-bulk sector of the Pharmaceutical
segment. Its mainstay Pharmaceutical segment is heavily
influenced by the generic wave. Overall, Cardinal is benefiting
from a spate of tuck-in acquisitions and capital deployment
strategies. The company continues to deploy capital to boost
investor confidence via share repurchases and dividend hikes.
However, Cardinal faces tough competition across all its
business segments, which may continue to pressure pricing and
Cardinal Health currently carries a Zacks Rank #3 (Hold)
Rite Aid Corporation
) carry Zacks Rank #1 (Strong Boy) and Zacks Rank #2 (Buy)
ratings, respectively, and are expected to do well.
AMERISOURCEBRGN (ABC): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
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