Cardinal' Distribution Contract With Walgreen To End Of August 2013; Stock Down

(RTTNews.com) - Cardinal Health Inc. ( CAH ) announced Tuesday that its pharmaceutical distribution contract with Walgreen Co. ( WAG ), which is scheduled to expire at the end of August 2013, will not be renewed.

"Although we are not yet ready to provide fiscal 2014 earnings guidance, our portfolio has considerable balance and we have prepared strategies to mitigate the impact of a Walgreens nonrenewal. We intend to provide more color on fiscal 2014 during our fiscal 2013 third and fourth quarter earnings calls," said George Barrett, Chairman and CEO.

The company expects 2014 non-GAAP earnings per share from continuing operations to be at least similar to the fiscal year 2013 guidance range of $3.42 to $3.50.

The company also noted that earnings for the current fiscal year 2013 would not be negatively impacted as the current Walgreens agreement remains in place throughout fiscal 2013.

Analysts polled by Thomson Reuters expect the company to report earnings of $3.49 per share for fiscal 2013. Analysts' estimates typically exclude special items.

After the expiration of this contract, the company also anticipates a significant net working capital decrease based on reduced inventory and accounts receivable, partially offset by reduced accounts payable. Based on the expected working capital decrease and other factors, it is anticipated that the expiration of the Walgreens contract will result in a meaningful net, after-tax benefit to cash flow from operating activities in fiscal 2014.

In the pre-market trade, CAH is currently trading at $42.73, down $3.40 or 7.37%.

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