Cardinal Health Inc.
) posted adjusted earnings per share $1.01 for the third quarter
of fiscal 2014 that fell 15.8% from $1.20 in the comparable
quarter of fiscal 2013 but surpassed the Zacks Consensus Estimate
by a penny.
Adjusted net earnings dipped 15.3% to $349 million from $412
million in the third quarter of fiscal 2013. The fall in earnings
was attributable to lower revenues during the quarter.
On a reported basis, net earnings decreased to $315 million or 91
cents per share in the quarter from $346 million or $1.00 per
share in the year-ago quarter.
Revenues in the quarter went down 12.7% to $22,427 million, due
to lower revenues from the Pharmaceutical segment. Nevertheless,
the top line beat the Zacks Consensus Estimate of $21,491
Adjusted operating earnings slid 3.1% to $561 million from $579
million in the year-ago quarter. However, adjusted operating
margin upped 20 basis points (bps) to 2.6% from 2.4% a year ago.
Revenues from Cardinal Health's mainstay Pharmaceutical segment
ebbed 15.0% to $18,762 million, owing to the expiration of the
), partially offset by sales growth from new and existing
customers. Segment earnings fell 9.2% to $452 million owing to
lower revenues, partially offset by strong performance from
Revenues from the smaller Medical segment grew 7.0% to $2,657
million in the quarter, due to the home health platform,
reflecting the acquisition of AssuraMed. Segment earnings rose
11.0% to $111 million, driven by home health, which was partially
offset by the effect of overall procedural volume softness and
reductions in Presource kitting volumes.
Cardinal Health exited the fiscal third quarter with cash and
cash equivalents of about $3,041 million, up significantly by
60.0% from $1,901 million as of Jun 30, 2013. Total debt stood at
$3,920 million as of Mar 31, 2014, up 1.7% from $3,854 million as
of Jun 30, 2013. However, debt-to-capitalization ratio fell 170
bps to 37.5% as of Mar 31, 2014 from 39.2% as of Jun 30, 2013 due
to increase in shareholder's equity.
In the first nine months of fiscal 2014, operating net cash flow
rose 26.7% to $1,808 million from $1,427 million in the
prior-year period due to increases in net earnings and
depreciation and amortization, and decreases in trade receivables
and inventories. Capital expenditure increased 40.0% to $138
million from $103 million in the first nine months of fiscal
EPS Guidance Reiterated
For fiscal 2014, Cardinal Health retained its forecast for
adjusted earnings per share in the band of $3.75 to $3.85. The
current Zacks Consensus Estimate of $3.83 for the year lies
within the guided range.
Despite a fall in earnings and revenues, we are impressed with
Cardinal's top line and bottom line results, which comfortably
beat the Zacks Consensus Estimates. Cardinal Health's strategy of
tuck-in acquisitions is yielding positive results as the
AssuraMed acquisition is paying off for the Medical segment.
Cardinal Health currently has a Zacks Rank #2 (Buy). Other stocks
from the Medical/Dental Supplies industry include
The Cooper Companies Inc.
). Both of them also carry a Zacks Rank #2 (Buy).
CARDINAL HEALTH (CAH): Free Stock Analysis
COOPER COS (COO): Free Stock Analysis Report
STERIS CORP (STE): Free Stock Analysis Report
WALGREEN CO (WAG): Free Stock Analysis Report
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