* Revenue down 7 percent, less than forecast
* Profit from continuing operations 93 cents/share
* Fiscal 2013 forecast tightened to $3.42-$3.50 a share
* Shares rise 2.1 pct to $44.59 in morning trade
By Toni Clarke
Feb 5 Drug wholesaler Cardinal Health Inc
reported a better-than-expected 16 percent rise in
quarterly earnings on Tuesday, driven by increased sales of
generic drugs and medical products such as surgical gowns and
Net earnings in the second quarter ended Dec. 31 rose to
$303 million, or 88 cents a share, from $262 million, or 75
cents a share, a year earlier, the company said on Tuesday.
Earnings from continuing operations excluding one-time items
were 93 cents a share, up from 81 cents a share a year earlier.
Analysts on average were expecting 86 cents a share, according
to Thomson Reuters I/B/E/S.
Cardinal's shares rose 2.1 percent to $44.59 in morning
trading on the New York Stock Exchange.
Revenue fell a less-than-expected 7 percent to $25.23
billion, as the addition of new customers to some extent offset
the loss of business from pharmacy benefit manager Express
Scripts Holding Co, which replaced Cardinal with rival
AmerisourceBergen Corp in October.
Analysts on average were expecting revenue of $24.61
billion, according to Thomson Reuters I/B/E/S.
The Dublin, Ohio-based company said it expected adjusted
earnings from continuing operations of between $3.42 and $3.50 a
share in fiscal 2013, a slight tightening from its previous
forecast of between $3.35 and $3.50.
Analysts are expecting 2013 earnings of $3.45 a share.
Revenue from the company's pharmaceuticals business fell 8
percent to $22.7 billion, while the division's profit rose 12
percent to $441 million. Generic drugs sell for lower prices,
which depresses revenue, but they are higher-margin products
that boost profits.
Later this year, Cardinal's contracts with CVS Caremark Corp
and Walgreen Co will expire. Cardinal's chief
executive officer, George Barrett, said on a conference call
with investors that the company will likely have a sense in the
March quarter of whether it is likely to win a renewal of those
Revenue from Cardinal's medical products business rose 3
percent to $2.5 billion, reflecting the benefit of last year's
acquisition of Futuremed Healthcare Products, a Canadian
supplier of nursing home products and specialized furniture
equipment, and the effect of one additional sales day than in
the year-earlier quarter. Excluding the acquisition and extra
sales day, revenue growth was flat.
Analysts said the quarter's results came as a relief to
investors, some of whom had feared that Cardinal's decision,
announced last month, to sell certain assets as part of a
restructuring of its medical business, would hurt profits.
The company attributed the flatness to continued softness in
key U.S. markets, particularly in the volume of medical
procedures. Profit in the medical supplies business rose 11
percent to $94 million, helped by acquisitions and the sale of
more branded products.
"While continued brand-to-generic conversions and the
previously announced movement of the Express Scripts contract
drove a revenue decline in the Pharmaceutical segment, excellent
performance from our generic programs and new customer wins
fueled profit gains," Barrett said.