Summary
Cardinal Health Inc. (CAH) reported its financial results for the quarter ended March 31, 2007. The company experienced a significant increase in revenue, up 8% year-over-year for the quarter, reaching $21.9 billion. For the nine-month period, revenue grew by 11% to $64.6 billion. This growth was driven by strong performance across all four of its reportable segments, particularly in Healthcare Supply Chain Services – Pharmaceutical, which constitutes the vast majority of its revenue. Despite revenue growth, the company reported a net loss of $0.01 per diluted share for the quarter, a sharp decline from net earnings of $0.34 per diluted share in the prior year. This was largely impacted by substantial "special items," most notably a $600 million reserve for shareholder litigation, which significantly affected operating earnings. The company also continues to manage ongoing legal proceedings and regulatory investigations, including an SEC investigation, which add uncertainty. The sale of the Pharmaceutical Technologies and Services segment (PTS Business) was completed in April 2007, providing significant cash proceeds intended for share repurchases, and contributed positively to earnings from discontinued operations in the current quarter.
Key Highlights
- 1Revenue increased by 8% to $21.9 billion for the three months ended March 31, 2007, and by 11% to $64.6 billion for the nine months ended March 31, 2007, compared to the prior year periods.
- 2The company reported a net loss of $0.01 per diluted share for the three months ended March 31, 2007, compared to net earnings of $0.34 per diluted share in the prior year's quarter.
- 3Significant "special items" totaling $612.0 million for the quarter, primarily driven by a $600.0 million reserve for shareholder litigation, negatively impacted operating earnings.
- 4The Pharmaceutical Technologies and Services (PTS) Business was classified as held for sale and its results are presented within discontinued operations, with the sale completed in April 2007 generating significant proceeds.
- 5Operating cash flow from continuing operations was $1.3 billion for the nine months ended March 31, 2007, a decrease from $1.6 billion in the prior year, partly due to increased trade receivables and the impact of the litigation reserve.
- 6The company repurchased approximately $1.4 billion of its common shares during the quarter under an expanded share repurchase program.
- 7The company continues to address ongoing legal proceedings, including shareholder litigation, ERISA litigation, and SEC/U.S. Attorney investigations, which may have material future impacts.