Summary
Cardinal Health Inc. reported its third-quarter results for the period ending September 29, 2014. Revenue for the quarter saw a slight decrease of 2% to $24.1 billion, primarily due to the expiration of a significant pharmaceutical distribution contract with Walgreen Co. in the prior year. Despite the revenue dip, gross margin improved by 6% to $1.3 billion, driven by growth from other customers and strong performance in generic programs. Operating earnings declined by 1% to $466 million, largely impacted by litigation charges, particularly related to a U.S. Drug Enforcement Administration investigation for which the company accrued $27 million. Net earnings from continuing operations decreased by 22% to $266 million, mainly due to a favorable tax settlement in the prior year that did not recur. The company demonstrated a commitment to shareholder returns by repurchasing $360 million in common stock and paying $119 million in dividends during the quarter. Overall, while facing headwinds from contract expirations and legal matters, the company's core operations showed resilience with improved gross margins.
Financial Highlights
48 data points| Revenue | $24.07B |
| Cost of Revenue | $22.73B |
| Gross Profit | $1.34B |
| SG&A Expenses | $775.00M |
| Operating Income | $466.00M |
| Interest Expense | $34.00M |
| Net Income | $266.00M |
| EPS (Basic) | $0.79 |
| EPS (Diluted) | $0.78 |
| Shares Outstanding (Basic) | 336.00M |
| Shares Outstanding (Diluted) | 340.00M |
Key Highlights
- 1Total revenue for the quarter decreased by 2% to $24.1 billion, primarily due to the expiration of the Walgreens distribution contract.
- 2Gross margin increased by 6% to $1.3 billion, reflecting growth from other customers and strong generic program performance.
- 3Operating earnings decreased by 1% to $466 million, significantly impacted by $28 million in net litigation charges, including a $27 million accrual for the DEA investigation.
- 4Earnings from continuing operations declined 22% to $266 million, influenced by the absence of a significant tax settlement benefit from the prior year.
- 5The company returned $479 million to shareholders through share repurchases ($360 million) and dividends ($119 million) in the quarter.
- 6The company established a 50/50 joint venture, Red Oak Sourcing, with CVS Health Corporation in July 2014 for generic pharmaceutical sourcing.
- 7Cash and equivalents decreased to $2.5 billion from $2.9 billion, mainly due to cash deployed for share repurchases and dividends.