Summary
Cardinal Health, Inc. (CAH) filed an 8-K on December 20, 2007, to provide an update on a voluntary recall of Alaris® Pump modules, model 8100. This recall affects units shipped prior to September 27, 2007. The company has taken steps to address the issue, including accruing reserves for the associated costs. Investors should note that Cardinal Health has already booked a $4 million reserve in the third quarter of 2007 and anticipates an additional reserve in the fourth quarter, bringing the total expected range for recall-related costs to $12 million to $14 million. While the company believes this reserve will be sufficient, it acknowledges the possibility of unforeseen developments that could impact the final costs.
Key Highlights
- 1Cardinal Health is providing an update on a voluntary recall of Alaris® Pump modules, model 8100 (formerly Medley™ Pump module).
- 2The recall specifically targets units shipped before September 27, 2007.
- 3A $4 million reserve was recognized in the quarter ended September 30, 2007, for recall-related expenses.
- 4An additional reserve is expected to be accrued in the quarter ending December 31, 2007.
- 5Total estimated reserves for the recall are projected to be between $12 million and $14 million.
- 6The company currently believes the established reserves will be sufficient to cover recall costs.
- 7Cardinal Health acknowledges potential for additional costs due to unforeseen developments related to the recall.