8-KRegulation FD

CARDINAL HEALTH INC 8-K Report, Regulation FD Disclosure (Mar 1, 2012)

Filed March 1, 2012For Securities:CAH

Summary

Cardinal Health, Inc. (CAH) filed an 8-K on March 1, 2012, to disclose a significant legal development regarding its distribution of controlled substances. A federal district court denied the company's motion for a preliminary injunction against the DEA's immediate suspension of its license to ship controlled substances from its Lakeland, Florida distribution center. While Cardinal Health disagrees with this decision and has filed an appeal, it has activated contingency plans to minimize disruption to its customers. Importantly, despite this setback, Cardinal Health stated it is not adjusting its previously issued non-GAAP EPS guidance range of $3.10-$3.20 for the fiscal year. The company emphasized its commitment to fighting prescription drug abuse through significant investments in anti-diversion systems and collaboration with various stakeholders, including stopping distribution to pharmacies identified as high-risk for diversion. Cardinal Health expressed a desire to work collaboratively with regulators on a more effective solution to combat prescription drug abuse without hindering legitimate medical use.

Key Highlights

  • 1Federal district court denied Cardinal Health's motion for a preliminary injunction against the DEA's suspension of its license to ship controlled substances from its Lakeland, FL distribution center.
  • 2Cardinal Health disagrees with the court's decision and has filed an appeal with the U.S. Court of Appeals for the D.C. Circuit.
  • 3The company has activated contingency plans to manage potential disruptions to customer needs.
  • 4Despite the legal challenges, Cardinal Health is reiterating its previously issued non-GAAP EPS guidance of $3.10-$3.20.
  • 5The company highlighted its extensive efforts and investments in combating prescription drug abuse and preventing drug diversion.
  • 6Cardinal Health has ceased distribution to hundreds of pharmacies deemed to pose an unreasonable risk of diversion.

Frequently Asked Questions

The federal district court denied Cardinal Health's motion for a preliminary injunction, meaning the DEA's suspension of its license to ship controlled substances from the Lakeland, FL distribution center is effective. However, Cardinal Health has activated contingency plans and stated it will make every effort to meet customer needs with minimal disruption. The company is also appealing this decision.

Based on the information available at the time of the filing, Cardinal Health is not adjusting its non-GAAP EPS guidance range of $3.10-$3.20, which was previously provided on February 2, 2012. This indicates the company believes it can manage the operational and financial impact of this situation without deviating from its stated earnings expectations.

Cardinal Health emphasizes its deep commitment to fighting prescription drug abuse. The company has invested millions in anti-diversion systems and specialists, has stopped distributing to high-risk pharmacies, and collaborates on educational programs. It seeks a collaborative approach with regulators and other supply chain participants to combat the issue effectively.

Cardinal Health disagrees with the district court's denial of its motion for a preliminary injunction and has filed an appeal to the U.S. Court of Appeals for the D.C. Circuit. The company has also put contingency plans into effect to manage customer service and is actively seeking to work collaboratively on solutions to prescription drug abuse.