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Cardinal Health Lifts FY12 Forecast As Q3 Results Top Estimates


Healthcare services provider Cardinal Health, Inc. (CAH) on Thursday lifted its fiscal 2012 adjusted earnings forecast range after reporting better-than expected profit and revenues for its third quarter.

Chairman and Chief Executive Officer George Barrett said, "Our Pharmaceutical segment continued its robust profit performance. Our Medical segment fundamentals showed continued momentum, but as anticipated, profit was negatively impacted by the cost of commodity inputs. However, we see the year-over-year impact of this dynamic subsiding in the fourth quarter of fiscal 2012 and into fiscal 2013."

For the third-quarter, net earnings rose 36 percent to $333.4 million or $0.95 per share, from $246 million or $0.70 per share in the same quarter last year. On a continuing operations basis, earnings per share grew 34 percent.

The latest quarter results were positively impacted by a $0.10 per share related to the reduction in the fair value of the P4 Healthcare acquisition earn-out liability.

Adjusted earnings from continuing operations grew 16 percent to $0.94 from $0.81 Last year. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.88 per share. Analysts' estimates typically exclude special items.

The results also were benefited from a lower tax rate than the prior year's higher-than-usual tax rate.

Revenues for the quarter rose 3 percent to $26.92 billion from $26.07 billion in the prior year, while analysts were looking for $26.71 billion.

In the quarter, Pharmaceutical segment revenues increased 3 percent to $24.5 billion, driven by growth from existing customers. Segment profit grew 9 percent boosted by the strong performance of generic programs including the impact of new and recently launched items.

In the Medical segment, revenues rose 8 percent on growth from existing customers, including strong sales of preferred products, while segment profit declined 17 percent reflecting the anticipated negative impact of commodity price increases and increased information system expenses. This was mainly related to the launch of Medical Business Transformation.

For fiscal 2012, Cardinal Health now expects adjusted earnings per share from continuing operations of $3.15 to $3.20, compared to previous guidance of $3.10 to $3.20. Analysts expect the company to report earnings of $3.19 per share for fiscal 2012.

On Wednesday, Cardinal Health's board of directors approved a 10.5 percent increase in quarterly dividend to $0.2375 per share or $0.95 per share on an annualized basis. The 111th consecutive regular quarterly dividend is payable on July 15 to shareholders of record on July 1.

Cardinal Health shares are currently trading at $42.50 in pre-market activity, up $0.08 or 0.19 percent.

by RTTNews Staff Writer

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