Cardinal Health Earnings: Profitable Quarter Accelerates Growth

Lower costs helped S&P 500 (NYSE:SPY) component Cardinal Health Inc. (NYSE:CAH) pull in a higher profit in the first quarter. Cardinal Health offers products and services that improve the safety and productivity of healthcare providers.

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Cardinal Health Inc. Earnings Cheat Sheet

Results: Net income for the retail-drug stores rose to $271 million (79 cents per share) vs. $236.8 million (68 cents per share) in the same quarter a year earlier. This marks a rise of 14.4% from the year-earlier quarter.

Revenue: Fell 3.4% to $25.89 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Cardinal Health Inc. reported adjusted net income of 81 cents per share. By that measure, the company beat the mean estimate of 79 cents per share. It fell short of the average revenue estimate of $26.71 billion.

Quoting Management: “We were pleased to report a solid beginning to our fiscal 2013. As we had expected, revenue was down, as a result of the pharmaceutical industry’s wave of brand-to-generic conversions. Our margin expansion continued to be strong, led by our Pharmaceutical segment and fueled by excellent contribution from our generic programs,” said George Barrett, chairman and chief executive officer of Cardinal Health. “Our Medical segment started the year more slowly than we planned, largely due to lighter than expected procedure volumes and some continued operational cleanup of our major systems and process transformation. We continue to target double digit segment profit growth for our Medical segment for fiscal year 2013.

Key Stats:

The company has now seen net income rise in three straight quarters. In the fourth quarter of the last fiscal year, net income rose 16.8% and in the third quarter of the last fiscal year, the figure rose 35.5%.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the first quarter of the last fiscal year, which saw revenue rise 9.6%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by one cent in the fourth quarter of the last fiscal year, by 6 cents in the third quarter of the last fiscal year, and by 5 cents in the second quarter of the last fiscal year.

The company’s cost of sales fell 90.4% from a year earlier to $2.47 billion. Last quarter, cost of sales was 9.6% of revenue versus 96% a year earlier.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 89 cents a share to 87 cents over the last ninety days. At $3.44 per share, the average estimate for the fiscal year has fallen from $3.55 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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