Cardinal Health raised its earnings outlook for fiscal 2015 after a strong second quarter boosted revenue 15% for the distributor of pharmaceuticals and manufacturer of medical and surgical products.
Cardinal Health finished what CEO George Barrett called “an excellent second quarter capping off a strong first half to our fiscal year” with earnings of $289 million, a 5% improvement over the prior year. And after reporting diluted earnings per share of 86 cents for the quarter, a 9% improvement, management raised its earnings guidance for the full year to a range of $4.28 to $4.38, up from previous guidance of $4.10 to $4.30.
The Dublin, Ohio-based company reported revenue of $25.5 billion for the quarter ended Dec. 31, up from $22.2 billion a year ago. Most of that growth came from Cardinal Health's pharmaceutical segment, which saw revenue rise 16% to $22.6 billion on expansion of its customer base and strong performance under generic programs, according to management. Cardinal Health established a joint venture last July with CVS Health known as Red Oak Sourcing to negotiate generic supply contracts with drug manufacturers.
The company announced in December that it would be Bayer HealthCare's manufacturer of an injectable drug used to treat advanced prostate cancer, symptomatic bone metastases and no known visceral metastatic disease. Cardinal Health is building a 64,000 square foot facility in Indianapolis that will be used exclusively for manufacturing of the drug, known as Xofigo, under the 15-year agreement with Bayer. The manufacturing facility is expected to be completed in 2017.
While revenue in Cardinal Health's medical segment was also up at $2.9 billion, representing a 4% increase from $2.8 billion in the year-ago period, this division didn't fare as well on the profit side. Pressures in Cardinal Health's Canadian market and increases to incentive compensation dragged the segment bottom line down 12%.
However, performance in this division may be stronger in the coming months because of a long-term strategic agreement established in November. Cardinal Health signed the agreement with Henry Schein, provider of healthcare products and services to office-based medical practices. Henry Schein will purchase Cardinal Health brand products and use the company as its main source for certain medical products.
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