Cardinal Health reported a jump in earnings in its third quarter, fueled mostly by growth in its pharmaceutical segment.
The Dublin, Ohio-based pharmaceutical and medical products distributor reported a $365 million profit for the three months ended March 31, up 16% from the same period the year before. Third-quarter revenue was $25.4 billion, up 18% from the year before.
Quarterly revenue growth came mostly from strong sales in Cardinal's pharmaceutical segment, which saw revenue growth of 20% to $22.6 billion. Profit in that segment grew 25% to $567 million. The numbers were boosted by business from Red Oak Sourcing, Cardinal's generic drug supply joint venture with CVS Health.
Cardinal recently acquired the specialty distribution business of Nashville-based Metro Medical Supply, according to its earnings statement. The Metro Medical acquisition adds scale to Cardinal Health's small but rapidly growing specialty business, Eric Coldwell, an analyst with Baird, said in a research note. The acquisition also better positions Cardinal for biosimilar distribution, Coldwell said.
Cardinal's revenue from medical supplies was down 4% to $2.8 billion compared with last year's third quarter, mostly due to acquisitions. Profit in that segment declined 8% to $102 million.
Year-to-date results weren't quite as strong. Year-over-year profit was down 1% at $920 million for the nine months ended March 31, even though revenue increased 10% to $75 billion.
An expired contract with Walgreen Co. continues to have a negative impact on financial results, the company said. Excluding that loss of business, year-to-date pharmaceutical revenue growth would have been 16% instead of 10%.
George Barrett, Cardinal Health's CEO and chairman, said in a statement that the company is “increasingly comfortable” with the upper half of its fiscal 2015 guidance range of $4.28 to $4.38 non-GAAP diluted earnings per share from continuing operations.
Cardinal also announced in March that it would acquire Cordis, Johnson & Johnson's cardiology medical-device business, for nearly $2 billion in cash.
