Cardinal Health reported higher-than-expected earnings for the fourth quarter and ended the fiscal year with sound financials thanks to significant growth in its pharmaceutical segment.
The Dublin, Ohio-based pharmaceutical and medical products distributor reported $295 million in earnings in the fourth quarter, up 26% from $234 million during the same period in fiscal 2014. Revenue was $27.5 million, up 20% from $22.9 million the year before.
Like last quarter, pharmaceutical revenues were once again strong for Cardinal, which reported $24.7 billion in drug segment revenue in the second quarter, up 23% from $20.1 billion during the same time the year before, as a result of growth from existing and new customers. Segment profit was up 42% at $535 million, banking on customer growth and continued strong performance in Cardinal's generic program, which includes its Red Oak Sourcing joint venture with Woonsocket, R.I.-based CVS Health.
Cardinal CEO George Barrett said during a conference call Thursday that Cardinal is finding a "broader base of customers who see us as a primary source for generics.” The company recently acquired Livonia, Mich.-based distributor Harvard Drug Group to scale its generic business and add new telemarketing capabilities.
The company's medical supplies business isn't faring as well—growth was essentially flat. Segment revenue grew by only 2% to $2.9 billion during last year's fourth quarter, while segment profit grew 7% to $103 million.
Acquisitions and growth in Cardinal's home medical supplies platform led to some revenue growth, but those gains were offset by a decline in the company's Canadian business. The slight growth in profit came from acquisitions, organic efforts and cost-cutting, the company said.
Fiscal 2015 revenue grew 13% to $102.5 billion, while profit growth was a bit more sluggish, up 4% at $1.22 billion.
Looking forward to 2016, Cardinal expects low double-digit percentage revenue growth in a range of $4.85 to $5.05. Barrett said capital investments will primarily be made in existing business.
The company is bullish on growth in China, where it projects double-digit growth in fiscal 2016, primarily in pharmaceuticals. Amid a booming market for specialty pharma, Cardinal also forecasts similar growth in its small-but-growing specialty pharmaceuticals business, following its acquisition of Nashville-based Metro Medical Supply.