Cardinal Health Sinks on Disappointing Outlook

Cardinal Health reported an 11% increase in net income for its fiscal first-quarter Monday, but shares of the company slipped on lower sales guidance in a key division. Net income came in at $301.8 million ($0.82/share) compared to $270.7 million ($0.66/share) a year ago. Revenue increased 4% to $21.97 billion. Both the company's earnings and revenue missed analysts' targets of $0.86/share on $22.51 billion of revenue. Cardinal also said it would fall short of the 7%-10% it had previously forecasted for its 2008 sales growth in its drug distribution business (earnings call transcript). It was the second announcement lowering forecasts for the company's largest division in the last two months. Mark Parrish, who managed the distribution of drugs and medical supplies, stepped down Monday as well to "pursue other interests." The company reaffirmed its full-year 2008 outlook, excluding some charges, of $3.95 to $4.15/ share; analysts forecast $4.07/share. Shares of Cardinal Health dropped 6.4% to $62.61.

Sources: Press Release, Bloomberg
Commentary: Biotech Buyout Frenzy Continues • Cardinal Health: Litigation, Sale and Acquisition Leave 2007 EPS Unchanged
Stocks to watch: CAH. Competitors: MCK, ABH, OMI. ETFs: XLV.

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