February 8, 2018 / 12:24 PM / 3 months ago

Cardinal Health profit beats on CVS tie-up, Medtronic unit buy

(Reuters) - Cardinal Health’s (CAH.N) quarterly profit topped analysts’ estimates as the U.S. drug distributor benefited from its purchase of Medtronic Plc’s (MDT.N) patient care business and a tie-up with drugstore chain CVS Health Corp (CVS.N).

The company also raised its 2018 adjusted earnings forecast, sending its shares up nearly 5 percent in early trading on Thursday.

U.S. drug distributors have partnered with big retail chains to buy generic drugs at lower costs to counter declining prices for such treatments.

Cardinal’s joint venture with CVS, Red Oak Sourcing, delivered better-than-planned results on the cost side, Chief Executive Mike Kauffman said on a post-earnings conference call.

Rival McKesson Corp (MCK.N) also reported a quarterly profit above analysts’ estimates last week, helped by its partnership with Walmart (WMT.N).

Cardinal’s quarterly revenue in its the pharmaceuticals division came in at $31.1 billion, above consensus estimate of $30.46 billion compiled by Cowen & Co.

The results cap off “a distributor earnings season in which all companies signaled stability in core businesses,” said Baird analyst Eric Coldwell.

    Cardinal’s medical unit, which also makes medical tapes and bandages, posted a 19 percent jump in quarterly revenue to $4 billion, boosted by its acquisition of the Medtronic business last year.

    Excluding items, Cardinal earned $1.51 per share in the in the second quarter ended Dec. 31, above analysts’ average estimate of $1.15, according to Thomson Reuters I/B/E/S.

    The drug distributor raised its 2018 adjusted earnings per share forecast by 40 cents to $5.25-$5.50, above analysts’ estimate of $5.14, on expected benefits from a lower tax rate.

    Net earnings attributable surged to $1.05 billion, or $3.33 per share, in the second quarter, from $324 million, or $1.02 per share, a year ago.

    The company recorded a $736 million benefit from income taxes, and said its board had authorized a $1 billion share repurchase program.

    Revenue rose to $35.19 billion from $33.15 billion.

    Reporting by Manas Mishra in Bengaluru; Editing by Martina D'Couto and Shailesh Kuber

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