Cardinal Health (NYSE:CAH) said today that its board approved a $1 billion share buyback plan, after the company’s stock price took a hit last week after it tightened its earnings outlook for the rest of the year.
Dublin, Ohio-based Cardinal said the share repurchasing program, which is slated to end Dec. 31, 2019, is in addition to the $393 million still remaining from a prior buyback plan. Cardinal Health’s board also OK’d a 16% boost to its quarterly dividend to 44.89¢ per share.
CAH stock fell more than -9% April 28 after the company’s fiscal 3rd-quarter results prompted it to tighten its full-year guidance. Cardinal Health posted profits of $386 million, or $1.17 per share, on sales of $30.7 billion for the quarter, amounting to a 5.8% bottom-line gain on sales growth of 20.9% compared with Q3 2015.
Adjusted to exclude 1-time items, earnings per share were $1.43, a full dime ahead of Wall Street’s consensus forecast. Still, CAH shares closed down -9.3% at $78.51 apiece April 28, the day of the earnings release as investors reacted to the updated outlook. CFO Michael Kaufmann told analysts that Cardinal Health now expects to report adjusted EPS of $5.17 to $5.27 for fiscal 2016, implying 4th-quarter guidance of $1.07 to $1.17.
“We had a strong financial and operational performance in our fiscal 3rd quarter. At the same time, we continued to enhance and grow enterprise-wide service and product lines, which are important to our customers and address some of healthcare’s most difficult challenges,” chairman & CEO George Barrett said in prepared remarks. “We delivered double-digit growth in revenue and profit in both our pharmaceutical and medical reporting segments and had very solid performance across our lines of business.”
The buyback announcement had the desired effect, as CAH shares were up 1.6% to $78.72 today in mid-morning trading.