Cardinal Health (NYSE: CAH) reported fourth-quarter adjusted earnings today that were only two-thirds of what The Street expected.
The Dublin, Ohio–based health care services company’s stock was down more than –13% to $51.04 apiece in morning trading. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was down slightly.
Cardinal Health reported profits of $116 million, or 40¢ per share, on sales of $42.59 billion for the three months ended June 30, 2021, for a bottom-line decline of –82.3% and a top-line increase of 16% compared with Q4 2020.
Adjusted to exclude one-time items, earnings per share were 77¢, 43¢ behind The Street, where analysts were looking EPS of $1.20 on sales of $40.43 billion.
A $197 million COVID-19-related inventory reserve adversely affected both GAAP and non-GAAP operating earnings, helping to swing the company’s Medical segment to a –$63 million Q4 loss compared with profits of $120 million a year ago. Medical segment revenue increased 23% to $4.2 billion.
State and local opioid lawsuits resulted in $149 million in pre-tax charges in Q4; it was $1.17 billion for the full year. The Pharmaceutical segment’s profit was about the same year-over-year, at $358 million. Sales grew 15% to $38.3 billion.
“We’re disappointed with our fourth-quarter results. Throughout the past year, we have been taking action to drive performance, and we will continue to move forward with urgency,” Cardinal Health CEO Mike Kaufmann said in a news release.
“For example, we divested the Cordis business, extended our Red Oak Sourcing agreement with CVS Health, identified $250 million of additional cost savings opportunities and made important leadership changes,” Kaufmann said. “With the actions we’ve taken to date and our plans for fiscal year 2022, we feel confident in our strategy and are encouraged by the tailwinds behind our growth areas and strong cash flow generation.”
The company estimates that COVID-19 had a total net negative impact on both GAAP and non-GAAP operating earnings of roughly $300 million in fiscal year 2021. For the new fiscal year, the company predicts the pandemic will create a $200 million tailwind for adjusted EPS, predicted at $5.60–5.90.