Cardinal Health (NYSE:CAH) stock is taking a hit today after the company announced that it was cutting profit projections for its Medical segment.
The Dublin, Ohio–based company reported that it expected its Medical segment to face additional inflationary impacts and lower volumes resulting primarily from global supply chain constraints. There is also a lower-than-expected offset from pricing actions.
The situation will negatively impact Medical segment profits for its 2022 fiscal year by $150–175 million. The amount is equal to 40–45¢ of non-GAAP diluted EPS.
Cardinal Health said it continues efforts to drive Medical segment performance, including simplifying its operating model, evolving its commercial contracting strategies and driving mix, and investing in its growth businesses.
“Looking ahead, we are resolute in our commitment to mitigate these impacts and drive efficiencies so we can better serve our customers,” CEO Mike Kaufmann said today at the annual J.P Morgan Healthcare Conference.
Kaufmann outlined how the Medical business is exiting 36 initial markets so that it can better focus on markets where it has an advantage. He spoke of significant investments to boost the supply chain, as well as streamlining manufacturing and modernizing distribution facilities.
CAH shares were down more than 6% to $50.58 apiece by early afternoon trading today. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was down slightly.