San Diego-based CareFusion posted a 1.4% increase in sales and a 6.3% dip in per-share earnings, touting noteworthy acquisitions and "a record number of contracts in the dispensing technologies business line." Adjusted earnings hit analysts’ expectations on the nose, but CFN shares dropped 2.3% today, trading at $38.89 as of about 2:45 p.m.
The device makers posted profits of $97 million, or 45¢ per diluted share, on sales of $922 million during the 3 months ended December 31. That compared with profits of $108 million, or 48¢ per share, on sales of $909 million during the same period the previous year. Adjusted to exclude special charges, per-share earnings came to 54¢.
CareFusion maintained its outlook for the fiscal year ahead, projecting sales growth of 1-4% on a constant currency basis compared to fiscal 2013 revenue of $2.55 billion. The company expects adjusted per-share earnings of $2.30-$2.40 for the year, according to a financial report.
Analysts for Leerink Swann eyed the results cautiously, projecting lower 2014 operating margins and revenues that may get pushed into 2015 amid increasing timelines for installations of CareFusion’s Pyxis medication supply management systems.
"The risk could be that installation time-lines continue to elongate, which might push revenue recognition even further out into FY15," Swann analyst Richard Newitter wrote in a note to investors. "That said, we’re inclined to view this largely as a timing issue and we remain encouraged that the company continues to register "record" increases to its backlog orders."
CareFusion has recently been at the center of a high-profile scandal involving accusations that the company paid illegal kickbacks to doctors to induce recommendations for the ChloraPrep skin wipes. CareFusion this year paid $41 million to settle a 2-year federal inquiry into the marketing practices for the product, following an agreement reached with the U.S. Dept of Justice in April 2013.
CareFusion may have closed the books on its part of the scandal, but Dr. Charles Denham, who was fingered as a target of CareFusion’s kickbacks, is gaining increasing attention as concerns grow that he used his position among influential patient safety boards to make recommendations that may have been fueled more by profit than by medical expertise.