DUBLIN, Ohio—Cardinal Health Inc. said Thursday its fiscal third-quarter profit soared from a year-ago period in which the health care products and services company established a $600 million reserve to settle lawsuits alleging securities law violations.
For the quarter ended March 31, net income rose to $356 million, or $1.02 per share, from $19 million, or 5 cents a share, a year ago. Excluding one-time charges, profit totaled $1.08 per share in the latest period.
Revenue rose 5 percent to $22.91 billion from $21.87 billion.
Analysts surveyed by Thomson Financial expected adjusted earnings of $1.01 per share on higher revenue of $23.42 billion.
In the 2007 quarter, the company established a reserve to settle lawsuits brought by investors which accused Cardinal and its officers of violating securities law by manipulating accounting practices and inflating Cardinal's earnings. Federal regulators began investigating the company in October 2003 over its accounting of money it got from vitamin manufacturers. The investigation was expanded to include its core pharmaceutical distribution business.
Cardinal then began an internal investigation, which resulted in the company restating its annual and quarterly financial statements for three years. Some employees were disciplined or fired, and the company's chief financial officer quit in 2004.
In its main wholesale drug distribution business, Cardinal said revenue rose 3 percent in the latest quarter to $19.9 billion but profit fell 31 percent to $300 million.
Cardinal said that business has been hurt by contracts with large customers being renegotiated at lower levels. It also cited the expense of measures it is putting in place at its distribution centers after three centers were cited by the federal government for not having effective controls on drugs. In one case, a distribution center in Florida supplied a painkiller to a business accused of dispensing excessive amounts based on illegitimate prescriptions from Internet pharmacies.
Cardinal, based in suburban Columbus, reaffirmed its earnings outlook for the year of $3.75 to $3.85 per share, excluding one-time items. Wall Street is looking for profit of $3.78.
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On the Net:
Cardinal Health: http://www.cardinalhealth.com
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