Spinoff cuts into Cardinal Health’s earnings

DUBLIN, Ohio –The creation of CareFusion cost Cardinal Health in its first earnings report as a stand-alone company. But the health services giant had promising revenue numbers over the three-month period and also did better than expected in its pharmaceutical business (while still posting a decline).

Cardinal posted a $38.2 million loss, or 11 cents per share, during this fiscal first quarter — compared to a profit of $249.1 million, or 69 cents per share, compared to last year at this time. Cardinal took a 71 cent per-share charge as a result of the spin-off.

Revenue for the quarter was up $1.4 billion, or 6 percent, from the previous year’s first quarter: $24.8 billion now compared to $23.4 billion in fiscal year 2009.

In an earnings conference call, Chief Executive Officer George Barrett said the company had done better than expected in its generics business and also benefited from higher sales to some of its customers. However, Barrett said the company’s pharmaceutical business would grow slowly due to a decrease in generic drug releases. It was also clear that restructuring at the company was still underway and Barrett said benefits from those changes wouldn’t be realized for some time.

The pharmaceutical unit’s revenue dropped by 2 percent this quarter, while its medical segment grew by 17 percent.

Not including the CareFusion and other one-time charges, Cardinal’s earnings from continuing operations increased $26 million, or 15 percent: $194 million in this quarter compared to $168 million in last year’s first quarter.

CareFusion meanwhile, did better than expected. The company’s earnings were down from last year, but the profit was higher than expected thanks to demand from H1N1. Cardinal owns 19 percent of CareFusion.