Drug distributor Cardinal Health (NYSE: CAH) reported a 19 percent fourth-quarter increase in sales of generic drugs, an area that continues to be a strength for the company.
Generics — as well as acquisitions that have allowed the company to sell more generics — contributed to a 9 percent increase in fourth-quarter revenue to $26.8 billion, according to a statement from the Dublin, Ohio company. That number slightly exceeded analysts’s expectations of $26.1 billion.
The “generic wave” will continue to be a boon to Cardinal as several new generic launches are expected to help Cardinal in its fiscal 2012, which began in July. In particular, cholesterol drug Lipitor loses patent protection in November and generic versions of the popular drug are expected to be available shortly thereafter.
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The company’s pharmaceutical segment, by far its largest, enjoyed year-over-year revenue growth of 10 percent to $24.5 billion and an impressive 30 percent increase in profits to $295 million. Those numbers were helped by Cardinal’s acquisitions last year of Chinese distribution business Yong Yu and a U.S. distributor focused on the East Coast, Kinray.
Overall, it was a solid quarter for Cardinal, with adjusted earnings per share from continuing operations coming in at 59 cents, 1 cent above the consensus analysts’s estimate.
If there was a negative for the company, it came from its medical segment, which distributes surgical kits and low-cost healthcare supplies like gloves, gowns and scrubs. While the segment’s revenue rose 7 percent to $2.3 billion, profits plunged 24 percent to $78 million.
CEO George Barrett blamed the decline on increasing commodity costs and “sluggish utilization” of surgical products.
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One area for improvement that Barrett cited is Cardinal’s specialty pharmaceuticals business, which involves distributing specialty drugs and a group purchasing organization for community-based physician practices. “We would’ve liked it to accelerate faster, but we feel good about the fact it’s picking up steam,” Barrett said.
On the year, Cardinal reported 4 percent revenue growth to $1.4 billion.
Adjusted diluted earnings per share from continuing operations was $2.67, a 20 percent increase over the prior year. That beat analysts’s expectations by a penny. The company expects the number in 2012 to come in between $3.04 and $3.19.
