Cardinal Health earnings rise on drug distribution business

Wednesday, October 26th 2005, 10:48 am

By: News On 6

COLUMBUS, Ohio (AP) _ Drug and medical services company Cardinal Health Inc. said Wednesday its first-quarter earnings rose 7 percent, primarily on the strength of its drug distribution business.

Cardinal's earnings grew to $228.3 million, or 53 cents per share, for the quarter, up from $213.3 million, or 49 cents per share, a year ago.

Excluding one-time costs and adjustments of 21 cents, the earnings were 75 cents per share, above the 72 cents per share estimate from analysts surveyed by Thomson Financial.

Revenue for the quarter that ended Sept. 30 grew 9 percent $19.4 billion from $17.8 billion a year ago.

Revenue from drug distribution, Cardinal's biggest business, was up 9 percent. Pharmaceutical technology turned in a disappointing performance with a 42 percent decline in earnings, said Chairman Robert Walter. But he expects the segment to recover in upcoming quarters as the company restructures pricing and drops unprofitable operations.

The suburban Columbus-based company announced last December that it would cut about 7 percent of its work force and close 25 offices as part of a three-year restructuring program. By cutting 4,200 jobs, Cardinal said it would eventually improve earnings by $500 million a year. But executives warned that initial costs of the restructuring _ including severance packages _ would bruise income in the short term.

Cardinal earnings dropped through all four quarters of the last fiscal year amid a federal investigation into money the company received from vitamin manufacturers.

A year ago, with its stock hovering at a five-year low of about $38, the company restated its earnings for 11 quarters after a long delay in releasing its financial statements. An internal accounting review a few months later led to the resignation of the company's controller and the firing or disciplining of a number of other employees.

Earlier this month, Cardinal announced a plan to consolidate three businesses, streamlining administrative and logistical functions.

Cardinal was No. 16 on this year's Fortune 500 list and the largest company in Ohio.