DUBLIN, Ohio – Medical supplier Cardinal Health Inc. (CAH) reported a 42 percent drop in second-quarter profit Friday — missing Wall Street targets — reduced its expectations for the year and said several employees have been disciplined following an internal accounting reivew.
Dublin-based Cardinal's controller resigned and other employees were fired or quit following the review, the company said on Friday.
Company spokesman Jim Mazzola on Friday he would not comment on the reason for controller's Gary Jensen resignation other than to say it was tied to the audit over how the company classifies revenue from its pharmaceutical distribution business.
The company, which has been the subject of a federal investigation over the accounting issue, would not say how many other employees were disciplined. Action ranged from terminations to the repayment of bonuses.
Cardinal Health reported a profit of $214 million, or 49 cents a share, for the quarter that ended Dec. 31 compared with a profit of $368.5 million, or 84 cents a share, a year ago. The company took a $105 million charge in the most recent quarter as part of its plan to slash jobs and close offices.
Sales rose 13 percent to $18.6 billion for the quarter compared with $16.4 billion a year ago.
Excluding the charge and other one-time costs, Cardinal Health reported a profit of $342 million, or 73 cents a share, compared with $370 million, or 84 cents a share, a year earlier. Analysts surveyed by Thomson First Call expected earnings of 77 cents.
Cardinal Health said in December that it would cut 4,200 jobs, or about 7 percent of its work force, and close 25 offices as part of a three-year restructuring plan to improve earnings by $500 million a year. Cardinal Health has abut 58,000 employees.
"Our second-quarter performance, while below Cardinal Health's potential, was in line with our previously revised expectations and reflects steady progress in several key areas of the business, including the transition to non-contingent distribution contracts with pharmaceutical manufacturers," Robert D. Walter, chairman and chief executive, said in a statement.
Cardinal cut its forecast for full-year earnings to a range of $3.20 to $3.40 per share excluding one-time items. The Thomson First Call esimate currently is for earnings of $3.45 per share, down from its 2004 earnings of $3.55 per share.
The company blamed its outlook on uncertainty about branded pharmaceutical price hikes, available inventory and the short-term impact from the transition to fee-based distribution in its drug distribution business.
For the first six months of its fiscal year, the company made $427.3 million, or 97 cents a share, compared with $651.7 million, or $1.47 a share in the previous year.
Cardinal stock fell $1.70, or nearly 3 percent, to $58.39 on the New York Stock Exchange (search). The company's stock has rebounded from its multiyear low of $36.08 in October.