(By Balaseshan) Cardinal Health Inc. (NYSE:CAH), a global healthcare services company, reported a 33% jump in third quarter earnings helped by higher segments growth as well as lower tax rate. Adjusted earnings and revenue exceeded Street's expectations.
Earnings from continuing operations for the third quarter were $332 million or $0.95 per share, up from $250 million or $0.71 per share last year. Adjusted earnings from continuing operations rose to $327 million or $0.94 per share from $286 million or $0.81 per share.
Revenue increased to $26.92 billion from $26.07 billion. Analysts had expected a profit of $0.88 per share on revenue of $26.71 billion.
Revenue for the Pharmaceutical segment rose 3% to $24.5 billion, driven by growth from existing customers. Segment profit grew 9% to $446 million, due to the strong performance of generic programs including the impact of new and recently launched items.
Revenue for the Medical segment increased 8% to $2.4 billion, driven by growth from existing customers, including strong sales of preferred products. Segment profit fell 17% to $89 million, due to the anticipated negative impact of commodity price increases and increased information system expenses, primarily related to the launch of the company's Medical Business Transformation.
Effective tax rate from continuing operations declined to 34.9% from 41.3%.
Return on equity increased to 21.9% from 17.8%, while adjusted return on equity rose to 21.6% from 20.7%. Net debt to capital for the quarter declined to 2% from 8%.
Looking ahead into the fiscal 2012, the company narrowed its earnings guidance to range of $3.15 to $3.20 per share from previous forecast of $3.10 to $3.20 per share, while Street predicts $3.19 per share.
The company anticipates the year-over-year impact of cost of commodity inputs dynamic subsiding in the fourth quarter of fiscal 2012 and into fiscal 2013.
CAH closed Wednesday's regular session down 0.07% at $42.42. The stock has been trading between $37.53 and $47.06 for the past 52 weeks.