Hurt by price deflation from generic drugs, Cardinal Health said that fiscal 2017 profitability will be at the lower end of its previous guidance range. It also said that profit in its pharmaceutical segment could decline in fiscal 2018.
Cardinal's 2017 non-generally accepted accounting principles (GAAP) earnings per share (EPS) from continuing operations are now expected to be at the bottom of its previous guidance range of $5.35 to $5.50, according to the company. Generic-drug price deflation is now expected to be in the low double digits for the full fiscal year, according to Cardinal.
In preliminary expectations for fiscal 2018, Cardinal projected that non-GAAP EPS will be flat to down midsingle digits. Although it expects generic-drug price deflation to moderate to midsingle digits in fiscal 2018, the deflation, combined with several undisclosed discrete items that will have a negative impact of $0.50 per share, could result in a high-single-digit profit decline compared with fiscal 2017. On the bright side, Cardinal said it expects that 2019 non-GAAP EPS will grow by at least high single digits in comparison with fiscal 2018.
In other Cardinal news, the company announced that it will acquire Medtronic's patient care, deep vein thrombosis, and nutritional insufficiency businesses for $6.1 billion. The deal is expected to be completed in the first quarter of fiscal 2018.
Once the acquisition is finalized, the businesses will be incorporated into Cardinal's medical segment. Cardinal expects the acquisition will add $0.21 to non-GAAP EPS from continuing operations in 2017, and will be accretive to non-GAAP diluted EPS by more than $0.55 per share in fiscal 2019.
