Cardinal Health’s Q2 profit surges on medical supplies acquisition, tax reform

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Fiscal second-quarter profits for Cardinal Health (NYSE:CAH) surged at a triple-digit clip, fueled by contributions from the medical supplies business it bought from Medtronic (NYSE:MDT) for $6 billion last year.

Dublin, Ohio-based Cardinal posted profits of $1.05 billion, or $3.33 per share, on sales of $35.19 billion for the three months ended Dec. 31, 2017. That amounts to profit growth of 225% on sales growth of 6.1% compared with fiscal Q2 2017.

Adjusted to exclude one-time items, including a 20¢-per-share net benefit from last year’s tax reforms, earnings per share were $1.51, a whopping 36¢ ahead of Wall Street, where analysts forecast sales of $34.65 billion.

The gains were driven by Cardinal’s newly reinforced medical segment, which saw profits rise 38.4% during the quarter, to $220 million, on sales growth of 18.6% to $4.04 billion.

“Overall, we are very pleased with the quarter,” CEO Mike Kaufmann said in prepared remarks. “Our pharmaceutical distribution business performed better than expected, and we continue to see strong growth in specialty solutions. In the medical segment, the integration of the patient recovery business is progressing as planned, and we are excited by the opportunities in that business. In addition, we remain encouraged by how well our value proposition is resonating with customers.”

Cardinal Health said it expects to post adjusted EPS of $5.25 to $5.50 for fiscal 2018.

CAH shares were up 4.8% to $68.24 apiece today in mid-morning trading.

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