On May 9, 2019 Cardinal Health (NYSE: CAH) reported third quarter fiscal year 2019 revenues of $35.2 billion, an increase of 5 percent (Press release, Cardinal Health, MAY 9, 2019, View Source [SID1234536078]). The company also reported a decrease in GAAP operating earnings of 21 percent to $432 million and a decrease in non-GAAP operating earnings of 15 percent to $667 million. GAAP diluted earnings per share (EPS) were $0.99, an increase of 22 percent. Non-GAAP diluted EPS increased 14 percent to $1.59.

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"We are pleased that Cardinal Health again delivered overall operating results that were consistent with our expectations for the quarter," said Mike Kaufmann, CEO. "Solid progress on our strategic initiatives, the recent renewal of our largest customer and our ability to navigate evolving market dynamics give us confidence over the long term."

Tax rate

During the third quarters of fiscal 2019 and 2018, GAAP effective tax rates were 20.0 percent and 45.1 percent, respectively, and non-GAAP effective tax rates were 21.6 percent and 37.5 percent, respectively.

This quarter’s lower effective tax rates included net favorable discrete items of $0.06 per share and a lower U.S. federal income tax rate. During the same quarter last year, the tax rate included unfavorable discrete items and a significant negative impact from Cordis.

Fiscal year 2019 outlook
The company does not provide GAAP EPS outlook because it is unable to reliably forecast most of the items that are excluded from GAAP EPS to calculate non-GAAP EPS. These items could cause EPS to differ materially from non-GAAP EPS. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.
The company is raising the lower end of its fiscal 2019 non-GAAP EPS guidance to the range of $5.02 to $5.17 from the range of $4.97 to $5.17.

Segment results

Pharmaceutical segment

Third quarter revenue for the Pharmaceutical segment increased 6 percent to $31.4 billion due to sales growth from Pharmaceutical Distribution and Specialty Solutions customers.

Segment profit for the quarter decreased 10 percent to $536 million, which reflects the negative impact from the company’s generics program performance, partially offset by Specialty Solutions performance.

Medical segment

Third quarter revenue for the Medical segment was down 1 percent due to the divestitures of the China distribution and naviHealth businesses, offset by growth from existing customers.

Medical segment profit decreased 22 percent to $155 million driven by performance of Cardinal Health Brand products.

Additional third quarter and recent highlights

Cardinal Health extended its agreements with CVS Health to distribute pharmaceuticals to retail pharmacies and distribution centers through June 30, 2023.

Cardinal Health board of directors approved a 1 percent increase in the company’s quarterly dividend from $0.4763 per share to $0.4811 per share, or $1.92 on an annualized basis. The dividend will be payable on July 15, 2019 to shareholders of record on July 1, 2019.

Cardinal Health announced the acquisition of mscripts, a company that delivers patient adherence and engagement solutions through an innovative, easy-to-use mobile and web-based health management platform.

Cardinal Health Specialty Solutions announced a collaboration with PANTHERx Specialty Pharmacy designed to meet the growing needs of the market and strengthen its cell and gene therapy capability.

Webcast

Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss third quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.

Presentation slides and a webcast replay will be available on the Cardinal Health website at ir.cardinalhealth.com until May 8, 2020.