Latex litigation charge cuts Cardinal Health profits

By Liz White, ERJ staff

Dublin, Ohio-Earnings at US-based healthcare supplier Cardinal Health Inc. dropped in the quarter to 30 Sept (Cardinal's first for 2005), despite a 16 percent rise in turnover to $17 800 million.

The Dublin, Ohio-headquartered firm-a major supplier of medical gloves-took what it said is a one-off charge of $16.4 million in its medical products business, for remaining latex litigation costs. Cardinal points out that this litigation, which began in the mid-1990s, “is nearing conclusion.”

The $16.4 million is Cardinal's current estimate of the costs to resolve all remaining litigation and related matters, net of estimated insurance proceeds. This non-recurring item had the effect of lowering the group's operating earnings in its Medical Products and Services division for the quarter.

For Cardinal as a whole, earnings from continuing operations declined to $217.8 million, although the company said that, excluding special items of $20 million for the quarter, net earnings from continuing operations decreased 28 percent to $238 million compared to $332 million in the same period last year.

The company said it generated strong cash flow from operations for the quarter of nearly $900 million.

"As we anticipated, the first quarter was challenging and our results are clearly below our historic performance and long-term expectations," said Robert Walter, chairman and chief executive officer, in Cardinal's results statement. "We are taking action in each segment to capitalise on the strategic opportunities that exist today in our business," he added.