Image via George Lange/Wikimedia
While Cardinal’s stock is down over 9% for the year and fell more than 20% in 2016, Barrett says the company sees significant growth in 2019 and beyond.
Cardinal distributes drugs and medical supplies, like first aid products, incontinence supplies, living aids and wound care products. Their products are distributed to 80% of hospitals and 60% of pharmacies.
Barrett says Cardinal has been focusing on diversifying its portfolio to focus more on the healthcare system and less on areas that are susceptible to swings, like the generic drug industry.
The CEO said the swings in generic drugs were bigger than expected, which hurt the company in the most recent quarter. But looking ahead to 2019, he says the company expects to see significant growth.
Earlier this month, Cardinal’s stock plunged more than 7% after releasing its fourth-quarter profit and downbeat guidance for next year.
Earnings came in at $274 million for the latest quarter, or 86 cents per share. During the same period last year, earnings came in at $333 million, or $1.02 per share.
Revenue was at $33 billion, up from $31.4 billion. The most recent quarter included a profit decrease in its pharmaceutical industry and growth in its pharmaceutical distribution customers.
The company expects EPS to come in between $4.85 and $5.10 in fiscal 2018, which was much lower than analysts projected.
The downbeat guidance was not a surprise, as the company had previously hinted that fiscal year 2018 would be down. In April, Cardinal said it expected profit decline in its pharmaceutical business.
When reporting its earnings for the fourth quarter, the company also noted that it would be taking “discrete actions” that would affect fiscal year 2018 and their “trajectory for 2019 and beyond.”
The medical supply and drug company was also under fire earlier in the month after the city of Cincinnati filed a lawsuit against them. The city has accused Cardinal of shipping excess millions of opioid dosages to the area over the years, which, they say, has contributed to the opioid epidemic.
The lawsuit states that Cardinal failed to investigate suspicious orders. The company does not manufacture drugs, but does fulfill orders for painkillers and other prescription drugs for pharmacies and clinics.
But Cardinal denies that it was lax in its policing of suspicious orders.
“We are industry leaders in implementing state-of-the-art controls to combat the diversion of pain medication from legitimate uses, and have funded community education and prevention programs for a decade,” the company said in a statement.
The company said the “copycat lawsuits” were “misguided and do nothing to stem the crisis.”
Cincinatti is seeking unspecified damages in the suit, which may run millions of dollars. The city is looking to triple damages under its RICO law and also wants compensation for the care of residents addicted to opioids.