Cardinal Health Sees Continued Growth From Cordis, Medical Products
By Jof Enriquez,
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Cardinal Health reported excellent fourth quarter fiscal year 2016 performance, driven by its cardiovascular device business, Cordis, and its Cardinal Health At Home brand products. The integrated healthcare company expects to sustain growth this year, but remains cautious with acquisitions.
Overall revenue for the fourth quarter jumped 14 percent to $31.4 billion compared to the same period last year, lifting fiscal year 2016 revenue by 19 percent to $121.5 billion, according to a company press release. The Medical segment grew more than 12 percent to $3.2 billion during the fourth quarter, and by 9 percent to a record $12.4 billion for the year. Profit for the fourth quarter increased 19 percent to $122 million, while full-year profit rose 6 percent to $457 million, due to acquisitions and growth in the Cardinal Health portfolio that includes Cordis.
Cardinal Health CFO Michael C. Kaufmann told analysts in a conference call that revenues are forecast to increase in the mid-single-digit percentage range versus the prior year, and he also sees double-digit segment profit growth and margin rate expansion, mainly from Cordis and Cardinal Health At Home.
"Our integration team has worked hard this year, and all day-one countries are stood up and providing solutions that drive efficiency, standardization, and improved patient outcomes. In fact, the Cordis team has already demonstrated measurable growth in certain geographic regions such as Europe, which hasn't seen that type of growth in a number of years," Kaufmann said during the call, according to Seeking Alpha.
"We feel really excited about Cordis. We think things are going really well. We've got all of the key employees, management team, sales folks in place. Things are going incredibly well," added Cardinal Health CEO George S. Barrett.
The acquisition of Cordis from Johnson & Johnson allowed Cardinal Health to gain a larger share of the United States and international cardiovascular market, and the integration so far has been smooth and successful. But future deals of a similar nature will have to wait.
"We will be very disciplined about the moves that we make, the way we deploy capital, the acquisitions we consider. All of those are really with the thought about where care is going and making sure we're on the right side of care," cautioned Barrett.
Cardinal Health considers itself well-positioned in the emerging era of value-based care, with offerings in the pharmaceutical, device, hospital products, home health care, and population management segments.
"Our solutions, offered through naviHealth, RightCare, and Curaspan, position us to help providers and payers manage the complex processes of discharge. With these tools, we can help direct patients to the optimal site of care, build the linkages to post-acute settings, and through our at Home business supply medical products to patients in their homes, improving their healthcare experience. These are important solutions as the population ages and the health system adapts," Barrett said during the call.
Barrett added that Cardinal Health "will continue to work very closely with providers and payers as well as CMS" in existing and newly-launched bundling programs.