Cardinal Health earnings beat estimates

Cardinal Health released first-quarter earnings for fiscal year 2019 early Thursday that beat Wall Street estimates, sending the stock price higher.

The cost of fighting hundreds of opioid-related lawsuits from around the country, though, has proved higher than expected, leading to an additional $80 million in expenses being factored into the company’s full-year outlook.

Shares of Dublin-based Cardinal, Ohio’s largest company by revenue, closed at $56.13, up 4.6 percent, on Thursday, after initially surging by 8 percent in premarket trading. The share price still remains far from its high of nearly $75 for the year.

Cardinal reported earnings of $593 million, or $1.94 per share, on revenue of $35.2 billion for the quarter. Cardinal said the results were boosted by the lower effective tax rates attributable to U.S. tax reform, as well as a positive impact of approximately 18 cents per share in one-time foreign tax benefits related to restructuring.

Profit for Cardinal’s larger pharmaceutical segment was down by 12 percent compared with the first quarter of 2018, which Cardinal said was attributable to continuing price pressure on generic drugs. Profit for its medical segment was up by 5 percent. The company said it has begun to see savings on labor costs related to an unspecified number of job reductions announced earlier this year; Cardinal has declined to detail how many people have been laid off.

Cardinal is one of three major companies that dominate the distribution of pharmaceutical products in the United States. Along with its competitors and drug manufacturers, Cardinal has been targeted in hundreds of lawsuits from municipalities and states alleging they were partly responsible for the surge in opioid addiction and overdose deaths in recent years.

In a phone interview on Thursday, Cardinal CEO Mike Kaufmann said the company now expects to incur about $80 million more in expenses related to opioids, most of that in added legal costs.