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CAH Renews Supplier Contract with Prime

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Cardinal Health Inc. (CAH - Free Report) revealed that it has renewed its three-year supplier agreement with St. Paul, Minn.-based medical supplies provider Prime Therapeutics. CAH supplies pharmaceuticals for Prime's pharmacy home delivery service, PrimeMail, and Prime Therapeutics Specialty Pharmacy.

Prime manages more than $15 billion in prescription drugs per year and serves about 23 million members. It is collectively owned by 13 Blue Cross and Blue Shield Plans, subsidiaries or affiliates of those plans.

Prime’s specialty pharmacy helps boost the health of people having rheumatoid arthritis, hepatitis C and multiple sclerosis, through personalized care management programs. As part of the agreement, CAH will continue to supply additional supply chain optimization services to boost operational efficiency of Prime.

Cardinal Health posted solid fiscal 2014 first-quarter adjusted earnings of $1.10 per share, which were up 36% from 81 cents earned in the year-ago quarter. Earnings per share comfortably surpassed the Zacks Consensus Estimate of 85 cents by an impressive margin of 29.4%.

Revenues in the first quarter went down 5% to $24,523 million, due to lower revenues from the Pharmaceutical segment. Nonetheless, the top line beat the Zacks Consensus Estimate of $22,680 million.

For fiscal 2014, CAH raised its forecast for adjusted earnings per share to the band of $3.62 to $3.72 from the earlier guidance of $3.45 to $3.60. Management cited the company’s outstanding fiscal first-quarter results along with efficient operating performance as the reason behind the upgraded guidance. The current Zacks Consensus Estimate of $3.69 for the year lies within the outlook band.

Cardinal Health currently has a Zacks Rank #2 (Buy). Other stocks in the medical/dental supplies industry that are currently worth a look include Align Technology Inc. (ALGN - Free Report) , McKesson Corporation (MCK - Free Report) , and Merit Medical Systems, Inc. (MMSI - Free Report) .  All of them carry a Zacks Rank #1 (Strong Buy).

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