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Cardinal Health to Pay $44M as Civil Penalty Settlement

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Cardinal Health Inc. (CAH - Free Report) announced that it would shell out $44 million as civil penalties for a 2012 administrative settlement with the U.S. Drug Enforcement Agency or DEA. The settlement led to a two-year suspension of the company’s registration to distribute Class II narcotics from its Lakeland distribution center. The DEA returned Cardinal’s registration in May 2014.
 
Over the past six months, Cardinal Health has traded below the Zacks categorized Medical/Dental-Supplies sub-industry. The stock currently represents a negative return of 3.38%, wider than the sub-industry’s decline of 3.06%. Year to date, the company represented a loss of 18.36%, while the S&P 500 rose 12.88%.  

On the positive side, Cardinal Health has compelling fundamentals in terms of revenues, multiplying over the last few years. Additionally, a long-term earnings growth rate of 10.24% instills investor confidence. Average volume of shares traded over the last three months was remarkable, at approximately 3,016,935. Currently, the stock has a market cap of $23.33 billion.

We are downbeat about the unfavorable estimate-revision trend, with eight estimates moving south over the last two months. Notably, the current-year estimates for the stock fell almost 16 cents to $5.44 per share, over the same time frame.

Of the $44 million to be paid as settlement, $34 million would be for civil penalties to settle allegations that it failed to report suspicious drug orders sent from its distribution center in Lakeland to pharmacies in Florida and in Maryland. Of the rest, $10 million would be for settlement in New York.

Headquartered in Dublin, OH, Cardinal Health Inc. is a nation-wide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers.

Cardinal Health expects near-term pharmaceutical performance to be subdued owing to lower generic pharmaceutical pricing and, to a lesser extent, from reduced levels of branded inflation.

Zacks Rank & Key Picks

Currently, Cardinal Health carries a Zacks Rank #3 (Hold). Some other better-ranked stocks in the broader medical sector include Addus HomeCare Corporation (ADUS - Free Report) , LHC Group, Inc. and IDEXX Laboratories, Inc. (IDXX - Free Report) . Addus HomeCare and IDEXX Laboratories sport a Zacks Rank #1 (Strong Buy). Meanwhile, LHC Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Addus HomeCare has a long-term expected earnings growth rate of approximately 15%. Notably, the stock represents an impressive one-year return of 51.2%.

LHC Group has a long-term expected earnings growth rate of 15%. The company has returned almost 19.3% in the last three months.

IDEXX Laboratories has an expected earnings growth of almost 15%. The company posted a promising year-to-date return of almost 64.4%.

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