Healthcare products and services provider Cardinal Health Inc. (CAH: News, Chart, Quote ) Tuesday revealed the decision to consolidate its operations into two major operating segments to reduce costs and focus on segment needs. As part of the restructuring, the company will eliminate 600 jobs worldwide, incurring about $63 million in charges, to be recorded in fiscal 2009. Cardinal also reiterated its earnings outlook for 2008.
The Healthcare Supply Chain Services segment will distribute pharmaceuticals and medical products to retail pharmacies, hospitals, physician offices, surgery centers and alternate care facilities. The Clinical and Medical Products segment will produce medication infusion and dispensing products, respiratory equipment, surgical instruments and technologies for preventing medication errors.
Healthcare Supply Chain Services segment will be led by Vice Chairman, George Barrett and will serve customers in North America. Vice Chairman, David Schlotterbeck will be head of the Clinical and Medical Products segment, serving global customers. The two segments will be connected with a small corporate organization and the hospital sales force of Cardinal.
The Dublin, Ohio-based Cardinal noted that the restructuring will result in the formation of a third segment that includes the pharmacy services unit, the orthopedic implants and instruments business as well as the enteral devices and airway management products division.
The company expects to recognize a major portion of the restructuring charges in fiscal 2009. Out of the 600 positions affected as part of the reorganization, 160 positions are currently vacant and will not be filled.
Cardinal reaffirmed its forecast of 2008 non-GAAP earnings per share from continuing operations to be in the middle of the $3.75-$3.85 range, excluding the potential dilutive impact of the acquisition of Enturia of 1 to 2 cents. The Street expect earnings of $3.78 per share.
Kerry Clark, chairman of Cardinal Health, said, "In fiscal '09, we remain committed to the turn-around of our pharmaceutical supply chain business, as we continue to strengthen our medical supply chain business, invest in an innovative pipeline of clinical products and ensure we have strong regulatory compliance programs in place across the company. We will also continue to optimize our portfolio to strengthen the core business."