Cardinal tries to improve its supply chain business

Filed in archive News on June 30, 2007

With increasing importance of logistics in the health system, Cardinal Health also wants to join the club: Cardinal Health Inc. said on Wednesday it believes it can improve its Supply Chain Medical business, which generates about 9 percent of its revenue, within a year.

According to Reuters, Chief Executive R. Kerry Clark told a conference call that the company will enter fiscal 2008, which starts July 1, with good momentum in many of its businesses and reiterated its financial outlook given on April 27.

But its Supply Chain Medical business, which distributes medical lab and surgical equipment from manufacturers to hospitals, is expected to perform below its targeted 6 to 9 percent profit growth and 4 to 7 percent revenue growth in fiscal 2008.

"This is where we have our work cut out for us," said Clark, who took the helm at Cardinal a year ago.

"I'm not a person of infinite patience, but I do think the business can be fixed and I really do think we're going to start to see noticeable signs of turnaround by the second half."

Clark described the business as inefficient and said Cardinal will try to cut costs and overhead. He said it is the "backbone" and the core business that supports its other programs that serve hospitals.

Cardinal, one of the nation's three top drug wholesalers, expects to benefit in fiscal 2008 from leverage resulting from its share-buyback program, continued growth in generic drugs, and strong demand for its medical delivery pumps.