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Cardinal Health takes loss on $829M write-down

DUBLIN, Ohio (AP) -- Prescription drug distributor Cardinal Health Inc. said Thursday that it took a loss in its fiscal fourth quarter after writing down the value of its nuclear pharmacy business by $829 million.

Despite the charge, the company's adjusted net income and its sales were stronger than Wall Street expected, and Cardinal Health raised its forecast for the fiscal year. Its shares picked up $1, or 2 percent, to close at $51.09. Earlier the stock peaked at $51.33, its highest point in nearly five years.

The nuclear pharmacy division runs facilities that make and deliver radiopharmaceuticals used in imaging and other procedures. Cardinal Health said wrote off all of the business' goodwill because the market for some of its products is declining. A business' goodwill typically reflects the value of assets such as a strong brand name, good relations with customers, and patents and proprietary technology.

Cardinal Health's overall sales declined because it lost a contract with pharmacy benefits manager Express Scripts earlier in the fiscal year. Soon a contract with the Walgreen drugstore chain will expire.

Cardinal lost $586 million, or $1.72 per share, over the three months ended June 30. A year ago it reported net income of $236 million, or 68 cents per share, for the period. Excluding one-time items it made 79 cents per share in the recent quarter. Revenue fell 5 percent, to $25.42 billion.

Analysts forecast adjusted net income of 77 cents per share and $24.55 billion in revenue, according to FactSet.

Revenue from Cardinal's pharmaceutical business fell 6 percent, to $22.78 billion. Revenue from its medical device division rose 11 percent, to $2.7 billion, after the company bought AssuraMed, a company that distributes medical supplies to patients at home.

Cardinal Health's contract with Express Scripts, the largest pharmacy benefits management company in the U.S., expired during Cardinal's fiscal second quarter. Its contract with Walgreen Co., the biggest U.S. drugstore chain, will expire Sept. 1. Walgreen said it decided to expand a supply deal with AmerisourceBergen Corp. instead of extending an agreement with Cardinal Health.

Cardinal Health expects to earn $3.45 to $3.60 per share in fiscal 2014, up from its previous outlook of $3.42 to $3.50 per share. Analysts expect $3.55 per share on average.