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Cardinal “Fee For Service” Distribution Transition Slows Earnings Growth

This article was originally published in The Pink Sheet Daily

Executive Summary

The transition from “buy and hold” distribution model to “fee-for-service” model is proceeding slowly, Cardinal acknowledges. The wholesaler also attributes earnings shortfall to delays in securing approval of its sterile manufacturing plants.

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Cardinal Raises Sterile Manufacturing Prices Despite Operational Problems

Price increases, greater capacity and cost-cutting will allow Cardinal’s sterile manufacturing unit to contribute to earnings again by the second half of the fiscal year, the company says.

Cardinal Raises Sterile Manufacturing Prices Despite Operational Problems

Price increases, greater capacity and cost-cutting will allow Cardinal’s sterile manufacturing unit to contribute to earnings again by the second half of the fiscal year, the company says.

Cardinal Expects More Frequent, But Smaller, Price Increases Through 2005

The transition to a fee-for-service model will prevent Cardinal from taking advantage of the more frequent price increases that are expected in the second half of the year, CEO Walter says. Cardinal expects that 85% of its vendor margins will come from manufacturers under fee-for-service contracts by mid-year.

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