Shares of Cardinal Health Inc. (CAH) plunged by 21% to $50.80 on Thursday after the company announced that its earnings for the remainder of the year will be worse than expected.
The company said that a tax rate of 37.5% in its most recent quarter hurt its bottom line at a time when most companies are benefitting from the corporate tax cut signed by the Trump administration last year.
The integrated healthcare services company cut its full-year earnings guidance to between $4.85 and $4.95 per share from its previous view between $5.25 and $5.50 per share. In addition to the tax issue, the company's loss of a contract with PharMerica and lower drug prices are responsible for the bearish outlook.
The company reported revenue of $33.6 billion in the third quarter, in line with analysts' expectations while earnings of $1.39 per share fell short of expectations.
"We recognize that today's results did not meet your expectations or ours. [Next year} will be more challenging than previously expected," CEO Mike Kaufman said.
McKesson shares closed down 5.2% while AmerisourceBergen fell 7.4% on the day.