CARDINAL HEALTH NET UP 28% IN 3RD QUARTER.

Byline: Evan Pondel Staff Writer

WOODLAND HILLS - Drug distributor Cardinal Health Inc. saw its third-quarter net income rise 28 percent, bolstered by the recent $770 million acquisition of nuclear pharmaceutical company Syncor International Corp., the company reported Wednesday.

Dublin, Ohio-based Cardinal Health reported a profit of $383.1 million, or 84 cents a share, for the quarter ended March 31, compared with $300.1 million, or 66 cents a share, in the year-ago period. Excluding one-time charges, Cardinal earned 86 cents a share.

``The integration of Syncor is progressing smoothly and the combined nuclear pharmacy services business in pharmaceutical technologies delivered a very strong quarter,'' Robert D. Walter, Cardinal's chairman and chief executive officer, said in a statement.

The purchase of Woodland Hills-based Syncor in January prompted Cardinal's revenues to increase 73 percent to $596 million. Operating earnings expanded 43 percent to $94 million, driven by solid revenue growth and the inclusion of results from Syncor's domestic operations, the company said.

Cardinal anticipates consolidating 18 nuclear pharmacies as a result of the Syncor acquisition, approximately 10 percent of the company's total nuclear pharmacy facilities. Ten of these consolidations are expected in the fourth quarter, the company said.

Prior to the acquisition, Syncor had decided to discontinue its imaging business and a portion of its international operations. But after Cardinal purchased Syncor, it decided to discontinue all of the company's international operations.

Syncor and Cardinal Health's agreement hit an impasse in November after payments to government officials in Asia were called in question. As part of due diligence before an acquisition, Cardinal Health scoured Syncor's books to look for signs of malfeasance. The company found improper payments made on behalf of Syncor to employees of state-owned health care facilities in Taiwan.

Totaling about $500,000, the payments were in direct violation of the Foreign Corrupt Practices Act. Syncor reached an agreement with U.S. Department of Justice that includes pleading guilty and paying a fine of $2 million.

The liquidation of the imaging and international operations is proceeding as planned with a substantial number of imaging centers either sold or under contract to be sold, Cardinal said.

The company expects to complete these operations by the end of 2003.

The Syncor acquisition resulted in third-quarter charges of $15.9 million, partly offset by a $6.1 million gain from a settlement with vitamin manufacturers for overcharges in prior periods. In the year-ago quarter, special items totaled $39.1 million.

Cardinal shares declined $5.47, or 9.5 percent, to close at $52.17 Wednesday on the New York Stock Exchange.