Cardinal Health Inc. said Monday that Chief Executive George Barrett will step down in January after more than eight years in the post, as pricing pressure for generic drugs has weighed on the company in recent months.
Mr. Barrett, 62 years old, will remain in his role as executive chairman until the company's shareholder meeting in November 2018. Lead independent director Gregory Kenny will then become nonexecutive chairman, the company said.
Chief Financial Officer Mike Kaufmann, 54 years old, will become the chief executive of the pharmaceutical and medical supplies distributor on Jan. 1.
Cardinal Health also announced that Jorge Gomez, CFO of Cardinal Health's medical division, will be taking over as finance chief of the entire company.
Cardinal Health, similar to other pharmaceutical wholesalers and manufacturers, has been hurt by lower generic drug prices, which the company said in April won't improve until the middle of 2018.
On Monday, the company said first-quarter profits in its pharmaceutical division fell 13% compared with last year, partly due to the decline in generic drug prices.
Overall profit fell 63% from a year ago to $115 million, as higher expenses also weighed on the firm. On an adjusted basis, earnings fell 13% to $346 million. Adjusted earnings per share were $1.09, beating analysts' estimates of $1. Revenue rose 2% to $32.6 billion.
Cardinal Health is also facing lawsuits filed by New Mexico and dozens of counties nationwide, alleging the company contributed to widespread addiction to opioid painkillers by failing to control distribution of the drugs. In its 2017 annual report, the company said it was "vigorously defending" itself against those suits, which in part allege companies violated controlled substance laws.
Cardinal Health announced Mr. Barrett's planned departure two days before its share-holder meeting. Last month, the International Brotherhood of Teamsters sent a letter to shareholders saying the structure of Cardinal Health's board was "inadequate" to respond to its "decade long role in fueling the opioid crisis." The Teamsters, whose funds own over $27 million of shares of Cardinal Health, asked shareholders to vote to remove Mr. Barrett as chairman.
Cardinal Health said in an emailed statement that "the separation of chairman and CEO was not in response to any group."
BY ALLISON PRANG