Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Atif Rahim – JP Morgan
Atif Rahim – JP Morgan
As we look at the earnings guidance you provided the run rate for this quarter implies you should be over $2.00 for the year but we recognize there are some items are going to be non-recurring. Could you perhaps quantify by EPS items that won’t be recurring in future quarters to give us a better picture of what the quarterly progression might look like going forward?
Jeff Henderson
I went through a little bit of this during my script but let me try to review some of these again and would be happy if there are any additional follow-up questions. First of all there was a unique acceleration of revenue and profit within Medical. Let me explain that in a little bit more detail. That was worth about $14 million of profit or $0.02 to $0.03.
The way it worked was basically as follows: when we owned both the domestic and international operations of our Medical business we did not recognize revenue or profit on sales until we sold to the end customer. Our domestic business would sell to our international business, our international business would hold those products in inventory and then when they eventually sold to an end customer we recognized that revenue and profit on the consolidated books of the company.
The moment we spun off CareFusion and they took the international business with them effectively they became a third party so any inventory they were holding at that moment of this spin-off effectively got reclassified as a sale of product and that revenue and income got accelerated into the quarter of the spin. As I said, that was worth about $14 million or $0.02 to $0.03 on and EPS basis.
In the Pharma segment as both George and I mentioned there were a number of price increases which individually weren’t significant but collectively represented a pull forward of about $15 million of income which is about $0.03 of earnings from future periods versus our original expectation most of that came from either Q2 or Q3. Again, I would view that as a pull forward from future quarters not necessarily out on the year.
The other unique item in Q1 was the early and strong flu season that impacted mostly within our Medical segment. As we said, that was worth about $5 million or $0.01 of EPS. I assume a follow up question to that would be wouldn’t you expect that to continue through the whole year. The answer is we don’t know. It’s obviously very hard to predict the flu season although we do expect to see continued flu related demand in Q2.
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