What lies ahead for the big bird of pharmaceutical and medical supply distribution? From an outsider's perspective, it would appear Cardinal Health (NYSE:CAH) is on the cusp of some significant changes that could mean greater value for its shareholders.

Results for the company's fourth quarter weren't good, but we already knew that would be the case. Sales rose 15% for the quarter, but operating earnings (without special items) fell 5% from the year-ago level. Results were a mess of special items and non-recurring charges, but when the dust settled you could see that the company posted the level of earnings that analysts were expecting.

For the individual operating units, performance in this quarter was a hodgepodge. The core pharmaceutical distribution business looked quite sound to me; revenue was up 16%, and operating income was up 18%. Medical product distribution wasn't quite as strong: Revenue was up 5%, and operating earnings were down 3%. Continuing an ongoing trend, the company's sterile manufacturing business was pretty much an operational disaster.

But enough on this quarter. I'd rather use my limited time here to talk about the future.

First, Cardinal remains in the midst of a transition to a new fee-for-service structure in the pharmaceutical distribution business. While the negotiations with pharmaceutical companies haven't gone very well (meaning lower fees), I see this move as a long-term positive. This new approach will end the speculative inventory buying of the past, and it should lead to a business structure that requires less working capital and is more predictable and stable.

Second, I hope Cardinal management decides to give it a rest with respect to additional acquisitions. The company's past efforts to diversify have, in my opinion, led to more diworsification than diversification and have caused more problems than they have been worth.

Last, the company seems to be transitioning to a more mature company model focused on sharing capital with shareholders. Should the company meet its dual targets of low-to-mid-teens growth and distribution of 50% of operating cash flow to shareholders, it will likely result in a good growth-income hybrid stock in a few years' time.

Companies in transition are prone to occasional setbacks and hiccups -- and investors should prepare themselves for that. In the case of Cardinal there is also an ongoing SEC investigation, and this company hasn't always lived up to its projections. Finally, there are also competitors such as AmeriSourceBergen (NYSE:ABC) and McKesson (NYSE:MCK) to contend with in the market.

All that said, this stock is worth keeping an eye on for the future. It has a good business in a growing market, coupled with solid cash flow and internal rates of return. Management needs to prove that it can execute the new plan, but if it succeeds this bird could be chirping again.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).