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Cardinal Health (CAH) Beats on Q3 Earnings, Ups '24 EPS View
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Cardinal Health, Inc. (CAH - Free Report) reported third-quarter fiscal 2024 adjusted earnings per share (EPS) of $2.08, which beat the Zacks Consensus Estimate of $1.95 by 6.7%. The bottom line also improved 20% year over year.
GAAP EPS in the quarter was $1.05 compared with $1.34 in the year-ago period.
Revenue Details
Sales improved 9% on a year-over-year basis to $54.9 billion. However, the top line missed the Zacks Consensus Estimate by 1.6%.
Segmental Analysis
Pharmaceutical and Specialty Solutions Segment
In the reported quarter, pharmaceutical revenues increased 9% to $50.7 billion on a year-over-year basis. The performance highlights branded pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.
Pharmaceutical profit totaled $580 million, up 4% from the year-ago quarter’s level. The upside was driven by generics program performance.
Global Medical Products and Distribution Segment
Revenues in this segment totaled $3.1 billion, up 4% year over year, driven by growth volume from existing customers.
The segment reported a profit of $20 million against a loss of $46 million in the year-ago quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives.
Other
This segment includes three operating segments: at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics. Sales totaled $1.2 billion in the quarter, up 14% year over year.
The segment’s profit amounted to $111 million, up 5% from the year-ago quarter’s level. The upside was driven by robust performance in OptiFreight Logistics.
Cardinal Health, Inc. Price, Consensus and EPS Surprise
Gross profit increased 9.1% year over year to $1.95 billion.
As a percentage of revenues, the gross margin in the reported quarter was 3.5%, almost flat on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.28 billion, up 8.7% year over year.
Operating income amounted to $367 million compared with $572 million in the year-ago quarter. However, adjusted operating income increased 10% year over year to $666 million.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $3.72 billion compared with $4.59 billion in the fiscal second quarter of 2024.
Cumulative net cash used in operating activities totaled $49 million against cumulative net cash provided by operating activities of $1.36 billion in the year-ago period.
2024 EPS View Raised
Cardinal Health raised its fiscal 2024 guidance for earnings. The company now anticipates adjusted EPS between $7.30 and $7.40, up from the previous guidance of $7.20-$7.35. The Zacks Consensus Estimate for the same is pegged at $7.28.
The company continues to expect revenues from its Pharmaceutical segment to grow 10-12%. Segmental profit is likely to increase 8.5-9.5%, up from the previous guidance of 7-9%.
Revenues from the Medical segment are estimated to grow 2%. Segmental profit is expected to be $65 million in the quarter.
The company also provided a preliminary guidance for fiscal 2025. It expects adjusted EPS to be at least $7.50 for the period. Segmental profit is estimated to grow at least 1% in the Pharmaceutical and Specialty Solutions segment and nearly $175 million in the Global Medical Products and Distribution segment. This metric for the Other segment is likely to grow nearly 10%.
Conclusion
Cardinal Health exited the fiscal third quarter on a mixed note. While its earnings beat the Zacks Consensus Estimate, revenues missed the same. However, the company witnessed year-over-year revenue growth across all its sectors.
Shares of the company were down 1.4% in pre-market trading following mixed results. The company’s shares have risen 11% year to date compared with the industry’s growth of 7.3%. The broader S&P 500 Index has moved up 10.1% in the same period.
Image Source: Zacks Investment Research
An intense competition and customer concentration are concerning.
Zacks Rank and Stocks to Consider
Cardinal Health carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Ecolab (ECL - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2 (Buy) at present, reported first-quarter 2024 adjusted earnings per share (EPS) of $2.14, which beat the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.5%.
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Cardinal Health (CAH) Beats on Q3 Earnings, Ups '24 EPS View
Cardinal Health, Inc. (CAH - Free Report) reported third-quarter fiscal 2024 adjusted earnings per share (EPS) of $2.08, which beat the Zacks Consensus Estimate of $1.95 by 6.7%. The bottom line also improved 20% year over year.
GAAP EPS in the quarter was $1.05 compared with $1.34 in the year-ago period.
Revenue Details
Sales improved 9% on a year-over-year basis to $54.9 billion. However, the top line missed the Zacks Consensus Estimate by 1.6%.
Segmental Analysis
Pharmaceutical and Specialty Solutions Segment
In the reported quarter, pharmaceutical revenues increased 9% to $50.7 billion on a year-over-year basis. The performance highlights branded pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.
Pharmaceutical profit totaled $580 million, up 4% from the year-ago quarter’s level. The upside was driven by generics program performance.
Global Medical Products and Distribution Segment
Revenues in this segment totaled $3.1 billion, up 4% year over year, driven by growth volume from existing customers.
The segment reported a profit of $20 million against a loss of $46 million in the year-ago quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives.
Other
This segment includes three operating segments: at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics. Sales totaled $1.2 billion in the quarter, up 14% year over year.
The segment’s profit amounted to $111 million, up 5% from the year-ago quarter’s level. The upside was driven by robust performance in OptiFreight Logistics.
Cardinal Health, Inc. Price, Consensus and EPS Surprise
Cardinal Health, Inc. price-consensus-eps-surprise-chart | Cardinal Health, Inc. Quote
Margin Analysis
Gross profit increased 9.1% year over year to $1.95 billion.
As a percentage of revenues, the gross margin in the reported quarter was 3.5%, almost flat on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.28 billion, up 8.7% year over year.
Operating income amounted to $367 million compared with $572 million in the year-ago quarter. However, adjusted operating income increased 10% year over year to $666 million.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $3.72 billion compared with $4.59 billion in the fiscal second quarter of 2024.
Cumulative net cash used in operating activities totaled $49 million against cumulative net cash provided by operating activities of $1.36 billion in the year-ago period.
2024 EPS View Raised
Cardinal Health raised its fiscal 2024 guidance for earnings. The company now anticipates adjusted EPS between $7.30 and $7.40, up from the previous guidance of $7.20-$7.35. The Zacks Consensus Estimate for the same is pegged at $7.28.
The company continues to expect revenues from its Pharmaceutical segment to grow 10-12%. Segmental profit is likely to increase 8.5-9.5%, up from the previous guidance of 7-9%.
Revenues from the Medical segment are estimated to grow 2%. Segmental profit is expected to be $65 million in the quarter.
The company also provided a preliminary guidance for fiscal 2025. It expects adjusted EPS to be at least $7.50 for the period. Segmental profit is estimated to grow at least 1% in the Pharmaceutical and Specialty Solutions segment and nearly $175 million in the Global Medical Products and Distribution segment. This metric for the Other segment is likely to grow nearly 10%.
Conclusion
Cardinal Health exited the fiscal third quarter on a mixed note. While its earnings beat the Zacks Consensus Estimate, revenues missed the same. However, the company witnessed year-over-year revenue growth across all its sectors.
Shares of the company were down 1.4% in pre-market trading following mixed results. The company’s shares have risen 11% year to date compared with the industry’s growth of 7.3%. The broader S&P 500 Index has moved up 10.1% in the same period.
Image Source: Zacks Investment Research
An intense competition and customer concentration are concerning.
Zacks Rank and Stocks to Consider
Cardinal Health carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Ecolab (ECL - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2 (Buy) at present, reported first-quarter 2024 adjusted earnings per share (EPS) of $2.14, which beat the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.5%.