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Cardinal Health (CAH) Q3 Earnings Beat Estimates, Rise Y/Y

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Cardinal Health Inc. (CAH - Free Report) reported third-quarter fiscal 2017 adjusted earnings of $1.53 per share, which beat the Zacks Consensus Estimate of $1.46 and increased 7% on a year-over-year basis.

Revenues increased 4% on a year-over-year basis to $31.8 billion. The figure, however, came below the Zacks Consensus Estimate of $32.5 billion.

Stock Performance

In the last three months, the stock lost 2.57%, underperforming the Zacks classified Medical - Dental Supplies sub-industry’s gain of almost 6.55%. Also, the current level compares unfavorably with the S&P 500’s return of 5.42% over the same time frame.

However, a long-term expected earnings growth rate of 7.43% instills confidence in investors.
 

 

Quarter Details

Pharmaceutical revenues increased 3% to $28.4 billion due to strong growth from net new and existing distribution customers. Strong performance by the Specialty business also drove results.

Medical segment revenues increased 9% to $3.4 billion primarily due to higher contribution from net new and existing customers.
 
Pharmaceutical segment profit in the quarter decreased 7% to $611 million due to generic pharmaceutical pricing and the loss of a large Pharmaceutical Distribution customer. This was partially offset by solid performance by Red Oak Sourcing.

Medical segment profit soared 16% to $148 million due to higher contribution from Cardinal Health Brand products and distribution services.  
Distribution, selling, general and administrative (SG&A) expenses increased 5% on a year-over-year basis to $960 million in the reported quarter. Net income declined 1% to $381 million from year-ago quarterly number of $386 million.

Financial Condition

Cash and cash equivalents were $1.39 billion as of Mar 31, 2017 compared with $2.36 billion as of Jun 30, 2016. Long-term debt was $4.85 billion as of Mar 31, 2017 compared with the Jun 30, 2016 level of $4.95 billion.

Guidance

The company reaffirmed fiscal 2017 guidance range for adjusted earnings per share from continuing operations of $5.35–$5.50. The outlook represents growth of approximately 2–5% from the prior fiscal year.

Cardinal Health, Inc. Price, Consensus and EPS Surprise

 

Cardinal Health, Inc. Price, Consensus and EPS Surprise | Cardinal Health, Inc. Quote

Zacks Rank & Stocks to Consider

Currently, Cardinal Health carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , Hologic, Inc. (HOLX - Free Report) and Sunshine Heart Inc . Notably, all the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 17.50%. The stock represents an impressive one-year return of 66.7%.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 31.5%.

Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock recorded a stellar EPS growth rate (last 3–5 years of actual earnings) of almost 22%.

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