Cardinal Eclipses Zacks Estimate

Cardinal Health (CAH) reported fiscal first-quarter earnings per share of 54 cents, surpassing the Zacks Consensus Estimate of 43 cents and the year-ago earnings of 47 cents.
 
Sales
 
Total sales in the reported quarter increased 6% year over year to $24.8 billion. Growth was witnessed across all the business segments.
 
Pharmaceutical segment revenues increased 5% year over year to $22.6 billion. Growth was primarily due to higher sales to existing pharmaceutical distribution customers. Sales to bulk customers increased 6% year over year to $11.3 billion. Sales to non-bulk customers increased 5% year over year to $11.2 billion.
 
Medical segment revenues increased 10% year over year to $2.2 billion. Growth can be primarily attributed to higher sales to existing customers. In addition, the CareFusion Corp. (CFN) spin-off has resulted in immediate revenue recognition from international sales to CareFusion.
 
Margins
 
Cardinal Health registered a minimal contraction in margins. Gross margin declined 10 basis points (bps) year over year to 3.7%. Distribution, selling, general and administrative expenses as a percentage of sales declined 10 bps year over year to 2.4%. Operating margin declined 20 bps year over year to 1.0%.
 
Balance Sheet & Cash Flow
 
Cardinal Health ended the reported quarter with cash and cash equivalents of roughly $1.6 billion, an increase of 30% sequentially. Cash flow from operations was $0.4 billion.
 
Guidance
 
Cardinal Health expects earnings per share to be at the higher end of its prior guidance of $1.90 to $2.
 
Cardinal Health is one of the largest global healthcare companies that helps pharmacies, hospitals and ambulatory care sites to focus on low-cost patient care. The company is also a leading manufacturer of medical and surgical products. The company recently completed the spin-off of its Clinical and Medical Products business to form a subsidiary, CareFusion Corporation. The spin-off was completed through a pro rata distribution of roughly 81% of CareFusion’s common stock.

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