Cardinal Health, Inc. (CAH - Free Report) reported third-quarter fiscal 2021 adjusted earnings of $1.53 per share (EPS), which lagged the Zacks Consensus Estimate of $1.58 by 3.2%. The bottom line also declined 5.6% year over year.
Revenue Details
Revenues improved 0.3% on a year-over-year basis to $39.28 billion. However, the top line missed the Zacks Consensus Estimate by 1.8%.
Segmental Analysis
Pharmaceutical Segment
In the fiscal third quarter, pharmaceutical revenues amounted to $35.10 billion, flat on a year-over-year basis. The performance highlights growth in sales from Pharmaceutical Distribution and Specialty Solutions customers with respect to the current period versus the unfavorable year-over-year comparison of the COVID-19-related acceleration in overall pharmaceutical sales.
Pharmaceutical witnessed a decline of 4.3% in profits to $511 million due to decrease in volume on account of the COVID-19 impact in the generics program. However, increase in contribution from brand sales mix partially offset the downside.
Medical Segment
In the quarter under review, revenues at this segment increased 3% to $4.17 billion attributable to higher sales from personal protective equipment (PPE) and increase in volumes in its lab business. Also, net positive impact from COVID-19 on products and distribution contributed to the upside.
Medical segment profit fell 2.2% to $174 million, due to benefits from cost savings that include global manufacturing efficiencies.
Margin Analysis
Gross profit fell 3.9% year over year to $1.81 billion.
As a percentage of revenues, gross margin in the reported quarter was 4.6%, down 20 basis points (bps) on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.12 billion, down 3.9% year over year.
The company reported operating income of $473 million in the quarter under review, down 15.8% from the prior-year quarter. As a percentage of revenues, operating margin in the reported quarter was 1.2%, down 20 bps from the year-ago quarter.
Financial Update
The company exited the quarter with cash and cash equivalents of $3.49 billion, compared with $3.74 billion on a sequential basis.
Net cash from operating activities totaled $277 million at end of the fiscal third quarter, compared with $1.68 billion in the year-ago quarter.
2021 Guidance Updated
Cardinal Health narrowed its fiscal 2021 outlook range. The company anticipates adjusted earnings per share between $5.90 and $6.05 (compared to the previously guided range of $5.85-$6.10). The Zacks Consensus Estimate is pegged at $6.03 per share.
Conclusion
Cardinal Health exited the fiscal third quarter on a weak note, wherein both earnings and revenues lagged the consensus mark. The company witnessed revenue growth in its Medical segment in the quarter under review.
Notably, introduction of a new suite of technology solutions, partnerships, divestment and increase in the company’s quarterly dividend are primary highlights.
However, intense competition and customer concentration are other concerns. The company witnessed a decline in profit with respect to both Pharmaceutical and Medical segments in the quarter under review, which is a woe.
Zacks Rank
Currently, Cardinal Health carries a Zacks Rank #3 (Hold).
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Integer Holdings Corporation (ITGR - Free Report) , Boston Scientific Corporation (BSX - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Integer Holdings reported first-quarter 2021 adjusted EPS of 97 cents, which surpassed the Zacks Consensus Estimate by 12.8%. First-quarter revenues of $290.5 million outpaced the Zacks Consensus Estimate by 2.6%.
Boston Scientific reported first-quarter 2020 adjusted EPS of 37 cents, which beat the Zacks Consensus Estimate by 32.1%. First-quarter revenues of $2.75 billion outpaced the consensus mark by 5.3%.
HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%.
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Cardinal Health, Inc. (CAH - Free Report) reported third-quarter fiscal 2021 adjusted earnings of $1.53 per share (EPS), which lagged the Zacks Consensus Estimate of $1.58 by 3.2%. The bottom line also declined 5.6% year over year.
Revenue Details
Revenues improved 0.3% on a year-over-year basis to $39.28 billion. However, the top line missed the Zacks Consensus Estimate by 1.8%.
Segmental Analysis
Pharmaceutical Segment
In the fiscal third quarter, pharmaceutical revenues amounted to $35.10 billion, flat on a year-over-year basis. The performance highlights growth in sales from Pharmaceutical Distribution and Specialty Solutions customers with respect to the current period versus the unfavorable year-over-year comparison of the COVID-19-related acceleration in overall pharmaceutical sales.
Pharmaceutical witnessed a decline of 4.3% in profits to $511 million due to decrease in volume on account of the COVID-19 impact in the generics program. However, increase in contribution from brand sales mix partially offset the downside.
Medical Segment
In the quarter under review, revenues at this segment increased 3% to $4.17 billion attributable to higher sales from personal protective equipment (PPE) and increase in volumes in its lab business. Also, net positive impact from COVID-19 on products and distribution contributed to the upside.
Medical segment profit fell 2.2% to $174 million, due to benefits from cost savings that include global manufacturing efficiencies.
Margin Analysis
Gross profit fell 3.9% year over year to $1.81 billion.
As a percentage of revenues, gross margin in the reported quarter was 4.6%, down 20 basis points (bps) on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.12 billion, down 3.9% year over year.
The company reported operating income of $473 million in the quarter under review, down 15.8% from the prior-year quarter. As a percentage of revenues, operating margin in the reported quarter was 1.2%, down 20 bps from the year-ago quarter.
Financial Update
The company exited the quarter with cash and cash equivalents of $3.49 billion, compared with $3.74 billion on a sequential basis.
Net cash from operating activities totaled $277 million at end of the fiscal third quarter, compared with $1.68 billion in the year-ago quarter.
2021 Guidance Updated
Cardinal Health narrowed its fiscal 2021 outlook range. The company anticipates adjusted earnings per share between $5.90 and $6.05 (compared to the previously guided range of $5.85-$6.10). The Zacks Consensus Estimate is pegged at $6.03 per share.
Conclusion
Cardinal Health exited the fiscal third quarter on a weak note, wherein both earnings and revenues lagged the consensus mark. The company witnessed revenue growth in its Medical segment in the quarter under review.
Notably, introduction of a new suite of technology solutions, partnerships, divestment and increase in the company’s quarterly dividend are primary highlights.
However, intense competition and customer concentration are other concerns. The company witnessed a decline in profit with respect to both Pharmaceutical and Medical segments in the quarter under review, which is a woe.
Zacks Rank
Currently, Cardinal Health carries a Zacks Rank #3 (Hold).
Earnings of Other MedTech Majors at a Glance
Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Integer Holdings Corporation (ITGR - Free Report) , Boston Scientific Corporation (BSX - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Integer Holdings reported first-quarter 2021 adjusted EPS of 97 cents, which surpassed the Zacks Consensus Estimate by 12.8%. First-quarter revenues of $290.5 million outpaced the Zacks Consensus Estimate by 2.6%.
Boston Scientific reported first-quarter 2020 adjusted EPS of 37 cents, which beat the Zacks Consensus Estimate by 32.1%. First-quarter revenues of $2.75 billion outpaced the consensus mark by 5.3%.
HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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