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Cardinal Health (CAH) Q3 Earnings & Revenues Miss Estimates

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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.

Cardinal Health, Inc. Price, Consensus and EPS Surprise

Cardinal Health, Inc. Price, Consensus and EPS Surprise

Cardinal Health, Inc. price-consensus-eps-surprise-chart | Cardinal Health, Inc. Quote

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.


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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