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Cardinal Health (CAH) Q4 Earnings Lag, Revenues Top Estimates

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Cardinal Health, Inc. (CAH - Free Report) reported fourth-quarter fiscal 2021 adjusted earnings of 77 cents per share (EPS), which lagged the Zacks Consensus Estimate of $1.18 by 34.8%. The bottom line declined 25.9% year over year.

GAAP EPS in the quarter was 40 cents, compared with year-ago quarter’s figure of $2.23.

For fiscal 2021 the company reported adjusted EPS of $5.57, up 2.25 from the previous year. The metric missed the consensus mark by 6.7%.

Revenue Details

Revenues improved 16.1% on a year-over-year basis to $42.59 billion. The top line outpaced the Zacks Consensus Estimate by 6.6%.

For fiscal 2021, revenues were $162.45 billion, up 6.2% from fiscal 2020. The figure beat the consensus mark by 1.7%.

Segmental Analysis

Pharmaceutical Segment

In the fiscal fourth quarter, pharmaceutical revenues amounted to $38.34 billion, up 15.4% on a year-over-year basis. The performance highlights growth in sales from Pharmaceutical Distribution and Specialty Solutions customers. The upside includes the favorable prior-year comparison from lower pharmaceutical demand associated with COVID-19.

Pharmaceutical profit was $358 million, flat on a year-over-year basis. The upside was driven by COVID-19 related rebound in volume in the Nuclear and Precision Health Solutions business. This was offset by the negative impact of Pharmaceutical Distribution customer contract renewals.

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

Medical Segment

In the quarter under review, revenues at this segment increased 22.9% to $4.25 billion attributable to a rebound in elective procedure volumes and positive pricing impact of personal protective equipment (PPE). Net positive impact from COVID-19 on products and distribution also contributed to the upside.

The company reported a loss of 63 million at the Medical segment, against the year-ago quarter’s profit of $120 million. An adverse impact from the pandemic was behind the loss.

Margin Analysis

Gross profit fell 7.2% year over year to $1.48 billion.

As a percentage of revenues, gross margin in the reported quarter was 3.5%, down 80 basis points (bps) on a year-over-year basis.

Distribution, selling, general and administrative expenses totaled $1.13 billion, down 0.7% year over year.

The company reported operating income of $162 million in the quarter under review, down 40% from the prior-year quarter. As a percentage of revenues, operating margin in the reported quarter was 0.4%, down 30 bps from the year-ago quarter.

Financial Update

The company exited the quarter with cash and cash equivalents of $3.41 billion, compared with $3.49 billion on a sequential basis.

Net cash from operating activities totaled $665 million at end of the fiscal fourth quarter, compared with $240 million in the year-ago quarter.

2022 Guidance

Cardinal Health issued its fiscal 2022 outlook. The company anticipates adjusted earnings per share between $5.60 and $5.90. The Zacks Consensus Estimate is pegged at $6.15 per share.

Conclusion

Cardinal Health exited the fiscal fourth quarter on a mixed note, wherein earnings lagged the consensus mark but revenues beat the same. The company witnessed revenue growth in both its Pharmaceutical and Medical segments in the quarter under review.

Amendment of agreement, divestments and successful negotiation of a comprehensive proposed settlement are primary highlights in the quarter under review.

However, intense competition and customer concentration are other concerns. Loss reported at the Medical segment is concerning. Contraction in both gross and operating margins 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 Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Hill-Rom Holdings, Inc. . While Encompass Health sports a Zacks Rank #1 (Strong Buy), both West Pharmaceutical and Hill-Rom carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Encompass Health reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

Hill-Rom reported third-quarter fiscal 2021 adjusted EPS of $1.38, which beat the Zacks Consensus Estimate by 2.9%. Fiscal third-quarter revenues of $717.7 million outpaced the consensus mark by 1.6%.


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