Back to top

Image: Bigstock

Cardinal Health (CAH) Q1 Earnings Lag, Revenues Top Estimates

Read MoreHide Full Article

Cardinal Health, Inc. (CAH - Free Report) reported first-quarter fiscal 2022 adjusted earnings of $1.29 per share (EPS), which lagged the Zacks Consensus Estimate of $1.32 by 2.3%. The bottom line declined 14.6% year over year.

GAAP EPS in the quarter was 94 cents, against the year-ago quarter’s loss of 86 cents.

Revenue Details

Revenues improved 12.6% on a year-over-year basis to $43.97 billion. The top line outpaced the Zacks Consensus Estimate by 5.3%.

Segmental Analysis

Pharmaceutical Segment

In the fiscal first quarter, pharmaceutical revenues amounted to $39.82 billion, up 13.4% on a year-over-year basis. The performance highlights growth in sales from Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical profit was $406 million, up 1% on a year-over-year basis. The upside was driven by improved volumes in comparison to the prior year, which were negatively impacted by the pandemic. This improvement was largely offset by investments in technology enhancements.

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 4.9% to $4.15 billion attributable to personal protective equipment (PPE) sales. The divestiture of the Cordis business, however, partially offset the upside.

The company reported a profit of $123 million at the Medical segment, which declined 46% from the year-ago quarter mainly due to higher supply chain costs.

Margin Analysis

Gross profit fell 4.3% year over year to $1.64 billion.

As a percentage of revenues, gross margin in the reported quarter was 3.7%, down 70 basis points (bps) on a year-over-year basis.

Distribution, selling, general and administrative expenses totaled $1.11 billion, down 2% year over year.

The company reported operating income of $415 million in the quarter under review, against the year-ago quarter’s loss of $624 million.

Financial Update

The company exited the first quarter with cash and cash equivalents of $2.46 billion, compared with $3.41 billion on a sequential basis.

Net cash used in operating activities totaled $646 million at the end of the fiscal first quarter, compared with net cash provided of $270 million in the year-ago quarter.

2022 Guidance Reiterated

Cardinal Health reaffirmed its fiscal 2022 outlook. The company anticipates adjusted earnings per share between $5.60 and $5.90. The Zacks Consensus Estimate is pegged at $5.73 per share.

Conclusion

Cardinal Health exited the fiscal first 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. The approval of an additional $3 billion share repurchase authorization is encouraging.

Announcement and extension of agreements along with meaningful collaborations are primary highlights in the quarter under review.

However, intense competition and customer concentration are other concerns. Year-over-year decline in profit at the Medical segment is disappointing. Contraction in gross margin is a woe.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some other better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) , and AngioDynamics, Inc. (ANGO - Free Report) . While both Thermo Fisher and West Pharmaceutical carry a Zacks Rank of 2 (Buy), AngioDynamics sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%.

West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%.

AngioDynamics reported first-quarter fiscal 2022 loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%.