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Cardinal Health (CAH) to Post Q3 Earnings: What's in Store?

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Cardinal Health, Inc. (CAH - Free Report) is scheduled to report third-quarter fiscal 2022 results on May 5, before the opening bell.

In the last reported quarter, the company delivered an earnings surprise of 3.3%. Its earnings beat the Zacks Consensus Estimate in one of the trailing four quarters and missed thrice, the average negative earnings surprise being 9.2%.

Q3 Estimates

For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.54 per share, indicating an improvement of 0.7% from the prior-year quarter. The same for revenues stands at $43 billion, suggesting growth of 9.5% from the year-ago reported figure.

Factors to Note

Cardinal Health's Pharmaceutical segment is the second-largest pharmaceutical distributor in the United States. In the second quarter of fiscal 2022, pharmaceutical revenues amounted to $41.38 billion, up 11% on a year-over-year basis. The performance reflects branded pharmaceutical sales growth from Pharmaceutical Distribution and Specialty Solutions customers. This momentum is likely to have continued in the fiscal third quarter.

Per the fiscal second-quarter 2022 earnings call, management continues to anticipate a recovery in generic volumes to pre-COVID levels by the end of the calendar year. During the last reported quarter, the segment witnessed double-digit contributions from its growth businesses — Specialty, Nuclear and Outcomes. The company's to-be-reported quarter's results are likely to have gained from this trend.

Per the fiscal second-quarter 2022 earnings release, Cardinal Health collaborated with Ember Technologies to offer a cold chain solution that ensures product integrity and security across the supply chain while substantially lowering shipping waste in the transport of temperature-sensitive medicines.

Cardinal Health, Inc. Price and EPS Surprise

Cardinal Health, Inc. Price and EPS Surprise

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

In November 2021, the company partnered with Zipline to provide on-demand autonomous aircraft delivery to pharmacies. Through this collaboration, Cardinal Health will utilize Zipline's service for on-demand replenishment of pharmaceutical and medical products to retail pharmacy locations. The operation is likely to aid in mitigating the risk of inventory stock-outs for certain products and offer customers the right products at the right time for their patients.

During the fiscal first quarter of 2022, Cardinal Health collaborated with TerraPower to help develop and produce Actinium-225, which will be utilized in drug trials involving targeted alpha therapy for diseases such as breast, prostate, colon and neuroendocrine cancers, melanoma and lymphoma.

These developments are likely to have favored the company's fiscal third-quarter performance.

It is worth mentioning here that in the fiscal second quarter, Cardinal Health's Medical segment displayed considerable weakness. The company reported a profit of $50 million in the Medical segment, which plunged 79% from the year-ago quarter primarily due to inflationary impacts and global supply chain restrictions in products and distribution. The deterioration represented the timing of selling higher-cost personal protective equipment (PPE), including the net positive impact in the prior year, and to a smaller extent, the divestiture of the Cordis business. This weakness is likely to have persisted in the to-be-reported quarter.

Here's What the Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Cardinal Health has an Earnings ESP of -1.82%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Vertex Pharmaceuticals Incorporated (VRTX - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here.

Vertex Pharmaceutical's long-term earnings growth rate is estimated at 11.5%. The company's earnings yield of 5.3% compares favorably with the industry's (31.5%).

Haemonetics Corporation (HAE - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank of 3.

Haemonetics' long-term earnings growth rate is estimated at 10%. The company's earnings yield of 5.5% compares favorably with the industry's 0.9%.

Meridian Bioscience, Inc. (VIVO - Free Report) has an Earnings ESP of +26.32% and a Zacks Rank of 2.

Meridian Bioscience's historical earnings growth rate stands at 16.3%. The company's earnings yield of 5.4% compares favorably with the industry's 0.9%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.