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Cardinal Health (CAH) Beats on Q2 Earnings, Ups '24 EPS View
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Cardinal Health, Inc. (CAH - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of $1.82, which beat the Zacks Consensus Estimate of $1.56 by 16.7%. The bottom line also improved 38% year over year.
GAAP EPS in the quarter was $1.43 against the year-ago period’s reported loss of 50 cents per share.
Revenue Details
Sales improved 11.6% on a year-over-year basis to $57.45 billion. The top line also outpaced the Zacks Consensus Estimate by 1.1%.
Segmental Analysis
Pharmaceutical Segment
In the reported quarter, pharmaceutical revenues increased 12.3% to $53.52 billion on a year-over-year basis. The performance highlights branded pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.
Pharmaceutical profit totaled $518 million, up 11.6% from the year-ago quarter’s level. The upside was driven by generics program performance and higher contributions from brand and specialty products.
Medical Segment
Revenues in this segment totaled $3.93 billion, up 3.5% year over year, driven by growth in at-Home Solutions, and Global Medical Products and Distribution.
The segment reported a profit of $71 million compared with $17 million in the year-ago quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives.
Cardinal Health, Inc. Price, Consensus and EPS Surprise
Gross profit increased 11% year over year to $1.85 billion.
As a percentage of revenues, the gross margin in the reported quarter was 3.2135%, almost flat on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.28 billion, up 8% year over year.
Operating income amounted to $482 million against the year-ago quarter’s operating loss of $119 million. The company recorded impairments and loss on disposal of assets of $1 million compared with $710 million in the prior-year quarter, which led to a loss in the same time frame.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $4.59 billion compared with $3.85 billion in the fiscal first quarter of 2024.
Cumulative net cash provided by operating activities totaled $1.19 billion compared with $597 million in the year-ago period.
2024 EPS View Raised
Cardinal Health raised its fiscal 2024 guidance for earnings. The company now anticipates adjusted EPS between $7.20 and $7.35, up from the previous guidance of $6.75-$7.00. The Zacks Consensus Estimate for the same is pegged at $6.91.
The company expects revenues for its Pharmaceutical Segment, excluding Nuclear and Precision Health Solutions, to grow 10-12%. Segment profit is likely to increase 7-9%.
Revenues for the Medical Segment, excluding at-Home Solutions and OptiFreight Logistics, are estimated to grow nearly 2%. Segment profit is expected to be $65 million.
Conclusion
Cardinal Health exited the fiscal second quarter on a strong note with better-than-expected earnings and revenues. The company also witnessed revenue growth in its Pharmaceutical segment. Recovery in the Medical segment is encouraging.
However, intense competition and customer concentration are concerning.
Zacks Rank and Stocks to Consider
Cardinal Health carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks to consider in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Acadia Healthcare (ACHC - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. UHS’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’s shares have risen 1.9% in the past six months against the industry’s 5% decline.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 43.5% in the past year against the industry’s 3.7% decline.
Acadia Healthcare, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.4%. ACHC’s long-term earnings growth rate is 11.2%.
Acadia’s shares have risen 11.7% in the past six months against the industry’s decline of 5%.
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Cardinal Health (CAH) Beats on Q2 Earnings, Ups '24 EPS View
Cardinal Health, Inc. (CAH - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of $1.82, which beat the Zacks Consensus Estimate of $1.56 by 16.7%. The bottom line also improved 38% year over year.
GAAP EPS in the quarter was $1.43 against the year-ago period’s reported loss of 50 cents per share.
Revenue Details
Sales improved 11.6% on a year-over-year basis to $57.45 billion. The top line also outpaced the Zacks Consensus Estimate by 1.1%.
Segmental Analysis
Pharmaceutical Segment
In the reported quarter, pharmaceutical revenues increased 12.3% to $53.52 billion on a year-over-year basis. The performance highlights branded pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.
Pharmaceutical profit totaled $518 million, up 11.6% from the year-ago quarter’s level. The upside was driven by generics program performance and higher contributions from brand and specialty products.
Medical Segment
Revenues in this segment totaled $3.93 billion, up 3.5% year over year, driven by growth in at-Home Solutions, and Global Medical Products and Distribution.
The segment reported a profit of $71 million compared with $17 million in the year-ago quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives.
Cardinal Health, Inc. Price, Consensus and EPS Surprise
Cardinal Health, Inc. price-consensus-eps-surprise-chart | Cardinal Health, Inc. Quote
Margin Analysis
Gross profit increased 11% year over year to $1.85 billion.
As a percentage of revenues, the gross margin in the reported quarter was 3.2135%, almost flat on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.28 billion, up 8% year over year.
Operating income amounted to $482 million against the year-ago quarter’s operating loss of $119 million. The company recorded impairments and loss on disposal of assets of $1 million compared with $710 million in the prior-year quarter, which led to a loss in the same time frame.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $4.59 billion compared with $3.85 billion in the fiscal first quarter of 2024.
Cumulative net cash provided by operating activities totaled $1.19 billion compared with $597 million in the year-ago period.
2024 EPS View Raised
Cardinal Health raised its fiscal 2024 guidance for earnings. The company now anticipates adjusted EPS between $7.20 and $7.35, up from the previous guidance of $6.75-$7.00. The Zacks Consensus Estimate for the same is pegged at $6.91.
The company expects revenues for its Pharmaceutical Segment, excluding Nuclear and Precision Health Solutions, to grow 10-12%. Segment profit is likely to increase 7-9%.
Revenues for the Medical Segment, excluding at-Home Solutions and OptiFreight Logistics, are estimated to grow nearly 2%. Segment profit is expected to be $65 million.
Conclusion
Cardinal Health exited the fiscal second quarter on a strong note with better-than-expected earnings and revenues. The company also witnessed revenue growth in its Pharmaceutical segment. Recovery in the Medical segment is encouraging.
However, intense competition and customer concentration are concerning.
Zacks Rank and Stocks to Consider
Cardinal Health carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks to consider in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Acadia Healthcare (ACHC - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. UHS’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’s shares have risen 1.9% in the past six months against the industry’s 5% decline.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 43.5% in the past year against the industry’s 3.7% decline.
Acadia Healthcare, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.4%. ACHC’s long-term earnings growth rate is 11.2%.
Acadia’s shares have risen 11.7% in the past six months against the industry’s decline of 5%.