Cardinal Health (CAH) Beats on Q4 Earnings, Ups '24 EPS View
Cardinal Health, Inc. CAH reported fiscal fourth-quarter 2023 adjusted earnings of $1.55 per share (EPS), beating the Zacks Consensus Estimate of $1.48 by 4.7%. The bottom line also improved 48% year over year.
GAAP loss per share in the quarter was 25 cents against the year-ago quarter’s earnings per share of 50 cents per share. The significant decline in GAAP earnings was led by a goodwill impairment charge of $368 million in the Medical segment.
Revenue Details
Sales improved 13% on a year-over-year basis to $53.5 billion. The top line also outpaced the Zacks Consensus Estimate by 2%.
Segmental Analysis
Pharmaceutical Segment
In the reported quarter, pharmaceutical revenues increased 15% to $49.7 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 $504 million, up 12% from the year-ago quarter’s level. The upside was driven by generics program performance.
Medical Segment
Revenues in this segment were $3.8 billion, flat year over year, as lower PPE volumes and pricing were completely offset by at-home Solutions growth.
The segment reported a profit of $82 million against a loss of $16 million in the year-ago quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives and normalization of PPE margins.
Margin Analysis
Gross profit increased 13% year over year to $1.83 billion.
As a percentage of revenues, the gross margin in the reported quarter was 3.5%, almost flat on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.27 billion, up 9.7% from that recorded in the comparable period of 2022.
Operating income came in at $137 million compared with the year-ago quarter’s operating income of $36 million.
Fiscal 2023 Results
For the full year, Cardinal Health’s revenues were up 13% at $205 billion. Adjusted EPS improved 14% to $5.79.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $4.04 billion compared with $3.99 billion in the fiscal third quarter of 2023.
Cumulative net cash provided by operating activities totaled $858 million compared with $2.99 billion in the year-ago period.
2024 Guidance Raised
Cardinal Health raised its fiscal 2024 guidance for earnings. The company anticipates adjusted EPS between $6.50 and $6.75, up from the previous guidance of $6.45-$6.70. The Zacks Consensus Estimate for the same is pegged at $5.73 per share.
CAH also raised its Pharmaceutical segment revenue guidance for fiscal 2024. The company expects revenues to grow by 10-12 %. It reiterated the Pharmaceutical segment’s profit outlook at 4-6% growth.
The company expects Medical segment sales to grow by nearly 3% and segment profit of almost $400 million.
Cardinal Health, Inc. Price, Consensus and EPS Surprise
Cardinal Health, Inc. price-consensus-eps-surprise-chart | Cardinal Health, Inc. Quote
Conclusion
Cardinal Health exited the fiscal fourth 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 Other Key Picks
Cardinal Health carries a Zacks Rank #2 (Buy) at present.
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Align Technology ALGN, McKesson MCK and West Pharmaceutical Services WST.
Align Technology, carrying a Zacks Rank of 2 at present, reported second-quarter 2023 adjusted EPS of $1.73, which beat the Zacks Consensus Estimate by 5.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Revenues of $1.73 billion outpaced the consensus mark by 5.5%.
Inari Medical has an estimated growth rate of 16.8% for revenues in 2024. NARI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 66.8%.
McKesson reported first-quarter fiscal 2024 adjusted EPS of $7.27, which beat the Zacks Consensus Estimate by 1.4%. Revenues of $74.48 billion surpassed the Zacks Consensus Estimate by 6.6%. The company currently carries a Zacks Rank #2.
MCK has a long-term estimated growth rate of 10.7%. Its earnings surpassed estimates in three of the trailing four quarters and missed the same once, delivering an average surprise of 8.1%.
West Pharmaceutical Services reported second-quarter 2023 adjusted EPS of $2.11, which beat the Zacks Consensus Estimate by 8.2%. Revenues of $754 million surpassed the consensus mark by 0.2%. The company currently carries a Zacks Rank #2.
WST has a long-term estimated growth rate of 4.6%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 12.47%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
McKesson Corporation (MCK) : Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
