U.S. Markets closed

Cardinal Health (CAH) Q4 Earnings and Revenues Top Estimates

Zacks Equity Research

Cardinal Health, Inc. CAH delivered fourth-quarter fiscal 2019 adjusted earnings of $1.11 per share, which surpassed the Zacks Consensus Estimate of 93 cents by 19.4%. Further, the reported figure improved 9.9% year over year.

Revenues increased 5.7% on a year-over-year basis to $37.35 billion and beat the Zacks Consensus Estimate by 1.2%.

FY19 at a Glance

For fiscal 2019, the company reported adjusted earnings of $5.28 per share, up 5.6% from the year-ago period. The metric exceeded the Zacks Consensus Estimate of $5.10 per share.

Revenues totaled $145.53 billion, up 6.4% year over year, which beat the Zacks Consensus Estimate of $144.72 billion.

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

Segmental Analysis

Pharmaceutical Segment

In the fiscal fourth quarter, pharmaceutical revenues improved 6.2% to $33.40 billion on a year-over-year basis. The upside can be attributed to sales growth from Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical witnessed an improvement of 7.5% in profits to $447 million owing to a positive impact from Specialty Solutions, and higher contribution from brand sales and mix. However, the company’s generic performance partially offset the upside.

Medical Segment

In the quarter under review, revenues at this segment rose 1.5% to $3.96 billion on account of growth from existing customers. However, divestiture of the naviHealth business partially offset the upside.

Medical segment profit declined 14.9% to $97 million owing to the performance of Cardinal Health Brand products. The benefits from cost savings initiatives mitigated the downside.

Margin Analysis

Gross profit fell 3.5% year over year to $1.67 billion.

As a percentage of revenues, gross margin in the quarter was 4.5%, down 40 bps on a year-over-year basis.

Distribution, selling, general and administrative expenses totaled $1.17 billion, down 8% year over year. Adjusted operating income totaled $507 million, up 9% from the year-ago quarter.

The company reported operating income of $307 million in the quarter under review, against the year-ago quarter’s loss of $1.08 billion.

Financial Update

As of Jun 30, 2019, cash and cash equivalents amounted to $2.53 billion, surging 43.6% from the 2018-end level.

Cash from operating activities totaled $506 million, down 8.7% from the year-ago quarter.

Fiscal 2020 Guidance

The company estimates adjusted earnings per share to range between $4.85 and $5.10. The mid-point of the latest guidance range of $4.98 lags the Zacks Consensus Estimate of $5.16.

It is important to note here that abovementioned guidance includes an expected incremental $130 million in cost savings associated with actions intended to optimize and simplify the company's operating model and cost structure.

In Conclusion

Cardinal Health exited the fiscal fourth quarter on a strong note, wherein both earnings and revenues outpaced the consensus mark. The Pharmaceutical segment witnessed solid growth in Pharmaceutical Distribution and Specialty Solutions customers. These apart, the company’s extension of agreements with CVS Health, collaboration with PANTHERx Specialty Pharmacy and buyout of mscripts raise optimism.

Nevertheless, profits in the Medical segment were hurt by the performance of the Cardinal Health Brand products. Further, huge investments in Pharmaceutical IT platform and lackluster generics performance are likely to mar Cardinal Health’s operational efficiencies in the upcoming quarters. Intense competition and customer concentration are other bottlenecks.

Zacks Rank

Currently, Cardinal Health carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks which posted solid results this earning season are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG.

Stryker delivered third-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter delivered third-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company carries a Zacks Rank #2.

Intuitive Surgical reported third-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>


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
 
Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report
 
Stryker Corporation (SYK) : Free Stock Analysis Report
 
Baxter International Inc. (BAX) : Free Stock Analysis Report
 
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.