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Cardinal Health's (CAH) New Tie-Up to Boost Patient Outcomes

Cardinal Health, Inc. CAH recently announced its collaboration with Signify Health, Inc. SGFY. The partnership is expected to offer in-home clinical and medication management services via Cardinal Health’s Outcomes business.

The collaboration will initially focus on addressing interventions recommended for Medicare Advantage members of joint clients and may expand into additional services (such as population health programs) and clinical interventions.

The latest tie-up is expected to significantly strengthen Cardinal Health's medication therapy management services, which is a component of its broader Pharmaceutical segment, on a national scale.

Rationale Behind the Collaboration

Per Cardinal Health, studies have shown that many members do not take their medications as prescribed. This collaboration is expected to bring together Signify Health's mobile network of credentialed clinicians and Outcomes' OutcomesOne clinical care platform and omnichannel network of pharmacies and payers. This will likely help address medication management challenges for health plan members by offering coordinated care from Signify Health clinicians, who also perform evaluations of those members at home.

Cardinal Health’s collaboration with Signify Health will likely aid in reducing costs and eradicate gaps in care for members nationwide to support their treatment journey from prescription to pharmacy and, ultimately, home.

Per Cardinal Health’s management, as more patients recover and manage their chronic illnesses from home, the partnership with Signify Health will likely aid in driving more powerful connections across transitions of care. This is expected to enable pharmacies and payers to reach patients requiring additional support.

Signify Health’s management believes the tie-up with Cardinal Health will enable it to make the vital service of medication management more convenient, accessible and connected to daily life. It will also likely improve medication safety and adherence and drive more value for the people currently being served by it.

Industry Prospects

Per a report by Stratview Research, the global medication management market is projected to grow from $1.68 billion in 2020 to $5.41 billion by 2026 at a CAGR of approximately 21.5%. Factors like the increasing elderly population, increasing adoption of IT in healthcare and a surge in the incidence of chronic and infectious diseases are expected to drive the market.

Given the growing market potential, the new collaboration seems to have been timed well.

Notable Developments

Last month, Cardinal Health announced its second-quarter fiscal 2023 results, where it recorded a solid uptick in its overall top line. Its Pharmaceutical segment’s revenues were also robust, which highlighted branded pharmaceutical sales growth from existing and new Pharmaceutical Distribution and Specialty Solutions customers. The segment also recorded a solid uptick in its profit, driven by generics program performance and a higher contribution from the brand sales mix.

In January, Cardinal Health announced its entry into a strategic collaboration with Palantir Technologies Inc. to design a solution that will give health systems and hospitals dynamic purchase decision insights to quickly improve their bottom line.

In November 2022, Cardinal Health announced the launch of Velocare, a supply chain network and last-mile fulfillment solution capable of reaching patients in a few hours with critical products and services required for hospital-level care at home.

Price Performance

Shares of the company have gained 37.2% in the past year against the industry’s 6.3% decline and the S&P 500’s 8.4% fall.

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Zacks Investment Research

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Zacks Rank & Other Key Picks

Currently, Cardinal Health carries a Zacks Rank #2 (Buy).

A couple of other top-ranked stocks in the broader medical space are Hologic, Inc. HOLX and McKesson Corporation MCK.

Hologic, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic has gained 11.2% against the industry’s 13% decline in the past year.

McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 3.4%.

McKesson has gained 21.9% against the industry’s 6.3% decline over the past year.

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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report

McKesson Corporation (MCK) : Free Stock Analysis Report

Hologic, Inc. (HOLX) : Free Stock Analysis Report

Signify Health, Inc. (SGFY) : Free Stock Analysis Report

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