Canada Markets close in 5 hrs 3 mins

Cardinal Health (CAH) Q1 Earnings & Revenues Beat Estimates

Zacks Equity Research

Cardinal Health, Inc. CAH reported first-quarter fiscal 2020 adjusted earnings of $1.27 per share, which surpassed the Zacks Consensus Estimate of $1.09 by 16.5%. However, the reported figure declined 1.6% year over year.

Revenues increased 6% on a year-over-year basis to $37.34 billion and beat the Zacks Consensus Estimate by 0.9%.

Segmental Analysis

Pharmaceutical Segment

In the fiscal first quarter, pharmaceutical revenues improved 6.4% to $33.43 billion on a year-over-year basis. The upside can be attributed to sales growth from Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical witnessed a decline of 2.7% in profits to $398 million thanks to an adverse impact of Pharmaceutical Distribution customer contract renewals. However, benefits from cost savings initiatives and performance of Specialty Solutions partially offset the downside.

Medical Segment

In the quarter under review, revenues at this segment rose 3.1% to $3.92 billion on account of organic growth across the segment, led by products and distribution, and Cardinal Health at Home. However, divestiture of the naviHealth business partially offset the upside.

Medical segment profit improved 25.9% to $170 million owing to benefits from cost savings initiatives, growth in products and distribution, services, and Cardinal Health at Home. The divestiture of the naviHealth business partially offset the upside.

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

Margin Analysis

Gross profit inched up 0.7% year over year to $1.68 billion.

As a percentage of revenues, gross margin in the reported quarter was 4.5%, down 20 bps on a year-over-year basis.

Distribution, selling, general and administrative expenses totaled $1.17 billion, down 4.2% year over year. Adjusted operating income totaled $577 million, up 6.5% from the year-ago quarter.

The company reported operating loss of $5.26 billion in the quarter under review, against the year-ago quarter’s income of $816 million.

Financial Update

As of Sep 30, 2019, cash and cash equivalents amounted to $1.21 billion, plunging 52.1% from sequentially.

Cash from operating activities totaled ($653) million, against that of $365 million in the year-ago quarter.

2020 Guidance Reaffirmed

The company has reaffirmed fiscal 2020 adjusted earnings per share, which will range between $4.85 and $5.10. The mid-point of the latest guidance range of $4.98 is lower than the Zacks Consensus Estimate of $4.99.

Per the company’s previously issued fiscal 2020 guidance, the company stated that the abovementioned guidance includes an expected incremental $130 million in cost savings associated with actions intended to optimize and simplify its operating model and cost structure.

In Conclusion

Cardinal Health exited the fiscal first 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. Moreover, the Medical segment exhibited a solid performance in the quarter under review. These apart, the company’s extension of agreements with CVS Health, collaboration with PANTHERx Specialty Pharmacy and buyout of mscripts raise optimism.

However, contraction in gross margin remains a woe. Further, investments in Pharmaceutical IT platform and lackluster generics performance are likely to mar Cardinal Health’s operational efficiencies in the days ahead. Intense competition and customer concentration are other concerns.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks that reported solid results this earning season are Edwards Lifesciences EW, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Third-quarter net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the Zacks Consensus Estimate by 1.3%.

ResMed reported third-quarter 2019 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>


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
 
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report
 
ResMed Inc. (RMD) : Free Stock Analysis Report
 
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research