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Cardinal Health (CAH)
NYSE:CAH
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Cardinal Health
(NYSE:CAH)60Neutral
Positive Factors
Acquisitions
The acquisition of ADS is expected to immediately contribute positively to earnings, providing an unrecognized lift to future performance.
Management Performance
The new management's impressive earnings track record is undeniable, showing strong execution over 10 quarters with only one narrow miss.
Negative Factors
GMPD Segment Challenges
The GMPD (Medical) segment experienced a reduction in EBIT outlook, partly due to cost optimization challenges.
Cardinal Health (CAH) vs. S&P 500 (SPY)
Market Cap
$31.28B
Dividend Yield1.56%
Average Volume (3M)2.47M
Price to Earnings (P/E)24.2
Beta (1Y)0.51
Revenue Growth2.85%
EPS Growth110.82%
CountryUS
Employees48,900
SectorHealthcare
Sector Strength74
IndustryMedical Distributors
Share Statistics
EPS (TTM)5.36
Shares Outstanding241,568,000
10 Day Avg. Volume2,469,022
30 Day Avg. Volume2,466,021
Financial Highlights & Ratios
PEG Ratio0.22
Price to Book (P/B)N/A
Price to Sales (P/S)0.14
Price to Cash Flow (P/CF)-19.60
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$144.85Price Target Upside14.68% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Cardinal Health Business Overview & Revenue Model
Company DescriptionCardinal Health, Inc. is a global, integrated healthcare services and products company. It operates in two primary segments: Pharmaceutical and Medical. The company provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices worldwide. Cardinal Health is committed to improving the cost-effectiveness of healthcare delivery through its vast distribution network, innovative technologies, and comprehensive range of healthcare products and services.
How the Company Makes MoneyCardinal Health generates revenue primarily through its Pharmaceutical and Medical segments. The Pharmaceutical segment, which accounts for the majority of the company's revenue, involves the distribution of branded and generic pharmaceuticals, specialty medicines, and over-the-counter healthcare and consumer products. The company earns money by purchasing these products at wholesale prices and distributing them to pharmacies, hospitals, and other healthcare providers, often under long-term contracts. The Medical segment focuses on the distribution of medical products, including surgical supplies, laboratory products, and other healthcare-related items. Revenue is generated through the sale of these products as well as through value-added services such as inventory management and logistics solutions. Cardinal Health also benefits from strategic partnerships and collaborations with healthcare manufacturers and providers, enabling it to offer a comprehensive portfolio of products and services to its customers.
Cardinal Health Financial Statement Overview
Summary
Cardinal Health shows robust revenue growth, but this is overshadowed by a strained balance sheet and declining cash flow. The company's positive revenue trajectory is offset by its negative equity and cash flow constraints, creating a mixed financial outlook.Income Statement
Cardinal Health shows robust revenue growth with a TTM revenue of $222.3 billion, a 21% increase from 2022. The gross profit margin is stable at 3.39%, and the net profit margin improved to 0.59%. Although EBIT and EBITDA margins are modest at 1.01% and 1.10% respectively, the consistent revenue growth indicates strong market demand.70
Positive
Balance Sheet
The balance sheet reveals challenges with negative stockholders' equity of $2.99 billion, resulting in an unfavorable debt-to-equity ratio. Despite a high total debt of $7.61 billion, the equity ratio is negative, indicating financial stress. The company's liabilities exceed assets, posing significant risk.40
Negative
Cash Flow
Operating cash flow has turned negative in TTM, stressing liquidity. Free cash flow has declined significantly from $3.25 billion to -$513 million. The company faces challenges in converting its income into cash, impacting its ability to finance operations without external funding.55
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 222.32B | 226.83B | 205.01B | 181.36B | 162.47B | 152.92B | Gross Profit |
| 7.54B | 7.41B | 6.89B | 6.54B | 6.78B | 6.87B | EBIT |
| 2.25B | 1.24B | 727.00M | 1.65B | 1.84B | 1.77B | EBITDA |
| 2.45B | 1.98B | 1.44B | 126.00M | 1.31B | -2.62B | Net Income Common Stockholders |
| 1.31B | 852.00M | 261.00M | -932.00M | 611.00M | -3.69B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 5.13B | 5.13B | 4.04B | 4.72B | 3.41B | 2.77B | Total Assets |
| 45.12B | 45.12B | 43.42B | 43.88B | 44.45B | 40.77B | Total Debt |
| 5.09B | 5.09B | 4.70B | 5.32B | 6.24B | 6.78B | Net Debt |
| -41.00M | -41.00M | 658.00M | 598.00M | 2.83B | 4.00B | Total Liabilities |
| 48.33B | 48.33B | 46.27B | 44.58B | 42.66B | 38.97B | Stockholders Equity |
| -3.21B | -3.21B | -2.85B | -706.00M | 1.79B | 1.79B |
| Cash Flow | Free Cash Flow | ||||
| -513.00M | 3.25B | 2.36B | 2.73B | 2.03B | 1.58B | Operating Cash Flow |
| -19.00M | 3.76B | 2.84B | 3.12B | 2.43B | 1.96B | Investing Cash Flow |
| -2.75B | -1.85B | -454.00M | 567.00M | -378.00M | 493.00M | Financing Cash Flow |
| 1.96B | -847.00M | -3.05B | -2.46B | -1.32B | -2.20B |
Cardinal Health Technical Analysis
Neutral
126.31
Price Trends
124.54
Positive
120.56
Positive
111.38
Positive
Market Momentum
0.76
Positive
48.34
Neutral
53.86
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAH, the sentiment is Neutral. The current price of 126.31 is below the 20-day moving average (MA) of 127.25, above the 50-day MA of 124.54, and above the 200-day MA of 111.38, indicating a neutral trend. The MACD of 0.76 indicates Positive momentum. The RSI at 48.34 is Neutral, neither overbought nor oversold. The STOCH value of 53.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CAH.
Cardinal Health Risk Analysis
Cardinal Health disclosed 19 risk factors in its most recent earnings report. Cardinal Health reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cardinal Health Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $80.67B | 29.50 | 51.23% | 0.41% | 14.29% | -1.20% | |
76 Outperform | $82.86B | 17.98 | 6.11% | 4.10% | 4.02% | -43.51% | |
66 Neutral | $8.96B | 23.20 | 11.49% | ― | 2.71% | -3.26% | |
60 Neutral | $31.28B | 24.17 | -43.80% | 1.56% | 2.85% | 110.82% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% | |
46 Neutral | $9.36B | ― | -79.12% | 9.75% | 5.62% | -1637.59% | |
39 Underperform | $738.70M | ― | -64.17% | ― | 3.55% | -757.75% |
* Healthcare Sector Average
Performance Comparison
CAH
Cardinal Health
126.31
15.46
13.95%
CVS
CVS Health
64.21
-6.29
-8.92%
HSIC
Henry Schein
70.31
-5.10
-6.76%
MCK
McKesson
643.69
117.29
22.28%
OMI
Owens & Minor
9.71
-14.91
-60.56%
WBA
Walgreens Boots Alliance
10.84
-8.80
-44.81%
Cardinal Health Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -1.13% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
Cardinal Health showed a strong performance in its Pharma segment and reported successful acquisitions, leading to a raised EPS guidance. However, the GMPD segment faced challenges, and overall company revenue decreased due to a contract expiration. Despite these challenges, the company's strategic acquisitions and specialty growth contribute positively to its future outlook.Highlights
Raised Fiscal '25 EPS Guidance
Cardinal Health raised its fiscal '25 EPS guidance to a range of $7.85 to $8, a $0.10 increase at the midpoint from the prior guidance of $7.75 to $7.90, driven by strong growth in the Pharma segment.
Pharma Segment Performance
The Pharma segment reported a 7% increase in segment profit, driven by growth from biopharma solutions and higher contributions from brand and specialty products.
Specialty Growth
Specialty category showed strong growth, contributing to the overall positive performance. Specialty revenue grew faster than the overall business, with new customer wins and expansions.
Successful Acquisitions
Closed the acquisition of a majority stake in GI Alliance and integrated oncology network transaction, aimed at expanding across key therapeutic areas.
Strong Performance in 'Other' Segments
The segments reported in 'Other' such as at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics collectively grew segment profit by 11%, driven by OptiFreight and Nuclear.
Lowlights
GMPD Segment Challenges
GMPD segment profit was slightly below expectations, affected by softer volumes and a $15 million impact from the write-off of uncollectible receivables in WaveMark.
Total Company Revenue Decrease
Total company revenue decreased 4% to $55 billion on a reported basis due to the impact of a customer contract expiration.
COVID-19 Vaccine Distribution Headwinds
Distribution of COVID-19 vaccines was a headwind in the quarter, with no meaningful contribution expected for the remainder of the fiscal year.
Interest and Other Costs Increase
Interest and other increased by $45 million to $38 million, primarily driven by financing impacts related to recent acquisitions.
Company Guidance
During the second quarter fiscal year 2025 earnings call, Cardinal Health Inc. provided updated guidance reflecting strong performance and strategic progress, particularly in their Pharmaceutical and Specialty Solutions segment. The company reported a 9% increase in operating earnings, leading to an adjusted EPS of $1.93 and raised its fiscal '25 EPS guidance to a range of $7.85 to $8. Total company revenue, after adjusting for a customer contract expiration, increased 16%, with a gross margin increase of 5%. In terms of segment-specific guidance, the Pharma segment's profit is expected to grow by 10% to 12%, while GMPD segment profit is forecasted between $130 million to $150 million. The company emphasized its strategic acquisitions of ION and GI Alliance, which, although not significantly impacting fiscal '25 EPS, are expected to enhance long-term growth, particularly in specialty areas. Additionally, capital allocation priorities include maintaining an investment-grade rating and executing planned share repurchases.Cardinal Health Corporate Events
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Cardinal Health Reports Mixed Q2 Results Amid Strategic Growth
Neutral
Jan 30, 2025
Cardinal Health reported a 4% decrease in second-quarter fiscal year 2025 revenues to $55.3 billion, though revenue increased by 16% when excluding a significant customer contract expiration. The company also announced a 9% increase in non-GAAP operating earnings to $635 million and raised its fiscal year 2025 non-GAAP EPS guidance. The acquisition of a 73% stake in GI Alliance was completed, aligning with strategic growth in specialty sectors.
Financial Disclosures
Cardinal Health Raises 2025 Earnings Forecast Expectations
Positive
Jan 14, 2025
Cardinal Health updated its non-GAAP diluted earnings per share expectations for fiscal year 2025, now anticipating results at the upper end of the $7.75 to $7.90 range. This adjustment is attributed to strong performance in the Pharmaceutical and Specialty Solutions segment, highlighting potential positive implications for stakeholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.