Cardinal Health reported mixed first-quarter fiscal 2015 results.
While EPS and revenues beat our estimates, both declined on a y-o-y
basis. Performance in the Pharmaceutical segment continued to
disappoint due to the expiration of the Walgreens contract.
However, Medical segment revenues were driven by meaningful
synergies from acquisitions and the positive net impact of customer
volume. We believe that the company's strategic buyouts, joint
ventures and supply agreements should foster growth, going forward.
Also, attractive returns to shareholders through consistent stock
repurchase activity should boost earnings. Cardinal Health
reaffirmed fiscal 2015 adjusted EPS in the $4.10 $4.30 range. As
such, we maintain our Neutral recommendation and set a price target
Cardinal Health, Inc. (CAH), headquartered in Dublin, OH, is a
nation-wide drug distributor and provider of services to
pharmacies, healthcare providers and manufacturers. It enables
pharmacies, hospitals, and ambulatory care sites to focus on
patient care while reducing costs and enhancing efficiency and
quality. As one of the largest global health care companies,
Cardinal Health is an important link in the health care supply
chain. It provides pharmaceuticals and medical products to more
than 40,000 locations daily. It is also a leading manufacturer of
medical and surgical products, including gloves, surgical apparel,
and fluid management products. In addition, Cardinal Health
supports the growing diagnostic industry by supplying medical
products to clinical labs and operating a large network of
radiopharmacies that dispense products to aid in the early
diagnosis of disease.
Cardinal Health has two reporting segments Pharmaceutical and
The Pharmaceutical segment (accounted for 88% of revenues in
fiscal 2014): It is the second largest pharmaceutical distributor
in the U.S. and the largest nuclear pharmacy. Its products and
services include pharmaceutical distribution, manufacturer and
specialty services, and nuclear and pharmacy services. In China,
the segment operates as Cardinal Health China, which supplies
branded, generic and specialty pharmaceuticals and provides
logistics, marketing and other services. This segment also offers
"specialty pharmaceutical products and services", which supplies
(1) oncology, rheumatology, urology and other pharmaceutical
products to physician offices (2) human plasma products and
specialty pharmaceutical products to hospitals and other healthcare
providers (3) consulting and other services to pharmaceutical
manufacturers, third party payors and healthcare providers.
The Medical segment (12%): The segment manufactures products
such as single-use surgical drapes, gowns and apparel exam and
surgical gloves and fluid suction and collection systems and offers
sterile and non-sterile procedure kits. These products are sold
directly or distributed via third-party sources in the U.S.,
Canada, Europe, South America and the Asia/Pacific.
The company reported total revenues of $91.1 billion in fiscal
2014, reflecting a year over year decline of 10%.
The company's fiscal year ends on Jun 30th.
Cardinal Health, Inc. (CAH): Read the Full Research
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