Cardinal Health CAH and Australia-based Telix recently entered a deal, selecting CAH as a commercial radiopharmaceutical distributor to supply finished unit doses of Telix's PET agent, Zircaix, for the imaging of kidney cancer in the United States, subject to regulatory approval.
Telix and Cardinal Health already have a contract in place under which CAH has successfully commercialized Telix’s PSMA-PET imaging, Illuccix, approved for diagnosing prostate cancer in men.
Likely Trend of CAH Stock Following the News
Following the announcement, shares of the company moved nearly 1.7% south to $111.32 at yesterday’s closing.
Cardinal Health has a competitive advantage in the specialized market attributable to its pharmaceutical and medical solutions. The company provides a growing range of safe products and industry knowledge. Through its partnerships and investments in Specialty, at-Home, and Services, the company continues to retain its focus on dynamic development sectors.
As the company continues to adopt robust business models for the future, it is also strengthening its core strengths related to product distribution and medical and pharmaceutical. Hence, owing to the strong future prospects of CAH, we expect the market sentiment to remain positive around this news as well.
Meanwhile, CAH currently has a market capitalization of $27.62 billion. It has an earnings yield of 6.72%, higher than the industry’s yield of 5.46%. In the last reported quarter, CAH delivered an earnings surprise of 6.98%.
More on CAH’s Distribution Deal With Telix
Cardinal Health’s broad commercial distribution network and experience are likely to enable reliable Zircaix supply across the United States to aid in kidney cancer diagnosis following its potential approval. Telix completed the submission of a Biologics License Application (BLA) to the FDA seeking approval for Zircaix in June. The company has requested a priority review of the BLA.
Telix is currently running special access programs in the United States, Europe and Australia to allow continued access to Zircaix outside of a clinical trial to patients for whom there are no comparable or satisfactory alternate options. Per the terms of the distribution deal with Telix, CAH will be responsible for the distribution of the drug under the expanded access program in the United States.
Per the American Cancer Society, about 81,610 new cases of kidney cancer are likely to be diagnosed in 2024, representing a significant market opportunity for Zircaix that is expected to benefit both Telix and Cardinal Health.
CAH’s Notable Distribution Network
Cardinal Health is strategically expanding its U.S. operations to better serve healthcare providers and patients by investing in new facilities and technology solutions. In September, CAH announced the opening of a new distribution center in Greenville, SC.
The distribution center is dedicated solely to the company’s at-Home Solutions business. The opening of the new distribution center is likely to provide a boost to the company’s at-Home Solutions business and generate additional revenues to support the growing market for at-Home solutions.
In August, CAH announced plans to open a new state-of-the-art distribution center in Walton Hills, OH, to support its medical products and distribution business in the United States. In 2023, the company opened two distribution centers in Central Ohio and a medical products replenishment center in New York, bolstering inventory levels and supply chain efficiency.
CAH’s Share Price Performance
In the past six months, CAH’s shares have gained 1.3% against the industry’s 4.5% decline. The S&P 500 has increased 9.4% in the same time frame.
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CAH’s Zacks Rank & Stocks to Consider
CAH presently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Universal Health Service UHS, Quest Diagnostics DGX and ABM Industries ABM. While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 56.1% compared with the industry's 48.1% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 13.9% so far this year compared with the industry’s 17.9% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 27.4% so far this year compared with the industry’s 17% growth.
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