Cardinal Health (CAH) is a leading global pharmaceutical and medical products distributor, serving over 100,000 hospitals worldwide. As the largest distributor of medical supplies and surgical products in the U.S., Cardinal Health plays a vital role in the healthcare system, supplying 90% of American hospitals, along with 60,000 pharmacies and over 10,000 specialty physician offices. The company’s strong performance is fueled by the growing demand for acute care services, which includes emergency rooms, ambulatory and surgical care centers, and inpatient hospital visits.
Cardinal Health’s vast portfolio encompasses a wide range of medical products, including durable medical equipment, anesthesia supplies, personal protective equipment (PPE), lab supplies, and surgical equipment. They also offer over 46,000 home healthcare products to over 3.4 million patients. Their digital ecosystem supports medication adherence for over 23 million patients and over 60 payers. Beyond product distribution, Cardinal Health provides numerous value-added services, including data and analytics, to enhance cost efficiencies, streamline workflows, and reduce waste for healthcare providers. They even offer customer packaging solutions for pharmaceuticals through their 60,000-square-foot facility, equipped with automated and semi-automated equipment to accommodate various batch sizes and projects while adhering to all FDA standards.
Cardinal Health’s Specialty business, focused on distributing and servicing specialty pharmaceuticals, pharmacies, and physician practices, is witnessing significant growth. The company offers technology platforms that streamline inventory management, track patient outcomes, manage reimbursement cycles, and improve overall efficiency for their clients. Specialty therapeutics encompass a wide array of high-cost, complex medications that often require specialized storage, handling, and patient support programs. In January 2024, Cardinal Health acquired Specialty Networks for $1.2 billion in cash to further accelerate its growth in the Specialty segment.
The company’s recent financial performance has been impressive. Cardinal Health’s fiscal fourth-quarter 2024 earnings report demonstrated strong top- and bottom-line growth. Earnings per share (EPS) came in at $1.84, surpassing analyst estimates by 10 cents. Non-GAAP operating earnings increased by 14% to $605 million, driven by growth in both the Global Medical Products and Distribution and Pharmaceuticals and Specialty Solutions segments. Revenue soared by 12.1% year-over-year (YoY) to $59.87 billion, exceeding analyst expectations of $58.74 billion. Fiscal 2024 operating cash flow and adjusted free cash flow reached record highs of $3.8 billion and $3.9 billion, respectively. Full-year fiscal 2024 revenues climbed 11% YoY to $226.8 billion, while full-year non-GAAP diluted EPS rose 29% to $7.53.
Looking ahead, Cardinal Health has raised its guidance for fiscal 2025. The company anticipates non-GAAP EPS of $7.55 to $7.70, surpassing the consensus estimate of $7.53. Full-year revenue is projected to grow 10% to 12% YoY. The Pharmaceutical and Specialty Solutions segment is expected to see revenues decline 4% to 6% YoY, while the Global Medical Products and Distribution (GMPD) segment is expected to experience 3% to 5% revenue growth. Other revenue is projected to grow 10% to 12% YoY.
Cardinal Health CEO Jason Hollar commented on the company’s strong performance: “We delivered robust cash flow generation, continued profit growth in the Pharmaceutical and Specialty Solutions segment and significant improvement driven by our GMPD Improvement Plan. We enter the new fiscal year with momentum and confidence, evidenced by our raised fiscal year 2025 guidance.”
The stock chart for CAH exhibits a bullish cup and handle breakout pattern. The cup lip line at $105.08 was tested on August 8, 2024, followed by a pullback that formed the handle, setting the stage for a rally. CAH gapped to the cup lip line and broke out higher after testing support for two days. The daily relative strength index (RSI) has bounced to the 75-band. Pullback support levels are at $105.08, $102.81, $98.79, and $96.05.
With strong earnings, a growing specialty business, and a bullish stock chart, Cardinal Health presents an attractive investment opportunity for those seeking exposure to the healthcare sector. The company’s commitment to innovation, its focus on efficiency, and its dedication to serving healthcare providers worldwide position it for continued success in the years to come.
