What's in Store for Cardinal Health in Q4 Earnings?

Cardinal Health, Inc. CAH is scheduled to report fourth-quarter fiscal 2024 results on Aug 14, before the opening bell.

In the last reported quarter, the company delivered an earnings surprise of 6.67%. CAH's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 12.91%.

Q4 Estimates

For the fiscal fourth quarter, the consensus mark for earnings is pegged at $1.72 per share, indicating an improvement of 10.9% from the prior-year quarter's reported figure. The same for revenues is pinned at $58.72 billion, implying growth of 9.9% year over year.

Factors to Note

From the fiscal third quarter of 2024, Cardinal Health started reporting its results under new operating segments — Pharmaceutical and Specialty solutions, Global Medical Products and Distribution (GMPD) segment, nuclear at-Home and OptiFreight.

The third quarter of fiscal 2024 witnessed an uptick in revenues in the Pharmaceutical segment, which amounted to approximately $50.7 billion, up 9% on a year-over-year basis. The Pharmaceutical Distribution and Specialty Solutions segment's performance highlighted branded pharmaceutical sales growth from existing customers. The segment's profit increased 4% during the fiscal third quarter. This momentum is likely to have continued in the fiscal fourth quarter as well. Moreover, the rising demand for GLP-1 medications is likely to have acted as a tailwind.

Higher contributions from brand and specialty products, as well as the effectiveness of the generics program, drove the positive outcome of the pharmaceutical segment in the last reported quarter. This trend is likely to have continued in the to-be-reported quarter as well.

Medical segment's revenues grew 4% year over year in the last reported quarter, driven by growth in at-Home Solutions and GMPD. The segment's profit was $20 million in the fiscal third quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives, which are likely to have boosted the medical segment's results in the fiscal fourth quarter as well.

In March 2024, Cardinal Health completed the acquisition of Specialty Networks, which is likely to expand the company's offerings with physicians in the areas of urology, GI, and rheumatology. Specialty Networks is providing a proven platform in PPS analytics that the company is likely to further invest in fiscal 2025 and look to extend to other therapeutic areas such as oncology.

Per the third-quarter earnings call, CAH's integration of Specialty Networks is underway, and the reaction from the providers the company serves has been extremely encouraging. The platform's insight generation capabilities for clinicians are robust, which is likely to accelerate CAH's upstream data and research opportunities with biopharma manufacturers. The company is expected to provide further updates in this regard in the to-be-reported quarter.

The company announced its new distribution center being built in South Carolina, which, per management, features the fastest order fulfillment system per square foot in the market. The center is scheduled to open by early next fiscal year. New distribution centers are likely to aid the company's supply chain, thus improving revenues. Cardinal Health is likely to provide further updates in this regard in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Cardinal Health this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.17%.

Zacks Rank: Cardinal Health currently carries a Zacks Rank #3.

Stocks to Consider

Here are a few other medical stocks worth considering, as these also have the right combination of elements to beat on earnings this reporting cycle.

Phibro Animal Health PAHC has an Earnings ESP of +0.99% and a Zacks Rank of 2 at present.

The stock has risen 59.5% year to date. PAHC's earnings beat estimates in the last reported quarter. It has a trailing four-quarter average negative earnings surprise of 2.30%.

Owens & Minor OMI has an Earnings ESP of +1.54% and a Zacks Rank of 2 at present.

The stock has lost 14.6% year to date. OMI's earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 11.99%.

ResMed RMD has an Earnings ESP of +2.85% and a Zacks Rank of 3 at present.

The stock has risen 16% year to date. RMD's earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 2.81%.

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