Cardinal Health, Inc.CAH reported first-quarter fiscal 2025 adjusted earnings per share (EPS) of $1.88, which beat the Zacks Consensus Estimate of $1.64 by 9.8%. The bottom line also improved 9.3% year over year.

GAAP EPS in the quarter was $1.70 against a loss of 5 cents per share in the year-ago period.

Revenue Details

Sales declined 4.3% on a year-over-year basis to $52.28 billion. However, the top line beat the Zacks Consensus Estimate by 2%.

Segmental Analysis

Pharmaceutical and Specialty Solutions

Pharmaceutical revenues decreased 5% to $48 billion on a year-over-year basis. The decline was due to the unfavorable impact of the customer contract expiration with OptumRx in June 2024. Excluding this impact, sales were up 16%, driven by branded and specialty pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical profit totaled $530 million, up 16% from the year-ago level. The upside was driven by higher contributions from brand and specialty products, including the earlier seasonal launch of COVID-19 vaccine distribution. This was also aided by positive generics program performance. However, the growth was partially offset by the customer contract expiration.

Global Medical Products and Distribution

Revenues in this segment totaled $3.1 billion, up 3% year over year, driven by growth volume from existing customers.

The segment reported a profit of $8 million compared with $12 million in the year-ago quarter. This upside was primarily driven by higher manufacturing and health and welfare costs, largely offset by an improvement in net inflationary impacts and growth from existing customers.

Other

This segment includes three operating segments — at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics. Sales totaled $1.2 billion, up 13% year over year.

The segment’s profit amounted to $104 million, up 8% from the year-ago level. The upside was driven by robust performance in OptiFreight Logistics.

Cardinal Health, Inc. Price, Consensus and EPS Surprise

Cardinal Health, Inc. price-consensus-eps-surprise-chart | Cardinal Health, Inc. Quote

Margin Analysis

Gross profit increased 9.1% year over year to $1.9 billion.

As a percentage of revenues, the gross margin in the reported quarter was 3.6%, expanding 60 basis points year over year.

Distribution, selling, general and administrative expenses totaled $1.28 billion, up 7.7% year over year.

Operating income amounted to $568 million against an operating loss of $32 million in the year-ago quarter. Adjusted operating income increased 12.2% year over year to $625 million.

Financial Update

The company exited the reported quarter with cash and cash equivalents of $2.87 billion compared with $5.13 billion in the fiscal fourth quarter of 2024.

Cumulative net cash used in operating activities totaled $1.65 billion against $871 million in cumulative net cash provided in the year-ago period.

2025 View Updated

Cardinal Health raised its fiscal 2025 guidance for earnings. The company now anticipates adjusted EPS to be between $7.75 and $7.90, up from the previous guidance of $7.55-$7.70. The Zacks Consensus Estimate for the same is pegged at $7.61.

The company expects revenues from its Pharmaceutical segment to decline 4-6% year over year. The anticipated decline reflects a $39 billion revenue headwind due to the OptumRx contract expiration in June 2024. Segmental profit is likely to increase 4-6% from the previous guidance of 1-3%.

Revenues from the Medical segment are estimated to grow 3-5%. Segmental profit is expected to be in the range of $140-$175 million compared with the previous guidance of $175 million.

Revenues from the Other segment are likely to grow 10-12% from the previous projection of 10%. Segmental profit is likely to grow nearly 10%.

Conclusion

Cardinal Health exited the fiscal first quarter on a positive note, wherein both earnings and revenues beat their respective Zacks Consensus Estimate. The company continued to witness strong demand for its Pharmaceutical and Specialty solutions. However, sales are likely to be under pressure due to OptumRx contract expiration.

Meanwhile, CAH’s medical products, and at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics are likely to support top-line growth going forward. Improvement in segmental profit looks promising. The expansion of gross margin also bodes well.

Shares of the company were up 3.8% in pre-market trading following better-than-expected results and improved EPS outlook. The company’s shares have risen 7.7% year to date against the industry’s decline of 2.3%. The broader S&P 500 Index has moved up 20% during the same period.

However, intense competition and customer concentration are concerning.

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Zacks Rank and Other Stocks to Consider

Cardinal Health carries a Zacks Rank #2 (Buy) at present.

Some other top-ranked stocks from the medical industry are AngioDynamics ANGO, Avanos Medical AVNS and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.

Avanos, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 31.2% for 2025. AVNS’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.

Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.

Globus Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.

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