Cardinal Health climbs 7.7% on stronger than expected earnings and revenue in Q3

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on May 11, 2020
Updated: Jan 25, 2024
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  • Cardinal Health posts £31.90 billion in revenue in Q1 and £1.32 of adjusted earnings per share.
  • The health services company estimates £4.23 to £4.39 of adjusted earnings per share in 2020.
  • The drug wholesaler's £285 million Q3 net income came in stronger than £241 million last year.

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Cardinal Health Inc. (NYSE: CAH) announced its third-quarter earnings report on Monday. Topping analysts’ estimates for earnings and revenue, the company was reported 7.7% up in premarket trading on Monday.

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The health services company reported a net income of £285 million in the third quarter that translates to 97 pence of earnings per share. In the same quarter last year, the company had recorded £241 million in net income or 80.5 pence of earnings per share.

Cardinal Health’s Q3 financial results versus analysts’ estimates

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On an adjusted basis, the drug wholesaler registered £1.32 of earnings per share in Q3. On the revenue front, Cardinal health climbed to £31.90 billion in the recent quarter versus the year-ago figure of £20.51 billion. According to FactSet, analysts had forecast the company to print £30.11 billion in revenue in the third quarter. Their estimate for adjusted earnings per share was capped at £1.17.

In fiscal 2020, the company now estimates £4.23 to £4.39 of adjusted earnings per share versus the analysts’ expectations of £4.22 per share. In Q2, Cardinal Health had posted £32.34 billion in revenue and £1.24 of adjusted earnings per share. In the next quarter, experts estimate £30.93 billion in revenue for Cardinal Health and 78.1 pence of adjusted earnings per share.

In the third quarter, Cardinal Health’s both segments reported a modest net positive effect from increased volume attributed to the Coronavirus pandemic that has so far infected more than 1.3 million in the United States and caused over 80,500 deaths. In the fourth quarter, however, the company warns of a significant net negative effect in both segments.

The negative impact, as per the company, will be due to the volume decline ascribed to deferrals or cancellations of elective medical procedures.

Cardinal Health’s performance in the stock market

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Cardinal Health’s earnings report follows Novartis that announced to have topped analysts’ estimates for earnings and revenue in the first quarter on April 28th.

Including the surge in premarket trading on Monday, Cardinal Health is currently trading around the same level in the stock market at which it started the year 2020. In comparison, the benchmark S&P 500 index has lost roughly 9% year to date.

In late March, the company’s shares were reported around 20% down as compared to its 2020 opening price. In 2019, the stock had posted an annual gain of more than 10%. At the time of writing, Cardinal Health has a market cap of £11.84 billion.

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