Core Viewpoint - Cardinal Health (CAH) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, thus affecting stock prices [4]. Cardinal Health's Earnings Outlook - For the fiscal year ending June 2025, Cardinal Health is expected to earn $8.09 per share, representing a 7.4% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Cardinal has risen by 2.3%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - Cardinal's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Group 1 - atai Life Sciences N.V. (ATAI) is outperforming its peers in the Medical sector with a year-to-date return of approximately 43.6%, while the average return for Medical companies is -6.3% [4] - The Zacks Rank for atai Life Sciences N.V. is 2 (Buy), indicating a favorable outlook based on earnings estimate revisions and improving earnings outlooks [3] - The Zacks Consensus Estimate for ATAI's full-year earnings has increased by 0.8% over the past quarter, reflecting improved analyst sentiment [4] Group 2 - atai Life Sciences N.V. is part of the Medical - Outpatient and Home Healthcare industry, which ranks 84 in the Zacks Industry Rank, and this industry has an average year-to-date return of 3.7% [6] - Cardinal Health (CAH), another stock in the Medical sector, has a year-to-date return of 29.6% and also holds a Zacks Rank of 2 (Buy) [5] - The Medical - Dental Supplies industry, to which Cardinal Health belongs, is currently ranked 42 and has experienced a year-to-date decline of -1% [7]

Core Insights - 16 dividend growth companies announced increases in the second half of April, indicating a positive trend in dividend policies among these firms [1] - Predictions are made for an additional 7 companies expected to announce dividend increases in the first half of May, suggesting ongoing confidence in dividend growth [1] Group 1 - The article highlights the effectiveness of investing in dividend growth stocks and reinvesting dividends as a strategy for long-term wealth growth [1] - The author operates a blog, HarvestingDividends.com, which focuses on S&P Dividend Aristocrats and other dividend growth stocks, providing valuable insights for investors [1]

Group 1 - Cardinal Health Inc. reported third-quarter 2025 adjusted EPS of $2.35, a 13% increase year over year, surpassing the consensus estimate of $2.17 [1] - Sales remained flat at $54.9 billion, missing the consensus of $55.35 billion, while adjusted operating earnings increased by 21% to $807 million [1] - The Pharmaceutical and Specialty Solutions segment's sales were unchanged at $50.6 billion [1] Group 2 - Revenue for the Global Medical Products and Distribution (GMPD) segment rose by 2% to $3.2 billion, driven by volume growth from existing customers [2] - Segment profit increased by 14% to $662 million in the third quarter, supported by brand and specialty products, MSO platforms, and positive generics program performance [6] - The company raised its fiscal year 2025 adjusted EPS guidance from $7.85-$8.00 to $8.05-$8.15, compared to the consensus of $7.96 [3] Group 3 - Cardinal Health anticipates double-digit non-GAAP EPS growth in fiscal 2026 despite evolving macroeconomic conditions [4] - The outlook for the Pharmaceutical and Specialty Solutions segment profit was increased to 11.5% to 12.5% growth, up from a previous range of 10% to 12% [6] - The company expects GMPD segment profit to be consistent with fiscal 2025 segment profit amid macro uncertainty [6] Group 4 - CAH stock is trading 2.30% higher at $144.53 [5] - The company plans to discuss its fiscal 2026 and beyond expectations at its upcoming Investor Day on June 12 [6]

Core Viewpoint - Cardinal Health, Inc. reported strong adjusted earnings per share (EPS) for the third quarter of fiscal 2025, beating estimates, while revenues remained flat and slightly missed expectations [1][12]. Financial Performance - Adjusted EPS for Q3 fiscal 2025 was $2.35, exceeding the Zacks Consensus Estimate of $2.15 by 9.3% and improving 12.4% year over year [1]. - GAAP EPS was $2.10, compared to $1.07 in the same quarter last year [1]. - Total revenue was $54.89 billion, flat year over year, but missed the Zacks Consensus Estimate by 0.2% [1]. Segmental Analysis - **Pharmaceutical and Specialty Solutions**: Revenues decreased 0.4% to $50.4 billion year over year, primarily due to the expiration of a customer contract with OptumRx, although sales grew 20% when excluding this impact [2]. - **Pharmaceutical Profit**: Totaled $662 million, up 14% from the previous year, driven by growth in brand and specialty products [3]. - **Global Medical Products and Distribution**: Revenues increased 2% to $3.2 billion, supported by growth from existing customers [3]. - **Other Segment**: Sales reached $1.3 billion, up 13% year over year, with profits of $134 million, a 22% increase from the prior year [4][5]. Margin Analysis - Gross profit rose 9.7% year over year to $2.12 billion, with a gross margin of 3.9%, expanding nearly 30 basis points [6]. - Operating income was $730 million, up 97.8% year over year, while adjusted operating income increased 21% to $807 million [6]. Financial Update - Cash and cash equivalents at the end of the quarter were $3.33 billion, down from $3.81 billion in the previous quarter [8]. - Net cash provided by operating activities was $2.91 billion, a significant increase from $27 million used in the same period last year [8]. 2025 Guidance Update - Cardinal Health updated its fiscal 2025 earnings guidance, now expecting adjusted EPS between $8.05 and $8.15, up from $7.85-$8.00 [9]. - Pharmaceutical segment revenues are anticipated to decline 4-6%, while segment profit is expected to increase 11.5-12.5% [9]. - Medical segment revenues are projected to grow 3-5%, with profits expected between $130-$140 million [10]. Future Outlook - The company expects double-digit EPS growth for fiscal 2026, driven by strong segment profit growth across various divisions [11]. - Continued strong demand for Pharmaceutical and Specialty Solutions is anticipated, with growth from existing customers offsetting contract expirations [12]. Market Performance - Despite mixed results, Cardinal Health's shares rose 0.5% in pre-market trading, with a year-to-date gain of 19.5% compared to the industry’s 0.9% growth [13].

Core Insights - Cardinal Health reported revenue of $54.88 billion for the quarter ended March 2025, a slight decrease of 0.1% year-over-year, with an EPS of $2.35, up from $2.08 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $55.03 billion by 0.27%, while the EPS exceeded the consensus estimate of $2.15 by 9.30% [1] Financial Performance Metrics - Revenue from Pharmaceutical and Specialty Solutions was $50.43 billion, slightly above the average estimate of $50.33 billion, reflecting a year-over-year decline of 0.4% [4] - Revenue from Other segments was reported at $1.30 billion, slightly exceeding the estimated $1.29 billion [4] - Revenue from Medical Products and Distribution was $3.16 billion, below the average estimate of $3.21 billion, but showed a year-over-year increase of 1.5% [4] - Segment profit for Pharmaceutical and Specialty Solutions was $662 million, surpassing the estimated $635.77 million [4] - Segment profit for Other was $134 million, exceeding the average estimate of $119.24 million [4] - Segment profit for Global Medical Products and Distribution was $39 million, below the average estimate of $44.16 million [4] Stock Performance - Cardinal Health's shares have returned +1.9% over the past month, contrasting with a -0.7% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1 - Cardinal Health reported quarterly earnings of $2.35 per share, exceeding the Zacks Consensus Estimate of $2.15 per share, and showing an increase from $2.08 per share a year ago, representing an earnings surprise of 9.30% [1] - The company posted revenues of $54.88 billion for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 0.27%, and down from $54.91 billion year-over-year [2] - Cardinal has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] Group 2 - The stock has increased approximately 19.5% since the beginning of the year, contrasting with the S&P 500's decline of -5.3% [3] - The current consensus EPS estimate for the upcoming quarter is $2 on revenues of $60.06 billion, and for the current fiscal year, it is $7.94 on revenues of $222.62 billion [7] - The Zacks Industry Rank places Medical - Dental Supplies in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Revenue and Earnings - Revenue for Q3 Fiscal 2025 was flat at $54.9 billion and decreased 3% to $162.4 billion for the nine months, primarily due to the expiration of OptumRx contracts[14]. - GAAP operating earnings increased to $730 million for Q3 and $1.8 billion for the nine months, while non-GAAP operating earnings rose 21% to $807 million and 14% to $2.1 billion, driven by branded pharmaceutical sales growth[16]. - GAAP diluted EPS for Q3 increased 96% to $2.10 and 118% to $5.44 for the nine months, primarily due to improved operating earnings and absence of prior goodwill impairment charges[20]. - Non-GAAP operating earnings for Q3 Fiscal 2025 were $807 million, representing a 21% growth rate compared to the prior year[119]. - Net earnings for the nine months ended March 31, 2025, were $1,326 million, compared to $620 million for the same period in 2024, representing a 113% increase[145]. Cash Flow and Liquidity - Cash and equivalents decreased to $3.3 billion at March 31, 2025, from $5.1 billion at June 30, 2024, with net cash provided by operating activities at $870 million[22]. - Cash flows from operating activities for the nine months ended March 31, 2025, were $870 million, down from $1,680 million in 2024, indicating a decrease of 48%[145]. - Total cash and equivalents at the end of the period was $3,326 million, down from $3,746 million at the end of the same period in 2024, marking a decrease of 11%[145]. - The company had $4.9 billion accrued related to opioid litigation settlements as of March 31, 2025, with payments totaling $797 million made during the nine months ended March 31, 2025[87]. Acquisitions and Investments - Cardinal Health deployed $1.1 billion for the Integrated Oncology Network acquisition and $2.8 billion for a 73% ownership interest in GI Alliance during the nine months ended March 31, 2025[23]. - The acquisition of GI Alliance is expected to positively impact segment revenue and profit while increasing amortization and acquisition-related costs[29]. - Cardinal Health completed the acquisition of Advanced Diabetes Supply Group for $1.1 billion, which will be reported in the at-Home Solutions segment[28]. - The acquisition of Integrated Oncology Network (ION) was completed for $1.1 billion in cash, supporting over 50 practice sites across 10 states[165]. - The acquisition of GI Alliance (GIA) was completed for approximately $2.8 billion in cash, with a 73% ownership interest[167]. Segment Performance - Pharma segment revenue for the three months ended March 31, 2025 was $50.4 billion, relatively flat compared to the prior year, while revenue for the nine months decreased 3% to $149.3 billion due to the expiration of OptumRx contracts[46]. - Global Medical Products and Distribution segment revenue increased 2% to $3.2 billion for the three months and $9.4 billion for the nine months ended March 31, 2025, primarily due to higher volumes from existing customers[47]. - Total segment profit for the three months ended March 31, 2025 increased 17% to $835 million, and for the nine months, it increased 13% to $2.1 billion, reflecting strong performance across segments[54]. Costs and Expenses - SG&A expenses for the three months ended March 31, 2025 increased 4% to $1.3 billion, and for the nine months, they increased 5% to $3.9 billion, primarily due to MSO platform acquisitions and higher costs to support sales growth[51]. - Interest expense for the three months ended March 31, 2025 increased to $74 million, and for the nine months, it increased to $141 million, primarily due to new debt financing[68]. - Restructuring and employee severance costs for Q3 Fiscal 2025 amounted to $28 million, while amortization and other acquisition-related costs were $152 million[119]. Tax and Goodwill - The effective tax rate for the three months ended March 31, 2025, was 23.6%, compared to 23.3% for the same period in 2024[69]. - During the nine months ended March 31, 2024, the company recognized pre-tax goodwill impairment charges of $675 million related to the GMPD segment, resulting in a net tax benefit of $56 million for fiscal 2024[70]. - Goodwill increased from $4.725 billion at June 30, 2024, to $8.906 billion at March 31, 2025, primarily due to the acquisitions of ION and GIA[187]. Shareholder Returns - The company approved a quarterly dividend of $0.5056 per share, amounting to an annualized rate of $2.02 per share, paid to shareholders on specified dates[89]. - The company has $2.7 billion authorized for share repurchases remaining under the program approved on June 7, 2023[135]. - The company’s share repurchase program activity resulted in a net cash outflow of $765 million for the nine months ended March 31, 2025, compared to $750 million in 2024, indicating ongoing commitment to returning capital to shareholders[145]. Risks and Uncertainties - Cardinal Health is facing potential additional costs and supply disruptions due to recent U.S. tariffs imposed on various countries[31]. - The company faces risks associated with entering new lines of business, including regulatory changes and competition from other healthcare organizations[128]. - The New York Opioid Stewardship Act created a $100 million annual assessment on manufacturers and distributors, with ongoing litigation regarding its constitutionality[204].

Financial Data and Key Metrics Changes - The company reported operating earnings growth of 21% and EPS growth of 13%, with EPS for the quarter at $2.35 [12][14] - Total company revenue was flat at nearly $55 billion, but adjusted for contract expiration, revenue increased by 19% year-over-year [13] - Total company gross profit dollars increased by 10%, while SG&A increased by only 4%, indicating strong cost control [13][14] Business Line Data and Key Metrics Changes - Pharmaceutical and Specialty Solutions revenue was relatively flat at $50.4 billion, but excluding customer contract expiration, revenue increased by 20% [15] - GNPD segment revenue increased by 2% to $3.2 billion, driven by volume growth from existing customers [17] - Other businesses reported a 13% revenue increase to $1.3 billion, with profit growth across all three operating segments [18] Market Data and Key Metrics Changes - The company generated over 99% of its enterprise revenue in the U.S., with 95% of segment profit from four of its five businesses largely unaffected by tariffs [9] - The company expects fiscal year 2025 revenue growth of 17% to 19% and segment profit growth of 16% to 18% in its Other segment [25] Company Strategy and Development Direction - The company has invested approximately $7 billion in the U.S. over the last two years, focusing on acquisitions, domestic manufacturing, and technology [9] - The company is committed to increasing patient access, affordability, and innovation in healthcare while navigating regulatory complexities [9][10] - The addition of Advanced Diabetes Supply Group is expected to be accretive to EPS and enhance the company's capabilities in diabetes care [11][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate sustainable long-term growth, raising fiscal year 2025 EPS guidance to a range of $8.5 to $8.15 [11][21] - The company anticipates continued strong demand and organic growth fueled by favorable market trends and competitive positioning [27] - Management is focused on mitigating tariff impacts through operational improvements and pricing strategies [36][66] Other Important Information - The company has completed customer onboardings that contribute approximately $10 billion of new customer revenue in fiscal year 2025 [23] - The effective tax rate for Q3 was 22.4%, a 2.5% increase from the prior year [14] Q&A Session Summary Question: Can you discuss the strong brand and specialty sales growth? - Management noted broad-based strength across various categories, with specialty distribution growth in the mid-teens and contributions from new customers [44][45] Question: Are there any headwinds from consumer weakness related to tariffs? - Management indicated no significant changes in demand, emphasizing the resilience of pharmaceutical demand even during macroeconomic challenges [53][54] Question: What is the AOI percentage for Cardinal Health brand revenue? - Approximately $4 billion of GNPD revenue comes from Cardinal Health brand, which has seen good volume growth [61] Question: How will the company offset tariff exposure? - Management stated that the majority of the anticipated $200 to $300 million in tariff costs will be addressed through pricing adjustments and operational actions [66][67] Question: What is the outlook for fiscal year 2026? - Management expects double-digit EPS growth, primarily driven by the Pharma segment, despite potential macro challenges [110]

Financial Data and Key Metrics Changes - The company reported operating earnings growth of 21% and EPS growth of 13%, with EPS for the quarter at $2.35 [11][12] - Total company revenue was flat at nearly $55 billion, but adjusted for contract expiration, revenue increased by 19% year-over-year [12][21] - Total company gross profit dollars increased by 10%, while SG&A increased by only 4%, indicating strong cost control [12][13] Business Line Data and Key Metrics Changes - Pharmaceutical and Specialty Solutions revenue was relatively flat at $50.4 billion, but excluding customer contract expiration, revenue increased by 20% [14][15] - GNPD segment revenue increased by 2% to $3.2 billion, driven by volume growth from existing customers [16] - Other businesses reported a 13% revenue increase to $1.3 billion, with At Home Solutions growing by 12%, Optifreight Logistics by 17%, and Nuclear by 14% [18] Market Data and Key Metrics Changes - The company generated over 99% of its enterprise revenue in the U.S., with 95% of segment profit from four of its five businesses largely unaffected by tariffs [6][7] - The company expects fiscal year 2025 revenue growth of 17% to 19% and segment profit growth of 16% to 18% in its Other segment [24] Company Strategy and Development Direction - The company has invested approximately $7 billion in the U.S. over the last two years, focusing on acquisitions, domestic manufacturing, and technology [7] - The company aims to enhance patient access, affordability, and innovation in healthcare while navigating regulatory complexities [6][7] - The addition of Advanced Diabetes Supply Group is expected to be accretive to EPS and enhance the company's capabilities in diabetes care [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate sustainable long-term growth and raised fiscal year 2025 EPS guidance to a range of $8.5 to $8.15 [10][21] - The company anticipates continued strong demand and organic growth driven by favorable market trends and competitive positioning [27][29] - Management acknowledged potential challenges from tariffs but emphasized proactive measures to mitigate impacts on customers and operations [35][36] Other Important Information - The company completed the acquisition of GI Alliance and Integrated Oncology Network, which are performing as expected [9][10] - The company has delivered adjusted free cash flow of $1.2 billion year-to-date and repurchased $750 million in shares [19][20] Q&A Session Summary Question: Strong brand and specialty sales growth - Management noted broad-based strength in brand and specialty sales, driven by multiple categories and new customer onboarding [44][46] Question: Consumer weakness related to tariffs - Management indicated no significant changes in consumer behavior or prescription demand despite macroeconomic concerns [53][54] Question: Cardinal Health brand revenue and USMCA coverage - Approximately $4 billion of GNPD revenue comes from Cardinal Health brand, which is higher margin relative to national brands [59][60] Question: Tariff impact on Cardinal Health brand - The majority of the anticipated $200 to $300 million in tariff costs will be addressed through pricing adjustments, particularly for Cardinal Health brand products [64][66] Question: Margin expansion in pharma - Management attributed margin expansion to growth in specialty and brand drug sales, acquisitions, and effective cost control measures [84][86] Question: Customer onboarding and new customer wins - The onboarding of new customers is progressing well, with a reaffirmation of $10 billion in incremental new customer revenue for the year [95][96]