Pharma, Specialty Units Likely to Drive Cardinal Health's Q1 Earnings

Core Viewpoint - Cardinal Health, Inc. (CAH) is expected to report strong first-quarter fiscal 2026 results, with adjusted earnings per share (EPS) anticipated to increase by 17.6% year-over-year, driven by robust pharmaceutical demand and new customer acquisitions [1][7]. Group 1: Performance Expectations - The company is projected to achieve revenues of $59.05 billion for the first quarter, reflecting a 13% increase from the previous year [7]. - The Pharmaceutical and Specialty Solutions unit is likely to be a key driver of revenue growth, benefiting from steady brand and generics volume growth, as well as contributions from biosimilars and GLP-1 therapies [3][9]. - The Other segment, which includes growth businesses like at-Home Solutions and Nuclear and Precision Health, is expected to show strong double-digit growth, with estimated sales of $1.49 billion [5]. Group 2: Segment Analysis - The Pharmaceutical and Specialty Solutions segment is estimated to generate $53.58 billion in sales, supported by increasing specialty penetration and new customer wins [3]. - The Global Medical Products and Distribution (GMPD) segment is projected to have sales of $3.19 billion, although margins may be pressured by tariff-related costs [4]. - U.S. and international sales are estimated at $57.82 billion and $437 million, respectively, with higher selling, general and administrative (SG&A) expenses potentially impacting operating leverage [6]. Group 3: Market Position and Valuation - Cardinal Health's shares have gained 1.2% over the past three months, underperforming the Medical - Dental Supplies sector and the S&P 500 [11]. - The company's forward 12-month price-to-earnings (P/E) ratio is 16.3X, which is below the industry average of 16.8X, indicating a potential valuation opportunity [15]. - The company is building a durable growth runway through its Pharmaceutical and Specialty Solutions business, supported by acquisitions and expansion into high-growth therapeutic areas [16][19]. Group 4: Growth Initiatives - The Biopharma Solutions segment is expected to grow at an annual rate of 20%, driven by technology-enabled services [17]. - The at-Home Solutions segment is capitalizing on the increasing demand for home healthcare, supported by recent acquisitions and distribution center expansions [18]. - Supply-chain modernization and growth in Cardinal-branded products in GMPD are expected to contribute to sustained earnings growth and margin expansion [19].