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Cardinal Health FY Conference Summary Company Overview - **Company**: Cardinal Health (NYSE: CAH) - **Date of Conference**: December 02, 2025 - **Key Speakers**: Aaron Alt (CFO), Matt Sims (VP of IR) Key Points Financial Performance - **Strong Q1 Results**: Cardinal Health reported double-digit growth across all five operating segments, driven by strong demand and execution [4][5] - **Revenue Growth**: The specialty part of the pharma business performed well, contributing to overall revenue growth [4][5] - **New Customer Volume**: Approximately $7 billion of new customer volume was added in the pharma business during the first half of the fiscal year [5][14] - **Full Year Guidance Raised**: The company raised its full-year guidance to $9.65-$9.85 [6] Business Segments - **Pharma Business**: The upcoming generic product pipeline from 2025 to 2029 is stronger than the previous five years, with generics being a significant revenue driver [8][9] - **At-Home and Nuclear Precision Health**: Both segments are experiencing double-digit organic growth, supported by investments in supply chain efficiency and capacity [22][23] - **OptiFreight**: This logistics technology provider is also seeing growth through better capabilities and customer penetration [23] Strategic Partnerships and Acquisitions - **Partnership with CVS**: The ongoing strategic partnership with CVS has been beneficial, especially after CVS's acquisition of Rite Aid, which brought new volume [12] - **Recent Acquisitions**: The integration of ADSG into the at-home business is progressing well, enhancing patient acquisition and care [6][24] Market Dynamics - **Competitive Landscape**: The medical products distribution market is undergoing changes with competitors exploring strategic alternatives, but Cardinal Health remains focused on its execution plan [27][28] - **Tariff Impact**: The company expects the net tariff impact to be at the top end of the previously disclosed range, but is managing pricing initiatives effectively [31] Regulatory Environment - **CMS Policies**: The administration's objectives for access, affordability, and innovation are aligned with Cardinal Health's goals, and the company is actively participating in policy discussions [33] - **Drug Price Negotiations**: The company has already factored potential impacts from drug price negotiations into its guidance [35] Future Outlook - **Investment in AI**: Cardinal Health is exploring AI opportunities across customer service, finance, and operations to enhance efficiency and effectiveness [48] - **DTC Models**: The rise of direct-to-consumer models is not seen as a threat, as many are supported by existing distributors [49] - **Long-term Growth Strategy**: The management is focused on long-term investments to ensure continued revenue and profit growth over the coming quarters [56][57] Capital Allocation - **Cash Flow Management**: The company raised its adjusted free cash flow guidance and plans to invest $600-$650 million in capital projects this fiscal year [44][46] - **Share Repurchase Program**: Cardinal Health is committed to a baseline share repurchase of at least $750 million [46] Innovation and Product Development - **GLP-1 Market**: The company anticipates that the introduction of oral solids will positively impact the GLP-1 market, potentially improving profitability [51] - **DME Regulatory Changes**: Cardinal Health believes it is well-positioned to thrive under new regulations due to its scale in the diabetes category [54] Conclusion - Cardinal Health is experiencing strong growth across its segments, driven by strategic partnerships, acquisitions, and a focus on innovation. The company is well-prepared to navigate market changes and regulatory challenges while maintaining a long-term growth strategy.

Core Insights - Investors should not rely solely on headline sales or earnings to assess a company's performance, especially in a challenging economic environment leading up to 2026 [1][2] - The interest coverage ratio is a critical indicator of a company's financial stability, reflecting its ability to service debt and sustain operations [2][5] Interest Coverage Ratio - The interest coverage ratio measures how effectively a company can pay interest charges on its debt, calculated as Earnings before Interest & Taxes (EBIT) divided by Interest Expense [4][5] - A higher interest coverage ratio indicates a stronger capacity to meet interest obligations, while a ratio below 1 suggests potential default risks [6][7] - Companies with high interest coverage ratios, such as Life Time Group Holdings, Cardinal Health, LeMaitre Vascular, and Flowserve, demonstrate better debt-servicing abilities [3][10] Company Performance - Life Time Group Holdings (LTH) has a projected sales growth of 13.8% and EPS growth of 57.9% for the current financial year, with shares rising 16.5% over the past year [12] - Cardinal Health (CAH) shows projected sales growth of 16.2% and EPS growth of 19.7%, with a significant stock increase of 73.3% in the past year [13] - LeMaitre Vascular (LMAT) anticipates sales growth of 12.9% and EPS growth of 30.1%, although its stock has declined by 21.3% in the past year [14] - Flowserve Corporation (FLS) expects sales growth of 4.6% and EPS growth of 31.9%, with a stock increase of 17.2% over the past year [15] Investment Strategy - A successful investment strategy should include stocks with an interest coverage ratio above the industry average, a favorable Zacks Rank, and a VGM Score of A or B [8][9]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, with the aim of buying high and selling higher, capitalizing on established price movements [1][2]. Company Overview: Cardinal Health (CAH) - Cardinal Health currently holds a Momentum Style Score of A, indicating strong momentum characteristics [3]. - The company has a Zacks Rank of 2 (Buy), suggesting a favorable outlook based on historical performance metrics [4]. Performance Metrics - Over the past week, CAH shares increased by 2%, outperforming the Zacks Medical - Dental Supplies industry, which rose by 0.57% [6]. - In a longer timeframe, CAH's monthly price change is 29.59%, significantly higher than the industry's 3.41% [6]. - Over the last quarter, CAH shares have risen by 41.56%, and over the past year, they have increased by 73.81%, while the S&P 500 only moved 5.68% and 14.42% respectively [7]. Trading Volume - CAH's average 20-day trading volume is 2,914,504 shares, which serves as a bullish indicator when combined with rising stock prices [8]. Earnings Outlook - In the past two months, 7 earnings estimates for CAH have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $9.45 to $9.86 [10]. - For the next fiscal year, 6 estimates have also moved higher, with no downward revisions during the same period [10]. Conclusion - Considering the strong performance metrics and positive earnings outlook, CAH is positioned as a 2 (Buy) stock with a Momentum Score of A, making it a potential candidate for near-term investment [12].

Core Viewpoint - Brokerage recommendations, particularly for Cardinal Health (CAH), show a strong positive bias, with an average brokerage recommendation (ABR) of 1.53, indicating a tendency towards "Strong Buy" [2][5][11] Summary by Sections Brokerage Recommendations - Cardinal Health has an ABR of 1.53, which is between Strong Buy and Buy, based on recommendations from 15 brokerage firms, with 11 of those being Strong Buy, representing 73.3% of all recommendations [2][5] - The ABR suggests a buying opportunity, but relying solely on this metric may not be advisable due to the historical ineffectiveness of brokerage recommendations in predicting stock price appreciation [5][11] Analyst Behavior - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][11] - This misalignment of interests can lead to misleading guidance for retail investors, making it essential to validate these recommendations with independent research [7][11] Zacks Rank vs. ABR - The Zacks Rank, which is based on earnings estimate revisions, is a more reliable indicator of a stock's near-term price performance compared to the ABR [8][12] - The Zacks Rank is displayed in whole numbers (1 to 5) and reflects timely updates based on analysts' earnings estimates, unlike the ABR, which may not be current [10][13] Earnings Estimates - The Zacks Consensus Estimate for Cardinal Health has increased by 4.4% over the past month to $9.86, indicating growing optimism among analysts regarding the company's earnings prospects [14] - This increase in consensus estimates, along with other factors, has resulted in a Zacks Rank of 2 (Buy) for Cardinal Health, suggesting a favorable outlook for the stock [15]

Core Insights - Cardinal Health (CAH) shares have increased by 29.4% over the past month, reaching a new 52-week high of $210.33, and have gained 77.1% since the start of the year, outperforming the Zacks Medical sector and the Zacks Medical - Dental Supplies industry [1] Financial Performance - Cardinal Health has consistently beaten earnings estimates, reporting EPS of $2.55 against a consensus estimate of $2.21 in its last earnings report on October 30, 2025, and exceeding revenue estimates by 8.39% [2] - For the current fiscal year, Cardinal is projected to achieve earnings of $9.86 per share on revenues of $258.58 billion, reflecting a 19.66% increase in EPS and a 16.18% increase in revenues. For the next fiscal year, earnings are expected to rise to $10.9 per share on revenues of $277.02 billion, indicating year-over-year changes of 10.53% and 7.13%, respectively [3] Valuation Metrics - Cardinal Health has a Value Score of A, a Growth Score of A, and a Momentum Score of C, resulting in a combined VGM Score of A, indicating strong potential for value investors [6] - The stock trades at 21.3 times current fiscal year EPS estimates, above the peer industry average of 15 times, and at 18 times trailing cash flow compared to a peer average of 12 times. The PEG ratio stands at 1.52, placing Cardinal in the top tier of stocks from a value perspective [7] Zacks Rank - Cardinal Health holds a Zacks Rank of 2 (Buy), supported by rising earnings estimates, making it a suitable choice for investors looking for stocks with strong potential [8] Industry Comparison - The Medical - Dental Supplies industry is performing well, ranking in the top 22% of all industries, providing favorable conditions for both Cardinal Health and its peer, McKesson Corporation (MCK), which also has a Zacks Rank of 2 (Buy) [11]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores are designed to help investors identify stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] - Value Score emphasizes finding undervalued stocks based on financial ratios [3] - Growth Score assesses a company's future earnings and financial health to identify sustainable growth opportunities [4] - Momentum Score capitalizes on price trends and earnings outlook changes to identify favorable buying opportunities [5] - VGM Score combines the three styles to highlight stocks with the best overall potential [6] Zacks Rank and Performance - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investment decisions [7] - Stocks rated 1 (Strong Buy) have historically delivered an average annual return of +23.93% since 1988, significantly outperforming the S&P 500 [8] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [10] Company Spotlight: Cardinal Health (CAH) - Cardinal Health is a major player in healthcare services, serving nearly 90% of U.S. hospitals and managing over 43,000 pharmaceutical shipments daily [12] - The company operates in various segments, including Pharmaceutical & Specialty Solutions and Global Medical Products & Distribution [12] - Cardinal Health holds a Zacks Rank of 2 (Buy) and a VGM Score of A, indicating strong growth potential [13] - The company is projected to achieve year-over-year earnings growth of 18.9% for the current fiscal year, with upward revisions in earnings estimates [13][14]

Group 1: Cardinal Health - Cardinal Health's share prices have surged nearly 74% year to date, with significant gains following a strong quarterly earnings report [3][4] - Fiscal first-quarter 2026 revenue reached $64 billion, a 22% increase from the previous year, exceeding analyst expectations [3][5] - Adjusted earnings per share (EPS) of $2.55 surpassed Wall Street's forecasts, with estimates predicting EPS growth of 19% and 12.6% for the current and next fiscal years, respectively [5] Group 2: Loews - Loews shares have increased by 24% year to date, reflecting a turnaround from weak returns in the 2010s [6][8] - The company, controlled by the Tisch family, focuses on increasing intrinsic value per share and is actively repurchasing shares [9] - Loews owns significant stakes in CNA Financial and has interests in energy pipelines, hotels, and packaging, making it an attractive option for conservative investors seeking steady returns [8][9] Group 3: SanDisk - SanDisk's shares have surged over sixfold since splitting from Western Digital in February, with a 70% increase in the past month [10][11] - The company benefits from a NAND shortage, with robust demand for memory chips driven by artificial intelligence infrastructure [10] - SanDisk has raised NAND flash contract prices by 50%, and the market currently values its shares at a forward price-to-earnings (P/E) ratio of around 19, indicating potential for continued growth [10][12]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]