Cardinal Health lifts 2025 profit outlook on strong demand for costly specialty drugs
Aug 14 (Reuters) -Cardinal Health CAH.N raised its 2025 profit forecast on Wednesday betting on strong demand for branded and specialty medicines at its pharmaceuticals unit.
Drug distributors have been benefiting from sales of specialty medicines used to treat complex conditions such as rheumatoid arthritis and cancer, along with cheaper versions of complex biotech drugs called biosimilars. This comes at a time when prices of generic medicines keep falling due to intense competition.
Cardinal Health also beat Wall Street estimates for fourth-quarter profit and revenue, driven by strength in its pharmaceutical and specialty solutions unit.
"This quarter and outlook was much better than many feared," EvercoreISI analyst Elizabeth Anderson said in a note.
Shares of the Ohio-based company were up 7% at $109.85 in premarket trading.
The company now expects 2025 adjusted earnings per share of $7.55 to $7.70, compared with its previous forecast of at least $7.50. According to LSEG data, analysts were expecting an annual profit of $7.53 per share.
Cardinal Health, however, expects pharmaceutical unit revenue to decline 4% to 6%in fiscal 2025, anticipating a hit from the loss of contracts with UnitedHealth Group's UNH.N pharmacy benefit management unit OptumRx, one of its largest customers.
The Optum contracts, signed in 2015, contributed 16% of Cardinal's total revenue in fiscal year 2023.
Last month, rival Cencora raised its annual profit forecast for the fourth time this year, betting on strong demand for high-priced specialty medicines.
The company sources a substantial amount of its revenue from the pharmaceutical and specialty solutions unit, through which it distributes branded and generic drugs, specialty medicines and over-the-counter healthcare and consumer products.
The unit brought in sales of $55.61 billion, up 13%year-over-year, in the fourth quarter ended June 30.
Total sales came in at $59.87 billion, beating estimates of $58.64 billion.
On an adjusted basis, Cardinal Health reported a profit of $1.84per share, topping expectations of $1.73 apiece.
Reporting by Mariam Sunny in Bengaluru; editing by Alan Barona
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