Cardinal Health lifts annual profit outlook on strength in specialty medicines unit (updated)

McKesson

01/11/2024 15:59

(Adds comments from conf call in paragraphs 4,8,9 details in
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    By Mariam Sunny
       Nov 1 (Reuters) - Cardinal Health  CAH.N  raised its
fiscal 2025 adjusted profit forecast on Friday as strong demand
for costly specialty medicines and branded drugs drove sales at
its pharmaceuticals unit, sending shares of the company up
nearly 7%.
    Drug distributors in the United States are expanding their
presence in the specialty medicines market that treats complex
conditions like rheumatoid arthritis and cancer due to their
high profit margins.
    The company struck a $1.12 billion deal in September to buy
community cancer center operator Integrated Oncology Network to
join its rivals McKesson  MCK.N  and Cencora  COR.N  in
expanding into cancer care.  
    Cardinal will evaluate additional opportunities in specialty
medicines, CEO Jason Hollar said on a call with analysts.
    The company now expects an adjusted per-share profit of
$7.75 to $7.90 for the fiscal year ending June 2025, up from the
previous $7.55 to $7.70. Analysts were expecting an annual
profit of $7.63 per share, according to data compiled by LSEG.
    The pharma and specialty solutions unit, which distributes
branded and specialty medicines, as well as over-the-counter
products, brought in first-quarter sales of $48 billion, beating
expectations of $46.86 billion.
    Cardinal expects a 2% to 4% revenue decline from the unit in
the fiscal year, compared with a 4% to 6% decline forecast
previously, as it anticipates increased demand for specialty
medicines and GLP-1 weight-loss drugs.
    The improvement is expected to help offset a hit from the
loss of contracts from UnitedHealth Group's  UNH.N  pharmacy
benefit management unit OptumRx, one of its largest customers.
    "GLP-1s are continuing to contribute and grow more so than
we had originally expected," CFO Aaron Alt said.
    Total revenue for the first quarter came in at $52.3
billion, beating estimates of $50.9 billion.
    On an adjusted basis, Cardinal reported a quarterly profit
of $1.88 per share, topping expectations of $1.62 apiece.

 (Reporting by Mariam Sunny in Bengaluru; Editing by Vijay
Kishore)
 ((Mariam.ESunny@thomsonreuters.com;))